CMS ENERGY CORP 10-K (Annual Reports) 2009-02-25

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Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549
FORM 10-K
[X]
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2008
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Com m is s ion Registrant; State of Incorporation; IRS Em ployer
File Num ber Addre s s ; and Tele phone Num ber 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
Securities registered pursuant to Section 12(b) of the Act:
Nam e of Each Exchange
Registrant Title of Class on Which Registere d
CMS Energy Corporation Common Stock, $.01 par value New York Stock Exchange
Consumers Energy Company Preferred Stocks, $100 par value: $4.16 New York Stock Exchange
Series, $4.50 Series
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
CMS Energy Corporation: Yes [X] No o Consumers Energy Company: Yes [X] No o
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
CMS Energy Corporation: Yes o No [X] Consumers Energy Company: Yes o No [X]
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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K. o
CMS Energy Corporation:
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2
of the Exchange Act. (Check one):
Large accelerated filer x Accelerated filer o Non-accelerated filer o Smaller reporting company o
(Do not check if a smaller reporting company)
Consumers Energy Company:
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2
of the Exchange Act. (Check one):
Large accelerated filer o Accelerated filer o Non-accelerated filer x Smaller reporting company o
(Do not check if a smaller reporting company)
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act).
CMS Energy Corporation: Yes o No [X] Consumers Energy Company: Yes o No [X]
The aggregate market value of CMS Energy voting and non-voting common equity held by non-affiliates was $3.344 billion for the
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224,418,751 CMS Energy Common Stock shares outstanding on June 30, 2008 based on the closing sale price of $14.90 for CMS
Energy Common Stock, as reported by the New York Stock Exchange on such date.
There were 226,623,039 shares of CMS Energy Common Stock outstanding on February 23, 2009. On February 23, 2009, CMS
Energy held all voting and non-voting common equity of Consumers.
Documents incorporated by reference: CMS Energy’s proxy statement and Consumers’ information statement relating to the 2009
annual meeting of shareholders to be held May 22, 2009, are incorporated by reference in Part III.
CMS Energy Corporation

And
Consumers Energy Company
Annual Reports on Form 10-K to the Securities and Exchange Commission for the Year Ended
December 31, 2008
This combined Form 10-K is separately filed by CMS Energy Corporation and Consumers Energy Company.
Information in this combined Form 10-K relating to each individual registrant is filed by such registrant on its own
behalf. Consumers Energy Company makes no representation regarding information relating to any other
companies affiliated with CMS Energy Corporation other than its own subsidiaries. None of CMS Energy
Corporation, CMS Enterprises Company nor any of CMS Energy Corporation’s other subsidiaries (other than
Consumers Energy Company) has any obligation in respect of Consumers Energy Company’s debt securities and
holders of such securities should not consider CMS Energy Corporation, CMS Enterprises Company or any of
CMS Energy Corporation’s other subsidiaries’ (other than Consumers Energy Company and its own subsidiaries
(in relevant circumstances)) financial resources or results of operations in making a decision with respect to
Consumers Energy Company’s debt securities. Similarly, Consumers Energy Company has no obligation in
respect of debt securities of CMS Energy Corporation.
TABLE OF CONTENTS
Page
Glossary 4
PART I:
Item 1. Business 11
Item 1A. Risk Factors 25
Item 1B. Unresolved Staff Comments 32
Item 2. Properties 33
Item 3. Legal Proceedings 33
Item 4. Submission of Matters to a Vote of Security Holders 37
PART II:
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities 38
Item 6. Selected Financial Data 38
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 39
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 39
Item 8. Financial Statements and Supplementary Data 40
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure CO-1
Item 9A. Controls and Procedures CO-1
Item 9A(T). Controls and Procedures CO-2
Item 9B. Other Information CO-2
PART III:
Item 10. Directors, Executive Officers and Corporate Governance CO-3
Item 11. Executive Compensation CO-3
Item 12. Security Ownership of Certain Beneficial Owners and Management Related Stockholder Matters CO-4
Item 13. Certain Relationships and Related Transactions, and Director Independence CO-4
Item 14. Principal Accountant Fees and Services CO-4
PART IV:
Item 15. Exhibits, Financial Statement Schedules CO-4
EX-3.(B)
EX-3.(D)
EX-4.(F)
EX-10.(B)
EX-10.(L)
EX-10.(M)
EX-10.(N)
EX-10.(P)
EX-10.(R)
EX-10.(S)
EX-10.(T)
EX-10.(TT)
EX-10.(WW)
EX-10.(XX)
EX-12.(A)
EX-12.(B)
EX-21
EX-23(A)
EX-23.(B)
EX-23(C)
EX-23(D)
EX-23.(E)
EX-23(F)
EX-24(A)
EX-24(B)
EX-31.(A)
EX-31.(B)
EX-31.(C)
EX-31.(D)
EX-32.(A)
EX-32.(B)
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GLOSSARY
Certain terms used in the text and financial statements are defined below
ABATE Association of Businesses Advocating Tariff Equity

ABO Accumulated Benefit Obligation. The liabilities of a pension plan based on
service and pay to date. This differs from the Projected Benefit Obligation
that is typically disclosed in that it does not reflect expected future salary
increases.
AEI Ashmore Energy International, a non-affiliated company
AFUDC Allowance for funds used during construction
AMT Alternative minimum tax
AOC Administrative Order on Consent
AOCI Accumulated Other Comprehensive Income
AOCL Accumulated Other Comprehensive Loss
APB Accounting Principles Board
APB Opinion No. 18 APB Opinion No. 18, “The Equity Method of Accounting for Investments
in Common Stock”
ARB Accounting Research Bulletin
ARO Asset retirement obligation
Bay Harbor A residential/commercial real estate area located near Petoskey, Michigan.
In 2002, CMS Energy sold its interest in Bay Harbor.
Beeland Beeland Group LLC, a wholly owned indirect subsidiary of CMS Energy
bcf Billion cubic feet of gas
Big Rock Big Rock Point nuclear power plant
Big Rock ISFSI Big Rock Independent Spent Fuel Storage Installation
Board of Directors Board of Directors of CMS Energy
Btu British thermal unit; one Btu equals the amount of energy required to raise
the temperature of one pound of water by one degree Fahrenheit
CAIR Clean Air Interstate Rule
CAMR Clean Air Mercury Rule
CEO Chief Executive Officer
CFO Chief Financial Officer
City gate arrangement The arrangement made for the point at which a local distribution company
physically receives gas from a supplier or pipeline
CKD Cement kiln dust
Clean Air Act Federal Clean Air Act, as amended
CMS Capital CMS Capital, L.L.C., a wholly owned subsidiary of CMS Energy
CMS Electric and Gas CMS Electric & Gas Company, L.L.C., a wholly owned subsidiary of
Enterprises
CMS Energy CMS Energy Corporation, the parent of Consumers and Enterprises
CMS Energy Common Stock or common stock Common stock of CMS Energy, par value $.01 per share
CMS ERM CMS Energy Resource Management Company, formerly CMS MST, a
wholly owned subsidiary of Enterprises
CMS Field Services CMS Field Services, Inc., a former wholly owned subsidiary of CMS Gas
Transmission
CMS Gas Transmission CMS Gas Transmission Company, a wholly owned subsidiary of
Enterprises
CMS Generation CMS Generation Co., a former wholly owned subsidiary of Enterprises
CMS International Ventures CMS International Ventures LLC, a subsidiary of Enterprises
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CMS Land CMS Land Company, a wholly owned subsidiary of CMS Energy
CMS MST CMS Marketing, Services and Trading Company, a wholly owned
subsidiary of Enterprises, whose name was changed to CMS ERM
effective January 2004
CMS Oil and Gas CMS Oil and Gas Company, formerly a wholly owned subsidiary of
Enterprises
CMS Viron CMS Viron Corporation, a wholly owned subsidiary of CMS ERM
Consumers Consumers Energy Company, a wholly owned subsidiary of CMS Energy
CPEE Companhia Paulista de Energia Eletrica, in which CMS International
Ventures formerly owned a 94 percent interest
Customer Choice Act Customer Choice and Electricity Reliability Act, a Michigan statute
DCCP Defined Company Contribution Plan
DC SERP Defined Contribution Supplemental Executive Retirement Plan
Dekatherms/day A measure of the heat content value of gas per day; one dekatherm/day is
equivalent to 1,000,000 British thermal units (Btu) per day
Detroit Edison The Detroit Edison Company, a non-affiliated company
DIG Dearborn Industrial Generation, LLC, a wholly owned subsidiary of CMS
Energy
DOE U.S. Department of Energy
DOJ U.S. Department of Justice
Dow The Dow Chemical Company, a non-affiliated company
DSSP Deferred Salary Savings Plan
EISP Executive Incentive Separation Plan
EITF Emerging Issues Task Force
EITF Issue 06-11 EITF Issue No. 06-11, “Accounting for Income Tax Benefits of Dividends
on Share-Based Payment Awards”
EITF Issue 07-5 EITF Issue No. 07-5, “Determining Whether an Instrument (or Embedded
Feature) Is Indexed to an Entity’s Own Stock”
EITF Issue 08-5 EITF Issue No. 08-5, “Issuer’s Accounting for Liabilities Measured at Fair
Value with a Third-Party Credit Enhancement”
El Chocon A 1,200 MW hydro power plant located in Argentina, in which CMS
Generation formerly held a 17.2 percent ownership interest
EnerBank EnerBank USA, a wholly owned subsidiary of CMS Capital
Entergy Entergy Corporation, a non-affiliated company
Enterprises CMS Enterprises Company, a wholly owned subsidiary of CMS Energy
EPA U.S. Environmental Protection Agency
EPS Earnings per share
Exchange Act Securities Exchange Act of 1934, as amended
FASB Financial Accounting Standards Board
FDIC Federal Deposit Insurance Corporation
FERC Federal Energy Regulatory Commission
FIN 14 FASB Interpretation No. 14, “Reasonable Estimation of Amount of a
Loss”
FIN 45 FASB Interpretation No. 45, “Guarantor’s Accounting and Disclosure
Requirements for Guarantees, including Indirect Guarantees of
Indebtedness of Others”
FIN 46(R) Revised FASB Interpretation No. 46, “Consolidation of Variable Interest
Entities”
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FIN 47 FASB Interpretation No. 47, “Accounting for Conditional Asset

Retirement Obligations”
FIN 48 FASB Interpretation No. 48, “Accounting for Uncertainty in Income
Taxes — an interpretation of FASB Statement No. 109”
First Mortgage Bond Indenture The indenture dated as of September 1, 1945 between Consumers and The
Bank of New York Mellon, as Trustee, and as amended and supplemented
FMB First Mortgage Bonds
FMLP First Midland Limited Partnership, a partnership that holds a lessor
interest in the MCV Facility
FOV Finding of Violation
FSP FASB Staff Position
FSP APB 14-1 FASB Staff Position on APB No. 14, “Accounting for Convertible Debt
and Debt Issued with Stock Purchase Warrants”
FSP EITF 03-6-1 FASB Staff Position on EITF No. 03-6, “Participating Securities and the
Two-Class method under FASB Statement No. 128”
FSP FAS 132(R)-1 FASB Staff Position on SFAS No. 132(R), “Employers’ Disclosures about
Pensions and Other Postretirement Benefits”
FSP FAS 133-1 and FIN 45-4 FASB Staff Position on SFAS No. 133, “Accounting for Derivative
Instruments and Hedging Activities” and FIN 45, “Guarantor’s
Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others”
FSP FAS 142-3 FASB Staff Position on SFAS No. 142, “Determination of the Useful Life
of Intangible Assets”
FSP FAS 157-3 FASB Staff Position on SFAS No. 157, “Fair Value Measurements”
FSP FIN 39-1 FASB Staff Position on SFAS Interpretation No. 39, “Offsetting of
Amounts Related to Certain Contracts”
GAAP U.S. Generally Accepted Accounting Principles
GasAtacama GasAtacama Holding Limited, a limited liability partnership that manages
GasAtacama S.A., which includes an integrated natural gas pipeline and
electric generating plant in Argentina and Chile and Atacama Finance
Company, in which CMS International Ventures formerly owned a
50 percent interest
Genesee Genesee Power Station Limited Partnership
GCR Gas cost recovery
GWh Gigawatt hour (a unit of energy equal to one million kilowatt hours)
Grayling Grayling Generating Station Limited Partnership
HYDRA-CO HYDRA-CO Enterprises, Inc. a wholly owned subsidiary of Enterprises
ICSID International Centre for the Settlement of Investment Disputes
IPP Independent power producer
IRS Internal Revenue Service
ISFSI Independent spent fuel storage installation
ITC Income tax credit
Jamaica Jamaica Private Power Company, Limited, a 63 MW diesel-fueled power
plant in Jamaica, in which CMS Generation formerly owned a 42 percent
interest
Jorf Lasfar A 1,356 MW coal-based power plant in Morocco, in which CMS
Generation formerly owned a 50 percent interest
kilovolts Thousand volts (unit used to measure the difference in electrical pressure
along a current)
kWh Kilowatt-hour (a unit of energy equal to one thousand watt hours)
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LS Power Group LS Power Group, a non-affiliated company

Lucid Energy Lucid Energy LLC, a non-affiliated company
Ludington Ludington pumped storage plant, jointly owned by Consumers and
Detroit Edison
Marathon Marathon Oil Company, Marathon E.G. Holding, Marathon E.G. Alba,
Marathon E.G. LPG, Marathon Production LTD, and Alba Associates,
LLC, each a non-affiliated company
mcf One thousand cubic feet of gas
MCV Facility A natural gas-fueled, combined-cycle cogeneration facility operated by
the MCV Partnership
MCV GP II Successor of CMS Midland, Inc., formerly a subsidiary of Consumers that
had a 49 percent ownership interest in the MCV Partnership
MCV Partnership Midland Cogeneration Venture Limited Partnership
MCV PPA The Power Purchase Agreement between Consumers and the MCV
Partnership with a 35-year term commencing in March 1990, as amended
and restated in an agreement dated as of June 9, 2008 between the MCV
Partnership and Consumers
MD&A Management’s Discussion and Analysis
MDEQ Michigan Department of Environmental Quality
MDL Multidistrict Litigation
MEI Michigan Energy Investments LLC, an affiliate of Lucid Energy
METC Michigan Electric Transmission Company, LLC, a non-affiliated company
owned by ITC Holdings Corporation and a member of MISO
MGP Manufactured Gas Plant
Midwest Energy Market An energy market developed by the MISO to provide day-ahead and real-
time market information and centralized dispatch for market participants
MISO Midwest Independent Transmission System Operator, Inc.
MPSC Michigan Public Service Commission
MRV Market-Related Value of Plan assets
MSBT Michigan Single Business Tax
MW Megawatt (a unit of power equal to one million watts)
MWh Megawatt hour (a unit of energy equal to one million watt hours)
NAV Net Asset Values
Neyveli ST-CMS Electric Company Private Ltd., a joint venture power project
company located in India, in which CMS International Ventures formerly
indirectly owned a 50 percent interest
NMC Nuclear Management Company LLC, a non-affiliated company
NOV Notice of Violation
NREPA Michigan Natural Resources and Environmental Protection Act
NSR New Source Review
NYMEX New York Mercantile Exchange
OPEB Postretirement benefit plans other than pensions
Palisades Palisades nuclear power plant, formerly owned by Consumers
Panhandle Panhandle Eastern Pipe Line Company, including its wholly owned
subsidiaries Trunkline, Pan Gas Storage, Panhandle Storage, and
Panhandle Holdings, a former wholly owned subsidiary of CMS Gas
Transmission
PCB Polychlorinated biphenyl
PDVSA Petroleos de Venezuela S.A., a non-affiliated company
Peabody Energy Peabody Energy Corporation, a non-affiliated company
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Pension Plan The trusteed, non-contributory, defined benefit pension plan of

Panhandle, Consumers and CMS Energy
Pension Protection Act The Pension Protection Act of 2006, signed into law on August 17, 2006
PowerSmith A 124 MW natural gas power plant located in Oklahoma, in which CMS
Generation formerly held a 6.25% limited partner ownership interest
Prairie State Prairie State Energy Campus, a planned 1,600 MW power plant and coal
mine in southern Illinois
PSCR Power supply cost recovery
PSD Prevention of Significant Deterioration
PUHCA Public Utility Holding Company Act
PURPA Public Utility Regulatory Policies Act of 1978
Quicksilver Quicksilver Resources, Inc., a non-affiliated company
RCP Resource Conservation Plan
Reserve Margin The amount of unused available electric capacity at peak demand as a
percentage of total electric peak demand
RMRR Routine maintenance, repair and replacement
ROA Retail Open Access, which allows electric generation customers to choose
alternative electric suppliers pursuant to the Customer Choice Act
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
SENECA Sistema Electrico del Estado Nueva Esparta C.A., a former wholly owned
subsidiary of CMS International Ventures
SERP Supplemental Executive Retirement Plan
SFAS Statement of Financial Accounting Standards
SFAS No. 13 SFAS No. 13, “Accounting for Leases”
SFAS No. 71 SFAS No. 71, “Accounting for the Effects of Certain Types of Regulation”
SFAS No. 87 SFAS No. 87, “Employers’ Accounting for Pensions”
SFAS No. 98 SFAS No. 98, “Accounting for Leases”
SFAS No. 106 SFAS No. 106, “Employers’ Accounting for Postretirement Benefits Other
Than Pensions”
SFAS No. 109 SFAS No. 109, “Accounting for Income Taxes”
SFAS No. 123(R) SFAS No. 123 (revised 2004), “Share-Based Payments”
SFAS No. 132(R) SFAS No. 132 (revised 2003), “Employers’ Disclosures about Pensions
and Other Postretirement Benefits”
SFAS No. 133 SFAS No. 133, “Accounting for Derivative Instruments and Hedging
Activities, as amended and interpreted”
SFAS No. 141(R) SFAS No. 141 (revised 2007), “Business Combinations”
SFAS No. 142 SFAS No. 142, “Goodwill and Other Intangible Assets”
SFAS No. 143 SFAS No. 143, “Accounting for Asset Retirement Obligations”
SFAS No. 157 SFAS No. 157, “Fair Value Measurements”
SFAS No. 158 SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and
Other Postretirement Plans — an amendment of FASB Statements No. 87,
88, 106, and 132(R)”
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SFAS No. 159 SFAS No. 159, “The Fair Value Option for Financial Assets and Financial
Liabilities, Including an Amendment to FASB Statement No. 115”
SFAS No. 160 SFAS No. 160, “Noncontrolling Interests in Consolidated Financial
Statements — an amendment of ARB No. 51”
SFAS No. 161 SFAS No. 161, “Disclosures about Derivative Instruments and Hedging
Activities, an amendment of FASB Statement No. 133”
Stranded Costs Costs incurred by utilities in order to serve their customers in a regulated
monopoly environment, which may not be recoverable in a competitive
environment because of customers leaving their systems and ceasing to
pay for their costs. These costs could include owned and purchased
generation and regulatory assets.
Superfund Comprehensive Environmental Response, Compensation and Liability Act
Supplemental Environmental Programs Environmentally beneficial projects which a party agrees to undertake as
part of the settlement of an enforcement action, but which the party is not
otherwise legally required to perform
Takoradi A 200 MW open-cycle combustion turbine crude oil power plant located
in Ghana, in which CMS Generation formerly owned a 90 percent interest
TAQA Abu Dhabi National Energy Company, a subsidiary of Abu Dhabi Water
and Electricity Authority, a non-affiliated company
T.E.S. Filer City T.E.S. Filer City Station Limited Partnership
TGN A natural gas transportation and pipeline business located in Argentina,
in which CMS Gas Transmission formerly owned a 23.54 percent interest
TNEB Tamil Nadu Electricity Board, a non-affiliated company
TRAC Terminal Rental Adjustment Clause, a provision of a leasing agreement
which permits or requires the rental price to be adjusted upward or
downward by reference to the amount realized by the lessor under the
agreement upon sale or other disposition of formerly leased property
Trunkline CMS Trunkline Gas Company, LLC, formerly a wholly owned subsidiary of
CMS Panhandle Holdings, LLC
Trust Preferred Securities Securities representing an undivided beneficial interest in the assets of
statutory business trusts, the interests of which have a preference with
respect to certain trust distributions over the interests of either CMS
Energy or Consumers, as applicable, as owner of the common beneficial
interests of the trusts
TSR Total shareholder return
Union Utility Workers Union of America, AFL-CIO
VEBA VEBA employees’ beneficiary association trusts accounts established to
set aside specifically employer contributed assets to pay for future
expenses of the OPEB plan
VIE Variable interest entity
Wolverine Wolverine Power Supply Cooperative, Inc., a non-affiliated company
Zeeland A 935 MW gas-based power plant located in Zeeland, Michigan
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PART I
ITEM 1. BUSINESS
GENERAL
CMS Energy
CMS Energy was formed in Michigan in 1987 and is an energy company operating primarily in Michigan. It is the
parent holding company of several subsidiaries, including Consumers and Enterprises. Consumers is a combination electric
and gas utility company that provides electricity and/or natural gas to almost 6.5 million of Michigan’s 10 million residents
and serves customers in all 68 counties of Michigan’s Lower Peninsula. Enterprises, through its subsidiaries and equity
investments, is engaged primarily in domestic independent power production.
CMS Energy’s consolidated operating revenue was $6.821 billion in 2008, $6.464 billion in 2007, and $6.126 billion in
2006. CMS Energy manages its businesses by the nature of services each provides and operates principally in three
business segments: electric utility, gas utility, and enterprises. See BUSINESS SEGMENTS in this Item 1 for further
discussion of each segment.
Consumers
Consumers was formed in Michigan in 1968 and is the successor to a corporation organized in Maine in 1910 that
conducted business in Michigan from 1915 to 1968. Consumers serves individuals and companies operating in the
alternative energy, automotive, metal, chemical and food products industries as well as a diversified group of other
industries. In 2008, Consumers served 1.8 million electric customers and 1.7 million gas customers.
Consumers’ consolidated operations account for a majority of CMS Energy’s total assets, income, and operating
revenue. Consumers’ consolidated operating revenue was $6.421 billion in 2008, $6.064 billion in 2007, and $5.721 billion in
2006.
Consumers’ rates and certain other aspects of its business are subject to the jurisdiction of the MPSC and the FERC,
as described in CMS ENERGY AND CONSUMERS REGULATION in this Item 1.
Consumers’ Properties — General: Consumers owns its principal properties in fee, except that most electric lines and
gas mains are located below public roads or on land owned by others and are accessed by Consumers pursuant to
easements and other rights. Almost all of Consumers’ properties are subject to the lien of its First Mortgage Bond
Indenture. For additional information on Consumers’ properties, see BUSINESS SEGMENTS — Consumers Electric
Utility — Electric Utility Properties, and — Consumers Gas Utility — Gas Utility Properties as described later in this Item 1.
BUSINESS SEGMENTS
CMS Energy Financial Information
For further information with respect to operating revenue, net operating income, and identifiable assets and liabilities
attributable to all of CMS Energy’s business segments and operations, see ITEM 8. CMS ENERGY’S FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA — SELECTED FINANCIAL INFORMATION, CONSOLIDATED
FINANCIAL STATEMENTS and NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
Consumers Financial Information

For further information with respect to operating revenue, net operating income, and identifiable assets and liabilities
attributable to Consumers’ electric and gas utility operations, see ITEM 8. CONSUMERS’ FINANCIAL STATEMENTS
AND SUPPLEMENTARY DATA — SELECTED FINANCIAL INFORMATION, CONSOLIDATED FINANCIAL
STATEMENTS and NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
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Consumers Electric Utility

Electric Utility Operations
Consumers’ electric utility operating revenue was $3.594 billion in 2008, $3.443 billion in 2007, and $3.302 billion in 2006.
Consumers’ electric utility operations include the generation, purchase, distribution and sale of electricity. At year-end
2008, Consumers was authorized to provide electric utility service in 61 of the 68 counties of Michigan’s Lower Peninsula.
Principal cities served include Battle Creek, Flint, Grand Rapids, Jackson, Kalamazoo, Midland, Muskegon and Saginaw.
Consumers’ electric utility customer base comprises a mix of residential, commercial and diversified industrial customers, the
largest segment of which is the automotive industry (which represents four percent of Consumers’ 2008 revenues).
Consumers’ electric utility operations are not dependent upon a single customer, or even a few customers, and the loss of
any one or even a few of these customers is not reasonably likely to have a material adverse effect on its financial condition.
Consumers’ electric utility operations are seasonal. The consumption of electric energy typically increases in the
summer months, primarily due to the use of air conditioners and other cooling equipment. In 2008, Consumers’ electric
deliveries were 39 billion kWh, which included ROA deliveries of 1.5 billion kWh. In 2007, Consumers’ electric deliveries
were 39 billion kWh, which included ROA deliveries of 1.4 billion kWh.
Consumers’ 2008 summer peak demand was 7,488 MW excluding ROA loads and 7,705 MW including ROA loads. For
the 2007-08 winter period, Consumers’ peak demand was 5,739 MW excluding ROA loads and 5,925 MW including ROA
loads. Alternative electric suppliers were providing generation services to ROA customers of 332 MW at December 31, 2008
and 315 MW at December 31, 2007. Consumers had a 13.7 percent Reserve Margin target for summer 2008, which was
achieved. Consumers owns or controls, through long-term contract, capacity necessary to supply 96.4 percent of projected
firm peak load for summer 2009 and has purchased the remainder from others.
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Electric Utility Properties

Generation: At December 31, 2008, Consumers’ electric generating system consisted of the following:
2008 2008 Ne t
S u m m e r Ne t Ge n e ration
Nu m be r of Un its an d Ye ar De m on strate d (Millions
Nam e an d Location (Michigan ) En te rin g S e rvice C apability (MW ) of k W h )
Coal Generation
J H Campbell 1 & 2 — West Olive 2 Units, 1962-1967 615 3,913
J H Campbell 3 — West Olive 1 Unit, 1980 770(a) 5,722
D E Karn — Essexville 2 Units, 1959-1961 515 2,073
B C Cobb — Muskegon 2 Units, 1956-1957 312 1,999
J R Whiting — Erie 3 Units, 1952-1953 328 2,211
J C Weadock — Essexville 2 Units, 1955-1958 310 1,783
Total coal generation 2,850 17,701
Oil/Gas Generation
B C Cobb — Muskegon 3 Units, 1999-2000(b) 183 —
D E Karn — Essexville 2 Units, 1975-1977 1,276 75
Zeeland — Zeeland 1 Unit, 2002 538 552
Total oil/gas generation 1,997 627
Hydroelectric
Conventional Hydro Generation 13 Plants, 1906-1949 73 454
Ludington 6 Units, 1973 955(c) (382)(d)
Total hydroelectric 1,028 72
Gas/Oil Combustion Turbine
Various Plants 7 Plants, 1966-1971 331 8
Zeeland — Zeeland 2 Units, 2001 330 210
Total gas/oil combustion turbine 661 218
Total owned generation 6,536 18,618
Purchased and Interchange Power(e) 3,050(f) 20,296(g)
Total 9,586 38,914
(a) Represents Consumers’ share of the capacity of the J H Campbell 3 unit, net of the 6.69 percent ownership interest of
the Michigan Public Power Agency and Wolverine.
(b) Cobb 1-3 are retired coal-based units that were converted to gas-based. Units were placed back into service in the
years indicated.
(c) Represents Consumers’ 51 percent share of the capacity of Ludington. Detroit Edison owns 49 percent.
(d) Represents Consumers’ share of net pumped storage generation. This facility electrically pumps water during off-peak
hours for storage to generate electricity later during peak-demand hours.
(e) Includes purchases from the Midwest Energy Market, long-term purchase contracts, options, spot market and other
seasonal purchases.
(f) Includes 1,240 MW of purchased contract capacity from the MCV Facility and 778 MW of purchased contract capacity
from the Palisades plant.
(g) Includes 6,837 million kWh of purchased energy from the Palisades plant and 3,789 million kWh of purchased energy
from the MCV Facility.
Distribution: Consumers’ distribution system includes:
• 398 miles of high-voltage distribution radial lines operating at 120 kilovolts or above;
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• 4,238 miles of high-voltage distribution overhead lines operating at 23 kilovolts and 46 kilovolts;
• 17 subsurface miles of high-voltage distribution underground lines operating at 23 kilovolts and 46 kilovolts;
• 55,734 miles of electric distribution overhead lines;
• 9,872 miles of underground distribution lines; and
• substations having an aggregate transformer capacity of 23,400,170 kilovoltamperes.
Consumers is interconnected to METC. METC owns an interstate high-voltage electric transmission system in
Michigan and is interconnected with neighboring utilities as well as other transmission systems.
Fuel Supply: As shown in the following table, Consumers generated electricity primarily from coal and from its former
ownership in nuclear power.
Million s of k W h
Powe r Ge n e rate d 2008 2007 2006 2005 2004
Coal 17,701 17,903 17,744 19,711 18,810
Nuclear — 1,781 5,904 6,636 5,346
Oil 41 112 48 225 193
Gas 804 129 161 356 38
Hydro 454 416 485 387 445
Net pumped storage (382) (478) (426) (516) (538)
Total net generation 18,618 19,863 23,916 26,799 24,294
The cost of all fuels consumed, shown in the following table, fluctuates with the mix of fuel used.
C ost pe r Million Btu
Fu e l C on su m e d 2008 2007 2006 2005 2004
Coal $ 2.01 $ 2.04 $2.09 $1.78 $ 1.43
Oil 11.54 8.21 8.68 5.98 4.68
Gas 10.94 10.29 8.92 9.76 10.07
Nuclear — 0.42 0.24 0.34 0.33
All Fuels(a) 2.47 2.07 1.72 1.64 1.26
(a) Weighted average fuel costs.

Consumers has four generating sites that burn coal. In 2008, these plants produced a combined total of 17,701 million
kWh of electricity, which represents 95 percent of the energy produced by Consumers’ plants. These plants burned
9.5 million tons of coal in 2008. On December 31, 2008, Consumers had on hand a 40-day supply of coal.
Consumers has entered into coal supply contracts with various suppliers and associated rail transportation contracts
for its coal-based generating plants. Under the terms of these agreements, Consumers is obligated to take physical delivery
of the coal and make payment based upon the contract terms. Consumers’ coal supply contracts expire through 2011 and
total an estimated $478 million. Its coal transportation contracts expire through 2009 and total an estimated $163 million.
Long-term coal supply contracts have accounted for approximately 60 to 90 percent of Consumers’ annual coal
requirements over the last 10 years.
At December 31, 2008, Consumers had future unrecognized commitments to purchase capacity and energy under long-
term power purchase agreements with various generating plants. These contracts require monthly capacity payments based
on the plants’ availability or deliverability. These payments for 2009 through 2030 total an estimated $13.770 billion and
average $626 million per year. This amount may vary depending upon plant availability and fuel costs. Consumers is
obligated to pay capacity charges based upon the amount of capacity available at a given time, whether or not power is
delivered to Consumers.
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Consumers Gas Utility

Gas Utility Operations
Consumers’ gas utility operating revenue was $2.827 billion in 2008, $2.621 billion in 2007, and $2.374 billion in 2006.
Consumers’ gas utility operations purchase, transport, store, distribute and sell natural gas. Consumers is authorized to
provide gas utility service in 46 of the 68 counties in Michigan’s Lower Peninsula. Principal cities served include Flint,
Jackson, Kalamazoo, Lansing, Pontiac, Saginaw, Macomb, Royal Oak, Howell, and Livonia, where more than 1.5 million of
Consumers’ gas customers are located. Consumers’ gas utility operations are not dependent upon a single customer, or
even a few customers, and the loss of any one or even a few of these customers is not reasonably likely to have a material
adverse effect on its financial condition.
Consumers’ gas utility operations are seasonal. Consumers injects natural gas into storage during the summer months
for use during the winter months when the demand for natural gas is higher. Peak demand occurs in the winter due to colder
temperatures and the resulting use of heating fuels. In 2008, deliveries of natural gas sold through Consumers’ pipeline and
distribution network totaled 344 bcf.
Gas Utility Properties: Consumers’ gas distribution and transmission system located throughout Michigan’s Lower
Peninsula consists of:
• 26,451 miles of distribution mains;
• 1,656 miles of transmission lines;
• 7 compressor stations with a total of 159,250 installed horsepower; and
• 15 gas storage fields with an aggregate storage capacity of 307 bcf and a working storage capacity of 142 bcf.
Gas Supply: In 2008, Consumers purchased 67 percent of the gas it delivered from United States producers and
23 percent from Canadian producers. Authorized suppliers in the gas customer choice program supplied the remaining
10 percent of gas that Consumers delivered.
Consumers’ firm gas transportation agreements are with ANR Pipeline Company, Great Lakes Gas Transmission, L.P.,
Trunkline Gas Co., Panhandle Eastern Pipe Line Company, and Vector Pipeline. Consumers uses these agreements to deliver
gas to Michigan for ultimate deliveries to market. Consumers’ firm transportation and city gate arrangements are capable of
delivering over 90 percent of Consumers’ total gas supply requirements. As of December 31, 2008, Consumers’ portfolio of
firm transportation from pipelines to Michigan is as follows:
Volum e
(de k athe rm s/day) Expiration
ANR Pipeline Company 50,000 March 2017
Great Lakes Gas Transmission, L.P 100,000 March 2011
Great Lakes Gas Transmission, L.P 50,000 March 2017
Trunkline Gas Company 240,000 October 2012
Panhandle Eastern Pipe Line Company (starting 4/01/09) 50,000 October 2009
Panhandle Eastern Pipe Line Company 50,000 October 2013
Vector Pipeline 50,000 March 2012
Consumers purchases the balance of its required gas supply under incremental firm transportation contracts, firm city
gate contracts and, as needed, interruptible transportation contracts. The amount of interruptible transportation service and
its use vary primarily with the price for this service and the availability and price of the spot supplies being purchased and
transported. Consumers’ use of interruptible transportation is generally in off-peak summer months and after Consumers
has fully utilized the services under the firm transportation agreements.
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Enterprises
Enterprises, through various subsidiaries and certain equity investments, is engaged primarily in domestic independent
power production and the marketing of independent power production. In 2007, Enterprises made a significant change in
business strategy by exiting the international marketplace and refocusing its business strategy to concentrate on its
independent power business in the United States.
Enterprises’ operating revenue included in Continuing Operations in our consolidated financial statements was
$379 million in 2008, $383 million in 2007, and $438 million in 2006. Operating revenue included in Discontinued Operations in
our consolidated financial statements was $235 million in 2007 and $684 million in 2006.
Independent Power Production

CMS Generation was formed in 1986. It invested in and operated non-utility power generation plants in the United
States and abroad. In 2007, Enterprises sold CMS Generation and all of its international assets and power production
facilities and transferred its domestic independent power plant operations to its subsidiary, HYDRA-CO. For more
information on the asset sales, see ITEM 8. CMS ENERGY’S FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA — NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — NOTE 3. ASSET SALES, DISCONTINUED
OPERATIONS AND IMPAIRMENT CHARGES — ASSET SALES.
The independent power production’s operating revenue included in Continuing Operations in our consolidated
financial statements was $36 million in 2008, $41 million in 2007, and $103 million in 2006. Operating revenue included in
Discontinued Operations in our consolidated financial statements was $124 million in 2007 and $437 million in 2006.
Independent Power Production Properties: At December 31, 2008, CMS Energy had ownership interests in
independent power plants totaling 1,199 gross MW or 1,078 net MW (net MW reflects that portion of the gross capacity in
relation to CMS Energy’s ownership interest).
The following table details CMS Energy’s interest in independent power plants at December 31, 2008:
Pe rce n tage of
Gross C apacity
Un de r Lon g-Te rm
Prim ary O wn e rship In te re st Gross C apacity C on tract
Location Fu e l Type (%) (MW ) (%)
California Biomass 37.8 36 100
Connecticut Scrap tire 100 31 0
Michigan Coal 50 70 100
Michigan Natural gas 100 710 92
Michigan Natural gas 100 224 0
Michigan Biomass 50 40 100
Michigan Biomass 50 38 100
North Carolina Biomass 50 50 0
Total 1,199
For information on capital expenditures, see ITEM 7. CMS ENERGY’S MANAGEMENT’S DISCUSSION AND
ANALYSIS — CAPITAL RESOURCES AND LIQUIDITY.
Energy Resource Management

CMS ERM was formed in 1996. It purchases and sells energy commodities in support of CMS Energy’s generating
facilities. In 2004, CMS ERM discontinued its natural gas retail program as customer contracts expired and changed its name
from CMS Marketing, Services and Trading Company to CMS Energy Resource Management Company.
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In 2008, CMS ERM marketed approximately 22 bcf of natural gas and 1,778 GWh of electricity. Its operating revenue
was $343 million in 2008, $342 million in 2007, and $334 million in 2006.
Natural Gas Transmission

CMS Gas Transmission was formed in 1988 and owned, developed and managed domestic and international natural gas
facilities. In March 2007, CMS Gas Transmission sold a portfolio of its businesses in Argentina and its northern Michigan
non-utility natural gas assets to Lucid Energy. In August 2007, CMS Gas Transmission sold its investment in GasAtacama
to Endesa S.A. In June 2008, CMS Gas Transmission completed the sale of TGN in Argentina. For more information on these
asset sales see ITEM 8. CMS ENERGY’S FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA — NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS — NOTE 3. ASSET SALES, DISCONTINUED OPERATIONS AND
IMPAIRMENT CHARGES — ASSET SALES.
CMS Gas Transmission’s operating revenue included in Continuing Operations in our consolidated financial
statements was less than $1 million in 2008 and 2007, and $1 million in 2006. Operating revenue included in Discontinued
Operations in our consolidated financial statements was $3 million in 2007 and $17 million in 2006.
International Energy Distribution

In April 2007, CMS Energy sold its ownership interest in SENECA. In June 2007, CMS Energy sold CPEE. For more
information on these asset sales, see ITEM 8. CMS ENERGY’S FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA — NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — NOTE 3. ASSET SALES, DISCONTINUED
OPERATIONS AND IMPAIRMENT CHARGES — ASSET SALES.
The international energy distribution’s operating revenue, all of which was reflected in Discontinued Operations in our
consolidated financial statements was $108 million in 2007 and $230 million in 2006.
CMS ENERGY AND CONSUMERS REGULATION

CMS Energy, Consumers and their subsidiaries are subject to regulation by various federal, state, local and foreign
governmental agencies, including those described in the following sections.
Michigan Public Service Commission

Consumers is subject to the jurisdiction of the MPSC, which regulates public utilities in Michigan with respect to retail
utility rates, accounting, utility services, certain facilities and other matters.
The Michigan Attorney General, ABATE, and the MPSC staff typically participate in MPSC proceedings concerning
Consumers. The Michigan Attorney General or ABATE often appeal significant MPSC orders.
Rate Proceedings: In 2008, the MPSC issued an order that established the electric authorized rate of return on common
equity at 10.7 percent. During 2008, we filed an electric rate case with the MPSC requesting an 11 percent authorized rate of
return, which is still pending. In February 2008, we filed a gas rate case with the MPSC requesting an 11 percent authorized
rate of return. In December 2008, the MPSC approved a settlement agreement that established the gas authorized rate of
return on common equity at 10.55 percent.
The PSCR and GCR processes allow for recovery of reasonable and prudent power supply and gas costs. The MPSC
reviews these costs for reasonableness and prudency in annual plan proceedings and in plan reconciliation proceedings.
For additional information, see ITEM 8. CMS ENERGY’S FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA —
NOTE 4 OF CMS ENERGY’S NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINGENCIES) —
CONSUMERS’ ELECTRIC UTILITY RATE MATTERS and CONSUMERS’ GAS UTILITY RATE MATTERS and ITEM 8.
CONSUMERS’ FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA — NOTE 4 OF CONSUMERS’ NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS (CONTINGENCIES) — ELECTRIC RATE MATTERS and GAS RATE
MATTERS.
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MPSC Regulation and Michigan Legislation: In October 2008, the Michigan governor signed into law a
comprehensive energy reform package. Significant features of the new legislation include:
• a provision to streamline the regulatory process by generally allowing utilities to self-implement rates six months
after filing, subject to refund, and requiring the MPSC to issue an order 12 months after filing or the rates as filed
become permanent,
• reform of the Customer Choice Act to limit generally alternative energy suppliers to no more than 10 percent of our
weather-adjusted sales,
• establishment of a certificate-of-necessity process at the MPSC for existing or proposed power plants, or power
purchase agreements if the construction, investment, or purchase costs more than $500 million,
• a requirement that 10 percent of electric sales volume come from renewable energy sources by 2015 with interim
targets, and
• new programs and incentives to encourage greater energy efficiency among customers, along with the requirement
that the utility prepare energy cost savings optimization plans and achieve sales reduction targets beginning in 2009
through 2015.
Consumers transports some of the natural gas it sells to customers through facilities owned by competitors including
gas producers, marketers and others. Pursuant to a self-implemented gas customer choice program, all of Consumers’ gas
customers are eligible to select an alternative gas commodity supplier.
Federal Energy Regulatory Commission
The FERC has exercised limited jurisdiction over several independent power plants and exempt wholesale generators in
which Enterprises has ownership interests, as well as over CMS ERM, CMS Gas Transmission, and DIG. Among other
things, the FERC has jurisdiction over acquisitions, operation and disposal of certain assets and facilities, services provided
and rates charged, conduct among affiliates, and limited jurisdiction over holding company matters with respect to CMS
Energy. The FERC, in connection with the North American Electric Reliability Corporation and regional reliability
organizations, also regulates generation owners and operators, load serving entities, purchase and sale entities and others
with regard to reliability of the bulk power system. Some of Consumers’ gas business is also subject to regulation by the
FERC, including a blanket transportation tariff pursuant to which Consumers may transport gas in interstate commerce.
The FERC also regulates certain aspects of Consumers’ electric operations including compliance with the FERC
accounting rules, wholesale rates, operation of licensed hydro-electric generating plants, transfers of certain facilities, and
corporate mergers and issuance of securities.
Other Regulation
The Secretary of Energy regulates imports and exports of natural gas and has delegated various aspects of this
jurisdiction to the FERC and the DOE’s Office of Fossil Fuels.
Consumers’ pipelines are subject to the Natural Gas Pipeline Safety Act of 1968 and the Pipeline Safety Improvement
Act of 2002, which regulate the safety of gas pipelines.
CMS ENERGY AND CONSUMERS ENVIRONMENTAL COMPLIANCE
CMS Energy, Consumers and their subsidiaries are subject to various federal, state and local regulations for
environmental quality, including air and water quality, waste management, zoning and other matters.
Consumers continues to install modern emission controls at its electric generating plants and convert electric
generating units to burn cleaner fuels. Consumers expects that the cost of future environmental compliance, especially
compliance with the federal Clean Air Act, will be significant because of the EPA regulations and
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proposed regulations regarding nitrogen oxides, particulate-related emissions, and mercury. Consumers plans to spend
$817 million for equipment installation through 2017 to comply with a number of these environmental regulations, including
regulations limiting nitrogen oxides and sulfur dioxide emissions. The MDEQ is currently reviewing public comments on
Michigan’s proposed mercury rule. If the proposed rule is enacted, Consumers expects to spend approximately $782 million
by 2015 to comply with the rule. For additional information concerning estimated capital expenditures related to
environmental compliance, including capital expenditures to reduce nitrogen oxides-related emissions, see ITEM 7. CMS
ENERGY’S MANAGEMENT’S DISCUSSION AND ANALYSIS — OUTLOOK — ELECTRIC UTILITY BUSINESS
UNCERTAINTIES — ELECTRIC ENVIRONMENTAL ESTIMATES.
Construction, operation, and closure of a modern solid waste disposal area for ash can be expensive because of strict
federal and state requirements. In order to achieve significant reductions in ash field closure costs, Consumers has worked
with others to use bottom ash and fly ash as part of a temporary and final cover for ash disposal areas instead of native
materials, in cases where the use of bottom ash and fly ash is compatible with environmental standards. To reduce disposal
volumes, Consumers sells coal ash for use as a Portland cement replacement in concrete products, as a filler for asphalt, as
feedstock for the manufacture of Portland cement and for other environmentally compatible uses.
The EPA has been considering the development of new federal standards for ash disposal areas for several years.
Michigan’s solid waste rules that regulate coal ash landfills were developed in 1993 and have been updated since that time.
All Consumers’ ash facilities have groundwater monitoring programs and are subject to quarterly MDEQ inspections. With
the installation of a new dry ash handling system at its Karn and Weadock plants in the fourth quarter of 2008, the vast
majority of Consumers’ fly ash is collected dry. Consumers is working through industry groups to ensure the development
of cost-effective rules that are consistent with protection of the environment.
Like most electric utilities, Consumers has PCB in some of its electrical equipment. During routine maintenance
activities, Consumers identified PCB as a component in certain paint, grout and sealant materials at Ludington. Consumers
removed and replaced part of the PCB material with non-PCB material. Since proposing a plan to deal with the remaining
materials, Consumers has had several communications with the EPA. We are not able to predict when the EPA will issue a
final ruling. Consumers is awaiting a response from the EPA.
Certain environmental regulations affecting CMS Energy and Consumers include, but are not limited to, the NREPA
and Superfund. Despite some differences between the statutes, both NREPA and Superfund can require the sharing of
remediation and other response costs among current site owners and operators, owners and operators at the time of
disposal, transporters, and those who arranged for disposal of hazardous substances at the site. For additional information
on Consumers’ NREPA and Superfund sites and information on notices of violation from the EPA related to alleged
violations of NSR regulations at three of Consumers’ coal-based facilities and alleged emission limits violations related to
fourteen of Consumers’ utility boilers, see ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA —
NOTE 4 (CONTINGENCIES) OF CMS ENERGY’S NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AND NOTE 4
OF CONSUMERS’ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
CMS Energy has recorded a significant liability for its obligations associated with Bay Harbor. For additional
information, see ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA — NOTE 4 (CONTINGENCIES) OF
CMS ENERGY’S NOTES TO CONSOLIDATED FINANCIAL STATEMENTS and ITEM 1A. RISK FACTORS.
CMS Energy’s and Consumers’ current insurance program does not extend to cover the risks of certain environmental
cleanup costs or environmental damages, such as claims for air pollution, damage to sites owned by CMS Energy or
Consumers, and for some past PCB contamination, and for some long-term storage or disposal of pollutants.
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CMS ENERGY AND CONSUMERS COMPETITION

Electric Competition
Consumers’ electric utility business experiences actual and potential competition from many sources, both in the
wholesale and retail markets, as well as in electric generation, electric delivery, and retail services.
The Customer Choice Act allows all of our electric customers to buy electric generation service from us or from an
alternative electric supplier. However, legislation enacted in Michigan in October 2008 revised the Customer Choice Act and
generally limits alternative electric supply to 10 percent of our weather-adjusted retail sales for the preceding calendar year.
At December 2008, alternative electric suppliers were providing 332 MW of generation service to ROA customers, which is
equivalent to 4 percent of our weather-adjusted retail sales from the preceding calendar year.
Consumers also has competition or potential competition from:
• industrial customers relocating all or a portion of their production capacity outside Consumers’ service territory for
economic reasons;
• municipalities owning or operating competing electric delivery systems;
• customer self-generation; and
• adjacent utilities that extend lines to customers in contiguous service territories.
Consumers addresses this competition by monitoring activity in adjacent areas and enforcing compliance with the
MPSC and the FERC rules, providing non-energy services, and providing tariff-based incentives that support economic
development.
Consumers offers non-energy revenue-producing services to electric customers, municipalities and other utilities in an
effort to offset costs. These services include engineering and consulting, construction of customer-owned distribution
facilities, sales of equipment (such as transformers), power quality analysis, energy management services, meter reading,
and joint construction for phone and cable. In these activities, Consumers faces competition from many sources, including
energy management services companies, other utilities, contractors, and retail merchandisers.
CMS ERM, a non-utility electric subsidiary, continues to focus on optimizing CMS Energy’s independent power
production portfolio. CMS Energy’s independent power production business, a non-utility electric subsidiary, faces
competition from generators, marketers and brokers, as well as other utilities marketing power in the wholesale market.
Gas Competition
Competition exists in various aspects of Consumers’ gas utility business, and is likely to increase. Competition comes
from other gas suppliers taking advantage of direct access to Consumers’ customers and from alternative fuels and energy
sources, such as propane, oil, and electricity.
INSURANCE
CMS Energy and its subsidiaries, including Consumers, maintain insurance coverage similar to comparable companies
in the same lines of business. The insurance policies are subject to terms, conditions, limitations and exclusions that might
not fully compensate CMS Energy for all losses. A portion of each loss is generally assumed by CMS Energy in the form of
deductibles and self-insured retentions that, in some cases, are substantial. As CMS Energy renews its policies it is
possible that some of the current insurance coverage may not be renewed or obtainable on commercially reasonable terms
due to restrictive insurance markets.
For a discussion of environmental insurance coverage, see ITEM 1. BUSINESS — CMS ENERGY AND CONSUMERS
ENVIRONMENTAL COMPLIANCE.
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EMPLOYEES
CMS Energy
At December 31, 2008, CMS Energy and its wholly owned subsidiaries, including Consumers, had 7,970 full-time
equivalent employees. Included in the total are 3,475 employees who are covered by union contracts.
Consumers
At December 31, 2008, Consumers and its subsidiaries had 7,697 full-time equivalent employees. Included in the total
are full-time operating, maintenance and construction employees and full-time and part-time call center employees who are
represented by the Union.
CMS ENERGY EXECUTIVE OFFICERS (as of February 1, 2009)

Nam e Age Position Pe riod
David W. Joos 55 President and CEO of CMS Energy 2004-Present
CEO of Consumers 2004-Present
Chairman of the Board, President, CEO of
Enterprises 5/2008-Present
Director of CMS Energy 2001-Present
Director of Consumers 2001-Present
Director of Enterprises 2000-Present
Chairman of the Board, CEO of Enterprises 2003-5/2008
President, Chief Operating Officer of CMS Energy 2001-2004
President, Chief Operating Officer of Consumers 2001-2004
Thomas J. Webb 56 Executive Vice President, CFO of CMS Energy 2002-Present
Executive Vice President, CFO of Consumers 2002-Present
Executive Vice President, CFO of Enterprises 2002-Present
James E. Brunner* 56 Senior Vice President and General Counsel of CMS
Energy 11/2006-Present
Senior Vice President and General Counsel of
Consumers 11/2006-Present
Senior Vice President of Enterprises 2006-11/2007
Senior Vice President, General Counsel and Chief
Compliance Officer of CMS Energy 5/2006-11/2006
Compliance Officer of Consumers 5/2006-11/2006
Senior Vice President, General Counsel and Interim
Chief Compliance Officer of Consumers 2/2006-5/2006
Senior Vice President and General Counsel of CMS
Energy 2/2006-5/2006
Consumers 2/2006-5/2006
Vice President and General Counsel of Consumers 7/2004-2/2006
Vice President of Consumers 7/2004
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John M. Butler ** 44 Senior Vice President of CMS Energy 2006-Present
Senior Vice President of Consumers 2006-Present
Senior Vice President of Enterprises 2006-Present
David G. Mengebier 51 Senior Vice President and Chief Compliance Officer
of CMS Energy 11/2006-Present
Senior Vice President and Chief Compliance Officer
of Consumers 11/2006-Present
Senior Vice President of CMS Energy 2001-11/2006
Senior Vice President of Consumers 2001-11/2006
John G. Russell 51 President and Chief Operating Officer of Consumers 2004-Present
Executive Vice President and President — Electric &
Gas of Consumers 7/2004-10/2004
Executive Vice President, President and CEO —
Electric of Consumers 2001-2004
Glenn P. Barba 43 Vice President, Controller and Chief Accounting
Officer of CMS Energy 2003-Present
Vice President, Controller and Chief Accounting
Officer of Consumers 2003-Present
Vice President, Chief Accounting Officer and
Controller of Enterprises 11/2007-Present
Vice President and Chief Accounting Officer of
Enterprises 2003-11/2007
* From 1993 until July 2004, Mr. Brunner was Assistant General Counsel of Consumers.
** From 2002 until 2004, Mr. Butler was Global Compensation and Benefits Resource Center Director at Dow and from 2004
until June 2006, Mr. Butler was Human Resources Director, Manufacturing and Engineering at Dow.
There are no family relationships among executive officers and directors of CMS Energy.
The present term of office of each of the executive officers extends to the first meeting of the Board of Directors after
the next annual election of Directors of CMS Energy (scheduled to be held on May 22, 2009).
CONSUMERS EXECUTIVE OFFICERS (as of February 1, 2009)

David W. Joos 55 President and CEO of CMS Energy 2004-Present
CEO of Consumers 2004-Present
Chairman of the Board, President, CEO of
Director of CMS Energy 2001-Present
Director of Consumers 2001-Present
Chairman of the Board, CEO of Enterprises 2003-5/2008
President, Chief Operating Officer of CMS Energy 2001-2004
President, Chief Operating Officer of Consumers 2001-2004
Thomas J. Webb 56 Executive Vice President, CFO of CMS Energy 2002-Present
Executive Vice President, CFO of Consumers 2002-Present
Executive Vice President, CFO of Enterprises 2002-Present
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James E. Brunner* 56 Senior Vice President and General Counsel of CMS
Energy 11/2006-Present
Consumers 11/2006-Present
Senior Vice President of Enterprises 2006-11/2007
Compliance Officer of CMS Energy 5/2006-11/2006
Compliance Officer of Consumers 5/2006-11/2006
Senior Vice President, General Counsel and Interim
Chief Compliance Officer of Consumers 2/2006-5/2006
Senior Vice President and General Counsel of CMS
Energy 2/2006-5/2006
Consumers 2/2006-5/2006
Vice President and General Counsel of Consumers 7/2004-2/2006
Vice President of Consumers 7/2004
John M. Butler ** 44 Senior Vice President of CMS Energy 2006-Present
Senior Vice President of Consumers 2006-Present
David G. Mengebier 51 Senior Vice President and Chief Compliance Officer
of CMS Energy 11/2006-Present
Senior Vice President and Chief Compliance Officer
of Consumers 11/2006-Present
Senior Vice President of CMS Energy 2001-11/2006
Senior Vice President of Consumers 2001-11/2006
John G. Russell 51 President and Chief Operating Officer of Consumers 2004-Present
Executive Vice President and President — Electric &
Gas of Consumers 7/2004-10/2004
Executive Vice President, President and CEO —
Electric of Consumers 2001-2004
William E. Garrity 60 Senior Vice President of Consumers 2005-Present
Vice President of Consumers 1999-2005
Frank Johnson 60 Senior Vice President of Consumers 2001-Present
Glenn P. Barba 43 Vice President, Controller and Chief Accounting
Officer of CMS Energy 2003-Present
Vice President, Controller and Chief Accounting
Officer of Consumers 2003-Present
Vice President, Chief Accounting Officer and
Controller of Enterprises 11/2007-Present
Vice President and Chief Accounting Officer of
Enterprises 2003-11/2007
* From 1993 until July 2004, Mr. Brunner was Assistant General Counsel of Consumers.
** From 2002 until 2004, Mr. Butler was Global Compensation and Benefits Resource Center Director at Dow and from 2004
until June 2006, Mr. Butler was Human Resources Director, Manufacturing and Engineering at Dow.
There are no family relationships among executive officers and directors of Consumers.
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The present term of office of each of the executive officers extends to the first meeting of the Board of Directors after
the next annual election of Directors of Consumers (scheduled to be held on May 22, 2009).
AVAILABLE INFORMATION
CMS Energy’s internet address is www.cmsenergy.com. Information contained in CMS Energy’s website is not
incorporated herein. You can access free of charge on our website all of our annual reports on Form 10-K, quarterly reports
on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act. These reports are available soon after they are electronically filed with the SEC. Also on our website are our:
• Corporate Governance Principles;
• Codes of Conduct (Code of Business Conduct and Statement of Ethics);
• Board committee charters (including the Audit Committee, the Compensation and Human Resources Committee, the
Finance Committee and the Governance and Public Responsibility Committee); and
• Articles of Incorporation (and amendments) and Bylaws.
We will provide this information in print to any shareholder who requests it.
You may also read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE,
Washington DC, 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-
800-SEC-0330. The SEC also maintains an internet site that contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the SEC. The address is http://www.sec.gov.
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ITEM 1A. RISK FACTORS

Actual results in future periods for CMS Energy and Consumers could differ materially from historical results and the
forward-looking statements contained in this report. Factors that might cause or contribute to these differences include, but
are not limited to, those discussed in the following sections. The companies’ business is influenced by many factors that
are difficult to predict, involve uncertainties that may materially affect actual results and are often beyond the companies’
control. Additional risks and uncertainties not presently known or that the companies’ management currently believes to be
immaterial may also adversely affect the companies. The risk factors described in the following sections, as well as the other
information included in this annual report and in the other documents filed with the SEC, should be considered carefully
before making an investment in securities of CMS Energy and Consumers. Risk factors of Consumers are also risk factors of
CMS Energy.
CMS Energy depends on dividends from its subsidiaries to meet its debt service obligations.
Due to its holding company structure, CMS Energy depends on dividends from its subsidiaries to meet its debt service
obligations. Restrictions contained in Consumers’ preferred stock provisions and other legal restrictions, such as certain
terms in its articles of incorporation and FERC requirements, limit Consumers’ ability to pay dividends or acquire its own
stock from CMS Energy. At December 31, 2008, Consumers had $331 million of unrestricted retained earnings available to
pay common stock dividends. If sufficient dividends are not paid to CMS Energy by its subsidiaries, CMS Energy may not
be able to generate the funds necessary to fulfill its cash obligations, thereby adversely affecting its liquidity and financial
condition.
CMS Energy has substantial indebtedness that could limit its financial flexibility and hence its ability to meet its debt
service obligations.
As of December 31, 2008, CMS Energy had $1.881 billion aggregate principal amount of indebtedness, including
$178 million of subordinated indebtedness relating to its convertible preferred securities. Subsidiary debt of $4.549 billion is
not included in the preceding total. As of December 31, 2008, there were $105 million of borrowings and $24 million of letters
of credit outstanding under CMS Energy’s revolving credit agreement. CMS Energy and its subsidiaries may incur
additional indebtedness in the future.
The level of CMS Energy’s present and future indebtedness could have several important effects on its future
operations, including, among others:
• a significant portion of its cash flow from operations will be dedicated to the payment of principal and interest on its
indebtedness and will not be available for other purposes;
• covenants contained in its existing debt arrangements require it to meet certain financial tests, which may affect its
flexibility in planning for, and reacting to, changes in its business;
• its ability to obtain additional financing for working capital, capital expenditures, acquisitions and general corporate
and other purposes may be limited;
• it may be at a competitive disadvantage to its competitors that are less leveraged;
• its vulnerability to adverse economic and industry conditions may increase; and
• its future credit ratings.
CMS Energy’s ability to meet its debt service obligations and to reduce its total indebtedness will depend on its future
performance, which will be subject to general economic conditions, industry cycles, regulatory decisions and financial,
business and other factors affecting its operations, many of which are beyond its control. CMS Energy cannot make
assurances that its business will continue to generate sufficient cash flow from operations to service its indebtedness. If it
is unable to generate sufficient cash flows from operations, it may be required to sell additional assets or obtain additional
financing. CMS Energy cannot assure that additional financing will be available on commercially acceptable terms or at all.
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CMS Energy cannot predict the outcome of claims regarding its participation in the development of Bay Harbor.
As part of the development of Bay Harbor by certain subsidiaries of CMS Energy, pursuant to an agreement with the
MDEQ, third parties constructed a golf course and park over several abandoned CKD piles, left over from the former cement
plant operations on the Bay Harbor site. The third parties also undertook a series of remedial actions, including removing
abandoned buildings and equipment; consolidating, shaping and covering CKD piles with soil and vegetation; removing
CKD from streams and beaches; and constructing a leachate collection system at an identified seep. Leachate is formed
when water passes through CKD. In 2002, CMS Energy sold its interest in Bay Harbor, but retained its obligations under
environmental indemnifications entered into at the start of the project.
In 2005, the EPA along with CMS Land and CMS Capital voluntarily executed an AOC under Superfund and approved
a Removal Action Work Plan to address issues at Bay Harbor. Collection systems required under the plan have been
installed and shoreline monitoring is ongoing. In February 2008, CMS Land and CMS Capital submitted a proposed
augmentation plan to the EPA to address areas where pH measurements are not satisfactory. CMS Land, CMS Capital and
the EPA have agreed upon the augmentation measures and a schedule for their installation. The augmentation measures are
being implemented and are anticipated to be completed in 2009.
In February 2008, the MDEQ and the EPA granted permits for CMS Land or its affiliate, Beeland, to construct and
operate a deep injection well near Alba, Michigan in eastern Antrim County. Certain environmental groups, a local
township, and a local county filed an appeal of the EPA’s decision and, following denial by the MDEQ of a right to a
hearing, filed lawsuits in the Ingham Circuit Court appealing the permits. The EPA has denied the appeal. One appeal
relating to the state permit remains pending in the state court. Groups opposed to the injection well filed a lawsuit in Antrim
County seeking an injunction against development of the well. In January 2009, the trial judge issued a preliminary
injunction. Beeland is considering an appeal of the court’s order.
CMS Land and CMS Capital, the MDEQ, the EPA, and other parties are having ongoing discussions concerning the
long-term remedy for the Bay Harbor sites. These discussions are addressing, among other things, issues relating to:
• the disposal of leachate,
• the capping and excavation of CKD,
• the location and design of collection lines and upstream diversion of water,
• potential flow of leachate below the collection system,
• applicable criteria for various substances such as mercury, and
• other matters that are likely to affect the scope of remedial work that CMS Land and CMS Capital may be obligated
to undertake.
CMS Energy has recorded a cumulative charge of $141 million, which includes accretion expense, for its obligations.
Depending on the size of any indemnification obligation or liability under environmental laws, an adverse outcome of this
matter could have a material adverse effect on CMS Energy’s liquidity and financial condition and could negatively impact
CMS Energy’s financial results. CMS Energy cannot predict the financial impact or outcome of this matter.
CMS Energy may be adversely affected by regulatory investigations and civil lawsuits regarding pricing information
that CMS MST and CMS Field Services provided to market publications.
CMS Energy notified appropriate regulatory and governmental agencies that some employees at CMS MST and CMS
Field Services appeared to have provided inaccurate information regarding natural gas trades to various energy industry
publications which compile and report index prices. CMS Energy is cooperating with an ongoing investigation by the DOJ
regarding this matter. CMS Energy is unable to predict the outcome of the DOJ investigation and what effect, if any, the
investigation will have on CMS Energy.
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CMS Energy, CMS MST, CMS Field Services, Cantera Natural Gas, Inc. (the company that purchased CMS Field
Services) and Cantera Gas Company were named as defendants in various lawsuits arising as a result of alleged false natural
gas price reporting. Allegations included manipulation of NYMEX natural gas futures and options prices, price-fixing
conspiracies and artificial inflation of natural gas retail prices in California, Colorado, Kansas, Missouri, Tennessee and
Wisconsin. CMS Energy cannot predict the outcome of the lawsuits. It is possible that the outcome in one or more of the
lawsuits could affect adversely CMS Energy’s liquidity, financial condition and results of operations.
CMS Energy and Consumers retain contingent liabilities in connection with their asset sales.
The agreements that CMS Energy and Consumers enter into for the sale of assets customarily include provisions
whereby they are required to:
• retain specified preexisting liabilities, such as for taxes, pensions or environmental conditions;
• indemnify the buyers against specified risks, including the inaccuracy of representations and warranties they
make; and
• make payments to the buyers depending on the outcome of post-closing adjustments, litigation, audits or other
reviews.
Many of these contingent liabilities can remain open for extended periods of time after the sales are closed. Depending
on the extent to which the buyers may ultimately seek to enforce their rights under these contractual provisions, and the
resolution of any disputes concerning them, there could be a material adverse effect on CMS Energy’s or Consumers’
liquidity, financial condition and results of operations.
CMS Energy and Consumers have financing needs and may be unable to obtain bank financing or access the capital
markets. If the national and worldwide financial crisis intensifies, potential disruption in the capital and credit markets
may adversely affect CMS Energy’s and Consumers’ businesses, including the availability and cost of short-term funds
for liquidity requirements and their ability to meet long-term commitments; each could adversely affect their liquidity,
financial condition and results of operations.
CMS Energy and Consumers may be subject to liquidity demands pursuant to commercial commitments, under
guarantees, indemnities and letters of credit. Consumers’ capital requirements are expected to be substantial over the next
several years as it implements generation and environmental projects.
CMS Energy and Consumers rely on the capital markets, particularly for publicly offered debt, as well as the banking
and commercial paper markets, to meet their financial commitments and short-term liquidity needs if internal funds are not
available from CMS Energy’s and Consumers’ respective operations. CMS Energy and Consumers also use letters of credit
issued under each of their revolving credit facilities to support certain operations and investments. Disruptions in the
capital and credit markets, as have been experienced during 2008, and continuing in 2009, could adversely affect CMS
Energy’s and Consumers’ ability to draw on their respective bank revolving credit facilities. CMS Energy’s and Consumers’
access to funds under those credit facilities is dependent on the ability of the banks that are parties to the facilities to meet
their funding commitments. Those banks may not be able to meet their funding commitments to CMS Energy and
Consumers if they experience shortages of capital and liquidity or if they experience excessive volumes of borrowing
requests from CMS Energy and Consumers and other borrowers within a short period of time.
Longer term disruptions in the capital and credit markets as a result of uncertainty, changing or increased regulation,
reduced alternatives or failures of significant financial institutions could adversely affect CMS Energy’s and Consumers’
access to liquidity needed for their respective businesses. Any disruption could require CMS Energy and Consumers to
take measures to conserve cash until the markets stabilize or until alternative credit arrangements or other funding for their
business needs can be arranged. These measures could include deferring capital expenditures, changing CMS Energy’s and
Consumers’ commodity purchasing strategy to avoid collateral-posting requirements, and reducing or eliminating future
share repurchases, dividend payments or other discretionary uses of cash.
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CMS Energy continues to explore financing opportunities to supplement its financial plan. These potential
opportunities include refinancing and/or issuing new capital markets debt, preferred stock and/or common equity, and bank
financing. CMS Energy cannot guarantee the capital markets’ acceptance of its securities or predict the impact of factors
beyond its control, such as actions of rating agencies. If CMS Energy is unable to obtain bank financing or access the
capital markets to incur or refinance indebtedness, there could be a material adverse effect on its liquidity, financial
condition and results of operations. Similarly, Consumers currently plans to seek funds through the capital markets,
commercial lenders and leasing arrangements. Entering into new financings is subject in part to capital market receptivity to
utility industry securities in general and to Consumers’ securities issuances in particular. Consumers cannot guarantee the
capital markets’ acceptance of its securities or predict the impact of factors beyond its control, such as actions of rating
agencies. If Consumers is unable to obtain bank financing or access the capital markets to incur or refinance indebtedness,
there could be a material adverse effect on its liquidity, financial condition and results of operations.
Certain of CMS Energy’s securities and those of its affiliates, including Consumers, are rated by various credit rating
agencies. Any reduction or withdrawal of one or more of its credit ratings could have a material adverse impact on CMS
Energy’s or Consumers’ ability to access capital on acceptable terms and maintain commodity lines of credit and could make
its cost of borrowing higher. If it is unable to maintain commodity lines of credit, CMS Energy or Consumers may have to
post collateral or make prepayments to certain of its suppliers pursuant to existing contracts with them. Further, any adverse
developments to Consumers, which provides dividends to CMS Energy, that result in a lowering of Consumers’ credit
ratings could have an adverse effect on CMS Energy’s credit ratings. CMS Energy and Consumers cannot guarantee that
any of their current ratings will remain in effect for any given period of time or that a rating will not be lowered or withdrawn
entirely by a rating agency.
Electric industry regulation could adversely affect CMS Energy’s and Consumers’ business, including their ability to
recover costs from their customers.
Federal and state regulation of electric utilities has changed dramatically in the last two decades and could continue to
change over the next several years. These changes could have a material adverse effect on CMS Energy’s and Consumers’
CMS Energy and Consumers are subject to, or affected by, extensive federal and state utility regulation. In CMS
Energy’s and Consumers’ business planning and management of operations, they must address the effects of existing and
proposed regulation on their businesses and changes in the regulatory framework, including initiatives by federal and state
legislatures, regional transmission organizations, utility regulators and taxing authorities. Adoption of new regulations by
federal or state agencies, or changes to current regulations and interpretations of these regulations may adversely affect
CMS Energy’s and Consumers’ liquidity, financial condition, and results of operations.
There are multiple proceedings pending before the FERC involving transmission rates, regional transmission
organizations and electric bulk power markets and transmission. The FERC reviewed the standards under which electric
utilities are allowed to participate in wholesale power markets without price restrictions. In June 2007, the FERC issued a
final rule on these standards that did not impact negatively Consumers’ ability to retain its market-based rate authority. The
U.S. Court of Appeals for the Ninth Circuit has been petitioned to review portions of this final rule. CMS Energy and
Consumers cannot predict the impact of these electric industry restructuring proceedings on their liquidity, financial
condition or results of operations.
CMS Energy and Consumers could incur significant costs to comply with environmental standards and face difficulty in
recovering these costs on a current basis.
CMS Energy, Consumers and their subsidiaries are subject to costly and increasingly stringent environmental
regulations. They expect that the cost of future environmental compliance, especially compliance with clean air and water
laws, will be significant. Federal rules governing coal-based electric generating plant emission controls for nitrogen oxides,
sulfur dioxide and mercury are being reviewed by the courts.
The U.S. Supreme Court, in Massachusetts v. EPA, has remanded a claim to the EPA to consider whether greenhouse
gases should be regulated as a pollutant under the Clean Air Act. The EPA is reviewing the matter. There
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are also pending regulatory and judicial actions which seek to have either existing or new coal-based power plants be
subject to greenhouse gas regulation under the Clean Air Act. In addition, legislative proposals have been before the
U.S. Congress pertaining to the potential regulation or control of carbon dioxide emissions and other greenhouse gases.
These or similar proposals are considered likely to be enacted in some form and could have a significant impact upon the
operation and cost of existing and planned future coal-based power plants.
In 2008, Consumers obtained 52 percent of its energy from purchased and interchange power and 48 percent of its
energy from Consumers-owned generation. Of the amount of energy obtained from Consumers-owned generation,
95 percent came from coal-based power plants. The electric energy from its coal, gas and oil-based power plants would be
subject to carbon dioxide emissions regulations. In 2008, it is estimated that carbon dioxide emissions from Consumers-
owned coal-based power plants, excluding the portion of jointly-owned Campbell Unit 3, exceeded approximately 19 million
tons of carbon dioxide. Enterprises also has interests in coal-based power plants and other types of power plants that
produce carbon emissions. These plants would also be subject to carbon dioxide emissions regulations. These proposals, if
enacted, could require the purchase of allowances for, or taxation of, carbon emissions, could require the curtailment of use
of coal-based power plants, or could require the use of other alternatives to fossil-fuel based generating capacity and/or
otherwise could significantly affect Consumers’ and Enterprises operations and plans for, and costs associated with their
fossil-fuel generating plants and purchased power.
There are ongoing state-level and Midwest regional greenhouse gas regulatory initiatives. The State of Michigan has
convened the Michigan Climate Action Council, a climate change stakeholder process. Michigan is also a signatory
participant in the Midwest Governors Greenhouse Gas Reduction Accord process. The governor of Michigan recently
proposed a 45 percent reduction in the use of fossil fuel for electric generation by 2020. The governor’s office has
subsequently advised us that the 45 percent is only a suggested target, and is intended to apply only to coal-based
generation. She also issued an executive directive requiring the MDEQ to determine whether an electric generation need
exists that would be served by a proposed coal-based power plant; and if such need exists, to consider reasonable and
prudent alternatives to coal before issuing an air permit for the proposed coal-based power plant. The Michigan attorney
general issued an opinion that invalidated the governor’s directive on the basis that the governor’s directive exceeded the
governor’s authority. If the attorney general’s action is challenged and the directive is ultimately upheld, it will have a
significant impact upon the operation and cost of existing and planned future coal-based power plants.
Other laws, proposals, rules and judicial interpretations of presently existing laws that govern areas such as electric
generating plant cooling water intake systems and electric generating plant modifications could have a significant impact
upon their generating plants. The EPA is currently contesting the applicability of NSR standards to certain of Consumers’
coal-based plant projects, which if the EPA’s position is sustained, could lead to costly environmental upgrades, monetary
sanctions, or both. If these measures or similar state measures are enacted or become effective, CMS Energy and
Consumers could be required to replace equipment, install additional equipment, restructure or shut down operations at
various facilities.
CMS Energy and Consumers expect to collect fully from their customers, through the ratemaking process, expenditures
incurred to comply with environmental regulations. However, if these expenditures are not recovered from customers in
Consumers’ rates, CMS Energy and/or Consumers may be required to seek significant additional financing to fund these
expenditures. This action could strain their cash resources. We can give no assurances that CMS Energy and/or Consumers
will have access to bank financing or capital markets to fund these environmental expenditures.
Market performance and other changes may decrease the value of benefit plan assets, which then could require
significant funding.
The performance of the capital markets affects the values of assets that are held in trust to satisfy future obligations
under CMS Energy’s and Consumers’ pension and postretirement benefit plans. CMS Energy and Consumers have
significant obligations in this area and hold significant assets in these trusts. These assets are subject to market
fluctuations and will yield uncertain returns, which may fall below CMS Energy’s and Consumers’ forecasted return rates. A
decline in the market value of the assets or a change in the level of interest rates used to
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measure the required minimum funding levels may increase the funding requirements of these obligations. Also, changes in
demographics, including increased number of retirements or changes in life expectancy assumptions, may increase the
funding requirements of the obligations related to the pension and postretirement benefit plans. If CMS Energy and
Consumers are unable to successfully manage their pension and postretirement plan assets, it could affect negatively their
Periodic reviews of the values of CMS Energy’s and Consumers’ assets could result in accounting charges.
CMS Energy and Consumers are required by GAAP to review periodically the carrying value of their assets, including
those that may be sold. Market conditions, the operational characteristics of their assets and other factors could result in
recording additional impairment charges for their assets, which could have an adverse effect on their stockholders’ equity
and their access to additional financing. In addition, CMS Energy and Consumers may be required to record impairment
charges at the time they sell assets, depending on the sale prices they are able to secure and other factors.
CMS Energy’s and Consumers’ revenues and results of operations are subject to risks that are beyond their control,
including but not limited to future terrorist attacks or related acts of war.
The cost of repairing damage to CMS Energy’s and Consumers’ facilities due to storms, natural disasters, wars,
terrorist acts and other catastrophic events, in excess of insurance recoveries and reserves established for these repairs,
may affect adversely their liquidity, financial condition and results of operations. The occurrence or risk of occurrence of
future terrorist activity and the high cost or potential unavailability of insurance to cover this terrorist activity may affect
their liquidity, financial condition and results of operations in unpredictable ways. These actions could also result in
disruptions of power and fuel markets. Instability in the financial markets as a result of terrorism, war or natural disasters,
credit crises, recessions or other factors may adversely affect CMS Energy’s and Consumers’ liquidity, financial condition
and results of operations.
Energy risk management strategies may not be effective in managing fuel and electricity pricing risks, which could
result in unanticipated liabilities to Consumers and CMS Energy or increased volatility of its earnings.
Consumers is exposed to changes in market prices for natural gas, coal, electricity and emission credits. Prices for
natural gas, coal, electricity and emission credits may fluctuate substantially over relatively short periods of time and expose
Consumers to commodity price risk. A substantial portion of Consumers’ operating expenses for its plants consists of the
costs of obtaining these commodities. Consumers manages these risks using established policies and procedures, and it
may use various contracts to manage these risks, including swaps, options, futures and forward contracts. No assurance
can be made that these strategies will be successful in managing Consumers’ pricing risk or that they will not result in net
liabilities to Consumers as a result of future volatility in these markets.
Natural gas prices in particular have historically been volatile. Consumers routinely enters into contracts to mitigate
exposure to the risks of demand, market effects of weather and changes in commodity prices associated with its gas
distribution business. These contracts are executed in conjunction with the GCR mechanism, which is designed to allow
Consumers to recover prudently incurred costs associated with those positions. However, Consumers does not always
hedge the entire exposure of its operations from commodity price volatility. Furthermore, the ability to hedge exposure to
commodity price volatility depends on liquid commodity markets. As a result, to the extent the commodity markets are
illiquid, Consumers may not be able to execute its risk management strategies, which could result in greater unhedged
positions than preferred at a given time. To the extent that unhedged positions exist, fluctuating commodity prices can
improve or worsen CMS Energy’s and Consumers’ liquidity, financial condition and results of operations.
In addition, Consumers included in its 2009-10 GCR filing a proposal to extend the GCR forward purchase period by two
years beyond the typical three-year period, through the 2013-14 GCR period. These potential additional gas purchases
could have a significant impact on Consumers’ credit requirements and could result in significant margin calls if prices were
to fall below the forward purchase prices of gas purchased.
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Changes in taxation as well as inherent difficulty in quantifying potential tax effects of business decisions could
negatively impact CMS Energy’s and Consumers’ results of operations.
CMS Energy and Consumers are required to make judgments regarding the potential tax effects of various financial
transactions and results of operations in order to estimate their obligations to taxing authorities. The tax obligations include
income, real estate, sales and use taxes, employment-related taxes and ongoing issues related to these tax matters. The
judgments include reserves for potential adverse outcomes regarding tax positions that have been taken that may be
subject to challenge by the IRS and/or other taxing authorities. Unfavorable settlements of any of the issues related to these
reserves at CMS Energy or Consumers could adversely affect their liquidity, financial condition and results of operations.
Consumers is exposed to risks related to general economic conditions in its service territories.
Consumers’ electric and gas utility businesses are impacted by the economic conditions of the customers it serves. In
its service territories in Michigan, the economy has been hampered by the continued downturn and financial uncertainty in
the automotive industry. Michigan’s economy has also been impacted negatively by the uncertainty in the financial and
credit markets resulting from the subprime mortgage crisis. In the event economic conditions in Michigan or the region
continue to decline, Consumers may experience reduced demand for electricity or natural gas that could result in decreased
earnings and cash flow. In addition, economic conditions in its service territory affect its collections of accounts receivable,
liquidity and financial condition.
CMS Energy’s and Consumers’ energy sales and operations are impacted by seasonal factors and varying weather
conditions from year to year.
CMS Energy’s and Consumers’ businesses are generally seasonal. Demand for electricity is greater in the summer and
winter months associated with cooling and heating, and demand for natural gas peaks in the winter heating season.
Accordingly, their overall results in the future may fluctuate substantially on a seasonal basis. Mild temperatures during the
summer cooling season and winter heating season will adversely affect CMS Energy’s and Consumers’ liquidity, financial
condition and results of operations.
Unplanned power plant outages may be costly for Consumers.
Unforeseen maintenance may be required to produce electricity. As a result of unforeseen maintenance, Consumers
may be required to incur unplanned expenses and to make spot market purchases of electricity that exceed its costs of
generation. Its liquidity, financial condition and results of operations may be adversely affected if it is unable to recover
those increased costs.
Failure to succeed in implementing new processes and information systems could interrupt our operations.
CMS Energy and Consumers depend on numerous information systems for operations and financial information and
billings. They completed recently a multi-year company-wide initiative to improve existing processes and implement new
core information systems. Failure to implement successfully new processes and new core information systems could
interrupt their operations.
Consumers may not be able to obtain an adequate supply of coal, which could limit its ability to operate its facilities.
Consumers is dependent on coal for much of its electric generating capacity. While Consumers has coal supply and
transportation contracts in place, there can be no assurance that the counterparties to these agreements will fulfill their
obligations to supply coal to Consumers. The suppliers under the agreements may experience financial or operational
problems that inhibit their ability to fulfill their obligations to Consumers. In addition, suppliers under these agreements may
not be required to supply coal to Consumers under certain circumstances, such as in the event of a natural disaster. If it is
unable to obtain its coal requirements under existing or future coal supply and transportation contracts, Consumers may be
required to purchase coal at higher prices, or it may be forced to make additional MWh purchases through other potentially
higher cost generating resources in the Midwest Energy Market. Higher coal costs increase its working capital
requirements.
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CMS Energy and Consumers are subject to rate regulation.
CMS Energy and Consumers are subject to rate regulation. Electric and gas rates for their utilities are set by the MPSC
and cannot be increased without regulatory authorization. The FERC authorizes certain subsidiaries of CMS Energy to sell
electricity at market-based rates. CMS Energy and Consumers may be impacted negatively by new regulations or
interpretations by the MPSC, the FERC or other regulatory bodies. Failure of CMS Energy and Consumers to obtain
adequate rates or regulatory approvals in a timely manner may adversely affect CMS Energy’s and Consumers’ liquidity,
financial condition, and results of operations. New legislation, regulations or interpretations could change how the business
of CMS Energy and Consumers operates, impact the ability of CMS Energy and Consumers to recover costs through rate
increases or require CMS Energy and Consumers to incur additional expenses.
CMS Energy and Consumers are exposed to credit risk of those with whom they do business.
CMS Energy and Consumers are exposed to credit risk of counterparties with whom they do business. Adverse
economic conditions affecting, or the financial difficulties of, counterparties with whom they do business could impair the
ability of these counterparties to pay for CMS Energy’s and Consumers’ services or fulfill their contractual obligations,
including performance and/or payment of damages. CMS Energy and Consumers depend on these counterparties to remit
payments and perform services on a timely basis. Any delay or default in payment and/or performance of contractual
obligations could adversely affect CMS Energy’s and Consumers’ liquidity, financial condition and results of operations.
The capital and credit markets have been experiencing levels of volatility and disruption unprecedented in recent years.
Market disruption and volatility could have a negative impact on CMS Energy’s and Consumers’ lenders, suppliers and
other counterparties or Consumers’ customers, causing them to fail to meet their obligations. Adverse economic conditions
could also have a negative impact on the loan portfolio of CMS Energy’s banking subsidiary, EnerBank.
CMS Energy could be required to pay cash to certain security holders in connection with the optional conversion of
their convertible securities.
CMS Energy has issued three series of cash-convertible securities, of which an aggregate principal amount (or par
value in the case of preferred stock) of approximately $677 million was outstanding as of December 31, 2008. If the trading
price of CMS Energy’s common stock exceeds specified amounts at the end of a particular fiscal quarter, then holders of
one or more series of these convertible securities will have the option to convert their securities in the following fiscal
quarter, with the principal amount (or par value) payable in cash by CMS Energy. Accordingly, if these trading price
minimums are satisfied and security holders exercise their conversion rights, CMS Energy may be required to outlay a
significant amount of cash to those security holders, which could adversely affect CMS Energy’s liquidity and financial
condition.
Consumers has a significant capital investment program planned for the next five years.
Consumers’ planned investments include a new coal-based power generation plant, an advanced metering
infrastructure program, renewable power generation, gas compression, and other electric and gas infrastructure to upgrade
delivery systems. The success of these investments depends on or could be affected by a variety of factors including, but
not limited to, effective cost and schedule management during implementation, changes in commodity and other prices,
operational performance, changes in environmental, legislative and regulatory requirements and regulatory cost recovery.
Consumers cannot predict the impact that any of these factors may have on the success of its capital investment program. It
is possible that adverse events reflected in these factors could adversely affect Consumers’ liquidity, financial condition
and results of operations.
ITEM 1B. UNRESOLVED STAFF COMMENTS

None.
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ITEM 2. PROPERTIES
Descriptions of CMS Energy’s and Consumers’ properties are found in the following sections of Item 1, all of which are
incorporated by reference in this Item 2:
• BUSINESS — GENERAL — Consumers — Consumers’ Properties — General;
• BUSINESS — BUSINESS SEGMENTS — Consumers Electric Utility — Electric Utility Properties;
• BUSINESS — BUSINESS SEGMENTS — Consumers Gas Utility — Gas Utility Properties; and
• BUSINESS — BUSINESS SEGMENTS — Independent Power Production — Independent Power Production
Properties.
ITEM 3. LEGAL PROCEEDINGS

CMS Energy, Consumers and some of their subsidiaries and affiliates are parties to certain routine lawsuits and
administrative proceedings incidental to their businesses involving, for example, claims for personal injury and property
damage, contractual matters, various taxes, and rates and licensing. For additional information regarding various pending
administrative and judicial proceedings involving regulatory, operating and environmental matters, see ITEM 1.
BUSINESS — CMS ENERGY AND CONSUMERS REGULATION, both CMS Energy’s and Consumers’ ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS and both CMS Energy’s and Consumers’ ITEM 8. FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA — NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
GAS INDEX PRICE REPORTING LITIGATION

Texas-Ohio Energy, Inc. filed a putative class action lawsuit in the United States District Court for the Eastern District
of California in November 2003 against a number of energy companies engaged in the sale of natural gas in the United
States (including CMS Energy). The complaint alleged defendants entered into a price-fixing scheme by engaging in
activities to manipulate the price of natural gas in California. The complaint alleged violations of the federal Sherman Act,
the California Cartwright Act, and the California Business and Professions Code relating to unlawful, unfair and deceptive
business practices. The complaint sought both actual and exemplary damages for alleged overcharges, attorneys’ fees and
injunctive relief regulating defendants’ future conduct relating to pricing and price reporting. In April 2004, a Nevada MDL
panel ordered the transfer of the Texas-Ohio case to a pending MDL matter in the Nevada federal district court that at the
time involved seven complaints originally filed in various state courts in California that made similar allegations. The court
granted the defendants’ motion to dismiss on the basis of the “filed rate doctrine” and entered a judgment in favor of the
defendants on April 11, 2005. Texas-Ohio appealed the dismissal to the Ninth Circuit Court of Appeals.
While that appeal was pending, CMS Energy agreed to settle the Texas-Ohio case and three other cases originally filed
in California federal courts (Fairhaven, Abelman Art Glass and Utility Savings), for a total payment of $700,000. On
September 10, 2007, the court entered an order granting final approval of the settlement and dismissing the CMS Energy
defendants from these cases. On September 26, 2007, the Ninth Circuit Court of Appeals reversed and remanded the case to
the federal district court. While CMS Energy is no longer a party to the Texas-Ohio case, the Ninth Circuit Court of
Appeals’ ruling may affect the positions of CMS Energy entities in other pending cases, as it did in the Leggett case
discussed in a following paragraph.
Commencing in or about February 2004, 15 state law complaints containing allegations similar to those made in the
Texas-Ohio case, but generally limited to the California Cartwright Act and unjust enrichment, were filed in various
California state courts against many of the same defendants named in the federal price manipulation cases discussed in the
preceding paragraphs. In addition to CMS Energy, CMS MST is named in all 15 state law complaints. Cantera Gas Company
and Cantera Natural Gas, LLC (erroneously sued as Cantera Natural Gas, Inc.) are named in all but one complaint. In
February 2005, these 15 separate actions, as well as nine other similar actions that were filed in California state court but do
not name CMS Energy or any of its former or current subsidiaries, were ordered coordinated with pending coordinated
proceedings in the San Diego Superior Court. The 24 state court complaints involving price reporting were coordinated as
Natural Gas Antitrust Cases V. Plaintiffs in Natural
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Gas Antitrust Cases V were ordered to file a consolidated complaint, but a consolidated complaint was filed only for the two
putative class action lawsuits. Pursuant to a ruling dated August 23, 2006, CMS Energy, Cantera Gas Company and Cantera
Natural Gas, LLC were dismissed as defendants in the master class action and the 13 non-class actions, due to lack of
personal jurisdiction. In September 2006, CMS MST reached an agreement in principle to settle the master class action for
$7 million. In March 2007, CMS Energy paid $7 million into a trust fund account following preliminary approval of the
settlement by the judge. On June 12, 2007, the court entered a judgment, final order and decree granting final approval to the
class action settlement with CMS MST. Certain of the individual cases filed in the California State Court remain pending
against CMS MST.
Samuel D. Leggett, et al. v. Duke Energy Corporation, et al., a class action complaint brought on behalf of retail and
business purchasers of natural gas in Tennessee, was filed in the Chancery Court of Fayette County, Tennessee in January
2005. The complaint contains claims for violations of the Tennessee Trade Practices Act based upon allegations of false
reporting of price information by defendants to publications that compile and publish indices of natural gas prices for
various natural gas hubs. The complaint seeks statutory full consideration damages and attorneys’ fees and injunctive relief
regulating defendants’ future conduct. The defendants include CMS Energy, CMS MST and CMS Field Services. On
February 2, 2007, the state court granted defendants’ motion to dismiss the complaint. Plaintiffs filed a notice of appeal on
April 4, 2007. Oral arguments were heard on November 8, 2007. On October 29, 2008, the appellate court reversed the trial
court and remanded the case for further proceedings, finding that the trial court had mis-applied the filed rate doctrine. The
CMS defendants have filed an applications for leave to appeal to the Tennessee Supreme Court which stays further
proceedings in the trial court until the Supreme Court rules on the application.
J.P. Morgan Trust Company, in its capacity as Trustee of the FLI Liquidating Trust, filed an action in Kansas state
court in August 2005 against a number of energy companies, including CMS Energy, CMS MST and CMS Field Services.
The complaint alleges various claims under the Kansas Restraint of Trade Act relating to reporting false natural gas trade
information to publications that report trade information. Plaintiff is seeking statutory full consideration damages for its
purchases of natural gas between January 1, 2000 and December 31, 2001. The case was removed to the United States
District Court for the District of Kansas on September 8, 2005 and transferred to the MDL proceeding on October 13, 2005.
CMS Energy filed a motion to dismiss for lack of personal jurisdiction, which was initially granted on December 18, 2006.
The court later reversed its ruling on reconsideration and allowed plaintiffs personal jurisdiction discovery. On September 7,
2007, CMS MST and CMS Field Services filed an answer to the complaint. CMS Energy has renewed its motion to dismiss
for lack of personal jurisdiction, and is awaiting the court’s decision. On September 26, 2008, defendants filed a motion for
judgment on the pleadings on the ground that the claims are barred by implied antitrust immunity arising from the
Commodity Exchange Act. Plaintiffs have filed a motion for class certification to which defendants’ response is due on
March 16, 2009.
On November 20, 2005, CMS MST was served with a summons and complaint which named CMS Energy, CMS MST
and CMS Field Services as defendants in a putative class action filed in Kansas state court, Learjet, Inc., et al. v. Oneok,
Inc., et al. Similar to the other actions that have been filed, the complaint alleges that during the putative class period,
January 1, 2000 through October 31, 2002, defendants engaged in a scheme to violate the Kansas Restraint of Trade Act by
knowingly reporting false or inaccurate information to the publications, thereby affecting the market price of natural gas.
Plaintiffs, who allege they purchased natural gas from defendants and others for their facilities, are seeking statutory full
consideration damages consisting of the full consideration paid by plaintiffs for natural gas. On December 7, 2005, the case
was removed to the United States District Court for the District of Kansas and later transferred to the MDL proceeding. On
September 7, 2007, CMS MST and CMS Field Services filed an answer to the complaint. CMS Energy has a pending motion
to dismiss for lack of personal jurisdiction and is awaiting the court’s decision. On September 26, 2008, defendants filed a
motion for judgment on the pleadings on the ground that the claims are barred by implied antitrust immunity arising from the
Commodity Exchange Act. Plaintiffs filed their motion for class certification on October 17, 2008. On October 27, 2008,
Defendants filed a second motion for judgment on the pleadings on statute of limitations grounds. Defendants’ response to
the class certification motion is due on March 16, 2009.
Breckenridge Brewery of Colorado, LLC and BBD Acquisition Co. v. Oneok, Inc., et al., a class action complaint
brought on behalf of retail direct purchasers of natural gas in Colorado, was filed in Colorado state court in May 2006.
Defendants, including CMS Energy, CMS Field Services, and CMS MST, are alleged to have violated
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the Colorado Antitrust Act of 1992 in connection with their natural gas price reporting activities. Plaintiffs are seeking full
refund damages. The case was removed to the United States District Court for the District of Colorado on June 12, 2006, and
later transferred to the MDL proceeding. CMS Energy filed a motion to dismiss for lack of personal jurisdiction, which was
initially granted. The court later reversed its ruling on reconsideration and allowed plaintiffs personal jurisdiction discovery.
CMS Energy has re-filed its personal jurisdiction motion and is awaiting the court’s decision. The remaining CMS Energy
defendants filed a summary judgment motion which the court granted in March 2008 on the basis that the named plaintiffs
made no natural gas purchases from any named defendant. Plaintiffs requested reconsideration and the court ordered
further briefing which was done. On January 8, 2009, the judge denied plaintiffs’ motion for reconsideration, thereby
dismissing CMS MST and CMS Field Services. On September 26, 2008, defendants filed a motion for judgment on the
pleadings on the ground that the claims are barred by implied antitrust immunity arising from the Commodity Exchange Act.
Plaintiffs filed their motion for class certification on October 17, 2008. On February 23, 2009, the court granted CMS Energy’s
motion to dismiss for lack of jurisdiction. The January 8, 2009 ruling also renders moot the defendants’ motion for judgment
on the pleadings filed in September 2008 and the plaintiffs’ motion for class certification. An appeal of the dismissal is
expected.
On October 30, 2006, CMS Energy and CMS MST were each served with a summons and complaint which named CMS
Energy, CMS MST and CMS Field Services as defendants in an action filed in Missouri state court, titled Missouri Public
Service Commission v. Oneok, Inc. The Missouri Public Service Commission purportedly is acting as an assignee of six local
distribution companies, and it alleges that from at least January 2000 through at least October 2002, defendants knowingly
reported false natural gas prices to publications that compile and publish indices of natural gas prices, and engaged in wash
sales. The complaint contains claims for violation of the Missouri antitrust law, fraud and unjust enrichment. Defendants
removed the case to Missouri federal court and then transferred it to the Nevada MDL proceeding. On October 30, 2007, the
court granted the plaintiff’s motion to remand the case to state court in Missouri. CMS Energy filed a motion to dismiss for
lack of personal jurisdiction, and in November 2008, plaintiffs voluntarily dismissed CMS Energy as a party to this case.
Defendants, including CMS MST and CMS Field Services, filed a motion to dismiss for lack of standing. On January 13,
2009, the state court judge in Kansas City, Missouri entered an order finding that the plaintiff Missouri Public Service
Commission lacks standing to sue and the case was dismissed as to all defendants. All other pending motions were
overruled as moot. An appeal of the dismissal is expected.
A class action complaint, Heartland Regional Medical Center, et al. v. Oneok Inc. et al., was filed in Missouri state court
in March 2007 alleging violations of Missouri antitrust laws. Defendants, including CMS Energy, CMS Field Services, and
CMS MST, are alleged to have violated the Missouri AntiTrust Law in connection with their natural gas price reporting
activities. The action was removed to Missouri federal court, and later transferred to the MDL proceeding. Plaintiffs filed a
motion to remand the case back to state court but later withdrew that motion and filed an amended complaint. CMS Energy
filed a motion to dismiss for lack of personal jurisdiction. CMS MST and CMS Field Services filed answers to the amended
complaint. On September 26, 2008, defendants filed a motion for judgment on the pleadings on the ground that the claims
are barred by implied antitrust immunity arising from the Commodity Exchange Act. Plaintiffs filed their motion for class
certification on October 17, 2008. Defendants’ response to the class certification motion is due on March 16, 2009.
A class action complaint, Arandell Corp., et al. v. XCEL Energy Inc., et al., was filed on or about December 15, 2006 in
Wisconsin state court on behalf of Wisconsin commercial entities that purchased natural gas between January 1, 2000 and
October 31, 2002. Defendants, including CMS Energy, CMS ERM and Cantera Gas Company, LLC, are alleged to have
violated Wisconsin’s Anti-Trust statute by conspiring to manipulate natural gas prices. Plaintiffs are seeking full
consideration damages, plus exemplary damages in an amount equal to three times the actual damages, and attorneys’ fees.
The action was removed to Wisconsin federal district court and later transferred to the MDL proceeding. All of the CMS
Energy defendants filed a motion to dismiss for lack of personal jurisdiction, which has been fully briefed. The court has not
yet ruled on the motion. On September 26, 2008, defendants filed a motion for judgment on the pleadings on the ground that
the claims are barred by implied antitrust immunity arising from the Commodity Exchange Act. Plaintiffs filed their motion for
class certification on October 17, 2008. Defendants’ response to the class certification motion is due on March 16, 2009.
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CMS Energy and the other CMS Energy defendants will defend themselves vigorously against these matters but
cannot predict their outcome.
QUICKSILVER RESOURCES, INC.

On November 1, 2001, Quicksilver sued CMS MST in Texas state court in Fort Worth, Texas for breach of contract in
connection with a base contract for the sale and purchase of natural gas. The contract outlines Quicksilver’s agreement to
sell, and CMS MST’s agreement to buy, natural gas. Quicksilver believes that it is entitled to more payments for natural gas
than it has received. CMS MST disagrees with Quicksilver’s analysis and believes that it has paid all amounts owed for
delivery of gas according to the contract. Quicksilver sought damages of up to approximately $126 million, plus prejudgment
interest and attorney fees.
The jury verdict awarded Quicksilver no compensatory damages but $10 million in punitive damages. The jury found
that CMS MST breached the contract and committed fraud but found no actual damage related to such a claim.
On May 15, 2007, the trial court vacated the jury award of punitive damages but held that the contract should be
rescinded prospectively. The judicial rescission of the contract caused CMS Energy to record a charge in the second
quarter of 2007 of $24 million, net of tax. To preserve its appellate rights, CMS MST filed a motion to modify, correct or
reform the judgment and a motion for a judgment contrary to the jury verdict with the trial court. The trial court dismissed
these motions. CMS MST has filed a notice of appeal with the Texas Court of Appeals. Quicksilver has filed a notice of
cross appeal. Both Quicksilver and CMS MST have filed their opening briefs and briefs of cross appeal. Oral arguments
were made on October 29, 2008. Quicksilver claims that the contract should be rescinded from its inception, rather than
merely from the date of the judgment. Although CMS Energy believes Quicksilver’s position to be without merit, if the court
were to grant the relief requested by Quicksilver, it could result in a loss of up to $10 million.
STATE STREET BANK/TEXAS SOUTHERN UNIVERSITY LITIGATION

In 1998, CMS Viron installed a number of energy savings measures at Texas Southern University. CMS Viron sold the
master lease for the project to Academic Capital which transferred its interest to State Street Bank. Although the university
accepted the improvements, it refused to pay on the technicality that the Texas Board of Higher Education had not
approved the expenditure. In 2002, State Street Bank sued CMS Viron in the District Court of Harris County, Texas because
state law made it difficult to sue the university. Presently, the plaintiffs are seeking approximately $6 million from CMS Viron.
CMS Viron believes it has a valid defense to the claim, but cannot predict the outcome of this litigation.
MARATHON INDEMNITY CLAIM REGARDING F.T. BARR CLAIM

On December 3, 2001, F. T. Barr, an individual with an overriding royalty interest in production from the Alba field, filed
a lawsuit in Harris County District Court in Texas against CMS Energy, CMS Oil and Gas and other defendants alleging that
his overriding royalty payments related to Alba field production were improperly calculated. CMS Oil and Gas believes that
Barr was properly paid on gas sales and that he was not entitled to the additional overriding royalty payment sought. All
parties signed a confidential settlement agreement on April 26, 2004. The settlement resolved claims between Barr and the
defendants, and the involved CMS Energy entities reserved all defenses to any indemnity claim relating to the settlement.
Issues exist between Marathon and certain current or former CMS Energy entities as to the existence and scope of any
indemnity obligations to Marathon in connection with the settlement. Between April 2005 and April 2008, there were no
further communications between Marathon and CMS Energy entities regarding this matter. In April 2008, Marathon
indicated its intent to pursue the indemnity claim. Present and former CMS Energy entities and Marathon entered into an
agreement tolling the statute of limitations on any claim by Marathon under the indemnity. CMS Energy entities dispute
Marathon’s claim, and will vigorously oppose it if raised in any legal proceeding. CMS Energy entities also will assert that
Marathon has suffered minimal, if any, damages. CMS Energy cannot predict the outcome of this matter. If Marathon’s
claim were sustained, it would have a material effect on CMS Energy’s future earnings and cash flow.
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FERC INVESTIGATION
On February 11, 2008, the FERC issued a data request to Consumers in conjunction with an investigation being
conducted into possible violations of the FERC’s posting and competitive bidding regulations regarding releases of firm
capacity on interstate natural gas pipelines. The request asked Consumers to provide documents relating to capacity
releases by Consumers, among other things. The FERC is presently investigating certain parties with regard to a practice
known as “flipping,” which involves the release, at below the maximum tariff rate, of capacity on a short term basis to a
party followed by a release of the same capacity to an affiliate of the original recipient of the released capacity in the
subsequent month. In other cases, the FERC has taken the position that this practice violates the FERC’s regulations that
require posting and competitive bidding of some capacity releases. Consumers has provided responses to the questions
posed in the February 11, 2008 data request. In June 2008, Consumers received a second set of data requests from the FERC.
Consumers has provided responses to the questions posed in the June 2008 request as well as to several telephonic follow-
up data requests. Consumers is fully cooperating with the FERC staff.
ENVIRONMENTAL MATTERS
The EPA has alleged that some utilities have incorrectly classified major plant modifications as RMRR rather than
seeking permits from the EPA to modify their plants. Consumers responded to information requests from the EPA on this
subject in 2000, 2002 and 2006. Consumers believes that it has properly interpreted the requirements of RMRR. In October
2008, Consumers received another information request from the EPA under Section 114 of the Clean Air Act. Consumers
responded to this information request in December 2008.
In addition to the EPA’s information request, in October 2008, Consumers received a NOV for three of its coal-based
facilities relating to violations of NSR regulations, alleging ten projects from 1986 to 1998 were subject to NSR review.
Consumers met with the EPA in January 2009 and has additional meetings scheduled. If the EPA does not accept
Consumers’ interpretation of RMRR, Consumers could be required to install additional pollution control equipment at some
or all of its coal-based electric generating plants, surrender emission allowances, engage in supplemental environmental
programs or pay fines. Additionally, Consumers would need to assess the viability of continuing operations at certain
plants. Consumers cannot predict the financial impact or outcome of this matter.
CMS Energy and Consumers, as well as their subsidiaries and affiliates, are subject to various other federal, state and
local laws and regulations relating to the environment. Several of these companies have been named parties to other
administrative or judicial proceedings involving environmental issues. Based on their present knowledge and subject to
future legal and factual developments, they believe it is unlikely that any of these other actions will have a material adverse
effect on their financial condition or future results of operations. For additional information, see both CMS Energy’s and
Consumers’ ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS and both CMS Energy’s and Consumers’ ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA — NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
CMS Energy
During the fourth quarter of 2008, CMS Energy did not submit any matters to a vote of security holders.
Consumers
During the fourth quarter of 2008, Consumers did not submit any matters to a vote of security holders.
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PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
CMS Energy
CMS Energy’s Common Stock is traded on the New York Stock Exchange. Market prices for CMS Energy’s Common
Stock and related security holder matters are contained in ITEM 7. CMS ENERGY’S MANAGEMENT’S DISCUSSION AND
ANALYSIS and ITEM 8. CMS ENERGY’S FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA — NOTE 18 OF
CMS ENERGY’S NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (QUARTERLY FINANCIAL AND COMMON
STOCK INFORMATION (UNAUDITED)) which is incorporated by reference herein. At February 23, 2009, the number of
registered holders of CMS Energy Common Stock totaled 46,080, based upon the number of record holders. On January 26,
2007, the Board of Directors reinstated a quarterly dividend on CMS Energy Common Stock of $0.05 per share. On
January 25, 2008, the Board of Directors increased the quarterly dividend on CMS Energy Common Stock to $0.09 per share.
On January 23, 2009, the Board of Directors increased the quarterly dividend on CMS Energy Common Stock to $0.125 per
share. Information regarding securities authorized for issuance under equity compensation plans is included in our
definitive proxy statement, which is incorporated by reference herein.
For additional information regarding dividends and dividend restrictions, see ITEM 8. FINANCIAL STATEMENTS
AND SUPPLEMENTARY DATA — NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
Consumers
Consumers’ common stock is privately held by its parent, CMS Energy, and does not trade in the public market.
Consumers paid cash dividends on its common stock of $113 million in February 2008, $55 million in May 2008, $70 million in
August 2008, and $59 million in November 2008. Consumers paid cash dividends on its common stock of $94 million in
February 2007, $41 million in May 2007, $41 million in August 2007, and $75 million in November 2007.
For additional information regarding dividends and dividend restrictions, see ITEM 8. FINANCIAL STATEMENTS
AND SUPPLEMENTARY DATA — NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
Issuer Repurchases of Equity Securities

For the three months ended December 31, 2008, there were no repurchases of equity securities by CMS Energy.
Periodically, CMS Energy repurchases certain restricted shares upon vesting under the Performance Incentive Stock Plan
from participants in this plan, equal to CMS Energy’s minimum statutory income tax withholding obligation. Shares
repurchased have a value based on the market price on the vesting date.
ITEM 6. SELECTED FINANCIAL DATA
CMS Energy
Selected financial information is contained in ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA — CMS ENERGY’S SELECTED FINANCIAL INFORMATION, which is incorporated by reference herein.
Consumers
Selected financial information is contained in ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA — CONSUMERS’ SELECTED FINANCIAL INFORMATION, which is incorporated by reference herein.
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CMS Energy
Management’s discussion and analysis of financial condition and results of operations is contained in ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA — CMS ENERGY’S MANAGEMENT’S DISCUSSION AND
ANALYSIS, which is incorporated by reference herein.
Consumers
Management’s discussion and analysis of financial condition and results of operations is contained in ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA — CONSUMERS’ MANAGEMENT’S DISCUSSION AND
ANALYSIS, which is incorporated by reference herein.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
CMS Energy
Quantitative and Qualitative Disclosures About Market Risk is contained in ITEM 8. FINANCIAL STATEMENTS
AND SUPPLEMENTARY DATA — CMS ENERGY’S MANAGEMENT’S DISCUSSION AND ANALYSIS — CRITICAL
ACCOUNTING POLICIES — FINANCIAL AND DERIVATIVE INSTRUMENTS AND MARKET RISK INFORMATION,
which is incorporated by reference herein.
Consumers
Quantitative and Qualitative Disclosures About Market Risk is contained in ITEM 8. FINANCIAL STATEMENTS
AND SUPPLEMENTARY DATA — CONSUMERS’ MANAGEMENT’S DISCUSSION AND ANALYSIS — CRITICAL
ACCOUNTING POLICIES — ACCOUNTING FOR FINANCIAL AND DERIVATIVE INSTRUMENTS AND MARKET RISK
INFORMATION, which is incorporated by reference herein.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Page
Index to Financial Statements:
Selected Financial Information CMS - 2
Management’s Discussion and Analysis CMS - 3
Forward-Looking Statements and Information CMS - 3
Executive Overview CMS - 5
Results of Operations CMS - 6
Critical Accounting Policies CMS - 13
Capital Resources and Liquidity CMS - 18
Outlook CMS - 23
Implementation of New Accounting Standards CMS - 30
New Accounting Standards Not Yet Effective CMS - 31
Consolidated Financial Statements
Consolidated Statements of Income (Loss) CMS - 34
Consolidated Statements of Cash Flows CMS - 36
Consolidated Balance Sheets CMS - 38
Consolidated Statements of Common Stockholders’ Equity CMS - 40
Notes to Consolidated Financial Statements:
1. Corporate Structure and Accounting Policies CMS - 42
2. Fair Value Measurements CMS - 49
3. Asset Sales, Discontinued Operations and Impairment Charges CMS - 53
4. Contingencies CMS - 56
5. Financings and Capitalization CMS - 67
6. Earnings Per Share CMS - 72
7. Financial and Derivative Instruments CMS - 73
8. Retirement Benefits CMS - 76
9. Asset Retirement Obligations CMS - 82
10. Income Taxes CMS - 84
11. Stock Based Compensation CMS - 87
12. Leases CMS - 89
13. Property, Plant, and Equipment CMS - 91
14. Equity Method Investments CMS - 92
15. Jointly Owned Regulated Utility Facilities CMS - 94
16. Reportable Segments CMS - 94
17. Consolidation of Variable Interest Entities CMS - 97
18. Quarterly Financial and Common Stock Information (Unaudited) CMS - 98
Reports of Independent Registered Public Accounting Firms CMS - 99
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Page
Selected Financial Information CE - 2
Management’s Discussion and Analysis
Forward-Looking Statements and Information CE - 3
Executive Overview CE - 5
Results of Operations CE - 7
Critical Accounting Policies CE - 12
Capital Resources and Liquidity CE - 16
Outlook CE - 22
Implementation of New Accounting Standards CE - 27
New Accounting Standards Not Yet Effective CE - 28
Consolidated Financial Statements
Consolidated Statements of Income CE - 31
Consolidated Statements of Cash Flows CE - 32
Consolidated Balance Sheets CE - 34
Consolidated Statements of Common Stockholder’s Equity CE - 36
Notes to Consolidated Financial Statements:
1. Corporate Structure and Accounting Policies CE - 39
2. Fair Value Measurements CE - 45
3. Asset Sales and Impairment Charges CE - 48
4. Contingencies CE - 49
5. Financings and Capitalization CE - 56
6. Financial and Derivative Instruments CE - 59
7. Retirement Benefits CE - 61
8. Asset Retirement Obligations CE - 67
9. Income Taxes CE - 69
10. Stock Based Compensation CE - 71
11. Leases CE - 74
12. Property, Plant, and Equipment CE - 75
13. Jointly Owned Regulated Utility Facilities CE - 77
14. Reportable Segments CE - 77
15. Quarterly Financial and Common Stock Information (Unaudited) CE - 79
Reports of Independent Registered Public Accounting Firms CE - 80
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(CMS ENERGY LOGO)
2008 Consolidated Financial Statements
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SELECTED FINANCIAL INFORMATION
2008 2007 2006 2005 2004

Operating revenue (in millions) ($ ) 6,821 6,464 6,126 5,879 5,154
Earnings from equity method investees (in millions) ($ ) 5 40 89 125 115
Income (loss) from continuing operations (in millions) ($ ) 300 (126) (133) (141) 112
Cumulative effect of change in accounting (in millions) ($ ) — — — — (2)
Income (loss) from discontinued operations (in millions) ($ ) — (89) 54 57 11
Net income (loss) (in millions) ($ ) 300 (215) (79) (84) 121
Net income (loss) available to common stockholders (in
millions) ($ ) 289 (227) (90) (94) 110
Average common shares outstanding (in thousands) 223,931 222,644 219,857 211,819 168,553
Net income (loss) from continuing operations per average
common share
CM S Energy — Basic ($ ) 1.29 (0.62) (0.66) (0.71) 0.59
— Diluted ($ ) 1.23 (0.62) (0.66) (0.71) 0.58
Cumulative effect of change in accounting per average
common share
CM S Energy — Basic ($ ) — — — — (0.01)
— Diluted ($ ) — — — — (0.01)
Net income (loss) per average common share
CM S Energy — Basic ($ ) 1.29 (1.02) (0.41) (0.44) 0.65
— Diluted ($ ) 1.23 (1.02) (0.41) (0.44) 0.64
Cash provided by operations (in millions) ($ ) 559 25 690 598 353
Capital expenditures, excluding acquisitions and capital
lease additions (in millions) ($ ) 792 1,263 670 593 525
Total assets (in millions)(a) ($ ) 14,901 14,192 15,325 15,976 15,833
Long-term debt, excluding current portion (in millions)(a) ($ ) 5,859 5,385 6,200 6,778 6,414
Long-term debt-related parties, excluding current portion
(in millions) ($ ) 178 178 178 178 504
Non-current portion of capital leases and finance lease
obligations (in millions) ($ ) 206 225 42 308 315
Total preferred stock (in millions) ($ ) 287 294 305 305 305
Cash dividends declared per common share ($ ) 0.36 0.20 — — —
M arket price of common stock at year-end ($ ) 10.11 17.38 16.70 14.51 10.45
Book value per common share at year-end ($ ) 10.88 9.46 10.03 10.53 10.62
Number of employees at year-end (full-time equivalents) 7,970 7,898 8,640 8,713 8,660
Electric Utility S tatistics
Sales (billions of kWh) 37 39 38 39 38
Customers (in thousands) 1,814 1,799 1,797 1,789 1,772
Average sales rate per kWh (c) 9.48 8.65 8.46 6.73 6.88
Gas Utility S tatistics
Sales and transportation deliveries (bcf) 338 340 309 350 385
Customers (in thousands)(b) 1,713 1,710 1,714 1,708 1,691
Average sales rate per mcf ($ ) 11.25 10.66 10.44 9.61 8.04
(a) Until their sale in November 2006, we were the primary beneficiary of the MCV Partnership and the FMLP. As a result,
we consolidated their assets, liabilities and activities into our consolidated financial statements through the date of
sale and for the years ended December 31, 2005 and 2004. These partnerships had third-party obligations totaling
$482 million at December 31, 2005 and $582 million at December 31, 2004. Property, plant and equipment serving as
collateral for these obligations had a carrying value of $224 million at December 31, 2005 and $1.426 billion at
December 31, 2004.
(b) Excludes off-system transportation customers.
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This MD&A is a consolidated report of CMS Energy. The terms “we” and “our” as used in this report refer to CMS
Energy and its subsidiaries as a consolidated entity, except where it is clear that such term means only CMS Energy.
FORWARD-LOOKING STATEMENTS AND INFORMATION

This Form 10-K and other written and oral statements that we make contain forward-looking statements as defined by
the Private Securities Litigation Reform Act of 1995. Our intention with the use of words such as “may,” “could,”
“anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” and other similar words is to identify forward-looking
statements that involve risk and uncertainty. We designed this discussion of potential risks and uncertainties to highlight
important factors that may impact our business and financial outlook. We 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 our actual
results to differ materially from the results anticipated in these statements. These factors include our inability to predict or
control:
• the price of CMS Energy Common Stock, capital and financial market conditions and the effect of these market
conditions on our postretirement benefit plans, interest rates, and access to the capital markets, including availability
of financing (including our accounts receivable sales program and revolving credit facilities) to CMS Energy,
Consumers, or any of their affiliates, and the energy industry,
• the impact of the continued downturn in the economy and the sharp downturn and extreme volatility in the financial
and credit markets on CMS Energy, including its:
• revenues,
• capital expenditure program and related earnings growth,
• ability to collect accounts receivable from our customers,
• cost of capital and availability of capital, and
• Pension Plan and postretirement benefit plans assets and required contributions,
• the market perception of the energy industry or of CMS Energy, Consumers, or any of their affiliates,
• the credit ratings of CMS Energy or Consumers,
• factors affecting operations, such as unusual weather conditions, catastrophic weather-related damage,
unscheduled generation outages, maintenance or repairs, environmental incidents, or electric transmission or gas
pipeline system constraints,
• changes in applicable laws, rules, regulations, principles or practices or in their interpretation, including with respect
to taxes, environmental and accounting matters, that could have an impact on our business,
• the impact of any future regulations or laws regarding:
• carbon dioxide, mercury and other greenhouse gas emissions,
• limitations on the use of coal-based electric power plants, and
• renewable portfolio standards and energy efficiency mandates,
• national, regional, and local economic, competitive, and regulatory policies, conditions and developments,
• adverse regulatory or legal interpretations or decisions, including those related to environmental laws and
regulations, and potential environmental remediation costs associated with these interpretations or decisions,
including but not limited to those that may affect Bay Harbor and Consumers’ RMRR classification under NSR
regulations,
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• potentially adverse regulatory treatment or failure to receive timely regulatory orders concerning a number of
significant questions currently or potentially before the MPSC, including:
• adequate and timely recovery of :
• Clean Air Act capital and operating costs and other environmental and safety-related expenditures,
• power supply and natural gas supply costs,
• operation and maintenance expenses at Consumers,
• additional utility rate-based investments,
• increased MISO energy and transmission costs,
• costs associated with energy efficiency investments and state or federally mandated renewable resource
standards,
• Big Rock decommissioning funding shortfalls,
• authorization of a new clean coal plant, and
• implementation of new energy legislation,
• adverse consequences resulting from a past or future assertion of indemnity or warranty claims associated with
previously owned assets and businesses, including claims resulting from attempts by foreign or domestic
governments to assess taxes on past operations or transactions,
• the ability of Consumers to recover nuclear fuel storage costs due to the DOE’s failure to accept spent nuclear fuel
on schedule, including the outcome of pending litigation with the DOE,
• the impact of expanded enforcement powers and investigation activities at the FERC,
• federal regulation of electric sales and transmission of electricity, including periodic re-examination by federal
regulators of our market-based sales authorizations in wholesale power markets without price restrictions,
• energy markets, including availability of capacity and the timing and extent of changes in commodity prices for oil,
coal, natural gas, natural gas liquids, electricity and certain related products due to lower or higher demand,
shortages, transportation problems, or other developments, and their impact on our cash flow and working capital,
• the impact of construction material prices and the availability of qualified construction personnel to implement our
construction program,
• potential disruption or interruption of facilities or operations due to accidents, war, or terrorism, and the ability to
obtain or maintain insurance coverage for these events,
• disruptions in the normal commercial insurance and surety bond markets that may increase costs or reduce
traditional insurance coverage, particularly terrorism and sabotage insurance, performance bonds, and tax-exempt
debt insurance, and stability of insurance providers,
• technological developments in energy production, delivery, usage, and storage,
• achievement of capital expenditure and operating expense goals,
• earnings volatility resulting from the GAAP requirement that we apply mark-to-market accounting to certain energy
commodity contracts, including electricity sales agreements, and interest rate swaps,
• changes in financial or regulatory accounting principles or policies,
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• a possible future requirement to comply with International Financial Reporting Standards, which differ from GAAP in
various ways, including the present lack of special accounting treatment for regulated activities similar to that
provided under SFAS No. 71,
• the impact of our new integrated business software system on our operations, including customer billing, finance,
purchasing, human resources and payroll processes, and utility asset construction and maintenance work
management systems,
• the impact of credit market and economic conditions on EnerBank,
• the outcome, cost, and other effects of legal or administrative proceedings, settlements, investigations or claims,
including the gas price reporting litigation and the pending appeal of the Quicksilver litigation,
• population growth or decline in the geographic areas where we do business,
• changes in the economic and financial viability of our suppliers, customers, and other counterparties and the
continued ability of these third parties to perform their obligations to us,
• the effectiveness of our risk management policies and procedures,
• our ability to achieve generation planning goals and the occurrence and duration of planned or unplanned
generation outages,
• adverse outcomes regarding tax positions due to the difficulty in quantifying tax effects of business decisions and
reserves, and
• other business or investment matters that may be disclosed from time to time in CMS Energy’s or Consumers’ SEC
filings, or in other publicly issued written documents.
For additional details regarding these and other uncertainties, see the “Outlook” section included in this MD&A,
Note 4, Contingencies, and Part I, Item 1A. Risk Factors.
EXECUTIVE OVERVIEW
CMS Energy is an energy company operating primarily in Michigan. We are the parent holding company of several
subsidiaries, including Consumers and Enterprises. Consumers is a combination electric and gas utility company serving
Michigan’s Lower Peninsula. Enterprises, through its subsidiaries and equity investments, is engaged in primarily domestic
independent power production. We manage our businesses by the nature of services each provides and operate principally
in three business segments: electric utility, gas utility, and enterprises.
We earn our revenue and generate cash from operations by providing electric and natural gas utility services, electric
power generation, gas distribution, transmission, and storage, and other energy-related services. Our businesses are
affected primarily by:
• weather, especially during the normal heating and cooling seasons,
• economic conditions, primarily in Michigan,
• regulation and regulatory issues that affect our electric and gas utility operations,
• energy commodity prices,
• interest rates, and
• our debt credit ratings.
During the past several years, our business strategy has emphasized improving our consolidated balance sheet and
maintaining focus on our core strength: utility operations and service.
Our forecast calls for investing in excess of $6 billion in the utility over the period from 2009 through 2013, with a key
aspect of our strategy being our Balanced Energy Initiative. Our Balanced Energy Initiative is a comprehensive energy
resource plan to meet our projected short-term and long-term electric power requirements
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with energy efficiency, demand management, expanded use of renewable energy, development of new power plants, and
pursuit of additional power purchase agreements to complement existing generating sources.
In October 2008, the Michigan governor signed into law a comprehensive energy reform package. In February 2009, we
filed our renewable energy plan and energy optimization plan with the MPSC in order to conform to various aspects of this
legislation.
As we work to implement plans to serve our customers in the future, the cost of energy and related cash flow issues
continue to challenge us. Natural gas prices and eastern coal prices have been volatile. These costs are recoverable from
our utility customers; however, as prices increase, the amount we pay for these commodities will require additional liquidity
due to the lag in cost recoveries. There is additional uncertainty associated with state and federal legislative and regulatory
proposals related to regulation of carbon dioxide emissions, particularly associated with coal-based generation. We are
closely monitoring these developments for the effect on our future plans.
We are developing an advanced metering infrastructure system that will provide enhanced controls and information
about our customer energy usage and notification of service interruptions. We expect to develop integration software and
pilot this new technology over the next two to three years.
In the future, we will focus our strategy on:
• continuing investment in our utility business,
• growing earnings while controlling operating and fuel costs and parent debt,
• managing cash flow, and
• maintaining principles of safe, efficient operations, customer value, fair and timely regulation, and consistent
financial performance.
As we execute our strategy, we will need to overcome a Michigan economy that has been adversely impacted by the
continued downturn and uncertainty in Michigan’s automotive industry. There also has been a sharp economic downturn,
uncertainty, and extreme volatility in the financial and credit markets resulting from the subprime mortgage crisis, bank
failures and consolidation, and other market weaknesses. While we believe that our sources of liquidity will be sufficient to
meet our requirements, we continue to monitor closely developments in the financial and credit markets and government
response to those developments for potential implications for our business.
RESULTS OF OPERATIONS
CMS ENERGY CONSOLIDATED RESULTS OF OPERATIONS
Ye ars En de d De ce m be r 31 2008 2007 2006

In Million s (Exce pt for Pe r
S h are Am ou n ts)
Net Earnings (Loss) Available to Common Stockholders $ 289 $ (227) $ (90)
Basic Earnings (Loss) Per Share $1.29 $(1.02) $(0.41)
Diluted Earnings (Loss) Per Share $1.23 $(1.02) $(0.41)
Ye ars En de d De ce m be r 31 2008 2007 C h an ge 2007 2006 C h an ge

In Million s
Electric Utility $271 $ 196 $ 75 $ 196 $ 199 $ (3)
Gas Utility 89 87 2 87 37 50
Enterprises 14 (412) 426 (412) (227) (185)
Corporate Interest and Other (85) (9) (76) (9) (153) 144
Discontinued Operations — (89) 89 (89) 54 (143)
Net Earnings (Loss) Available to Common Stockholders $289 $(227) $ 516 $(227) $ (90) $ (137)
In 2008, net income was $289 million compared with a net loss of $227 million for 2007. Combined net income from our
electric and gas utility segments increased, compared with 2007, reflecting the positive impact of the MPSC rate orders and
the elimination of certain costs from the power purchase agreement with the MCV
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Partnership, partially offset by lower electric deliveries and increased depreciation expense. Further increasing net income
was the absence of activities associated with assets sold in 2007, the absence of costs associated with the termination of
contracts in 2007, and a reduction in corporate interest expense.
Specific changes to net earnings (loss) available to common stockholders for 2008 versus 2007 are:
In Million s
• absence of costs incurred by CMS ERM due to the termination of certain electricity sales agreements and
the rescission of a contract with Quicksilver, $ 217
• absence of impairment charges related to international businesses sold in 2007, 133
• increase in net earnings at our electric and gas utility segments primarily due to favorable MPSC rate
orders, 129
• absence of a net loss on the disposal of discontinued operations in 2007, 89
• other net increase at Enterprises and corporate and other primarily due to reduced interest and operating
and maintenance expense, and the absence of early debt retirement premiums paid in 2007, 37
• elimination of certain costs at our electric utility from the power purchase agreement with the MCV
Partnership, 29
• absence of an increase in the provision for environmental remediation costs at Bay Harbor, 29
• absence of a 2007 net tax benefit, associated with the sale of assets, recorded at Enterprises and corporate
and other, (53)
• decreased deliveries at our electric utility segment, (51)
• decrease due to a charge that recognized an other than temporary decline in the fair value of our SERP
investments in 2008 which replaced a gain on the sale of SERP assets in 2007, and (30)
• other combined net decrease at our electric and gas utility segments due primarily to higher depreciation
expense offset by a reduction in nuclear operating and maintenance costs. (13)
Total change $ 516
For 2007, our net loss was $227 million compared with a net loss of $90 million for 2006. The increase in net loss was
due primarily to the termination of contracts at CMS ERM. Further increasing the net loss were charges related to the exit
from our international businesses, the absence of earnings from these businesses, and an increase in the provision for Bay
Harbor environmental remediation costs. The increase in losses was partially offset by the absence of the shareholder
settlement liability recorded in 2006, the absence of activities related to our former interest in the MCV Partnership, and
increased earnings at our utility primarily due to the positive effects of rate orders and increased sales.
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Specific changes to net loss available to common stockholders for 2007 versus 2006 are:
In Million s
• costs incurred by CMS ERM due to the rescission of a contract with Quicksilver and the termination
of certain electricity sales agreements, $ (217)
• impact from discontinued operations as losses recorded on the disposal of international businesses in
2007 replaced earnings recorded for these businesses in 2006, (143)
• reduction in earnings from equity method investees primarily due to the absence of earnings from
international businesses sold in 2007, (32)
• increase in the provision for environmental remediation costs at Bay Harbor, (29)
• additional taxes at our corporate and Enterprises segments as the absence of tax benefits associated
with the resolution of an IRS income tax audit in 2006 more than offset the net tax benefits associated
with the sale of international businesses recorded in 2007, (16)
• absence of a 2006 net charge resulting from our agreement to settle shareholder class action lawsuits, 80
• absence of activities related to our former interest in the MCV Partnership including asset impairments
and mark-to-market impacts, 60
• earnings from non-MCV-related mark-to-market impacts primarily at CMS ERM, as mark-to-market
gains in 2007 replaced losses in 2006, 49
• increase in combined net earnings at our gas utility and electric utility, primarily due to the positive
effects of the MPSC gas rate orders and increased weather-related deliveries, 47
• decrease in non-MCV-related asset impairment charges, net of insurance reimbursement, and 38
• additional increase at Enterprises and corporate primarily due to gains on the sale of international
businesses in 2007, a reduction in interest expense, and increased interest income. 26
Total change $ (137)
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ELECTRIC UTILITY RESULTS OF OPERATIONS

In Million s
Net income $271 $196 $ 75 $196 $199 $ (3)
Reasons for the change:
Electric deliveries and rate increase $ 89 $ (118)
Surcharge revenue 15 6
Power supply costs and related revenue 18 (17)
Non-commodity revenue (14) (12)
Depreciation and other operating expenses 40 150
Other income (46) 26
General taxes 15 (15)
Interest charges 11 (18)
Income taxes (53) (5)
Total change $ 75 $ (3)
Electric deliveries and rate increase: For 2008, electric delivery revenues increased $89 million versus 2007 primarily
due to additional revenue of $168 million from the inclusion of the Zeeland power plant in rates and from the June 2008 rate
order. The increase was partially offset by decreased electric revenue of $79 million primarily due to lower deliveries.
Deliveries to end-use customers were 37.5 billion kWh, a decrease of 1.3 billion kWh or 3 percent versus 2007.
Approximately 45 percent of the decrease in electric deliveries was due to weather.
For 2007, electric delivery revenues decreased $118 million versus 2006. The decrease was primarily due to $136 million
of revenue related to Palisades that was designated toward the recovery of PSCR costs consistent with the MPSC order
related to the sale in April 2007. Partially offsetting the decrease were increased electric delivery revenues of $14 million, as
deliveries to end-use customers were 38.8 billion kWh, an increase of 0.3 billion kWh or 0.8 percent versus 2006. The
increase in electric deliveries was primarily due to favorable weather. Also contributing to the increase was $2 million of
additional revenue from the inclusion of the Zeeland power plant in rates and $2 million related to the return of additional
former ROA customers.
Surcharge revenue: For 2008, surcharge revenue increased $15 million versus 2007. The increase was primarily due to
the April 2008 MPSC order allowing recovery of pension and OPEB benefits through a surcharge. Consistent with the
recovery of these costs, we recognized a similar amount of benefit expense. For additional details, see “Depreciation and
other operating expenses” within this section and Note 8, Retirement Benefits.
For 2007, surcharge revenue increased $6 million versus 2006. The increase was primarily due to a surcharge that we
began collecting in the first quarter of 2006 that the MPSC authorized under Section 10d(4) of the Customer Choice Act.
Power supply costs and related revenue: For 2008, PSCR revenue increased by $18 million versus 2007. The increase
primarily reflects the absence of a 2007 reduction to revenue made in response to the MPSC’s position that PSCR discounts
given to our Transitional Primary Rate customers could not be recovered under the PSCR mechanism.
For 2007, PSCR revenue decreased by $17 million versus 2006. This decrease primarily reflects amounts excluded from
recovery in the 2006 PSCR reconciliation case. The decrease also reflects the absence, in 2007, of an increase in power
supply revenue associated with the 2005 PSCR reconciliation case.
Non-commodity revenue: For 2008, non-commodity revenue decreased $14 million versus 2007 primarily due to the
absence, in 2008, of METC transmission services revenue. The METC transmission service agreement expired in April 2007.
For 2007, non-commodity revenue decreased $12 million versus 2006 primarily due to lower METC transmission
services revenue.
Depreciation and other operating expenses: For 2008, depreciation and other operating expenses decreased $40 million
versus 2007. The decrease was primarily due to the absence of operating expenses of Palisades, which
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was sold in April 2007, and certain costs that are no longer incurred under our power purchase agreement with the MCV
Partnership. Also contributing to the decrease in expenses was the April 2008 MPSC order allowing us to retain a portion of
the proceeds from the 2006 sale of certain sulfur dioxide allowances. The decrease was partially offset by higher pension
and OPEB expense due to the April 2008 MPSC order allowing recovery of certain costs through a surcharge, increased
depreciation and amortization expense due to more plant in service and increased amortization of certain regulatory assets.
For additional details on our power purchase agreement with the MCV Partnership, see Note 4, Contingencies, “Other
Consumers’ Electric Utility Contingencies.”
For 2007, depreciation and other operating expenses decreased $150 million versus 2006. The decrease was primarily
due to lower operating expenses of Palisades, which was sold in April 2007. Also contributing to the decrease was the
absence, in 2007, of costs incurred in 2006 related to a refueling outage at Palisades, and lower overhead line maintenance
and storm restoration costs. These decreases were offset partially by increased depreciation and amortization expense due
to more plant in service and increased amortization of certain regulatory assets.
Other income: For 2008, other income decreased $46 million versus 2007. The decrease was primarily due to reduced
interest income, reflecting lower levels of short-term cash investments, and the MPSC’s June 2008 order, which did not
allow us to recover all of our costs associated with the sale of Palisades. Also contributing to the decrease was a charge
that recognized an other-than-temporary decline in the fair value of our SERP investments.
For 2007, other income increased $26 million versus 2006 primarily due to higher interest income on short-term cash
investments. The increase in short-term cash investments was primarily due to proceeds from the Palisades sale and equity
infusions into Consumers.
General taxes: For 2008, general tax expense decreased $15 million versus 2007 primarily due to the absence, in 2008, of
MSBT, which was replaced with the Michigan Business Tax effective January 1, 2008. The Michigan Business Tax is an
income tax. The decrease was partially offset by higher property tax expense.
For 2007, general tax expense increased $15 million versus 2006 primarily due to higher property tax expense, reflecting
higher millage rates and lower property tax refunds versus 2006.
Interest charges: For 2008, interest charges decreased $11 million versus 2007 primarily due to lower interest
associated with amounts to be refunded to our customers as a result of the sale of Palisades. The MPSC order approving
the Palisades power purchase agreement with Entergy directed us to record interest on the unrefunded balances. Also
contributing to the decrease was the absence, in 2008, of interest charges related to an IRS settlement.
For 2007, interest charges increased $18 million versus 2006. The increase was primarily due to interest on amounts to
be refunded to customers as a result of the sale of Palisades as ordered by the MPSC and interest charges related to the IRS
settlement.
Income taxes: For 2008, income taxes increased $53 million versus 2007. The increase primarily reflects $47 million due
to higher earnings and $6 million due to the inclusion of the Michigan Business Tax.
For 2007, income taxes increased $5 million versus 2006 primarily due to the absence, in 2007, of a $4 million income tax
benefit from the restoration and utilization of income tax credits resulting from the resolution of an IRS income tax audit.
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GAS UTILITY RESULTS OF OPERATIONS

In Million s
Net income $ 89 $ 87 $ 2 $ 87 $ 37 $ 50
Gas deliveries and rate increase $ 44 $ 91
Gas wholesale and retail services, other gas revenues, and other
income (28) 14
Other operating expenses (24) (19)
General taxes and depreciation (1) (11)
Interest charges 9 4
Income taxes 2 (29)
Total change $ 2 $ 50
Gas deliveries and rate increase: For 2008, gas delivery revenues increased $44 million versus 2007 primarily due to
additional revenue of $33 million from the MPSC’s August 2007 and December 2008 gas rate orders. Also contributing to
the increase was higher gas delivery revenue of $11 million. Gas deliveries, including miscellaneous transportation to end-
use customers, were 304 bcf, an increase of 4 bcf or 1.3 percent. The increase in gas deliveries was due to colder weather in
2008.
For 2007, gas delivery revenues increased $91 million versus 2006 primarily due to additional revenue of $81 million
from the MPSC’s November 2006 and August 2007 gas rate orders. Gas delivery revenues also increased $10 million as gas
deliveries, including miscellaneous transportation to end-use customers, were 300 bcf, an increase of 18 bcf or 6.4 percent.
The increase in gas deliveries was primarily due to colder weather, partially offset by higher system losses.
Gas wholesale and retail services, other gas revenues, and other income: For 2008, gas wholesale and retail services,
other gas revenues, and other income decreased $28 million versus 2007. The decrease was primarily due to lower interest
income reflecting lower short-term investments, and lower pipeline capacity optimization revenue. Also contributing to the
decrease was a charge that recognized an other-than-temporary decline in the fair value of our SERP investments.
For 2007, gas wholesale and retail services, other gas revenues, and other income increased $14 million versus 2006.
The increase was primarily due to higher interest income on short-term cash investments. The increase in short-term cash
investments was primarily due to proceeds from the Palisades sale and equity infusions into Consumers.
Other operating expenses: For 2008, other operating expenses increased $24 million versus 2007 primarily due to
higher uncollectible accounts expense and higher operating expense across our storage, transmission and distribution
systems.
For 2007, other operating expenses increased $19 million versus 2006 primarily due to higher uncollectible accounts
expense and payments, beginning in November 2006, to a fund that provides energy assistance to low-income customers.
General taxes and depreciation: For 2008, general taxes and depreciation increased $1 million versus 2007. The increase
was primarily due to higher depreciation and increased property taxes. The increase was partially offset by decreased
general taxes due to the absence, in 2008, of MSBT, which was replaced by the Michigan Business Tax effective January 1,
2008. The Michigan Business Tax is an income tax.
For 2007, general taxes and depreciation increased $11 million versus 2006. The increase in general taxes reflects higher
property tax expense due to higher millage rates and lower property tax refunds versus 2006. The increase in depreciation
expense is primarily due to higher plant in service.
Interest charges: For 2008, interest charges decreased $9 million versus 2007 primarily due to lower average debt levels
and a lower average interest rate.
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For 2007, interest charges decreased $4 million versus 2006 primarily due to lower average debt levels and a lower
average interest rate versus 2006.
Income taxes: For 2008, income taxes decreased $2 million versus 2007. The decrease reflects $4 million related to the
tax treatment of items related to property, plant and equipment, as required by the MPSC orders. This decrease was partially
offset by a $1 million increase due to the inclusion of the Michigan Business Tax and $1 million related to the forfeiture of
restricted stock.
For 2007, income taxes increased $29 million versus 2006 primarily due to higher earnings by the gas utility.
ENTERPRISES RESULTS OF OPERATIONS

In Million s
Net income (loss) $ 14 $(412) $ 426 $(412) $(227) $ (185)
CMS ERM $ 242 $ (144)
Activities associated with the sale of international assets 164 (58)
Environmental remediation 29 (23)
DIG (7) (22)
Other (2) 2
The MCV Partnership — 60
Total Change $ 426 $ (185)
CMS ERM: Net income in 2008 increased $242 million versus 2007. The increase is due to the absence of $217 million of
costs incurred for the termination of certain electricity sales agreements and the rescission of a contract with Quicksilver
recorded in 2007 and $33 million in net operating efficiencies from the absence of certain sales and supply contracts, offset
partially by an $8 million net decrease in mark-to-market activity.
Net loss in 2007 increased by $144 million as $217 million of costs incurred for the termination of certain electricity sales
agreements and the rescission of a contract with Quicksilver more than offset a $58 million net increase in mark-to-market
gains, a $7 million reduction in fuel costs, and a $8 million net reduction in other expenses.
Activities associated with sale of international assets: These activities increased net income in 2008 by $164 million
versus 2007 as the absences of $122 million of net impairment charges, $46 million of tax expense on deferred earnings, and
$29 million of operating and maintenance expense recorded in 2007 more than offset the absence of the combined $33 million
of net earnings and gains on the sale of these assets recorded in 2007. For additional information, see Note 3, Asset Sales,
Discontinued Operations and Impairment Charges.
These activities increased net loss by $58 million in 2007 versus 2006. Taxes related to these assets increased net loss
by $79 million as $46 million of tax expense on the recognition of previously deferred earnings recorded in 2007 replaced a
benefit from the resolution of an IRS income tax audit recorded in 2006. Further increasing net loss was a $31 million net
reduction in equity earnings from these businesses. The decreases were partially offset by a $19 million net decrease in
impairment charges, a $14 million net gain on the sale of these assets, and a $19 million reduction in interest and other
expenses. For additional information, see Note 3, Asset Sales, Discontinued Operations and Impairment Charges.
Environmental remediation: Our environmental remediation charges relate to our projections of future costs
associated with Bay Harbor. These charges, net of tax, were $29 million in 2007 and $6 million in 2006. For additional
information, see Note 4, Contingencies.
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DIG: Net income decreased $7 million in 2008 versus 2007. The decrease is due to $5 million of higher maintenance
costs and a $2 million reduction in steam sales.
Net loss increased $22 million in 2007 versus 2006. The increase is primarily due to the absences of a $13 million
favorable arbitration settlement and $11 million of third-party tolling revenue recorded in 2006 partly offset by a $2 million
reduction in interest costs.
Other: Net decrease of $2 million in 2008 versus 2007 primarily due to a $9 million change in the valuation of our SERP
investments as the $5 million gain on re-balancing recorded in 2007 was replaced by $4 million of expense for the other-than-
temporary decline in the value of these investments recorded in 2008. The impact of the SERP investment activity more than
offset $3 million of reduced interest expense and a $4 million reduction in other net expenses.
Net increase of $2 million in 2007 versus 2006 primarily due to a $5 million gain on the re-balancing of our SERP
investments. This gain was offset partially by a $3 million net increase in other expenses.
MCV: We sold our interest in the MCV Partnership in November 2006. In 2006, our share of the MCV Partnership’s
loss was $60 million, net of tax and minority interest. This was due primarily to mark-to-market losses and the net impact of
the sale transaction, including asset impairment charges. These losses were partially offset by operating income and a
property tax refund received in 2006.
CORPORATE INTEREST AND OTHER NET EXPENSES

In Million s
Net loss $(85) $ (9) $ (76) $ (9) $(153) $ 144
For 2008, corporate interest and other net expenses were $85 million, an increase of $76 million versus 2007. The
increase of $76 million primarily reflects the absence, in 2008, of the one-time recognition of certain tax benefits related to the
sale of our international operations and reduced interest income. Partially offsetting the increase was the absence, in 2008,
of the reduction in fair value of notes receivable from GasAtacama and premiums paid on the early retirement of CMS
Energy debt in June 2007 and reduced interest expense due to lower debt levels in 2008.
For 2007, corporate interest and other net expenses were $9 million, a decrease of $144 million versus 2006. The
$144 million decrease primarily reflects the absence, in 2007, of a charge for the settlement of our shareholder class action
lawsuits partially offset by the absence of an insurance reimbursement received in June 2006. Also contributing to the
decrease was the reduction in tax expense in 2007 related to the sale of our international operations. Partially offsetting the
decrease was the absence, in 2007, of a tax benefit due to the resolution of an IRS income tax audit.
DISCONTINUED OPERATIONS
For 2008, there was no net income from discontinued operations. The $89 million net loss from discontinued operations
in 2007 represents the net loss on the disposal of international businesses sold in 2007.
For 2007, the net loss from discontinued operations was $89 million versus $54 million of net income in 2006. The net
loss on the disposal of international businesses in 2007 replaced earnings recorded for these businesses in 2006.
CRITICAL ACCOUNTING POLICIES

The following accounting policies and related information are important to an understanding of our results of
operations and financial condition and should be considered an integral part of our MD&A. For additional accounting
policies, see Note 1, Corporate Structure and Accounting Policies.
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USE OF ESTIMATES AND ASSUMPTIONS

In preparing our consolidated financial statements, we use estimates and assumptions that may affect reported
amounts and disclosures. We use accounting estimates for asset valuations, depreciation, amortization, financial and
derivative instruments, employee benefits, indemnifications and contingencies. Actual results may differ from estimated
results due to changes in the regulatory environment, competition, foreign exchange, regulatory decisions, lawsuits, and
other factors.
Contingencies: We record a liability for contingencies when we conclude that it is probable that a liability has been
incurred and the amount of loss can be reasonably estimated. We consider all relevant factors in making these assessments.
Fair Value Measurements: We have assets and liabilities that we account for or disclose at fair value. Our fair value
measurements are performed in accordance with SFAS No. 157, which requires the incorporation of all assumptions that
market participants would use in pricing an asset or liability, including assumptions about risk. Development of these
assumptions requires significant judgment.
The most material of our fair value measurements are of our SERP assets, our derivative instruments, and the year-end
measurement of our pension and OPEB plan assets. For a detailed discussion of the methods used to calculate our fair value
measurements, see Note 2, Fair Value Measurements.
Income Taxes: The amount of income taxes we pay is subject to ongoing audits by federal, state, and foreign tax
authorities, which can result in proposed assessments. Our estimate of the potential outcome of any uncertain tax issue is
highly judgmental. We believe we have provided adequately for these exposures; however, our future results may include
favorable or unfavorable adjustments to our estimated tax liabilities in the period the assessments are made or resolved or
when statutes of limitation on potential assessments expire. Additionally, our judgment as to our ability to recover our
deferred tax assets may change. We believe our valuation allowances related to our deferred tax assets are adequate, but
future results may include favorable or unfavorable adjustments. As a result, our effective tax rate may fluctuate
significantly over time.
Long-Lived Assets and Equity Method Investments: Our assessment of the recoverability of long-lived assets and
equity method investments involves critical accounting estimates. We periodically perform tests of impairment if certain
triggering events occur or if there has been a decline in value that may be other than temporary. Of our total assets,
recorded at $14.901 billion at December 31, 2008, 62 percent represent long-lived assets and equity method investments that
are subject to this type of analysis. We base our evaluations of impairment on such indicators as:
• the nature of the assets,
• projected future economic benefits,
• regulatory and political environments,
• historical and future cash flow and profitability measurements, and
• other external market conditions and factors.
The estimates we use can change over time, which could have a material impact on our consolidated financial
statements. For additional details, see Note 1, Corporate Structure and Accounting Policies — “Impairment of Long-Lived
Assets and Equity Method Investments.”
ACCOUNTING FOR THE EFFECTS OF INDUSTRY REGULATION

Consumers’ involvement in a regulated industry requires us to use SFAS No. 71 to account for the effects of the
regulators’ decisions that impact the timing and recognition of its revenues and expenses. As a result, Consumers may defer
or recognize revenues and expenses differently than a non-regulated entity.
For example, Consumers may record as regulatory assets items that a non-regulated entity normally would expense if
the actions of the regulator indicate that Consumers will recover the expenses in future rates. Conversely, Consumers may
record as regulatory liabilities items that non-regulated entities may normally recognize as
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revenues, if the actions of the regulator indicate that it will be required to refund the revenues to customers. Judgment is
required to determine the appropriate accounting for items recorded as regulatory assets and liabilities. At December 31,
2008, Consumers had $2.438 billion recorded as regulatory assets and $1.988 billion recorded as regulatory liabilities.
Our PSCR and GCR cost recovery mechanisms also give rise to probable future revenues that will be recovered from
customers or past overrecoveries that will be refunded to customers through the ratemaking process. Underrecoveries are
included in Accrued power supply and gas revenue and overrecoveries are included in Accrued rate refunds on our
Consolidated Balance Sheets. At December 31, 2008, we had $7 million recorded as regulatory assets for underrecoveries of
power supply and gas costs and $7 million recorded as regulatory liabilities for overrecoveries of power supply and gas
costs.
For additional details, see Note 1, Corporate Structure and Accounting Policies - “Utility Regulation.”
FINANCIAL AND DERIVATIVE INSTRUMENTS AND MARKET RISK INFORMATION

Financial Instruments: Debt and equity securities classified as available-for-sale are reported at fair value determined
from quoted market prices. Unrealized gains and losses resulting from changes in fair value of available-for-sale debt and
equity securities are reported, net of tax, in equity as part of AOCL. Unrealized losses are excluded from earnings unless the
related changes in fair value are determined to be other than temporary.
Derivative Instruments: We use the criteria in SFAS No. 133 to determine if we need to account for certain contracts as
derivative instruments. These criteria are complex and often require significant judgment in applying them to specific
contracts. If a contract is a derivative and does not qualify for the normal purchases and sales exception under
SFAS No. 133, we record it on our consolidated balance sheet at its fair value. Each quarter, we adjust the resulting asset or
liability to reflect any change in the fair value of the contract, a practice known as marking the contract to market. For
additional details on our derivatives, see Note 7, Financial and Derivative Instruments.
To determine the fair value of our derivatives, we generally use information from external sources, such as quoted
market prices and other valuation information. For certain contracts, this information is not available and we use
mathematical models to value our derivatives. The most material of our derivative liabilities, an electricity sales agreement
held by CMS ERM, extends beyond the term for which quoted electricity prices are available. Thus, to value this derivative
we use a valuation model that incorporates a proprietary forward pricing curve for electricity based on forward natural gas
prices and an implied heat rate. Our model incorporates discounting, credit, and modeling risks. The model is sensitive to
electricity and natural gas forward prices, and the fair value of this derivative liability will increase as these forward prices
increase. We adjust our model each quarter to incorporate market data as it becomes available.
The fair values we calculate for our derivatives may change significantly as commodity prices and volatilities change.
The cash returns we actually realize on our derivatives may be different from the fair values that we estimate. For derivatives
in an asset position, our calculations of fair value include reserves of less than $1 million to reflect the credit risk of our
counterparties. For derivatives in a liability position, our calculations include reserves of $1 million to reflect our own credit
risk. For additional details on how we determine the fair values of our derivatives, see Note 2, Fair Value Measurements.
The types of contracts we typically classify as derivatives are interest rate swaps, financial transmission rights, fixed
price fuel contracts, natural gas futures, electricity swaps, and forward and option contracts for electricity, natural gas, and
foreign currencies. Most of our commodity purchase and sale contracts are not subject to derivative accounting under
SFAS No. 133 because:
• they do not have a notional amount (that is, a number of units specified in a derivative instrument, such as MWh of
electricity or bcf of natural gas),
• they qualify for the normal purchases and sales exception, or
• there is not an active market for the commodity.
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Our coal purchase contracts are not derivatives because there is not an active market for the coal we purchase. If an
active market for coal develops in the future, some of these contracts may qualify as derivatives. For Consumers, which is
subject to regulatory accounting, the resulting mark-to-market gains and losses would be offset by changes in regulatory
assets and liabilities and would not affect net income. For other CMS Energy subsidiaries, we do not believe the resulting
mark-to-market impact on earnings would be material.
CMS ERM Contracts: In order to support CMS Energy’s ongoing non-utility operations, CMS ERM enters into
contracts to purchase and sell electricity and natural gas in the future. These forward contracts are generally long-term in
nature and result in physical delivery of the commodity at a contracted price. To manage commodity price risks associated
with these forward purchase and sale contracts, CMS ERM also uses various financial instruments, such as swaps, options,
and futures.
In the past, CMS ERM generally classified all of its derivatives that result in physical delivery of commodities as non-
trading contracts and all of its derivatives that financially settle as trading contracts. Following the restructuring of our DIG
investment and the resulting streamlining of CMS ERM’s risk management activities in the first quarter of 2008, we
reevaluated the classification of CMS ERM’s derivatives as trading versus non-trading. We determined that all of CMS
ERM’s derivatives are held for purposes other than trading. Therefore, during 2008, we have classified all of CMS ERM’s
derivatives as non-trading derivatives.
Market Risk Information: We are exposed to market risks including, but not limited to, changes in interest rates,
commodity prices, foreign currency exchange rates, and equity security prices. We may enter into various risk management
contracts to limit our exposure to these risks, including swaps, options, futures, and forward contracts. We enter into these
contracts using established policies and procedures, under the direction of an executive oversight committee consisting of
senior management representatives and a risk committee consisting of business unit managers.
These contracts contain credit risk, which is the risk that our counterparties will fail to meet their contractual
obligations. We reduce this risk using established policies and procedures, such as evaluating our counterparties’ credit
quality and setting collateral requirements as necessary. If terms permit, we use standard agreements that allow us to net
positive and negative exposures associated with the same counterparty. Given these policies, our current exposures, and
our credit reserves, we do not expect a material adverse effect on our financial position or future earnings because of
counterparty nonperformance.
The following risk sensitivities illustrate the potential loss in fair value, cash flows, or future earnings from our financial
instruments, including our derivative contracts, assuming a hypothetical adverse change in market rates or prices of
10 percent. Potential losses could exceed the amounts shown in the sensitivity analyses if changes in market rates or prices
were to exceed 10 percent.
Interest Rate Risk: We are exposed to interest rate risk resulting from issuing fixed-rate and variable-rate financing
instruments, and from interest rate swap agreements. We use a combination of these instruments to manage this risk as
deemed appropriate, based upon market conditions. These strategies are designed to provide and maintain a balance
between risk and the lowest cost of capital.
Interest Rate Risk Sensitivity Analysis (assuming an increase in market interest rates of 10 percent):
De ce m be r 31 2008 2007
In Million s
Variable-rate financing — before-tax annual earnings exposure $ 1 $ 2
Fixed-rate financing — potential reduction in fair value(a) 208 172
(a) Fair value reduction could only be realized if we transferred all of our fixed-rate financing to other creditors.
Commodity Price Risk: Operating in the energy industry, we are exposed to commodity price risk, which arises from
fluctuations in the price of electricity, natural gas, coal, and other commodities. Commodity prices are influenced by a
number of factors, including weather, changes in supply and demand, and liquidity of commodity markets. In order to
manage commodity price risk, we may enter into various non-trading derivative contracts, such as forward purchase and
sale contracts, options, and swaps.
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Commodity Price Risk Sensitivity Analysis (assuming an adverse change in market prices of 10 percent):
De ce m be r 31 2008 2007
In Million s
Potential reduction in fair value:
Fixed price fuel contracts $ 1 $ —
Electricity swaps — 4
Natural gas swaps and futures 1 1
Investment Securities Price Risk: Our investments in debt and equity securities are exposed to changes in interest
rates and price fluctuations in equity markets. The following table shows the potential effect of adverse changes in interest
rates and fluctuations in equity prices on our available-for-sale investments.
Investment Securities Price Risk Sensitivity Analysis (assuming an adverse change in market prices of 10 percent):
De ce m be r 31 2008 2007
In Million s
Potential reduction in fair value of available-for-sale:
Equity securities $ 4 $ 6
Debt securities 1 —
(Primarily SERP investments)
For additional details on market risk and derivative activities, see Note 7, Financial and Derivative Instruments.
RETIREMENT BENEFITS
Pension: We have external trust funds to provide retirement pension benefits to our employees under a non-
contributory, defined benefit Pension Plan. On September 1, 2005, the defined benefit Pension Plan was closed to new
participants and we implemented the qualified DCCP, which provides an employer contribution of five percent of base pay
to the existing 401(k) plan. An employee contribution is not required to receive the plan’s employer cash contribution. All
employees hired on or after September 1, 2005 participate in this plan as part of their retirement benefit program. Previous
cash balance pension plan participants also participate in the DCCP as of September 1, 2005. Additional pay credits under
the cash balance pension plan were discontinued as of that date.
401(k): We provide an employer match in our 401(k) plan equal to 60 percent on eligible contributions up to the first
six percent of an employee’s wages.
OPEB: We provide postretirement health and life benefits under our OPEB plan to qualifying retired employees.
In accordance with SFAS No. 158, we record liabilities for pension and OPEB on our consolidated balance sheet at the
present value of the future obligations, net of any plan assets. We use SFAS No. 87 to account for pension expense and
SFAS No. 106 to account for other postretirement benefit expense. The calculation of the liabilities and associated expenses
requires the expertise of actuaries, and requires many assumptions, including:
• life expectancies,
• discount rates,
• expected long-term rate of return on plan assets,
• rate of compensation increases, and
• anticipated health care costs.
A change in these assumptions could change significantly our recorded liabilities and associated expenses.
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The following table provides an estimate of our pension cost, OPEB cost, and cash contributions for the next three
years:
Expe cte d Pe n sion C ost O PEB C ost Pe n sion C on tribu tion O PEB C on tribu tion
In Million s
2009 $ 101 $ 77 $ 300 $ 53
2010 91 74 127 53
2011 88 72 105 53
Contribution estimates include amounts required and discretionary contributions. Consumers’ pension and OPEB
costs are recoverable through our general ratemaking process. Actual future pension cost and contributions will depend on
future investment performance, changes in future discount rates, and various other factors related to the populations
participating in the Pension Plan.
Lowering the expected long-term rate of return on the Pension Plan assets by 0.25 percent (from 8.25 percent to
8.00 percent) would increase estimated pension cost for 2009 by $3 million. Lowering the discount rate by 0.25 percent (from
6.50 percent to 6.25 percent) would increase estimated pension cost for 2009 by $5 million.
For additional details on postretirement benefits, see Note 8, Retirement Benefits.
ACCOUNTING FOR ASSET RETIREMENT OBLIGATIONS

We are required to 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. We have legal obligations to remove some of our assets at the end of their useful lives. We
calculate the fair value of ARO liabilities using an expected present value technique that reflects assumptions about costs,
inflation, and profit margin that third parties would consider to assume the obligation. We did not include a market risk
premium in our ARO fair value estimates since a reasonable estimate could not be made.
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. Generally, our gas
transmission and electric and gas distribution assets have indeterminate lives and retirement cash flows that cannot be
determined. However, we have recorded an ARO for our obligation to cut, purge, and cap abandoned gas distribution mains
and gas services at the end of their useful lives. We have not recorded a liability for assets that have insignificant
cumulative disposal costs, such as substation batteries. For additional details, see Note 9, Asset Retirement Obligations.
CAPITAL RESOURCES AND LIQUIDITY

Factors affecting our liquidity and capital requirements include:
• results of operations,
• capital expenditures,
• energy commodity and transportation costs,
• contractual obligations,
• regulatory decisions,
• debt maturities,
• credit ratings,
• pension plan funding requirements,
• tendering of our convertible securities by holders for conversion,
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• working capital needs,

• collateral requirements, and
• access to credit markets.
During the summer months, we buy natural gas and store it for resale during the winter heating season. Although our
prudent natural gas costs are recoverable from our customers, the storage of natural gas as inventory requires additional
liquidity due to the lag in cost recovery.
Components of our cash management plan include controlling operating expenses and capital expenditures and
evaluating market conditions for financing opportunities, if needed. We have taken the following actions to strengthen our
liquidity:
• in September 2008, Consumers issued $350 million FMB, and
• in September 2008, Consumers entered into a $150 million revolving credit agreement.
In April 2008, we redeemed two of our tax-exempt debt issues with $96 million of refinancing proceeds and converted
$35 million of tax-exempt debt previously backed by municipal bond insurers to variable rate demand bonds, effectively
eliminating our variable rate debt backed by municipal bond insurers.
Despite the current market volatility, we expect to be able to continue to have access to the capital markets.
Consumers’ accounts receivable sales program is planned for renewal in May 2009. Of our $1.392 billion in letters of credit
and revolving credit facilities, $342 million are planned for renewal in 2009 and $1.050 billion are planned for renewal in 2012.
Our senior notes maturities are $300 million in 2010, $300 million in 2011 and $150 million in 2012. Consumers’ FMB maturities
are $350 million in 2009, $250 million in 2010 and $300 million in 2012. We believe that our current level of cash and our
anticipated cash flows from operating activities, together with access to sources of liquidity, will be sufficient to meet cash
requirements. If access to the capital markets is diminished or otherwise restricted, we would implement contingency plans
to address debt maturities that may include reduced capital spending. For additional details, see Note 5, Financings and
Capitalization.
In January 2009, the Board of Directors voted to increase the quarterly common stock dividend from $0.09 per share to
$0.125 per share, for the first quarter of 2009. The dividend is payable February 27, 2009 to shareholders of record on
February 6, 2009.
CASH POSITION, INVESTING, AND FINANCING
Our operating, investing, and financing activities meet consolidated cash needs. At December 31, 2008, we had
$248 million of consolidated cash, which includes $35 million of restricted cash and $9 million held by entities consolidated
under FIN 46(R).
Our primary ongoing source of cash is dividends and other distributions from our subsidiaries. Consumers paid
$297 million in common stock dividends and Enterprises paid $950 million in common stock dividends, resulting from 2007
asset sales, to CMS Energy for the year ended December 31, 2008. For details on dividend restrictions, see Note 5,
Financings and Capitalization.
Our Consolidated Statements of Cash Flows include amounts related to discontinued operations through the date of
disposal. The sale of our discontinued operations had no material adverse effect on our liquidity, as we used the sales
proceeds to invest in our utility business and to reduce debt. For additional details on discontinued operations, see Note 3,
Asset Sales, Discontinued Operations and Impairment Charges.
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The following tables provide a summary of the major items affecting our cash flows from operating, investing and
financing activities:
Operating Activities:

In Million s
Net cash provided by operating activities $559 $ 25 $ 534 $ 25 $690 $ (665)
Net income (loss) $ 515 $ (136)
Non-cash operating activities(a) (154) 59
Accounts receivable and accrued revenue 371 (526)
Inventories (61) 95
Accounts payable 40 (2)
Postretirement benefits contributions 133 (115)
Shareholder class action settlement payment 125 (125)
Electric sales contract termination payment (275) —
MCV Partnership gas supplier funds on deposit — 147
Regulatory liabilities (64) (173)
Other assets and liabilities (96) 111
(a) Represents adjustments to reconcile net income (loss) to net cash provided by operating activities, including
depreciation and amortization, deferred income taxes, postretirement benefits expense, asset impairment charges, and
other non-cash charges.
2008 versus 2007: Cash provided by operating activities increased primarily as a result of increased earnings and the
timing of cash receipts from accounts receivable. We accelerate our collections from customer billings through the sale of
accounts receivable. We sold $325 million of accounts receivable at the end of 2006, which reduced our collections from
customers during 2007. We did not sell accounts receivable in 2007 and sold $170 million of accounts receivable during
2008. Also contributing to the increase in cash provided by operating activities were lower postretirement benefit
contributions, the absence, in 2008, of a payment made to settle a shareholder class action lawsuit, and other timing
differences. These increases were partially offset by a payment made by CMS ERM in February 2008 to terminate electric
sales contracts, refunds to customers of excess Palisades decommissioning funds, the impact of higher commodity prices
on inventory purchases, and increased accounts receivable billings at the end of 2008 due to regulatory actions and
weather-driven demand.
2007 versus 2006: Cash provided by operating activities decreased primarily as result of decreased earnings and the
absence, in 2007, of the sale of accounts receivable. Also contributing to the decrease in cash provided by operating
activities were payments made to fund our Pension Plan and to settle a shareholder class action lawsuit, refunds to
customers of excess Palisades decommissioning funds, and reduced cash distributions from international investments sold
during 2007. These decreases were partially offset by a decrease in expenditures for gas inventory, as the milder winter in
2006 allowed us to accumulate more gas in our storage facilities, the absence of the release of the MCV Partnership gas
supplier funds on deposit due to the sale of our interest in the MCV Partnership in 2006, and other timing differences.
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Investing Activities:

In Million s
Net cash provided by (used in) investing activities $(839) $662 $ (1,501) $662 $(751) $ 1,413
Proceeds from asset sales, net of cash relinquished $ (1,601) $ 1,683
Proceeds from nuclear decommissioning trust funds (333) 311
Capital expenditures 471 (593)
Other investing (38) 12
Total change $ (1,501) $ 1,413
2008 versus 2007: The increase in net cash used in investing activities reflects the absence, in 2008, of proceeds from
asset sales and from our nuclear decommissioning trust funds. This increase was partially offset by a decrease in capital
expenditures resulting from the absence of the Zeeland power plant purchase made in 2007.
2007 versus 2006: The increase in cash provided by investing activities was primarily due to proceeds from asset
sales and the dissolution of our nuclear decommissioning trust funds. These changes were partially offset by an increase in
capital expenditures primarily due to the purchase of the Zeeland power plant.
For additional details on asset sales, see Note 3, Asset Sales, Discontinued Operations and Impairment Charges.
Financing Activities:

In Million s
Net cash provided by (used in) financing activities $145 $(692) $ 837 $(692) $(436) $ (256)
Proceeds from notes, bonds and other long-term debt $ 881 $ 415
Retirement of notes, bonds and other long-term debt (35) (602)
Other financing (9) (69)
2008 versus 2007: The increase in net cash provided by financing activities was primarily due to an increase in
proceeds from the issuance of long-term debt.
2007 versus 2006: The increase in cash used in financing activities was primarily due to an increase in net debt
retirements and the payment of common stock dividends.
Restrictive Covenants: Our senior notes indenture requires us to maintain a minimum interest coverage ratio, as
defined. Our $550 million revolving credit agreement requires us to maintain a maximum debt to EBITDA (Earnings Before
Interest, Taxes, Depreciation, and Amortization) ratio, as defined, and a minimum interest coverage ratio, as defined.
Consumers’ credit agreements require it to maintain a maximum debt to capital ratio, as defined. At December 31, 2008, we
were in compliance with these requirements as detailed in the following table:
(1) Minim u m Re su lt at
(2) Maxim u m De ce m be r 31,
C re dit Agre e m e n t or Facility Ratio Re qu ire m e n t 2008
CMS senior notes indenture Interest Coverage (1)1.7 to 1.0 3.89 to 1.0
CMS revolving credit agreement Debt to EBITDA (2)7.0 to 1.0 4.71 to 1.0
CMS revolving credit agreement Interest Coverage (1)1.2 to 1.0 4.45 to 1.0
Consumers’ credit agreements Debt to Capital (2)0.7 to 1.0 0.52 to 1.0
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Credit Ratings: Our access to capital markets and costs of financing are influenced by the ratings of our securities.
The following table displays our securities ratings along with those of Consumers as of December 31, 2008. The ratings
outlook from S&P (Standard and Poor’s Rating Services),Moody’s (Moody’s Investor Services, Inc.) and Fitch (Fitch
Ratings) on all securities is stable.
Issu e r S e cu ritie s S &P Moody’s Fitch
CMS Energy Senior Unsecured Debt BB+ Ba1 BB+
CMS Energy Secured Bank Credit Facilities − Baa3 BBB-
CMS Energy Trust Preferred Securities BB Ba2 BB
(Long-term debt - related parties)
Consumers Senior Secured Debt (FMB) BBB Baa1 BBB+
Consumers Senior Unsecured Debt BBB- Baa2 BBB
Consumers Securitization Bonds AAA Aaa AAA
Consumers Senior Secured Insured Quarterly Notes AAA Aaa AAA
Consumers Tax Exempt Bonds BBB Baa1 −
Consumers Tax Exempt Bonds, LOC backed AAA Aaa −
For additional details on long-term debt activity, see Note 5, Financings and Capitalization.
OBLIGATIONS AND COMMITMENTS

Contractual Obligations: The following table summarizes our contractual cash obligations for each of the periods
presented. The table shows the timing of the obligations and their expected effect on our liquidity and cash flow in future
periods. The table excludes all amounts classified as current liabilities on our Consolidated Balance Sheets, other than the
current portion of long-term debt and capital and finance leases.
Paym e n ts Due
Le ss Th an O n e to Th re e to More Th an
C on tractu al O bligation s at De ce m be r 31, 2008 Total O n e Ye ar Th re e Ye ars Five Ye ars Five Ye ars
In Million s
Long-term debt(a) $ 6,348 $ 489 $ 1,037 $ 1,197 $ 3,625
Long-term debt — related parties(a) 178 — — — 178
Interest payments on long-term debt(b) 2,707 341 591 461 1,314
Capital and finance leases(c) 231 25 47 41 118
Interest payments on capital and finance leases(d) 122 13 25 22 62
Operating leases(e) 237 27 51 44 115
Purchase obligations(f) 14,699 2,201 2,391 1,545 8,562
Total contractual obligations $24,522 $ 3,096 $ 4,142 $ 3,310 $ 13,974
(a) Principal amounts due on outstanding debt obligations, current and long-term, at December 31, 2008. For additional
details on long-term debt, see Note 5, Financings and Capitalization.
(b) Currently scheduled interest payments on both variable and fixed-rate long-term debt and long-term debt — related
parties, current and long-term. Variable interest payments are based on contractual rates in effect at December 31,
2008.
(c) Principal portion of lease payments under our capital and finance leases, comprised mainly of leased service vehicles,
leased office furniture, and certain power purchase agreements.
(d) Imputed interest on the capital leases.
(e) Minimum noncancelable lease payments under our leases of railroad cars, certain vehicles, and miscellaneous office
buildings and equipment, which are accounted for as operating leases.
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(f) Long-term contracts for purchase of commodities and services. These obligations include operating contracts used to
assure adequate supply with generating facilities that meet PURPA requirements. These commodities and services
include:
• natural gas and associated transportation,
• electricity, and
• coal and associated transportation.
Our purchase obligations include long-term power purchase agreements with various generating plants, which require
us to make monthly capacity payments based on the plants’ availability or deliverability. These payments will approximate
$36 million per month during 2009. If a plant is not available to deliver electricity, we will not be obligated to make these
payments for that period. For additional details on power supply costs, see “Electric Utility Results of Operations” within
this MD&A and Note 4, Contingencies, “Consumers’ Electric Utility Rate Matters — Power Supply Costs.”
Revolving Credit Facilities: For details on our revolving credit facilities, see Note 5, Financings and Capitalization.
Sale of Accounts Receivable: Under its revolving accounts receivable sales program, Consumers may sell up to
$250 million of eligible accounts receivable at December 31, 2008, reduced from $325 million at December 31, 2007.
Capital Expenditures: For planning purposes, we forecast capital expenditures over a three-year period. We review
these estimates and may revise them, periodically, due to a number of factors including environmental regulations, business
opportunities, market volatility, economic trends, and the ability to access capital. The following is a summary of our
estimated capital expenditures, including lease commitments, for 2009 through 2011:
Ye ars En ding De ce m be r 31 2009 2010 2011
In Million s
Electric utility operations(a)(b) $574 $ 847 $705
Gas utility operations(b) 276 287 251
Enterprises 1 1 —
Total $851 $1,135 $956
(a) These amounts include estimates for capital expenditures that may be required by revisions to the Clean Air Act’s
national air quality standards or potential renewable energy programs.
(b) These amounts include estimates for capital expenditures related to information technology projects, facility
improvements, and vehicle leasing.
OFF-BALANCE SHEET ARRANGEMENTS

CMS Energy and certain of its subsidiaries enter into various arrangements in the normal course of business to
facilitate commercial transactions with third parties. These arrangements include indemnifications, surety bonds, letters of
credit, and financial and performance guarantees. Indemnifications are usually agreements to reimburse a counterparty that
may incur losses due to outside claims or breach of contract terms. The maximum payment we would be required to make
under a number of these indemnities is not estimable. While we believe it is unlikely that we will incur any material losses
related to indemnifications we have not recorded as liabilities, we cannot predict the impact of these contingent obligations
on our liquidity and financial condition. For additional details on these and other guarantee arrangements, see Note 4,
Contingencies, Other Contingencies — Indemnifications.
OUTLOOK
CORPORATE OUTLOOK
In the future, we will focus our strategy on continuing investment in our utility business, growing earnings while
controlling operating costs and parent debt, and maintaining principles of safe, efficient operations, customer value, fair and
timely regulation, and consistent financial performance.
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Our primary focus will be to continue to invest in our utility system to enable us to meet our customer commitments, to
comply with increasingly demanding environmental performance standards, to improve system performance, and to
maintain adequate supply and capacity. Our primary focus with respect to our non-utility businesses will be to optimize
cash flow and to maximize the value of our assets.
ELECTRIC UTILITY BUSINESS OUTLOOK

Balanced Energy Initiative: Our Balanced Energy Initiative is a comprehensive energy resource plan to meet our
projected short-term and long-term electric power requirements through:
• energy efficiency,
• demand management,
• expanded use of renewable energy, and
• development of new power plants and pursuit of additional power purchase agreements to complement existing
generating sources.
Our Balanced Energy Initiative includes our plan to build an 800 MW advanced clean coal-based plant at our
Karn/Weadock Generating complex near Bay City, Michigan. We expect the plant to be in operation in 2017. Legislation
enacted in Michigan in October 2008 provided guidelines with respect to the MPSC review and approval of energy resource
plans and proposed power plants. We plan to file a new case with the MPSC that conforms to the new legislation.
Proposed Coal Plant Projects: In February 2009, the Michigan governor issued an executive directive that set forth
additional requirements for the issuance of a permit to install a coal-based electric generating plant in the state of Michigan.
The directive requires the MDEQ, before issuing an air permit for any coal-based electric generating plant, to consider,
among other things,
• whether additional generation is needed, and
• whether other feasible and prudent alternatives to a new coal plant exist that would better protect the environment,
including potential demand reduction measures and purchasing power from existing sources.
We are examining the legality of the directive, as well as its impact on our existing air permit application for our planned
advanced clean coal plant. The Michigan attorney general issued an opinion that invalidated the governor’s directive on
the basis that the governor’s directive exceeded the governor’s authority.
In February 2009, the Michigan governor also proposed a 45 percent reduction in the use of fossil fuel for electric
generation by 2020. The governor’s office has subsequently advised us that the 45 percent is only a suggested target, and
is intended to apply only to coal-based generation. If implemented, it will have a significant impact upon the operation and
cost of existing and planned future coal-based power plants.
We cannot predict the impact of the governor’s statements or other factors on our future power supply plans.
Electric Customer Revenue Outlook: Michigan’s economy has suffered from closures and restructuring of automotive
manufacturing facilities and those of related suppliers and from the depressed housing market. The Michigan economy also
has been harmed by the current volatility in the credit markets. Although our electric utility results are not dependent
substantially upon a single customer, or even a few customers, those in the automotive sector represented four percent of
our total 2008 electric revenue and two and a half percent of our 2008 electric operating income. We cannot predict the
financial impact of the Michigan economy on our electric customer revenue.
Electric Deliveries: We experienced a decrease in electric deliveries of approximately 3.5 percent in 2008 compared
with 2007, or 2.0 percent excluding impacts from differences in weather. This decrease reflects a decline in industrial
economic activity and the cancellation of one wholesale customer contract. For 2009, we expect a decrease in electric
deliveries of 2.5 percent compared with 2008, or 2.1 percent excluding impacts from differences in weather. Our outlook for
2009 includes continuing growth in deliveries to our largest-growing customer, which produces semiconductor and solar
energy components. Excluding this customer’s growth, we expect electric
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deliveries in 2009 to decline 3.4 percent compared with 2008 or 3.0 percent excluding impacts from differences in weather.
Our outlook reflects reduced deliveries associated with our investment in energy efficiency programs included in the
recently enacted legislation, as well as recent projections of Michigan economic conditions.
After 2009, we anticipate economic conditions to stabilize, resulting in modestly growing deliveries of electricity. We
expect deliveries to grow on average about 0.8 percent annually over the period from 2009 to 2014. This growth rate also
includes expected results of energy efficiency programs and both full-service sales and delivery service to customers who
choose to buy generation service from an alternative electric supplier, but transactions with other wholesale market
participants are not included. Actual growth may vary from this trend due to the following:
• energy conservation measures and results of energy efficiency programs,
• fluctuations in weather, and
• changes in economic conditions, including utilization and expansion or contraction of manufacturing facilities,
population trends, and housing activity.
Electric Reserve Margin: To reduce the risk of high power supply costs during peak demand periods and to achieve
our Reserve Margin target, we purchase electric capacity and energy for the physical delivery of electricity primarily in the
summer months. We are currently planning for a Reserve Margin of 12.7 percent for summer 2009, or supply resources equal
to 112.7 percent of projected firm summer peak load. We have purchased capacity and energy covering our Reserve Margin
requirements for 2009 through 2010. Of the 2009 supply resources target, we expect 96.4 percent to come from our electric
generating plants and long-term power purchase contracts, with other capacity and energy contractual arrangements
making up the remainder. We expect capacity costs for these electric capacity and energy contractual arrangements to be
$15 million for 2009.
Electric Transmission Expenses: We expect the transmission charges we incur to increase by $55 million in 2009
compared with 2008 primarily due to a 25 percent increase in METC and Wolverine transmission rates. This increase was
included in our 2009 PSCR plan filed with the MPSC in September 2008.
The MPSC issued an order that allowed transmission expenses to be included in the PSCR process. The Attorney
General appealed the MPSC order to the Michigan Court of Appeals, which affirmed the MPSC order. The Attorney General
filed an application for leave to appeal with the Michigan Supreme Court, which was granted in September 2008. We cannot
predict the financial impact or outcome of this matter.
For additional details on the electric transmission expense litigation, see Note 4, Contingencies, “Consumers’ Electric
Utility Contingencies -Litigation.”
Renewable Energy Plan: Legislation enacted in Michigan in October 2008 prescribed renewable energy standards for
energy and capacity. The energy standard requires that 10 percent of our electric sales volume come from renewable
sources by 2015 with interim target requirements. Approximately four percent of our electric sales volume comes presently
from renewable sources. The legislation also requires us to add new renewable energy capacity of 200 MW by year-end
2013 and 500 MW by year-end 2015, from owned renewable energy sources or power purchased agreements. We have
secured more than 36,000 acres of land easements in Michigan’s Tuscola and Mason counties for potential wind generation
development and we are collecting presently wind speed and other meteorological data at the sites.
In February 2009, we filed our Renewable Energy Plan with the MPSC. The plan details how we will meet the renewable
energy standards for energy and capacity.
Energy Optimization Plan: Legislation enacted in Michigan in October 2008 requires utilities to prepare energy
optimization plans and achieve annual sales reduction targets beginning in 2009 through 2015. In February 2009, we filed
our Energy Optimization Plan with the MPSC, which details our proposed energy cost savings plan through incentives to
reduce customer usage among all customer classes and the method of recovery of program costs.
Ancillary Services: In January 2009, MISO implemented an ancillary services market for the purchase and sale of
regulation and contingency reserves. We include ancillary service costs in our PSCR.
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ELECTRIC UTILITY BUSINESS UNCERTAINTIES

Several electric business trends and uncertainties may affect our financial condition and future results of operations.
These trends and uncertainties could have a material impact on revenues and income from continuing electric operations.
Electric Environmental Estimates: Our operations are subject to various state and federal environmental laws and
regulations. Generally, we have been able to recover in customer rates our costs to operate our facilities in compliance with
these laws and regulations.
Clean Air Act: We continue to focus on complying with the federal Clean Air Act and numerous state and federal
regulations. We plan to spend $817 million for equipment installation through 2017 to comply with a number of
environmental regulations, including regulations limiting nitrogen oxides and sulfur dioxide emissions. We expect to recover
these costs in customer rates.
We plan to purchase additional nitrogen oxides emission allowances through 2010 at an estimated cost of $5 million per
year. We also plan to purchase sulfur dioxide emission allowances, between 2013 and 2015, at an expected cost ranging from
$9 million to $27 million per year. We expect to recover emissions allowance costs from our customers through the PSCR
process.
Clean Air Interstate Rule: In March 2005, the EPA adopted the CAIR, which required additional coal-based electric
generating plant emission controls for nitrogen oxides and sulfur dioxide. The CAIR was appealed to the U.S. Court of
Appeals for the District of Columbia. The court initially vacated the CAIR and the CAIR federal implementation plan in their
entirety, but subsequently, the court changed course and remanded the rule to the EPA maintaining the rule in effect
pending EPA revision. As a result, the CAIR still remains in effect, with the first annual nitrogen oxides compliance year
beginning January 1, 2009. The EPA must now revise the rule to resolve the court’s concerns. The court did not set a
timetable for the revision.
State and Federal Mercury Air Rules: In March 2005, the EPA issued the CAMR, which required initial reductions of
mercury emissions from coal-based electric generating plants by 2010 and further reductions by 2018. A number of states
and other entities appealed certain portions of the CAMR to the U.S. Court of Appeals for the District of Columbia. The
U.S. Court of Appeals for the District of Columbia decided the case in February 2008, and determined that the rules
developed by the EPA were not consistent with the Clean Air Act. The U.S. Supreme Court has been petitioned to review
this decision.
In April 2006, Michigan’s governor proposed a plan that would result in mercury emissions reductions of 90 percent by
2015. The MDEQ is reviewing public comments made in response to a newly released mercury emissions reduction
proposal. If this plan becomes effective, we estimate that the associated costs will be approximately $782 million by 2015.
Routine Maintenance Classification: The EPA has alleged that some utilities have incorrectly classified major plant
modifications as RMRR rather than seeking permits from the EPA to modify their plants. We responded to information
requests from the EPA on this subject in 2000, 2002, and 2006. We believe that we have properly interpreted the
requirements of RMRR. In October 2008, we received another information request from the EPA under Section 114 of the
Clean Air Act. We responded to this information request in December 2008.
In addition to the EPA’s information request, in October 2008, we received a NOV for three of our coal-based facilities
relating to violations of NSR regulations, alleging ten projects from 1986 to 1998 were subject to NSR review. We met with
the EPA in January 2009 and have additional meetings scheduled. If the EPA does not accept our interpretation of RMRR,
we could be required to install additional pollution control equipment at some or all of our coal-based electric generating
plants, surrender emission allowances, engage in supplemental environmental programs or pay fines. Additionally, we
would need to assess the viability of continuing operations at certain plants. We cannot predict the financial impact or
outcome of this matter.
Greenhouse Gases: The United States Congress has introduced proposals that would require reductions in emissions
of greenhouse gases, including carbon dioxide. We consider it likely that Congress will enact greenhouse gas legislation,
but the form of any final bill is difficult to predict. These laws, or similar state laws or rules, if enacted, could require us to
replace equipment, install additional equipment for emission controls, purchase
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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, we expect to have an opportunity to recover these costs and capital
expenditures in rates consistent with the recovery of other reasonable costs of complying with environmental laws and
regulations.
In July 2008, the EPA published an Advance Notice of Proposed Rulemaking to present possible options for regulating
greenhouse gases under the Clean Air Act, as well as to solicit comments and additional ideas. We submitted comments to
the EPA on this issue in November 2008. In addition to the potential for federal actions related to greenhouse gas
regulation, the State of Michigan has convened the Michigan Climate Action Council, a climate change stakeholder
process. Michigan is also a signatory participant in the Midwest Governors Greenhouse Gas Reduction Accord process.
We cannot predict the extent or the likelihood of any actions that could result from these state and regional processes.
Water: In July 2004, the EPA issued rules that govern existing electric generating plant cooling water intake systems.
These rules require a significant reduction in the number of fish harmed by intake structures at existing power plants. The
EPA compliance options in the rule were challenged before the U.S. Court of Appeals for the Second Circuit, which
remanded the bulk of the rule back to the EPA for reconsideration in January 2007. In April 2008, the U.S. Supreme Court
agreed to hear an industry challenge to the appellate court ruling in this case. A decision from the U.S Supreme Court is
expected in the first half of 2009. The EPA is planning to issue a revised draft rule in 2009, following the court decision.
We estimate that capital expenditures to comply with these regulations will be approximately $128 million; however an
unfavorable U.S. Supreme Court decision could increase expenditures significantly.
We will continue to monitor these developments and respond to their potential implications for our business,
consolidated results of operations, cash flows, and financial position. For additional details on electric environmental
matters, see Note 4, Contingencies, “Consumers’ Electric Utility Contingencies - Electric Environmental Matters.”
Stranded Cost Recovery: In October 2008, the Michigan legislature enacted legislation that amended the Customer
Choice Act and directed the MPSC to approve rates that will allow recovery of Stranded Costs within five years. In January
2009, we filed an application with the MPSC requesting recovery of these Stranded Costs through a surcharge on both full
service and ROA customers. At December 31, 2008, we had a regulatory asset for Stranded Costs of $71 million.
Electric Rate Case: In November 2008, we filed an application with the MPSC seeking an annual increase in revenue of
$214 million based on an 11 percent authorized return on equity. The filing seeks recovery of costs associated with new
plant investments including Clean Air Act investments, higher operating and maintenance costs, and the approval to
recover costs associated with our advanced metering infrastructure program. The Michigan legislation enacted in October
2008 generally allows utilities to self-implement rates six months after filing, subject to refund, unless the MPSC finds good
cause to prohibit such self-implementation. We cannot predict the financial impact or outcome of this proceeding.
Palisades Regulatory Proceedings: We sold Palisades to Entergy in April 2007. The MPSC order approving the
transaction required that we credit $255 million of excess sale proceeds and decommissioning amounts to our retail
customers by December 2008. There are additional excess sales proceeds and decommissioning fund balances of
$109 million above the amount in the MPSC order. The distribution of these funds is still pending with the MPSC.
For additional details on electric rate matters, see Note 4, Contingencies, “Consumers’ Electric Utility Rate Matters.”
GAS UTILITY BUSINESS OUTLOOK

Gas Deliveries: For 2009, we expect gas deliveries to decrease by 3.4 percent compared with 2008, or 4.7 percent,
excluding impacts from differences in weather, due to continuing conservation and overall economic
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conditions in Michigan. We expect gas deliveries to average a decline of less than 1.6 percent annually over the next five
years. Actual delivery levels from year to year may vary from this trend due to the following:
• fluctuations in weather,
• use by independent power producers,
• availability and development of renewable energy sources,
• changes in gas prices,
• Michigan economic conditions including population trends and housing activity,
• the price of competing energy sources or fuels, and
• energy efficiency and conservation.
GAS UTILITY BUSINESS UNCERTAINTIES

Several gas business trends and uncertainties may affect our future financial results and financial condition. These
trends and uncertainties could have a material impact on future revenues and income from gas operations.
Gas Environmental Estimates: We expect to incur investigation and remedial action costs at a number of sites,
including 23 former manufactured gas plant sites. For additional details, see Note 4, Contingencies, “Consumers’ Gas Utility
Contingencies — Gas Environmental Matters.”
Gas Cost Recovery: The GCR process is designed to allow us to recover all of our purchased natural gas costs if
incurred under reasonable and prudent policies and practices. The MPSC reviews these costs, policies, and practices for
prudence in annual plan and reconciliation proceedings. For additional details on GCR, see Note 4, Contingencies,
“Consumers’ Gas Utility Rate Matters — Gas Cost Recovery.”
Gas Depreciation: On August 1, 2008, we filed a gas depreciation case using 2007 data with the MPSC-ordered
variations on traditional cost-of-removal methodologies. In December 2008, the MPSC approved a partial settlement
agreement allowing us to implement the filed depreciation rates, on an interim basis, concurrent with the implementation of
settled rates in our 2008 gas rate case. The interim depreciation rates reduce our depreciation expense by approximately
$20 million per year and will remain in effect until a final order is issued in our gas depreciation case. If a final order in our
gas depreciation case is not issued concurrently with a final order in a general gas rate case, the MPSC may incorporate the
results of the depreciation case into general gas rates through a surcharge, which may be either positive or negative.
Lost and Unaccounted for Gas: Gas utilities typically lose a portion of gas as it is injected into and withdrawn from
storage and sent through transmission and distribution systems. We recover the cost of lost and unaccounted for gas
through general rate cases, which have traditionally provided for recovery based on an average of the previous five years
of actual losses. To the extent that we experience lost and unaccounted for gas that exceeds the previous five-year average,
we may be unable to recover these amounts in rates.
ENTERPRISES OUTLOOK
Our primary focus with respect to our remaining non-utility businesses is to optimize cash flow and maximize the value
of our assets.
In connection with the sale of our Argentine and Michigan assets to Lucid Energy in March 2007, we entered into
agreements that granted MEI, an affiliate of Lucid Energy, rights to certain awards or proceeds that we could receive in the
future. At December 31, 2008, $7 million remains as a deferred credit on our Consolidated Balance Sheets related to MEI’s
right to proceeds that Enterprises will receive if it sells its stock interest in CMS Generation San Nicolas Company.
Enterprises Uncertainties: Trends and uncertainties that could have a material impact on our consolidated income,
cash flows, or balance sheet include:
• the impact of indemnity and environmental remediation obligations at Bay Harbor,
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• the outcome of certain legal proceedings,

• the impact of representations, warranties, and indemnities we provided in connection with the sales of our
international assets, and
• 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.
For additional details regarding Enterprises Uncertainties, see Note 4, Contingencies and Part I, Item 3. Legal
Proceedings.
OTHER OUTLOOK
Advanced Metering Infrastructure: We are developing an advanced metering system that will provide enhanced
controls and information about our customer energy usage and notification of service interruptions. The system also will
allow customers to make decisions about energy efficiency and conservation, provide other customer benefits, and reduce
costs. We expect to develop integration software and pilot new technology over the next two to three years, and incur
capital expenditures of approximately $800 million over the next seven years for the full deployment of these “smart meters.”
Emergency Shutoff Protection Rules: In February 2009, the MPSC issued rules that would put additional emergency
shutoff protections and service limitation protections in place for our residential electric and natural gas customers. The
protection exceeds previous shutoff rules as follows:
• extends the protection period from March 31, 2009 to April 30, 2009,
• includes protection for physically or mentally disabled customers of record,
• expands the qualifications for low income shutoff protection, and
• gives customers the payment options.
We are presently evaluating the impacts of these rules on our cash flows and financial position.
Litigation and Regulatory Investigation: We are the subject of an investigation by the DOJ regarding inaccurate
pricing information provided by CMS MST to certain market publications. Also, we are named as a party in various
litigation matters including, but not limited to, several lawsuits regarding alleged false natural gas price reporting and price
manipulation and the appeal initiated by Quicksilver in the Texas Court of Appeals. Additionally, the SEC is investigating
the actions of former CMS Energy subsidiaries in relation to Equatorial Guinea. For additional details regarding these and
other matters, see Note 4, Contingencies and Part I, Item 3. Legal Proceedings.
Emergency Economic Stabilization Act of 2008 — Mark-to-Market Accounting: In October 2008, President Bush
signed into law a $700 billion economic recovery plan. The plan included a provision authorizing the SEC to suspend the
application of SFAS No. 157 for any issuer with respect to any class or category of transaction as deemed necessary. In
addition, the SEC was required to conduct a study on mark-to-market accounting (fair value accounting), including its
possible impacts on recent bank failures, along with a consideration of alternative accounting treatments. In late December
2008, the SEC submitted a report on its study to Congress. The report concluded that mark-to-market accounting was not a
major factor in recent bank failures, and recommended that existing fair value and mark-to-market accounting requirements
remain in place. The report included recommendations for improving fair value accounting and reporting. We apply this
accounting primarily to our derivative instruments and our SERP investments, and we will continue to monitor
developments relating to the SEC report, including reactions and responses to the report’s recommendations, for potential
impact to us.
EnerBank: EnerBank, a wholly owned subsidiary representing one percent of CMS Energy’s net assets, is a state-
chartered, FDIC-insured industrial bank providing unsecured home improvement loans. The carrying value of EnerBank’s
loan portfolio was $190 million at December 31, 2008 and was funded by deposit liabilities of $176 million. Twelve-month
rolling average default rates on loans held by EnerBank have risen from 1.0 percent at
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December 31, 2007 to 1.4 percent at December 31, 2008. Due to recent economic events, EnerBank expects the level of loan
defaults to continue to increase throughout 2009 and into 2010, returning to lower levels thereafter.
IMPLEMENTATION OF NEW ACCOUNTING STANDARDS

SFAS No. 157, Fair Value Measurements: This standard, which was effective for us January 1, 2008, defines fair
value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The
implementation of this standard did not have a material effect on our consolidated financial statements. For additional
details on our fair value measurements, see Note 2, Fair Value Measurements.
SEC / FASB Guidance on Fair Value Measurements: In September 2008, in response to concerns about fair value
accounting and its possible role in the recent declines in the financial markets, the SEC Office of the Chief Accountant and
the FASB staff jointly released additional guidance on fair value measurements. The guidance, which was effective for us
upon issuance, did not change or conflict with the fair value principles in SFAS No. 157, but rather provided further
clarification on how to value a financial asset in an illiquid market. This guidance had no impact on our fair value
measurements.
FSP FAS 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active: In
October 2008, the FASB issued this standard, effective for us for the quarter ended September 30, 2008. The standard
clarifies the application of SFAS No. 157 in measuring financial assets in illiquid markets and is consistent with the guidance
issued by the SEC and the FASB as discussed in the preceding paragraph, but an example is provided to illustrate the
concepts. The standard was to be applied prospectively. The guidance in this standard did not impact our fair value
measurements.
SFAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans — an
amendment of FASB Statements No. 87, 88, 106, and 132(R): In September 2006, the FASB issued SFAS No. 158. Phase
one of this standard, implemented in December 2006, required us to recognize the funded status of our defined benefit
postretirement plans on our Consolidated Balance Sheets at December 31, 2006. Phase two, implemented in January 2008,
required us to change our plan measurement date from November 30 to December 31, effective for the year ending
December 31, 2008. For additional details, see Note 8, Retirement Benefits.
SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, Including an amendment to
FASB Statement No. 115: This standard, which was effective for us January 1, 2008, gives us the option to measure certain
financial instruments and other items at fair value, with changes in fair value recognized in earnings. We have not elected
the fair value option for any financial instruments or other items.
FSP FIN 39-1, Amendment of FASB Interpretation No. 39: This standard, which was effective for us January 1, 2008,
permits us to offset the fair value of derivative instruments held under master netting arrangements with cash collateral
received or paid for those derivatives. Adopting this standard resulted in an immaterial reduction to both our total assets
and total liabilities. There was no impact on earnings from adopting this standard. We applied the standard retrospectively
for all periods presented in our consolidated financial statements. For additional details, see Note 7, Financial and Derivative
Instruments.
EITF Issue 06-11, Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards: This standard,
which was effective for us January 1, 2008, requires companies to recognize, as an increase to additional paid-in capital, the
income tax benefit realized from dividends or dividend equivalents that are charged to retained earnings and paid to
employees for non-vested equity-classified employee share-based payment awards. This standard did not have a material
effect on our consolidated financial statements.
FSP FAS 133-1 and FIN 45-4, Disclosures about Credit Derivatives and Certain Guarantees: An Amendment of
FASB Statement No. 133 and FASB Interpretation No. 45; and Clarification of the Effective Date of FASB Statement
No. 161: In September 2008, the FASB issued this standard, effective for us December 31, 2008. This standard amended
SFAS No. 133 and FIN 45 to require enhanced disclosures for issuers of credit derivatives and financial guarantees. We
have not issued any credit derivatives; thus, this standard applies only to our disclosures about guarantees we have
issued. This standard involves disclosures only, and did not
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have a material effect on our consolidated financial statements. For additional details on our guarantees, see Note 4,
Contingencies.
FSP FAS 140-4 and FIN 46(R)-8, Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets
and Interests in Variable Interest Entities: This standard, which was effective for us for the year ended December 31, 2008,
requires companies to provide additional details about their continuing involvement with transferred financial assets and
their involvement with VIEs. This standard involves disclosures only, and did not impact our consolidated income, cash
flows, or financial position. For additional details, see Note 5, Financings and Capitalization, “Sale of Accounts Receivable,”
and Note 17, Consolidation of Variable Interest Entities.
NEW ACCOUNTING STANDARDS NOT YET EFFECTIVE

SFAS No. 141(R), Business Combinations: In December 2007, the FASB issued SFAS No. 141(R), which replaces
SFAS No. 141, Business Combinations. SFAS No. 141(R) establishes how an acquiring entity should measure and recognize
assets acquired, liabilities assumed, and noncontrolling interests acquired through a business combination. The standard
also establishes how goodwill or gains from bargain purchases should be measured and recognized, and what information
the acquirer should disclose to enable users of the financial statements to evaluate the nature and financial effects of a
business combination. Costs of an acquisition are to be recognized separately from the business combination. We will
apply SFAS No. 141(R) prospectively to any business combination for which the date of acquisition is on or after January 1,
2009.
SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements — an amendment to ARB No. 51: In
December 2007, the FASB issued SFAS No. 160, effective for us January 1, 2009. Under this standard, ownership interests in
subsidiaries held by third parties, which are currently referred to as minority interests, will be presented as noncontrolling
interests and shown separately on our Consolidated Balance Sheets within equity. In addition, net income (loss)
attributable to noncontrolling interests will be included in net income on our Consolidated Statements of Income (Loss).
These changes involve presentation only, and will not otherwise impact our consolidated financial statements. The
standard will also affect the accounting for changes in a parent’s ownership interest, including deconsolidation of a
subsidiary. We will apply these provisions of SFAS No. 160 prospectively to any such transactions.
SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB
Statement No. 133: In March 2008, the FASB issued SFAS No. 161, effective for us January 1, 2009. This standard requires
entities to provide enhanced disclosures about how and why derivatives are used, how derivatives and related hedged
items are accounted for under SFAS No. 133, and how derivatives and related hedged items affect the entity’s financial
position, financial performance, and cash flows. This standard will not have a material effect on our consolidated financial
statements.
FSP FAS 142-3, Determination of the Useful Life of Intangible Assets: In April 2008, the FASB issued FSP FAS 142-
3, effective for us January 1, 2009. This standard amends SFAS No. 142 to require expanded consideration of expected
future renewals or extensions of intangible assets when determining their useful lives. This standard will be applied
prospectively for intangible assets acquired after the effective date. This standard will not have a material impact on our
consolidated financial statements.
FSP APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled In Cash Upon Conversion
(Including Partial Cash Settlement): In May 2008, the FASB issued FSP APB 14-1, effective for us January 1, 2009 with
retrospective application required. This standard will apply to our convertible debt securities, and will require us to account
for the liability and equity components of these securities separately and in a manner that will reflect our borrowing rate for
nonconvertible debt. We expect that the retrospective implementation of this standard will result in a reduction of Long-
term debt of approximately $22 million, an increase in Current deferred income tax liabilities of approximately $3 million, an
increase of Non-current deferred income tax liabilities of $6 million, an increase of Other paid-in capital of approximately
$37 million, and an increase of Accumulated deficit of approximately $24 million as of January 1, 2009. We further expect that
the implementation of this standard will increase reported interest expense, net of taxes, by approximately $4 million in 2009.
For additional details on our convertible debt instruments, see Note 5, Financings and Capitalization.
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FSP EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities: In June 2008, the FASB issued FSP EITF 03-6-1, effective for us January 1, 2009 with retrospective
application required. Under this standard, share-based payment awards that accrue cash dividends when common
shareholders receive dividends are considered participating securities if the dividends do not need to be returned to the
company when the employee forfeits the award. This standard will apply to our outstanding unvested restricted stock
awards, which will be considered participating securities and thus will be included in the computation of basic EPS. Had this
standard been in place in 2008, it would have reduced 2008 basic and diluted EPS by approximately $0.01. We consider this
figure to be representative of the potential impact of this standard on future years’ EPS.
EITF Issue 07-5, Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own
Stock: In June 2008, the FASB ratified EITF Issue 07-5, effective for us January 1, 2009. This standard establishes criteria for
determining whether freestanding instruments or embedded features are considered “indexed to an entity’s own stock” for
the purpose of assessing potential derivative accounting or balance sheet classification issues. The standard applies to all
outstanding instruments at January 1, 2009, with any transition impacts recognized as a cumulative effect adjustment to the
opening balance of retained earnings. This guidance applies to the equity conversion features in our contingently
convertible senior notes and preferred stock. These conversion features have been exempted from derivative accounting
because they are indexed to our own stock and would be classified in stockholders’ equity. These features are still
considered indexed to our own stock under this new guidance, and thus, this standard will have no impact on our
EITF Issue 08-5, Issuer’s Accounting for Liabilities Measured at Fair Value with a Third-Party Credit
Enhancement: In September 2008, the FASB ratified EITF Issue 08-5, effective for us January 1, 2009. This guidance
concludes that the fair value measurement of a liability should not consider the effect of a third-party credit enhancement or
guarantee supporting the liability. The fair value of the liability should thus reflect the credit standing of the issuer and
should not be adjusted to reflect the credit standing of a third-party guarantor. The standard is to be applied prospectively.
This standard will not have a material impact on our consolidated financial statements.
FSP FAS 132(R)-1, Employers’ Disclosures about Postretirement Benefit Plan Assets: In December 2008, the FASB
issued this standard, effective for us for the year ending December 31, 2009. The standard requires expanded annual
disclosures about the plan assets in our defined benefit pension and OPEB plans. The required disclosures include
information about investment allocation decisions, major categories of plan assets, the inputs and valuation techniques
used in the fair value measurements, the effects of significant unobservable inputs on changes in plan assets, and
significant concentrations of risk within plan assets. The standard involves disclosures only, and will not impact our
consolidated income, cash flows, or financial position.
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CONSOLIDATED STATEMENTS OF INCOME (LOSS)
Ye ars En de d De ce m be r 31
2008 2007 2006
In Million s
Operating Revenue $6,821 $6,464 $6,126
Earnings from Equity Method Investees 5 40 89
Operating Expenses
Fuel for electric generation 600 523 711
Fuel costs mark-to-market at the MCV Partnership — — 204
Purchased and interchange power 1,335 1,407 709
Cost of gas sold 2,277 2,172 2,131
Electric sales contract termination — 279 —
Other operating expenses 837 976 1,136
Maintenance 193 201 297
Depreciation and amortization 589 540 550
General taxes 204 222 151
Asset impairment charges, net of insurance recoveries — 204 459
Gain on asset sales, net (9) (21) (79)
6,026 6,503 6,269
Operating Income (Loss) 800 1 (54)
Other Income (Deductions)
Interest and dividends 30 96 76
Regulatory return on capital expenditures 33 31 26
Other income 15 41 31
Other expense (37) (39) (21)
41 129 112
Fixed Charges
Interest on long-term debt 349 382 448
Interest on long-term debt — related parties 14 14 15
Other interest 33 48 27
Capitalized interest (4) (6) (10)
Preferred dividends of subsidiaries — — 3
392 438 483
Income (Loss) Before Income Taxes 449 (308) (425)
Income Tax Expense (Benefit) 142 (195) (188)
Income (Loss) Before Minority Interests (Obligations), Net 307 (113) (237)
Minority Interests (Obligations), Net 7 13 (104)
Income (Loss) From Continuing Operations 300 (126) (133)
Income (Loss) From Discontinued Operations, Net of Tax (Tax Benefit) of $1, $(1), and
$32 — (89) 54
Net Income (Loss) 300 (215) (79)
Preferred Dividends 11 11 11
Redemption Premium on Preferred Stock — 1 —
Net Income (Loss) Available to Common Stockholders $ 289 $ (227) $ (90)
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2008 2007 2006
In Million s, Exce pt Pe r
S h are Am ou n ts
CMS Energy
Net Income (Loss)
Net Income (Loss) Available to Common Stockholders $ 289 $ (227) $ (90)
Basic Earnings (Loss) Per Average Common Share
Income (Loss) from Continuing Operations $ 1.29 $ (0.62) $ (0.66)
Income (Loss) from Discontinued Operations — (0.40) 0.25
Net Income (Loss) Attributable to Common Stock $ 1.29 $ (1.02) $ (0.41)
Diluted Earnings (Loss) Per Average Common Share
Income (Loss) from Continuing Operations $ 1.23 $ (0.62) $ (0.66)
Income (Loss) from Discontinued Operations — (0.40) 0.25
Net Income (Loss) Attributable to Common Stock $ 1.23 $ (1.02) $ (0.41)
Dividends Declared Per Common Share $ 0.36 $ 0.20 $ —
The accompanying notes are an integral part of these statements.
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CONSOLIDATED STATEMENTS OF CASH FLOWS
2008 2007 2006
In Million s
Cash Flows from Operating Activities
Net income (loss) $ 300 $ (215) $ (79)
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization, net of nuclear decommissioning of $-, $4, and $6 589 545 576
Deferred income taxes and investment tax credit 129 (221) (271)
Minority interests (obligations), net 7 (8) (98)
Asset impairment charges, net of insurance recoveries — 204 459
Postretirement benefits expense 144 131 131
Electric sales contract termination — 279 —
Shareholder class action settlement expense — — 125
Fuel costs mark-to-market at the MCV Partnership — — 204
Regulatory return on capital expenditures (33) (31) (26)
Capital lease and other amortization 36 55 44
Bad debt expense 51 37 28
Loss (gain) on the sale of assets (9) 112 (79)
Earnings from equity method investees (5) (40) (89)
Cash distributions from equity method investees 4 18 75
Postretirement benefits contributions (51) (184) (69)
Shareholder class action settlement payment — (125) —
Electric sales contract termination payment (275) — —
Changes in other assets and liabilities:
Decrease (increase) in accounts receivable and accrued revenues (80) (451) 75
Decrease (increase) in accrued power supply and gas revenue 35 99 (91)
Increase in inventories (71) (10) (105)
Decrease in accounts payable (5) (45) (43)
Increase (decrease) in accrued expenses (31) (31) 39
Decrease in the MCV Partnership gas supplier funds on deposit — — (147)
Increase (decrease) in other current and non-current regulatory liabilities (178) (114) 59
Decrease in other current and non-current assets 12 37 58
Decrease in other current and non-current liabilities (10) (17) (86)
Net cash provided by operating activities 559 25 690
Cash Flows from Investing Activities
Capital expenditures (excludes assets placed under capital lease) (792) (1,263) (670)
Cost to retire property (34) (28) (78)
Restricted cash and restricted short-term investments 1 49 124
Investments in nuclear decommissioning trust funds — (1) (21)
Proceeds from nuclear decommissioning trust funds — 333 22
Maturity of the MCV Partnership restricted investment securities held-to-maturity — — 130
Purchase of the MCV Partnership restricted investment securities held-to-maturity — — (131)
Proceeds from sale of assets 3 1,717 69
Cash relinquished from sale of assets — (113) (148)
Increase in non-current notes receivable (19) (32) (50)
Other investing 2 — 2
Net cash provided by (used in) investing activities (839) 662 (751)
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2008 2007 2006
In Million s
Cash Flows from Financing Activities
Proceeds from notes, bonds, and other long-term debt 1,396 515 100
Issuance of common stock 9 15 8
Retirement of bonds and other long-term debt (1,130) (1,095) (493)
Redemption of preferred stock (1) (32) —
Payment of common stock dividends (82) (45) —
Payment of preferred stock dividends (13) (13) (13)
Payment of capital lease and financial lease obligations (26) (20) (26)
Debt issuance costs, financing fees, and other (8) (17) (12)
Net cash provided by (used in) financing activities 145 (692) (436)
Effect of Exchange Rates on Cash — 2 1
Net Decrease in Cash and Cash Equivalents (135) (3) (496)
Cash and Cash Equivalents, Beginning of Period 348 351 847
Cash and Cash Equivalents, End of Period $ 213 $ 348 $ 351
Other cash flow activities and non-cash investing and financing activities were:
Cash transactions
Interest paid (net of amounts capitalized) $ 364 $ 432 $ 487
Income taxes paid (net of refunds of $2, $- , and $2) 3 14 98
Non-cash transactions
Other assets placed under capital lease $ 5 $ 229 $ 7
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CMS ENERGY CORPORATION

CONSOLIDATED BALANCE SHEETS
De ce m be r 31
2008 2007
In Million s
ASSETS
Plant and Property (At cost)
Electric utility $ 8,965 $ 8,555
Gas utility 3,622 3,467
Enterprises 390 391
Other 33 34
13,010 12,447
Less accumulated depreciation, depletion and amortization 4,428 4,166
8,582 8,281
Construction work-in-progress 608 447
9,190 8,728
Equity Investments
Enterprises 5 6
Other 6 5
11 11
Current Assets
Cash and cash equivalents at cost, which equals fair value 213 348
Restricted cash at cost, which equals fair value 35 34
Accounts receivable and accrued revenue, less allowances of $26 in 2008 and $21 in 2007 851 837
Notes receivable 95 68
Accrued power supply and gas revenue 7 45
Accounts receivable and notes receivable — related parties — 2
Inventories at average cost
Gas in underground storage 1,168 1,123
Materials and supplies 110 86
Generating plant fuel stock 127 125
Deferred property taxes 165 158
Regulatory assets — postretirement benefits 19 19
Prepayments and other 37 35
2,827 2,880
Non-current Assets
Regulatory Assets
Securitized costs 416 466
Postretirement benefits 1,431 921
Customer Choice Act 90 149
Other 482 504
Deferred income taxes — 99
Notes receivable, less allowances of $34 in 2008 and $33 in 2007 186 168
Other 268 266
2,873 2,573
Total Assets $14,901 $14,192
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De ce m be r 31
2008 2007
In Million s
STOCKHOLDERS’ INVESTMENT AND LIABILITIES
Capitalization
Common stockholders’ equity
Common stock, authorized 350.0 shares; outstanding 226.4 shares and 225.1 shares, respectively $ 2 $ 2
Other paid-in capital 4,496 4,480
Accumulated other comprehensive loss (28) (144)
Accumulated deficit (2,007) (2,208)
2,463 2,130
Preferred stock of subsidiary 44 44
Preferred stock 243 250
Long-term debt 5,859 5,385
Long-term debt — related parties 178 178
Non-current portion of capital and finance lease obligations 206 225
8,993 8,212
Minority Interests 52 53
Current Liabilities
Current portion of long-term debt, capital and finance lease obligations 514 722
Notes payable — 1
Accounts payable 466 430
Accrued rate refunds 7 19
Accounts payable — related parties — 1
Accrued interest 107 103
Accrued taxes 289 308
Deferred income taxes 100 41
Regulatory liabilities 120 164
Electric sales contract termination liability 2 279
Argentine currency impairment reserve — 197
Other 258 208
1,863 2,473
Non-current Liabilities
Regulatory Liabilities
Cost of removal 1,203 1,127
Income taxes, net 519 533
Other 146 313
Asset retirement obligation 206 198
Deferred investment tax credit 54 58
Deferred income taxes 46 —
Other 317 367
3,993 3,454
Commitments and Contingencies (Notes 4, 5, 7, 10 and 12)
Total Stockholders’ Investment and Liabilities $14,901 $14,192
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Consolidated Statements of Common Stockholders’ Equity
2008 2007 2006 2008 2007 2006
Nu m be r of S h are s in Th ou san ds In Million s
Common S tock
At beginning and end of period $ 2 $ 2 $ 2
Other Paid-in Capital
At beginning of period 225,146 222,783 220,497 4,480 4,468 4,436
Common stock repurchased (38) (318) (98) (1) (5) (2)
Common stock reacquired (445) (19) (59) — — —
Common stock issued 1,751 2,339 2,375 17 30 33
Common stock reissued — 361 68 — 6 1
Redemption of preferred stock — — — — (19) —
At end of period 226,414 225,146 222,783 4,496 4,480 4,468
Accumulated Other Comprehensive Loss
Retirement benefits liability
At beginning of period (15) (23) (19)
Retirement benefits liability adjustments(a) — — 3
Net gain (loss) arising during the period(a) (12) 7 —
Amortization of net actuarial loss(a) — 1 —
Adjustment to initially apply FASB Statement
No. 158 — — (7)
At end of period (27) (15) (23)
Investments
At beginning of period — 14 9
Unrealized gain (loss) on investments(a) (15) 1 5
Reclassification adjustments included in net income
(loss)(a) 15 (15) —
At end of period — — 14
Derivative instruments
At beginning of period (1) (12) 35
Unrealized loss on derivative instruments(a) — (3) (15)
Reclassification adjustments included in net income
(loss)(a) — 14 (32)
Foreign currency translation
Sale of interests in TGN(a) 128 — —
Sale of Argentine assets(a) — 128 —
Sale of Brazilian assets(a) — 36 —
Other foreign currency translations(a) — 5 16
At end of period — (128) (297)
At end of period (28) (144) (318)
Accumulated Deficit
At beginning of period (2,208) (1,918) (1,828)
Effects of changing the retirement plans measurement
date pursuant to SFAS No. 158
Service cost, interest cost, and expected return on plan
assets for December 1 through December 31, 2007,
net of tax (4) — —
Additional loss from December 1 through
December 31, 2007, net of tax (2) — —
Adjustment to initially apply FIN 48 — (18) —
Net income (loss)(a) 300 (215) (79)
Preferred stock dividends declared (11) (11) (11)
Common stock dividends declared (82) (45) —
Redemption of preferred stock(a) — (1) —
At end of period (2,007) (2,208) (1,918)
Total Common S tockholders’ Equity $ 2,463 $ 2,130 $ 2,234
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2008 2007 2006
In Million s
(a) Disclosure of Comprehensive Income (Loss):
Net income (loss) $300 $(215) $ (79)
Retirement benefits liability:
Retirement benefits liability adjustments, net of tax of $1 in 2006 — — 3
Net gain (loss) arising during the period, net of tax (tax benefit) of ($6) in 2008 and $5 in
2007 (12) 7 —
Amortization of net actuarial loss, net of tax of $- — 1 —
Investments:
Unrealized gain (loss) on investments, net of tax (tax benefit) of ($9) in 2008, $- in 2007
and $2 in 2006 (15) 1 5
Reclassification adjustments included in net income (loss), net of tax (tax benefit) of $9
in 2008 and ($7) in 2007 15 (15) —
Derivative instruments:
Unrealized loss on derivative instruments, net of tax (tax benefit) of $- in 2008, $2 in
2007, and $(11) in 2006 — (3) (15)
Reclassification adjustments included in net income (loss), net of tax (tax benefit) of $-
in 2008, $7 in 2007, and $(19) in 2006 — 14 (32)
Foreign currency translation:
Sale of interests in TGN, net of tax of $69 128 — —
Sale of Argentine assets, net of tax of $68 — 128 —
Sale of Brazilian assets, net of tax of $20 — 36 —
Other foreign currency translations, net of tax of $- in 2008, $2 in 2007, and $9 in 2006 — 5 16
Total Comprehensive Income (Loss) $416 $ (41) $(102)
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1: CORPORATE STRUCTURE AND ACCOUNTING POLICIES

Corporate Structure: CMS Energy is an energy company operating primarily in Michigan. We are the parent holding
company of several subsidiaries, including Consumers and Enterprises. Consumers is a combination electric and gas utility
company serving Michigan’s Lower Peninsula. Enterprises, through its subsidiaries and equity investments, is engaged
primarily in domestic independent power production. We manage our businesses by the nature of services each provides
and operate principally in three business segments: electric utility, gas utility, and enterprises.
Principles of Consolidation: The consolidated financial statements comprise CMS Energy, Consumers, Enterprises,
and all other entities in which we have a controlling financial interest or are the primary beneficiary, in accordance with
FIN 46(R). We use the equity method of accounting for investments in companies and partnerships that are not
consolidated, where we have significant influence over operations and financial policies, but are not the primary beneficiary.
We eliminate intercompany transactions and balances.
Use of Estimates: We prepare our consolidated financial statements in conformity with GAAP. We are required to make
estimates using assumptions that may affect the reported amounts and disclosures. Actual results could differ from those
estimates.
We record estimated liabilities for contingencies in our consolidated financial statements when it is probable that a
liability has been incurred and when the amount of loss can be reasonably estimated. For additional details, see Note 4,
Contingencies.
Revenue Recognition Policy: We recognize revenues from deliveries of electricity and natural gas, and from the
transportation, processing, and storage of natural gas when services are provided. We record unbilled revenues for the
estimated amount of energy delivered to customers but not yet billed. Unbilled revenues are estimated by applying an
average billed rate for each customer class based on actual billed volume distributions. Our unbilled revenues, which are
recorded as Accounts receivable on our Consolidated Balance Sheets, were $507 million at December 31, 2008 and
$490 million at December 31, 2007. We record sales tax on a net basis and exclude it from revenues. We recognize revenues
on sales of marketed electricity, natural gas, and other energy products at delivery.
Accounting for Legal Fees: We expense legal fees as incurred; fees incurred but not yet billed are accrued based on
estimates of work performed. This policy also applies to fees incurred on behalf of employees and officers related to
indemnification agreements; these fees are billed directly to us.
Accounting for MISO Transactions: MISO requires that we submit hourly day-ahead and real-time bids and offers for
energy at locations across the MISO region. Consumers and CMS ERM account for MISO transactions on a net hourly
basis in each of the real-time and day-ahead markets, and net transactions across all MISO energy market locations. We
record net purchases in a single hour in “Purchased and interchange power” and net sales in a single hour in “Operating
Revenue” in the Consolidated Statements of Income (Loss). We record net sale billing adjustments when we receive
invoices. We record expense accruals for future net purchases adjustments based on historical experience, and reconcile
accruals to actual expenses when we receive invoices.
Capitalized Interest: We capitalize interest on certain qualifying assets that are undergoing activities to prepare them
for their intended use. Capitalization of interest is limited to the actual interest cost incurred. Consumers capitalizes AFUDC
on regulated construction projects and includes these amounts in plant in service.
Cash and Cash Equivalents: Cash and cash equivalents include short-term, highly liquid investments with original
maturities of three months or less.
Collective Bargaining Agreements: At December 31, 2008, the Union represented 45 percent of Consumers’
employees. The Union represents Consumers’ operating, maintenance, construction, and call center employees.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Determination of Pension and OPEB MRV of Plan Assets: We determine the MRV for pension plan assets, as defined
in SFAS No. 87, as the fair value of plan assets on the measurement date, adjusted by the gains or losses that will not be
admitted into MRV until future years. We reflect each year’s assets gain or loss in MRV in equal amounts over a five-year
period beginning on the date the original amount was determined. We determine the MRV for OPEB plan assets, as defined
in SFAS No. 106, as the fair value of assets on the measurement date. We use the MRV in the calculation of net pension and
OPEB costs.
Earnings Per Share: We calculate basic and diluted EPS using the weighted-average number of shares of common
stock and dilutive potential common stock outstanding during the period. Potential common stock, for purposes of
determining diluted EPS, includes the effects of dilutive stock options, warrants and convertible securities. We compute the
effect on potential common stock using the treasury stock method or the if-converted method, as applicable. Diluted EPS
excludes the impact of antidilutive securities, which are those securities resulting in an increase in EPS or a decrease in loss
per share. For EPS computation, see Note 6, Earnings Per Share.
Financial and Derivative Instruments: We record debt and equity securities classified as available-for-sale at fair value
determined primarily from quoted market prices. On a specific identification basis, we report unrealized gains and losses
from changes in fair value of certain available-for-sale debt and equity securities, net of tax, in equity as part of AOCL. We
exclude unrealized losses from earnings unless the related changes in fair value are determined to be other than temporary.
In accordance with SFAS No. 133, if a contract is a derivative and does not qualify for the normal purchases and sales
exception, we record it on our Consolidated Balance Sheets at its fair value. If a derivative qualifies for cash flow hedge
accounting, we report changes in its fair value in AOCL; otherwise, we report the changes in earnings.
For additional details regarding financial and derivative instruments, see Note 7, Financial and Derivative Instruments.
Impairment of Long-Lived Assets and Equity Method Investments: We perform tests of impairment if certain triggering
events occur, or if there has been a decline in value that may be other than temporary.
We evaluate our long-lived assets held-in-use for impairment by calculating the undiscounted future cash flows
expected to result from the use of the asset and its eventual disposition. If the undiscounted future cash flows are less than
the carrying amount, we recognize an impairment loss equal to the amount by which the carrying amount exceeds the fair
value. We estimate the fair value of the asset using quoted market prices, market prices of similar assets, or discounted
future cash flow analyses.
We also assess our equity method investments for impairment whenever there has been a decline in value that is other
than temporary. This assessment requires us to determine the fair values of our equity method investments. We determine
fair value using valuation methodologies, including discounted cash flows, and we assess the ability of the investee to
sustain an earnings capacity that justifies the carrying amount of the investment. We record an impairment if the fair value
is less than the carrying value and the decline in value is considered to be other than temporary.
For additional details, see Note 3, Asset Sales, Discontinued Operations and Impairment Charges.
International Operations and Foreign Currency: We completed the sale of our international assets in 2007.
Previously, our subsidiaries and affiliates whose functional currency was not the U.S. dollar translated their assets and
liabilities into U.S. dollars at the exchange rates in effect at the end of the fiscal period. We translated revenue and expense
accounts of these subsidiaries and affiliates into U.S. dollars at the average exchange rates that prevailed during the period.
We showed these foreign currency translation adjustments in the stockholders’ equity
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section on our Consolidated Balance Sheets. We include exchange rate fluctuations on transactions denominated in a
currency other than the functional currency, except those that are hedged, in determining net income.
For additional details on the sale of our international assets, see Note 3, Asset Sales, Discontinued Operations and
Impairment Charges.
Inventory: We use the weighted-average cost method for valuing working gas, recoverable cushion gas in
underground storage facilities, and materials and supplies inventory. We also use this method for valuing coal inventory,
and we classify these costs as generating plant fuel stock on our Consolidated Balance Sheets.
We classify emission allowances as materials and supplies inventory and use the average cost method to remove
amounts from inventory as we use the emission allowances to generate power.
Maintenance and Depreciation: We charge property repairs and minor property replacement to maintenance expense.
We use the direct expense method to account for planned major maintenance activities. We charge planned major
maintenance activities to operating expense unless the cost represents the acquisition of additional components or the
replacement of an existing component. We capitalize the cost of plant additions and replacements.
We depreciate utility property using a composite method, in which we apply a single MPSC-approved depreciation rate
to the gross investment in a particular class of property within the electric and gas divisions. We perform depreciation
studies periodically to determine appropriate group lives. The composite depreciation rates for our properties are as follows:

Electric utility property 3.0% 3.0% 3.1%
Gas utility property 3.6% 3.6% 3.6%
Other property 8.5% 8.7% 8.2%
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Other Income and Other Expense: The following tables show the components of Other income and Other expense:
In Million s
Other income
Interest and dividends — related parties $ — $ — $ 8
Gain on SERP investment — 22 —
Return on stranded and security costs 5 6 5
MCV Partnership emission allowance sales — — 8
Electric restructuring return 1 2 4
Foreign currency gain 2 1 —
Gain on investment — 7 1
Refund of surety bond premium — — 1
All other 7 3 4
Total other income $ 15 $ 41 $ 31

In Million s
Other expense
Accretion expense $— $— $ (4)
Unrealized investment loss (24) — —
Loss on reacquired and extinguished debt — (22) (5)
Abandoned Midland project — (8) —
Derivative loss on debt tender offer — (3) —
Civic and political expenditures (5) (2) (2)
Donations — — (9)
All other (8) (4) (1)
Total other expense $(37) $(39) $(21)
Property, Plant, and Equipment: We record property, plant, and equipment at original cost when placed into service.
When utility property is retired, or otherwise disposed of in the ordinary course of business, we charge the original cost to
accumulated depreciation, along with associated cost of removal, net of salvage. We recognize gains or losses on the
retirement or disposal of non-regulated assets in income. Our internal-use computer software costs are capitalized or
expensed in accordance with Statement of Position 98-1, Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use. For additional details, see Note 9, Asset Retirement Obligations and Note 13, Property, Plant,
and Equipment. Cost of removal collected from our customers, but not spent, is recorded as a regulatory liability.
We capitalize AFUDC on regulated major construction projects. AFUDC represents the estimated cost of debt and a
reasonable return on equity funds used to finance construction additions. We record the offsetting credit as a reduction of
interest for the amount representing the borrowed funds component and as other income for the equity funds component in
the Consolidated Statements of Income (Loss). When construction is completed and the
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property is placed in service, we depreciate and recover the capitalized AFUDC from our customers over the life of the
related asset. The following table shows our electric, gas and common composite AFUDC capitalization rates:
AFUDC capitalization rate 7.7% 7.4% 7.5%
Property Taxes: Property taxes are based upon the taxable value of Consumers’ real and personal property assessed
by local units of government within the State of Michigan. We record property tax expense ratably over the fiscal year of
the taxing authority for which the taxes are levied based on budgeted Consumers’ customer sales. The deferred property tax
balance represents the amount of Consumers’ accrued property tax, which will be recognized over future governmental
fiscal periods.
Reclassifications: We have reclassified certain prior-period amounts on our Consolidated Financial Statements to
conform to the presentation for the current period. These reclassifications did not affect consolidated net income (loss) or
cash flows for the periods presented.
Restricted Cash: We classify restricted cash dedicated for repayment of Securitization bonds as a current asset, as the
related payments occur within one year.
Trade Receivables and Notes Receivable: Accounts receivable are primarily composed of trade receivables and
unbilled receivables. We record our accounts receivable at cost which approximates fair value. We establish an allowance
for uncollectible accounts and loan losses based on historical losses and management’s assessment of existing economic
conditions, customer trends, and other factors. We assess late payment fees on trade receivables based on contractual
past-due terms established with customers. We charge accounts deemed uncollectible to operating expense.
At December 31, 2008, Non-current notes receivable included EnerBank’s loans totaling $186 million, net of an
allowance for loan losses of $4 million. EnerBank provides unsecured, fixed-rate installment loans to homeowners to finance
the purchase of home improvements.
Unamortized Debt Premium, Discount, and Expense: We capitalize premiums, discounts, and issuance costs of long-
term debt and amortize those costs over the terms of the debt issues. For the non-regulated portions of our businesses, we
expense any refinancing costs as incurred. For the regulated portions of our businesses, if we refinance debt, we capitalize
any remaining unamortized premiums, discounts, and issuance costs and amortize them over the terms of the newly issued
debt.
Utility Regulation: Consumers is subject to the actions of the MPSC and the FERC and prepares its consolidated
financial statements in accordance with the provisions of SFAS No. 71. As a result, Consumers may defer or recognize
revenues and expenses differently than a non-regulated entity. For example, Consumers may record as regulatory assets
items that a non-regulated entity normally would expense if the actions of the regulator indicate that Consumers will recover
the expenses in future rates. Conversely, Consumers may record as regulatory liabilities items that non-regulated entities
may normally recognize as revenues if the actions of the regulator indicate that Consumers will be required to refund the
revenues to customers.
We reflect the following regulatory assets and liabilities, which include both current and non-current amounts, on our
Consolidated Balance Sheets.
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De ce m be r 31 En d of Re cove ry or Re fun d Pe riod 2008 2007

In Million s
Assets Earning a Return:
Customer Choice Act 2010 $ 90 $ 149
Stranded Costs See Note 4 71 68
Electric restructuring implementation plan 2009 3 14
Manufactured gas plant sites (Note 4) 2018 31 33
Other(a) various 44 50
Assets Not Earning a Return:
Postretirement Benefits (Note 8) various 1,450 940
Securitized costs (Note 5) 2015 416 466
Unamortized debt costs n/a 66 74
ARO (Note 9) n/a 92 85
Big Rock nuclear decommissioning and related costs (Note 4) n/a 129 129
Manufactured gas plant sites (Note 4) n/a 38 17
Palisades sales transaction costs (Notes 3 and 4) n/a — 28
Other(a) 2011 8 6
Total regulatory assets(b) $2,438 $2,059
Palisades refund — Current (Note 4)(c) 2009 $ 120 $ 164
Cost of removal (Note 9) n/a 1,203 1,127
Income taxes, net (Note 10) n/a 519 533
ARO (Note 9) n/a 137 141
Palisades refund — Non-current (Note 4)(c) 2008 — 140
Total regulatory liabilities(b) $1,988 $2,137
(a) At December 31, 2008 and 2007, other regulatory assets include a gas inventory regulatory asset and OPEB and
pension expense incurred in excess of the MPSC-approved amount. We will recover these regulatory assets from our
customers by 2011. Other regulatory liabilities include liabilities related to the sale of sulfur dioxide allowances and
AFUDC collected in excess of the MPSC-approved amount.
(b) At December 31, 2008 and 2007, we classified $19 million of regulatory assets as current regulatory assets. At
December 31, 2008, we classified $120 million of regulatory liabilities as current regulatory liabilities. At December 31,
2007, we classified $164 million of regulatory liabilities as current regulatory liabilities.
(c) The MPSC order approving the Palisades and Big Rock ISFSI sale transaction required that we credit $255 million of
excess sales proceeds and decommissioning amounts to our retail customers by December 2008. For 2007, the current
portion of regulatory liabilities for Palisades refunds represents the remaining portion of this obligation, plus interest.
There are additional excess sales proceeds and decommissioning fund balances above the amount in the MPSC order.
For 2007, the non-current portion of regulatory liabilities for Palisades refunds represents this obligation, plus interest.
For 2008, these additional excess sales proceeds are reported in the current portion of regulatory liabilities for Palisades
refunds as it is probable the proceeds will be credited to customers within one year. For additional details, see Note 4,
Contingencies, “Consumers’ Electric Utility Rate Matters.”
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Our PSCR and GCR cost recovery mechanisms also represent probable future revenues that will be recovered from
customers or previously collected revenues that will be refunded to customers through the ratemaking process.
Underrecoveries are included in Accrued power supply and gas revenue and overrecoveries are included in Accrued rate
refunds on our Consolidated Balance Sheets. For additional details on PSCR, see Note 4, Contingencies, “Consumers’
Electric Utility Rate Matters — Power Supply Costs” and for additional details on GCR, see Note 4, Contingencies,
“Consumers’ Gas Utility Rate Matters — Gas Cost Recovery.”
We reflect the following regulatory assets and liabilities for underrecoveries and overrecoveries on our Consolidated
Balance Sheets:
Ye ars En de d De ce m be r 31 2008 2007
In Million s
Regulatory Assets for PSCR and GCR
Underrecoveries of power supply and gas costs $ 7 $ 45
Regulatory Liabilities for PSCR and GCR
Overrecoveries of power supply and gas costs $ 7 $ 19
New Accounting Standards Not Yet Effective: SFAS No. 141(R), Business Combinations: In December 2007, the FASB
issued SFAS No. 141(R), which replaces SFAS No. 141, Business Combinations. SFAS No. 141(R) establishes how an
acquiring entity should measure and recognize assets acquired, liabilities assumed, and noncontrolling interests acquired
through a business combination. The standard also establishes how goodwill or gains from bargain purchases should be
measured and recognized and what information the acquirer should disclose to enable users of the financial statements to
evaluate the nature and financial effects of a business combination. Costs of an acquisition are to be recognized separately
from the business combination. We will apply SFAS No. 141(R) prospectively to any business combination for which the
date of acquisition is on or after January 1, 2009.
interests and shown separately on our Consolidated Balance Sheets within equity. In addition, net income (loss)
attributable to noncontrolling interests will be included in net income on our Consolidated Statements of Income (Loss).
These changes involve presentation only, and will not otherwise impact our consolidated financial statements. The
standard will also affect the accounting for changes in a parent’s ownership interest, including deconsolidation of a
subsidiary. We will apply these provisions of SFAS No. 160 prospectively to any such transactions.
SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement
No. 133: In March 2008, the FASB issued SFAS No. 161, effective for us January 1, 2009. This standard requires entities to
provide enhanced disclosures about how and why derivatives are used, how derivatives and related hedged items are
accounted for under SFAS No. 133, and how derivatives and related hedged items affect the entity’s financial position,
financial performance, and cash flows. This standard will not have a material effect on our consolidated financial statements.
FSP FAS 142-3, Determination of the Useful Life of Intangible Assets: In April 2008, the FASB issued FSP FAS 142-3,
effective for us January 1, 2009. This standard amends SFAS No. 142 to require expanded consideration of expected future
renewals or extensions of intangible assets when determining their useful lives. This standard will be applied prospectively
for intangible assets acquired after the effective date. This standard will not have a material impact on our consolidated
financial statements.
FSP APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled In Cash Upon Conversion
(Including Partial Cash Settlement): In May 2008, the FASB issued FSP APB 14-1, effective for us January 1, 2009
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with retrospective application required. This standard will apply to our convertible debt securities, and will require us to
account for the liability and equity components of these securities separately and in a manner that will reflect our borrowing
rate for nonconvertible debt. We expect that the retrospective implementation of this standard will result in a reduction of
Long-term debt of approximately $22 million, an increase in Current deferred income tax liabilities of approximately $3 million,
an increase of Non-current deferred income tax liabilities of $6 million, an increase of Other paid-in capital of approximately
$37 million, and an increase of Accumulated deficit of approximately $24 million as of January 1, 2009. We further expect that
the implementation of this standard will increase reported interest expense, net of taxes, by approximately $4 million in 2009.
For additional details on our convertible debt instruments, see Note 5, Financings and Capitalization.
FSP EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities: In June 2008, the FASB issued FSP EITF 03-6-1, effective for us January 1, 2009 with retrospective
application required. Under this standard, share-based payment awards that accrue cash dividends when common
shareholders receive dividends are considered participating securities if the dividends do not need to be returned to the
company when the employee forfeits the award. This standard will apply to our outstanding unvested restricted stock
awards, which will be considered participating securities and thus will be included in the computation of basic EPS. Had this
standard been in place in 2008, it would have reduced 2008 basic and diluted EPS by approximately $0.01. We consider this
figure to be representative of the potential impact of this standard on future years’ EPS.
EITF Issue 07-5, Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock: In
June 2008, the FASB ratified EITF Issue 07-5, effective for us January 1, 2009. This standard establishes criteria for
determining whether freestanding instruments or embedded features are considered “indexed to an entity’s own stock” for
the purpose of assessing potential derivative accounting or balance sheet classification issues. The standard applies to all
outstanding instruments at January 1, 2009, with any transition impacts recognized as a cumulative effect adjustment to the
opening balance of retained earnings. This guidance applies to the equity conversion features in our contingently
convertible senior notes and preferred stock. These conversion features have been exempted from derivative accounting
because they are indexed to our own stock and would be classified in stockholders’ equity. These features are still
considered indexed to our own stock under this new guidance, and thus, this standard will have no impact on our
EITF Issue 08-5, Issuer’s Accounting for Liabilities Measured at Fair Value with a Third-Party Credit Enhancement:
In September 2008, the FASB ratified EITF Issue 08-5, effective for us January 1, 2009. This guidance concludes that the fair
value measurement of a liability should not consider the effect of a third-party credit enhancement or guarantee supporting
the liability. The fair value of the liability should thus reflect the credit standing of the issuer and should not be adjusted to
reflect the credit standing of a third-party guarantor. The standard is to be applied prospectively. This standard will not
have a material impact on our consolidated financial statements.
2: FAIR VALUE MEASUREMENTS

SFAS No. 157, which became effective January 1, 2008, defines fair value, establishes a framework for measuring fair
value, and expands disclosures about fair value measurements. It does not require any new fair value measurements, but
applies to those fair value measurements recorded or disclosed under other accounting
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standards. The standard defines fair value as the price that would be received to sell an asset or paid to transfer a liability in
an orderly exchange between market participants, and requires that fair value measurements incorporate all assumptions
that market participants would use in pricing an asset or liability, including assumptions about risk. The standard also
eliminates the prohibition against recognizing “day one” gains and losses on derivative instruments. We did not hold any
derivatives with “day one” gains or losses during the year ended December 31, 2008. The standard is to be applied
prospectively, except that limited retrospective application is required for three types of financial instruments, none of
which we held during the year ended December 31, 2008.
SFAS No. 157 establishes a fair value hierarchy that 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. These markets must be
accessible to us at the measurement date.
• 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, interest rates and yield
curves observable at commonly quoted intervals, credit risks, default rates, and inputs derived from or corroborated
by observable market data.
• Level 3 inputs are unobservable inputs that reflect our own assumptions about how market participants would value
our assets and liabilities.
To the extent possible, we use quoted market prices or other observable market pricing data in valuing assets and
liabilities measured at fair value under SFAS No. 157. If this information is unavailable, we use market-corroborated data or
reasonable estimates about market participant assumptions. We 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.
The FASB issued a one-year deferral of SFAS No. 157 for nonfinancial assets and liabilities, except those that are
recorded or disclosed at fair value on a recurring basis. Under this partial deferral, SFAS No. 157 became effective on
January 1, 2009 for fair value measurements in the following areas:
• AROs,
• most of the nonfinancial assets and liabilities acquired in a business combination, and
• impairment analyses performed for nonfinancial assets.
SFAS No. 157 was effective January 1, 2008 for our derivative instruments, available-for-sale investment securities,
nonqualified deferred compensation plan assets and liabilities, and financial instruments disclosed in Note 7, Financial and
Derivative Instruments, “Financial Instruments.” SFAS No. 157 also applied to the year-end measurement of fair values of
our pension and OPEB plan assets. For details on the accounting of our pension and OPEB plans, see Note 8, Retirement
Benefits. The implementation of SFAS No. 157 did not have a material effect on our consolidated financial statements.
SEC and FASB Guidance on Fair Value Measurements: On September 30, 2008, in response to concerns about fair
value accounting and its possible role in the recent declines in the financial markets, the SEC Office of the Chief Accountant
and the FASB staff jointly released additional guidance on fair value measurements. The guidance, which was effective for
us upon issuance, did not change or conflict with the fair value principles in SFAS No. 157, but rather provided further
clarification on how to value a financial asset in an illiquid market. In October 2008, the FASB issued FSP FAS 157-3,
Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active. The standard is consistent
with the joint guidance issued by the SEC and the FASB and was effective for us for the quarter ended September 30, 2008.
The standard was to be applied prospectively. The guidance in this standard and the joint guidance provided by the FASB
and the SEC did not affect our fair value measurements.
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ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS

The following table summarizes, by level within the fair value hierarchy, our assets and liabilities reported at fair value
on a recurring basis at December 31, 2008.
Total Le ve l 1 Le ve l 2 Le ve l 3
In Million s
Assets:
Cash Equivalents $176 $ 176 $ — $ —
Nonqualified Deferred Compensation Plan Assets 5 5 — —
SERP
Equity Securities 39 39 — —
Debt Securities 29 — 29 —
Derivative Instruments:
CMS ERM Non-trading electricity/gas contracts(a) 1 — 1 —
Total $250 $ 220 $ 30 $ —
Liabilities:
Nonqualified Deferred Compensation Plan Liabilities $ (5) $ (5) $ — $ —
CMS ERM Non-trading electricity/gas contracts(b) (17) (2) — (15)
Interest rate collar (1) — — (1)
Foreign exchange forward (1) — (1) —
Fixed price fuel contracts (1) — (1) —
Total(c) $ (25) $ (7) $ (2) $ (16)
(a) This amount is gross and excludes the immaterial impact of offsetting derivative assets and liabilities under master
netting arrangements. We report the fair values of our derivative assets net of these impacts within Other assets on
our Consolidated Balance Sheets.
(b) This amount is gross and excludes the immaterial impact of offsetting derivative assets and liabilities under master
netting arrangements and the $2 million impact of offsetting cash margin deposits paid by CMS ERM to other parties.
We report the fair values of our derivative liabilities net of these impacts within Other liabilities on our Consolidated
Balance Sheets.
(c) At December 31, 2008, liabilities classified as Level 3 represent 64 percent of total liabilities measured at fair value.
Cash Equivalents: Our cash equivalents consist of money market funds with daily liquidity. The funds invest in
U.S. Treasury notes, other government-backed securities, and repurchase agreements collateralized by U.S. Treasury notes.
Nonqualified Deferred Compensation Plan Assets: Our nonqualified deferred compensation plan assets are invested
in various mutual funds. We value these assets using a market approach, which uses the daily quoted NAV provided by the
fund managers that are the basis for transactions to buy or sell shares in each fund. On our Consolidated Balance Sheets,
these assets are included in Other non-current assets.
SERP Assets: Our SERP assets are valued using a market approach, which incorporates prices and other relevant
information from market transactions. Our SERP equity securities consist of an investment in a Standard & Poor’s 500 Index
mutual fund. The fund’s securities are listed on an active exchange or dealer market. The fair value of the SERP equity
securities is based on the NAV of the mutual fund that is derived from the daily closing prices of
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the equity securities held by the fund. The NAV is the basis for transactions to buy or sell shares in the fund. Our SERP
debt securities, which are investment grade municipal bonds, are valued using a market approach, which is based on a
matrix pricing model that incorporates market-based information. The fair value of our SERP debt securities is derived from
various observable inputs, including benchmark yields, reported securities trades, broker/dealer quotes, bond ratings, and
general information on market movements for investment grade municipal securities normally considered by market
participants when pricing a debt security. SERP assets are included in Other non-current assets on our Consolidated
Balance Sheets. For additional details about our SERP securities, see Note 7, Financial and Derivative Instruments.
Nonqualified Deferred Compensation Plan Liabilities: The non-qualified deferred compensation plan liabilities are
valued 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. These liabilities, except for our primary DSSP plan liability, are included in Other non-current
liabilities on our Consolidated Balance Sheets. Our primary DSSP plan liability is included in Non-current postretirement
benefits on our Consolidated Balance Sheets.
Derivative Instruments: Our derivative instruments are valued 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. We use various inputs to value our derivatives depending on the type of contract and the availability of market
data. We have exchange-traded derivative contracts that are valued based on Level 1 quoted prices in actively traded
markets. We also have derivatives that are valued using Level 2 inputs, including commodity market prices, interest rates,
credit ratings, default rates, and market-based seasonality factors. For derivative instruments that extend beyond time
periods in which quoted prices are available, we use modeling methods to project future prices. These fair value
measurements are classified in Level 3 unless modeling was required only for an insignificant portion of the total derivative
value.
CMS ERM’s non-trading contracts include an electricity sales agreement that extends beyond the term for which
quoted electricity prices are available and which is classified as Level 3. To value this agreement, we use a proprietary
forward power pricing curve that is based on forward gas prices and an implied heat rate. We also increased the fair value of
the liability for this agreement by an amount that reflects the uncertainty of our model.
For all fair values other than Level 1 prices, we incorporate adjustments for the risk of nonperformance. For our
derivative assets, we apply a credit adjustment against the asset based on the published default rate for the counterparty’s
assigned credit rating. These credit ratings are assigned to each counterparty based on an internal credit-scoring model that
considers various inputs, including the counterparty’s financial statements, credit reports, trade press, and other
information that would be available to market participants. We compare the results of our credit-scoring model to credit
ratings published by independent rating agencies. To the extent that our internal ratings are comparable to those obtained
from the independent agencies, we classify the resulting credit adjustment within Level 2. If our internal model results in a
rating that is outside of the range of ratings given by the independent agencies, the credit adjustment would be classified as
a Level 3 input, and, if significant to the overall valuation, would cause the entire fair value to be classified as Level 3. We
also adjust our derivative liabilities downward to reflect our own risk of nonperformance, based on the published credit
ratings for our company. Adjustments for credit risk using the approach outlined above are not materially different than the
adjustments that would result from using credit default swap rates for the contracts we currently hold. For details about our
derivative contracts, see Note 7, Financial and Derivative Instruments.
Interest Rate Collar: Grayling Generating Station Limited Partnership executed an interest rate collar contract as an
economic hedge of the variable interest rate charged on its outstanding revenue bonds. This interest rate collar was valued
using an income approach that incorporated forward interest rates and a consideration of appropriate credit risk in
discounting projected cashflows. Due to the use of unobservable assumptions in the credit risk component, we have
classified the fair value of this contract as Level 3. We record the fair value of this derivative in Other non-current liabilities
on our Consolidated Balance Sheets. For additional information on our interest rate collar, see Note 7, Financial and
Derivative Instruments, “Derivative Instruments.”
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Foreign Exchange Forward: We executed this foreign exchange forward contract as an economic hedge of an
exposure to the Moroccan dirham/US dollar exchange rate. This contract was valued using an income approach that
incorporated forward exchange rates and a consideration of appropriate credit risk in discounting projected cashflows. We
recorded the fair value of this derivative in Other current liabilities on our Consolidated Balance Sheets at December 31,
2008. For additional information on our foreign exchange forward, see Note 7, Financial and Derivative Instruments,
“Derivative Instruments.”
Fixed Price Fuel Contracts: Under certain fixed price fuel contracts, we have effectively locked in a price per gallon for
gasoline and diesel fuel we will purchase from January 2009 through November 2009. These contracts are valued using an
income approach that incorporated forward national fuel prices adjusted to reflect conditions in Michigan. The fair values of
these contracts are included in Other current liabilities on our Consolidated Balance Sheets. For additional information on
our fixed fuel price contracts, see Note 7, Financial and Derivative Instruments, “Derivative Instruments.”
Assets and Liabilities Measured at Fair Value on a Recurring Basis using Level 3 inputs
The following table is a reconciliation of changes in the fair values of our Level 3 assets and liabilities:
C MS ERM
Non -tradin g
con tracts
In Million s
Balance at December 31, 2007 $ (19)
Total gains (realized and unrealized)
Included in earnings(a) 2
Purchases, sales, issuances, and settlements (net) 1
Balance at December 31, 2008 (16)
Unrealized gains included in earnings for the year ended December 31, 2008 relating to assets and liabilities
still held at December 31, 2008(a) $ 3
(a) Realized and unrealized gains for Level 3 recurring fair values are recorded in earnings as a component of Operating
Revenue or Operating Expenses in our Consolidated Statements of Income (Loss).
3: ASSET SALES, DISCONTINUED OPERATIONS AND IMPAIRMENT CHARGES

ASSET S ALES
The impacts of our asset sales are included in Gain on asset sales, net and Income (Loss) from Discontinued
Operations in our Consolidated Statements of Income (Loss). Asset sales were immaterial for the year ended December 31,
2008.
In connection with the sale of our Argentine and Michigan assets to Lucid Energy in March 2007, we entered into
agreements that granted MEI, an affiliate of Lucid Energy, the right to any proceeds from an assignment of the ICSID award
associated with TGN, as well as an option to purchase CMS Gas Transmission’s ownership interests in TGN, and the rights
to any proceeds Enterprises will receive if it sells its stock interest in CMS Generation San Nicolas Company.
In June 2008, we executed an agreement with MEI and a third-party to assign the ICSID award and to sell our interests
in TGN directly to the third-party. In accordance with the agreements executed in March 2007, the proceeds from the
assignment of the ICSID award and the sale of TGN were passed on to MEI and we recognized an $8 million gain on the
assignment of the ICSID award in Gain on asset sales, net in our Consolidated Statements of Income (Loss). We also
recognized a $197 million cumulative net foreign currency translation loss related to TGN,
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which had been deferred as a Foreign Currency Translation component of stockholders’ equity. This charge was fully offset
by the elimination of a $197 million Argentine currency impairment reserve on our Consolidated Balance Sheets, created
when we impaired our investment in TGN in March 2007. For additional details, see “Impairment Charges” within this Note.
As of December 31, 2008, $7 million remains as a deferred credit on our Consolidated Balance Sheets related to MEI’s
right to proceeds that Enterprises will receive if it sells its stock interest in CMS Generation San Nicolas Company.
The following table summarizes our asset sales for the year ended December 31, 2007:
Disposal of
C on tin u ing Discontin u e d
O pe ration s O pe ration s
C ash Pre tax Pre tax
Mon th sold Bu sin e ss Proce e ds Gain (Loss) Gain (Loss)
In Million s
March El Chocon(a) $ 50 $ 34 $ —
March Argentine/Michigan businesses(b) 130 (5) (278)
April Palisades(c) 333 — —
April SENECA(d) 106 — 46
May Middle East, Africa and India businesses(e) 792 (15) 96
June CMS Energy Brasil S.A.(f) 201 — 3
August GasAtacama(g) 80 — —
October Jamaica(h) 14 1 —
Various Other 11 6 —
Total $ 1,717 $ 21 $ (133)
(a) We sold our interest in El Chocon to Endesa, S.A.

(b) We sold a portfolio of our businesses in Argentina and our northern Michigan non-utility natural gas assets to Lucid
Energy. Due to the settlement of certain legal proceedings, we recognized a $17 million gain in 2007.
(c) We sold Palisades to Entergy for $380 million and as of December 31, 2007, received $363 million after various closing
adjustments. We also paid Entergy $30 million to assume ownership and responsibility for the Big Rock ISFSI. Because
of the sale of Palisades, we paid the NMC, the former operator of Palisades, $7 million in exit fees and forfeited our
$5 million investment in the NMC. Entergy assumed responsibility for the future decommissioning of Palisades and for
storage and disposal of spent nuclear fuel located at Palisades and the Big Rock ISFSI sites.
We accounted for the disposal of Palisades as a financing for accounting purposes and thus we recognized no gain in
the Consolidated Statements of Income (Loss). We accounted for the remaining non-real estate assets and liabilities
associated with the transaction as a sale.
(d) We sold our ownership interest in SENECA and certain associated generating equipment to PDVSA.
(e) We sold our ownership interest in businesses in the Middle East, Africa, and India to TAQA.
(f) We sold CMS Energy Brasil S.A. to CPFL Energia S.A., a Brazilian utility.
(g) We sold our investment in GasAtacama to Endesa S.A.
(h) We sold our investment in Jamaica to AEI.
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The following table summarizes our asset sales for the year ended December 31, 2006:
C on tin u ing
O pe ration s
Gross C ash Pre tax
Mon th sold Bu sin e ss/Proje ct Proce e ds Gain
In Million s
October Land in Ludington, Michigan $ 6 $ 2
November MCV GP II(a) 61 77
Various Other 2 —
Total $ 69 $ 79
(a) In November 2006, we sold all of our interests in the Consumers’ subsidiaries that held the MCV Partnership and the
MCV Facility to an affiliate of GSO Capital Partners and Rockland Capital Energy Investments.
Because of the MCV PPA, the transaction is a sale and leaseback for accounting purposes. We have continuing
involvement with the MCV Partnership through an existing guarantee associated with the future operations of the MCV
Facility. As a result, we accounted for the MCV Facility as a financing for accounting purposes and not a sale. The value of
the finance obligation was based on an allocation of the transaction proceeds to the fair values of the net assets sold and
fair value of the MCV Facility under the financing. The total proceeds were less than the fair value of the net assets sold. As
a result, there were no proceeds remaining to allocate to the MCV Facility; therefore, we recorded no finance obligation.
The transaction resulted in an after-tax loss of $41 million, which includes a reclassification of $30 million of AOCI into
earnings, an $80 million impairment charge on the MCV Facility, an $8 million gain on the removal of our interests in the
MCV Partnership and the MCV Facility, and $1 million benefit in general taxes. Upon the sale of our interests in the MCV
Partnership and the FMLP, we were no longer the primary beneficiary of these entities and the entities were deconsolidated.
DISCONTINUED OPERATIONS
Discontinued operations are a component of our Enterprises business segment. We included the following amounts in
the Income (Loss) From Discontinued Operations line in our Consolidated Statements of Income (Loss):
In Million s
Revenues $ — $235 $684
Discontinued operations:
Pretax income (loss) from discontinued operations $ 1 $ (90) $ 86
Income tax expense (benefit) 1 (1) 32
Income (Loss) From Discontinued Operations $ — $ (89)(a) $ 54
(a) Includes a loss on disposal of our Argentine and northern Michigan non-utility assets of $278 million ($171 million
after tax and after minority interest), a gain on disposal of SENECA of $46 million ($33 million after tax and after minority
interest), a gain on disposal of our ownership interests in businesses in the Middle East, Africa, and India of
$96 million ($62 million after tax), and a gain on disposal of CMS Energy Brasil S.A. of $3 million ($2 million after tax).
Discontinued operations include a provision for closing costs and a portion of CMS Energy’s parent company interest
expense. We allocated interest expense of $7 million for 2007 and $17 million for 2006 equal to the net book value of the
asset sold divided by CMS Energy’s total capitalization of each discontinued operation multiplied by CMS Energy’s
interest expense.
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IMPAIRMENT CHARGES
We recorded no impairments of long-lived assets for the year ended December 31, 2008. The following table
summarizes asset impairments at our Enterprises business segment for the years ended December 31, 2007 and December 31,
2006:
In Million s
Asset impairments:
TGN(a) $140 $ —
GasAtacama(b) 35 239
Jamaica(c) 22 —
PowerSmith(d) 5 —
Prairie State(e) 2 —
MCV Partnership(f) — 218
Other — 2
Total asset impairments $204 $459
(a) We recorded a $215 million impairment charge to recognize the reduction in fair value of our investment in TGN, a
natural gas business in Argentina. The impairment included a cumulative net foreign currency translation loss of
$197 million. In 2007, we recognized a $75 million deferred credit in Asset impairment charges, net of insurance
recoveries, in our Consolidated Statements of Income (Loss).
(b) In 2007, we recorded an impairment charge to reflect the fair value of our investment in GasAtacama as determined in
sale negotiations. In 2006, we performed an impairment analysis of our investment in GasAtacama and concluded that
there had been a decline in fair value that was other than temporary. We recorded an impairment charge in the third
quarter of 2006.
(c) We recorded an impairment charge to reflect the fair value of our investment in an electric generating plant in Jamaica
by discounting a set of probability-weighted streams of future operating cash flows.
(d) We recorded an impairment charge to reflect the fair value of our investment in PowerSmith as determined in sale
negotiations.
(e) We recorded an impairment charge to reflect our withdrawal from the co-development of Prairie State with Peabody
Energy because the project did not meet our investment criteria.
(f) We recorded an impairment charge of $218 million to recognize the reduction in fair value of the MCV Facility’s real
estate assets.
4: CONTINGENCIES
CMS ENERGY CONTINGENCIES
Gas Index Price Reporting Investigation: We notified appropriate regulatory and governmental agencies that some
employees at CMS MST and CMS Field Services appeared to have provided inaccurate information regarding natural gas
trades to various energy industry publications, which compile and report index prices. We cooperated with an investigation
by the DOJ regarding this matter. Although we have not received any formal notification that the DOJ has completed its
investigation, the DOJ’s last request for information occurred in November 2003, and we completed our response to this
request in May 2004. We are unable to predict the outcome of the DOJ investigation and what effect, if any, the
investigation will have on our business.
Gas Index Price Reporting Litigation: We, along with CMS MST, CMS Field Services, Cantera Natural Gas, Inc. (the
company that purchased CMS Field Services) and Cantera Gas Company are named as defendants in
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various lawsuits arising as a result of allegedly inaccurate natural gas price reporting. Allegations include manipulation of
NYMEX natural gas futures and options prices, price-fixing conspiracies, and artificial inflation of natural gas retail prices in
California, Colorado, Kansas, Missouri, Tennessee, and Wisconsin. In June 2007, CMS MST settled a master class action
suit in California state court for $7 million. In September 2007, the CMS Energy defendants also settled four class action
suits originally filed in California federal court. There were two recent dismissals of the CMS Energy defendants: Missouri
Public Service Commission, state court on January 13, 2009, and Breckenridge, federal court on January 8, 2009. On February
23, 2009, the court also granted CMS Energy’s motion to dismiss for lack of jurisdiction. Appeals are expected in both cases.
The other cases in several jurisdictions remain pending. We cannot predict the financial impact or outcome of these matters.
Bay Harbor: As part of the development of Bay Harbor by certain subsidiaries of CMS Energy, pursuant to an
agreement with the MDEQ, third parties constructed a golf course and park over several abandoned CKD piles, left over
from the former cement plant operations on the Bay Harbor site. The third parties also undertook a series of remedial
actions, including removing abandoned buildings and equipment; consolidating, shaping and covering CKD piles with soil
and vegetation; removing CKD from streams and beaches; and constructing a leachate collection system at an identified
seep. Leachate is formed when water passes through CKD. In 2002, CMS Energy sold its interest in Bay Harbor, but
retained its obligations under environmental indemnifications entered into at the start of the project.
In 2005, the EPA along with CMS Land and CMS Capital voluntarily executed an AOC under Superfund and approved
a Removal Action Work Plan to address issues at Bay Harbor. Collection systems required under the plan have been
installed and shoreline monitoring is ongoing. In February 2008, CMS Land and CMS Capital submitted a proposed
augmentation plan to the EPA to address areas where pH measurements are not satisfactory. CMS Land, CMS Capital and
the EPA have agreed upon the augmentation measures and a schedule for their installation. The augmentation measures are
being implemented and are anticipated to be completed in 2009.
In February 2008, the MDEQ and the EPA granted permits for CMS Land or its affiliate, Beeland, to construct and
operate a deep injection well near Alba, Michigan in eastern Antrim County. Certain environmental groups, a local
township, and a local county filed an appeal of the EPA’s decision and following denial by the MDEQ of a right to a
hearing, filed lawsuits in the Ingham Circuit Court appealing the permits. The EPA has denied the appeal. One appeal
relating to the state permit remains pending in the state court. Groups opposed to the injection well filed a lawsuit in Antrim
County seeking an injunction against development of the well. In January 2009, the trial judge issued a preliminary
injunction. Beeland is considering an appeal of the court’s order.
CMS Land and CMS Capital, the MDEQ, the EPA, and other parties are having ongoing discussions concerning the
long-term remedy for the Bay Harbor sites. These discussions are addressing, among other things:
• the disposal of leachate,
• the capping and excavation of CKD,
• the location and design of collection lines and upstream diversion of water,
• potential flow of leachate below the collection system,
• applicable criteria for various substances such as mercury, and
• other matters that are likely to affect the scope of remedial work that CMS Land and CMS Capital may be obligated
to undertake.
CMS Energy has recorded a cumulative charge, which includes accretion expense, related to Bay Harbor of
$141 million. At December 31, 2008, we have a recorded liability of $62 million for our remaining obligations. We calculated
this liability based on discounted projected costs, using a discount rate of 4.45 percent and an inflation rate of one percent
on annual operating and maintenance costs. We based the discount rate on the interest rate for 30-year U.S. Treasury
securities on December 31, 2007, the date of the last major revision to our remediation cost
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estimate. The undiscounted amount of the remaining obligation is $75 million. We expect to pay $21 million in 2009,
$12 million in 2010, $3 million in 2011, and the remaining expenditures as part of long-term liquid disposal and operating and
maintenance costs. Our estimate of remedial action costs and the timing of expenditures could be impacted by any
significant change in circumstances or assumptions, such as:
• an increase in the number of problem areas,
• different remediation techniques,
• nature and extent of contamination,
• continued inability to reach agreement with the MDEQ or the EPA over required remedial actions,
• delays in the receipt of requested permits,
• delays following the receipt of any requested permits due to legal appeals of third parties,
• increase in water disposal costs,
• delays in developing a long-term water disposal option,
• additional or new legal or regulatory requirements, or
• new or different landowner claims.
Depending on the size of any indemnification obligation or liability under environmental laws, an adverse outcome of
this matter could have a material adverse effect on CMS Energy’s liquidity and financial condition and could negatively
impact CMS Energy’s financial results. We cannot predict the financial impact or outcome of this matter.
Quicksilver Resources, Inc.: On November 1, 2001, Quicksilver sued CMS MST in Texas state court in Fort Worth,
Texas for breach of contract in connection with a base contract for the sale and purchase of natural gas. The contract
outlines Quicksilver’s agreement to sell, and CMS MST’s agreement to buy, natural gas. Quicksilver believes that it is
entitled to more payments for natural gas than it has received. CMS MST disagrees with Quicksilver’s analysis and believes
that it has paid all amounts owed for delivery of gas according to the contract. Quicksilver sought damages of up to
approximately $126 million, plus prejudgment interest and attorney fees.
The jury verdict awarded Quicksilver no compensatory damages but $10 million in punitive damages. The jury found
that CMS MST breached the contract and committed fraud but found no actual damage related to such a claim.
On May 15, 2007, the trial court vacated the jury award of punitive damages but held that the contract should be
rescinded prospectively. The judicial rescission of the contract caused CMS Energy to record a charge in the second
quarter of 2007 of $24 million, net of tax. To preserve its appellate rights, CMS MST filed a motion to modify, correct or
reform the judgment and a motion for a judgment contrary to the jury verdict with the trial court. The trial court dismissed
these motions. CMS MST has filed a notice of appeal with the Texas Court of Appeals. Quicksilver has filed a notice of
cross appeal. Both Quicksilver and CMS MST have filed their opening briefs and briefs of cross appeal. Oral arguments
were made on October 29, 2008. Quicksilver claims that the contract should be rescinded from its inception, rather than
merely from the date of the judgment. Although we believe Quicksilver’s position to be without merit, if the court were to
grant the relief requested by Quicksilver, it could result in a loss of up to $10 million.
CONSUMERS’ ELECTRIC UTILITY CONTINGENCIES

Electric Environmental Matters: Our operations are subject to environmental laws and regulations. Generally, we have
been able to recover in customer rates the costs to operate our facilities in compliance with these laws and regulations.
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Cleanup and Solid Waste: Under the NREPA, we will ultimately incur investigation and response activity costs at a
number of sites. We believe that these costs will be recoverable in rates under current ratemaking policies.
We are a potentially responsible party at a number of contaminated sites administered under the Superfund. Superfund
liability is joint and several. However, many other creditworthy parties with substantial assets are potentially responsible
with respect to the individual sites. Based on our experience, we estimate that our share of the total liability for most of our
known Superfund sites will be between $2 million and $11 million. A number of factors, including the number of potentially
responsible parties involved with each site, affect our share of the total liability. As of December 31, 2008, we have recorded
a liability of $2 million, the minimum amount of our range of possible outcomes estimated probable Superfund liability in
accordance with FIN 14.
The timing of payments related to our investigation and response activities at our Superfund and NREPA sites is
uncertain. Periodically, we receive information about new sites, which leads us to review our response activity estimates.
Any significant change in the underlying assumptions, such as an increase in the number of sites, different remediation
techniques, nature and extent of contamination, and legal and regulatory requirements, could affect our estimates of NREPA
and Superfund liability.
Ludington PCB: In October 1998, during routine maintenance activities, we identified PCB as a component in certain
paint, grout, and sealant materials at Ludington. We removed and replaced part of the PCB material with non-PCB material.
Since proposing a plan to deal with the remaining materials, we have had several communications with the EPA. We are not
able to predict when the EPA will issue a final ruling. We cannot predict the financial impact or outcome of this matter.
Electric Utility Plant Air Permit Issues: In April 2007, we received a NOV/FOV from the EPA alleging that fourteen
utility boilers exceeded visible emission limits in their associated air permits. The utility boilers are located at the
Karn/Weadock Generating Complex, Campbell Plant, Cobb Electric Generating Station and Whiting Plant, which are all in
Michigan. We have responded formally to the NOV/FOV denying the allegations and are awaiting the EPA’s response to
our submission. We cannot predict the financial impact or outcome of this matter.
requirements of RMRR. In October 2008, we received another information request from the EPA pursuant to Section 114 of
the Clean Air Act. We responded to this information request in December 2008. In addition to the EPA’s information
request, in October 2008, we received a NOV for three of our coal-based facilities relating to violations of NSR regulations,
alleging ten projects from 1986 to 1998 were subject to NSR review. We met with the EPA in January 2009 and have
additional meetings scheduled. If the EPA does not accept our interpretation of RMRR, we could be required to install
additional pollution control equipment at some or all of our coal-based electric generating plants, surrender emission
allowances, engage in supplemental environmental programs and pay fines. Additionally, we would need to assess the
viability of continuing operations at certain plants. We cannot predict the financial impact or outcome of this matter.
timetable for the revision. We cannot predict the financial impact or outcome of this matter.
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Litigation: Our transmission charges paid to MISO have been subject to regulatory review and recovery through the
annual PSCR process. The Attorney General has argued that the statute governing the PSCR process does not permit
recovery of transmission charges in that manner and those expenses should be considered in general rate cases. Several
decisions of the Michigan Court of Appeals have ruled against the Attorney General’s arguments, but in September 2008,
the Michigan Supreme Court granted the Attorney General’s applications for leave to appeal two of those decisions. If the
Michigan Supreme Court accepts the Attorney General’s position, we and other electric utilities will be required to obtain
recovery of transmission charges through an alternative ratemaking mechanism. We expect a decision by the Michigan
Supreme Court on these appeals by mid-2009. We cannot predict the financial impact or outcome of this matter.
CONSUMERS’ ELECTRIC UTILITY RATE MATTERS

Stranded Cost Recovery: In November 2004, the MPSC approved recovery of our Stranded Costs incurred in 2002 and
2003 plus interest through the period of collection through a surcharge on ROA customers. Since the MPSC order, we have
experienced a downward trend in ROA customers, although recently this trend has slightly reversed. In October 2008, the
Michigan legislature enacted legislation that amended the Customer Choice Act and directed the MPSC to approve rates
that will allow recovery of Stranded Costs within five years. In January 2009, we filed an application with the MPSC
requesting recovery of these Stranded Costs through a surcharge on both full service and ROA customers. At
December 31, 2008, we had a regulatory asset for Stranded Costs of $71 million.
Power Supply Costs: The PSCR process is designed to allow us to recover all of our power supply costs if incurred
under reasonable and prudent policies and practices. The MPSC reviews these costs, policies, and practices for prudence in
annual plan and reconciliation proceedings.
The following table summarizes our PSCR reconciliation filing currently pending with the MPSC:
Powe r S u pply C ost Re cove ry Re con ciliation
Ne t Unde r- PSC R C ost
PSC R Ye ar Date File d re cove ry of Powe r S old De scription of Ne t Unde rre cove ry
2007 March 2008 $42 million(a) $1.628 billion In our 2007 PSCR Plan we expected to offset power
supply costs by including a $44 million credit for
Palisades sale proceeds due customers. However,
the MPSC directed that the Palisades sale proceeds
be refunded through bill credits outside of the PSCR
process.
(a) This amount includes 2006 underrecoveries as allowed by the MPSC order in our 2007 PSCR plan case.
2008 PSCR Plan: In September 2007, we submitted our 2008 PSCR plan filing to the MPSC. The plan includes recovery
of 2007 PSCR underrecoveries of $42 million. We self-implemented a 2008 PSCR charge in January 2008. In November 2008,
the MPSC issued an order approving our PSCR plan factor.
2009 PSCR Plan: In September 2008, we submitted our 2009 PSCR plan filing to the MPSC. The plan seeks approval to
apply a uniform maximum PSCR factor of $0.02680 per kWh for all classes of customers. The plan also seeks approval to
recover an expected $22 million discount in power supply charges provided to a large industrial customer. The MPSC
approved the discount in 2005 to promote long-term investments in the industrial infrastructure of Michigan. We self-
implemented a 2009 PSCR charge in January 2009.
While we expect to recover fully all of our PSCR costs, we cannot predict the financial impact or the outcome of these
proceedings. When we are unable to collect these costs as they are incurred, there is a negative impact on our cash flows.
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recover costs associated with our advanced metering infrastructure program. The following table details the components of
the requested increase in revenue:
C om pone n ts of th e Incre ase in Re ve n u e
In Million s
Operating and maintenance $ 50
Rate of return 17
Rate base 76
Book depreciation on new investment 14
Property taxes on new investment 9
Gross margin 43
Other 5
Total $ 214
This is the first electric rate case under the new streamlined regulatory process enacted by the Michigan legislation in
October 2008. The new provisions generally allows utilities to self-implement rates six months after filing, subject to refund,
unless the MPSC finds good cause to prohibit such self-implementation. The new provisions require the MPSC to issue an
order 12 months after filing or the rates, as filed, become permanent. We cannot predict the financial impact or outcome of
this proceeding.
Palisades Regulatory Proceedings: The MPSC order approving the Palisades sale transaction required that we credit
$255 million of excess sales proceeds and decommissioning amounts to our retail customers by December 2008. There are
additional excess sales proceeds and decommissioning fund balances of $135 million above the amount in the MPSC order.
The MPSC order in our 2007 electric rate case instructed us to offset the excess sales proceeds and decommissioning fund
balances with $26 million of transaction costs from the Palisades sale and credit the remaining balance of $109 million to
customers. The distribution of these funds is still pending with the MPSC.
OTHER CONSUMERS’ ELECTRIC UTILITY CONTINGENCIES

The MCV PPA: We have a 35-year power purchase agreement that began in 1990 with the MCV Partnership to
purchase 1,240 MW of electricity. In June 2008, the MPSC approved an amended and restated MCV PPA, which took effect
in October 2008. The MCV PPA provides for:
• a capacity charge of $10.14 per MWh of available capacity,
• a fixed energy charge based on our annual average base load coal generating plant operating and maintenance cost,
• a variable energy charge for all delivered energy that reflects the MCV Partnership’s cost of production,
• a $5 million annual contribution by the MCV Partnership to a renewable resources program, and
• an option for us to extend the MCV PPA for five years or purchase the MCV Facility at the conclusion of the MCV
PPA’s term in March 2025.
Capacity and energy charges, net of RCP replacement energy and benefits, under the MCV PPA were $320 million in
2008, $464 million in 2007, and $411 million in 2006. We estimate that capacity and energy charges under the MCV PPA will
range from $240 million to $330 million annually.
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Nuclear Matters: DOE Litigation: In 1997, a U.S. Court of Appeals decision confirmed that the DOE was to begin
accepting deliveries of spent nuclear fuel for disposal by January 1998. Subsequent U.S. Court of Appeals litigation, in
which we and other utilities participated, has not been successful in producing more specific relief for the DOE’s failure to
accept the spent nuclear fuel.
A number of court decisions support the right of utilities to pursue damage claims in the United States Court of Claims
against the DOE for failure to take delivery of spent nuclear fuel. We filed our complaint in December 2002. If our litigation
against the DOE is successful, we plan to use any recoveries as reimbursement for the incurred costs of spent nuclear fuel
storage during our ownership of Palisades and Big Rock. We cannot predict the financial impact or outcome of this matter.
The sale of Palisades and the Big Rock ISFSI did not transfer the right to any recoveries from the DOE related to costs of
spent nuclear fuel storage incurred during our ownership of Palisades and Big Rock.
Big Rock Decommissioning: The MPSC and the FERC regulate the recovery of costs to decommission Big Rock. In
December 2000, funding of a Big Rock trust fund ended because the MPSC-authorized decommissioning surcharge
collection period expired. The level of funds provided by the trust fell short of the amount needed to complete
decommissioning. As a result, we provided $44 million of corporate contributions for decommissioning costs. This amount
is in addition to the $30 million payment to Entergy to assume ownership and responsibility for the Big Rock ISFSI and
additional corporate contributions for nuclear fuel storage costs of $55 million, due to the DOE’s failure to accept spent
nuclear fuel on schedule. At December 31, 2008, we have a $129 million regulatory asset recorded on our Consolidated
Balance Sheets for these costs.
In July 2008, we filed an application with the MPSC seeking the deferral of ratemaking treatment for the recovery of our
nuclear fuel storage costs and the payment to Entergy, until the litigation regarding these costs is resolved in the federal
courts. In the application, we also are seeking to recover the $44 million Big Rock decommissioning shortfall from
customers. We cannot predict the outcome of this proceeding.
Nuclear Fuel Disposal Cost: We deferred payment for disposal of spent nuclear fuel used before April 7, 1983. Our
DOE liability is $162 million at December 31, 2008. This amount includes interest, and is payable upon the first delivery of
spent nuclear fuel to the DOE. We recovered the amount of this liability, excluding a portion of interest, through electric
rates. In conjunction with the sale of Palisades and the Big Rock ISFSI, we retained this obligation and provide a
$162 million letter of credit to Entergy as security for this obligation.
CONSUMERS’ GAS UTILITY CONTINGENCIES

Gas Environmental Matters: We expect to incur investigation and remediation costs at a number of sites under the
NREPA, a Michigan statute that covers environmental activities including remediation. These sites include 23 former
manufactured gas plant facilities. We operated the facilities on these sites for some part of their operating lives. For some of
these sites, we have no current ownership or may own only a portion of the original site. In December 2008, we estimated
our remaining costs to be between $38 million and $52 million. We expect to fund most of these costs through proceeds
from insurance settlements and MPSC-approved rates.
At December 31, 2008, we have a liability of $38 million and a regulatory asset of $69 million that, includes $31 million of
deferred MGP expenditures. The timing of payments related to the remediation of our manufactured gas plant sites is
uncertain. We expect annual response activity costs to range between $5 million and $6 million over the next five years.
Periodically, we review these response activity 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
our estimates of annual response activity costs and MGP liability.
FERC Investigation: In February 2008, we received a data request relating to an investigation the FERC is conducting
into possible violations of the FERC’s posting and competitive bidding regulations related to releases of firm capacity on
natural gas pipelines. We responded to the FERC’s first data request in the first quarter of 2008. In
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July 2008, we responded to a second set of data requests from the FERC. The FERC has also taken depositions and made an
additional data request. We cannot predict the financial impact or the outcome of this matter.
CONSUMERS’ GAS UTILITY RATE MATTERS

prudence in annual plan and reconciliation proceedings.
The following table summarizes our GCR reconciliation filings currently pending with the MPSC:
Gas C ost Re cove ry Re con ciliation
Ne t O ve r- GC R C ost
GC R Ye ar Date File d re cove ry of Gas Sold De scription of Ne t O ve rre cove ry
2007-2008 June 2008 $17 million $1.7 billion The total amount reflects an overrecovery of $15 million
plus $2 million in accrued interest owed to customers.
GCR plan for year 2008-2009: In February 2009, the MPSC issued an order for our 2008-2009 GCR plan year. The
order approved a base GCR ceiling factor of $8.17 per mcf for April 2008 through March 2009, subject to a quarterly ceiling
price adjustment mechanism.
Due to an increase in NYMEX gas prices, the base GCR ceiling factor increased to $9.52 per mcf for the three-month
period of April through June 2008 and to $9.92 for the three-month period of July through September 2008, pursuant to the
quarterly ceiling price adjustment mechanism. Beginning in October 2008, the base GCR ceiling factor was adjusted to $8.17
due to a decrease in NYMEX gas prices.
The GCR billing factor is adjusted monthly in order to minimize the over or underrecovery amounts in our annual GCR
reconciliation. Our GCR billing factor for March 2009 is $8.17 per mcf. We are currently anticipating an underrecovery will
occur during the 2008-2009 GCR year.
GCR plan for year 2009-2010: In December 2008, we filed an application with the MPSC seeking approval of a GCR
plan for our 2009-2010 GCR plan year. Our request proposed the use of a base GCR ceiling factor of $8.10 per mcf, plus a
quarterly GCR ceiling price adjustment contingent upon future events. We expect to self-implement a 2009 GCR charge in
April 2009.
While we expect to recover fully all of our GCR costs, we cannot predict the financial impact or the outcome of these
proceedings. When we are unable to collect GCR costs as they are incurred, there is a negative impact on our cash flows.
2008 Gas Rate Case: In December 2008, the MPSC approved a settlement agreement authorizing a rate increase of
$22 million, based on a 10.55 percent authorized return on equity, for service rendered on and after December 24, 2008. The
settlement includes a $20 million decrease in depreciation rates and requires that we not request a new gas general rate
increase prior to May 1, 2009.
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OTHER CONTINGENCIES — INDEMNIFICATIONS

Equatorial Guinea Tax Claim: In 2004, we received a request for indemnification from the purchaser of CMS Oil and
Gas. The indemnification claim relates to the sale of our oil, gas and methanol projects in Equatorial Guinea and the claim of
the government of Equatorial Guinea that we owe $142 million in taxes in connection with that sale. CMS Energy concluded
that the government’s tax claim is without merit and the purchaser of CMS Oil and Gas submitted a response to the
government rejecting the claim. The government of Equatorial Guinea has indicated that it still intends to pursue its claim.
We cannot predict the financial impact or outcome of this matter.
Moroccan Tax Claim: In May 2007, we sold our 50 percent interest in Jorf Lasfar. As part of the sale agreement, we
agreed to indemnify the purchaser for 50 percent of any tax assessments on Jorf Lasfar attributable to tax years prior to the
sale. In December 2007, the Moroccan tax authority concluded its audit of Jorf Lasfar for tax years 2003 through 2005. The
audit asserted deficiencies in certain corporate and withholding taxes. In January 2009, we paid $18 million, which was
charged against a tax indemnification liability established when we recorded the sale of Jorf Lasfar, and accordingly it did
not affect earnings.
Marathon Indemnity Claim regarding F.T. Barr Claim: On December 3, 2001, F. T. Barr, an individual with an
overriding royalty interest in production from the Alba field, filed a lawsuit in Harris County District Court in Texas against
CMS Energy, CMS Oil and Gas and other defendants alleging that his overriding royalty payments related to Alba field
production were improperly calculated. CMS Oil and Gas believes that Barr was paid properly on gas sales and that he was
not entitled to the additional overriding royalty payment sought. All parties signed a confidential settlement agreement on
April 26, 2004. The settlement resolved claims between Barr and the defendants, and the involved CMS Energy entities
reserved all defenses to any indemnity claim relating to the settlement. There is disagreement between Marathon and certain
current or former CMS Energy entities as to the existence and scope of any indemnity obligations to Marathon in
connection with the settlement. Between April 2005 and April 2008, there were no further communications between
Marathon and CMS Energy entities regarding this matter. In April 2008, Marathon indicated its intent to pursue the
indemnity claim. Present and former CMS Energy entities and Marathon entered into an agreement tolling the statute of
limitations on any claim by Marathon under the indemnity. CMS Energy entities dispute Marathon’s claim, and will
vigorously oppose it if raised in any legal proceeding. CMS Energy entities also will assert that Marathon has suffered
minimal, if any, damages. CMS Energy cannot predict the outcome of this matter. If Marathon’s claim were sustained, it
would have a material effect on CMS Energy’s future earnings and cash flow.
Guarantees and Indemnifications: FIN 45 requires a guarantor, upon issuance of a guarantee, to recognize a liability
for the fair value of the obligation it undertakes in issuing the guarantee. To measure the fair value of a guarantee liability,
we recognize a liability for any premium received or receivable in exchange for the guarantee. For a guarantee issued as part
of a larger transaction, such as in association with an asset sale or executory contract, we recognize a liability for any
premium that we would have received had we issued the guarantee as a single item.
The following table describes our guarantees at December 31, 2008:
FIN 45
Maxim u m C arrying
Gu aran te e De scription Issu e Date Expiration Date O bligation Am ou n t
In Million s
Indemnifications from asset sales and other agreements Various Indefinite $ 1,445(a) $ 84(b)
Surety bonds and other indemnifications Various Indefinite 35 1
Guarantees and put options Various
through
September
Various 2027 89(c) 1
(a) The majority of this amount arises from provisions in stock and asset sales agreements under which we indemnify the
purchaser for losses resulting from claims related to tax disputes, claims related to power
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purchase agreements and the failure of title to the assets or stock we sold to the purchaser. Except for items described
elsewhere in this Note, we believe the likelihood of loss to be remote for the indemnifications we have not recorded as
liabilities.
(b) In May 2007, CMS Energy provided an indemnification to TAQA in connection with the sale of its ownership interests
in businesses in the Middle East, Africa, and India. This indemnification is capped at $50 million and expires two years
after the May 2, 2007 sale closing date. The indemnification covers claims related to the following matters:
• a dispute between Neyveli and the TNEB regarding the capital costs to be reflected in the tariff paid by the TNEB to
Neyveli, and
• various matters, including the lack of a valid site lease and current operating license for Takoradi.
As of December 31, 2008, we have recorded an $84 million liability in connection with indemnities related to the sale of
certain subsidiaries, including a $50 million liability related to the indemnification to TAQA described in the preceding
paragraphs. The TAQA indemnification liability may be resolved during 2009, and our ultimate payment obligation
could be materially less than the amount we have accrued for the indemnification.
(c) The maximum obligation includes $85 million related to the MCV Partnership’s nonperformance under a steam and
electric power agreement with Dow. We sold our interests in the MCV Partnership and the FMLP. The sales agreement
calls for the purchaser, an affiliate of GSO Capital Partners and Rockland Capital Energy Investments, to pay
$85 million, subject to certain reimbursement rights, if Dow terminates an agreement under which the MCV Partnership
provides it steam and electric power. This agreement expires in March 2016, subject to certain terms and conditions.
The purchaser secured its reimbursement obligation with an irrevocable letter of credit of up to $85 million.
The following table provides additional information regarding our guarantees:
Gu aran te e De scription How Gu aran te e Arose Eve n ts Th at W ou ld Re qu ire Pe rform an ce
Indemnifications from asset sales and Stock and asset sales agreements Findings of misrepresentation, breach
other agreements of warranties, tax claims and other
specific events or circumstances
Surety bonds and other Normal operating activity, permits Nonperformance
indemnifications and licenses
Guarantees and put options Normal operating activity Agreement Nonperformance or non-payment by a
to provide power and steam to Dow subsidiary under a related contract
Bay Harbor remediation efforts MCV Partnership’s nonperformance or
non-payment under a related contract
Owners exercising put options
requiring us to purchase property
At December 31, 2008, certain contracts contained provisions allowing us to recover, from third parties, amounts paid
under the guarantees. Additionally, if we are required to purchase a Bay Harbor property under a put option agreement, we
may sell the property to recover the amount paid under the option.
We also enter into various agreements containing tax and other indemnification provisions for which, due to a number
of factors, we are unable to estimate the maximum potential obligation. These factors include unspecified exposure under
certain agreements. We consider the likelihood that we would be required to perform or incur significant losses related to
these indemnities to be remote.
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Other: In addition to the matters disclosed in this Note, Consumers and certain other subsidiaries of CMS Energy are
parties to certain lawsuits and administrative proceedings before various courts and governmental agencies arising from the
ordinary course of business. These lawsuits and proceedings may involve personal injury, property damage, contractual
matters, environmental issues, federal and state taxes, rates, licensing, and other matters.
CONTRACTUAL COMMITMENTS
Purchase Obligations: The following table summarizes our contractual cash obligations for each of the periods
presented.
Purchase O bligation s at De ce m be r 31, 2008
Paym e n ts Due
Total O n e Ye ar Th re e Ye ars Five Ye ars Five Ye ars
In Million s
Purchase obligations(a) $14,699 $ 2,201 $ 2,391 $ 1,545 $ 8,562
(a) Long-term contracts for purchase of commodities and services. These obligations include operating contracts used to
ensure adequate supply with generating facilities that meet PURPA requirements. The commodities and services
include:
• and associated transportation.
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5: FINANCINGS AND CAPITALIZATION

Long-term debt at December 31 follows:
Inte re st Rate (%) Maturity 2008 2007
In Million s
Senior notes 7.750 2010 $ 300 $ 300
8.500 2011 300 300
6.300 2012 150 150
Variable(a) 2013 150 150
6.875 2015 125 125
6.550 2017 250 250
3.375(b) 2023 140 150
2.875(b) 2024 288 288
1,703 1,713
Revolving Credit Facility 105 —
Total — CMS Energy Corporation 1,808 1,713
CONSUMERS ENERGY COMPANY
First mortgage bonds(c) 4.250 2008 — 250
4.800 2009 200 200
4.400 2009 150 150
4.000 2010 250 250
5.000 2012 300 300
5.375 2013 375 375
6.000 2014 200 200
5.000 2015 225 225
5.500 2016 350 350
5.150 2017 250 250
5.650 2018 250 —
6.125 2019 350 —
5.650 2020 300 300
5.650 2035 142 145
5.800 2035 175 175
3,517 3,170
Senior notes 6.375 2008 — 159
6.875 2018 180 180
Securitization bonds 5.495(d) 2009-2015 277 309
Nuclear fuel disposal liability (e) 162 159
Tax-exempt pollution control revenue bonds Various 2010-2035 161 161
Total — Consumers Energy Company 4,297 4,138
OTHER S UBSIDIARIES
EnerBank brokered certificates of deposit 4.374(f) 2009-2018 176 153
Genesee tax exempt bonds 7.500 2009-2021 57 59
Grayling tax exempt bonds Variable(g) 2009-2012 19 24
Total — other subsidiaries 252 236
Total principal amount outstanding 6,357 6,087
Current amounts (489) (692)
Net unamortized discount (9) (10)
Total long-term debt $5,859 $5,385
(a) The variable rate senior notes bear interest at three-month LIBOR plus 95 basis points (5.7025 percent at December 31,
2008 which reset to 2.0444 percent in January 2009).
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(b) Contingently convertible notes. See the “Contingently Convertible Securities” section in this Note for further
discussion of the conversion features.
(c) The weighted-average interest rate for our FMB was 5.329 percent at December 31, 2008 and 5.131 percent at
December 31, 2007.
(d) Represents the weighted-average interest rate at December 31, 2008 (5.442 percent at December 31, 2007).
(e) The maturity date is uncertain.
(f) Represents the weighted-average interest rate for EnerBank’s brokered certificates of deposit at December 31, 2008
(5.198 percent at December 31, 2007). These deposits are sold through investment brokers in large pools with each
certificate within the pool having a face value of $1,000. They cannot be withdrawn until maturity, except in the case of
death or incompetence of the holder.
(g) The interest rate for the tax exempt bonds was 0.910 percent at December 31, 2008 and 3.530 percent at December 31,
2007.
Financings: The following is a summary of significant long-term debt transactions during 2008:
Prin cipal
(In m illion s) Inte re st Rate (%) Issu e /Re tire m e n t Date Maturity Date
Debt Issuances:
Consumers
First mortgage bonds $ 250 5.650% March 2008 September 2018
Tax-exempt bonds(a) 28 4.250% March 2008 June 2010
Tax-exempt bonds(b) 68 Variable March 2008 April 2018
First mortgage bonds 350 6.125% September 2008 March 2019
Total $ 696
Debt Retirements:
Consumers
Senior notes $ 159 6.375% February 2008 February 2008
First mortgage bonds 250 4.250% April 2008 April 2008
Tax-exempt bonds(a) 28 Variable April 2008 June 2010
Tax-exempt bonds(b) 68 Variable April 2008 April 2018
Total $ 505
(a) In March 2008, Consumers utilized the Michigan Strategic Fund for the issuance of $28 million of tax-exempt Michigan
Strategic Fund Limited Obligation Refunding Revenue Bonds, bearing interest at a 4.25 percent annual rate. The bonds
are secured by FMB. Consumers used the proceeds to redeem $28 million of insured tax-exempt bonds in April 2008.
(b) In March 2008, Consumers utilized the Michigan Strategic Fund for the issuance of $68 million of tax-exempt Michigan
Strategic Fund Variable Rate Limited Obligation Refunding Revenue Bonds. The initial interest rate was 2.25 percent
and it resets weekly. The bonds, which are backed by a letter of credit, are subject to optional tender by the holders
that would result in remarketing. Consumers used the proceeds to redeem $68 million of insured tax-exempt bonds in
April 2008.
In April 2008, Consumers caused the conversion of $35 million of tax-exempt Michigan Strategic Fund Variable Rate
Limited Obligation Revenue Bonds from insured bonds to demand bonds, backed by a letter of credit.
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The Michigan Strategic Fund is housed within the Michigan Department of Treasury to provide public and private
development finance opportunities for agriculture, forestry, business, industry and communities within the State of
Michigan.
First Mortgage Bonds: Consumers secures its FMB by a mortgage and lien on substantially all of its property.
Consumers’ ability to issue FMB is restricted by certain provisions in the First Mortgage Bond Indenture and the need for
regulatory approvals under federal law. Restrictive issuance provisions in the First Mortgage Bond Indenture include
achieving a two-times interest coverage ratio and having sufficient unfunded net property additions.
Regulatory Authorization for Financings: The FERC has authorized Consumers to have outstanding at any one time,
up to $1.0 billion of secured and unsecured short-term securities for general corporate purposes. The remaining availability
is $550 million at December 31, 2008.
The FERC has also authorized Consumers to issue and sell up to $1.5 billion of secured and unsecured long-term
securities for general corporate purposes. The remaining availability is $950 million at December 31, 2008.
The authorizations are for the period ending June 30, 2010. Any long-term issuances during the authorization period
are exempt from the FERC’s competitive bidding and negotiated placement requirements.
Securitization Bonds: Certain regulatory assets collateralize securitization bonds. The bondholders have no recourse
to our other assets. Through Consumers’ rate structure, we bill customers for securitization surcharges to fund the payment
of principal, interest, and other related expenses. The surcharges collected are remitted to a trustee and are not available to
creditors of Consumers or creditors of Consumers’ affiliates. Securitization surcharges totaled $53 million in 2008 and
$48 million in 2007.
Long-Term Debt — Related Parties: CMS Energy formed a statutory wholly owned business trust for the sole
purpose of issuing preferred securities and lending the gross proceeds to itself. The sole assets of the trust consists of the
debentures described in the following table. These debentures have terms similar to those of the mandatorily redeemable
preferred securities the trust issued. We determined that we do not hold the controlling financial interest in our trust
preferred security structure. Accordingly, this entity is reflected in Long-term debt — related parties on our Consolidated
Balance Sheets.
The following is a summary of Long-term debt — related parties at December 31:
De be n ture an d re late d party Inte re st Rate (%) Maturity 2008 2007
In Million s
Convertible subordinated debentures, CMS Energy Trust I 7.75 2027 $178 $178
In the event of default, holders of the Trust Preferred Securities would be entitled to exercise and enforce the trust’s
creditor rights against us, which may include acceleration of the principal amount due on the debentures. We have issued
certain guarantees with respect to payments on the preferred securities. These guarantees, when taken together with our
obligations under the debentures, related indenture and trust documents, provide full and unconditional guarantees for the
trust’s obligations under the preferred securities. Our maximum exposure for the trust’s obligations is recorded on our
balance sheet as Long-term debt — related parties in the amount of $178 million.
Debt Maturities: At December 31, 2008, the aggregate annual contractual maturities for long-term debt and long-term
debt — related parties for the next five years are:
Paym e n ts Due
2009 2010 2011 2012 2013
In Million s
Long-term debt and long-term debt — related parties $489 $673 $364 $618 $579
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Revolving Credit Facilities: The following secured revolving credit facilities with banks are available at December 31,
2008:
O u tstan ding
Am ou n t of Am ou n t Le tte rs of Am ou n t
C om pany Expiration Date Facility Borrowe d C re dit Available
In Million s
CMS Energy(a) April 2, 2012 $ 550 $ 105 $ 24 $ 421
Consumers March 30, 2012 500 — 172 328
Consumers(b) November 30, 2009 192 — 192 —
Consumers September 9, 2009 150 — — 150
(a) Average borrowings during 2008 totaled $212 million, with a weighted average annual interest rate of 3.59 percent, at
LIBOR plus 0.75 percent. At December 31, 2008, the annual interest rate on the amount borrowed was 2.0 percent.
(b) Secured revolving letter of credit facility.
Dividend Restrictions: Under provisions of our senior notes indenture, at December 31, 2008, payment of common
stock dividends was limited to $585 million.
Under the provisions of its articles of incorporation, at December 31, 2008, Consumers had $331 million of unrestricted
retained earnings available to pay common stock dividends. Provisions of the Federal Power Act and the Natural Gas Act
appear to restrict dividends to the amount of Consumers’ retained earnings. Several decisions from the FERC suggest that
under a variety of circumstances common stock dividends from Consumers would not be limited to amounts in Consumers’
retained earnings. Decisions in those circumstances would, however, be based on specific facts and circumstances and
would result only after a formal regulatory filing process.
During 2008, CMS Energy received $297 million of common stock dividends from Consumers.
Sale of Accounts Receivable: Under a revolving accounts receivable sales program, we sell eligible accounts receivable
to a wholly owned, consolidated, bankruptcy-remote special-purpose entity. In turn, the special purpose entity may sell an
undivided interest in up to $250 million of the receivables at December 31, 2008, reduced from $325 million at December 31,
2007. The special purpose entity sold $170 million in receivables at December 31, 2008 and no receivables at December 31,
2007. The purchaser of the receivables has no recourse against our other assets for failure of a debtor to pay when due and
no right to any receivables not sold. We have neither recorded a gain or loss on the receivables sold nor retained any
interest in the receivables sold. We continue to service the receivables sold to the special-purpose entity.
The following table summarizes certain cash flows under our accounts receivable sales program:
In Million s
Administrative fees $ 1 $ 3
Net cash flow as a result of accounts receivable financing $ 170 $ (325)
Collections from customers $6,060 $5,881
Capitalization: The authorized capital stock of CMS Energy consists of:

• 350 million shares of CMS Energy Common Stock, par value $0.01 per share, and
• 10 million shares of CMS Energy Preferred Stock, par value $0.01 per share.
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Preferred Stock: Details about our outstanding preferred stock follow:

Nu m be r of S h are s
De ce m be r 31 2008 2007 2008 2007
In Million s
Preferred stock 4.50% convertible, Authorized 10,000,000 shares 4,978,000 5,000,000 $249 $250
At December 31, 2008, $6 million of the total amount outstanding that was tendered for conversion in December 2008 is
classified in current liabilities on our consolidated balance sheets. See the “Contingently Convertible Securities” section in
this Note for further discussion of the convertible preferred stock.
In February 2007, we repurchased our non-voting preferred subsidiary interest of $11 million and redeemed it for a cash
payment of $32 million. We reversed the original $19 million addition to paid-in-capital and charged a $1 million redemption
premium to accumulated deficit.
Preferred Stock of Subsidiary: Details about Consumers’ preferred stock outstanding follow:
O ptional
Re de m ption Nu m be r of S h are s
De ce m be r 31 S e rie s Price 2008 2007 2008 2007
In Million s
Preferred stock
Cumulative $100 par value, Authorized
7,500,000 shares, with no mandatory redemption $ 4.16 $ 103.25 68,451 68,451 $ 7 $ 7
$ 4.50 $ 110.00 373,148 373,148 37 37
Total Preferred stock of subsidiary $ 44 $ 44
Contingently Convertible Securities: At December 31, 2008, the significant terms of our contingently convertible
securities were as follows:
Adjuste d Adjuste d
O u tstan ding C on ve rsion Trigge r
S e cu rity Maturity (In m illion s) Price Price
4.50% preferred stock — $ 249 $ 9.51 $ 11.42
3.375% senior notes 2023 $ 140 $ 10.26 $ 12.31
2.875% senior notes 2024 $ 288 $ 14.18 $ 17.02
We have the right to require the 4.50 percent preferred stock to be converted if the closing price of our common stock
remains at or above $12.37 for 20 of any 30 consecutive trading days. The holders of the 3.375 percent senior notes have the
right to require us to purchase the notes at par on July 15, 2013 and 2018. The holders of the 2.875 percent senior notes have
the right to require us to purchase the notes at par on December 1, 2011, 2014, and 2019.
The securities become convertible for a calendar quarter if the price of our common stock remains at or above the
trigger price for 20 of 30 consecutive trading days ending on the last trading day of the previous quarter. The trigger price at
which these securities become convertible is 120 percent of the conversion price. The conversion and trigger prices are
subject to adjustment under certain circumstances, including payments or distributions to our common stockholders. The
conversion and trigger price adjustment is made when the cumulative change in conversion and trigger prices is one
percent or more.
All of our contingently convertible securities, if converted, require us to pay cash up to the principal (or par) amount of
the securities. Any conversion value in excess of that amount is paid in shares of our common stock.
During December 2008, no trigger price contingencies were met.
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In June 2008, $1 million of 4.50 percent preferred stock was tendered for conversion. The conversion at $14.10 per share
resulted in the issuance of 32,567 shares of common stock and payment of $1 million. In July 2008, $10 million of
3.375 percent senior notes was tendered for conversion. The conversion at $13.41 per share resulted in the issuance of
213,742 shares of common stock and payment of $10 million.
In December 2008, $6 million of 4.50 percent preferred stock was tendered for conversion. The conversion price
determined in January 2009 was $10.92 per share. The conversion resulted in the issuance of 84,592 shares of common stock
and payment of $6 million in January 2009.
6: EARNINGS PER SHARE

The following table presents our basic and diluted EPS computations based on Income (Loss) from Continuing
Operations:
In Million s, Exce pt
pe r S h are Am ou n ts
Income (Loss) Available to Common Stockholders
Income (Loss) from Continuing Operations $ 300 $ (126) $ (133)
Less Preferred Dividends and Redemption Premiums (11) (12) (11)
Income (Loss) from Continuing Operations Available to Common Stockholders Basic
and Diluted 289 (138) (144)
Average Common Shares Outstanding Applicable to Basic and Diluted EPS
Weighted Average Shares — Basic 223.9 222.6 219.9
Add dilutive impact of Contingently Convertible Securities 10.4 — —
Add dilutive Options, Warrants and Restricted Stock Awards 0.5 — —
Weighted Average Shares — Diluted 234.8 222.6 219.9
Earnings (Loss) Per Average Common Share Available to Common Stockholders
Basic $ 1.29 $ (0.62) $ (0.66)
Diluted $ 1.23 $ (0.62) $ (0.66)
Contingently Convertible Securities: When we have positive income from continuing operations, our contingently
convertible securities dilute EPS to the extent that the conversion value, which is based on the average market price of our
common stock, exceeds the principal or par value. Had there been positive income from continuing operations, our
contingently convertible securities would have contributed an additional 19.7 million shares to the calculation of diluted
EPS for 2007, and 11.3 million shares for 2006. For additional details on our contingently convertible securities, see Note 5,
Financings and Capitalization.
Stock Options, Warrants and Restricted Stock Awards: For the year ended December 31, 2008, outstanding options
and warrants to purchase 0.6 million shares of common stock had no impact on diluted EPS, since the exercise price was
greater than the average market price of common stock. These stock options have the potential to dilute EPS in the future.
Had there been positive income from continuing operations, 1.1 million shares of unvested restricted stock awards and
options and warrants to purchase 0.3 million shares of common stock would have been included in the calculation of diluted
EPS for the year ended December 31, 2007. For the year ended December 31, 2006, had there been positive income from
continuing operations, 1.0 million shares of unvested restricted stock awards and options and warrants to purchase
0.5 million shares of common stock would have been included in the calculation of diluted EPS.
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Convertible Debentures: For the years ended December 31, 2008, 2007, and 2006, there was no impact on diluted EPS
from our 7.75 percent convertible subordinated debentures. Using the if-converted method, the debentures would have:
• increased the numerator of diluted EPS by $9 million from an assumed reduction of interest expense, net of tax, and
• increased the denominator of diluted EPS by 4.2 million shares.
We can revoke the conversion rights if certain conditions are met.
In June 2008, the FASB issued FSP EITF 03-6-1, effective for us January 1, 2009 with retrospective application required.
Under this standard, share-based payment awards that accrue cash dividends when common shareholders receive
dividends are considered participating securities if the dividends do not need to be returned to the company when the
employee forfeits the award. This standard will apply to our outstanding unvested restricted stock awards, which will be
considered participating securities and thus will be included in the computation of basic EPS. Had this standard been in
place in 2008, it would have reduced 2008 basic and diluted EPS by approximately $0.01. We consider this figure to be
representative of the potential impact of this standard on future years’ EPS.
7: FINANCIAL AND DERIVATIVE INSTRUMENTS

Financial Instruments: The carrying amounts of cash, current accounts and notes receivable, short-term investments,
and current liabilities approximate their fair values because of their short-term nature. We estimate the fair values of long-
term financial instruments based on quoted market prices or, in the absence of specific market prices, on quoted market
prices of similar instruments or other valuation techniques.
The cost or carrying amount and fair value of our long-term financial instruments were as follows:
2008 2007
C ost or C ost or
C arrying C arrying
De ce m be r 31 Am ou n t Fair Value Am ou n t Fair Value
In Million s
Securities held to maturity $ 3 $ 3 $ 3 $ 3
Securities available for sale 68 68 75 75
Notes receivable, net 186 201 163 170
Long-term debt(a) 6,348 5,962 6,077 6,287
Long-term debt — related parties 178 107 178 173
(a) Includes current maturities of $489 million at December 31, 2008 and $692 million at December 31, 2007. Settlement of
long-term debt is generally not expected until maturity.
A summary of our investment securities follows:
2008 2007
Un re aliz e d Un re aliz e d Fair Un re aliz e d Un re aliz e d Fair
De ce m be r 31 C ost Gain s Losse s Value C ost Gain s Losse s Value
In Million s
Available for sale:
Equity securities $ 39 $ — $ — $ 39 $ 62 $ — $ — $ 62
Debt securities 29 — — 29 13 — — 13
Held to maturity:
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Equity securities classified as available for sale consist of an investment in a Standard & Poor’s 500 Index mutual fund.
Debt securities classified as available for sale consist of investment-grade municipal bonds. Debt securities classified as
held to maturity consist of municipal bonds and mortgage-backed securities held by EnerBank.
During 2008, the fair value of our SERP investment in equity securities declined to $39 million. We determined that this
decline in fair value was other than temporary. Accordingly, we reclassified net unrealized losses of $24 million ($15 million,
net of tax) from AOCL to Other expense in the Consolidated Statements of Income (Loss) and established a new cost basis
of $39 million for these investments, which was equal to fair value at December 31, 2008.
The fair value of debt securities by contractual maturity at December 31, 2008 is as follows:
In Million s
Due one year or less $ 1
Due after one year through five years 12
Due after five years through ten years 13
Due after ten years 6
Total $ 32
During 2008, the proceeds from sales of SERP securities were $2 million. Gross losses realized were immaterial. During
2007, the proceeds from sales of SERP securities were $64 million, and $23 million of gross gains and $1 million of gross
losses were realized. We reclassified net gains of $15 million, net of tax of $7 million, from AOCL and included this amount in
net loss in 2007. The proceeds from sales of SERP securities were $6 million during 2006. Gross gains and losses were
immaterial in 2006.
Derivative Instruments: In order to limit our exposure to certain market risks, primarily changes in interest rates,
commodity prices, and foreign currency exchange rates, we may enter into various risk management contracts, such as
swaps, options, futures, and forward contracts. We enter into these contracts using established policies and procedures,
under the direction of an executive oversight committee consisting of senior management representatives and a risk
committee consisting of business unit managers.
The contracts we use to manage market risks may qualify as derivative instruments that are subject to derivative
accounting under SFAS No. 133. If a contract is a derivative and does not qualify for the normal purchases and sales
exception under SFAS No. 133, we record it on our consolidated balance sheet at its fair value. Each quarter, we adjust the
resulting asset or liability to reflect any change in the fair value of the contract, a practice known as marking the contract to
market. Since we have not designated any of our derivatives as accounting hedges under SFAS No. 133, we report all mark-
to-market gains and losses in earnings. For a discussion of how we determine the fair value of our derivatives, see Note 2,
Fair Value Measurements.
Most of our commodity purchase and sale contracts are not subject to derivative accounting under SFAS No. 133
because:
active market for coal develops in the future, some of these contracts may qualify as derivatives. For Consumers, which is
subject to regulatory accounting, the resulting mark-to-market gains and losses would be
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offset by changes in regulatory assets and liabilities and would not affect net income. For other CMS Energy subsidiaries,
we do not believe the resulting mark-to-market impact on earnings would be material.
The following table summarizes our derivative instruments:
De ce m be r 31 2008 2007
Fair Un re aliz e d Fair Un re aliz e d
De rivative Instru m e n ts C ost Value Loss C ost Value Loss
In Million s
Interest rate collar $ — $ (1) $ (1) $ — $ — $ —
Fixed price fuel contracts — (1) (1) — — —
Electricity and gas contracts — (16) (16) — (23) (23)
Foreign exchange forward — (1) (1) — — —
Interest Rate Collar: Grayling Generating Station Limited Partnership executed this interest rate collar contract as an
economic hedge of the variable interest rate charged on its outstanding revenue bonds. We record the fair value of this
derivative in Other non-current liabilities on our Consolidated Balance Sheets. We recorded the mark-to-market loss on this
derivative in Other expense on our Consolidated Statements of Income (Loss).
Fixed Price Fuel Contracts: Consumers entered into two financial contracts to fix economically the price of gasoline
and diesel fuel it purchases for its fleet vehicles and equipment. Under these agreements, Consumers has effectively locked
in a price per gallon for gasoline and diesel fuel it will purchase from January through November 2009. We record the fair
value of these derivatives in Other current liabilities on our Consolidated Balance Sheets. We recorded the mark-to-market
losses on these derivatives in Other expense on our Consolidated Statements of Income (Loss).
Electricity and Gas Contracts: In order to support CMS Energy’s ongoing non-utility operations, CMS ERM enters
into contracts to purchase and sell electricity and natural gas in the future. These forward contracts are generally long-term
in nature and result in physical delivery of the commodity at a contracted price. To manage commodity price risks
associated with these forward purchase and sale contracts, CMS ERM also uses various financial instruments, such as
swaps, options, and futures.
In the past, CMS ERM generally classified all of its derivatives that result in physical delivery of commodities as non-
trading contracts and all of its derivatives that financially settle as trading contracts. Following the restructuring of our DIG
investment and the resulting streamlining of CMS ERM’s risk management activities in the first quarter of 2008, we
reevaluated the classification of CMS ERM’s derivatives as trading versus non-trading. We determined that all of CMS
ERM’s derivatives are held for purposes other than trading. Therefore, during 2008, we have classified all of CMS ERM’s
derivatives as non-trading derivatives.
We record the fair value of these contracts in Other current and non-current assets or Other current and non-current
liabilities on our Consolidated Balance Sheets. For contracts that economically hedge sales of power or gas to third parties,
CMS ERM records mark-to-market gains and losses in earnings as a component of Operating Revenue. For contracts that
economically hedge purchases of power or gas, CMS ERM records mark-to-market gains and losses in earnings as a
component of Operating Expenses.
On January 1, 2008, we implemented FSP FIN 39-1, which permits entities to offset the fair value of derivatives held
under master netting arrangements with cash collateral received or paid for those derivatives. We have made an accounting
policy choice to offset the fair value of our derivatives held under master netting arrangements. Therefore, as a result of
adopting this standard, we also offset related cash collateral amounts, which resulted in a reduction to both CMS ERM’s
derivative-related assets and liabilities of $2 million at December 31, 2008 and $4 million at December 31, 2007.
Foreign Exchange Forward: We executed this foreign exchange forward contract as an economic hedge of an
exposure to the Moroccan dirham/US dollar exchange rate. This exposure resulted from a tax indemnification, under which
we agreed to pay an amount equal to 150 million Moroccan dirhams (approximately $18 million) to the
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purchaser of our previous interest in Jorf Lasfar. We settled this obligation and the related derivative in January 2009. We
recorded the fair value of this derivative in Other current liabilities on our Consolidated Balance Sheets at December 31,
2008. We recorded the mark-to-market loss on this derivative in Other expense on our Consolidated Statements of Income
(Loss). For further details on the related tax indemnification, see Note 4, Contingencies, “Other Contingencies —
Indemnifications — Moroccan Tax Claim.”
Credit Risk: Our swaps, options, and forward contracts contain credit risk, which is the risk that our counterparties
will fail to meet their contractual obligations. We reduce this risk through using established policies and procedures. For
each counterparty, we assess credit quality by considering credit ratings, financial condition, and other available
information. We establish a credit limit for each counterparty based upon our evaluation of its credit quality. We monitor
our exposure to potential loss under each contract and take action when appropriate.
CMS ERM enters into contracts primarily with companies in the electric and gas industry. This industry concentration
may have a positive or negative impact on our exposure to credit risk based on how similar changes in economic conditions,
the weather, or other conditions affect these counterparties. CMS ERM reduces its credit risk exposure by using industry-
standard agreements that allow for netting positive and negative exposures associated with the same counterparty.
Typically, these agreements also allow each party to demand adequate assurance of future performance from the other
party, when there is reason to do so.
The following table illustrates our exposure to potential losses at December 31, 2008, if each counterparty within this
industry concentration failed to meet its contractual obligations. This table includes contracts accounted for as financial
instruments. It does not include trade accounts receivable, derivative contracts that qualify as normal purchases and sales
under SFAS No. 133, or other contracts that we do not account for as derivatives.
Ne t Exposure Ne t Exposure
Exposure from Inve stm e n t from Inve stm e n t
Be fore C ollate ral Ne t Grade Grade
C ollate ral(a) He ld Exposure C om panie s C om panie s (%)
In Million s
CMS ERM $ 1 $ — $ 1 $ 1 100%
(a) Exposure is reflected net of payables or derivative liabilities if netting arrangements exist.
Given our credit policies, our current exposures, and our credit reserves, we do not expect a material adverse effect on
our financial position or future earnings as a result of counterparty nonperformance.
8: RETIREMENT BENEFITS
We provide retirement benefits to our employees under a number of different plans, including:
• a non-contributory, qualified defined benefit Pension Plan (closed to new non-union participants as of July 1, 2003
and closed to new union participants as of September 1, 2005),
• a qualified cash balance Pension Plan for certain employees hired between July 1, 2003 and August 31, 2005,
• a non-contributory, qualified DCCP for employees hired on or after September 1, 2005,
• benefits to certain management employees under a non-contributory, nonqualified defined benefit SERP (closed to
new participants as of March 31, 2006),
• benefits to certain management employees under a non-contributory, nonqualified DC SERP hired on or after April 1,
2006,
• health care and life insurance benefits under OPEB,
• benefits to a selected group of management under a non-contributory, nonqualified EISP, and
• a contributory, qualified defined contribution 401(k) plan.
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Pension Plan: The Pension Plan includes funds for most of our current employees, the employees of our subsidiaries,
and Panhandle, a former subsidiary. The Pension Plan’s assets are not distinguishable by company.
On September 1, 2005, we implemented the DCCP. The DCCP provides an employer contribution of five percent of base
pay to the existing employees’ 401(k) plan. No employee contribution is required in order to receive the plan’s employer
contribution. All employees hired on and after September 1, 2005 participate in this plan. Participants in the cash balance
pension plan, in effect from July 1, 2003 to September 1, 2005, also participate in the DCCP as of September 1, 2005.
Additional pay credits under the cash balance pension plan were discontinued as of that date. The DCCP expense was
$3 million for the year ended December 31, 2008 and $2 million for the years ended December 31, 2007 and 2006.
SERP: SERP benefits are paid from a trust established in 1988. SERP is not a qualified plan under the Internal Revenue
Code. SERP trust earnings are taxable and trust assets are included in our consolidated assets. Trust assets were $69 million
at December 31, 2008 and $95 million at December 31, 2007. The assets are classified as Other non-current assets on our
Consolidated Balance Sheets. The ABO for SERP was $80 million at December 31, 2008 and $83 million at December 31, 2007.
A contribution of $25 million was made to the trust in December 2007.
On April 1, 2006, we implemented a DC SERP and froze further new participation in the defined benefit SERP. The DC
SERP provides participants benefits ranging from 5 percent to 15 percent of total compensation. The DC SERP requires a
minimum of five years of participation before vesting. Our contributions to the plan, if any, will be placed in a grantor trust.
Trust assets were less than $1 million at December 31, 2008 and 2007. The assets are classified as Other non-current assets
on our Consolidated Balance Sheets. The DC SERP expense was less than $1 million for the years ended December 31, 2008,
2007 and 2006.
401(k): The employer’s match for the 401(k) plan is 60 percent on eligible contributions up to the first six percent of an
employee’s wages. The total 401(k) plan cost was $16 million for the year ended December 31, 2008, $14 million for the year
ended December 31, 2007 and $15 million for the year end December 31, 2006.
EISP: We implemented a nonqualified EISP in 2002 to provide flexibility in separation of employment by officers, a
selected group of management, or other highly compensated employees. Terms of the plan may include payment of a lump
sum, payment of monthly benefits for life, payment of premiums for continuation of health care, or any other legally
permissible term deemed to be in our best interest to offer. The EISP expense was less than $1 million for the years ended
December 31, 2008 and 2007 and $1 million for the year ended December 31, 2006. The ABO for the EISP was $4 million at
December 31, 2008 and December 31, 2007.
OPEB: The OPEB plan covers all regular full-time employees who are covered by the employee health care plan on a
company-subsidized basis the day before they retire from the company at age 55 or older and who have at least 10 full years
of applicable continuous service. Regular full-time employees who qualify for a pension plan disability retirement and have
15 years of applicable continuous service are also eligible. Retiree health care costs were based on the assumption that
costs would increase 8.0 percent for those under 65 and 9.5 percent for those over 65 in 2008. The 2009 rate of increase for
OPEB health costs for those under 65 is expected to be 8.5 percent and for those over 65 is expected to be 8.0 percent. The
rate of increase is expected to slow to 5 percent for those under 65 by 2017 and for those over 65 by 2017 and thereafter.
The health care cost trend rate assumption affects the estimated costs recorded. A one percentage point change in the
assumed health care cost trend assumption would have the following effects:
O n e Pe rce n tage O n e Pe rce n tage

Poin t In cre ase Poin t De cre ase
In Million s
Effect on total service and interest cost component $ 16 $ (13)
Effect on postretirement benefit obligation $ 177 $ (155)
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Upon adoption of SFAS No. 106 in 1992, we recorded a liability of $466 million for the accumulated transition obligation
and a corresponding regulatory asset for anticipated recovery in utility rates. For additional details, see Note 1, Corporate
Structure and Accounting Policies, “Utility Regulation.” The MPSC authorized recovery of the electric utility portion of
these costs in 1994 over 18 years and the gas utility portion in 1996 over 16 years.
SFAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans — an amendment
of FASB Statements No. 87, 88, 106, and 132(R): In September 2006, the FASB issued SFAS No. 158. This standard
required us to recognize the funded status of our defined benefit postretirement plans on our Consolidated Balance Sheets
at December 31, 2006. SFAS No. 158 also required us to recognize changes in the funded status of our plans in the year in
which the changes occur. In addition, the standard required that we change our plan measurement date from November 30
to December 31, effective December 31, 2008. In the first quarter of 2008, we recorded the measurement date change, which
resulted in a $6 million net-of-tax decrease to retained earnings, a $4 million reduction to the SFAS No. 158 regulatory assets,
a $7 million increase in Postretirement benefit liabilities, and a $5 million increase in Deferred tax assets on our Consolidated
Balance Sheets.
In April 2008, the MPSC issued an order in our PSCR case that allowed us to collect a one-time surcharge under a
pension and OPEB equalization mechanism. For 2008, we collected $10 million of pension and $2 million of OPEB surcharge
revenue in electric rates. We recorded a reduction of $12 million of equalization regulatory assets on our Consolidated
Balance Sheets and an increase of $12 million of expense on our Consolidated Statements of Income (Loss). Thus, our
collection of the equalization mechanism surcharge had no impact on net income for the year ended December 31, 2008.
Assumptions: The following tables recap the weighted-average assumptions used in our retirement benefits plans to
determine benefit obligations and net periodic benefit cost:
Weighted Average For Benefit Obligations:

Pe n sion & SERP O PEB
Ye ars En de d De ce m be r 31 2008 2007 2006 2008 2007 2006
Discount rate(a) 6.50% 6.40% 5.65% 6.50% 6.50% 5.65%
Expected long-term rate of return on plan assets(b) 8.25% 8.25% 8.25% 7.75% 7.75% 7.75%
Mortality table(c) 2000 2000 2000 2000 2000 2000
Rate of compensation increase:
Pension 4.00% 4.00% 4.00%
SERP 5.50% 5.50% 5.50%
Weighted Average For Net Periodic Benefit Cost:

Discount rate(a) 6.40% 5.65% 5.75% 6.50% 5.65% 5.75%
Pension 4.00% 4.00% 4.00%
SERP 5.50% 5.50% 5.50%
(a) The discount rate is set to reflect the rates at which benefits can be effectively settled. It is set equal to the equivalent
single rate that results from a yield curve analysis that incorporates projected benefit payments specific to our pension
and other postretirement benefit plans, and the yields on high quality corporate bonds rated Aa or better.
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(b) We determine our long-term rate of return by considering historical market returns, the current and expected future
economic environment, the capital market principles of risk and return, and the expert opinions of individuals and firms
with financial market knowledge. We consider the asset allocation of the portfolio in forecasting the future expected
total return of the portfolio. The goal is to determine a long-term rate of return that can be incorporated into the
planning of future cash flow requirements in conjunction with the change in the liability. Annually, we review for
reasonableness and appropriateness of the forecasted returns for various classes of assets used to construct an
expected return model.
(c) The mortality assumption is based on the RP-2000 mortality tables with projection of future mortality improvements
using Scale AA, which aligns with the IRS prescriptions for cash funding valuations under the Pension Protection Act.
Costs: The following tables recap the costs and other changes in plan assets and benefit obligations incurred in our
retirement benefits plans:
Pe n sion & SERP
In Million s
Net periodic pension cost
Service cost $ 43 $ 50 $ 51
Interest expense 101 91 88
Expected return on plan assets (81) (79) (85)
Amortization of:
Net loss 41 46 43
Prior service cost 6 7 7
Net periodic pension cost 110 115 104
Regulatory adjustment(a) 4 (22) (11)
Net periodic pension cost after regulatory adjustment $114 $ 93 $ 93
O PEB
In Million s
Net periodic OPEB cost Service cost $ 22 $ 25 $ 23
Amortization of:
Net loss 9 22 20
Prior service credit (10) (10) (10)
Net periodic OPEB cost 27 44 40
Net periodic OPEB cost after regulatory adjustment $ 30 $ 38 $ 38
(a) Regulatory adjustments are the differences between amounts included in rates and the periodic benefit cost calculated
pursuant to SFAS No. 87 and SFAS No. 106. The pension regulatory asset had a balance of $29 million at December 31,
2008 and $33 million at December 31, 2007. The OPEB regulatory asset had a balance of $5 million at December 31, 2008
and $8 million at December 31, 2007.
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The estimated net loss and prior service cost for the defined benefit pension plans that will be amortized into net
periodic benefit cost over the next fiscal year from the regulatory asset is $44 million and from AOCL is $3 million. The
estimated net loss and prior service credit for OPEB plans that will be amortized into net periodic benefit cost over the next
fiscal year from the regulatory asset is $23 million and from AOCL is $1 million.
We amortize gains and losses in excess of 10 percent of the greater of the benefit obligation and the MRV over the
average remaining service period. The estimated time of amortization of gains and losses is 12 years for pension and
14 years for OPEB. Prior service cost amortization is established in the years in which the prior service cost first occurred,
and are based on the same amortization period in all future years until the prior service costs are fully recognized. The
estimated time of amortization of new prior service costs is 12 years for pension and 10 years for OPEB.
Reconciliations: The following table reconciles the funding of our retirement benefits plans with our retirement
benefits plans’ liability:
Pe n sion Plan S ERP O PEB
In Million s
Benefit obligation at beginning of period $1,565 $1,576 $ 95 $ 92 $1,136 $1,243
Service cost 45 49 1 1 24 25
Interest cost 103 86 7 5 78 69
Actuarial loss (gain) (66) 30 (3) 1 81 (128)
Palisades sale — (38) — — — (20)
Benefits paid (123) (138) (5) (4) (53) (53)
Benefit obligation at end of period(a) 1,524 1,565 95 95 1,266 1,136
Plan assets at fair value at beginning of period 1,078 1,040 — — 852 798
Actual return on plan assets (231) 89 — — (201) 55
Company contribution — 109 5 4 64 52
Actual benefits paid(b) (123) (138) (5) (4) (53) (48)
Plan assets at fair value at end of period 724 1,078 — — 662 852
Funded status at end of measurement period (800) (487) (95) (95) (604) (284)
Additional VEBA Contributions or Non-Trust Benefit Payments — — — — — 12
Funded status at December 31(c) $ (800) $ (487) $(95) $(95) $ (604) $ (272)
(a) The Medicare Prescription Drug, Improvement and Modernization Act of 2003 establishes a prescription drug benefit
under Medicare (Medicare Part D) and a federal subsidy, which is tax-exempt, to sponsors of retiree health care benefit
plans that provide a benefit that is actuarially equivalent to Medicare Part D. The Medicare Part D annualized reduction
in net OPEB cost was $25 million for 2008 and $28 million for 2007. The reduction includes $7 million for 2008 and 2007
in capitalized OPEB costs.
(b) We received $6 million in 2008 and $4 million in 2007 for Medicare Part D Subsidy payments.
(c) Liabilities for retirement benefits comprised $1.494 billion classified as non-current and $5 million classified as current
for the year ended December 31, 2008, and $850 million classified as non-current and $4 million classified as current for
the year ended December 31, 2007.
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The following table provides pension PBO, ABO and fair value of plan assets:
In Million s
Pension PBO $1,524 $1,565
Pension ABO 1,240 1,231
Fair value of Pension Plan assets $ 724 $1,078
Items Not Yet Recognized as a Component of Net Periodic Benefit Cost: The following table recaps the amounts
recognized in SFAS No. 158 regulatory assets and AOCL that have not been recognized as components of net periodic
benefit cost. For additional details on regulatory assets, see Note 1, Corporate Structure and Accounting Policies, “Utility
Regulation.”
Pe n sion &
S ERP O PEB
Ye ars En de d De ce m be r 31 2008 2007 2008 2007
In Million s
Regulatory assets
Net loss $835 $636 $595 $265
Prior service cost (credit) 33 39 (78) (89)
AOCL
Net loss (gain) 50 46 (9) (22)
Total amounts recognized in regulatory assets and AOCL $921 $724 $505 $151
Plan Assets: The following table recaps the categories of plan assets in our retirement benefits plans:
Pe n sion O PEB
Asset Category:
Fixed Income 37% 30% 55% 34%
Equity Securities 50% 60% 45% 66%
Alternative Strategy 13% 10% — —
We contributed $51 million to our OPEB plan in 2008 and we plan to contribute $53 million to our OPEB plan in 2009. Of
the $51 million OPEB contribution made during 2008, $10 million was contributed to the 401(h) component of the qualified
pension plan and the remaining $41 million was contributed to the VEBA trust accounts. We did not contribute to our
Pension Plan in 2008, but plan to contribute $300 million to our Pension Plan in 2009. Contributions include required and
discretionary amounts. Actual future contributions will depend on future investment performance, changes in future
discount rates, and various other factors related to the populations participating in the plans.
In 2008, the consultant for the Pension Plan, recommended an adjustment to the target asset allocation for Pension Plan
assets. The recommended revised target asset allocation for the Pension Plan assets was 50 percent equity, 30 percent fixed
income, and 20 percent alternative strategy investments from the previous target of 60 percent equity, 30 percent fixed
income and 10 percent alternative strategy investments. This recommendation was thoroughly reviewed and approved by
our Benefit Administration Committee. This adjustment is being made gradually by the allocation of contributions into
alternative assets and the drawdown of equities to cover plan benefit payments and distributions. This revised target asset
allocation is expected to continue to maximize the long-term return on plan assets, while maintaining a prudent level of risk.
The level of acceptable risk is a function of the liabilities of the plan. Equity investments are diversified mostly across the
Standard & Poor’s 500 Index, with lesser allocations to the Standard & Poor’s MidCap and SmallCap Indexes and Foreign
Equity Funds. Fixed-income investments are diversified across investment grade instruments of both government and
corporate issuers as well as
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high-yield and global bond funds. Alternative strategies are diversified across absolute return investment approaches and
global tactical asset allocation. We use annual liability measurements, quarterly portfolio reviews, and periodic
asset/liability studies to evaluate the need for adjustments to the portfolio allocation.
We established union and non-union VEBA trusts to fund our future retiree health and life insurance benefits. These
trusts are funded through the ratemaking process for Consumers and through direct contributions from the non-utility
subsidiaries. We invest the equity portions of the union and non-union health care VEBA trusts in a Standard & Poor’s 500
Index fund. We invest the fixed-income portion of the union health care VEBA trust in domestic investment grade taxable
instruments. We invest the fixed-income portion of the non-union health care VEBA trust in a diversified mix of domestic
tax-exempt securities. The investment selections of each VEBA trust are influenced by the tax consequences, as well as the
objective of generating asset returns that will meet the medical and life insurance costs of retirees.
SFAS No. 132(R) Benefit Payments: The expected benefit payments for each of the next five years and the five-year
period thereafter are as follows:
Pe n sion S ERP O PEB(a)
In Million s
2009 $ 72 $ 5 $ 57
2010 78 5 60
2011 85 5 62
2012 96 6 64
2013 106 6 65
2014-2018 669 39 363
(a) OPEB benefit payments are net of employee contributions and expected Medicare Part D prescription drug subsidy
payments. The subsidies to be received are estimated to be $6 million for 2009 and 2010, $7 million for 2011, $8 million
for 2012 and 2013 and $50 million combined for 2014 through 2018.
9: ASSET RETIREMENT OBLIGATIONS

SFAS No. 143, Accounting for Asset Retirement Obligations: This standard requires us to 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. No market risk premium
was included in our ARO fair value estimate since a reasonable estimate could not be made. If a five percent market risk
premium were assumed, our ARO liability at December 31, 2008 would increase by $10 million.
indeterminate lives, the liability is to be recognized when a reasonable estimate of fair value can be made. Historically, our
gas transmission and electric and gas distribution assets have indeterminate lives and retirement cash flows that cannot be
determined. During 2007, however, we implemented a new fixed asset accounting system that facilitates ARO accounting
estimates for gas distribution mains and services. The new system enabled us to calculate a reasonable estimate of the fair
value of the cost to cut, purge, and cap abandoned gas distribution mains and services at the end of their useful lives. We
recorded a $101 million ARO liability and an asset of equal value at December 31, 2007. We have not recorded a liability for
assets that have insignificant cumulative disposal costs, such as substation batteries.
FASB Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations: This Interpretation clarified
the term “conditional asset retirement obligation” used in SFAS No. 143. The term refers to a legal obligation to perform an
asset retirement activity in which the timing or method of settlement are conditional on a future event. We determined that
abatement of asbestos included in our plant investments and the cut, purge, and cap of abandoned gas distribution mains
and services qualify as conditional AROs, as defined by FIN 47.
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The following table lists the assets that we have legal obligations to remove at the end of their useful lives and for
which we have an ARO liability recorded:
In S e rvice
ARO De scription Date Lon g-Live d Asse ts
December 31, 2008
Closure of coal ash disposal areas Various Generating plants coal ash areas
Closure of wells at gas storage fields Various Gas storage fields
Indoor gas services equipment relocations Various Gas meters located inside structures
Asbestos abatement 1973 Electric and gas utility plant
Gas distribution cut, purge & cap Various Gas distribution mains & services
Natural gas-based power plant 1997 Gas fueled power plant
Close gas treating plant and gas wells Various Gas transmission and storage
No assets have been restricted for purposes of settling AROs.
ARO ARO
Liability C ash flow Liability
ARO De scription 12/31/06 Incu rre d S e ttle d(a) Accre tion Re vision s 12/31/07
In Million s
Palisades-decommission $ 401 $ — $ (410) $ 7 $ 2 $ —
Big Rock-decommission 2 — (3) 1 — —
Coal ash disposal areas 57 — (4) 6 — 59
Wells at gas storage fields 1 — — — — 1
Indoor gas services relocations 1 — — — — 1
Asbestos abatement 35 — (1) 2 — 36
Gas distribution cut, purge, cap — 101 — — — 101
Natural gas-based power plant 1 — (1) — — —
Close gas treating plant and gas wells 2 — (2) — — —
Total $ 500 $ 101 $ (421) $ 16 $ 2 $ 198
ARO ARO
In Million s
Palisades-decommission $ — $ — $ — $ — $ — $ —
Big Rock-decommission — — — — — —
Gas distribution cut, purge, cap 101 (1) (2) 7 — 105
Natural gas-based power plant — — — — — —
Close gas treating plant and gas wells — — — 1 — 1
Total $ 198 $ (1) $ (7) $ 16 $ — $ 206
(a) Cash payments of $7 million in 2008 and $5 million in 2007 are included in the Other current and non-current liabilities
line in Net cash provided by operating activities in our Consolidated Statements of Cash Flows. In
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April 2007, we sold Palisades to Entergy and paid Entergy to assume ownership and responsibility for the Big Rock
ISFSI. Our AROs related to Palisades and the Big Rock ISFSI ended with the sale, and we removed the related ARO
liabilities from our Consolidated Balance Sheets. We also removed the Big Rock ARO related to the plant in the second
quarter of 2007 due to the completion of decommissioning.
10: INCOME TAXES

CMS Energy and its subsidiaries file a consolidated federal income tax return and a combined Michigan income tax
return. Income taxes generally are allocated based on each company’s separate taxable income in accordance with the CMS
Energy tax sharing agreement.
We use deferred tax accounting for temporary differences. These occur when there are differences between the book
and tax carrying amounts of assets and liabilities. ITC has been deferred and is being amortized over the estimated service
lives of the related properties. We use ITC to reduce current income taxes payable.
AMT paid generally becomes a tax credit that we can carry forward indefinitely to reduce regular tax liabilities in future
periods when regular taxes paid exceed the tax calculated for AMT. At December 31, 2008, we had AMT credit
carryforwards of $272 million that do not expire, federal tax loss carryforwards of $1.302 billion that expire from 2023 through
2028 and Michigan tax loss carryforwards of $383 million that expire in 2018. In addition, we have a net benefit of
$160 million for future Michigan tax deductions which were granted as part of the Michigan Business Tax legislation of
2007. We do not believe that a valuation allowance is required, as we expect to use the loss carryforwards prior to their
expiration. We also have general business credit carryforwards of $20 million that expire from 2009 through 2028. We have
provided $2 million of valuation allowances for these items. It is reasonably possible that further adjustments will be made
to the valuation allowance within one year.
In January 2009, the State of Michigan enacted changes to the Michigan Business Tax, which were retroactive to
January 1, 2008. These changes included the decoupling from federal bonus depreciation, which reduces the Michigan tax
loss carryforward previously discussed by approximately $160 million.
The significant components of income tax expense (benefit) on continuing operations consisted of:
In Million s
Current income taxes:
Federal $ 4 $ 229 $ 133
Federal income tax benefit of operating loss carryforwards — (209) (31)
State and local 9 1 —
Foreign — — (2)
$ 13 $ 21 $ 100
Deferred income taxes:
Federal $137 $(212) $(281)
State and local (4) — —
Foreign — — (3)
$133 $(212) $(284)
Deferred ITC, net (4) (4) (4)
Tax expense/(benefit) $142 $(195) $(188)
Current tax expense reflects the settlement of income tax audits for prior years, as well as the provision for the current
year’s income taxes. Deferred tax assets and liabilities are recognized for the estimated future tax effect of temporary
differences between the tax basis of assets or liabilities and the reported amounts in our consolidated
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financial statements. Deferred tax assets and liabilities are classified as current or noncurrent according to the classification
of the related assets or liabilities. Deferred tax assets and liabilities not related to assets or liabilities are classified according
to the expected reversal date of the temporary differences.
The amount of income taxes we pay is subject to ongoing audits by federal, state and foreign tax authorities, which can
result in proposed assessments. Our estimate of the potential outcome for any uncertain tax issue is highly judgmental. We
believe that our accrued tax liabilities at December 31, 2008 are adequate for all years.
The principal components of deferred income tax assets (liabilities) recognized on our Consolidated Balance Sheets are
as follows:
De ce m be r 31 2008 2007
In Million s
Current Assets and (Liabilities):
Deferred charges $ 1 $ 107
Tax loss and credit carryforwards 148 —
Reserves and accruals 20 —
Employee benefits (96) 8
Gas inventory (219) (204)
Other 46 48
Net Current (Liability) $(100) $ (41)
Noncurrent Assets and (Liabilities):
Tax loss and credit carryforwards $ 775 $ 761
SFAS No. 109 regulatory liability 205 207
Reserves and accruals 43 92
Currency translation adjustment — 77
Foreign investments inflation indexing 30 23
Employee benefits 101 64
Valuation allowance (32) (32)
Property (968) (840)
Securitized costs (161) (180)
Nuclear decommissioning (including unrecovered costs) (20) (18)
Other (19) (55)
Net Noncurrent Asset/(Liability) $ (46) $ 99
Total Deferred Income Tax Asset/(Liability) $(146) $ 58
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The actual income tax expense (benefit) on continuing operations differs from the amount computed by applying the
statutory federal tax rate of 35 percent to income (loss) before income taxes as follows:

In Million s
Income (loss) from continuing operations before income taxes
Domestic $ 440 $(124) $(118)
Foreign 2 (197) (203)
Total 442 (321) (321)
Statutory federal income tax rate x 35% x 35% x 35%
Expected income tax expense (benefit) 155 (112) (112)
Increase (decrease) in taxes from:
Property differences 3 9 13
Income tax effect of foreign investments — 47 (29)
ITC amortization (4) (4) (4)
State and local income taxes, net of federal benefit 3 — —
Medicare Part D exempt income (9) (10) (10)
Tax exempt income (1) (1) (3)
Tax contingency reserves — — (15)
Valuation allowance (6) (121) 23
IRS settlement/credit restoration — — (49)
Other, net 1 (3) (2)
Recorded income tax benefit $ 142 $(195) $(188)
Effective tax rate 32.1% 60.7% 58.6%
In June 2006, the IRS concluded its audit of CMS Energy and its subsidiaries and adjusted taxable income for the years
ended December 31, 1987 through December 31, 2001. The overall cumulative increase to taxable income related primarily to
the disallowance of the simplified service cost method with respect to certain self-constructed utility assets, resulting in a
deferral of these expenses to future years. Reduction of our income tax provision is primarily due to the restoration and
utilization of previously written off income tax credits. The years 2002 through 2007 are currently open under the statute of
limitations and 2002 through 2005 are currently under audit by the IRS.
As of December 31, 2006, U.S. income taxes were not recorded on the undistributed earnings of foreign subsidiaries
that had been or were intended to be reinvested indefinitely. During the first quarter of 2007, we announced we had signed
agreements or plans to sell substantially all of our foreign assets or subsidiaries. These sales resulted in the recognition in
2007 of $71 million of U.S. income tax expense associated with the change in our assumption regarding permanent
reinvestment of these undistributed earnings, with $46 million of this amount reflected in income from continuing operations
and $25 million in discontinued operations. Additionally, gains on the sales of our international investments resulted in the
release of $121 million of valuation allowance during 2007.
On January 1, 2007 we adopted the provisions of FIN 48. As a result of the implementation of FIN 48, we recorded a
charge for additional uncertain tax benefits of $11 million, which was accounted for as a reduction of our beginning retained
earnings. Included in this amount was an increase in our valuation allowance of $100 million, decreases to tax reserves of
$61 million and a decrease to deferred tax liabilities of $28 million.
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A reconciliation of the beginning and ending amount of unrecognized tax benefits in accordance with FIN 48 is as
follows:
(In Million s)
Ye ar En de d De ce m be r 31 2008 2007
Balance at beginning of period $ 51 $ 151
Reductions for prior year tax positions — (101)
Additions for prior year tax positions 12 1
Statute lapses — —
Additions for current year tax positions 2 —
Settlements — —
Balance at end of period $ 65 $ 51
Included in the balance at December 31, 2008 are $55 million of tax positions for which the ultimate deductibility is
highly certain but for which there is uncertainty about the timing of such deductibility. Because of the impact of deferred tax
accounting, other than interest and penalties, the disallowance of the shorter deductibility period would not affect the
annual effective tax rate but would accelerate the payment of cash to the taxing authority to an earlier period. As of
December 31, 2008, remaining uncertain tax benefits that would reduce our effective tax rate in future years are $10 million. It
is reasonably possible that, within the next twelve months, we will settle with the IRS on our simplified service cost
methodology, a timing issue. An estimate of a settlement range cannot be made at this point.
As of December 31, 2007 we had accrued $2 million of net interest expense on our uncertain tax liabilities. We accrued a
net additional $1 million of interest on tax liabilities during 2008. The total net interest liability is $6 million as of
December 31, 2008, $3 million of which relates to uncertain tax positions. We have not accrued any penalties with respect to
uncertain tax benefits. We recognize accrued interest and penalties, where applicable, related to uncertain tax benefits as
part of income tax expense.
11: STOCK-BASED COMPENSATION

We provide a Performance Incentive Stock Plan (the Plan) to key employees and non-employee directors based on
their contributions to the successful management of the company. The Plan has a five-year term, expiring in May 2009.
All grants under the Plan for 2008, 2007, and 2006 were in the form of TSR restricted stock and time-lapse restricted
stock. Restricted stock recipients receive shares of CMS Energy Common Stock that have full dividend and voting rights.
TSR restricted stock vesting is contingent on meeting a three-year service requirement and specific market conditions. Half
of the market condition is based on the achievement of specified levels of TSR over a three-year period and half is based on
a comparison of our TSR with the median shareholders’ return of a peer group over the same three-year period. Depending
on the performance of the market, a recipient may earn a total award ranging from zero to 150 percent of the initial grant.
Time-lapse restricted stock vests after a service period of five years for awards granted prior to 2004, and three years for
awards granted in 2004 and thereafter. Restricted stock awards granted to officers in 2006 were entirely TSR restricted stock.
Awards granted to officers in 2007 and 2008 were 80 percent TSR restricted stock and 20 percent time-lapsed restricted
stock.
All restricted stock awards are subject to forfeiture if employment terminates before vesting. However, if certain
minimum service requirements are met or are waived by action of the Compensation and Human Resources Committee of the
Board of Directors, restricted shares may vest fully upon:
• retirement,
• disability, or
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• change of control of CMS Energy, as defined by the Plan.

The Plan also allows for stock options, stock appreciation rights, phantom shares, and performance units, none of
which were granted in 2008, 2007, or 2006.
Shares awarded or subject to stock options, phantom shares, and performance units may not exceed 6 million shares
from June 2004 through May 2009, nor may such awards to any recipient exceed 250,000 shares in any fiscal year. We may
issue awards of up to 3,384,080 shares of common stock under the Plan at December 31, 2008. Shares for which payment or
exercise is in cash, as well as forfeited shares or stock options, may be awarded or granted again under the Plan.
The following table summarizes restricted stock activity under the Plan:
W e ighte d-Ave rage

Grant Date
Nu m be r of Fair Value
Re stricte d S tock S h are s pe r S h are
Nonvested at December 31, 2007 1,681,454 $ 13.52
Granted(a) 739,350 $ 10.38
Vested (171,004) $ 13.67
Forfeited(b) (445,500) $ 15.34
(a) During 2008, we granted 482,240 TSR shares and 257,110 time-lapse shares of restricted stock.
(b) During 2008, 432,500 TSR shares granted in 2005 were forfeited due to the failure to meet the specific market
conditions.
We expense the awards’ fair value over the required service period. As a result, we recognize all compensation expense
for share-based awards that have accelerated service provisions upon retirement by the period in which the employee
becomes eligible to retire. We calculate the fair value of time-lapse restricted stock based on the price of our common stock
on the grant date. We calculate the fair value of TSR restricted stock awards on the grant date using a Monte Carlo
simulation. We base expected volatilities on the historical volatility of the price of CMS Energy Common Stock.
The risk-free rate for each valuation was based on the three-year U.S. Treasury yield at the award grant date. The
following table summarizes the significant assumptions used to estimate the fair value of the TSR restricted stock awards:
2008 2007 2006
Expected volatility 19.70% 19.11% 20.51%
Expected dividend yield 2.67% 1.20% 0.00%
Risk-free rate 2.83% 4.59% 4.82%
The total fair value of shares vested was $2 million in 2008, $15 million in 2007, and $4 million in 2006. Compensation
expense related to restricted stock was $8 million in 2008, $10 million in 2007, and $9 million in 2006. The total related income
tax benefit recognized in income was $3 million in 2008, $3 million in 2007, and $3 million in 2006. At December 31, 2008, there
was $7 million of total unrecognized compensation cost related to restricted stock. We expect to recognize this cost over a
weighted-average period of 2.3 years.
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The following table summarizes stock option activity under the Plan:
O ptions
O u tstan ding,
Fu lly Ve ste d, W e ighte d-Ave rage W e ighte d-Ave rage Aggre gate
an d Exe rcise Price Re m aining Intrin sic
S tock O ptions Exe rcisable pe r S h are C on tractu al Te rm Value
(In m illion s)
Outstanding at December 31, 2007 1,213,905 $ 21.51 3.8 years $ (5)
Granted — —
Exercised (173,000) $ 6.45
Cancelled or Expired (233,365) $ 32.42
Outstanding at December 31, 2008 807,540 $ 21.58 2.8 years $ (9)
Stock options give the holder the right to purchase common stock at the market price on the grant date. Stock options
are exercisable upon grant, and expire up to ten years and one month from the grant date. We issue new shares when
recipients exercise stock options. The total intrinsic value of stock options exercised was $1 million in 2008, $9 million in
2007, and $1 million in 2006. Cash received from exercise of these stock options was $1 million in 2008.
Since we have utilized tax loss carryforwards, we were not able to realize the excess tax benefits upon exercise of stock
options and vesting of restricted stock. Therefore, we did not recognize the related excess tax benefits in equity. As of
December 31, 2008, we have $17 million of unrealized excess tax benefits.
The following table summarizes the weighted average grant date fair value:
Weighted average grant date fair value per share
Restricted stock granted $10.38 $14.18 $13.84
Stock options granted(a) — — —
(a) No stock options were granted in 2008, 2007, or 2006.

SFAS No. 123(R) requires companies to use the fair value of employee stock options and similar awards at the grant
date to value the awards. SFAS No. 123(R) was effective for us on January 1, 2006. We elected to adopt the modified
prospective method recognition provisions of SFAS No. 123(R) instead of retrospective restatement. We adopted the fair
value method of accounting for share-based awards effective December 2002. Therefore, SFAS No. 123(R) did not have a
significant impact on our results of operations when it became effective.
12: LEASES
We lease various assets, including service vehicles, railcars, gas pipeline capacity and buildings. In accordance with
SFAS No. 13, we account for a number of our power purchase agreements as capital and operating leases.
Operating leases for coal-carrying railcars have lease terms expiring over the next 15 years. These leases contain fair
market value extension and buyout provisions, with some providing for predetermined extension period rentals. Capital
leases for our vehicle fleet operations have a maximum term of 120 months and TRAC end-of-life provisions.
We have capital leases for gas transportation pipelines to the Karn generating complex and Zeeland power plant. The
capital lease for the gas transportation pipeline into the Karn generating complex has a term of 15 years with a provision to
extend the contract from month to month. The capital lease for the gas transportation pipeline to the Zeeland power plant
has a lease term of 12 years with a renewal provision at the end of the contract. The
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remaining term of our long-term power purchase agreements range between 2 and 22 years. Most of our power purchase
agreements contain provisions at the end of the initial contract terms to renew the agreements annually.
Consumers is authorized by the MPSC to record both capital and operating lease payments as operating expense and
recover the total cost from our customers. The following table summarizes our capital and operating lease expenses:
In Million s
Capital lease expense $ 46 $ 34 $ 15
Operating lease expense 28 25 21
Income from subleases (1) (2) (2)
Minimum annual rental commitments under our non-cancelable leases at December 31, 2008 are:
C apital Finan ce O pe ratin g

Le ase s Le ase (a) Le ase s
In Million s
2009 $ 16 $ 23 $ 27
2010 15 22 26
2011 13 21 25
2012 15 20 25
2013 8 20 19
2014 and thereafter 48 133 115
Total minimum lease payments 115 239 $ 237
Less imputed interest 58 65
Present value of net minimum lease payments 57 174
Less current portion 12 13
Non-current portion $ 45 $ 161
(a) In April 2007, we sold Palisades to Entergy and entered into a 15-year power purchase agreement to buy all of the
capacity and energy produced by Palisades, up to the annual average capacity of 798 MW. We provided $30 million in
security to Entergy for our power purchase agreement obligation in the form of a letter of credit. We estimate that
capacity and energy payments under the Palisades power purchase agreement will average $320 million annually. Our
total purchases of capacity and energy under the Palisades power purchase agreement were $298 million in 2008 and
Because of the Palisades power purchase agreement and our continuing involvement with the Palisades assets, we
accounted for the disposal of Palisades as a financing and not a sale. SFAS No. 98 specifies the accounting required
for a seller’s sale and simultaneous leaseback involving real estate. We have continuing involvement with Palisades
through security provided to Entergy for our power purchase agreement obligation, our DOE liability and other forms
of involvement. As a result, we accounted for the Palisades plant, which is the real estate asset subject to the
leaseback, as a financing for accounting purposes and not a sale. As a financing, no gain on the sale of Palisades was
recognized in the Consolidated Statements of Income (Loss). We accounted for the remaining non-real estate assets
and liabilities associated with the transaction as a sale.
As a financing, the Palisades plant remains on our Consolidated Balance Sheets and we continue to depreciate it. We
recorded the related proceeds as a finance obligation with payments recorded to interest expense and the finance
obligation based on the amortization of the obligation over the life of the Palisades power purchase
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agreement. The value of the finance obligation was based on an allocation of the transaction proceeds to the fair
values of the net assets sold and fair value of the Palisades plant asset under the financing. Total amortization and
interest charges under the financing were $23 million in 2008 and $18 million in 2007.
13: PROPERTY, PLANT, AND EQUIPMENT

The following table is a summary of our property, plant, and equipment:
Estim ate d
De pre ciable
De ce m be r 31 Life in Ye ars 2008 2007
In Million s
Electric:
Generation 18-85 $3,357 $3,328
Distribution 12-75 4,766 4,496
Other 7-40 551 438
Capital and finance leases(a) 291 293
Gas:
Underground storage facilities(b) 30-65 270 267
Transmission 13-75 473 570
Other 5-50 398 320
Capital leases(a) 21 24
Enterprises:
IPP 3-45 379 378
CMS Electric and Gas n/a — 2
Other 3-25 11 11
Other: 7-71 33 34
Less accumulated depreciation, depletion, and amortization(c) 4,428 4,166
Net property, plant, and equipment(d) $9,190 $8,728
(a) Capital and finance leases presented in this table are gross amounts. Accumulated amortization of capital and finance
leases was $79 million at December 31, 2008 and $62 million at December 31, 2007. Additions were $6 million and
Retirements and adjustments were $3 million during 2008. Additions were $229 million during 2007, which includes
$197 million related to assets under the Palisades finance lease. Retirements and adjustments were $26 million during
2007.
(b) Includes base natural gas in underground storage of $26 million at December 31, 2008 and December 31, 2007, which is
not subject to depreciation.
(c) At December 31, 2008, accumulated depreciation, depletion, and amortization included $4.241 billion from our utility
plant assets and $187 million from other plant assets. At December 31, 2007, accumulated depreciation, depletion, and
amortization included $3.992 billion from our utility plant assets and $174 million from other plant assets.
(d) At December 31, 2008, utility plant additions were $629 million and utility plant retirements, including other plant
adjustments, were $60 million. At December 31, 2007, utility plant additions, including capital leases, were $1.303 billion
and utility plant retirements, including other plant adjustments, were $1.094 billion.
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Asset Acquisition: In December 2007, we purchased a 935 MW gas-based generating plant located in Zeeland,
Michigan for $519 million from an affiliate of LS Power Group. The original cost of the plant was $350 million and the plant
acquisition adjustment was $213 million. This results in an increase to property, plant, and equipment of $519 million, net of
$44 million of accumulated depreciation. The purchase also increased capital leases by $12 million. For additional details on
the Zeeland finance lease, see Note 12, Leases.
Included in net property, plant and equipment are intangible assets. The following table summarizes our intangible
assets:
Am ortiz ation 2008 2007

De ce m be r 31 Life Accum u late d Accum u late d
De scription in ye ars Gross C ost(a) Am ortiz ation Gross C ost(a) Am ortiz ation
In Million s
Software development 7-15 $ 370 $ 192 $ 207 $ 170
Plant acquisition adjustments 40 214 6 214 —
Rights of way 50-75 118 33 116 32
Leasehold improvements various 11 9 19 16
Franchises and consents various 14 6 14 5
Other intangibles various 20 14 20 14
Total $ 747 $ 260 $ 590 $ 237
(a) Intangible asset additions for our utility plant were $163 million during 2008, which included $161 million related to the
installation and operation of our new integrated business software system. Intangible asset additions for our utility
plant were $232 million during 2007, which included the Zeeland $213 million plant acquisition adjustment. Retirements
were $23 million during 2007.
Pretax amortization expense related to intangible assets was $32 million for the year ended December 31, 2008,
$21 million for the year ended December 31, 2007, and $23 million for the year ended December 31, 2006. We expect
intangible assets amortization to range between $25 million and $29 million per year over the next five years.
14: EQUITY METHOD INVESTMENTS

We account for certain investments in other companies and partnerships using the equity method, in accordance with
APB Opinion No. 18, when we have significant influence, typically when ownership is more than 20 percent but less than a
majority. Earnings from equity method investments were $5 million in 2008, $40 million in 2007, and $89 million in 2006. The
amount of consolidated retained earnings that represents undistributed earnings from these equity method investments was
$1 million at December 31, 2008, $22 million at December 31, 2007, and $14 million at December 31, 2006.
If assets or income from continuing operations associated with any of our individual equity method investments, or on
an aggregate basis by any combination of equity method investments, exceed 10 percent of our consolidated assets or
income, then we must present summarized financial data of that subsidiary or combination of subsidiaries in our notes. At
December 31, 2008, no individual equity method investment or combination of investments exceeded the 10 percent
threshold.
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The following is summarized financial information for equity method investments that exceeded the 10 percent
threshold at December 31, 2007 and December 31, 2006:
Income Statement Data
Ye ar En de d
De ce m be r 31, 2007
Total(b)
In Million s
Operating revenue $ 598
Operating expenses 448
Operating income 150
Other expense, net 69
Net income $ 81
Ye ar En de d
De ce m be r 31, 2006
Jorf
Lasfar(a) Total(b)
In Million s
Operating revenue $ 482 $ 2,093
Operating expenses 317 1,600
Operating income 165 493
Other expense, net 57 252
Net income $ 108 $ 241
Balance Sheet Data

De ce m be r 31, 2007
Total(b)
In Million s
Assets
Current assets $ 7
Property, plant and equipment, net 6
Other assets 177
$ 190
Liabilities
Current liabilities $ 4
Long-term debt and other non-current liabilities —
Equity 186
$ 190
(a) We sold our investment in Jorf Lasfar in 2007. At December 31, 2006, our investment in Jorf Lasfar was $313 million.
Our share of net income from Jorf Lasfar was $16 million for the period January 1, 2007 through May 1, 2007, and
$54 million for the year ended December 31, 2006.
(b) Amounts include financial data from equity method investments through the date of sale.
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15: JOINTLY OWNED REGULATED UTILITY FACILITIES

We have investments in jointly owned regulated utility facilities, as shown in the following table:
O wn e rship Ne t Accum u late d C on stru ction

S h are Inve stm e n t(a) De pre ciation W ork in Progre ss
De ce m be r 31 (%) 2008 2007 2008 2007 2008 2007
In Million s
Campbell Unit 3 93.3 $ 675 $ 664 $ 360 $ 337 $ 19 $ 44
Ludington 51.0 61 65 107 104 7 1
Distribution Various 96 89 41 44 3 5
(a) Net investment is the amount of utility plant in service less accumulated depreciation.
We include our share of the direct expenses of the jointly owned plants in operating expenses. We share operation,
maintenance, and other expenses of these jointly owned utility facilities in proportion to each participant’s undivided
ownership interest. We are required to provide only our share of financing for the jointly owned utility facilities.
16: REPORTABLE SEGMENTS

Our reportable segments consist of business units defined by the products and services they offer. We evaluate
performance based on the net income of each segment. These reportable segments are:
• electric utility, consisting of regulated activities associated with the generation and distribution of electricity in
Michigan through our subsidiary, Consumers,
• gas utility, consisting of regulated activities associated with the transportation, storage, and distribution of natural
gas in Michigan through our subsidiary, Consumers, and
• enterprises, consisting of various subsidiaries engaging primarily in domestic independent power production.
Accounting policies of our segments are as described in Note 1, Corporate Structure and Accounting Policies. Our
consolidated financial statements reflect the assets, liabilities, revenues, and expenses of the individual segments when
appropriate. We allocate accounts among the segments when common accounts are attributable to more than one segment.
The allocations are based on certain measures of business activities, such as revenue, labor dollars, customers, other
operation and maintenance expense, construction expense, leased property, taxes or functional surveys. For example,
customer receivables are allocated based on revenue, and pension provisions are allocated based on labor dollars.
We account for inter-segment sales and transfers at current market prices and eliminate them in consolidated net
income (loss) by segment. The “Other” segment includes corporate interest and other expenses, and certain deferred
income taxes. We have reclassified certain amounts in 2006 to include CMS Capital results in the Other segment.
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The following tables provide financial information by reportable segment:

In Million s
Operating Revenues
Electric utility $3,594 $3,443 $3,302
Gas utility 2,827 2,621 2,373
Enterprises 379 383 438
Other 21 17 13
$6,821 $6,464 $6,126
Earnings from Equity Method Investees
Enterprises $ 5 $ 39 $ 87
Other — 1 2
$ 5 $ 40 $ 89
Depreciation and Amortization
Electric utility $ 438 $ 397 $ 380
Gas utility 136 127 122
Enterprises 11 12 44
Other 4 4 4
$ 589 $ 540 $ 550
Fixed Charges
Enterprises 6 9 66
Other 141 168 177
$ 392 $ 438 $ 480
Income Tax Expense (Benefit)
Enterprises (10) (183) (145)
Other (46) (159) (156)
$ 142 $ (195) $ (188)
Net Income (Loss) Available to Common Stockholders
Enterprises 14 (412) (227)
Discontinued operations(a) — (89) 54
Other (85) (9) (153)
$ 289 $ (227) $ (90)
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In Million s
Investments
Enterprises $ 5 $ 6 $ 556
Other 6 5 10
$ 11 $ 11 $ 566
Total Assets
Electric utility(b) $ 8,904 $ 8,492 $ 8,516
Gas utility(b) 4,565 4,102 3,950
Enterprises 313 982 1,901
Other 1,119 616 958
$14,901 $14,192 $15,325
Capital Expenditures(c)
Electric utility $ 553 $ 1,319 $ 462
Enterprises 3 5 42
Other — — 1
$ 797 $ 1,492 $ 677
Geographic Areas(d)
2008 2007 2006
In Million s
United States
Operating revenue $ 6,821 $ 6,462 $ 6,123
Operating income $ 799 $ 151 $ 85
Total Assets $14,898 $14,187 $14,077
International
Operating revenue $ — $ 2 $ 3
Operating income (loss) $ 1 $ (150) $ (139)
Total Assets $ 3 $ 5 $ 1,248
(a) Amounts include income tax expense of $1 million for December 31, 2008, an income tax benefit of $1 million for
December 31, 2007, and income tax expense of $32 million for December 31, 2006.
(b) Amounts include a portion of Consumers’ other common assets attributable to both the electric and gas utility
businesses.
(c) Amounts include purchase of nuclear fuel and capital lease additions. Amounts also include a portion of Consumers’
capital expenditures for plant and equipment attributable to both the electric and gas utility businesses.
(d) Revenues are based on the country location of customers.
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17: CONSOLIDATION OF VARIABLE INTEREST ENTITIES

FIN 46(R) requires the consolidation of entities that are VIEs if the reporting company determines that it will absorb a
majority of the VIE’s expected losses, receive a majority of the VIE’s residual returns, or both. The company that is required
to consolidate the VIE is called the primary beneficiary. Variable interests are contractual, ownership or other interests in an
entity that change as the fair value of the entity’s net assets, excluding variable interests, change. An entity is considered
to be a VIE when its capital is insufficient to permit it to finance its activities without additional subordinated financial
support or its equity investors, as a group, lack the characteristics of having a controlling financial interest. When
determining whether we are the primary beneficiary of a VIE we examine the following factors:
• related party agreements such as operating and maintenance agreements, power purchase agreements and leases,
• ownership interest, and
• allocation of expected losses and return based on discounted cash flows at a weighted average cost of capital.
We are the primary beneficiary of three VIEs through our ownership interests in the following partnerships:
Total
Nature of Ge n e ratin g
Nam e (O wn e rship In te re st) the En tity Finan cin g of Partne rship C apacity
T.E.S. Filer City (50)% Coal-based Non-recourse long-term debt that matured in December 70 MW
power 2007.
generator
Grayling (50)% Wood Sale of revenue bonds that mature in November 2012 and 40 MW
waste-based bear interest at variable rates. The debt is recourse to the
power partnership, but not the individual partners, and secured
generator by a letter of credit equal to the outstanding balance.
Genesee (50)% Wood Sale of revenue bonds that mature in 2021 and bear 38 MW
waste-based interest at fixed rates. The debt is non-recourse to the
power partnership and secured by a CMS Energy guarantee
generator capped at $3 million annually.
Total 148 MW
We consolidated these entities for all periods presented.

We have operating and management contracts with these partnerships and we are the primary purchaser of power from
each partnership through long-term power purchase agreements. We also have reduced dispatch agreements with Grayling
and Genesee, which allow the relative facilities to be dispatched based on the market price of wood waste. This results in
fuel cost savings, which the partnerships share with us.
The partnerships have third-party obligations totaling $76 million at December 31, 2008 and $83 million at December 31,
2007. Property, plant, and equipment serving as collateral for these obligations have a carrying value of $145 million at
December 31, 2008 and $180 million at December 31, 2007. Other than through outstanding letters of credit and guarantees of
$5 million, the creditors of these partnerships do not have recourse to the general credit of CMS Energy. We have not
provided financial or other support during the periods presented that were not previously contractually required.
Additionally, through our trust preferred security structure, we hold an interest in a variable interest entity in which we
are not the primary beneficiary. We deconsolidated the entity and reflected it as Long-term debt-Related parties. Our
maximum exposure to loss through our interest is limited to our Long-term debt-Related parties balance of $178 million. For
additional information, see Note 5, Financings and Capitalization, “Long-Term Debt-Related Parties.”
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18: QUARTERLY FINANCIAL AND COMMON STOCK INFORMATION (UNAUDITED)

2008
Q u arte rs En de d March 31 Ju n e 30 S e pt. 30 De c. 31
In Million s, Exce pt Pe r S h are Am ou n ts
Operating revenue $ 2,184 $ 1,365 $ 1,428 $ 1,844
Operating income 253 155 212 180
Income from continuing operations 106 50 80 64
Income (loss) from discontinued operations(a) — (1) 1 —
Net income 106 49 81 64
Preferred dividends 3 3 2 3
Net income available to common stockholders 103 46 79 61
Income from continuing operations per average common share — basic 0.46 0.21 0.35 0.27
Income from continuing operations per average common share — diluted 0.44 0.20 0.33 0.27
Basic earnings per average common share(b) 0.46 0.20 0.36 0.27
Diluted earnings per average common share(b) 0.44 0.19 0.34 0.27
Common stock prices(c)
High 17.16 15.83 14.91 12.58
Low 13.35 13.78 12.09 8.81
2007
Q u arte rs En de d March 31 Ju n e 30 S e pt. 30 De c. 31(d)
In Million s, Exce pt Pe r S h are Am ou n ts
Operating income (loss) (24) 7 212 (194)
Income (loss) from continuing operations (33) (55) 84 (122)
Income (loss) from discontinued operations(a) (178) 91 — (2)
Net income (loss) (211) 36 84 (124)
Preferred dividends 3 3 2 3
Redemption premium on preferred stock 1 — — —
Net income (loss) available to common stockholders (215) 33 82 (127)
Income (loss) from continuing operations per average common share —
basic (0.17) (0.26) 0.37 (0.56)
Income (loss) from continuing operations per average common share —
diluted (0.17) (0.26) 0.34 (0.56)
Basic earnings (loss) per average common share(b) (0.97) 0.15 0.37 (0.57)
Diluted earnings (loss) per average common share(b) (0.97) 0.15 0.34 (0.57)
Common stock prices(c)
High 18.21 18.93 17.90 17.91
Low 16.00 16.78 15.48 16.06
(a) Net of tax.

(b) Sum of the quarters may not equal the annual earnings (loss) per share due to changes in shares outstanding.
(c) Based on New York Stock Exchange composite transactions.
(d) The quarter ended December 31, 2007 includes a $181 million net after-tax charge resulting from an electricity sales
agreement termination.
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Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income
(loss), of cash flows, and of common stockholders’ equity present fairly, in all material respects, the financial position of
CMS Energy Corporation and its subsidiaries at December 31, 2008 and December 31, 2007, and the results of their
operations and their cash flows for each of the two years in the period ended December 31, 2008 in conformity with
accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement
schedules listed in the accompanying index present fairly, in all material respects, the information set forth therein when
read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all
material respects, effective internal control over financial reporting as of December 31, 2008, based on criteria established in
Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). The Company’s management is responsible for these financial statements and financial statement
schedules, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of
internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting
appearing under Item 9A. Our responsibility is to express opinions on these financial statements, on the financial statement
schedules, and on the Company’s internal control over financial reporting based on our integrated audits. We conducted
our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement and whether effective internal control over financial reporting was maintained in
all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation. Our audit of internal control over
financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a
material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances.
We believe that our audits provide a reasonable basis for our opinions.
As discussed in Note 10 to the consolidated financial statements, the Company changed the manner in which it
accounts for uncertain income tax provisions in 2007.
A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and
procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial
statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls
may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures
may deteriorate.
/s/ PricewaterhouseCoopers LLP
Detroit, Michigan
February 25, 2009
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To the Partners and the Management Committee of

Midland Cogeneration Venture Limited Partnership:
In our opinion, the accompanying statements of operations and of cash flows present fairly, in all material respects, the
results of operations and cash flows of Midland Cogeneration Venture Limited Partnership for the period ended
November 21, 2006 in conformity with accounting principles generally accepted in the United States of America. These
financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of these statements in accordance with the
standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
Detroit, Michigan
February 19, 2007
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders of

We have audited the accompanying consolidated statements of income (loss), common stockholders’ equity, and cash
flows of CMS Energy Corporation (a Michigan Corporation) for the year ended December 31, 2006. Our audit also included
the financial statement schedules as it relates to 2006 listed in the Index at Item 15(a)(2). These financial statements and
schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on these
financial statements and schedules based on our audit. We did not audit the financial statements of Midland Cogeneration
Venture Limited Partnership, a former 49% owned variable interest entity which has been consolidated through the date of
sale, November 21, 2006 (Note 3), which statements reflect total revenues constituting 8.9% in 2006 of the related
consolidated totals. Those statements were audited by other auditors whose report has been furnished to us, and our
opinion on the consolidated financial statements, insofar as it relates to the amounts included for the period indicated
above for Midland Cogeneration Venture Limited Partnership, is based solely on the report of the other auditors.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall financial statement presentation. We
believe that our audit and the report of other auditors provide a reasonable basis for our opinion.
In our opinion, based on our audit and the report of other auditors, the financial statements referred to above present
fairly, in all material respects, the consolidated results of CMS Energy Corporation’s operations and its cash flows for the
year ended December 31, 2006, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the
related financial statement schedules, when considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
As discussed in Note 8 to the consolidated financial statements, in accordance with Financial Accounting Standards
Board (FASB) Statement of Financial Accounting Standards No. 158, “Employers’ Accounting for Defined Benefit Pension
and Other Postretirement Plans — an amendment of FASB Statements No. 87, 88, 106 and 132(R),” the Company changed its
method of accounting for the funded status of its defined benefit pension and other postretirement benefit plans in 2006.
/s/ Ernst & Young LLP
Detroit, Michigan
February 21, 2007, except for “Discontinued
Operations” in Note 3 as to which the date
is February 20, 2008
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(CONSUMERS ENERGY LOGO)
2008 CONSOLIDATED FINANCIAL STATEMENTS
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SELECTED FINANCIAL INFORMATION
2008 2007 2006 2005 2004
Operating revenue (in millions) ($) 6,421 6,064 5,721 5,232 4,711
Earnings from equity method investees (in millions) ($) — — 1 1 1
Income (loss) before cumulative effect of change in
accounting principle (in millions) ($) 364 312 186 (96) 280
Cumulative effect of change in accounting (in millions) ($) — — — — (1)
Net income (loss) (in millions) ($) 364 312 186 (96) 279
Net income (loss) available to common stockholder (in
millions) ($) 362 310 184 (98) 277
Cash provided by operations (in millions) ($) 873 440 474 639 595
Capital expenditures, excluding capital lease additions (in
millions) ($) 789 1,258 646 572 508
Total assets (in millions)(a) ($) 14,246 13,401 12,845 13,178 12,811
Long-term debt, excluding current portion (in millions)(a) ($) 3,908 3,692 4,127 4,303 4,000
Long-term debt — related parties, excluding current portion
(in millions) ($) — — — — 326
Non-current portion of capital and finance lease obligations
(in millions) ($) 206 225 42 308 315
Total preferred stock (in millions) ($) 44 44 44 44 44
Number of preferred shareholders at year-end 1,584 1,641 1,728 1,823 1,931
Book value per common share at year-end ($) 44.05 43.37 35.17 33.03 28.68
Number of full-time equivalent employees at year-end 7,697 7,614 8,026 8,114 8,050
Electric statistics
Sales (billions of kWh) 37 39 38 39 38
Customers (in thousands) 1,814 1,799 1,797 1,789 1,772
Average sales rate per kWh (¢) 9.48 8.65 8.46 6.73 6.88
Gas Utility Statistics
Sales and transportation deliveries (bcf) 338 340 309 350 385
Customers (in thousands)(b) 1,713 1,710 1,714 1,708 1,691
Average sales rate per mcf ($) 11.25 10.66 10.44 9.61 8.04
(a) Until their sale in November 2006 , we were the primary beneficiary of both the MCV Partnership and the FMLP. As a
result, we consolidated their assets, liabilities and activities into our consolidated financial statements as of and for the
years ended December 31, 2005 and 2004. These partnerships had third-party obligations totaling $482 million at
December 31, 2005 and $582 million at December 31, 2004. Property, plant and equipment serving as collateral for these
obligations had a carrying value of $224 million at December 31, 2005 and $1.426 billion at December 31, 2004.
(b) Excludes off-system transportation customers.
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This MD&A is a consolidated report of Consumers. The terms “we” and “our” as used in this report refer to
Consumers and its subsidiaries as a consolidated entity, except where it is clear that such term means only Consumers.
FORWARD-LOOKING STATEMENTS AND INFORMATION

This Form 10-K and other written and oral statements that we make contain forward-looking statements as defined by
the Private Securities Litigation Reform Act of 1995. Our intention with the use of words such as “may,” “could,”
“anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” and other similar words is to identify forward-looking
statements that involve risk and uncertainty. We designed this discussion of potential risks and uncertainties to highlight
important factors that may impact our business and financial outlook. We 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 our actual
results to differ materially from the results anticipated in these statements. These factors include our inability to predict or
control:
• the price of CMS Energy Common Stock, capital and financial market conditions and the effect of these market
conditions on our postretirement benefit plans, interest rates, and access to the capital markets, including availability
of financing (including our accounts receivable sales program and revolving credit facilities) to Consumers, CMS
Energy, or any of their affiliates, and the energy industry,
• the impact of the continued downturn in the economy and the sharp downturn and extreme volatility in the financial
and credit markets on CMS Energy, including its:
• revenues,
• capital expenditure program and related earnings growth,
• ability to collect accounts receivable from our customers,
• cost of capital and availability of capital, and
• Pension Plan and postretirement benefit plans assets and required contributions,
• the market perception of the energy industry or of Consumers, CMS Energy, or any of their affiliates,
• the credit ratings of Consumers or CMS Energy,
• factors affecting operations, such as unusual weather conditions, catastrophic weather-related damage,
unscheduled generation outages, maintenance or repairs, environmental incidents, or electric transmission or gas
pipeline system constraints,
• changes in applicable laws, rules, regulations, principles or practices or in their interpretation, including with respect
to taxes, environmental and accounting matters, that could have an impact on our business,
• the impact of any future regulations or laws regarding:
• carbon dioxide, mercury and other greenhouse gas emissions,
• limitations on the use of coal-based electric power plants, and
• renewable portfolio standards and energy efficiency mandates,
• national, regional, and local economic, competitive, and regulatory policies, conditions and developments,
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• adverse regulatory or legal interpretations or decisions, including those related to environmental laws and
regulations, and potential environmental remediation costs associated with these interpretations or decisions,
including but not limited to those that may affect our RMRR classification under NSR regulation,
• potentially adverse regulatory treatment or failure to receive timely regulatory orders concerning a number of
significant questions currently or potentially before the MPSC, including:
• adequate and timely recovery of:
• Clean Air Act capital and operating costs and other environmental and safety-related expenditures,
• power supply and natural gas supply costs,
• additional electric and gas rate-based investments,
• increased MISO energy and transmission costs,
• costs associated with energy efficiency investments and state or federally mandated renewable resource
standards,
• Big Rock decommissioning funding shortfalls,
• timely recognition in rates of additional equity investments and additional operation and maintenance expenses at
Consumers,
• authorization of a new clean coal plant, and
• implementation of new energy legislation,
• adverse consequences resulting from a past or future assertion of indemnity or warranty claims associated with
previously owned assets and businesses,
• our ability to recover nuclear fuel storage costs due to the DOE’s failure to accept spent nuclear fuel on schedule,
including the outcome of pending litigation with the DOE,
• the impact of expanded enforcement powers and investigation activities at the FERC,
• federal regulation of electric sales and transmission of electricity, including periodic re-examination by federal
regulators of our market-based sales authorizations in wholesale power markets without price restrictions,
• energy markets, including availability of capacity and the timing and extent of changes in commodity prices for oil,
coal, natural gas, natural gas liquids, electricity and certain related products due to lower or higher demand,
shortages, transportation problems, or other developments, and their impact on our cash flow and working capital,
• the impact of construction material prices and the availability of qualified construction personnel to implement our
construction program,
• potential disruption or interruption of facilities or operations due to accidents, war, or terrorism, and the ability to
obtain or maintain insurance coverage for these events,
• disruptions in the normal commercial insurance and surety bond markets that may increase costs or reduce
traditional insurance coverage, particularly terrorism and sabotage insurance, performance bonds, and tax-exempt
debt insurance, and stability of insurance providers,
• technological developments in energy production, delivery, usage, and storage,
• achievement of capital expenditure and operating expense goals,
• earnings volatility resulting from the GAAP requirement that we apply mark-to-market accounting to certain energy
commodity contracts,
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• changes in financial or regulatory accounting principles or policies,

• a possible future requirement to comply with International Financial Reporting Standards, which differ from GAAP in
various ways including the present lack of special accounting treatment for regulated activities similar to that
provided under SFAS No. 71,
• the impact of our new integrated business software system on our operations, including customer billing, finance,
purchasing, human resources and payroll processes, and utility asset construction and maintenance work
management systems,
• the outcome, cost, and other effects of legal or administrative proceedings, settlements, investigations or claims,
• population growth or decline in the geographic areas where we do business,
• changes in the economic and financial viability of our suppliers, customers, and other counterparties and the
continued ability of these third parties to perform their obligations to us,
• the effectiveness of our risk management policies and procedures,
• our ability to achieve generation planning goals and the occurrence and duration of planned or unplanned
generation outages,
• adverse outcomes regarding tax positions due to the difficulty in quantifying tax effects of business decisions and
reserves, and
• other business or investment matters that may be disclosed from time to time in Consumers’ or CMS Energy’s SEC
filings, or in other publicly issued written documents.
For additional details regarding these and other uncertainties, see the “Outlook” section included in this MD&A,
Note 4, Contingencies, and Part I, Item 1A. Risk Factors.
EXECUTIVE OVERVIEW
Consumers, a subsidiary of CMS Energy, a holding company, is a combination electric and gas utility company serving
in Michigan’s Lower Peninsula. Our customer base includes a mix of residential, commercial, and diversified industrial
customers.
We manage our business by the nature of service provided and operate principally in two business segments: electric
utility and gas utility. Our electric utility operations include the generation, purchase, distribution, and sale of electricity.
Our gas utility operations include the purchase, transportation, storage, distribution, and sale of natural gas.
We earn our revenue and generate cash from operations by providing electric and natural gas utility services, electric
power generation, gas distribution, transmission, and storage, and other energy-related services. Our businesses are
affected primarily by:
• weather, especially during the normal heating and cooling seasons,
• economic conditions,
• regulation and regulatory issues,
• energy commodity prices,
• interest rates, and
• our debt credit rating.
During the past several years, our business strategy has emphasized improving our consolidated balance sheet and
maintaining focus on our core strength: utility operations and service.
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Our forecast calls for investing in excess of $6 billion in the utility over the period from 2009 through 2013, with a key
aspect of our strategy being our Balanced Energy Initiative. Our Balanced Energy Initiative is a comprehensive energy
resource plan to meet our projected short-term and long-term electric power requirements with energy efficiency, demand
management, expanded use of renewable energy, and development of new power plants and pursuit of additional power
purchase agreements to complement existing generating sources.
In October 2008, the Michigan governor signed into law a comprehensive energy reform package. In February 2009, we
filed our renewable energy plan and energy optimization plan with the MPSC in order to conform to various aspects of this
legislation.
As we work to implement plans to serve our customers in the future, the cost of energy and related cash flow issues
continue to challenge us. Natural gas prices and eastern coal prices have been volatile. These costs are recoverable from
our utility customers; however, as prices increase, the amount we pay for these commodities will require additional liquidity
due to the lag in cost recoveries. There is additional uncertainty associated with state and federal legislative and regulatory
proposals related to regulation of carbon dioxide emissions, particularly associated with coal-based generation. We are
closely monitoring these developments for the effect on our future plans.
We are developing an advanced metering infrastructure system that will provide enhanced controls and information
about our customer energy usage and notification of service interruptions. We expect to develop integration software and
pilot this new technology over the next two to three years.
In the future, we will continue to focus our strategy on:
• investing in our utility system to enable us to meet our customer commitments, improve customer service, comply
with increasing environmental performance standards, improve system performance, and maintain adequate supply
and capacity,
• growing earnings while controlling operating and fuel costs,
• managing cash flow, and
• maintaining principles of safe, efficient operations, customer value, fair and timely regulation, and consistent
financial performance.
As we execute our strategy, we will need to overcome a Michigan economy that has been adversely impacted by the
continued downturn and uncertainty in Michigan’s automotive industry. There also has been a sharp economic downturn,
uncertainty, and extreme volatility in the financial and credit markets resulting from the subprime mortgage crisis, bank
failures and consolidation, and other market weaknesses. While we believe that our sources of liquidity will be sufficient to
meet our requirements, we continue to monitor closely developments in the financial and credit markets and government
response to those developments for potential implications for our business.
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RESULTS OF OPERATIONS
NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDER

In Million s
Electric $271 $196 $ 75 $196 $199 (3)
Gas 89 87 2 87 37 50
Other (Includes The MCV Partnership interest) 2 27 (25) 27 (52) 79
Net Income Available to Common Stockholder $362 $310 $ 52 $310 $184 $ 126
For 2008, our net income available to our common stockholder was $362 million, compared to $310 million for 2007. The
increase reflects higher net income from our electric utility segment primarily due to rate increases authorized in December
2007 and June 2008 and reduced costs associated with our power purchase agreement with the MCV Partnership. Partially
offsetting these increases was a decrease in electric deliveries and increased depreciation expense.
Specific changes to net income available to our common stockholder for 2008 versus 2007 are:
In Million s
• increase in electric delivery revenue primarily due to the MPSC’s December 2007 and June 2008 electric
rate orders, $ 109
• decrease in electric operating expense due to the absence, in 2008, of certain costs which are no longer
incurred under our power purchase agreement with the MCV Partnership, 29
• absence of nuclear operating and maintenance costs, 25
• increase in gas delivery revenue primarily due to the MPSC’s August 2007 gas rate order, 20
• decrease in electric deliveries, (51)
• decrease in other income, (48)
• increase in depreciation expense, and (31)
• other net decreases (1)
Total change $ 52
For 2007, our net income available to our common stockholder was $310 million, compared to $184 million for 2006. In
2006, we sold our ownership interest in the MCV Partnership. Accordingly, in 2007, we no longer experienced mark-to-
market losses on certain long-term gas contracts and associated financial hedges at the MCV Partnership. The increase in
2007 also reflects higher net income from our gas utility due to colder weather and gas rate increases authorized in
November 2006 and August 2007. Partially offsetting these gains was a small decrease in electric net income, influenced by
several factors, including regulatory disallowances in 2007, higher property taxes, and higher electric deliveries.
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Specific changes to net income available to our common stockholder for 2007 versus 2006 are:
In Million s
• lower operating and maintenance costs primarily due to the sale of Palisades in April 2007, $ 82
• decrease in losses from our ownership interest in the MCV Partnership primarily due to the absence, in
2007, of mark-to-market losses on certain long-term gas contracts and financial hedges, 60
• increase in gas delivery revenue primarily due to the MPSC’s November 2006 and August 2007 gas rate
orders, 47
• decrease in other income tax adjustments primarily due to higher expected utilization of capital loss
carryforwards, 14
• increase in electric revenue primarily due to favorable weather and higher surcharge revenue, 16
• increase in gas delivery revenue primarily due to colder weather, 12
• decrease due to electric revenue being used to offset costs incurred under our power purchase
agreement with Entergy, (88)
• increase in general taxes, primarily due to higher property tax expense, (14)
• increase in interest charges, and (7)
• other net increases to income 4
Total change $ 126
ELECTRIC UTILITY RESULTS OF OPERATIONS

In Million s
Net income $271 $196 $ 75 $196 $199 $ (3)
Electric deliveries and rate increase $ 89 $ (118)
Surcharge revenue 15 6
Power supply costs and related revenue 18 (17)
Non-commodity revenue (14) (12)
Depreciation and other operating expenses 40 150
Other income (46) 26
General taxes 15 (15)
Interest charges 11 (18)
Income taxes (53) (5)
Electric deliveries and rate increase: For 2008, electric delivery revenues increased $89 million versus 2007 primarily
due to additional revenue of $168 million from the inclusion of the Zeeland power plant in rates and from the June 2008 rate
order. The increase was partially offset by decreased electric revenue of $79 million primarily due to lower deliveries.
Deliveries to end-use customers were 37.5 billion kWh, a decrease of 1.3 billion kWh or 3 percent versus 2007.
Approximately 45 percent of the decrease in electric deliveries was due to weather.
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For 2007, electric delivery revenues decreased $118 million versus 2006. The decrease was primarily due to $136 million
of revenue related to Palisades that was designated toward the recovery of PSCR costs consistent with the MPSC order
related to the sale in April 2007. Partially offsetting the decrease were increased electric delivery revenues of $14 million, as
deliveries to end-use customers were 38.8 billion kWh, an increase of 0.3 billion kWh or 0.8 percent versus 2006. The
increase in electric deliveries was primarily due to favorable weather. Also contributing to the increase was $2 million of
additional revenue from the inclusion of the Zeeland power plant in rates and $2 million related to the return of additional
former ROA customers.
Surcharge revenue: For 2008, surcharge revenue increased $15 million versus 2007. The increase was primarily due to
the April 2008 MPSC order allowing recovery of pension and OPEB benefits through a surcharge. Consistent with the
recovery of these costs, we recognized a similar amount of benefit expense. For additional details, see “Depreciation and
other operating expenses” within this section and Note 7, Retirement Benefits.
For 2007, surcharge revenue increased $6 million versus 2006. The increase was primarily due to a surcharge that we
began collecting in the first quarter of 2006 that the MPSC authorized under Section 10d(4) of the Customer Choice Act.
Power supply costs and related revenue: For 2008, PSCR revenue increased by $18 million versus 2007. The increase
primarily reflects the absence of a 2007 reduction to revenue made in response to the MPSC’s position that PSCR discounts
given to our Transitional Primary Rate customers could not be recovered under the PSCR mechanism.
For 2007, PSCR revenue decreased by $17 million versus 2006. This decrease primarily reflects amounts excluded from
recovery in the 2006 PSCR reconciliation case. The decrease also reflects the absence, in 2007, of an increase in power
supply revenue associated with the 2005 PSCR reconciliation case.
Non-commodity revenue: For 2008, non-commodity revenue decreased $14 million versus 2007 primarily due to the
absence, in 2008, of METC transmission services revenue. The METC transmission service agreement expired in April 2007.
For 2007, non-commodity revenue decreased $12 million versus 2006 primarily due to lower METC transmission
services revenue.
Depreciation and other operating expenses: For 2008, depreciation and other operating expenses decreased $40 million
versus 2007. The decrease was primarily due to the absence of operating expenses of Palisades, which was sold in April
2007, and certain costs that are no longer incurred under our power purchase agreement with the MCV Partnership. Also
contributing to the decrease in expenses was the April 2008 MPSC order allowing us to retain a portion of the proceeds from
the 2006 sale of certain sulfur dioxide allowances. The decrease was partially offset by higher pension and OPEB expense
due to the April 2008 MPSC order allowing recovery of certain costs through a surcharge, increased depreciation and
amortization expense due to more plant in service and increased amortization of certain regulatory assets. For additional
details on our power purchase agreement with the MCV Partnership, see Note 4, Contingencies, “Other Electric
Contingencies.”
For 2007, depreciation and other operating expenses decreased $150 million versus 2006. The decrease was primarily
due to lower operating expenses of Palisades, which was sold in April 2007. Also contributing to the decrease was the
absence, in 2007, of costs incurred in 2006 related to a refueling outage at Palisades, and lower overhead line maintenance
and storm restoration costs. These decreases were offset partially by increased depreciation and amortization expense due
to more plant in service and increased amortization of certain regulatory assets.
Other income: For 2008, other income decreased $46 million versus 2007. The decrease was primarily due to reduced
interest income, reflecting lower levels of short-term cash investments, and the MPSC’s June 2008 order, which did not
allow us to recover all of our costs associated with the sale of Palisades. Also contributing to the decrease was a charge
that recognized an other-than-temporary decline in the fair value of our SERP investments.
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For 2007, other income increased $26 million versus 2006 primarily due to higher interest income on short-term cash
investments. The increase in short-term cash investments was primarily due to proceeds from the Palisades sale and equity
infusions from CMS Energy.
General taxes: For 2008, general tax expense decreased $15 million versus 2007 primarily due to the absence, in 2008, of
MSBT, which was replaced with the Michigan Business Tax effective January 1, 2008. The Michigan Business Tax is an
income tax. The decrease was partially offset by higher property tax expense.
For 2007, general tax expense increased $15 million versus 2006 primarily due to higher property tax expense, reflecting
higher millage rates and lower property tax refunds versus 2006.
Interest charges: For 2008, interest charges decreased $11 million versus 2007 primarily due to lower interest
associated with amounts to be refunded to our customers as a result of the sale of Palisades. The MPSC order approving
the Palisades power purchase agreement with Entergy directed us to record interest on the unrefunded balances. Also
contributing to the decrease was the absence, in 2008, of interest charges related to an IRS settlement.
For 2007, interest charges increased $18 million versus 2006. The increase was primarily due to interest on amounts to
be refunded to customers as a result of the sale of Palisades as ordered by the MPSC and interest charges related to the IRS
settlement.
Income taxes: For 2008, income taxes increased $53 million versus 2007. The increase primarily reflects $47 million due
to higher earnings and $6 million due to the inclusion of the Michigan Business Tax.
For 2007, income taxes increased $5 million versus 2006 primarily due to the absence, in 2007, of a $4 million income tax
benefit from the restoration and utilization of income tax credits resulting from the resolution of an IRS income tax audit.
GAS UTILITY RESULTS OF OPERATIONS

In Million s
Net income $ 89 $ 87 $ 2 $ 87 $ 37 $ 50
Gas deliveries and rate increase $ 44 $ 91
Gas wholesale and retail services, other gas revenues, and other
income (28) 14
Other operating expenses (24) (19)
General taxes and depreciation (1) (11)
Interest charges 9 4
Income taxes 2 (29)
Total change $ 2 $ 50
Gas deliveries and rate increase: For 2008, gas delivery revenues increased $44 million versus 2007 primarily due to
additional revenue of $33 million from the MPSC’s August 2007 and December 2008 gas rate orders. Also contributing to
the increase was higher gas delivery revenue of $11 million. Gas deliveries, including miscellaneous transportation to end-
use customers, were 304 bcf, an increase of 4 bcf or 1.3 percent. The increase in gas deliveries was due to colder weather in
2008.
For 2007, gas delivery revenues increased $91 million versus 2006 primarily due to additional revenue of $81 million
from the MPSC’s November 2006 and August 2007 gas rate orders. Gas delivery revenues also increased $10 million as gas
deliveries, including miscellaneous transportation to end-use customers, were 300 bcf,
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an increase of 18 bcf or 6.4 percent. The increase in gas deliveries was primarily due to colder weather, partially offset by
higher system losses.
Gas wholesale and retail services, other gas revenues, and other income: For 2008, gas wholesale and retail services,
other gas revenues, and other income decreased $28 million versus 2007. The decrease was primarily due to lower interest
income reflecting lower short-term investments, and lower pipeline capacity optimization revenue. Also contributing to the
decrease was a charge that recognized an other-than-temporary decline in the fair value of our SERP investments.
For 2007, gas wholesale and retail services, other gas revenues, and other income increased $14 million versus 2006.
The increase was primarily due to higher interest income on short-term cash investments. The increase in short-term cash
investments was primarily due to proceeds from the Palisades sale and equity infusions from CMS Energy.
Other operating expenses: For 2008, other operating expenses increased $24 million versus 2007 primarily due to
higher uncollectible accounts expense and higher operating expense across our storage, transmission and distribution
systems.
For 2007, other operating expenses increased $19 million versus 2006 primarily due to higher uncollectible accounts
expense and payments, beginning in November 2006, to a fund that provides energy assistance to low-income customers.
General taxes and depreciation: For 2008, general taxes and depreciation increased $1 million versus 2007. The increase
was primarily due to higher depreciation and increased property taxes. The increase was partially offset by decreased
general taxes due to the absence, in 2008, of MSBT, which was replaced by the Michigan Business Tax effective January 1,
2008. The Michigan Business Tax is an income tax.
For 2007, general taxes and depreciation increased $11 million versus 2006. The increase in general taxes reflects higher
property tax expense due to higher millage rates and lower property tax refunds versus 2006. The increase in depreciation
expense is primarily due to higher plant in service.
Interest charges: For 2008, interest charges decreased $9 million versus 2007 primarily due to lower average debt levels
and a lower average interest rate.
For 2007, interest charges decreased $4 million versus 2006 primarily due to lower average debt levels and a lower
average interest rate versus 2006.
Income taxes: For 2008, income taxes decreased $2 million versus 2007. The decrease reflects $4 million related to the
tax treatment of items related to property, plant and equipment, as required by the MPSC orders. This decrease was partially
offset by a $1 million increase due to the inclusion of the Michigan Business Tax and $1 million related to the forfeiture of
restricted stock.
For 2007, income taxes increased $29 million versus 2006 primarily due to higher earnings by the gas utility.
OTHER NONUTILITY RESULTS OF OPERATIONS

In Million s
Net income (loss) $ 2 $ 27 $ (25) $ 27 $(52) $ 79
For 2008, net income from other nonutility operations was $2 million, a decrease of $25 million versus 2007. The
decrease was primarily due to the absence, in 2008, of certain income tax benefits.
For 2007, net income from other nonutility operations was $27 million, an increase of $79 million versus 2006. In late
2006, we sold our ownership interest in the MCV Partnership. Accordingly, in 2007, the increase in earnings primarily
reflects the absence, in 2007, of mark-to-market losses on certain long-term gas contracts and associated
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financial hedges at the MCV Partnership. Also contributing to the increase was lower income tax expense, reflecting higher
expected utilization of capital loss carryforwards. See Note 9, Income Taxes, for further details.
CRITICAL ACCOUNTING POLICIES

The following accounting policies and related information are important to an understanding of our results of
operations and financial condition and should be considered an integral part of our MD&A. For additional accounting
policies, see Note 1, Corporate Structure and Accounting Policies.
USE OF ESTIMATES AND ASSUMPTIONS

In preparing our consolidated financial statements, we use estimates and assumptions that may affect reported
amounts and disclosures. We use accounting estimates for asset valuations, depreciation, amortization, financial and
derivative instruments, employee benefits, indemnifications and contingencies. Actual results may differ from estimated
results due to changes in the regulatory environment, competition, regulatory decisions, lawsuits, and other factors.
Contingencies: We record a liability for contingencies when we conclude that it is probable that a liability has been
incurred and the amount of loss can be reasonably estimated. We consider all relevant factors in making these assessments.
Fair Value Measurements: We have assets and liabilities that we account for or disclose at fair value. Our fair value
measurements are performed in accordance with SFAS No. 157, which requires the incorporation of all assumptions that
market participants would use in pricing an asset or liability, including assumptions about risk. Development of these
assumptions requires significant judgment.
The most material of our fair value measurements are of our SERP assets, our investment in CMS Energy Common
Stock, and the year-end measurement of our pension and OPEB plan assets. For a detailed discussion of the methods used
to calculate our fair value measurements, see Note 2, Fair Value Measurements.
Long-Lived Assets and Investments: Our assessment of the recoverability of long-lived assets and investments
involves critical accounting estimates. We periodically perform tests of impairment if certain conditions triggering events
occur or if there has been a decline in value that may be other than temporary. Of our total assets, recorded at $14.246 billion
at December 3l, 2008, 63 percent represent long-lived assets and investments that are subject to this type of analysis. We
base our evaluations of impairment on such indicators as:
• the nature of the assets,
• projected future economic benefits,
• regulatory and political environments,
• historical and future cash flow and profitability measurements, and
• other external market conditions and factors.
The estimates we use can change over time, which could have a material impact on our consolidated financial
statements. For additional details, see Note 1, Corporate Structure and Accounting Policies, “Impairment of Investments
and Long-Lived Assets.”
ACCOUNTING FOR THE EFFECTS OF INDUSTRY REGULATION

Our involvement in a regulated industry requires us to use SFAS No. 71 to account for the effects of the regulators’
decisions that impact the timing and recognition of our revenues and expenses. As a result, we may defer or recognize
revenues and expenses differently than a non-regulated entity.
For example, we may record as regulatory assets items that a non-regulated entity normally would expense if the
actions of the regulator indicate that we will recover the expenses in future rates. Conversely, we may record as
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regulatory liabilities items that non-regulated entities may normally recognize as revenues, if the actions of the regulator
indicate that we will be required to refund the revenues to customers. Judgment is required to determine the appropriate
accounting for items recorded as regulatory assets and liabilities. At December 31, 2008, we had $2.438 billion recorded as
regulatory assets and $1.988 billion recorded as regulatory liabilities.
Our PSCR and GCR cost recovery mechanisms also give rise to probable future revenues that will be recovered from
customers or past overrecoveries that will be refunded to customers through the ratemaking process. Underrecoveries are
included in Accrued power supply and gas revenue and overrecoveries are included in Accrued rate refunds on our
Consolidated Balance Sheets. At December 31, 2008, we had $7 million recorded as regulatory assets for underrecoveries of
power supply and gas costs and $7 million recorded as regulatory liabilities for overrecoveries of power supply and gas
costs.
For additional details, see Note 1, Corporate Structure and Accounting Policies, “Utility Regulation.”
ACCOUNTING FOR FINANCIAL AND DERIVATIVE INSTRUMENTS AND MARKET RISK INFORMATION
Financial Instruments: Debt and equity securities classified as available-for-sale are reported at fair value determined
from quoted market prices. Unrealized gains and losses resulting from changes in fair value of available-for-sale debt and
equity securities are reported, net of tax, in equity as part of AOCL. Unrealized losses are excluded from earnings unless the
related changes in fair value are determined to be other than temporary.
Derivative Instruments: We use the criteria in SFAS No. 133 to determine if we need to account for certain contracts as
derivative instruments. These criteria are complex and often require significant judgment in applying them to specific
contracts. If a contract is a derivative and does not qualify for the normal purchases and sales exception under
SFAS No. 133, we record it on our consolidated balance sheet at its fair value. Each quarter, we adjust the resulting asset or
liability to reflect any change in the fair value of the contract, a practice known as marking the contract to market. For
additional details on our derivatives, see Note 6, Financial and Derivative Instruments.
To determine the fair value of our derivatives, we generally use information from external sources, such as quoted
market prices and other valuation information. Our valuations use various inputs and assumptions, including commodity
market prices and volatilities, as well as interest rates and contract maturity dates. The fair values we calculate for our
derivatives may change significantly as commodity prices and volatilities change. The cash returns we actually realize on
our derivatives may be different from the fair values that we estimate. For derivatives in an asset position, our calculations
of fair value include reserves to reflect the credit risk of our counterparties. For derivatives in a liability position, our
calculations include reserves to reflect our own credit risk. At December 31, 2008, the amount of credit reserves we have
recorded is immaterial. For additional details on how we determine the fair values of our derivatives, see Note 2, Fair Value
Measurements.
The types of contracts we typically classify as derivatives are financial transmission rights, fixed price fuel contracts,
and forward and option contracts for natural gas and foreign currencies. Most of our commodity purchase and sale
contracts are not subject to derivative accounting under SFAS No. 133 because:
active market for coal develops in the future, some of these contracts may qualify as derivatives. Under regulatory
accounting, the resulting mark-to-market gains and losses would be offset by changes in regulatory assets and liabilities
and would not affect net income.
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Market Risk Information: We are exposed to market risks including, but not limited to, changes in interest rates,
commodity prices, foreign currency exchange rates, and equity security prices. We may enter into various risk management
contracts to limit our exposure to these risks, including swaps, options, and forward contracts. We enter into these
contracts using established policies and procedures, under the direction of an executive oversight committee consisting of
senior management representatives and a risk committee consisting of business unit managers.
These contracts contain credit risk, which is the risk that our counterparties will fail to meet their contractual
obligations. We reduce this risk using established policies and procedures, such as evaluating our counterparties’ credit
quality and setting collateral requirements as necessary. If terms permit, we use standard agreements that allow us to net
positive and negative exposures associated with the same counterparty. Given these policies, our current exposures, and
our credit reserves, we do not expect a material adverse effect on our financial position or future earnings because of
counterparty nonperformance.
The following risk sensitivities illustrate the potential loss in fair value, cash flows, or future earnings from our financial
instruments, including our derivative contracts, assuming a hypothetical adverse change in market rates or prices of
10 percent. Potential losses could exceed the amounts shown in the sensitivity analyses if changes in market rates or prices
were to exceed 10 percent.
Interest Rate Risk: We are exposed to interest rate risk resulting from issuing fixed-rate and variable-rate financing
instruments, and from interest rate swap agreements. We use a combination of these instruments to manage this risk as
deemed appropriate, based upon market conditions. These strategies are designed to provide and maintain a balance
between risk and the lowest cost of capital.
Interest Rate Risk Sensitivity Analysis (assuming an increase in market interest rates of 10 percent):
De ce m be r 31 2008 2007
In Million s
Variable-rate financing — before tax annual earnings exposure $ 1 $ 1
Fixed-rate financing — potential reduction in fair value(a) 136 116
(a) Fair value reduction could only be realized if we transferred all of our fixed-rate financing to other creditors.
Commodity Price Risk: Operating in the energy industry, we are exposed to commodity price risk, which arises from
fluctuations in the price of electricity, natural gas, coal, and other commodities. Commodity prices are influenced by a
number of factors, including weather, changes in supply and demand, and liquidity of commodity markets. In order to
manage commodity price risk, we may enter into various non-trading derivative contracts, such as fixed price fuel contracts.
Commodity Price Risk Sensitivity Analysis (assuming an adverse change in market prices of 10 percent):
De ce m be r 31 2008 2007
In Million s
Potential reduction in fair value:
Fixed price fuel contracts $ 1 $ —
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Investment Securities Price Risk: Our investments in debt and equity securities are exposed to changes in interest
rates and price fluctuations in equity markets. The following table shows the potential effect of adverse changes in interest
rates and fluctuations in equity prices on our available-for-sale investments.
Investment Securities Price Risk Sensitivity Analysis (assuming an adverse change in market prices of 10 percent):
De ce m be r 31 2008 2007
In Million s
Potential reduction in fair value of available-for-sale equity securities (SERP investments and investment
in CMS Energy common stock) $ 4 $ 7
For additional details on market risk and derivative activities, see Note 6, Financial and Derivative Instruments.
RETIREMENT BENEFITS
Pension: We have external trust funds to provide retirement pension benefits to our employees under a non-
contributory, defined benefit Pension Plan. On September 1, 2005, the defined benefit Pension Plan was closed to new
participants and we implemented the qualified DCCP, which provides an employer contribution of five percent of base pay
to the existing 401(k) plan. An employee contribution is not required to receive the plan’s employer cash contribution. All
employees hired on or after September 1, 2005 participate in this plan as part of their retirement benefit program. Previous
cash balance pension plan participants also participate in the DCCP as of September 1, 2005. Additional pay credits under
the cash balance pension plan were discontinued as of that date.
401(k): We provide an employer match in our 401(k) plan equal to 60 percent on eligible contributions up to the first
six percent of an employee’s wages.
OPEB: We provide postretirement health and life benefits under our OPEB plan to qualifying retired employees.
In accordance with SFAS No. 158, we record liabilities for pension and OPEB on our consolidated balance sheet at the
present value of the future obligations, net of any plan assets. We use SFAS No. 87 to account for pension expense and
SFAS No. 106 to account for other postretirement benefit expense. The calculation of the liabilities and associated expenses
requires the expertise of actuaries, and requires many assumptions, including:
• life expectancies,
• discount rates,
• expected long-term rate of return on plan assets,
• rate of compensation increases, and
• anticipated health care costs.
A change in these assumptions could change significantly our recorded liabilities and associated expenses.
The following table provides an estimate of our pension cost, OPEB cost, and cash contributions for the next three
years:
Expe cte d Pe n sion C ost O PEB C ost Pe n sion C on tribu tion O PEB C on tribu tion
In Million s
2009 $ 98 $ 78 $ 291 $ 52
2010 88 75 123 52
2011 85 73 102 52
Contribution estimates include amounts required and discretionary contributions. Consumers’ pension and OPEB
costs are recoverable through our general ratemaking process. Actual future pension cost and contributions
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will depend on future investment performance, changes in future discount rates, and various other factors related to the
populations participating in the Pension Plan.
Lowering the expected long-term rate of return on the Pension Plan assets by 0.25 percent (from 8.25 percent to
8.00 percent) would increase estimated pension cost for 2009 by $3 million. Lowering the discount rate by 0.25 percent (from
6.50 percent to 6.25 percent) would increase estimated pension cost for 2009 by $5 million.
For additional details on postretirement benefits, see Note 7, Retirement Benefits.
ACCOUNTING FOR ASSET RETIREMENT OBLIGATIONS

We are required to 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. We have legal obligations to remove some of our assets at the end of their useful lives. We
calculate the fair value of ARO liabilities using an expected present value technique, that reflects assumptions about costs,
inflation, and profit margin that third parties would consider to assume the obligation. We did not include a market risk
premium in our ARO fair value estimates since a reasonable estimate could not be made.
indeterminate lives, the liability is recognized when a reasonable estimate of fair value can be made. Generally, our gas
transmission and electric and gas distribution assets have indeterminate lives and retirement cash flows that cannot be
determined. However, we have recorded an ARO for our obligation to cut, purge, and cap abandoned gas distribution mains
and gas services at the end of their useful lives. We have not recorded a liability for assets that have insignificant
cumulative disposal costs, such as substation batteries. For additional details, see Note 8, Asset Retirement Obligations.
RELATED PARTY TRANSACTIONS

We enter into a number of significant transactions with related parties. These transactions include:
• purchase and sale of electricity from and to Enterprises,
• payment of parent company overhead costs to CMS Energy, and
• investment in CMS Energy Common Stock.
Transactions involving the power supply purchases from certain affiliates of Enterprises are based upon avoided costs
under PURPA 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 generally occur in the normal course of business.
For additional details on related party transactions, see Note 1, Corporate Structure and Accounting Policies, “Related
Party Transactions.”
CAPITAL RESOURCES AND LIQUIDITY

Factors affecting our liquidity and capital requirements include:
• results of operations,
• capital expenditures,
• energy commodity and transportation costs,
• contractual obligations,
• regulatory decisions,
• debt maturities,
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• credit ratings,
• pension plan funding requirements,
• working capital needs,
• collateral requirements, and
• access to credit markets.
During the summer months, we buy natural gas and store it for resale during the winter heating season. Although our
prudent natural gas costs are recoverable from our customers, the storage of natural gas as inventory requires additional
liquidity due to the lag in cost recovery.
Components of our cash management plan include controlling operating expenses and capital expenditures and
evaluating market conditions for financing opportunities, if needed. We have taken the following actions to strengthen our
liquidity:
• in September 2008, we issued $350 million FMB, and
• in September 2008, we entered into a $150 million revolving credit agreement.
In April 2008, we redeemed two of our tax-exempt debt issues with $96 million of refinancing proceeds and converted
$35 million of tax-exempt debt previously backed by municipal bond insurers to variable rate demand bonds, effectively
eliminating our variable rate debt backed by municipal bond insurers.
Despite the current market volatility, we expect to be able to continue to have access to the capital markets, including
funds available under our revolving credit facilities and our accounts receivable sales program. Our accounts receivable
sales program is planned for renewal in May 2009. Of our $842 million in letters of credit and revolving credit facilities,
$342 million are planned for renewal in 2009 and $500 million are planned for renewal in 2012. Our FMB maturities are
$350 million in 2009, $250 million in 2010 and $300 million in 2012. We believe that our current level of cash and our
anticipated cash flows from operating activities, together with access to sources of liquidity, will be sufficient to meet cash
requirements. If access to the capital markets is diminished or otherwise restricted, we would implement contingency plans
to address debt maturities that may include reduced capital spending. For additional details, see Note 5, Financings and
Capitalization.
CASH POSITION, INVESTING, AND FINANCING
Our operating, investing, and financing activities meet consolidated cash needs. At December 31, 2008, we had
$94 million of consolidated cash, which includes $25 million of restricted cash.
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The following tables provide a summary of the major items affecting our cash flows from operating, investing and
financing activities:
Operating Activities:
In Million s
Net cash provided by operating activities $873 $440 $ 433 $440 $474 $ (34)
Net income $ 52 $ 126
Non-cash operating activities(a) 209 (62)
Accounts receivable and accrued revenue 363 (466)
Inventories (84) 109
Accrued taxes (144) 181
MCV Partnership gas supplier funds on deposit — 147
Postretirement benefits contributions 123 (105)
Regulatory liabilities (64) (173)
Other assets and liabilities (46) 200
(a) Represents adjustments to reconcile net income to net cash provided by operating activities including depreciation and
amortization, deferred income taxes, postretirement benefits expense, asset impairment charges, and other non-cash
charges.
2008 versus 2007: Cash provided by operating activities increased primarily as a result of increased earnings and the
timing of cash receipts from accounts receivable. We accelerate our collections from customer billings through the sale of
accounts receivable. We sold $325 million of accounts receivable at the end of 2006, which reduced our collections from
customers during 2007. We did not sell accounts receivable in 2007 and sold $170 million of accounts receivable during
2008. Also contributing to the increase in cash provided by operating activities were lower postretirement benefit
contributions and other timing differences. These increases were partially offset by refunds to customers of excess
Palisades decommissioning funds, the impact of higher commodity prices on inventory purchases, and increased accounts
receivable billings at the end of 2008 due to regulatory actions and weather-driven demand.
2007 versus 2006: The decrease in cash provided by operating activities was primarily due to the absence, in 2007, of
the sale of accounts receivable, a payment to fund our Pension Plan, and refunds to customers of excess Palisades
decommissioning funds. These decreases were partially offset by increased earnings, the absence, in 2007, of tax payments
made to the parent related to the 2006 IRS income tax audit, the absence of the release of the MCV Partnership gas supplier
funds on deposit due to the sale of our interest in the MCV Partnership in 2006, a decrease in expenditures for gas inventory
as the milder winter in 2006 allowed us to accumulate more gas in our storage facilities and other timing differences.
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INVESTING ACTIVITIES:
In Million s
Net cash used in investing activities $(823) $(583) $ (240) $(583) $(673) $ 90
Proceeds from asset sales, net of cash relinquished $ (337) $ 416
Proceeds from nuclear decommissioning trust funds (333) 311
Capital expenditures 469 (612)
Other investing (39) (25)
Total change $ (240) $ 90
2008 versus 2007: The increase in net cash used in investing activities reflects the absence, in 2008, of asset sale
proceeds and proceeds from our nuclear decommissioning trust funds. This increase was partially offset by a decrease in
capital expenditures resulting from the absence of the Zeeland power plant purchase made in 2007.
2007 versus 2006: The decrease in net cash used in investing activities was primarily due to proceeds from the sale of
Palisades and the related dissolution of our nuclear decommissioning trust funds. This decrease was partially offset by an
increase in capital expenditures primarily due to the purchase of the Zeeland power plant.
Financing Activities:
In Million s
Net cash provided by (used in) financing activities $(176) $301 $ (477) $301 $(180) $ 481
Proceeds from issuance of long-term debt $ 600 $ —
Retirement of long-term debt (410) 183
Payment of common stock dividends (46) (104)
Stockholder’s contribution, net (650) 450
Other financing 29 (48)
Total change $ (477) $ 481
2008 versus 2007: The increase in net cash used in financing activities was primarily due to the absence of
contributions from the parent, partially offset by an increase in net proceeds from long-term debt.
2007 versus 2006: The increase in net cash provided by financing activities was primarily due to an increase in
contributions from the parent and a decrease in retirement of long-term debt. These changes were partially offset by an
increase in common stock dividend payments.
Restrictive Covenants: Our credit agreements require us to maintain a debt to capital ratio, as defined, at a maximum of
0.70 to 1.0. At December 31, 2008, this debt to capital ratio was 0.52 to 1.0.
Credit Ratings: Our access to capital markets and costs of financing are influenced by the ratings of our securities.
The following table displays our securities ratings as of December 31, 2008. The ratings outlook from
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S&P (Standard and Poor’s Rating Services),Moody’s (Moody’s Investor Services, Inc.) and Fitch (Fitch Ratings) on all
securities is stable.
S e cu ritie s S &P Moody’s Fitch
Senior Secured Debt (FMB) BBB Baa1 BBB+
Senior Unsecured Debt BBB- Baa2 BBB
Securitization Bonds AAA Aaa AAA
Senior Secured Insured Quarterly Notes AAA Aaa AAA
Tax Exempt Bonds BBB Baa1 —
Tax Exempt Bonds, LOC backed AAA Aaa —
For additional details on long-term debt activity, see Note 5, Financings and Capitalization.
OBLIGATIONS AND COMMITMENTS

Contractual Obligations: The following table summarizes our contractual cash obligations for each of the periods
presented. The table shows the timing of the obligations and their expected effect on our liquidity and cash flow in future
periods. The table excludes all amounts classified as current liabilities on our Consolidated Balance Sheets, other than the
current portion of long-term debt and capital and finance leases.
Paym e n ts Due
C on tractu al O bligation s Le ss Th an O n e to Th re e to More Th an
at De ce m be r 31, 2008 Total O n e Ye ar Th re e Ye ars Five Ye ars Five Ye ars
In Million s
Long-term debt(a) $ 4,291 $ 383 $ 380 $ 755 $ 2,773
Interest payments on long-term debt(b) 1,814 213 378 332 891
Capital and finance leases(c) 231 25 47 41 118
Interest payments on capital and finance leases(d) 122 13 25 22 62
Operating leases(e) 237 27 51 44 115
Purchase obligations(f) 14,699 2,201 2,391 1,545 8,562
Purchase obligations — related parties(f) 1,570 78 166 168 1,158
Total contractual obligations $22,964 $ 2,940 $ 3,438 $ 2,907 $ 13,679
(a) Principal amounts due on outstanding debt obligations, current and long-term, at December 31, 2008. For additional
details on long-term debt, see Note 5, Financings and Capitalization.
(b) Currently scheduled interest payments on both variable and fixed-rate long-term debt, current and long-term. Variable
interest payments are based on contractual rates in effect at December 31, 2008.
(c) Principal portion of lease payments under our capital and finance leases, comprised mainly of leased service vehicles,
leased office furniture, and certain power purchase agreements.
(d) Imputed interest on the capital leases.
(e) Minimum noncancelable lease payments under our leases of railroad cars, certain vehicles, and miscellaneous office
buildings and equipment, which are accounted for as operating leases.
(f) Long-term contracts for purchase of commodities and services. These obligations include operating contracts used to
assure adequate supply with generating facilities that meet PURPA requirements. These commodities and services
include:
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Our purchase obligations include long-term power purchase agreements with various generating plants, which require
us to make monthly capacity payments based on the plants’ availability or deliverability. These payments will approximate
$40 million per month during 2009. If a plant is not available to deliver electricity, we will not be obligated to make these
payments for that period. For additional details on power supply costs, see “Electric Utility Results of Operations” within
this MD&A and Note 4, Contingencies, “Electric Rate Matters — Power Supply Costs.”
Revolving Credit Facilities: For details on our revolving credit facilities, see Note 5, Financings and Capitalization.
Dividend Restrictions: For details on dividend restrictions, see Note 5, Financings and Capitalization.
OFF-BALANCE SHEET ARRANGEMENTS

Off-Balance Sheet Arrangements: We enter into various arrangements in the normal course of business to facilitate
commercial transactions with third parties. These arrangements include indemnifications, surety bonds, letters of credit, and
financial and performance guarantees. Indemnifications are usually agreements to reimburse a counterparty that may incur
losses due to outside claims or breach of contract terms. The maximum payment we would be required to make under a
number of these indemnities is not estimable. While we believe it is unlikely that we will incur any material losses related to
indemnifications we have not recorded as liabilities, we cannot predict the impact of these contingent obligations on our
liquidity and financial condition. For additional details on these arrangements, see Note 4, Contingencies, Other
Contingencies — Indemnifications — Guarantees and Indemnifications.
Sale of Accounts Receivable: Under our revolving accounts receivable sales program, we may sell up to $250 million of
eligible accounts receivable at December 31, 2008, reduced from $325 million at December 31, 2007.
Capital Expenditures: For planning purposes, we forecast capital expenditures over a three-year period. We review
these estimates and may revise them, periodically, due to a number of factors including environmental regulations, business
opportunities, market volatility, economic trends, and the ability to access capital. The following is a summary of our
estimated capital expenditures, including lease commitments, for 2009 through 2011:
Ye ars En ding De ce m be r 31 2009 2010 2011
In Million s
Construction $628 $ 748 $664
Clean Air(a) 69 197 105
New Customers 70 87 91
Other(b) 83 102 96
Total $850 $1,134 $956
Electric utility operations(a)(b) $574 $ 847 $705
Gas utility operations(b) 276 287 251
Total $850 $1,134 $956
(a) These amounts include estimates for capital expenditures that may be required by revisions to the Clean Air Act’s
national air quality standards or potential renewable energy programs.
(b) These amounts include estimates for capital expenditures related to information technology projects, facility
improvements, and vehicle leasing.
Dividend Restrictions: For details on dividend restrictions, see Note 5, Financings and Capitalization.
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OUTLOOK
CORPORATE OUTLOOK
Our business strategy will focus on continuing to invest in our utility system to enable us to meet our customer
commitments, to comply with increasingly demanding environmental performance standards, to improve system
performance, and to maintain adequate supply and capacity.
ELECTRIC BUSINESS OUTLOOK

Balanced Energy Initiative: Our Balanced Energy Initiative is a comprehensive energy resource plan to meet our
projected short-term and long-term electric power requirements through:
• energy efficiency,
• demand management,
• expanded use of renewable energy, and
• development of new power plants and pursuit of additional power purchase agreements to complement existing
generating sources.
Our Balanced Energy Initiative includes our plan to build an 800 MW advanced clean coal-based plant at our
Karn/Weadock Generating complex near Bay City, Michigan. We expect the plant to be in operation in 2017. Legislation
enacted in Michigan in October 2008 provided guidelines with respect to the MPSC review and approval of energy resource
plans and proposed power plants. We plan to file a new case with the MPSC that conforms to the new legislation.
Proposed Coal Plant Projects: In February 2009, the Michigan governor issued an executive directive that set forth
additional requirements for the issuance of a permit to install a coal-based electric generating plant in the state of Michigan.
The directive requires the MDEQ, before issuing an air permit for any coal-based electric generating plant, to consider,
among other things,
• whether additional generation is needed, and
• whether other feasible and prudent alternatives to a new coal plant exist that would better protect the environment,
including potential demand reduction measures and purchasing power from existing sources.
We are examining the legality of the directive, as well as its impact on our existing air permit application for our planned
advanced clean coal plant. The Michigan attorney general issued an opinion that invalidated the governor’s directive on
the basis that the governor’s directive exceeded the governor’s authority.
In February 2009, the Michigan governor also proposed a 45 percent reduction in the use of fossil fuel for electric
generation by 2020. The governor’s office has subsequently advised us that the 45 percent is only a suggested target, and
is intended to apply only to coal-based generation. If implemented, it will have a significant impact upon the operation and
cost of existing and planned future coal-based power plants.
We cannot predict the impact of the governor’s statements or other factors on our future power supply plans.
Electric Customer Revenue Outlook: Michigan’s economy has suffered from closures and restructuring of automotive
manufacturing facilities and those of related suppliers and from the depressed housing market. The Michigan economy also
has been harmed by the current volatility in the credit markets. Although our electric utility results are not dependent
substantially upon a single customer, or even a few customers, those in the automotive sector represented four percent of
our total 2008 electric revenue and two and a half percent of our 2008 electric operating income. We cannot predict the
financial impact of the Michigan economy on our electric customer revenue.
Electric Deliveries: We experienced a decrease in electric deliveries of approximately 3.5 percent in 2008 compared
with 2007, or 2.0 percent excluding impacts from differences in weather. This decrease reflects a decline
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in industrial economic activity and the cancellation of one wholesale customer contract. For 2009, we expect a decrease in
electric deliveries of 2.5 percent compared with 2008, or 2.1 percent excluding impacts from differences in weather. Our
outlook for 2009 includes continuing growth in deliveries to our largest-growing customer, which produces semiconductor
and solar energy components. Excluding this customer’s growth, we expect electric deliveries in 2009 to decline 3.4 percent
compared with 2008 or 3.0 percent excluding impacts from differences in weather. Our outlook reflects reduced deliveries
associated with our investment in energy efficiency programs included in the recently enacted legislation, as well as recent
projections of Michigan economic conditions.
After 2009, we anticipate economic conditions to stabilize, resulting in modestly growing deliveries of electricity. We
expect deliveries to grow on average about 0.8 percent annually over the period from 2009 to 2014. This growth rate also
includes expected results of energy efficiency programs and both full-service sales and delivery service to customers who
choose to buy generation service from an alternative electric supplier, but transactions with other wholesale market
participants are not included. Actual growth may vary from this trend due to the following:
• energy conservation measures and results of energy efficiency programs,
• fluctuations in weather, and
• changes in economic conditions, including utilization and expansion or contraction of manufacturing facilities,
population trends, and housing activity.
Electric Reserve Margin: To reduce the risk of high power supply costs during peak demand periods and to achieve
our Reserve Margin target, we purchase electric capacity and energy for the physical delivery of electricity primarily in the
summer months. We are currently planning for a Reserve Margin of 12.7 percent for summer 2009, or supply resources equal
to 112.7 percent of projected firm summer peak load. We have purchased capacity and energy covering our Reserve Margin
requirements for 2009 through 2010. Of the 2009 supply resources target, we expect 96.4 percent to come from our electric
generating plants and long-term power purchase contracts, with other capacity and energy contractual arrangements
making up the remainder. We expect capacity costs for these electric capacity and energy contractual arrangements to be
$15 million for 2009.
Electric Transmission Expenses: We expect the transmission charges we incur to increase by $55 million in 2009
compared with 2008 primarily due to a 25 percent increase in METC and Wolverine transmission rates. This increase was
included in our 2009 PSCR plan filed with the MPSC in September 2008.
The MPSC issued an order that allowed transmission expenses to be included in the PSCR process. The Attorney
General appealed the MPSC order to the Michigan Court of Appeals, which affirmed the MPSC order. The Attorney General
filed an application for leave to appeal with the Michigan Supreme Court, which was granted in September 2008. We cannot
predict the financial impact or outcome of this matter.
For additional details on the electric transmission expense litigation, see Note 4, Contingencies, “Electric
Contingencies — Litigation.”
Renewable Energy Plan: Legislation enacted in Michigan in October 2008 prescribed renewable energy standards for
energy and capacity. The energy standard requires that 10 percent of our electric sales volume come from renewable
sources by 2015 with interim target requirements. Approximately four percent of our electric sales volume comes presently
from renewable sources. The legislation also requires us to add new renewable energy capacity of 200 MW by year-end
2013 and 500 MW by year-end 2015, from owned renewable energy sources or power purchased agreements. We have
secured more than 36,000 acres of land easements in Michigan’s Tuscola and Mason counties for potential wind generation
development and we are collecting presently wind speed and other meteorological data at the sites.
In February 2009, we filed our Renewable Energy Plan with the MPSC. The plan details how we will meet the renewable
energy standards for energy and capacity.
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Energy Optimization Plan: Legislation enacted in Michigan in October 2008 requires utilities to prepare energy
optimization plans and achieve annual sales reduction targets beginning in 2009 through 2015. In February 2009, we filed
our Energy Optimization Plan with the MPSC, which details our proposed energy cost savings plan through incentives to
reduce customer usage among all customer classes and the method of recovery of program costs.
Ancillary Services: In January 2009, MISO implemented an ancillary services market for the purchase and sale of
regulation and contingency reserves. We include ancillary service costs in our PSCR.
ELECTRIC BUSINESS UNCERTAINTIES

Several electric business trends and uncertainties may affect our financial condition and future results of operations.
These trends and uncertainties could have a material impact on revenues and income from continuing electric operations.
Electric Environmental Estimates: Our operations are subject to various state and federal environmental laws and
regulations. Generally, we have been able to recover in customer rates our costs to operate our facilities in compliance with
these laws and regulations.
Clean Air Act: We continue to focus on complying with the federal Clean Air Act and numerous state and federal
regulations. We plan to spend $817 million for equipment installation through 2017 to comply with a number of
environmental regulations, including regulations limiting nitrogen oxides and sulfur dioxide emissions. We expect to recover
these costs in customer rates.
We plan to purchase additional nitrogen oxides emission allowances through 2010 at an estimated cost of $5 million per
year. We also plan to purchase sulfur dioxide emission allowances, between 2013 and 2015, at an estimated cost ranging
from $9 million to $27 million per year. We expect to recover emissions allowance costs from our customers through the
PSCR process.
timetable for the revision.
State and Federal Mercury Air Rules: In March 2005, the EPA issued the CAMR, which required initial reductions of
mercury emissions from coal-based electric generating plants by 2010 and further reductions by 2018. A number of states
and other entities appealed certain portions of the CAMR to the U.S. Court of Appeals for the District of Columbia. The
U.S. Court of Appeals for the District of Columbia decided the case in February 2008, and determined that the rules
developed by the EPA were not consistent with the Clean Air Act. The U.S. Supreme Court has been petitioned to review
this decision.
In April 2006, Michigan’s governor proposed a plan that would result in mercury emissions reductions of 90 percent by
2015. The MDEQ is reviewing public comments made in response to a newly released mercury emissions reduction
proposal. If this plan becomes effective, we estimate that the associated costs will be approximately $782 million by 2015.
requirements of RMRR. In October 2008, we received another information request from the EPA under Section 114 of the
Clean Air Act. We responded to this information request in December 2008.
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In addition to the EPA’s information request, in October 2008, we received a NOV for three of our coal-based facilities
relating to violations of NSR regulations, alleging ten projects from 1986 to 1998 were subject to NSR review. We met with
the EPA in January 2009 and have additional meetings scheduled. If the EPA does not accept our interpretation of RMRR,
we could be required to install additional pollution control equipment at some or all of our coal-based electric generating
plants, surrender emission allowances, engage in supplemental environmental programs or pay fines. Additionally, we
would need to assess the viability of continuing operations at certain plants. We cannot predict the financial impact or
outcome of this matter.
Greenhouse Gases: The United States Congress has introduced proposals that would require reductions in emissions
of greenhouse gases, including carbon dioxide. We consider it likely that Congress will enact greenhouse gas legislation,
but the form of any final bill is difficult to predict. These laws, or similar state laws or rules, if enacted, could require us to
replace equipment, install additional equipment for emission controls, purchase 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, we expect to have an opportunity to recover these costs and capital expenditures in rates
consistent with the recovery of other reasonable costs of complying with environmental laws and regulations.
In July 2008, the EPA published an Advance Notice of Proposed Rulemaking to present possible options for regulating
greenhouse gases under the Clean Air Act, as well as to solicit comments and additional ideas. We submitted comments to
the EPA on this issue in November 2008. In addition to the potential for federal actions related to greenhouse gas
regulation, the State of Michigan has convened the Michigan Climate Action Council, a climate change stakeholder
process. Michigan is also a signatory participant in the Midwest Governors Greenhouse Gas Reduction Accord process.
We cannot predict the extent or the likelihood of any actions that could result from these state and regional processes.
Water: In July 2004, the EPA issued rules that govern existing electric generating plant cooling water intake systems.
These rules require a significant reduction in the number of fish harmed by intake structures at existing power plants. The
EPA compliance options in the rule were challenged before the U.S. Court of Appeals for the Second Circuit, which
remanded the bulk of the rule back to the EPA for reconsideration in January 2007. In April 2008, the U.S. Supreme Court
agreed to hear an industry challenge to the appellate court ruling in this case. A decision from the U.S Supreme Court is
expected in the first half of 2009. The EPA is planning to issue a revised draft rule in 2009, following the court decision.
We estimate that capital expenditures to comply with these regulations will be approximately $128 million; however an
unfavorable U.S. Supreme Court decision could increase expenditures significantly.
We will continue to monitor these developments and respond to their potential implications for our business,
consolidated results of operations, cash flows, and financial position. For additional details on electric environmental
matters, see Note 4, Contingencies, “Electric Contingencies — Electric Environmental Matters.”
Stranded Cost Recovery: In October 2008, the Michigan legislature enacted legislation that amended the Customer
Choice Act and directed the MPSC to approve rates that will allow recovery of Stranded Costs within five years. In January
2009, we filed an application with the MPSC requesting recovery of these Stranded Costs through a surcharge on both full
service and ROA customers. At December 31, 2008, we had a regulatory asset for Stranded Costs of $71 million.
recover costs associated with our advanced metering infrastructure program. The Michigan legislation enacted in October
2008 generally allows utilities to self-implement rates six months after filing, subject to refund, unless the MPSC finds good
cause to prohibit such self-implementation. We cannot predict the financial impact or outcome of this proceeding.
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Palisades Regulatory Proceedings: We sold Palisades to Entergy in April 2007. The MPSC order approving the
transaction required that we credit $255 million of excess sale proceeds and decommissioning amounts to our retail
customers by December 2008. There are additional excess sales proceeds and decommissioning fund balances of
$109 million above the amount in the MPSC order. The distribution of these funds is still pending with the MPSC.
For additional details on electric rate matters, see Note 4, Contingencies, “Electric Rate Matters.”
GAS BUSINESS OUTLOOK

Gas Deliveries: For 2009, we expect gas deliveries to decrease by 3.4 percent compared with 2008, or 4.7 percent,
excluding impacts from differences in weather, due to continuing conservation and overall economic conditions in
Michigan. We expect gas deliveries to average a decline of less than 1.6 percent annually over the next five years. Actual
delivery levels from year to year may vary from this trend due to the following:
• fluctuations in weather,
• use by independent power producers,
• availability and development of renewable energy sources,
• changes in gas prices,
• Michigan economic conditions including population trends and housing activity,
• the price of competing energy sources or fuels, and
• energy efficiency and conservation.
GAS BUSINESS UNCERTAINTIES

Several gas business trends and uncertainties may affect our future financial results and financial condition. These
trends and uncertainties could have a material impact on future revenues and income from gas operations.
Gas Environmental Estimates: We expect to incur investigation and remedial action costs at a number of sites,
including 23 former manufactured gas plant sites. For additional details, see Note 4, Contingencies, “Gas Contingencies -
Gas Environmental Matters.”
prudence in annual plan and reconciliation proceedings. For additional details on GCR, see Note 4, Contingencies, “Gas
Rate Matters — Gas Cost Recovery.”
Lost and Unaccounted for Gas: Gas utilities typically lose a portion of gas as it is injected into and withdrawn from
storage and sent through transmission and distribution systems. We recover the cost of lost and unaccounted for gas
through general rate cases, which have traditionally provided for recovery based on an average of the previous five years
of actual losses. To the extent that we experience lost and unaccounted for gas that exceeds the previous five-year average,
we may be unable to recover these amounts in rates.
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OTHER OUTLOOK
Advanced Metering Infrastructure: We are developing an advanced metering system that will provide enhanced
controls and information about our customer energy usage and notification of service interruptions. The system also will
allow customers to make decisions about energy efficiency and conservation, provide other customer benefits, and reduce
costs. We expect to develop integration software and pilot new technology over the next two to three years, and incur
capital expenditures of approximately $800 million over the next seven years for the full deployment of these “smart meters.”
Emergency Shutoff Protection Rules: In February 2009, the MPSC issued rules that would put additional emergency
shutoff protections and service limitation protections in place for our residential electric and natural gas customers. The
protection exceeds previous shutoff rules as follows:
• extends the protection period from March 31, 2009 to April 30, 2009,
• includes protection for physically or mentally disabled customers of record,
• expands the qualifications for low income shutoff protection, and
• gives customers the payment options.
We are presently evaluating the impacts of these rules on our cash flows and financial position.
Litigation and Regulatory Investigation: We are a party to certain lawsuits and administrative proceedings before
various courts and governmental agencies arising from the ordinary course of business.
For additional details regarding these lawsuits and proceedings, see Note 4, Contingencies and Part I, Item 3. Legal
Proceedings.
Emergency Economic Stabilization Act of 2008 — Mark-to-Market Accounting: In October 2008, President Bush
signed into law a $700 billion economic recovery plan. The plan included a provision authorizing the SEC to suspend the
application of SFAS No. 157 for any issuer with respect to any class or category of transaction as deemed necessary. In
addition, the SEC was required to conduct a study on mark-to-market accounting (fair value accounting), including its
possible impacts on recent bank failures, along with a consideration of alternative accounting treatments. In late December
2008, the SEC submitted a report on its study to Congress. The report concluded that mark-to-market accounting was not a
major factor in recent bank failures, and recommended that existing fair value and mark-to-market accounting requirements
remain in place. The report included recommendations for improving fair value accounting and reporting. We apply this
accounting primarily to our investment in CMS Energy Common Stock and our SERP investments, and we will continue to
monitor developments relating to the SEC report, including reactions and responses to the report’s recommendations, for
potential impact to us.
IMPLEMENTATION OF NEW ACCOUNTING STANDARDS

SFAS No. 157, Fair Value Measurements: This standard, which was effective for us January 1, 2008, defines fair
value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The
implementation of this standard did not have a material effect on our consolidated financial statements. For additional
details on our fair value measurements, see Note 2, Fair Value Measurements.
SEC / FASB Guidance on Fair Value Measurements: In September 2008, in response to concerns about fair value
accounting and its possible role in the recent declines in the financial markets, the SEC Office of the Chief Accountant and
the FASB staff jointly released additional guidance on fair value measurements. The guidance, which was effective for us
upon issuance, did not change or conflict with the fair value principles in SFAS No. 157, but rather provided further
clarification on how to value a financial asset in an illiquid market. This guidance had no impact on our fair value
measurements.
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FSP FAS 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active: In
October 2008, the FASB issued this standard, effective for us for the quarter ended September 30, 2008. The standard
clarifies the application of SFAS No. 157 in measuring financial assets in illiquid markets and is consistent with the guidance
issued by the SEC and the FASB as discussed in the preceding paragraph, but an example is provided to illustrate the
concepts. The standard was to be applied prospectively. The guidance in this standard did not impact our fair value
measurements.
SFAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans — an
amendment of FASB Statements No. 87, 88, 106, and 132(R): In September 2006, the FASB issued SFAS No. 158. Phase
one of this standard, implemented in December 2006, required us to recognize the funded status of our defined benefit
postretirement plans on our Consolidated Balance Sheets at December 31, 2006. Phase two, implemented in January 2008,
required us to change our plan measurement date from November 30 to December 31, effective for the year ending
December 31, 2008. For additional details, see Note 7, Retirement Benefits.
SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, Including an amendment to
FASB Statement No. 115: This standard, which was effective for us January 1, 2008, gives us the option to measure certain
financial instruments and other items at fair value, with changes in fair value recognized in earnings. We have not elected
the fair value option for any financial instruments or other items.
EITF Issue 06-11, Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards: This
standard, which was effective for us January 1, 2008, requires companies to recognize, as an increase to additional paid-in
capital, the income tax benefit realized from dividends or dividend equivalents that are charged to retained earnings and paid
to employees for non-vested equity-classified employee share-based payment awards. This standard did not have a material
effect on our consolidated financial statements.
FSP FAS 133-1 and FIN 45-4, Disclosures about Credit Derivatives and Certain Guarantees: An Amendment of
FASB Statement No. 133 and FASB Interpretation No. 45; and Clarification of the Effective Date of FASB Statement
No. 161: In September 2008, the FASB issued this standard, effective for us December 31, 2008. This standard amended
SFAS No. 133 and FIN 45 to require enhanced disclosures for issuers of credit derivatives and financial guarantees. We
have not issued any credit derivatives; thus, this standard applies only to our disclosures about guarantees we have
issued. This standard involves disclosures only, and did not have a material effect on our consolidated financial statements.
For additional details on our guarantees, see Note 4, Contingencies.
NEW ACCOUNTING STANDARDS NOT YET EFFECTIVE

SFAS No. 141(R), Business Combinations: In December 2007, the FASB issued SFAS No. 141(R), which replaces
SFAS No. 141, Business Combinations. SFAS No. 141(R) establishes how an acquiring entity should measure and recognize
assets acquired, liabilities assumed, and noncontrolling interests acquired through a business combination. The standard
also establishes how goodwill or gains from bargain purchases should be measured and recognized, and what information
the acquirer should disclose to enable users of the financial statements to evaluate the nature and financial effects of a
business combination. Costs of an acquisition are to be recognized separately from the business combination. We will
apply SFAS No. 141(R) prospectively to any business combination for which the date of acquisition is on or after January 1,
2009.
interests and shown separately on our Consolidated Balance Sheets within equity. In addition, net income attributable to
noncontrolling interests will be included in net income on our Consolidated Statements of Income. These changes involve
presentation only, and will not otherwise impact our consolidated financial statements. The standard will also affect the
accounting for changes in a parent’s ownership interest,
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including deconsolidation of a subsidiary. We will apply these provisions of SFAS No. 160 prospectively to any such
transactions.
SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB
Statement No. 133: In March 2008, the FASB issued SFAS No. 161, effective for us January 1, 2009. This standard requires
entities to provide enhanced disclosures about how and why derivatives are used, how derivatives and related hedged
items are accounted for under SFAS No. 133, and how derivatives and related hedged items affect the entity’s financial
position, financial performance, and cash flows. This standard will not have a material effect on our consolidated financial
statements.
FSP FAS 142-3, Determination of the Useful Life of Intangible Assets: In April 2008, the FASB issued FSP FAS 142-
3, effective for us January 1, 2009. This standard amends SFAS No. 142 to require expanded consideration of expected
future renewals or extensions of intangible assets when determining their useful lives. This standard will be applied
prospectively for intangible assets acquired after the effective date. This standard will not have a material impact on our
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CONSOLIDATED STATEMENTS OF INCOME
2008 2007 2006
In Million s
Operating Revenue $6,421 $6,064 $5,721
Earnings from Equity Method Investees — — 1
Operating Expenses
Fuel for electric generation 483 385 672
Fuel costs mark-to-market at the M CV Partnership — — 204
Purchased and interchange power 1,313 1,370 647
Purchased power — related parties 75 79 74
Cost of gas sold 2,079 1,918 1,770
Other operating expenses 766 808 895
M aintenance 169 183 284
General taxes 195 217 150
Asset impairment charges — — 218
Loss (gain) on asset sales, net 1 (2) (79)
5,655 5,482 5,362
Operating Income 766 582 360
Interest 25 69 62
Interest and dividends — related parties 1 1 —
Regulatory return on capital expenditures 33 31 26
Other income 12 32 20
Other expense (28) (14) (12)
43 119 96
Interest Charges Interest on long-term debt 229 234 281
Interest on long-term debt — related parties — 2 5
Other interest 22 34 13
Capitalized interest (4) (6) (10)
247 264 289
Income Before Income Taxes 562 437 167
Income Tax Expense 198 125 91
Income Before Minority Obligations, Net 364 312 76
Minority Obligations, Net — — (110)
Net Income 364 312 186
Preferred S tock Dividends 2 2 2
Net Income Available to Common S tockholder $ 362 $ 310 $ 184
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CONSOLIDATED STATEMENTS OF CASH FLOWS
2008 2007 2006
In Million s
Cash Flows from Operating Activities
Net income $ 364 $ 312 $ 186
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization (includes nuclear decommissioning of $—, $4 and $6) 574 524 527
Deferred income taxes and investment tax credit 196 55 (113)
Regulatory return on capital expenditures (33) (31) (26)
M inority obligations, net — — (110)
Fuel costs mark-to-market at the M CV Partnership — — 204
Asset impairment charges — — 218
Postretirement benefits expense 141 124 122
Capital lease and other amortization 30 44 37
Bad debt expense 47 33 30
Loss (gain) on sale of assets 1 (2) (79)
Earnings from equity method investees — — (1)
Postretirement benefits contributions (50) (173) (68)
Changes in assets and liabilities:
Decrease (increase) in accounts receivable, notes receivable and accrued revenue (79) (442) 24
Decrease (increase) in accrued power supply and gas revenue 35 99 (91)
Increase in inventories (89) (5) (114)
Increase (decrease) in accounts payable 1 (23) (32)
Increase (decrease) in accrued expenses (15) (15) 35
Increase (decrease) in accrued taxes (64) 80 (101)
Decrease in the M CV Partnership gas supplier funds on deposit — — (147)
Increase (decrease) in other current and non-current regulatory liabilities (178) (114) 59
Decrease (increase) in other current and non-current assets 14 (7) (50)
Decrease in other current and non-current liabilities (22) (19) (36)
Net cash provided by operating activities 873 440 474
Cash Flows from Investing Activities
Capital expenditures (excludes assets placed under capital lease) (789) (1,258) (646)
Cost to retire property (34) (28) (78)
Restricted cash and restricted short-term investments — 32 126
Investments in nuclear decommissioning trust funds — (1) (21)
Proceeds from nuclear decommissioning trust funds — 333 22
M aturity of the M CV Partnership restricted investment securities held-to-maturity — — 130
Purchase of the M CV Partnership restricted investment securities held-to-maturity — — (131)
Cash proceeds from sale of assets — 337 69
Cash relinquished from sale of assets — — (148)
Other investing — 2 4
Net cash used in investing activities (823) (583) (673)
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De ce m be r 31
2008 2007 2006
In Million s
Cash Flows from Financing Activities
Proceeds from issuance of long term debt 600 — —
Retirement of long-term debt (444) (34) (217)
Payment of common stock dividends (297) (251) (147)
Payment of capital and finance lease obligations (26) (20) (26)
Stockholder’s contribution, net — 650 200
Increase (decrease) in notes payable — (42) 15
Debt issuance and financing costs (7) (1) (3)
Net cash provided by (used in) financing activities (176) 301 (180)
Net Increase (Decrease) in Cash and Cash Equivalents (126) 158 (379)
Cash and Cash Equivalents, Beginning of Period 195 37 416
Cash and Cash Equivalents, End of Period $ 69 $ 195 $ 37
Other cash flow activities and non-cash investing and financing activities were:
Cash transactions
Interest paid (net of amounts capitalized) $ 206 $ 242 $ 279
Income taxes paid (net of refunds, $—, $98, and $39) 84 — 306
Non-cash transactions
Other assets placed under capital lease $ 5 $ 229 $ 7
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CONSOLIDATED BALANCE SHEETS
De ce m be r 31
2008 2007
In Million s
ASSETS
Plant and Property (at cost)
Electric $ 8,965 $ 8,555
Gas 3,622 3,467
Other 15 15
12,602 12,037
Less accumulated depreciation, depletion, and amortization 4,242 3,993
8,360 8,044
8,967 8,491
Investments
Stock of affiliates 19 32
Current Assets
Cash and cash equivalents at cost, which equals fair value 69 195
Restricted cash at cost, which equals fair value 25 25
Accounts receivable and accrued revenue, less allowances of $24 in 2008 and $16 in 2007 829 810
Notes receivable 93 67
Accrued power supply and gas revenue 7 45
Accounts receivable — related parties 2 4
Inventories at average cost
Gas in underground storage 1,168 1,123
Materials and supplies 103 79
Generating plant fuel stock 118 100
Deferred property taxes 165 158
Regulatory assets — postretirement benefits 19 19
Prepayments and other 30 28
2,628 2,653
Non-current Assets
Regulatory assets Securitized costs 416 466
Customer Choice Act 90 149
Other 482 504
Other 213 185
2,632 2,225
Total Assets $14,246 $13,401
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De ce m be r 31
2008 2007
In Million s
STOCKHOLDER’S INVESTMENT AND LIABILITIES
Capitalization
Common stockholder’s equity
Common stock, authorized 125.0 shares; outstanding 84.1 shares for both periods $ 841 $ 841
Paid-in capital 2,482 2,482
Accumulated other comprehensive loss (1) —
Retained earnings 383 324
3,705 3,647
Preferred stock 44 44
Long-term debt 3,908 3,692
Non-current portion of capital and finance lease obligations 206 225
7,863 7,608
Current Liabilities
Current portion of long-term debt, capital and finance lease obligations 408 470
Accrued rate refunds 7 19
Accounts payable — related parties 14 13
Accrued interest 69 65
Accrued taxes 289 353
Regulatory liabilities 120 164
Other 151 150
1,779 1,788
Non-current Liabilities
Regulatory liabilities
Cost of removal 1,203 1,127
Income taxes, net 519 533
Other 146 313
Asset retirement obligations 205 198
Deferred investment tax credit 54 58
Other 249 250
4,604 4,005
Commitments and Contingencies (Notes 4, 5, 6, 9, and 11)
Total Stockholder’s Investment and Liabilities $14,246 $13,401
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CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDER’S EQUITY
2008 2007 2006
In Million s
Common Stock
At beginning and end of period(a) $ 841 $ 841 $ 841
Other Paid-in Capital
At beginning of period 2,482 1,832 1,632
Stockholder’s contribution — 650 200
At end of period 2,482 2,482 1,832
Accumulated Other Comprehensive Income
Retirement benefits liability adjustments(b) 6 — —
Net gain (loss) arising during the period(b) 2 (7) —
Adjustment to initially apply FASB Statement No. 158, net of tax — — (6)
Investments
At beginning of period 15 23 18
Unrealized gain (loss) on investments(b) (19) (1) 5
Reclassification adjustments included in net income(b) 10 (7) —
At end of period 6 15 23
At beginning of period — — 56
Unrealized loss on derivative instruments(b) — — (21)
Reclassification adjustments included in net income(b) — — (35)
At end of period — — —
Total Accumulated Other Comprehensive Income (Loss) (1) — 15
Retained Earnings
At beginning of period 324 270 233
Effects of changing the retirement plans measurement date pursuant to SFAS No. 158
Service cost, interest cost, and expected return on plan assets for December 1 through
December 31, 2007 net of tax (4) — —
Additional loss from December 1 through December 31, 2007, net of tax (2) — —
Adjustment to initially apply FIN 48, net of tax — (5) —
Net income(b) 364 312 186
Cash dividends declared — Common Stock (297) (251) (147)
Cash dividends declared — Preferred Stock (2) (2) (2)
At end of period 383 324 270
Total Common Stockholder’s Equity $3,705 $3,647 $2,958
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Ye ars En de d De ce m be r
31
2008 2007 2006
In Million s
(a) Number of shares of common stock outstanding was 84,108,789 for all periods presented
(b) Disclosure of Comprehensive Income:

Net income $364 $312 $186
Retirement benefits liability adjustment, net of tax of $2 in 2008 6 — —
Net gain (loss) arising during the period, net of tax (tax benefit) of $1 in 2008, and $(4) in
2007 2 (7) —
Investments
Unrealized gain (loss) on investments, net of tax (tax benefit) of $(10) in 2008, $(1) in
2007, and $2 in 2006 (19) (1) 5
Reclassification adjustments included in net income, net of tax (tax benefit) of $6 in 2008
and $(3) in 2007 10 (7) —
Unrealized loss on derivative instruments, net of tax benefit of $(11) in 2006 — — (21)
Reclassification adjustments included in net income, net of tax benefit of $(19) in 2006 — — (35)
Total Comprehensive Income $363 $297 $135
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1: CORPORATE STRUCTURE AND ACCOUNTING POLICIES

Corporate Structure: Consumers, a subsidiary of CMS Energy, a holding company, is a combination electric and gas
utility company serving Michigan’s Lower Peninsula. Our customer base includes a mix of residential, commercial, and
diversified industrial customers. We manage our business by the nature of service provided and operate principally in two
business segments: electric utility and gas utility.
Principles of Consolidation: The consolidated financial statements comprise Consumers and all other entities in which
we have a controlling financial interest or are the primary beneficiary, in accordance with FIN 46(R). We use the equity
method of accounting for investments in companies and partnerships that are not consolidated, where we have significant
influence over operations and financial policies, but are not the primary beneficiary. We eliminate intercompany
transactions and balances.
Use of Estimates: We prepare our consolidated financial statements in conformity with GAAP. We are required to make
estimates using assumptions that may affect the reported amounts and disclosures. Actual results could differ from those
estimates.
We record estimated liabilities for contingencies in our consolidated financial statements when it is probable that a
liability has been incurred and when the amount of loss can be reasonably estimated. For additional details, see Note 4,
Contingencies.
Revenue Recognition Policy: We recognize revenues from deliveries of electricity and natural gas, and from the
storage of natural gas when services are provided. We record unbilled revenues for the estimated amount of energy
delivered to customers but not yet billed. Unbilled revenues are estimated by applying an average billed rate for each
customer class based on actual billed volume distributions. Our unbilled revenues, which are recorded as Accounts
receivable on our Consolidated Balance Sheets, were $507 million at December 31, 2008 and $490 million at December 31,
2007. We record sales tax on a net basis and exclude it from revenues.
Accounting for Legal Fees: We expense legal fees as incurred; fees incurred but not yet billed are accrued based on
estimates of work performed. This policy also applies to fees incurred on behalf of employees and officers related to
indemnification agreements; these fees are billed directly to us.
Accounting for MISO Transactions: MISO requires that we submit hourly day-ahead and real-time bids and offers for
energy at locations across the MISO region. We account for MISO transactions on a net hourly basis in each of the real-
time and day-ahead markets, and net transactions across all MISO energy market locations. We record net purchases in a
single hour in “Purchased and interchange power” and net sales in a single hour in “Operating Revenue” in the
Consolidated Statements of Income. We record expense accruals for future net purchases adjustments based on historical
experience, and reconcile accruals to actual expenses when we receive invoices.
Capitalized Interest: We capitalize interest on certain qualifying assets that are undergoing activities to prepare them
for their intended use. Capitalization of interest is limited to the actual interest cost incurred. Our regulated businesses
capitalize AFUDC on regulated construction projects and include these amounts in plant in service.
Cash and Cash Equivalents: Cash and cash equivalents include short-term, highly-liquid investments with original
maturities of three months or less.
Collective Bargaining Agreements: At December 31, 2008, the Union represented approximately 45 percent of our
employees. The Union represents Consumers’ operating, maintenance, and construction employees and our call center
employees.
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Determination of Pension and OPEB MRV of Plan Assets: We determine the MRV for pension plan assets, as defined
in SFAS No. 87, as the fair value of plan assets on the measurement date, adjusted by the gains or losses that will not be
admitted into MRV until future years. We reflect each year’s assets gain or loss in MRV in equal amounts over a five-year
period beginning on the date the original amount was determined. We determine the MRV for OPEB plan assets, as defined
in SFAS No. 106, as the fair value of assets on the measurement date. We use the MRV in the calculation of net pension and
OPEB costs.
Financial and Derivative Instruments: We record debt and equity securities classified as available-for-sale at fair value
determined primarily from quoted market prices. On a specific identification basis, we report unrealized gains and losses
from changes in fair value of certain available-for-sale debt and equity securities, net of tax, in equity as part of AOCL. We
exclude unrealized losses from earnings unless the related changes in fair value are determined to be other than temporary.
In accordance with SFAS No. 133, if a contract is a derivative and does not qualify for the normal purchases and sales
exception, we record it on our Consolidated Balance Sheets at its fair value. If a derivative qualifies for cash flow hedge
accounting, we report changes in its fair value in AOCL; otherwise, we report the changes in earnings.
For additional details regarding financial and derivative instruments, see Note 6, Financial and Derivative Instruments.
Impairment of Investments and Long-Lived Assets: We perform tests of impairment if certain triggering events occur,
or if there has been a decline in value that may be other than temporary.
We evaluate our long-lived assets held-in-use for impairment by calculating the undiscounted future cash flows
expected to result from the use of the asset and its eventual disposition. If the undiscounted future cash flows are less than
the carrying amount, we recognize an impairment loss equal to the amount by which the carrying amount exceeds the fair
value. We estimate the fair value of the asset using quoted market prices, market prices of similar assets, or discounted
future cash flow analyses.
We also assess our investments for impairment whenever there has been a decline in value that is other than
temporary. This assessment requires us to determine the fair values of our investments. We determine fair value using
valuation methodologies, including discounted cash flows and the ability of the investee to sustain an earnings capacity
that justifies the carrying amount of the investment. We record an impairment if the fair value is less than the carrying value
and the decline in value is considered to be other than temporary.
For additional details, see Note 3, Asset Sales and Impairment Charges.
Inventory: We use the weighted average cost method for valuing working gas and recoverable cushion gas in
underground storage facilities and materials and supplies inventory. We also use this method for valuing coal inventory
and classify these costs as generating plant fuel stock on our Consolidated Balance Sheets.
We classify emission allowances as materials and supplies inventory and use the average cost method to remove
amounts from inventory as we use the emission allowances to generate power.
Maintenance and Depreciation: We charge property repairs and minor property replacement to maintenance expense.
We use the direct expense method to account for planned major maintenance activities. We charge planned major
maintenance activities to operating expense unless the cost represents the acquisition of additional components or the
replacement of an existing component. We capitalize the cost of plant additions and replacements.
We depreciate utility property using a composite method, in which we apply a single MPSC-approved depreciation rate
to the gross investment in a particular class of property within the electric and gas divisions. We
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perform depreciation studies periodically to determine appropriate group lives. The composite depreciation rates for our
properties are as follows:
Electric utility property 3.0% 3.0% 3.1%
Gas utility property 3.6% 3.6% 3.6%
Other property 8.5% 8.7% 8.2%
Other Income and Other Expense: The following tables show the components of Other income and Other expense:
In Million s
Other income
Electric restructuring return $ 1 $ 2 $ 4
Return on stranded and security costs 5 6 5
MCV Partnership emission allowance sales — — 8
Gain on SERP investment — 10 —
Gain on investment — 7 —
Gain on stock — 4 1
All other 6 3 2
Total other income $ 12 $ 32 $ 20

In Million s
Other expense
Unrealized investment loss $(17) $— $—
Civic and political expenditures (5) (2) (2)
Donations — — (9)
Abandoned Midland Project — (8) —
All other (6) (4) (1)
Total other expense $(28) $(14) $(12)
Property, Plant, and Equipment: We record property, plant, and equipment at original cost when placed into service.
When utility property is retired, or otherwise disposed of in the ordinary course of business, we charge the original cost to
accumulated depreciation, along with associated cost of removal, net of salvage. We recognize gains or losses on the
retirement or disposal of non-regulated assets in income. Our internal-use computer software costs are capitalized or
expensed in accordance with Statement of Position 98-1, Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use. For additional details, see Note 8, Asset Retirement Obligations and Note 12, Property, Plant,
and Equipment. Cost of removal collected from our customers, but not spent, is recorded as a regulatory liability.
We capitalize AFUDC on regulated major construction projects. AFUDC represents the estimated cost of debt and a
reasonable return on equity funds used to finance construction additions. We record the offsetting credit as a reduction of
interest for the amount representing the borrowed funds component and as other income for the equity funds component in
the Consolidated Statements of Income. When construction is completed and the property is
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placed in service, we depreciate and recover the capitalized AFUDC from our customers over the life of the related asset.
The following table shows our electric, gas and common composite AFUDC capitalization rates:
AFUDC capitalization rate 7.7% 7.4% 7.5%
Property Taxes: Property taxes are based upon the taxable value of Consumers’ real and personal property assessed
by local units of government within the State of Michigan. We record property tax expense ratably over the fiscal year of
the taxing authority for which the taxes are levied based on budgeted customer sales. The deferred property tax balance
represents the amount of accrued property tax, which will be recognized over future governmental fiscal periods.
Reclassifications: We have reclassified certain prior-period amounts on our Consolidated Financial Statements to
conform to the presentation for the current period. These reclassifications did not affect consolidated net income or cash
flow for the periods presented.
Related Party Transactions: We recorded income and expense from related parties as follows:
De scription Re late d Party 2008 2007 2006
In Million s
Type of Income:
Dividend Income CMS Energy $ 1 $ 1 $—
Type of Expense:
Electric generating capacity and energy Affiliates of Enterprises (75) (79) (74)
CMS Energy and Consumers’ affiliated Trust
Interest expense on note payable Preferred Securities Companies — (2) (5)
Gas transportation(a) CMS Bay Area Pipeline, L.L.C. — (1) (4)
(a) CMS Bay Area Pipeline, L.L.C. was sold to Lucid Energy in March 2007.
We own 1.8 million shares of CMS Energy Common Stock with a fair value of $19 million at December 31, 2008. For
additional details on our investment in CMS Energy Common Stock, see Note 6, Financial and Derivative Instruments.
Restricted Cash: We classify restricted cash dedicated for repayment of Securitization bonds as a current asset, as the
related payments occur within one year.
Trade Receivables: Accounts receivable is primarily composed of trade receivables and unbilled receivables. We
record our accounts receivable at cost which approximates fair value. We establish an allowance for uncollectible accounts
based on historical losses and management’s assessment of existing economic conditions, customer trends, and other
factors. We assess late payment fees on trade receivables based on contractual past-due terms established with customers.
We charge accounts deemed uncollectible to operating expense.
Unamortized Debt Premium, Discount, and Expense: We capitalize premiums, discounts, and issuance costs of long-
term debt and amortize those costs over the terms of the debt issues. For the non-regulated portions of our businesses, we
expense any refinancing costs as incurred. For the regulated portions of our businesses, if we refinance debt, we capitalize
any remaining unamortized premiums, discounts, and issuance costs and amortize them over the terms of the newly issued
debt.
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Utility Regulation: We are subject to the actions of the MPSC and the FERC and prepare our consolidated financial
statements in accordance with the provisions of SFAS No. 71. As a result, we may defer or recognize revenues and
expenses differently than a non-regulated entity. For example, we may record as regulatory assets items that a non-regulated
entity normally would expense if the actions of the regulator indicate that we will recover the expenses in future rates.
Conversely, we may record as regulatory liabilities items that non-regulated entities may normally recognize as revenues if
the actions of the regulator indicate that we will be required to refund revenues to customers.
We reflect the following regulatory assets and liabilities, which include both current and non-current amounts, on our
Consolidated Balance Sheets.
En d of
re cove ry or
De ce m be r 31 re fun d pe riod 2008 2007
In Million s
Assets Earning a Return:
Customer Choice Act 2010 $ 90 $ 149
Stranded Costs See Note 4 71 68
Electric restructuring implementation plan 2009 3 14
Manufactured gas plant sites (Note 4) 2018 31 33
Assets Not Earning a Return:
Postretirement Benefits (Note 7) various 1,450 940
Securitized costs (Note 5) 2015 416 466
Unamortized debt costs n/a 66 74
ARO (Note 8) n/a 92 85
Big Rock nuclear decommissioning and related costs (Note 4) n/a 129 129
Manufactured gas plant sites (Note 4) n/a 38 17
Palisades sales transaction costs (Notes 3 and 4) n/a — 28
Other(a) 2011 8 6
Total regulatory assets(b) $2,438 $2,059
Palisades refund — Current (Note 4)(c) 2009 $ 120 $ 164
Cost of removal (Note 8) n/a 1,203 1,127
Income taxes, net (Note 9) n/a 519 533
ARO (Note 8) n/a 137 141
Palisades refund — Non-current (Note 4)(c) 2008 — 140
Total regulatory liabilities(b) $1,988 $2,137
(a) At December 31, 2008 and 2007, other regulatory assets include a gas inventory regulatory asset and OPEB and
pension expense incurred in excess of the MPSC-approved amount. We will recover these regulatory assets from our
customers by 2011. Other regulatory liabilities include liabilities related to the sale of sulfur dioxide allowances and
AFUDC collected in excess of the MPSC-approved amount.
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(b) At December 31, 2008 and 2007, we classified $19 million of regulatory assets as current regulatory assets. At
December 31, 2008, we classified $120 million of regulatory liabilities as current regulatory liabilities. At December 31,
2007, we classified $164 million of regulatory liabilities as current regulatory liabilities.
(c) The MPSC order approving the Palisades and Big Rock ISFSI sale transaction required that we credit $255 million of
excess sales proceeds and decommissioning amounts to our retail customers by December 2008. For 2007, the current
portion of regulatory liabilities for Palisades refunds represents the remaining portion of this obligation, plus interest.
There are additional excess sales proceeds and decommissioning fund balances above the amount in the MPSC order.
For 2007, the non-current portion of regulatory liabilities for Palisades refunds represents this obligation, plus interest.
For 2008, these additional excess sales proceeds are reported in the current portion of regulatory liabilities for Palisades
refunds as it is probable the proceeds will be credited to customers within one year. For additional details, see Note 4,
Contingencies, “Electric Rate Matters.”
Our PSCR and GCR cost recovery mechanisms also represent probable future revenues that will be recovered from
customers or previously collected revenues that will be refunded to customers through the ratemaking process.
Underrecoveries are included in Accrued power supply and gas revenue and overrecoveries are included in Accrued rate
refunds on our Consolidated Balance Sheets. For additional details on PSCR, see Note 4, Contingencies, “Electric Rate
Matters — Power Supply Costs” and for additional details on GCR, see Note 4, Contingencies, “Gas Rate Matters — Gas
Cost Recovery.”
We reflect the following regulatory assets and liabilities for underrecoveries and overrecoveries on our Consolidated
Balance Sheets:
In Million s
Regulatory Assets for PSCR and GCR
underrecoveries of power supply and gas costs $ 7 $ 45
Regulatory Liabilities for PSCR and GCR
overrecoveries of power supply and gas costs $ 7 $ 19
New Accounting Standards Not Yet Effective: SFAS No. 141(R), Business Combinations: In December 2007, the FASB
issued SFAS No. 141(R), which replaces SFAS No. 141, Business Combinations. SFAS No. 141(R) establishes how an
acquiring entity should measure and recognize assets acquired, liabilities assumed, and noncontrolling interests acquired
through a business combination. The standard also establishes how goodwill or gains from bargain purchases should be
measured and recognized and what information the acquirer should disclose to enable users of the financial statements to
evaluate the nature and financial effects of a business combination. Costs of an acquisition are to be recognized separately
from the business combination. We will apply SFAS No. 141(R) prospectively to any business combination for which the
date of acquisition is on or after January 1, 2009.
interests and shown separately on our Consolidated Balance Sheets within equity. In addition, net income attributable to
noncontrolling interests will be included in net income on our Consolidated Statements of Income. These changes involve
presentation only, and will not otherwise impact our consolidated financial statements. The standard will also affect the
accounting for changes in a parent’s ownership interest, including deconsolidation of a subsidiary. We will apply these
provisions of SFAS No. 160 prospectively to any such transactions.
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SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement
No. 133: In March 2008, the FASB issued SFAS No. 161, effective for us January 1, 2009. This standard requires entities to
provide enhanced disclosures about how and why derivatives are used, how derivatives and related hedged items are
accounted for under SFAS No. 133, and how derivatives and related hedged items affect the entity’s financial position,
financial performance, and cash flows. This standard will not have a material impact on our consolidated financial
statements.
FSP FAS 142-3, Determination of the Useful Life of Intangible Assets: In April 2008, the FASB issued FSP FAS 142-3,
effective for us January 1, 2009. This standard amends SFAS No. 142 to require expanded consideration of expected future
renewals or extensions of intangible assets when determining their useful lives. This standard will be applied prospectively
for intangible assets acquired after the effective date. This standard will not have a material impact on our consolidated
financial statements.
2: FAIR VALUE MEASUREMENTS

SFAS No. 157, which became effective January 1, 2008, defines fair value, establishes a framework for measuring fair
value, and expands disclosures about fair value measurements. It does not require any new fair value measurements, but
applies to those fair value measurements recorded or disclosed under other accounting standards. The standard defines fair
value as the price that would be received to sell an asset or paid to transfer a liability in an orderly exchange between market
participants, and requires that fair value measurements incorporate all assumptions that market participants would use in
pricing an asset or liability, including assumptions about risk. The standard also eliminates the prohibition against
recognizing “day one” gains and losses on derivative instruments. We did not hold any derivatives with “day one” gains or
losses during the year ended December 31, 2008. The standard is to be applied prospectively, except that limited
retrospective application is required for three types of financial instruments, none of which we held during the year ended
December 31, 2008.
SFAS No. 157 establishes a fair value hierarchy that 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. These markets must be
accessible to us at the measurement date.
• 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, interest
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rates and yield curves observable at commonly quoted intervals, credit risks, default rates, and inputs derived from
or corroborated by observable market data.
• Level 3 inputs are unobservable inputs that reflect our own assumptions about how market participants would value
our assets and liabilities.
To the extent possible, we use quoted market prices or other observable market pricing data in valuing assets and
liabilities measured at fair value under SFAS No. 157. If this information is unavailable, we use market-corroborated data or
reasonable estimates about market participant assumptions. We 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.
The FASB issued a one-year deferral of SFAS No. 157 for nonfinancial assets and liabilities, except those that are
recorded or disclosed at fair value on a recurring basis. Under this partial deferral, SFAS No. 157 became effective on
January 1, 2009 for fair value measurements in the following areas:
• AROs,
• most of the nonfinancial assets and liabilities acquired in a business combination, and
• impairment analyses performed for nonfinancial assets.
SFAS No. 157 was effective January 1, 2008 for our available-for-sale investment securities, nonqualified deferred
compensation plan assets and liabilities, derivative instruments, and the financial instruments disclosed in Note 6, Financial
and Derivative Instruments, “Financial Instruments.” SFAS No. 157 also applied to the year-end measurement of fair values
of our pension and OPEB plan assets. For details on the accounting of our pension and OPEB plans, see Note 7, Retirement
Benefits. The implementation of SFAS No. 157 did not have a material effect on our consolidated financial statements.
SEC and FASB Guidance on Fair Value Measurements: On September 30, 2008, in response to concerns about fair
value accounting and its possible role in the recent declines in the financial markets, the SEC Office of the Chief Accountant
and the FASB staff jointly released additional guidance on fair value measurements. The guidance, which was effective for
us upon issuance, did not change or conflict with the fair value principles in SFAS No. 157, but rather provided further
clarification on how to value a financial asset in an illiquid market. In October 2008, the FASB issued FSP FAS 157-3,
Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active. The standard is consistent
with the joint guidance issued by the SEC and the FASB and was effective for us for the quarter ended September 30, 2008.
The standard was to be applied prospectively. The guidance in this standard and the joint guidance provided by the FASB
and the SEC did not affect our fair value measurements.
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ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS

The following table summarizes, by level within the fair value hierarchy, our assets and liabilities reported at fair value
on a recurring basis at December 31, 2008.
Total Le ve l 1 Le ve l 2
In Million s
Assets:
Cash Equivalents $ 56 $ 56 $ —
CMS Energy Common Stock 19 19 —
Nonqualified Deferred Compensation Plan Assets 3 3 —
SERP
Equity Securities 25 25 —
Debt Securities 19 — 19
Total $122 $ 103 $ 19
Liabilities:
Nonqualified Deferred Compensation Plan Liabilities $ (3) $ (3) $ —
Fixed price fuel contracts (1) — (1)
Total $ (4) $ (3) $ (1)
Cash Equivalents: Our cash equivalents consist of money market funds with daily liquidity. The funds invest in
U.S. Treasury notes, other government-backed securities, and repurchase agreements collateralized by U.S. Treasury notes.
Nonqualified Deferred Compensation Plan Assets: Our nonqualified deferred compensation plan assets are invested
in various mutual funds. We value these assets using a market approach, which uses the daily quoted NAV provided by the
fund managers that are the basis for transactions to buy or sell shares in each fund. On our Consolidated Balance Sheets,
these assets are included in Other non-current assets.
SERP Assets: Our SERP assets are valued using a market approach, which incorporates prices and other relevant
information from market transactions. Our SERP equity securities consist of an investment in Standard & Poor’s 500 Index
mutual fund. The fund’s securities are listed on an active exchange or dealer market. The fair value of the SERP equity
securities is based on the NAV of the mutual fund that is derived from the daily closing prices of the equity securities held
by the fund. The NAV is the basis for transactions to buy or sell shares in the fund. Our SERP debt securities, which are
investment grade municipal bonds, are valued using a market approach, which is based on a matrix pricing model that
incorporates market-based information. The fair value of our SERP debt securities is derived from various observable inputs,
including benchmark yields, reported securities trades, broker/dealer quotes, bond ratings, and general information on
market movements for investment grade municipal securities normally considered by market participants when pricing a
debt security. SERP assets are included in Other non-current assets on our Consolidated Balance Sheets. For additional
details about our SERP securities, see Note 6, Financial and Derivative Instruments.
Nonqualified Deferred Compensation Plan Liabilities: The non-qualified deferred compensation plan liabilities are
valued 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. These liabilities, except for our primary DSSP plan liability, are included in Other non-current
liabilities on our Consolidated Balance Sheets. Our primary DSSP plan liability is included in Non-current postretirement
benefits on our Consolidated Balance Sheets.
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Fixed price fuel contracts: Under certain agreements, we have effectively locked in a price per gallon for gasoline and
diesel fuel we will purchase from January 2009 through November 2009. These contracts are valued using an income
approach that incorporated forward national fuel prices adjusted to reflect conditions in Michigan. The fair values of these
contracts are included in Other current liabilities on our Consolidated Balance Sheets. For additional information on our
fixed fuel price contracts, see Note 6, Financial and Derivative Instruments, “Derivative Instruments.”
At December 31, 2008, we did not have any assets or liabilities classified as Level 3.
3: ASSET SALES AND IMPAIRMENT CHARGES

ASSET SALES
The impacts of our asset sales are included in Loss (gain) on asset sales, net in our Consolidated Statements of
Income. Asset sales were immaterial for the year ended December 31, 2008.
For the year ended December 31, 2007, we sold the following assets:
Gross C ash Pre tax

In Million s
April Palisades(a) $ 333 $ —
Various Other 4 2
Total $ 337 $ 2
(a) We sold Palisades to Entergy for $380 million and as of December 31, 2007, received $363 million after various closing
adjustments. We also paid Entergy $30 million to assume ownership and responsibility for the Big Rock ISFSI. Because
of the sale of Palisades, we paid the NMC, the former operator of Palisades, $7 million in exit fees and forfeited our
$5 million investment in the NMC. Entergy assumed responsibility for the future decommissioning of Palisades and for
storage and disposal of spent nuclear fuel located at Palisades and the Big Rock ISFSI sites.
We accounted for the disposal of Palisades as a financing for accounting purposes and thus we recognized no gain in
the Consolidated Statements of Income. We accounted for the remaining non-real estate assets and liabilities associated
with the transaction as a sale.
For the year ended December 31, 2006, we sold the following assets:
Gross C ash Pre tax

In Million s
October Land in Ludington, Michigan $ 6 $ 2
November MCV GP II(a) 61 77
Various Other 2 —
Total $ 69 $ 79
(a) In November 2006, we sold all of our interests in the Consumers’ subsidiaries that held the MCV Partnership and the
MCV Facility to an affiliate of GSO Capital Partners and Rockland Capital Energy Investments.
Because of the MCV PPA, the transaction is a sale and leaseback for accounting purposes. We have continuing
involvement with the MCV Partnership through an existing guarantee associated with the future operations of the MCV
Facility. As a result, we accounted for the MCV Facility as a financing for accounting purposes and not a sale. The value of
the finance obligation was based on an allocation of the transaction proceeds to the fair values of the
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net assets sold and fair value of the MCV Facility under the financing. The total proceeds were less than the fair value of
the net assets sold. As a result, there were no proceeds remaining to allocate to the MCV Facility; therefore, we recorded no
finance obligation.
The transaction resulted in an after-tax loss of $41 million, which includes a reclassification of $30 million of AOCI into
earnings, an $80 million impairment charge on the MCV Facility, an $8 million gain on the removal of our interests in the
MCV Partnership and the MCV Facility, and $1 million benefit in general taxes. Upon the sale of our interests in the MCV
Partnership and the FMLP, we were no longer the primary beneficiary of these entities and the entities were deconsolidated.
IMPAIRMENT CHARGES
We recorded no impairments of long-lived assets for the years ended December 31, 2008 and December 31, 2007. For
the year ended December 31, 2006, we recorded an impairment charge of $218 million to recognize the reduction in fair value
of the MCV Facility’s real estate assets. The result was an $80 million reduction to our consolidated net income after
considering tax effects and minority interest.
4: CONTINGENCIES
ELECTRIC CONTINGENCIES
Electric Environmental Matters: Our operations are subject to environmental laws and regulations. Generally, we have
been able to recover in customer rates the costs to operate our facilities in compliance with these laws and regulations.
Cleanup and Solid Waste: Under the NREPA, we will ultimately incur investigation and response activity costs at a
number of sites. We believe that these costs will be recoverable in rates under current ratemaking policies.
We are a potentially responsible party at a number of contaminated sites administered under the Superfund. Superfund
liability is joint and several. However, many other creditworthy parties with substantial assets are potentially responsible
with respect to the individual sites. Based on our experience, we estimate that our share of the total liability for most of our
known Superfund sites will be between $2 million and $11 million. A number of factors, including the number of potentially
responsible parties involved with each site, affect our share of the total liability. As of December 31, 2008, we have recorded
a liability of $2 million, the minimum amount of our range of possible outcomes estimated probable Superfund liability in
accordance with FIN 14.
The timing of payments related to our investigation and response activities at our Superfund and NREPA sites is
uncertain. Periodically, we receive information about new sites, which leads us to review our response activity estimates.
Any significant change in the underlying assumptions, such as an increase in the number of sites, different remediation
techniques, nature and extent of contamination, and legal and regulatory requirements, could affect our estimates of NREPA
and Superfund liability.
Ludington PCB: In October 1998, during routine maintenance activities, we identified PCB as a component in certain
paint, grout, and sealant materials at Ludington. We removed and replaced part of the PCB material with non-PCB material.
Since proposing a plan to deal with the remaining materials, we have had several communications with the EPA. We are not
able to predict when the EPA will issue a final ruling. We cannot predict the financial impact or outcome of this matter.
Electric Utility Plant Air Permit Issues: In April 2007, we received a NOV/FOV from the EPA alleging that fourteen
utility boilers exceeded visible emission limits in their associated air permits. The utility boilers are located at the
Karn/Weadock Generating Complex, Campbell Plant, Cobb Electric Generating Station and Whiting Plant, which are all in
Michigan. We have responded formally to the NOV/FOV denying the allegations and are awaiting the EPA’s response to
our submission. We cannot predict the financial impact or outcome of this matter.
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requirements of RMRR. In October 2008, we received another information request from the EPA pursuant to Section 114 of
the Clean Air Act. We responded to this information request in December 2008. In addition to the EPA’s information
request, in October 2008, we received a NOV for three of our coal-based facilities relating to violations of NSR regulations,
alleging ten projects from 1986 to 1998 were subject to NSR review. We met with the EPA in January 2009 and have
additional meetings scheduled. If the EPA does not accept our interpretation of RMRR, we could be required to install
additional pollution control equipment at some or all of our coal-based electric generating plants, surrender emission
allowances, engage in supplemental environmental programs and pay fines. Additionally, we would need to assess the
viability of continuing operations at certain plants. We cannot predict the financial impact or outcome of this matter.
timetable for the revision. We cannot predict the financial impact or outcome of this matter.
Litigation: Our transmission charges paid to MISO have been subject to regulatory review and recovery through the
annual PSCR process. The Attorney General has argued that the statute governing the PSCR process does not permit
recovery of transmission charges in that manner and those expenses should be considered in general rate cases. Several
decisions of the Michigan Court of Appeals have ruled against the Attorney General’s arguments, but in September 2008,
the Michigan Supreme Court granted the Attorney General’s applications for leave to appeal two of those decisions. If the
Michigan Supreme Court accepts the Attorney General’s position, we and other electric utilities will be required to obtain
recovery of transmission charges through an alternative ratemaking mechanism. We expect a decision by the Michigan
Supreme Court on these appeals by mid-2009. We cannot predict the financial impact or outcome of this matter.
ELECTRIC RATE MATTERS

Stranded Cost Recovery: In November 2004, the MPSC approved recovery of our Stranded Costs incurred in 2002 and
2003 plus interest through the period of collection through a surcharge on ROA customers. Since the MPSC order, we have
experienced a downward trend in ROA customers, although recently this trend has slightly reversed. In October 2008, the
Michigan legislature enacted legislation that amended the Customer Choice Act and directed the MPSC to approve rates
that will allow recovery of Stranded Costs within five years. In January 2009, we filed an application with the MPSC
requesting recovery of these Stranded Costs through a surcharge on both full service and ROA customers. At
December 31, 2008, we had a regulatory asset for Stranded Costs of $71 million.
Power Supply Costs: The PSCR process is designed to allow us to recover all of our power supply costs if incurred
under reasonable and prudent policies and practices. The MPSC reviews these costs, policies, and practices for prudence in
annual plan and reconciliation proceedings.
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The following table summarizes our PSCR reconciliation filing currently pending with the MPSC:
POWER SUPPLY COST RECOVERY RECONCILIATION
Ne t Unde r- PSC R C ost

PSC R Ye ar Date File d re cove ry of Powe r S old De scription of Ne t Unde rre cove ry
2007 March 2008 $42 million(a) $1.628 billion In our 2007 PSCR Plan we expected to offset power
supply costs by including a $44 million credit for
Palisades sale proceeds due customers. However, the
MPSC directed that the Palisades sale proceeds be
refunded through bill credits outside of the PSCR
process.
(a) This amount includes 2006 underrecoveries as allowed by the MPSC order in our 2007 PSCR plan case.
2008 PSCR Plan: In September 2007, we submitted our 2008 PSCR plan filing to the MPSC. The plan includes recovery
of 2007 PSCR underrecoveries of $42 million. We self-implemented a 2008 PSCR charge in January 2008. In November 2008,
the MPSC issued an order approving our PSCR plan factor.
2009 PSCR Plan: In September 2008, we submitted our 2009 PSCR plan filing to the MPSC. The plan seeks approval to
apply a uniform maximum PSCR factor of $0.02680 per kWh for all classes of customers. The plan also seeks approval to
recover an expected $22 million discount in power supply charges provided to a large industrial customer. The MPSC
approved the discount in 2005 to promote long-term investments in the industrial infrastructure of Michigan. We self-
implemented a 2009 PSCR charge in January 2009.
While we expect to recover fully all of our PSCR costs, we cannot predict the financial impact or the outcome of these
proceedings. When we are unable to collect these costs as they are incurred, there is a negative impact on our cash flows.
recover costs associated with our advanced metering infrastructure program. The following table details the components of
the requested increase in revenue:
C om pone n ts of th e incre ase in re ve n u e In Million s
Operating and maintenance $ 50
Rate of return 17
Rate base 76
Book depreciation on new investment 14
Property taxes on new investment 9
Gross margin 43
Other 5
Total $ 214
This is the first electric rate case under the new streamlined regulatory process enacted by the Michigan legislation in
October 2008. The new provisions generally allows utilities to self-implement rates six months after filing, subject to refund,
unless the MPSC finds good cause to prohibit such self-implementation. The new provisions require the MPSC to issue an
order 12 months after filing or the rates, as filed, become permanent. We cannot predict the financial impact or outcome of
this proceeding.
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Palisades Regulatory Proceedings: The MPSC order approving the Palisades sale transaction required that we credit
$255 million of excess sales proceeds and decommissioning amounts to our retail customers by December 2008. There are
additional excess sales proceeds and decommissioning fund balances of $135 million above the amount in the MPSC order.
The MPSC order in our 2007 electric rate case instructed us to offset the excess sales proceeds and decommissioning fund
balances with $26 million of transaction costs from the Palisades sale and credit the remaining balance of $109 million to
customers. The distribution of these funds is still pending with the MPSC.
OTHER ELECTRIC CONTINGENCIES

The MCV PPA: We have a 35-year power purchase agreement that began in 1990 with the MCV Partnership to
purchase 1,240 MW of electricity. In June 2008, the MPSC approved an amended and restated MCV PPA, which took effect
in October 2008. The MCV PPA provides for:
• a capacity charge of $10.14 per MWh of available capacity,
• a fixed energy charge based on our annual average base load coal generating plant operating and maintenance cost,
• a variable energy charge for all delivered energy that reflects the MCV Partnership’s cost of production,
• a $5 million annual contribution by the MCV Partnership to a renewable resources program, and
• an option for us to extend the MCV PPA for five years or purchase the MCV Facility at the conclusion of the MCV
PPA’s term in March 2025.
Capacity and energy charges, net of RCP replacement energy and benefits, under the MCV PPA were $320 million in
2008, $464 million in 2007, and $411 million in 2006. We estimate that capacity and energy charges under the MCV PPA will
range from $240 million to $330 million annually.
Nuclear Matters: DOE Litigation: In 1997, a U.S. Court of Appeals decision confirmed that the DOE was to begin
accepting deliveries of spent nuclear fuel for disposal by January 1998. Subsequent U.S. Court of Appeals litigation, in
which we and other utilities participated, has not been successful in producing more specific relief for the DOE’s failure to
accept the spent nuclear fuel.
A number of court decisions support the right of utilities to pursue damage claims in the United States Court of Claims
against the DOE for failure to take delivery of spent nuclear fuel. We filed our complaint in December 2002. If our litigation
against the DOE is successful, we plan to use any recoveries as reimbursement for the incurred costs of spent nuclear fuel
storage during our ownership of Palisades and Big Rock. We cannot predict the financial impact or outcome of this matter.
The sale of Palisades and the Big Rock ISFSI did not transfer the right to any recoveries from the DOE related to costs of
spent nuclear fuel storage incurred during our ownership of Palisades and Big Rock.
Big Rock Decommissioning: The MPSC and the FERC regulate the recovery of costs to decommission Big Rock. In
December 2000, funding of a Big Rock trust fund ended because the MPSC-authorized decommissioning surcharge
collection period expired. The level of funds provided by the trust fell short of the amount needed to complete
decommissioning. As a result, we provided $44 million of corporate contributions for decommissioning costs. This amount
is in addition to the $30 million payment to Entergy to assume ownership and responsibility for the Big Rock ISFSI and
additional corporate contributions for nuclear fuel storage costs of $55 million, due to the DOE’s failure to accept spent
nuclear fuel on schedule. At December 31, 2008, we have a $129 million regulatory asset recorded on our Consolidated
Balance Sheets for these costs.
In July 2008, we filed an application with the MPSC seeking the deferral of ratemaking treatment for the recovery of our
nuclear fuel storage costs and the payment to Entergy, until the litigation regarding these costs is
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resolved in the federal courts. In the application, we also are seeking to recover the $44 million Big Rock decommissioning
shortfall from customers. We cannot predict the outcome of this proceeding.
Nuclear Fuel Disposal Cost: We deferred payment for disposal of spent nuclear fuel used before April 7, 1983. Our
DOE liability is $162 million at December 31, 2008. This amount includes interest, and is payable upon the first delivery of
spent nuclear fuel to the DOE. We recovered the amount of this liability, excluding a portion of interest, through electric
rates. In conjunction with the sale of Palisades and the Big Rock ISFSI, we retained this obligation and provide a
$162 million letter of credit to Entergy as security for this obligation.
GAS CONTINGENCIES
Gas Environmental Matters: We expect to incur investigation and remediation costs at a number of sites under the
NREPA, a Michigan statute that covers environmental activities including remediation. These sites include 23 former
manufactured gas plant facilities. We operated the facilities on these sites for some part of their operating lives. For some of
these sites, we have no current ownership or may own only a portion of the original site. In December 2008, we estimated
our remaining costs to be between $38 million and $52 million. We expect to fund most of these costs through proceeds
from insurance settlements and MPSC-approved rates.
At December 31, 2008, we have a liability of $38 million and a regulatory asset of $69 million that, includes $31 million of
deferred MGP expenditures. The timing of payments related to the remediation of our manufactured gas plant sites is
uncertain. We expect annual response activity costs to range between $5 million and $6 million over the next five years.
Periodically, we review these response activity 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
our estimates of annual response activity costs and MGP liability.
FERC Investigation: In February 2008, we received a data request relating to an investigation the FERC is conducting
into possible violations of the FERC’s posting and competitive bidding regulations related to releases of firm capacity on
natural gas pipelines. We responded to the FERC’s first data request in the first quarter of 2008. In July 2008, we responded
to a second set of data requests from the FERC. The FERC has also taken depositions and made an additional data request.
We cannot predict the financial impact or the outcome of this matter.
GAS RATE MATTERS

prudence in annual plan and reconciliation proceedings.
The following table summarizes our GCR reconciliation filings currently pending with the MPSC:
GAS COST RECOVERY RECONCILIATION
Ne t O ve r- GC R C ost
GC R Ye ar Date File d re cove ry of Gas Sold De scription of Ne t O ve rre cove ry
2007-2008 June 2008 $17 million $1.7 billion The total amount reflects an overrecovery of $15 million plus
$2 million in accrued interest owed to customers.
GCR plan for year 2008-2009: In February 2009, the MPSC issued an order for our 2008-2009 GCR plan year. The
order approved a base GCR ceiling factor of $8.17 per mcf for April 2008 through March 2009, subject to a quarterly ceiling
price adjustment mechanism.
Due to an increase in NYMEX gas prices, the base GCR ceiling factor increased to $9.52 per mcf for the three-month
period of April through June 2008 and to $9.92 for the three-month period of July through September 2008,
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pursuant to the quarterly ceiling price adjustment mechanism. Beginning in October 2008, the base GCR ceiling factor was
adjusted to $8.17 due to a decrease in NYMEX gas prices.
The GCR billing factor is adjusted monthly in order to minimize the over or underrecovery amounts in our annual GCR
reconciliation. Our GCR billing factor for March 2009 is $8.17 per mcf. We are currently anticipating an underrecovery will
occur during the 2008-2009 GCR year.
GCR plan for year 2009-2010: In December 2008, we filed an application with the MPSC seeking approval of a GCR
plan for our 2009-2010 GCR plan year. Our request proposed the use of a base GCR ceiling factor of $8.10 per mcf, plus a
quarterly GCR ceiling price adjustment contingent upon future events. We expect to self-implement a 2009 GCR charge in
April 2009.
While we expect to recover fully all of our GCR costs, we cannot predict the financial impact or the outcome of these
proceedings. When we are unable to collect GCR costs as they are incurred, there is a negative impact on our cash flows.
2008 Gas Rate Case: In December 2008, the MPSC approved a settlement agreement authorizing a rate increase of
$22 million, based on a 10.55 percent authorized return on equity, for service rendered on and after December 24, 2008. The
settlement includes a $20 million decrease in depreciation rates and requires that we not request a new gas general rate
increase prior to May 1, 2009.
OTHER CONTINGENCIES — INDEMNIFICATIONS

Guarantees and Indemnifications: FIN 45 requires a guarantor, upon issuance of a guarantee, to recognize a liability
for the fair value of the obligation it undertakes in issuing the guarantee. To measure the fair value of a guarantee liability,
we recognize a liability for any premium received or receivable in exchange for the guarantee. For a guarantee issued as part
of a larger transaction, such as in association with an asset sale or executory contract, we recognize a liability for any
premium that we would have received had we issued the guarantee as a single item.
The following table describes our guarantees at December 31, 2008:
Expiration Maxim u m
Gu aran te e De scription Issu e Date Date O bligation
In Million s
Surety bonds and other indemnifications Various Various $ —(a)
Guarantee January 1987 March 2016 85(b)
(a) In the normal course of business, we issue surety bonds and indemnities to third parties to facilitate commercial
transactions. We would be required to pay a counterparty if it incurs losses due to a breach of contract terms or
nonperformance under the contract. At December 31, 2008, the guarantee liability recorded for surety bonds and
indemnities was immaterial. The maximum obligation for surety bonds and indemnities was less than $1 million.
(b) The maximum obligation includes $85 million related to the MCV Partnership’s non-performance under a steam and
electric power agreement with Dow. We sold our interests in the MCV Partnership and the FMLP.
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The sales agreement calls for the purchaser, an affiliate of GSO Capital Partners and Rockland Capital Energy
Investments, to pay $85 million, subject to certain reimbursement rights, if Dow terminates an agreement under which
the MCV Partnership provides it steam and electric power. This agreement expires in March 2016, subject to certain
terms and conditions. The purchaser secured its reimbursement obligation with an irrevocable letter of credit of up to
$85 million.
We also enter into various agreements containing tax and other indemnification provisions for which, due to a number
of factors, we are unable to estimate the maximum potential obligation. These factors include unspecified exposure under
certain agreements. We consider the likelihood that we would be required to perform or incur significant losses related to
these indemnities to be remote.
Other: In addition to the matters disclosed within this Note, we are party to certain lawsuits and administrative
proceedings before various courts and governmental agencies arising from the ordinary course of business. These lawsuits
and proceedings may involve personal injury, property damage, contractual matters, environmental issues, federal and state
taxes, rates, licensing, and other matters.
CONTRACTUAL COMMITMENTS
Purchase Obligations: The following table summarizes our contractual cash obligations for each of the periods
presented.
PURCHASE OBLIGATIONS AT DECEMBER 31, 2008

Paym e n ts Due
Total O n e Ye ar Th re e Ye ars Five Ye ars Five Ye ars
In Million s
Purchase obligations(a) $14,699 $ 2,201 $ 2,391 $ 1,545 $ 8,562
Purchase obligations — related parties(a) 1,570 78 166 168 1,158
(a) Long-term contracts for purchase of commodities and services. These obligations include operating contracts used to
ensure adequate supply with generating facilities that meet PURPA requirements. The commodities and services
include:
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5: FINANCINGS AND CAPITALIZATION

Long-term debt at December 31 follows:
Inte re st Rate (%) Maturity 2008 2007
(In Million s)
First mortgage bonds(a) 4.250 2008 $ — $ 250
4.800 2009 200 200
4.400 2009 150 150
4.000 2010 250 250
5.000 2012 300 300
5.375 2013 375 375
6.000 2014 200 200
5.000 2015 225 225
5.500 2016 350 350
5.150 2017 250 250
5.650 2018 250 —
6.125 2019 350 —
5.650 2020 300 300
5.650 2035 142 145
5.800 2035 175 175
3,517 3,170
Senior notes 6.375 2008 — 159
6.875 2018 180 180
Securitization bonds 5.495(b) 2009-2015 277 309
Nuclear fuel disposal liability (c) 162 159
Tax-exempt pollution control revenue bonds Various 2010-2035 161 161
Total principal amount outstanding 4,297 4,138
Current amounts (383) (440)
Net unamortized discount (6) (6)
Total long-term debt $3,908 $3,692
(a) The weighted-average interest rate for our FMB was 5.329 percent at December 31, 2008 and 5.131 percent at
December 31, 2007.
(b) Represents the weighted-average interest rate at December 31, 2008 (5.442 percent at December 31, 2007).
(c) The maturity date is uncertain.
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Financings: The following is a summary of significant long-term debt transactions during 2008:
Issu e /Re tire m e n t

Prin cipal Inte re st Rate (%) Date Maturity Date
(In m illion s)
Debt Issuances:
First mortgage bonds $ 250 5.650% March 2008 September 2018
Tax-exempt bonds(a) 28 4.250% March 2008 June 2010
Tax-exempt bonds(b) 68 Variable March 2008 April 2018
First mortgage bonds 350 6.125% September 2008 March 2019
Total $ 696
Debt Retirements:
Senior notes $ 159 6.375% February 2008 February 2008
First mortgage bonds 250 4.250% April 2008 April 2008
Tax-exempt bonds(a) 28 Variable April 2008 June 2010
Tax-exempt bonds(b) 68 Variable April 2008 April 2018
Total $ 505
(a) In March 2008, we utilized the Michigan Strategic Fund for the issuance of $28 million of tax-exempt Michigan Strategic
Fund Limited Obligation Refunding Revenue Bonds, bearing interest at a 4.25 percent annual rate. The bonds are
secured by FMB. We used the proceeds to redeem $28 million of insured tax-exempt bonds in April 2008.
(b) In March 2008, we utilized the Michigan Strategic Fund for the issuance of $68 million of tax-exempt Michigan Strategic
Fund Variable Rate Limited Obligation Refunding Revenue Bonds. The initial interest rate was 2.25 percent and it
resets weekly. The bonds, which are backed by a letter of credit, are subject to optional tender by the holders that
would result in remarketing. We used the proceeds to redeem $68 million of insured tax-exempt bonds in April 2008.
In April 2008, we caused the conversion of $35 million of tax-exempt Michigan Strategic Fund Variable Rate Limited
Obligation Revenue Bonds from insured bonds to demand bonds, backed by a letter of credit.
The Michigan Strategic Fund is housed within the Michigan Department of Treasury to provide public and private
development finance opportunities for agriculture, forestry, business, industry and communities within the State of
Michigan.
First Mortgage Bonds: We secure our FMB by a mortgage and lien on substantially all of our property. Our ability to
issue FMB is restricted by certain provisions in the First Mortgage Bond Indenture and the need for regulatory approvals
under federal law. Restrictive issuance provisions in our First Mortgage Bond Indenture include achieving a two-times
interest coverage ratio and having sufficient unfunded net property additions.
Regulatory Authorization for Financings: The FERC has authorized us to have outstanding at any one time, up to
$1.0 billion of secured and unsecured short-term securities for general corporate purposes. The remaining availability is
$550 million at December 31, 2008.
The FERC has also authorized us to issue and sell up to $1.5 billion of secured and unsecured long-term securities for
general corporate purposes. The remaining availability is $950 million at December 31, 2008.
The authorizations are for the period ending June 30, 2010. Any long-term issuances during the authorization period
are exempt from the FERC’s competitive bidding and negotiated placement requirements.
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Securitization Bonds: Certain regulatory assets collateralize securitization bonds. The bondholders have no recourse
to our other assets. Through our rate structure, we bill customers for securitization surcharges to fund the payment of
principal, interest, and other related expenses. The surcharges collected are remitted to a trustee and are not available to our
creditors or creditors of our affiliates. Securitization surcharges totaled $53 million in 2008 and $48 million in 2007.
Debt Maturities: At December 31, 2008, the aggregate annual contractual maturities for long-term debt for the next five
years are:
Paym e n ts Due
2009 2010 2011 2012 2013
In Million s
Long-term debt $383 $343 $ 37 $339 $416
Revolving Credit Facilities: The following secured revolving credit facilities with banks are available at December 31,
2008:
O u tstan ding
Am ou n t of Am ou n t Le tte rs of Am ou n t
Expiration Date Facility Borrowe d C re dit Available
In Million s
March 30, 2012 $ 500 $ — $ 172 $ 328
November 30, 2009(a) 192 — 192 —
September 9, 2009 150 — — 150
(a) Secured revolving letter of credit facility.

Dividend Restrictions: Under the provisions of our articles of incorporation, at December 31, 2008, we had $331 million
of unrestricted retained earnings available to pay common stock dividends. Provisions of the Federal Power Act and the
Natural Gas Act effectively restrict dividends to the amount of our retained earnings. Several decisions from the FERC
suggest that under a variety of circumstances our common stock dividends would not be limited to amounts in our retained
earnings. Decisions in those circumstances would, however, be based on specific facts and circumstances and would result
only after a formal regulatory filing process.
During 2008, we paid $297 million in common stock dividends to CMS Energy.
Sale of Accounts Receivable: Under a revolving accounts receivable sales program, we sell eligible accounts receivable
to a wholly owned, consolidated, bankruptcy-remote special-purpose entity. In turn, the special purpose entity may sell an
undivided interest in up to $250 million of the receivables at December 31, 2008, reduced from $325 million at December 31,
2007. The special purpose entity sold $170 million in receivables at December 31, 2008 and no receivables at December 31,
2007. The purchaser of the receivables has no recourse against our other assets for failure of a debtor to pay when due and
no right to any receivables not sold. We have neither recorded a gain or loss on the receivables sold nor retained any
interest in the receivables sold. We continue to service the receivables sold to the special-purpose entity.
The following table summarizes certain cash flows under our accounts receivable sales program:
In Million s
Administrative fees $ 1 $ 3
Net cash flow as a result of accounts receivable financing $ 170 $ (325)
Collections from customers $6,060 $5,881
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Preferred Stock: Details about our outstanding preferred stock follow:
O ptional
Re de m ption Nu m be r of S h are s
De ce m be r 31 S e rie s Price 2008 2007 2008 2007
In Million s
Preferred stock
Cumulative $100 par value, Authorized
7,500,000 shares, with no mandatory redemption $ 4.16 $ 103.25 68,451 68,451 $ 7 $ 7
$ 4.50 $ 110.00 373,148 373,148 37 37
Total Preferred stock $ 44 $ 44
6: FINANCIAL AND DERIVATIVE INSTRUMENTS

Financial Instruments: The carrying amounts of cash, current accounts and notes receivable, short-term investments,
and current liabilities approximate their fair values because of their short-term nature. We estimate the fair values of long-
term financial instruments based on quoted market prices or, in the absence of specific market prices, on quoted market
prices of similar instruments or other valuation techniques.
The book value and fair value of our long-term debt instruments follows:
2008 2007
Book Fair Book Fair
De ce m be r 31 Value Value Value Value
In Million s
Long-term debt(a) $4,291 $4,073 $4,132 $4,099
(a) Includes current maturities of $383 million at December 31, 2008 and $440 million at December 31, 2007. Settlement of
long-term debt is generally not expected until maturity.
The summary of our available-for-sale investment securities follows:
2008 2007
Unrealized Unrealized Fair Unrealized Unrealized Fair
December 31 Cost Gains Losses Value Cost Gains Losses Value
In Millions
Common stock of CMS Energy(a) $ 8 $ 11 $ — $ 19 $ 8 $ 24 $ — $ 32

SERP:
Equity securities 25 — — 25 35 — — 35
(a) At December 31, 2008 and 2007, we held 1.8 million shares of CMS Energy Common Stock.
SERP equity securities consist of an investment in a Standard & Poor’s 500 Index mutual fund. SERP debt securities
consist of investment grade municipal bonds.
During 2008, the fair value of our SERP investment in equity securities declined to $25 million. We determined that this
decline in fair value was other than temporary. Accordingly, we reclassified net unrealized losses of $16 million ($10 million,
net of tax) from AOCL to Other expense in the Consolidated Statements of Income and established a new cost basis of
$25 million for these investments, which was equal to fair value at December 31, 2008.
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The fair value of available-for-sale debt securities by contractual maturity at December 31, 2008 is as follows:
In Million s
Due one year or less $ 1
Due after one year through five years 8
Due after five years through ten years 7
Due after ten years 3
Total $ 19
During 2008, the proceeds from sales of SERP securities were $2 million. Gross losses realized were immaterial. During
2007, the proceeds from sales of SERP securities were $29 million, and $11 million of gross gains and $1 million of gross
losses were realized. We reclassified net gains of $7 million, net of tax of $3 million, from AOCL and included this amount in
net income in 2007. The proceeds from sales of SERP securities were $3 million during 2006. Gross gains and losses were
immaterial in 2006.
Derivative Instruments: In order to limit our exposure to certain market risks, primarily changes in interest rates,
commodity prices, and foreign currency exchange rates, we may enter into various risk management contracts, such as
swaps, options, and forward contracts. We enter into these contracts using established policies and procedures, under the
direction of an executive oversight committee consisting of senior management representatives and a risk committee
consisting of business unit managers.
The contracts we use to manage market risks may qualify as derivative instruments that are subject to derivative
accounting under SFAS No. 133. If a contract is a derivative and does not qualify for the normal purchases and sales
exception under SFAS No. 133, we record it on our consolidated balance sheet at its fair value. Each quarter, we adjust the
resulting asset or liability to reflect any change in the fair value of the contract, a practice known as marking the contract to
market. Since we have not designated any of our derivatives as accounting hedges under SFAS No. 133, we report all mark-
to-market gains and losses in earnings. For a discussion of how we determine the fair value of our derivatives, see Note 2,
Fair Value Measurements.
Most of our commodity purchase and sale contracts are not subject to derivative accounting under SFAS No. 133
because:
active market for coal develops in the future, some of these contracts may qualify as derivatives. Under regulatory
accounting, the resulting mark-to-market gains and losses would be offset by changes in regulatory assets and liabilities
and would not affect net income.
Fixed price fuel contracts: In December 2008, we entered into two financial contracts to fix economically the price of
gasoline and diesel fuel we purchase for our fleet vehicles and equipment. Under these agreements, we have effectively
locked in a price per gallon for gasoline and diesel fuel we will purchase from January through November 2009. At
December 31, 2008, the fair value of these derivatives was a liability of $1 million. We record the fair value of these
derivatives in Other current liabilities on our Consolidated Balance Sheets. We recorded the mark-to-market losses on these
derivatives in Other expense on our Consolidated Statements of Income.
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7: RETIREMENT BENEFITS
We provide retirement benefits to our employees under a number of different plans, including:
• a non-contributory, qualified defined benefit Pension Plan (closed to new non-union participants as of July 1, 2003
and closed to new union participants as of September 1, 2005),
• a qualified cash balance Pension Plan for certain employees hired between July 1, 2003 and August 31, 2005,
• a non-contributory, qualified DCCP for employees hired on or after September 1, 2005,
• benefits to certain management employees under a non-contributory, nonqualified defined benefit SERP (closed to
new participants as of March 31, 2006),
• benefits to certain management employees under a non-contributory, nonqualified DC SERP hired on or after April 1,
2006,
• health care and life insurance benefits under OPEB,
• benefits to a selected group of management under a non-contributory, nonqualified EISP, and
• a contributory, qualified defined contribution 401(k) plan.
Pension Plan: The Pension Plan includes funds for most of our current employees, the employees of our subsidiaries,
and Panhandle, a former subsidiary. The Pension Plan’s assets are not distinguishable by company.
On September 1, 2005, we implemented the DCCP. The DCCP provides an employer contribution of five percent of base
pay to the existing employees’ 401(k) plan. No employee contribution is required in order to receive the plan’s employer
contribution. All employees hired on and after September 1, 2005 participate in this plan. Participants in the cash balance
pension plan, in effect from July 1, 2003 to September 1, 2005, also participate in the DCCP as of September 1, 2005.
Additional pay credits under the cash balance pension plan were discontinued as of that date. The DCCP expense was
$3 million for the year ended December 31, 2008 and $2 million for the years ended December 31, 2007 and 2006.
SERP: SERP benefits are paid from a trust established in 1988. SERP is not a qualified plan under the Internal Revenue
Code. SERP trust earnings are taxable and trust assets are included in our consolidated assets. Consumers’ trust assets
were $45 million at December 31, 2008 and $53 million at December 31, 2007. The assets are classified as Other non-current
assets on our Consolidated Balance Sheets. The ABO for SERP was $47 million at December 31, 2008 and $48 million at
December 31, 2007. A contribution of $21 million was made to the trust in December 2007.
On April 1, 2006, we implemented a DC SERP and froze further new participation in the defined benefit SERP. The DC
SERP provides participants benefits ranging from 5 percent to 15 percent of total compensation. The DC SERP requires a
minimum of five years of participation before vesting. Our contributions to the plan, if any, will be placed in a grantor trust.
Trust assets were less than $1 million at December 31, 2008 and 2007. The assets are classified as Other non-current assets
on our Consolidated Balance Sheets. The DC SERP expense was less than $1 million for the years ended December 31, 2008,
2007 and 2006.
401(k): The employer’s match for the 401(k) plan is 60 percent on eligible contributions up to the first six percent of an
employee’s wages. The total 401(k) plan cost was $15 million for the year ended December 31, 2008 and $14 million for the
years ended December 31, 2007 and 2006.
EISP: We implemented a nonqualified EISP in 2002 to provide flexibility in separation of employment by officers, a
selected group of management, or other highly compensated employees. Terms of the plan may include payment of a lump
sum, payment of monthly benefits for life, payment of premiums for continuation of health care, or any other legally
permissible term deemed to be in our best interest to offer. The EISP expense was less than
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$1 million for each of the years ended December 31, 2008, 2007 and 2006. The ABO for the EISP was $1 million at
December 31, 2008 and December 31, 2007.
OPEB: The OPEB plan covers all regular full-time employees who are covered by the employee health care plan on a
company-subsidized basis the day before they retire from the company at age 55 or older and who have at least 10 full years
of applicable continuous service. Regular full-time employees who qualify for a pension plan disability retirement and have
15 years of applicable continuous service are also eligible. Retiree health care costs were based on the assumption that
costs would increase 8.0 percent for those under 65 and 9.5 percent for those over 65 in 2008. The 2009 rate of increase for
OPEB health costs for those under 65 is expected to be 8.5 percent and for those over 65 is expected to be 8.0 percent. The
rate of increase is expected to slow to 5 percent for those under 65 by 2017 and for those over 65 by 2017 and thereafter.
The health care cost trend rate assumption affects the estimated costs recorded. A one percentage point change in the
assumed health care cost trend assumption would have the following effects:
O n e Pe rce n tage O n e Pe rce n tage

Poin t In cre ase Poin t De cre ase
In Million s
Effect on total service and interest cost component $ 15 $ (13)
Effect on postretirement benefit obligation $ 172 $ (150)
Upon adoption of SFAS No. 106 in 1992, we recorded a liability of $466 million for the accumulated transition obligation
and a corresponding regulatory asset for anticipated recovery in utility rates. For additional details, see Note 1, Corporate
Structure and Accounting Policies, “Utility Regulation.” The MPSC authorized recovery of the electric utility portion of
these costs in 1994 over 18 years and the gas utility portion in 1996 over 16 years.
SFAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans — an amendment
of FASB Statements No. 87, 88, 106, and 132(R): In September 2006, the FASB issued SFAS No. 158. This standard
required us to recognize the funded status of our defined benefit postretirement plans on our Consolidated Balance Sheets
at December 31, 2006. SFAS No. 158 also required us to recognize changes in the funded status of our plans in the year in
which the changes occur. In addition, the standard required that we change our plan measurement date from November 30
to December 31, effective December 31, 2008. In the first quarter of 2008, we recorded the measurement date change, which
resulted in a $6 million net-of-tax decrease to retained earnings, a $4 million reduction to the SFAS No. 158 regulatory assets,
a $7 million increase in Postretirement benefit liabilities, and a $5 million increase in Deferred tax assets on our Consolidated
Balance Sheets.
In April 2008, the MPSC issued an order in our PSCR case that allowed us to collect a one-time surcharge under a
pension and OPEB equalization mechanism. For 2008, we collected $10 million of pension and $2 million of OPEB surcharge
revenue in electric rates. We recorded a reduction of $12 million of equalization regulatory assets on our Consolidated
Balance Sheets and an increase of $12 million of expense on our Consolidated Statements of Income. Thus, our collection of
the equalization mechanism surcharge had no impact on net income for the year ended December 31, 2008.
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Assumptions: The following tables recap the weighted-average assumptions used in our retirement benefits plans to
determine benefit obligations and net periodic benefit cost:
Weighted Average For Benefit Obligations:

Discount rate(a) 6.50% 6.40% 5.65% 6.50% 6.50% 5.65%
Pension 4.00% 4.00% 4.00%
SERP 5.50% 5.50% 5.50%
Weighted Average For Net Periodic Benefit Cost:

Discount rate(a) 6.40% 5.65% 5.75% 6.50% 5.65% 5.75%
Pension 4.00% 4.00% 4.00%
SERP 5.50% 5.50% 5.50%
(a) The discount rate is set to reflect the rates at which benefits can be effectively settled. It is set equal to the equivalent
single rate that results from a yield curve analysis that incorporates projected benefit payments specific to our pension
and other postretirement benefit plans, and the yields on high quality corporate bonds rated Aa or better.
(b) We determine our long-term rate of return by considering historical market returns, the current and expected future
economic environment, the capital market principles of risk and return, and the expert opinions of individuals and firms
with financial market knowledge. We consider the asset allocation of the portfolio in forecasting the future expected
total return of the portfolio. The goal is to determine a long-term rate of return that can be incorporated into the
planning of future cash flow requirements in conjunction with the change in the liability. Annually, we review for
reasonableness and appropriateness of the forecasted returns for various classes of assets used to construct an
expected return model.
(c) The mortality assumption is based on the RP-2000 mortality tables with projection of future mortality improvements
using Scale AA, which aligns with the IRS prescriptions for cash funding valuations under the Pension Protection Act.
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Costs: The following tables recap the costs and other changes in plan assets and benefit obligations incurred in our
retirement benefits plans:
Pe n sion & SERP
In Million s
Net periodic pension cost
Amortization of:
Net loss 40 44 41
Prior service cost 6 7 7
Net periodic pension cost 105 107 96
Net periodic pension cost after regulatory adjustment $109 $ 85 $ 85
O PEB
In Million s
Net periodic OPEB cost
Amortization of:
Net loss 10 23 20
Prior service credit (10) (10) (10)
Net periodic OPEB cost 29 45 39
Net periodic OPEB cost after regulatory adjustment $ 32 $ 39 $ 37
(a) Regulatory adjustments are the differences between amounts included in rates and the periodic benefit cost calculated
pursuant to SFAS No. 87 and SFAS No. 106. The pension regulatory asset had a balance of $29 million at December 31,
2008 and $33 million at December 31, 2007. The OPEB regulatory asset had a balance of $5 million at December 31, 2008
and $8 million at December 31, 2007.
The estimated net loss and prior service cost for the defined benefit pension plans that will be amortized into net
periodic benefit cost over the next fiscal year from the regulatory asset is $44 million. The estimated net loss and prior
service credit for OPEB plans that will be amortized into net periodic benefit cost over the next fiscal year from the
regulatory asset is $23 million.
We amortize gains and losses in excess of 10 percent of the greater of the benefit obligation and the MRV over the
average remaining service period. The estimated time of amortization of gains and losses is 12 years for pension and
14 years for OPEB. Prior service cost amortization is established in the years in which the prior service cost first occurred,
and are based on the same amortization period in all future years until the prior service costs are fully
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recognized. The estimated time of amortization of new prior service costs is 12 years for pension and 10 years for OPEB.
Reconciliations: The following table reconciles the funding of our retirement benefits plans with our retirement
benefits plans’ liability:
Pe n sion Plan S ERP O PEB
In Million s
Benefit obligation at beginning of period $1,565 $1,576 $ 61 $ 47 $1,082 $1,179
Service cost 45 49 1 1 23 24
Interest cost 103 86 4 3 74 65
Actuarial loss (gain) (66) 30 (2) 12 91 (115)
Benefits paid (123) (138) (2) (2) (51) (51)
Benefit obligation at end of period(a) 1,524 1,565 62 61 1,219 1,082
Plan assets at fair value at beginning of period 1,078 1,040 — — 785 734
Actual return on plan assets (231) 89 — — (185) 51
Company contribution — 109 2 2 62 51
Actual benefits paid(b) (123) (138) (2) (2) (50) (46)
Plan assets at fair value at end of period 724 1,078 — — 612 785
Funded status at end of measurement period (800) (487) (62) (61) (607) (297)
Additional VEBA Contributions or Non-Trust Benefit Payments — — — — — 12
Funded status at December 31(c)(d) $ (800) $ (487) $(62) $(61) $ (607) $ (285)
(a) The Medicare Prescription Drug, Improvement and Modernization Act of 2003 establishes a prescription drug benefit
under Medicare (Medicare Part D), and a federal subsidy, which is tax-exempt, to sponsors of retiree health care benefit
plans that provide a benefit that is actuarially equivalent to Medicare Part D. The Medicare Part D annualized reduction
in net OPEB cost was $24 million for 2008 and $27 million for 2007. The reduction includes $7 million for 2008 and 2007
in capitalized OPEB costs.
(b) We received $5 million in 2008 and $4 million in 2007 for Medicare Part D Subsidy payments.
(c) Liabilities for retirement benefits comprised $1.429 billion classified as non-current and $2 million classified as current
for the year ended December 31, 2008, and $805 million classified as non-current and $2 million classified as current for
the year ended December 31, 2007.
(d) Of the $800 million funded status of Pension Plan at December 31, 2008, $762 million is attributable to Consumers. Of
the $487 million funded status of the Pension Plan at December 31, 2007, $461 million is attributable to Consumers,
based on allocation of expenses.
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The following table provides pension PBO, ABO and fair value of plan assets:
In Million s
Pension PBO $1,524 $1,565
Pension ABO 1,240 1,231
Fair value of Pension Plan assets $ 724 $1,078
Items Not Yet Recognized as a Component of Net Periodic Benefit Cost: The following table recaps the amounts
recognized in SFAS No. 158 regulatory assets and AOCL that have not been recognized as components of net periodic
benefit cost. For additional details on regulatory assets, see Note 1, Corporate Structure and Accounting Policies, “Utility
Regulation.”
Pe n sion &
S ERP O PEB
In Million s
Regulatory assets
Net loss $835 $636 $595 $265
AOCL
Net loss 8 18 — —
Prior service cost 1 1 — —
Total amounts recognized in regulatory assets and AOCL $877 $694 $517 $176
Plan Assets: The following table recaps the categories of plan assets in our retirement benefits plans:
Pe n sion O PEB
Asset Category:
Fixed Income 37% 30% 55% 34%
Equity Securities 50% 60% 45% 66%
Alternative Strategy 13% 10% — —
We contributed $50 million to our OPEB plan in 2008 and we plan to contribute $52 million to our OPEB plan in 2009. Of
the $50 million OPEB contribution made during 2008, $10 million was contributed to the 401(h) component of the qualified
pension plan and the remaining $40 million was contributed to the VEBA trust accounts. We did not contribute to our
Pension Plan in 2008, but plan to contribute $291 million to our Pension Plan in 2009. Contributions include required and
discretionary amounts. Actual future contributions will depend on future investment performance, changes in future
discount rates, and various other factors related to the populations participating in the plans.
In 2008, the consultant for the Pension Plan, recommended an adjustment to the target asset allocation for Pension Plan
assets. The recommended revised target asset allocation for the Pension Plan assets was 50 percent equity, 30 percent fixed
income, and 20 percent alternative strategy investments from the previous target of 60 percent equity, 30 percent fixed
income and 10 percent alternative strategy investments. This recommendation was thoroughly reviewed and approved by
our Benefit Administration Committee. This adjustment is being made gradually by the allocation of contributions into
alternative assets and the drawdown of equities to cover plan benefit payments and distributions. This revised target asset
allocation is expected to continue to maximize the
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long-term return on plan assets, while maintaining a prudent level of risk. The level of acceptable risk is a function of the
liabilities of the plan. Equity investments are diversified mostly across the Standard & Poor’s 500 Index, with lesser
allocations to the Standard & Poor’s MidCap and SmallCap Indexes and Foreign Equity Funds. Fixed-income investments
are diversified across investment grade instruments of both government and corporate issuers as well as high-yield and
global bond funds. Alternative strategies are diversified across absolute return investment approaches and global tactical
asset allocation. We use annual liability measurements, quarterly portfolio reviews, and periodic asset/liability studies to
evaluate the need for adjustments to the portfolio allocation.
We established union and non-union VEBA trusts to fund our future retiree health and life insurance benefits. These
trusts are funded through the ratemaking process for Consumers and through direct contributions from the non-utility
subsidiaries. We invest the equity portions of the union and non-union health care VEBA trusts in a Standard & Poor’s 500
Index fund. We invest the fixed-income portion of the union health care VEBA trust in domestic investment grade taxable
instruments. We invest the fixed-income portion of the non-union health care VEBA trust in a diversified mix of domestic
tax-exempt securities. The investment selections of each VEBA trust are influenced by the tax consequences, as well as the
objective of generating asset returns that will meet the medical and life insurance costs of retirees.
SFAS No. 132(R) Benefit Payments: The expected benefit payments for each of the next five years and the five-year
period thereafter are as follows:
Pe n sion S ERP O PEB(a)
In Million s
2009 $ 72 $ 2 $ 53
2010 78 2 55
2011 85 2 58
2012 96 2 60
2013 106 2 61
2014-2018 669 9 338
(a) OPEB benefit payments are net of employee contributions and expected Medicare Part D prescription drug subsidy
payments. The subsidies to be received are estimated to be $5 million for 2009, $6 million for 2010 and 2011, $7 million
for 2012, $8 million for 2013 and $46 million combined for 2014 through 2018.
8: ASSET RETIREMENT OBLIGATIONS

SFAS No. 143, Accounting for Asset Retirement Obligations: This standard requires us to 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. No market risk premium
was included in our ARO fair value estimate since a reasonable estimate could not be made. If a five percent market risk
premium were assumed, our ARO liability at December 31, 2008 would increase by $10 million.
indeterminate lives, the liability is to be recognized when a reasonable estimate of fair value can be made. Historically, our
gas transmission and electric and gas distribution assets have indeterminate lives and retirement cash flows that cannot be
determined. During 2007, however, we implemented a new fixed asset accounting system that facilitates ARO accounting
estimates for gas distribution mains and services. The new system enabled us to calculate a reasonable estimate of the fair
value of the cost to cut, purge, and cap abandoned gas distribution mains and services at the end of their useful lives. We
recorded a $101 million ARO liability and an asset of equal value at December 31, 2007. We have not recorded a liability for
assets that have insignificant cumulative disposal costs, such as substation batteries.
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FASB Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations: This Interpretation clarified
the term “conditional asset retirement obligation” used in SFAS No. 143. The term refers to a legal obligation to perform an
asset retirement activity in which the timing and (or) method of settlement are conditional on a future event. We determined
that abatement of asbestos included in our plant investments and the cut, purge, and cap of abandoned gas distribution
mains and services qualify as conditional AROs, as defined by FIN 47.
The following table lists the assets that we have legal obligations to remove at the end of their useful lives and for
which we have an ARO liability recorded:
In S e rvice
ARO De scription Date Lon g-Live d Asse ts
December 31, 2008
Closure of coal ash disposal areas Various Generating plants coal ash areas
Closure of wells at gas storage fields Various Gas storage fields
Indoor gas services equipment relocations Various Gas meters located inside structures
Asbestos abatement 1973 Electric and gas utility plant
Gas distribution cut, purge & cap Various Gas distribution mains & services
No assets have been restricted for purposes of settling AROs.
ARO ARO
In Million s
Palisades — decommission $ 401 $ — $ (410) $ 7 $ 2 $ —
Big Rock — decommission 2 — (3) 1 — —
Gas distribution cut, purge, cap — 101 — — — 101
Total $ 497 $ 101 $ (418) $ 16 $ 2 $ 198
ARO ARO
In Million s
Palisades — decommission $ — $ — $ — $ — $ — $ —
Big Rock — decommission — — — — — —
Gas distribution cut, purge, cap 101 (1) (2) 7 — 105
Total $ 198 $ (1) $ (7) $ 15 $ — $ 205
(a) Cash payments of $7 million in 2008 and $5 million in 2007 are included in the Other current and non-current liabilities
line in Net cash provided by operating activities in our Consolidated Statements of Cash Flows. In
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April 2007, we sold Palisades to Entergy and paid Entergy to assume ownership and responsibility for the Big Rock
ISFSI. Our AROs related to Palisades and the Big Rock ISFSI ended with the sale, and we removed the related ARO
liabilities from our Consolidated Balance Sheets. We also removed the Big Rock ARO related to the plant in the second
quarter of 2007 due to the completion of decommissioning.
9: INCOME TAXES
We join in the filing of a consolidated federal income tax return and a combined Michigan income tax return with CMS
Energy and its subsidiaries. Income taxes generally are allocated based on each company’s separate taxable income in
accordance with the CMS Energy tax sharing agreement. We had tax related payables to CMS Energy of $75 million in 2008
and $154 million in 2007.
We utilize deferred tax accounting for temporary differences. These occur when there are differences between the book
and tax carrying amounts of assets and liabilities. ITC has been deferred and is being amortized over the estimated service
life of related properties. We use ITC to reduce current income taxes payable.
At December 31, 2008, we had federal tax loss carryforwards of $77 million that expire from 2023 through 2028. In
addition, we have a net benefit of $194 million for future Michigan tax deductions which were granted as part of the
Michigan Business Tax legislation of 2007. We do not believe that valuation allowances are required, as we expect to fully
utilize the loss carryforwards prior to their expiration.
The significant components of income tax expense (benefit) consisted of:
In Million s
Current income taxes:
Federal $ (10) $114 $ 212
Federal income tax benefit of operating loss carryforwards — (44) (8)
State and local 12 — —
$ 2 $ 70 $ 204
Deferred income taxes:
Federal $200 $ 59 $(109)
State — — —
$200 $ 59 $(109)
Deferred ITC, net (4) (4) (4)
Tax expense $198 $125 $ 91
Current tax expense reflects the settlement of income tax audits for prior years, as well as the provision for current
year’s income taxes. Deferred tax assets and liabilities are recognized for the estimated future tax effect of temporary
differences between the tax basis of assets or liabilities and the reported amounts in our consolidated financial statements.
Deferred tax assets and liabilities are classified as current or non-current according to the classification of the related assets
or liabilities. Deferred tax assets and liabilities not related to assets or liabilities are classified according to the expected
reversal date of the temporary differences.
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The principal components of deferred tax assets (liabilities) recognized on our Consolidated Balance Sheets are as
follows:
De ce m be r 31 2008 2007
In Million s
Current Assets and (Liabilities):
Tax loss and credit carryforwards $ 8 $ —
Employee benefits (100) 5
Gas inventory (219) (204)
Other 34 48
Net Current (Liability) $ (277) $(151)
Noncurrent Assets and (Liabilities):
Tax loss and credit carryforwards $ 213 $ 249
SFAS No. 109 regulatory liability 205 207
Nuclear decommissioning (including unrecovered costs) (20) (18)
Property (1,056) (919)
Securitized costs (161) (180)
Employee benefits 80 39
Other (53) (91)
Net Noncurrent (Liability) $ (792) $(713)
Total Deferred Income Tax (Liability) $(1,069) $(864)
The actual income tax expense (benefit) differs from the amount computed by applying the statutory federal tax rate of
35 percent to income (loss) before income taxes as follows:
In Million s
Income before income taxes and minority obligations, net 562 437 277
Statutory federal income tax rate x 35% x 35% x 35%
Expected income tax expense 197 153 97
Increase (decrease) in taxes from:
Property differences 3 9 13
IRS settlement/credit restoration — — (19)
State and local income tax, net 8 — —
Medicare part D exempt income (8) (9) (10)
ITC amortization (4) (3) (4)
Valuation allowance — (23) 15
Other, net 2 (2) (1)
Recorded income tax expense $ 198 $ 125 $ 91
Effective tax rate 35.2% 28.6% 32.9%
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The amount of income taxes we pay is subject to ongoing audits by federal, state and foreign tax authorities, which can
result in proposed assessments. Our estimate for the potential outcome for any uncertain tax issue is highly judgmental. We
believe that our accrued tax liabilities at December 31, 2008 are adequate for all years.
In June 2006, the IRS concluded its most recent audit of CMS Energy and its subsidiaries, and adjusted taxable income
for the years ended December 31, 1987 through December 31, 2001. The overall cumulative increase to taxable income related
primarily to the disallowance of the simplified service cost method with respect to certain self-constructed utility assets,
resulting in a deferral of these expenses to future periods. The adjustments to taxable income have been allocated based
upon Consumers’ separate taxable income in accordance with CMS Energy’s tax sharing agreement. We made a payment to
CMS Energy for our share of these audit adjustments of $232 million, and reduced our 2006 income tax provision by
$19 million, primarily for the restoration and utilization of previously written off income tax credits. The years 2002 through
2007 are open under the statute of limitations and 2002 through 2005 are currently under audit by the IRS.
On January 1, 2007 we adopted the provisions of FIN 48. As a result of the implementation of FIN 48, we recorded a
charge for additional uncertain tax benefits of $5 million, accounted for as a reduction of our beginning retained earnings.
Included in this amount was an increase in our valuation allowance of $7 million, increases to tax reserves of $55 million and
a decrease to deferred tax liabilities of $57 million. The capital gains of 2007 provided for the release of $23 million of
valuation allowance, as reflected in our effective tax rate reconciliation.
A reconciliation of the beginning and ending amount of unrecognized tax benefits in accordance with FIN 48 is as
follows:
(In m illion s)
Ye ar e n de d De ce m be r 31 2008 2007
Balance at beginning of period $ 41 $ 51
Reductions for prior year tax positions — (11)
Additions for prior year tax positions 12 1
Statute lapses — —
Additions for current year tax positions 2 —
Settlements — —
Balance at end of period $ 55 $ 41
The balance of $55 million is entirely attributable to tax positions for which the ultimate deductibility is highly certain
but for which there is uncertainty about the timing of such deductibility. Because of the impact of deferred tax accounting,
the disallowance of the shorter deductibility period would not affect the annual effective tax rate. Since all our remaining
uncertain tax benefits relate only to timing issues, at December 31, 2008, there are no uncertain benefits that would reduce
our effective tax rate in future years. It is reasonably possible that, within the next twelve months, we will settle with the IRS
on our simplified service cost methodology, a timing issue. An estimate of a settlement range cannot be made at this point.
We accrued an additional $1 million of net interest on tax liabilities during 2008. The total net interest liability is
$3 million as of December 31, 2008, none of which is related to uncertain tax positions. We recognize accrued interest and
penalties, where applicable, related to uncertain tax benefits as part of income tax expense.
10: STOCK-BASED COMPENSATION

We provide a Performance Incentive Stock Plan (the Plan) to key employees and non-employee directors based on
their contributions to the successful management of the company. The Plan has a five-year term, expiring in May 2009.
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All grants under the Plan for 2008, 2007, and 2006 were in the form of TSR restricted stock and time-lapse restricted
stock. Restricted stock recipients receive shares of CMS Energy Common Stock that have full dividend and voting rights.
TSR restricted stock vesting is contingent on meeting a three-year service requirement and specific market conditions. Half
of the market condition is based on the achievement of specified levels of TSR over a three-year period and half is based on
a comparison of our TSR with the median shareholders’ return of a peer group over the same three-year period. Depending
on the performance of the market, a recipient may earn a total award ranging from zero to 150 percent of the initial grant.
Time-lapse restricted stock vests after a service period of five years for awards granted prior to 2004, and three years for
awards granted in 2004 and thereafter. Restricted stock awards granted to officers in 2006 were entirely TSR restricted stock.
Awards granted to officers in 2007 and 2008 were 80 percent TSR restricted stock and 20 percent time-lapsed restricted
stock.
All restricted stock awards are subject to forfeiture if employment terminates before vesting. However, if certain
minimum service requirements are met or are waived by action of the Compensation and Human Resources Committee of the
Board of Directors, restricted shares may vest fully upon:
• retirement,
• disability, or
• change of control of CMS Energy, as defined by the Plan.
The Plan also allows for stock options, stock appreciation rights, phantom shares, and performance units, none of
which were granted in 2008, 2007, or 2006.
Shares awarded or subject to stock options, phantom shares, and performance units may not exceed 6 million shares
from June 2004 through May 2009, nor may such awards to any recipient exceed 250,000 shares in any fiscal year. We may
issue awards of up to 3,384,080 shares of common stock under the Plan at December 31, 2008. Shares for which payment or
exercise is in cash, as well as forfeited shares or stock options, may be awarded or granted again under the Plan.
The following table summarizes restricted stock activity under the Plan:
W e ighte d-Ave rage

Grant Date Fair Valu e
Re stricte d S tock Nu m be r of S h are s pe r S h are
Granted(a) 672,370 $ 10.43
Vested (135,804) $ 13.71
Forfeited(b) (343,725) $ 15.60
(a) During 2008, we granted 432,656 TSR shares and 239,714 time-lapse shares of restricted stock.
(b) During 2008, 338,725 TSR shares granted in 2005 were forfeited due to the failure to meet the specific market
conditions.
We expense the awards’ fair value over the required service period. As a result, we recognize all compensation expense
for share-based awards that have accelerated service provisions upon retirement by the period in which the employee
becomes eligible to retire. We calculate the fair value of time-lapse restricted stock based on the price of our common stock
on the grant date. We calculate the fair value of TSR restricted stock awards on the grant date using a Monte Carlo
simulation. We base expected volatilities on the historical volatility of the price of CMS Energy Common Stock.
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The risk-free rate for each valuation was based on the three-year U.S. Treasury yield at the award grant date. The
following table summarizes the significant assumptions used to estimate the fair value of the TSR restricted stock awards:
2008 2007 2006
Expected volatility 19.70% 19.11% 20.51%
Expected dividend yield 2.67% 1.20% 0.00%
Risk-free rate 2.83% 4.59% 4.82%
The total fair value of shares vested was $2 million in 2008, $10 million in 2007, and $2 million in 2006. Compensation
expense related to restricted stock was $7 million in 2008, $7 million in 2007, and $7 million in 2006. The total related income
tax benefit recognized in income was $2 million in 2008, $2 million in 2007, and $2 million in 2006. At December 31, 2008, there
was $6 million of total unrecognized compensation cost related to restricted stock. We expect to recognize this cost over a
weighted-average period of 2.3 years.
The following table summarizes stock option activity under the Plan:
W e ighte d- W e ighte d-
O ptions Ave rage Ave rage
O u tstan ding, Exe rcise Re m aining Aggre gate
Fu lly Ve ste d, Price pe r C on tractu al Intrin sic
S tock O ptions an d Exe rcisable S h are Te rm Value
(In m illion s)
Outstanding at December 31, 2007 686,226 $ 21.83 3.6 years $ (3)
Granted — —
Exercised (44,561)(a) 6.35
Cancelled or Expired (143,879)(b) 35.85
Outstanding at December 31, 2008 497,786 19.81 2.9 years $ (1)
(a) Exercised shares of 8,000 relate to improper allocation of exercised shares to Consumers in 2007.
(b) Cancelled or expired shares of 64,000 relate to improper allocation of cancelled shares to Consumers in 2007.
Stock options give the holder the right to purchase common stock at the market price on the grant date. Stock options
are exercisable upon grant, and expire up to ten years and one month from the grant date. We issue new shares when
recipients exercise stock options. The total intrinsic value of stock options exercised was less than $1 million in 2008,
$6 million in 2007, and $1 million in 2006. Cash received from exercise of these stock options was less than $1 million in 2008.
The following table summarizes the weighted average grant date fair value:
Weighted average grant date fair value per share
Restricted stock granted $10.43 $14.12 $13.82
Stock options granted(a) — — —
(a) No stock options were granted in 2008, 2007, or 2006.

SFAS No. 123(R) requires companies to use the fair value of employee stock options and similar awards at the grant
date to value the awards. SFAS No. 123(R) was effective for us on January 1, 2006. We elected to adopt the modified
prospective method recognition provisions of SFAS No. 123(R) instead of retrospective restatement. We adopted the fair
value method of accounting for share-based awards effective December 2002. Therefore, SFAS No. 123(R) did not have a
significant impact on our results of operations when it became effective.
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11: LEASES
We lease various assets, including service vehicles, railcars, gas pipeline capacity and buildings. In accordance with
SFAS No. 13, we account for a number of our power purchase agreements as capital and operating leases.
Operating leases for coal-carrying railcars have lease terms expiring over the next 15 years. These leases contain fair
market value extension and buyout provisions, with some providing for predetermined extension period rentals. Capital
leases for our vehicle fleet operations have a maximum term of 120 months and TRAC end-of-life provisions.
We have capital leases for gas transportation pipelines to the Karn generating complex and Zeeland power plant. The
capital lease for the gas transportation pipeline into the Karn generating complex has a term of 15 years with a provision to
extend the contract from month to month. The capital lease for the gas transportation pipeline to the Zeeland power plant
has a lease term of 12 years with a renewal provision at the end of the contract. The remaining term of our long-term power
purchase agreements range between 2 and 22 years. Most of our power purchase agreements contain provisions at the end
of the initial contract term to renew the agreement annually.
We are authorized by the MPSC to record both capital and operating lease payments as operating expense and recover
the total cost from our customers. The following table summarizes our capital and operating lease expenses:
In Million s
Capital lease expense $ 46 $ 34 $ 15
Operating lease expense 27 23 19
Minimum annual rental commitments under our non-cancelable leases at December 31, 2008 are:
C apital Finan ce O pe ratin g

Le ase s Le ase (a) Le ase s
In Million s
2009 $ 16 $ 23 $ 27
2010 15 22 26
2011 13 21 25
2012 15 20 25
2013 8 20 19
2014 and thereafter 47 133 115
Total minimum lease payments 114 239 $ 237
Less imputed interest 57 65
Present value of net minimum lease payments 57 174
Less current portion 12 13
Non-current portion $ 45 $ 161
(a) In April 2007, we sold Palisades to Entergy and entered into a 15-year power purchase agreement to buy all of the
capacity and energy produced by Palisades, up to the annual average capacity of 798 MW. We provided $30 million in
security to Entergy for our power purchase agreement obligation in the form of a letter of credit. We estimate that
capacity and energy payments under the Palisades power purchase agreement will average $320 million annually. Our
total purchases of capacity and energy under the Palisades power purchase agreement were $298 million in 2008 and
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Because of the Palisades power purchase agreement and our continuing involvement with the Palisades assets, we
accounted for the disposal of Palisades as a financing and not a sale. SFAS No. 98 specifies the accounting required for a
seller’s sale and simultaneous leaseback involving real estate. We have continuing involvement with Palisades through
security provided to Entergy for our power purchase agreement obligation, our DOE liability and other forms of
involvement. As a result, we accounted for the Palisades plant, which is the real estate asset subject to the leaseback, as a
financing for accounting purposes and not a sale. As a financing, no gain on the sale of Palisades was recognized in the
Consolidated Statements of Income. We accounted for the remaining non-real estate assets and liabilities associated with
the transaction as a sale.
As a financing, the Palisades plant remains on our Consolidated Balance Sheets and we continue to depreciate it. We
recorded the related proceeds as a finance obligation with payments recorded to interest expense and the finance obligation
based on the amortization of the obligation over the life of the Palisades power purchase agreement. The value of the
finance obligation was based on an allocation of the transaction proceeds to the fair values of the net assets sold and fair
value of the Palisades plant asset under the financing. Total amortization and interest charges under the financing were
$23 million in 2008 and $18 million in 2007.
12: PROPERTY, PLANT, AND EQUIPMENT

The following table is a summary of our property, plant, and equipment:
Estim ate d
De pre ciable
De ce m be r 31 Life in Ye ars 2008 2007
In Million s
Electric:
Generation 18-85 $3,357 $3,328
Other 7-40 551 438
Capital and finance leases(a) 291 293
Gas:
Underground storage facilities(b) 30-65 270 267
Transmission 13-75 473 570
Other 5-50 398 320
Capital leases(a) 21 24
Other:
Non-utility property 7-71 15 15
Less accumulated depreciation, depletion, and amortization(c) 4,242 3,993
Net property, plant, and equipment(d) $8,967 $8,491
(a) Capital and finance leases presented in this table are gross amounts. Accumulated amortization of capital and finance
leases was $79 million at December 31, 2008 and $62 million at December 31, 2007. Additions were $5 million and
Retirements and adjustments were $3 million during 2008. Additions were $229 million during 2007, which includes
$197 million related to assets under the Palisades finance lease. Retirements and adjustments were $26 million during
2007.
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(b) Includes base natural gas in underground storage of $26 million at December 31, 2008 and December 31, 2007, which is
not subject to depreciation.
(c) At December 31, 2008, accumulated depreciation, depletion, and amortization included $4.241 billion from our utility
plant and $1 million related to our non-utility plant assets. At December 31, 2007, accumulated depreciation, depletion,
and amortization included $3.992 billion from our utility plant and $1 million related to our non-utility plant assets.
(d) At December 31, 2008, utility plant additions were $629 million and utility plant retirements, including other plant
adjustments, were $60 million. At December 31, 2007, utility plant additions were $1.303 billion and utility plant
retirements, including other plant adjustments, were $1.094 billion.
Asset Acquisition: In December 2007, we purchased a 935 MW gas-based generating plant located in Zeeland,
Michigan for $519 million from an affiliate of LS Power Group. The original cost of the plant was $350 million and the plant
acquisition adjustment was $213 million. This results in an increase to property, plant, and equipment of $519 million, net of
$44 million of accumulated depreciation. The purchase also increased capital leases by $12 million. For additional details on
the Zeeland finance lease, see Note 11, Leases.
Included in net property, plant and equipment are intangible assets. The following table summarizes our intangible
assets:
De ce m be r 31 2008 2007
Am ortiz ation Accum u late d Accum u late d
De scription Life in ye ars Gross C ost(a) Am ortiz ation Gross C ost(a) Am ortiz ation
In Million s
Software development 7-15 $ 370 $ 192 $ 207 $ 170
Plant acquisition adjustments 40 214 6 214 —
Rights of way 50-75 118 33 116 32
Leasehold improvements various 11 9 19 16
Franchises and consents n/a 14 6 14 5
Other intangibles n/a 18 13 18 13
Total $ 745 $ 259 $ 588 $ 236
(a) Intangible asset additions were $163 million during 2008, which included $161 million related to the installation and
operation of our new integrated business software system. Intangible asset additions for our utility plant were
$232 million during 2007, which included the Zeeland $213 million plant acquisition adjustment. Retirements were
$23 million during 2007.
Pretax amortization expense related to intangible assets was $32 million for the year ended December 31, 2008,
$21 million for the year ended December 31, 2007, and $22 million for the year ended December 31, 2006. We expect
intangible assets amortization to range between $25 million and $29 million per year over the next five years.
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13: JOINTLY OWNED REGULATED UTILITY FACILITIES

We have investments in jointly owned regulated utility facilities, as shown in the following table:
Accum u late d C on stru ction

O wn e rship Ne t In ve stm e n t(a) De pre ciation W ork in Progre ss
De ce m be r 31 S h are 2008 2007 2008 2007 2008 2007
(%) In Million s
Campbell Unit 3 93.3 $ 675 $ 664 $ 360 $ 337 $ 19 $ 44
Ludington 51.0 61 65 107 104 7 1
Distribution Various 96 89 41 44 3 5
(a) Net investment is the amount of utility plant in service less accumulated depreciation.
We include our share of the direct expenses of the jointly owned plants in operating expenses. We share operation,
maintenance, and other expenses of these jointly owned utility facilities in proportion to each participant’s undivided
ownership interest. We are required to provide only our share of financing for the jointly owned utility facilities.
14: REPORTABLE SEGMENTS

Our reportable segments consist of business units defined by the products and services they offer. We evaluate
performance based on the net income of each segment. Our two reportable segments are electric utility and gas utility.
The electric utility segment consists of regulated activities associated with the generation and distribution of electricity
in Michigan. The gas utility segment consists of regulated activities associated with the transportation, storage, and
distribution of natural gas in Michigan.
Accounting policies of our segments are as described in Note 1, Corporate Structure and Accounting Policies. Our
consolidated financial statements reflect the assets, liabilities, revenues, and expenses of the two individual segments when
appropriate. We allocate accounts between the electric and gas segments where common accounts are attributable to both
segments. The allocations are based on certain measures of business activities, such as revenue, labor dollars, customers,
construction expense, leased property, taxes or functional surveys. For example, customer receivables are allocated based
on revenue, and pension provisions are allocated based on labor dollars.
We account for inter-segment sales and transfers at current market prices and eliminate them in consolidated net
income available to common stockholder by segment. The “Other” segment includes our consolidated special purpose
entity for the sale of trade receivables, and in 2006 the MCV Partnership and the FMLP.
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The following tables provide financial information by reportable segment:

In Million s
Operating Revenues
Electric $ 3,594 $ 3,443 $ 3,302
Gas 2,827 2,621 2,374
Other — — 45
$ 6,421 $ 6,064 $ 5,721
Earnings from Equity Method Investees
Electric $ — $ — $ 1
Depreciation and Amortization
Electric $ 438 $ 397 $ 380
Gas 136 127 122
Other — — 25
$ 574 $ 524 $ 527
Interest Charges
Electric $ 185 $ 193 $ 167
Gas 60 70 73
Other 2 1 49
$ 247 $ 264 $ 289
Income Tax Expense (Benefit)
Electric $ 153 $ 100 $ 95
Gas 45 47 18
Other — (22) (22)
$ 198 $ 125 $ 91
Net Income (Loss) Available to Common Stockholder
Electric $ 271 $ 196 $ 199
Gas 89 87 37
Other 2 27 (52)
$ 362 $ 310 $ 184
Investments in Equity Method Investees
Electric $ — $ — $ 5
Total Assets
Electric(a) $ 8,904 $ 8,492 $ 8,516
Gas(a) 4,565 4,102 3,950
Other 777 807 379
$14,246 $13,401 $12,845
Capital Expenditures(b)
Electric $ 553 $ 1,319 $ 462
Gas 241 168 172
Other — — 19
$ 794 $ 1,487 $ 653
(a) Amounts include a portion of our other common assets attributable to both the electric and gas utility businesses.
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(b) Amounts include capital lease additions and a portion of our capital expenditures for plant and equipment attributable
to both the electric and gas utility businesses.
15: QUARTERLY FINANCIAL AND COMMON STOCK INFORMATION (UNAUDITED)

2008
In Million s
Net income 130 60 91 83
Preferred stock dividends 1 — 1 —
Net income available to common stockholder 129 60 90 83
2007
In Million s
Net income 113 44 60 95
Preferred stock dividends 1 — — 1
Net income available to common stockholder 112 44 60 94
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To the Board of Directors and Stockholder of Consumers Energy Company

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income
(loss), of cash flows, and of common stockholder’s equity present fairly, in all material respects, the financial position of
Consumers Energy Company and its subsidiaries at December 31, 2008 and December 31, 2007, and the results of their
operations and their cash flows for each of the two years in the period ended December 31, 2008 in conformity with
accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement
schedules listed in the accompanying index present fairly, in all material respects, the information set forth therein when
read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all
material respects, effective internal control over financial reporting as of December 31, 2008, based on criteria established in
Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). The Company’s management is responsible for these financial statements and financial statement
schedules, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of
internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting
appearing under Item 9A. Our responsibility is to express opinions on these financial statements, on the financial statement
schedules, and on the Company’s internal control over financial reporting based on our integrated audits. We conducted
our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement and whether effective internal control over financial reporting was maintained in
all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation. Our audit of internal control over
financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a
material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances.
We believe that our audits provide a reasonable basis for our opinions.
As discussed in Note 9 to the consolidated financial statements, the Company changed the manner in which it
accounts for uncertain income tax provisions in 2007.
A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and
procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial
statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
Detroit, Michigan
February 25, 2009
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To the Partners and the Management Committee of

Midland Cogeneration Venture Limited Partnership:
In our opinion, the accompanying statements of operations and of cash flows present fairly, in all material respects, the
results of operations and cash flows of Midland Cogeneration Venture Limited Partnership for the period ended
November 21, 2006 in conformity with accounting principles generally accepted in the United States of America. These
financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of these statements in accordance with the
standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
Detroit, Michigan
February 19, 2007
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholder of Consumers Energy Company

We have audited the accompanying consolidated statements of income, common stockholder’s equity, and cash flows
of Consumers Energy Company (a Michigan Corporation and wholly-owned subsidiary of CMS Energy Corporation) for the
year ended December 31, 2006. Our audit also included the financial statement schedule as it relates to 2006 listed in the
Index at Item 15(a)(2). These financial statements and schedule are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements and schedule based on our audit. We did not audit the
financial statements of Midland Cogeneration Venture Limited Partnership, a former 49% owned variable interest entity
which has been consolidated through the date of sale, November 21, 2006 (Note 3), which statements reflect total revenues
constituting 9.5% in 2006 of the related consolidated totals. Those statements were audited by other auditors whose report
has been furnished to us, and our opinion on the consolidated financial statements, insofar as it relates to the amounts
included for the period indicated above for Midland Cogeneration Venture Limited Partnership, is based solely on the report
of the other auditors.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall financial statement presentation. We
believe that our audit and the report of other auditors provide a reasonable basis for our opinion.
In our opinion, based on our audit and the report of other auditors, the financial statements referred to above present
fairly, in all material respects, the consolidated results of Consumers Energy Company’s operations and its cash flows for
the year ended December 31, 2006, in conformity with U.S. generally accepted accounting principles. Also, in our opinion,
the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
As discussed in Note 7 to the consolidated financial statements, in accordance with Financial Accounting Standards
Board (FASB) Statement of Financial Accounting Standards No. 158, “Employers’ Accounting for Defined Benefit Pension
and Other Postretirement Plans — an amendment of FASB Statements No. 87, 88, 106 and 132(R),” the Company changed its
method of accounting for the funded status of its defined benefit pension and other postretirement benefit plans in 2006.
Detroit, Michigan
February 21, 2007
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

ON ACCOUNTING AND FINANCIAL DISCLOSURE
CMS Energy
None.
Consumers
None.
ITEM 9A. CMS ENERGY’S CONTROLS AND PROCEDURES

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures: Under the supervision and with the
participation of management, including its CEO and CFO, CMS Energy conducted an evaluation of its disclosure controls
and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on such
evaluation, CMS Energy’s CEO and CFO have concluded that its disclosure controls and procedures were effective as of
December 31, 2008.
Management’s Annual Report on Internal Control Over Financial Reporting: CMS Energy’s management is
responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act
Rule 13a-15(f). CMS Energy’s internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with GAAP and includes policies and procedures that:
• pertain to the maintenance of records that in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of CMS Energy;
• provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with GAAP, and that receipts and expenditures of CMS Energy are being made only in
accordance with authorizations of management and directors of CMS Energy; and
• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or
disposition of CMS Energy’s assets that could have a material effect on its financial statements.
Management, including its CEO and CFO, does not expect that its internal controls will prevent or detect all errors and
all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that
there are resource constraints, and the benefits of controls must be considered relative to their costs. In addition, any
evaluation of the effectiveness of controls is subject to risks that those internal controls may become inadequate in future
periods because of changes in business conditions, or that the degree of compliance with the policies or procedures
deteriorates.
Under the supervision and with the participation of management, including its CEO and CFO, CMS Energy conducted
an evaluation of the effectiveness of its internal control over financial reporting as of December 31, 2008. In making this
evaluation, management used the criteria set forth in the framework in Internal Control — Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission. Based on such evaluation, CMS Energy’s
management concluded that its internal control over financial reporting was effective as of December 31, 2008. The
effectiveness of CMS Energy’s internal control over financial reporting as of December 31, 2008, has been audited by
PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears
under Item 8.
Changes in Internal Control over Financial Reporting: There have been no changes in CMS Energy’s internal control
over financial reporting during the most recently completed fiscal quarter that have materially affected, or are reasonably
likely to materially affect, its internal control over financial reporting.
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ITEM 9A(T). CONSUMERS’ CONTROLS AND PROCEDURES

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures: Under the supervision and with the
participation of management, including its CEO and CFO, Consumers conducted an evaluation of its disclosure controls and
procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on such evaluation,
Consumers’ CEO and CFO have concluded that its disclosure controls and procedures were effective as of December 31,
2008.
Management’s Annual Report on Internal Control Over Financial Reporting: Consumers’ management is
responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act
Rule 13a-15(f). Consumers’ internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with GAAP and includes policies and procedures that:
• pertain to the maintenance of records that in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of Consumers;
• provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with GAAP, and that receipts and expenditures of Consumers are being made only in
accordance with authorizations of management and directors of Consumers; and
• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or
disposition of Consumers’ assets that could have a material effect on its financial statements.
Management, including its CEO and CFO, does not expect that its internal controls will prevent or detect all errors and
all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that
there are resource constraints, and the benefits of controls must be considered relative to their costs. In addition, any
evaluation of the effectiveness of controls is subject to risks that those internal controls may become inadequate in future
periods because of changes in business conditions, or that the degree of compliance with the policies or procedures
deteriorates.
Under the supervision and with the participation of management, including its CEO and CFO, Consumers conducted an
evaluation of the effectiveness of its internal control over financial reporting as of December 31, 2008. In making this
evaluation, management used the criteria set forth in the framework in Internal Control — Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission. Based on such evaluation, Consumers’
management concluded that its internal control over financial reporting was effective as of December 31, 2008. The
effectiveness of Consumers’ internal control over financial reporting as of December 31, 2008, has been audited by
PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears
under Item 8.
Changes in Internal Control over Financial Reporting: There have been no changes in Consumers’ internal control
over financial reporting during the most recently completed fiscal quarter that have materially affected, or are reasonably
likely to materially affect, its internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
CMS Energy
None.
Consumers
None.
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PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
CMS Energy
Information that is required in Item 10 regarding directors, executive officers and corporate governance is included in
CMS Energy’s definitive proxy statement, which is incorporated by reference herein.
CODE OF ETHICS
CMS Energy has adopted a code of ethics that applies to its CEO, CFO and Chief Accounting Officer (“CAO”), as well
as all other officers and employees of CMS Energy and its affiliates, including Consumers. CMS Energy has also adopted a
Directors Code of Conduct that applies to its directors. The code of ethics, included in CMS Energy’s Code of Conduct and
Statement of Ethics Handbook, and the Directors Code of Conduct can be found on CMS Energy’s website at
www.cmsenergy.com. CMS Energy’s Code of Conduct and Statement of Ethics, including the code of ethics, is
administered by the Chief Compliance Officer of CMS Energy, who reports directly to the Audit Committee of CMS
Energy’s Boards of Directors. The Directors Code of Conduct is administered by the Audit Committee of the Board. Any
alleged violation of the Directors Code of Conduct by a director will be investigated by disinterested members of the Audit
Committee of the Board, or if none, by disinterested members of the entire Board. Any amendment to, or waiver from, a
provision of CMS Energy’s code of ethics that applies to CMS Energy’s CEO, CFO, CAO or persons performing similar
functions will be disclosed on CMS Energy’s website at www.cmsenergy.com under “Compliance and Ethics.”
Consumers
Information that is required in Item 10 regarding Consumers’ directors, executive officers and corporate governance is
included in CMS Energy’s definitive proxy statement, which is incorporated by reference herein.
CODE OF ETHICS
Consumers has adopted a code of ethics that applies to its CEO, CFO and Chief Accounting Officer (“CAO”), as well
as all other officers and employees of Consumers and its affiliates. Consumers has also adopted a Directors Code of
Conduct that applies to its directors. The code of ethics, included in Consumers’ Code of Conduct and Statement of Ethics
Handbook, and the Directors Code of Conduct can be found on Consumers’ website at www.cmsenergy.com. Consumers’
Code of Conduct and Statement of Ethics, including the code of ethics, is administered by the Chief Compliance Officer of
Consumers, who reports directly to the Audit Committee of Consumers’ board of directors. The Directors Code of Conduct
is administered by the Audit Committee of Consumers’ board of directors. Any alleged violation of the Directors Code of
Conduct by a director will be investigated by disinterested members of the Audit Committee of Consumers’ board of
directors, or if none, by disinterested members of the entire board of directors. Any amendment to, or waiver from, a
provision of Consumers’ code of ethics that applies to Consumers’ CEO, CFO, CAO or persons performing similar functions
will be disclosed on Consumers’ website at www.consumersenergy.com under “Compliance and Ethics.”
ITEM 11. EXECUTIVE COMPENSATION

Information that is required in Item 11 regarding executive compensation of CMS Energy’s and Consumers’ executive
officers is included in CMS Energy’s definitive proxy statement, which is incorporated by reference herein.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND

MANAGEMENT AND RELATED STOCKHOLDER MATTERS
CMS Energy
Information that is required in Item 12 regarding securities authorized for issuance under equity compensation plans
and security ownership of certain beneficial owners and management is included in CMS Energy’s definitive proxy
statement, which is incorporated by reference herein.
Consumers
Information that is required in Item 12 regarding securities authorized for issuance under equity compensation plans
and security ownership of certain beneficial owners and management of Consumers is included in CMS Energy’s definitive
proxy statement, which is incorporated by reference herein.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,

AND DIRECTOR INDEPENDENCE
CMS Energy
Information that is required in Item 13 regarding certain relationships and related transactions, and director
independence is included in CMS Energy’s definitive proxy statement, which is incorporated by reference herein.
Consumers
Information that is required in Item 13 regarding certain relationships and related transactions, and director
independence regarding Consumers is included in CMS Energy’s definitive proxy statement, which is incorporated by
reference herein.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
CMS Energy
Information that is required in Item 14 regarding principal accountant fees and services is included in CMS Energy’s
definitive proxy statement, which is incorporated by reference herein.
Consumers
Information that is required in Item 14 regarding principal accountant fees and services relating to Consumers is
included in CMS Energy’s definitive proxy statement, which is incorporated by reference herein.
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)(1) Financial Statements and Reports of Independent Public Accountants for CMS Energy and Consumers are
included in each company’s ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA and are
incorporated by reference herein.
(a)(2) Index to Financial Statement Schedules.
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Page
Schedule I Condensed Financial Information of Registrant CMS Energy-Parent Company
Condensed Statements of Income (Loss) CO-12
Statements of Cash Flows CO-13
Condensed Balance Sheets CO-14
Notes to Condensed Financial Statements CO-16
Schedule II Valuation and Qualifying Accounts and Reserves
CMS Energy Corporation CO-18
Consumers Energy Company CO-18
CMS Energy Corporation CMS-99
Consumers Energy Company CE-80
Schedules other than those listed above are omitted because they are either not required, not applicable or the required
information is shown in the financial statements or notes thereto. Columns omitted from schedules filed have been omitted
because the information is not applicable.
(a)(3) Exhibits for CMS Energy and Consumers are listed after Item 15(b) below and are incorporated by reference
herein.
(b) Exhibits, including those incorporated by reference.
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CMS ENERGY’S AND CONSUMERS’ EXHIBITS

The agreements included as exhibits to this Form 10-K filing are included to provide information regarding the terms of
the agreements and are not intended to provide any other factual or disclosure information about us or the other parties to
the agreements. The agreements may contain representations and warranties 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 to the parties to each of the agreements and
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. Additional information about us may
be found in this filing, at www.cmsenergy.com, and through the SEC’s website at http://www.sec.gov.
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W ith File As Exh ibit
Exh ibits Nu m be r Nu m be r De scription
(3)(a) 1-9513 (99)(a) — Restated Articles of Incorporation of CMS Energy, effective June 1, 2004
(Form 8-K filed June 3, 2004)
(3)(b) — CMS Energy Corporation Bylaws, amended and restated as of January 22,
2009
(3)(c) 1-5611 3(c) — Restated Articles of Incorporation of Consumers effective June 7, 2000
(2000 Form 10-K)
(3)(d) — Consumers Energy Company Bylaws, amended and restated as of
January 22, 2009
(4)(a) 2-65973 (b)(1)-4 — Indenture dated as of September 1, 1945, between Consumers and
Chemical Bank (successor to Manufacturers Hanover Trust Company), as
Trustee, including therein indentures supplemental thereto through the
Forty-third Supplemental Indenture dated as of May 1, 1979 (Form S-16
filed November 13, 1979) Indentures Supplemental thereto:
1-5611 (4)(a) — 71st dated as of 3/06/98 (1997 Form 10-K)
1-5611 (4)(d) — 90th dated as of 4/30/03 (1st qtr. 2003 Form 10-Q)
1-5611 (4)(a) — 91st dated as of 5/23/03 (3rd qtr. 2003 Form 10-Q)
1-5611 (4)(b) — 92nd dated as of 8/26/03 (3rd qtr. 2003 Form 10-Q)
1-5611 (4)(a) — 96th dated as of 8/17/04 (Form 8-K filed August 20, 2004)
333-120611 (4)(e)(xv) — 97th dated as of 9/1/04 (Consumers Form S-3 dated November 18, 2004)
1-5611 4.4 — 98th dated as of 12/13/04 (Form 8-K filed December 13, 2004)
1-5611 (4)(a)(i) — 99th dated as of 1/20/05 (2004 Form 10-K)
1-5611 4.2 — 100th dated as of 3/24/05 (Form 8-K filed March 30, 2005)
1-5611 4.2 — 102nd dated as of 4/13/05 (Form 8-K filed April 13, 2005)
1-5611 4.2 — 104th dated as of 8/11/05 (Form 8-K filed August 11, 2005)
1-5611 4(b) — 105th dated as of 3/30/07 (2007 Form 10-K)
1-5611 4(a) — 106th dated as of 11/30/07 (2007 Form 10-K)
1-5611 (4)(a) — 107th dated as of 3/1/08 (1st qtr. 2008 Form 10-Q)
1-5611 4.1 — 108th dated as of 3/14/08 (Form 8-K filed March 14, 2008)
1-5611 4.1 — 109th dated as of 9/11/08 (Form 8-K filed September 16, 2008)
1-5611 4.1 — 110th dated as of 9/12/08 (Form 8-K filed September 12, 2008)
(4)(b) 1-5611 (4)(b) — Indenture dated as of January 1, 1996 between Consumers and The Bank
of New York Mellon, as Trustee (1995 Form 10-K)
(4)(c) 1-5611 (4)(c) — Indenture dated as of February 1, 1998 between Consumers and The Bank
of New York Mellon (formerly The Chase Manhattan Bank), as Trustee
(1997 Form 10-K)
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(4)(d) 33-47629 (4)(a)* — Indenture dated as of September 15, 1992 between CMS Energy and NBD
Bank, as Trustee (Form S-3 filed May 1, 1992) Indentures Supplemental
thereto:
333-58686 (4)(a)* — 11th dated as of 3/29/01 (Form S-8 filed April 11, 2001)
1-9513 (4)(d)(i)* — 15th dated as of 9/29/04 (2004 Form 10-K)
1-9513 (4)(d)(ii)* — 16th dated as of 12/16/04 (2004 Form 10-K)
1-9513 4.2* — 17th dated as of 12/13/04 (Form 8-K filed December 13, 2004)
1-9513 4.2* — 18th dated as of 1/19/05 (Form 8-K filed January 20, 2005)
1-9513 4.2* — 19th dated as of 12/13/05 (Form 8-K filed December 15, 2005)
1-9513 4.2* — 20th dated as of 7/3/07 (Form 8-K filed July 5, 2007)
1-9513 4.3* — 21st dated as of 7/3/07 (Form 8-K filed July 5, 2007)
(4)(e) 1-9513 (4a)* — Indenture dated as of June 1, 1997, between CMS Energy and The Bank of
New York Mellon, as trustee (Form 8-K filed July 1, 1997) Indentures
Supplemental thereto:
1-9513 (4)(b)* — 1st dated as of 6/20/97 (Form 8-K filed July 1, 1997)
(4)(f) — Certificate of Designation of 4.50% Cumulative Convertible Preferred
Stock dated as of December 20, 2004, corrected February 27, 2006
(10)(a) 1-9513 10.2* — $300 million Seventh Amended and Restated Credit Agreement dated as
of April 2, 2007 among CMS Energy Corporation, the Banks, the
Administrative Agent, Collateral Agent, Syndication Agent and
Documentation Agents all defined therein (Form 8-K filed April 3,
2007) Amendments thereto:
1-9513 10(a)* — Amendment No. 1 dated as of December 19, 2007 (2007 Form 10-K)
(10)(b)* — Amendment No. 2 dated as of January 23, 2009
Assumptions thereto:
(10)(c) 1-9513 10.1* — Assumption and Acceptance dated January 8, 2008 (Form 8-K filed
January 11, 2008)
(10)(d) 1-9513 10(b)* — Fourth Amended and Restated Pledge and Security Agreement dated as
of April 2, 2007 among CMS Energy and Collateral Agent, as defined
therein (2007 Form 10-K)
(10)(e) 1-9513 10(c)* — Amended and Restated Cash Collateral Agreement dated as of April 2,
2007, made by CMS Energy to the Administrative Agent for the lenders
and Collateral Agent, as defined therein (2007 Form 10-K)
10)(f) 1-5611 10.1 — $500 million Fourth Amended and Restated Credit Agreement dated as of
March 30, 2007 among Consumers Energy Company, the Banks, the
Administrative Agent, the Collateral Agent, the Syndication Agent and
the Documentation Agents all as defined therein (Form 8-K filed April 3,
2007)
(10)(g) 1-9513 (10)(e) — 2004 Form of Executive Severance Agreement (2007 Form 10-K)
(10)(h) 1-9513 (10)(f) — 2004 Form of Officer Severance Agreement (2007 Form 10-K)
(10)(i) 1-9513 (10)(g) — 2004 Form of Change-in-Control Agreement (2007 Form 10-K)
(10)(j) 1-9513 (10)(h) — CMS Energy’s Performance Incentive Stock Plan effective February 3,
1988, as amended June 1, 2004 and as further amended effective
November 30, 2007 (2007 Form 10-K)
(10)(k) 1-9513 (10)(i) — CMS Deferred Salary Savings Plan effective December 1, 1989 and as
further amended effective December 1, 2007 (2007 Form 10-K)
(10)(l) — Amendment to the Deferred Salary Savings Plan dated December 21, 2008
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(10)(m) — Annual Officer Incentive Compensation Plan for CMS Energy Corporation
and its Subsidiaries effective January 1, 2004, amended and restated
effective as of January 1, 2008
(10)(n) — Amendment to the Officer’s Incentive Compensation Plan dated
December 21, 2008
(10)(o) 1-9513 (10)(k) — Supplemental Executive Retirement Plan for Employees of CMS
Energy/Consumers Energy Company effective January 1, 1982, as further
amended December 1, 2007 (2007 Form 10-K)
(10)(p) — Amendment to the Defined Benefit Supplemental Executive Retirement
Plan dated December 21, 2008
(10)(q) 1-9513 (10)(l) — Defined Contribution Supplemental Executive Retirement Plan effective
April 1, 2006 and as further amended effective December 1, 2007 (2007
Form 10-K)
(10)(r) — Amendment to the Defined Contribution Supplemental Executive
Retirement Plan dated December 21, 2008
(10)(s) — 2009 Form of Change in Control Agreement
(10)(t) — 2009 Form of Officer Separation Agreement
(10)(u) 1-9513 (10)(v) — Amended and Restated Investor Partner Tax Indemnification Agreement
dated as of June 1, 1990 among Investor Partners, CMS Midland as
Indemnitor and CMS Energy as Guarantor (1990 Form 10-K)
(10)(v) 1-9513 (10)(y)* — Environmental Agreement dated as of June 1, 1990 made by CMS Energy
to The Connecticut National Bank and Others (1990 Form 10-K)
(10)(w) 1-5611 (10)(y) — Unwind Agreement dated as of December 10, 1991 by and among CMS
Energy, Midland Group, Ltd., Consumers, CMS Midland, Inc., MEC
Development Corp. and CMS Midland Holdings Company (1991 Form 10-
K)
(10)(x) 1-5611 (10)(z) — Stipulated AGE Release Amount Payment Agreement dated as of June 1,
1990, among CMS Energy, Consumers and The Dow Chemical Company
(1991 Form 10-K)
(10)(y) 1-5611 (10)(aa)* — Parent Guaranty dated as of June 14, 1990 from CMS Energy to MCV, each
of the Owner Trustees, the Indenture Trustees, the Owner Participants
and the Initial Purchasers of Senior Bonds in the MCV Sale Leaseback
transaction, and MEC Development (1991 Form 10-K)
(10)(z) 1-8157 10.41 — Contract for Firm Transportation of Natural Gas between Consumers
Power Company and Trunkline Gas Company, dated November 1, 1989,
and Amendment, dated November 1, 1989 (1989 Form 10-K of PanEnergy
Corp.)
(10)(aa) 1-8157 10.41 — Contract for Firm Transportation of Natural Gas between Consumers
Power Company and Trunkline Gas Company, dated November 1, 1989
(1991 Form 10-K of PanEnergy Corp.)
(10)(bb) 1-2921 10.03 — Contract for Firm Transportation of Natural Gas between Consumers
Power Company and Trunkline Gas Company, dated September 1, 1993
(1993 Form 10-K)
(10)(cc) 1-5611 (10)(a) — Asset Sale Agreement dated as of July 11, 2006 by and among Consumers
Energy Company as Seller and Entergy Nuclear Palisades, LLC as Buyer
(2nd qtr. 2006 Form 10-Q)
(10)(dd) 1-5611 (10)(b) — Palisades Nuclear Power Plant Power Purchase Agreement dated as of
July 11, 2006 between Entergy Nuclear Palisades, LLC and Consumers
Energy Company (2nd qtr. 2006 Form 10-Q)
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(10)(ee) 1-9513 99.2* — Letter of Intent dated January 31, 2007 between CMS Enterprises
Company and Lucid Energy LLC (Form 8-K filed February 1, 2007)
(10)(ff) 1-9513 99.2* — Agreement of Purchase and Sale, by and between CMS Enterprises
Company and Abu Dhabi National Energy Company PJSC dated as of
February 3, 2007 (Form 8-K filed February 6, 2007)
(10)(gg) 1-9513 99.2* — Memorandum of Understanding dated February 13, 2007 between CMS
Energy Corporation and Petroleos de Venezuela, S.A. (Form 8-K filed
February 14, 2007)
(10)(hh) 1-9513 10.1* — Common Agreement dated March 12, 2007 between CMS Enterprises
Company and Lucid Energy, LLC (Form 8-K filed March 14, 2007)
(10)(ii) 1-9513 10.2* — Agreement of Purchase and Sale dated March 12, 2007 by and among
CMS Enterprises Company, CMS Energy Investment, LLC, and Lucid
Energy, LLC and Michigan Pipeline and Processing, LLC (Form 8-K filed
March 14, 2007)
(10)(jj) 1-9513 10.3* — Agreement of Purchase and Sale dated March 12, 2007 by and among
CMS Enterprises Company, CMS Generation Holdings Company, CMS
International Ventures, LLC, and Lucid Energy, LLC and New Argentine
Generation Company, LLC (Form 8-K filed March 14, 2007)
(10)(kk) 1-9513 10.1* — Agreement of Purchase and Sale dated as of March 30, 2007 between
CMS Energy Corporation and Petroleos de Venezuela, S.A. (Form 8-K filed
April 5, 2007)
(10)(ll) 1-9513 10.1* — Share Purchase Agreement dated as of April 12, 2007 by and among CMS
Electric and Gas, L.L.C., CMS Energy Brasil S.A. and CPFL Energia S.A.
together with CMS Energy Corporation (solely for the limited purposes of
Section 8.9) (Form 8-K filed April 17, 2007)
(10)(mm) 1-5611 99.2 — Purchase and Sale Agreement by and between Broadway Gen Funding,
LLC as Seller and Consumers Energy Company as Buyer dated as of
May 24, 2007 (Form 8-K filed May 29, 2007)
(10)(nn) 1-9513 99.2* — Amended and Restated Securities Purchase Agreement by and among
CMS International Ventures, L.L.C., CMS Capital L.L.C., CMS Gas
Argentina Company and CMS Enterprises and AEI Chile Holdings LTD
together with Ashmore Energy International (for purposes of the Parent
Guarantee) dated as of June 1, 2007 (Form 8-K filed June 4, 2007)
(10)(oo) 1-9513 99.3* — Stock Purchase Agreement by and among Hydra-Co Enterprises, Inc.,
HCO-Jamaica, Inc., and AEI Central America LTD together with Ashmore
Energy International dated as of May 31, 2007 (Form 8-K filed June 4,
2007)
(10)(pp) 1-9513 99.1* — Securities Purchase Agreement by and among CMS International
Ventures, L.L.C., CMS Capital, L.L.C., CMS Gas Argentina Company and
CMS Enterprises Company and Pacific Energy LLC together with Empresa
Nacional De Electricdad S.A. (for purposes of the Parent Guarantee) dated
as of July 11, 2007 (Form 8-K filed July 11, 2007)
(10)(qq) 1-9513 (10)(a)* — Form of Indemnification Agreement between CMS Energy Corporation
and its Directors, effective as of November 1, 2007 (3rd qtr. 2007 Form 10-
Q)
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(10)(rr) 1-5611 (10)(b) — Form of Indemnification Agreement between Consumers Energy Company
and its Directors, effective as of November 1, 2007 (3rd qtr. 2007 Form 10-
Q)
(10)(ss) 1-5611 10.1 — $200 million Letter of Credit Reimbursement Agreement dated as of
November 30, 2007 between Consumers Energy Company and the Bank of
Nova Scotia (Form 8-K filed December 6, 2007)
(10)(tt) — First Amendment to Reimbursement Agreement dated as of September 25,
2008
(10)(uu) 1-5611 10.1 — $150 million Revolving Credit Agreement dated as of September 11, 2008
among Consumers Energy Company, the Banks, Agent and an LC Issuer,
Co-Syndication Agents, and Documentation Agent all as defined therein
(Form 8-K filed September 16, 2008)
(10)(vv) 1-5611 10(a) — Settlement Agreement and Amended and Restated Power Purchase
Agreement between Consumers Energy Company and Midland
Cogeneration Venture Limited Partnership (2nd qtr. 2008 Form 10-Q)
(10)(ww) — Receivables Purchase Agreement dated as of May 22, 2003 among
Consumers Receivables Funding II, LLC, Consumers Energy Company,
Falcon Asset Securitization Corporation, The Financial Institutions from
time to time parties hereto, as Financial Institutions, and Bank One, NA, as
Administrative Agent, as amended by Amendment No. 1 dated as of
August 18, 2003, Amendment No. 2 dated, as of October 10, 2003,
Amendment No. 3 dated as of May 20, 2004, Amendment No. 4 dated, as
of September 28, 2004, Amendment No. 5 dated as of May 19, 2005,
Amendment No. 6 dated as of September 8, 2005, Amendment No. 7 dated
as of December 22, 2005, Amendment No. 8 dated as of March 13, 2006,
Amendment No. 9 dated as of May 18, 2006, Amendment No. 10 dated as
of August 15, 2006, Amendment No. 11 dated as of May 18, 2007,
Amendment No. 12 dated as of August 14, 2007, Amendment No. 13 dated
as of August 12, 2008, Amendment No. 14 dated as of November 5, 2008,
and Amendment No. 15 dated as of February 12, 2009
(10)(xx) — Receivables Sale Agreement, dated as of May 22, 2003, between
Consumers Energy Company, as Originator and Consumers Receivables
Funding II, LLC, as Buyer, as amended by Amendment No. 1 dated as of
May 20, 2004 and as amended by Amendment No. 2 dated as of
August 15, 2006
(12)(a) — Statement regarding computation of CMS Energy’s Ratio of Earnings to
Fixed Charges and Combined Fixed Charges and Preferred Dividends
(12)(b) — Statement regarding computation of Consumers’ Ratio of Earnings to
Fixed Charges and Combined Fixed Charges and Preferred Dividends
(16)(a) 1-9513 16.1 — Letter from Ernst & Young to the Securities and Exchange Commission
dated January 25, 2007 (Form 8-K filed January 25, 2007)
(16)(b) 1-9513 16.1 — Letter from Ernst & Young to the Securities and Exchange Commission
dated February 28, 2007 (Form 8-K filed February 28, 2007)
(21) — Subsidiaries of CMS Energy and Consumers
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(23)(a) — Consent of PricewaterhouseCoopers LLP for CMS Energy
(23)(b) — Consent of Ernst & Young LLP for CMS Energy
(23)(c) — Consent of PricewaterhouseCoopers LLP for CMS Energy re: MCV
(23)(d) — Consent of PricewaterhouseCoopers LLP for Consumers Energy
(23)(e) — Consent of Ernst & Young LLP for Consumers Energy
(23)(f) — Consent of PricewaterhouseCoopers LLP for Consumers Energy re: MCV
(24)(a) — Power of Attorney for CMS Energy
(24)(b) — Power of Attorney for Consumers
(31)(a) — CMS Energy’s certification of the CEO pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
(31)(b) — CMS Energy’s certification of the CFO pursuant to Section 302 of the
(31)(c) — Consumers’ certification of the CEO pursuant to Section 302 of the
(31)(d) — Consumers’ certification of the CFO pursuant to Section 302 of the
(32)(a) — CMS Energy’s certifications pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002
(32)(b) — Consumers’ certifications pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
* Obligations of only CMS Energy but not of Consumers.

Exhibits listed above that have heretofore been filed with the SEC pursuant to various acts administered by the
Commission, and which were designated as noted above, are hereby incorporated herein by reference and made a part
hereof with the same effect as if filed herewith.
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SCHEDULE I — CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CMS Energy — Parent Company
Condensed Statements of Income (Loss)
In Million s
Dividends from Consolidated Subsidiaries $1,247 $ 251 $ 147
Operating Expenses
Depreciation and amortization (3) (3) (3)
Gain on asset sales, net — 81 —
Shareholder class action settlement — — (125)
Other operating income (deductions) (5) (10) 13
(8) 68 (115)
Total Operating Income 1,239 319 32
Equity in undistributed earnings of subsidiaries (814) (393) (55)
Interest income 1 3 —
Other deductions (4) (24) (6)
(817) (414) (61)
Fixed Charges
Interest on long-term debt 119 144 156
Interest on preferred securities 14 14 14
Intercompany interest expense and other 48 70 24
181 228 194
Income (Loss) Before Income Taxes 241 (323) (223)
Income Tax Benefit (59) (138) (155)
Income (Loss) From Continuing Operations 300 (185) (68)
Loss From Discontinued Operations — (30) (11)
Net Income (Loss) 300 (215) (79)
Preferred Dividends 11 11 11
Redemption Premium on Preferred Stock — 1 —
Net Income (Loss) Available to Common Stockholders $ 289 $(227) $ (90)
The accompanying condensed notes are an integral part of these statements
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Statements of Cash Flows
In Million s
Cash Flows From Operating Activities
Net income (loss) $ 300 $ (215) $ (79)
Adjustments to reconcile net income (loss) to net cash provided by operating
activities:
Loss (earnings) of equity method subsidiaries (433) 142 (92)
Dividends received from subsidiaries 1,247 251 147
Gain on sale of assets — (81) —
Shareholder class action settlement expense — — 125
Decrease (increase) in accounts receivable — 11 (2)
Increase (decrease) in accounts payable (2) (3) 2
Shareholder class action settlement payment — (125) —
Change in other assets and liabilities (60) (58) 2
Net cash provided by (used in) operating activities 1,055 (75) 106
Cash Flows From Investing Activities
Investment in subsidiaries (22) (660) (216)
Changes in notes receivable, net — 42 (15)
Net cash used in investing activities (22) (618) (231)
Cash Flows From Financing Activities
Proceeds from bank loans and notes 665 400 —
Proceeds from issuance of common stock 9 15 8
Retirement of bank loans and notes (570) (958) (75)
Redemption of preferred stock (1) (1) —
Payment of common stock dividends (82) (45) —
Debt issuance costs and financing fees — (1) (5)
Changes in notes payable, net (1,043) 1,294 208
Net cash provided by (used in) financing activities (1,033) 693 125
Net Change in Cash and Temporary Cash Investments $ — $ — $ —
Cash and Temporary Cash Investments, Beginning of Period $ — $ — $ —
Cash and Temporary Cash Investments, End of Period $ — $ — $ —
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Condensed Balance Sheets
De ce m be r 31 2008 2007
In Million s
Assets
Property, Plant and Equipment, at cost $ 16 $ 16
Less accumulated depreciation (15) (12)
1 4
Investment in Subsidiaries 4,913 5,593
Current Assets
Cash and temporary cash investments — —
Notes and accrued interest receivable 1 1
Accrued taxes receivable 41 —
Accounts receivable, including intercompany and related parties 4 4
51 66
Non-current Assets
Other investment — SERP 16 22
Other 40 81
404 423
Total Assets $5,369 $6,086
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Condensed Balance Sheets
De ce m be r 31 2008 2007
In Million s
Stockholders’ Investment and Liabilities
Capitalization
Common stockholders’ equity $2,463 $2,130
Nonredeemable preferred stock 243 250
Long-term debt
Senior Notes 1,808 1,564
Related Party 178 178
Unamortized Discount (4) (5)
4,688 4,117
Current Liabilities
Current portion of long-term debt — 150
Accounts and notes payable, including intercompany and related parties 615 1,660
Accrued interest, including intercompany 34 36
Accrued taxes — 97
Other 11 5
660 1,948
Non-Current Liabilities
Postretirement benefits 21 21
Total Stockholders’ Investment and Liabilities $5,369 $6,086
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Notes to Condensed Financial Statements
1: Summary of Significant Accounting Policies

Corporate Structure and Basis of Presentation: CMS Energy is an energy company operating primarily in Michigan.
We are the parent holding company of Consumers Energy and Enterprises. The condensed financial statements of CMS
Energy — Parent Company reflect the investments in wholly owned subsidiaries using the equity method of accounting.
Use of Estimates: CMS Energy is required to make estimates using assumptions that may affect the reported amounts
and disclosures. Actual results could differ from those estimates. We record estimated liabilities for contingencies in our
condensed financial statements when it is probable that a loss will be incurred in the future as a result of a current event,
and when an amount can be reasonably estimated.
2: Contingencies
Securities Class Action Lawsuits: On January 3, 2007, CMS Energy and other parties entered into a Memorandum of
Understanding (the “MOU”) dated December 28, 2006, subject to court approval, regarding settlement of the two class
action lawsuits. The settlement was approved by a special committee of independent directors and by the full board of
directors. Both judged that it was in the best interests of shareholders to eliminate this business uncertainty. Under the
terms of the MOU, the litigation settled for a total of $200 million, including the cost of administering the settlement and any
attorney fees the court awards. On September 6, 2007, the court issued a final order approving the settlement. CMS Energy
made a payment of approximately $123 million plus interest on the settlement balance on September 20, 2007. CMS Energy’s
insurers paid approximately $77 million, the balance of the settlement amount, directly to the settlement account. In entering
into the MOU, CMS Energy made no admission of liability under the two class action lawsuits.
3: Financings
Long-term debt, including current maturities was $1.804 billion at December 31, 2008 and $1.559 billion at December 31,
2007. Long-term debt — related parties was $178 million at December 31, 2008 and December 31, 2007.
At December 31, 2008, the annual maturities for long-term debt and long-term debt — related parties for the next five
years are:
Paym e n ts Due
2009 2010 2011 2012 2013
(In Million s)
Long-term debt and long-term debt — related parties $ — $300 $300 $255 $150
Additional details on long-term debt, dividend restrictions and capitalization are included in Note 5, Financings and
Capitalization to the Annual Report.
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4: Related Party Transactions

Common Stock: Consumers Energy held 1.8 million shares of CMS Energy’s common stock at December 31, 2008 and
December 31, 2007.
Cash Dividends Paid: Our consolidated subsidiaries, Consumers Energy and Enterprises paid the following common
stock dividends to CMS Energy for the years ended December 31:
2008 2007 2006
(In Million s)
Dividends:
Consumers Energy $ 297 $251 $147
Enterprises 950 — —
Total $1,247 $251 $147
5: Guaranty
We have issued a guaranty on behalf of our wholly owned subsidiary, CMS ERM, to support its payment obligations
to a third-party under certain commodity purchase or swap agreements. Our maximum potential obligation under the
guaranty is $5 million, plus expenses.
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SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006
Balan ce at C h arge d C h arge d/Accru e d Balan ce

Be ginn ing to to othe r at En d
De scription of Pe riod Expe n se Accou n ts De du ction s of Pe riod
(In Million s)
Accumulated provision for uncollectible
accounts:
2008 $ 21 $ 51 $ — $ 46 $ 26
2007 $ 25 $ 37 $ 7 $ 34 $ 21
2006 $ 25 $ 30 $ — $ 30 $ 25
Deferred tax valuation allowance:
2008 $ 32 $ — $ 7 $ 7 $ 32
2007 $ 72 $ — $ 81 $ 121 $ 32
2006 $ 10 $ 31 $ 42 $ 11 $ 72
Allowance for notes receivable, including
related parties:
2008 $ 33 $ — $ 1 $ — $ 34
2007 $ 101 $ — $ 1 $ 69 $ 33
2006 $ 49 $ 55 $ 1 $ 4 $ 101

SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006
Balan ce at C h arge d C h arge d/Accru e d Balan ce

Be ginn ing to to othe r at En d
De scription of Pe riod Expe n se Accou n ts De du ction s of Pe riod
(In Million s)
Accumulated provision for uncollectible
accounts:
2008 $ 16 $ 47 $ — $ 39 $ 24
2007 $ 14 $ 33 $ — $ 31 $ 16
2006 $ 13 $ 30 $ — $ 29 $ 14
Deferred tax valuation allowance:
2008 $ — $ — $ — $ — $ —
2007 $ 15 $ — $ 8 $ 23 $ —
2006 $ — $ 16 $ — $ 1 $ 15
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, CMS Energy Corporation
has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized, on the
25th day of February 2009.
By /s/ DAVID W. JOOS

David W. Joos
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report has been signed below by the
following persons on behalf of CMS Energy Corporation and in the capacities indicated and on the 25th day of February
2009.
S ignature Title
(i) Principal executive officer:
/s/ DAVID W. JOOS President and Chief Executive Officer
David W. Joos
(ii) Principal financial officer:
/s/ THOMAS J. WEBB Executive Vice President and Chief Financial Officer
Thomas J. Webb
(iii) Controller or principal accounting officer:
/s/ GLENN P. BARBA Vice President, Controller and Chief Accounting Officer
Glenn P. Barba
(iv) A majority of the Directors:

* Director
Merribel S. Ayres
* Director
Jon E. Barfield
* Director
Richard M. Gabrys
* Director
David W. Joos
* Director
Philip R. Lochner, Jr.
* Director
Michael T. Monahan
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S ignature Title
* Director
Joseph F. Paquette, Jr.
* Director
Percy A. Pierre
* Director
Kenneth L. Way
* Director
Kenneth Whipple
* Director
John B. Yasinsky
*By /s/ THOMAS J. WEBB
Thomas J. Webb,
Attorney-in-Fact
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Consumers Energy
Company has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized, on
the 25th day of February 2009.
By /s/ DAVID W. JOOS

David W. Joos
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report has been signed below by the
following persons on behalf of Consumers Energy Company and in the capacities indicated and on the 25th day of February
2009.
S ignature Title
(i) Principal executive officer:

/s/ DAVID W. JOOS Chief Executive Officer
David W. Joos
(ii) Principal financial officer:
/s/ THOMAS J. WEBB Executive Vice President and

Chief Financial Officer
Thomas J. Webb
(iii) Controller or principal accounting officer:
/s/ GLENN P. BARBA Vice President, Controller

and Chief Accounting Officer
Glenn P. Barba
(iv) A majority of the Directors:

* Director
Merribel S. Ayres
* Director
Jon E. Barfield
* Director
Richard M. Gabrys
* Director
David W. Joos
* Director
Philip R. Lochner, Jr.

* Director
Michael T. Monahan
* Director
Joseph F. Paquette, Jr.

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S ignature Title
* Director
Percy A. Pierre
* Director
Kenneth L. Way
* Director
Kenneth Whipple
* Director
John B. Yasinsky
*By /s/ THOMAS J. WEBB
Thomas J. Webb,
Attorney-in-Fact
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EXHIBITS
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CMS ENERGY’S AND CONSUMERS’ EXHIBIT INDEX

Exh ibits De scription
(3)(b) — CMS Energy Corporation Bylaws, amended and restated as of January 22, 2009
(3)(d) — Consumers Energy Company Bylaws, amended and restated as of January 22, 2009
(4)(f) — Certificate of Designation of 4.50% Cumulative Convertible Preferred Stock dated as of December 20,
2004, corrected February 27, 2006
(10)(b) — Amendment No. 2 dated as of January 23, 2009 to $300 million CMS Energy Seventh Amended and
Restated Credit Agreement
(10)(l) — Amendment to the Deferred Salary Savings Plan dated December 21, 2008
(10)(m) — Annual Officer Incentive Compensation Plan for CMS Energy Corporation and its Subsidiaries
effective January 1, 2004, amended and restated effective as of January 1, 2008
(10)(n) — Amendment to the Officer’s Incentive Compensation Plan dated December 21, 2008
(10)(p) — Amendment to the Defined Benefit Supplemental Executive Retirement Plan dated December 21, 2008
(10)(r) — Amendment to the Defined Contribution Supplemental Executive Retirement Plan dated December 21,
2008
(10)(s) — 2009 Form of Change in Control Agreement
(10)(t) — 2009 Form of Officer Separation Agreement
(10)(tt) — First Amendment to Reimbursement Agreement dated as of September 25, 2008
(10)(ww) — Receivables Purchase Agreement dated as of May 22, 2003 among Consumers Receivables
Funding II, LLC, Consumers Energy Company, Falcon Asset Securitization Corporation, The
Financial Institutions from time to time parties hereto, as Financial Institutions, and Bank One, NA, as
Administrative Agent, as amended by Amendment No. 1 dated as of August 18, 2003, Amendment
No. 2 dated, as of October 10, 2003, Amendment No. 3 dated as of May 20, 2004, Amendment No. 4
dated, as of September 28, 2004, Amendment No. 5 dated as of May 19, 2005, Amendment No. 6 dated
as of September 8, 2005, Amendment No. 7 dated as of December 22, 2005, Amendment No. 8 dated
as of March 13, 2006, Amendment No. 9 dated as of May 18, 2006, Amendment No. 10 dated as of
August 15, 2006, Amendment No. 11 dated as of May 18, 2007, Amendment No. 12 dated as of
August 14, 2007, Amendment No. 13 dated as of August 12, 2008, Amendment No. 14 dated as of
November 5, 2008, and Amendment No. 15 dated as of February 12, 2009
(10)(xx) — Receivables Sale Agreement, dated as of May 22, 2003, between Consumers Energy Company, as
Originator and Consumers Receivables Funding II, LLC, as Buyer, as amended by Amendment No. 1
dated as of May 20, 2004 and as amended by Amendment No. 2 dated as of August 15, 2006
(12)(a) — Statement regarding computation of CMS Energy’s Ratio of Earnings to Fixed Charges and
Combined Fixed Charges and Preferred Dividends
(12)(b) — Statement regarding computation of Consumers’ Ratio of Earnings to Fixed Charges and Combined
Fixed Charges and Preferred Dividends
(21) — Subsidiaries of CMS Energy and Consumers
(23)(a) — Consent of PricewaterhouseCoopers LLP for CMS Energy
(23)(b) — Consent of Ernst & Young LLP for CMS Energy
(23)(c) — Consent of PricewaterhouseCoopers LLP for CMS Energy re: MCV
(23)(d) — Consent of PricewaterhouseCoopers LLP for Consumers Energy
(23)(e) — Consent of Ernst & Young LLP for Consumers Energy
(23)(f) — Consent of PricewaterhouseCoopers LLP for Consumers Energy re: MCV
(24)(a) — Power of Attorney for CMS Energy
(24)(b) — Power of Attorney for Consumers
(31)(a) — CMS Energy’s certification of the CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(31)(b) — CMS Energy’s certification of the CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(31)(c) — Consumers’ certification of the CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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Exh ibits De scription

(31)(d) — Consumers’ certification of the CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(32)(a) — CMS Energy’s certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(32)(b) — Consumers’ certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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Exhibit (3)(b)

BYLAWS
ARTICLE I: LOCATION OF OFFICES

Section 1 — Registered Office: The registered office of CMS Energy Corporation, (the “Corporation”) shall be at such place in the City of
Jackson, County of Jackson, Michigan, or elsewhere in the State of Michigan, as the Board of Directors may from time to time designate.
Section 2 — Other Offices: The Corporation may have and maintain other offices within or without the State of Michigan.
ARTICLE II: CORPORATE SEAL

Section 1 — Corporate Seal: The Corporation shall have a corporate seal bearing the name of the Corporation. The form of the corporate
seal may be altered by the Board of Directors.
ARTICLE III: FISCAL YEAR

Section 1 — Fiscal Year: The fiscal year of the Corporation shall begin with the first day of January and end with the thirty-first day of
December of each year.
ARTICLE IV: SHAREHOLDERS’ MEETINGS

Section 1 — Annual Meetings: An annual meeting of the shareholders for election of Directors and for such other business as may come
before the meeting shall be held at the registered office of the Corporation or at such other place within or without the State of Michigan, at
10:00 AM, Eastern Daylight Saving Time, or at such other time on the fourth Friday in May of each year or upon such other day as the
Board of Directors may designate, but in no event shall such date be more than ninety (90) days after the fourth Friday in May.
Section 2 — Special Meetings: Special meetings of the shareholders may be called by the Board of Directors or by the Chairman of the
Board. Such meetings shall be held at the registered office of the Corporation or at such other place within or without the State of Michigan
as the Board of Directors may designate.
Section 3 — Notices: Except as otherwise provided by law, written notice of any meeting of the shareholders shall be given, either
personally or by mail to each shareholder of record entitled to vote at such meeting, not less than ten (10) days nor more than sixty
(60) days prior to the date of the meeting, at their last known address as the same appears on the stock records of the Corporation. Written
notice shall be considered given when deposited, with postage thereon prepaid, in a post office or official depository under the control of
the United States Postal Service. Such notice shall specify the time and place of holding the meeting, the purpose or purposes for which
such meeting is called, and the record date fixed for the determination of shareholders entitled to notice of and to vote at
such meeting. The Board of Directors shall fix a record date for determining shareholders entitled to notice of and to vote at such meeting.
The Board of Directors shall fix a record date for determining shareholders entitled to notice of and to vote at a meeting of shareholders,
which record date shall not be more than sixty (60) days nor less than ten (10) days before the date of the meeting. Such record date shall
apply to any adjournment of the meeting unless the Board of Directors shall fix a new record date for purposes of the adjourned meeting.
No notice of an adjourned meeting shall be necessary if the time and place to which the meeting is adjourned are announced at the
meeting at which the adjournment is taken. At the adjourned meeting only such business may be transacted as might have been transacted
at the original meeting. If, after an adjournment, the Board of Directors shall fix a new record date for the adjourned meeting, a notice of the
adjourned meeting shall be mailed, in conformity with the provisions of the first paragraph of this Section 3, to each shareholder of record
on the new record date entitled to vote at the adjourned meeting.
Section 4 — Quorum: Except as otherwise provided by law or by the Articles of Incorporation of the Corporation, the holders of the shares
of stock of the Corporation entitled to cast a majority of the votes at a meeting shall constitute a quorum for the transaction of business at
the meeting, but a lesser number may convene any meeting and, by a majority vote of the shares present at the meeting, may adjourn the
same from time to time until a quorum shall be present.
Section 5 — Voting: Shareholders may vote at all meetings in person or by proxy, but all proxies shall be filed with the Secretary of the
meeting before being voted upon.
Subject to the provisions of the Articles of Incorporation of the Corporation, at all meetings of the shareholders of the Corporation, each
holder of Common Stock shall be entitled on all questions to one vote for each share of stock held by such holder, and a majority of the
votes cast by the holders of shares entitled to vote thereon shall be sufficient for the adoption of any question presented, unless otherwise
provided by law or by the Articles of Incorporation of the Corporation.
Section 6 — Inspectors: In advance of any meeting of shareholders the Board of Directors shall appoint one or more inspectors to act at
such meeting or any adjournment thereof. The inspectors shall have such powers and duties as are provided by law.
Section 7 — Notice of Shareholder Business and Director Nominations:
(A) Annual Meetings of Shareholders.
(1) Nominations of persons for election to the Board of Directors of the Corporation and the proposal of business to be considered by
the shareholders at an annual meeting of shareholders may be made (i) pursuant to the Corporation’s notice of meeting, (ii) by or at the
direction of the Board of Directors, or (iii) by any shareholder of the Corporation who (x) is a shareholder of record at the time of giving
notice provided for in this Bylaw and at the time of the annual meeting of shareholders, (y) is entitled to vote at the meeting, and
(z) complies with the notice procedures as to such business or
nomination set forth in this Bylaw. Clause (iii) of this paragraph shall be the exclusive means for a shareholder to make nominations or
submit other business (other than matters properly brought under Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”) and included in the Corporation’s notice of meeting) before an annual meeting of shareholders.
(2) For nominations or other business to be properly brought before an annual meeting by a shareholder pursuant to clause (iii) of
paragraph (A)(1) of this Section 7, such other business must be a proper subject for shareholder action under Michigan corporation law,
and the shareholder must have given timely notice of such nomination or other business in writing to the Secretary of the Corporation. To
be timely, a shareholder’s notice shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the
ninetieth (90th) day and not later than the sixtieth (60th) day prior to the first anniversary of the preceding year’s annual meeting date;
provided, however, that in the event that the date of the annual meeting is more than thirty (30) days before or after such anniversary date,
notice by the shareholder to be timely must be so delivered no later than the tenth (10th) day following the date on which public
announcement of the date of such meeting is first made by the Corporation. In no event shall the public announcement of an adjournment
of an annual meeting commence a new time period for the giving of a shareholder’s notice as described above.
To be in proper form, a shareholder’s notice to the Secretary must set forth:
(i) the following as to the shareholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or business
proposal is made:
(a) the name and address of such shareholder, as it appears on the Corporation’s books, and of the beneficial owner, if any;
(b) the class or series and number of shares of capital stock of the Corporation that are owned beneficially and of record by such
shareholder and beneficial owner, if any, as of the date of such notice (which information shall be supplemented by such shareholder
and beneficial owner, if any, not later than ten (10) days after the record date for the meeting to disclose such ownership as of the record
date);
(c) a description of any agreement, arrangement or understanding (including any derivative or short positions, profit interests,
options, hedging transactions, and borrowed or loaned shares) that has been entered into as of the date of such notice by, or on behalf
of, the shareholder or beneficial owner, if any, or any of their affiliates or associates, the effect or intent of which is to mitigate loss to,
manage risk or benefit of share price changes for, or increase or decrease the voting power of the shareholder or beneficial owner, if any,
or any of their affiliates or associates with respect to shares of stock of the Corporation, and a representation that the shareholder or
beneficial owner, if any, will notify the Corporation in writing of any such agreement, arrangement or understanding in effect as of the
record date for the meeting promptly following the later of the record date or the date notice of the record date is first publicly disclosed;
(d) any proxy, contract, arrangement, understanding or relationship pursuant to which shareholder or beneficial owner, if any, has a
right to vote any shares of any security of the Corporation; and
(e) any other information relating to such shareholder and beneficial owner, if any, that would be required to be disclosed in a proxy
statement or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or for the
election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated
thereunder;
(ii) the following additional information if the notice relates to any business other than the nomination of a director that the shareholder
proposes to bring before the meeting:
(a) a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the
meeting, the text of the proposal, and any material interest of such shareholder or beneficial owner, if any, in such business; and
(b) a description of all agreements, arrangements and understandings between such shareholder and beneficial owner, if any, and any
other person or persons (including their names) in connection with the proposal of such business by such shareholder;
(iii) the following additional information as to each person whom the shareholder proposes to nominate for election as a director:
(a) the name, age, and business and residential addresses of such person;
(b) the principal occupation or employment of such person;
(c) the number of shares of capital stock of the Corporation beneficially owned by such person;
(d) such person’s written consent to being named in the proxy statement as a nominee and serving as a director if elected;
(e) such other information relating to such person that would be required to be disclosed in a proxy statement or other filings required
to be made in connection with proxy solicitations of proxies for election of directors in a contested election pursuant to Section 14 of the
Exchange Act and the rules and regulations promulgated thereunder; and
(f) an undertaking to provide such other information as the Corporation may reasonably require to determine the eligibility of such
person to
serve as an independent director of the Corporation or that could be material to a reasonable shareholder’s understanding of the
independence, or lack thereof, of such person;
(iv) a representation that the shareholder or beneficial owner, if any, intends to appear in person or by proxy at the meeting to propose
such business or make such nomination; and
(v) a representation whether the shareholder or beneficial owner, if any, intends or is part of a group which intends (a) to deliver a proxy
statement and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to approve the
proposal or elect the nominee and/or (b) otherwise to solicit proxies from shareholders in support of such proposal or nomination.
(B) Special Meetings of Shareholders.
Only such business shall be conducted at a special meeting of shareholders as shall have been brought before the meeting of
shareholders pursuant to the Corporation’s notice of meeting. Nominations of persons for election to the Board of Directors may be made at
a special meeting of shareholders only if directors are to be elected at such meeting pursuant to the Corporation’s notice of meeting. To be
properly brought before a special meeting, nominations of persons for election to the Board of Directors must be (i) made by or at the
direction of the Board of Directors or (ii) provided that the Board of Directors has determined that directors shall be elected at such meeting,
made by any shareholder of the Corporation, who (x) is a shareholder of record at the time of giving of notice provided for in this Bylaw and
at the time of the special meeting, (y) is entitled to vote at the meeting, and (z) complies with the notice procedures set forth in this Bylaw.
Clause (ii) of this paragraph shall be the exclusive means for a shareholder to make nominations for director before a special meeting of
shareholders.
For nominations to be properly brought before a special meeting by a shareholder pursuant to clause (ii) of the preceding paragraph, the
shareholder must have given timely notice of the nomination to the Secretary of the Corporation in the form required by paragraph (A)(2) of
this section 7. To be timely, a shareholder’s notice shall be delivered to the Secretary at the principal executive offices of the Corporation
not earlier than the ninetieth (90th) day prior to such special meeting date and not later than the later of the sixtieth (60th) day prior to such
special meeting date and the tenth (10th) day following the day on which public announcement is first made of the date of the special
meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall the public announcement
of an adjournment of a special meeting commence a new time period for the giving of a shareholder’s notice as described above.
(C) General.
(1) Only such persons who are nominated in accordance with the procedures set forth in this Bylaw shall be eligible to be elected as
directors at a meeting of shareholders, and only such business shall be conducted at a meeting of shareholders as shall have been brought
before the meeting in accordance with the procedures set forth in
this Bylaw. Except as otherwise provided by law, the Articles of Incorporation or these Bylaws, the Chairman of the meeting shall have the
power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as
the case may be, in accordance with the procedures set forth in this Bylaw and, if any proposed nomination or business is not in
compliance with this Bylaw, to declare that such proposal shall be disregarded.
(2) For purposes of this Bylaw, “public announcement” shall mean disclosure in a press release reported by the PR Newswire or
comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission
pursuant to Section 13, 14 or 15(d) of the Exchange Act and the rules and regulations promulgated thereunder.
(3) Nothing in this Bylaw shall be deemed to affect any rights of (i) shareholders to request inclusion of proposals in the Corporation’s
proxy statement pursuant to Rule 14a-8 under the Exchange Act or (ii) the holders of any series of preferred stock if and to the extent
provided for under law, the Articles of Incorporation or these Bylaws.
ARTICLE V: DIRECTORS
Section 1 — Number: The Board of Directors of the Corporation shall consist of not less than seven (7) nor more than seventeen
(17) members, as fixed from time to time by resolution of the Board of Directors.
Section 2 — Election: The Directors shall be elected annually at the annual meeting of the shareholders or at any adjournment thereof.
Section 3 — Term of Office: Subject to the provisions of the Articles of Incorporation of the Corporation and unless otherwise provided by
law, the Directors shall hold office from the date of their election until the next succeeding annual meeting and until their successors are
elected and shall qualify.
Section 4 — Vacancies: Any vacancy or vacancies in the Board of Directors arising from any cause may be filled by the affirmative vote of a
majority of the Directors then in office although less than a quorum. An increase in the number of members shall be construed as creating a
vacancy.
ARTICLE VI: DIRECTORS’ MEETINGS

Section 1 — Organization Meeting: As soon as possible after their election, the Board of Directors shall meet and organize and may also
transact other business.
Section 2 — Other Meetings: Meetings of the Board of Directors may be held at any time upon call of the Secretary or an Assistant
Secretary made at the direction of the Chairman of the Board, the President, a Vice Chairman, if any, or a Vice President.
Section 3 — Place of Meeting: All meetings of Directors shall be held at such place within or without the State of Michigan as may be
designated in the call therefore.
Section 4 — Notice: A reasonable notice of all meetings, in writing or otherwise, shall be given to each Director or sent to the Director’s
residence or place of business; provided, however, that no notice shall be required for an organization meeting if held on the same day as
the shareholders’ meeting at which Directors were elected.
No notice of the holding of an adjourned meeting shall be necessary.
Notice of all meetings shall specify the time and place of holding the meeting and unless otherwise stated any and all business may be
transacted at any such meeting.
Notice of the time, place and purpose of any meeting may be waived in writing either before or after the holding thereof.
Section 5 — Quorum: At all meetings of the Board of Directors a majority of the Board then in office shall constitute a quorum but a majority
of the Directors present may convene and adjourn any such meeting from time to time until a quorum shall be present; provided, that if the
Board shall consist of ten (10) and not more than fifteen (15), then five (5) members shall constitute a quorum; and if the Board shall consist
of more than fifteen (15), then seven (7) members shall constitute a quorum.
Section 6 — Voting: All questions coming before any meeting of the Board of Directors for action shall be decided by a majority vote of the
Directors present at such meeting, unless otherwise provided by law, the Articles of Incorporation of the Corporation or by these Bylaws.
Section 7 — Participation by Communications Equipment: A Director or a member of a Committee designated by the Board of Directors may
participate in a meeting by means of conference telephone or similar communications equipment by means of which all persons participating
in the meeting can hear each other. Participation in a meeting by such means shall constitute presence in person at the meeting.
Section 8 — Action Without Meeting: Any action required or permitted to be taken pursuant to authorization voted at a meeting of the
Board of Directors or a Committee thereof, may be taken without a meeting if, before or after the action, all members of the Board or of the
Committee consent thereto in writing. The written consents shall be filed with the minutes of the proceedings of the Board or Committee,
and the consents shall have the same effect as a vote of the Board or Committee for all purposes.
ARTICLE VII: EXECUTIVE AND OTHER COMMITTEES

Section 1 — Number and Qualifications: By resolution passed by a majority of the whole Board, the Board of Directors may from time to
time designate one or more of their number to constitute an Executive or any other Committee of the Board, as the Board of Directors may
from time to time determine to be desirable, and may fix the number of members and designate the Chairperson of each such Committee,
except that the Audit
Committee shall consist of not less than three outside members of the Board of Directors. Except as provided by law, the powers of each
such Committee shall be as defined in the resolution or resolutions of the Board of Directors relating to the authorization of such
Committee, and may include, if such resolution or resolutions so provide, the power and authority to declare a dividend or to authorize the
issuance of shares of stock of the Corporation.
Section 2 — Appointment: The appointment of members of each such Committee, or other action respecting any Committee, may take place
at any meeting of the Directors.
Section 3 — Term of Office: The members of each Committee shall hold office at the pleasure of the Board of Directors.
Section 4 — Vacancies: Any vacancy or vacancies in any such Committee arising from any cause shall be filled by resolution passed by a
majority of the whole Board of Directors. By like vote the Board may designate one or more Directors to serve as alternate members of a
Committee, who may replace an absent or disqualified member at a meeting of a Committee; provided, however, in the absence or
disqualification of a member of a Committee, the members of the Committee present at a meeting and not disqualified from voting, whether
or not constituting a quorum, may unanimously appoint another member of the Board of Directors to act in the place of the absent or
disqualified member.
Section 5 — Minutes: Except as provided in Section 2 of Article X hereof or as otherwise determined by the Board of Directors, each such
Committee shall make a written report or recommendation following its meetings or keep minutes of all its meetings.
Section 6 — Quorum: At all meetings of any duly authorized Committee of the Board of Directors, a majority of the members of such
Committee shall constitute a quorum but a majority of the members present may convene and adjourn any such meeting from time to time
until a quorum shall be present; provided, that with respect to any Committee of the Board other than the Executive Committee, if the
membership of such Committee is four (4) or less, then two (2) members of such Committee shall constitute a quorum and one member may
convene and adjourn any such meeting from time to time until a quorum shall be present.
ARTICLE VIII: OFFICERS

Section 1 — Election: The officers shall be chosen by the Board of Directors. The Corporation shall have a Chairman of the Board, a
President, a Secretary and a Treasurer, and such other officers as the Board of Directors may from time to time determine, who shall have
respectively such duties and authority as may be provided by these Bylaws or as may be provided by resolution of the Board of Directors
not inconsistent herewith. Any two (2) or more of such offices may be held by the same persons but no officer shall execute, acknowledge
or verify any instrument in more than one capacity if such instrument is required by law, by the Articles of Incorporation of the Corporation
or by these Bylaws to be executed, acknowledged or verified by two (2) or more officers.
Section 2 — Qualifications: The Chairman of the Board and Vice Chairman, if any, shall be chosen from among the Board of Directors, but
the other officers need not be members of the Board.
Section 3 — Vacancies: Any vacancy or vacancies among the officers arising from any cause shall be filled by the Board of Directors. In
case of the absence of any officer of the Corporation or for any other reason that the Board of Directors may deem sufficient, the Board of
Directors may delegate, for the time being, the powers or duties, or any of them, of any officer to any other officer or to any Director.
Section 4 — Term of Office: Each officer of the Corporation shall hold office until a successor is chosen and qualified, or until the officer’s
resignation or removal. Any officer appointed by the Board of Directors may be removed at any time by the Board of Directors with or
without cause.
Section 5 — Compensation: The compensation of the officers shall be fixed by a committee of the Board of Directors composed of
independent directors as defined by applicable law and regulation.
ARTICLE IX: AGENTS

Section 1 — Resident Agent: The Corporation shall have and continuously maintain a resident agent, which may be either an individual
resident in the State of Michigan whose business office is identical with the Corporation’s registered office or a Michigan corporation or a
foreign corporation authorized to transact business in Michigan and having a business office identical with the Corporation’s registered
office. The Board of Directors shall appoint the resident agent.
Section 2 — Other Agents: The Board of Directors may appoint such other agents as may in their judgment be necessary for the proper
conduct of the business of the Corporation.
ARTICLE X: POWERS AND DUTIES

Section 1 — Directors: The business and affairs of the Corporation shall be managed by the Board of Directors which shall have and
exercise all of the powers and authority of the Corporation except as otherwise provided by law, by the Articles of Incorporation of the
Corporation or by these Bylaws.
Section 2 — Executive Committee: In the interim between meetings of the Board of Directors, the Executive Committee shall have and
exercise all the powers and authority of the Board of Directors except as otherwise provided by law. The Executive Committee shall meet
from time to time on the call of the Chairman of the Board or the Chairman of the Committee. The Secretary shall keep minutes in sufficient
detail to advise fully the Board of Directors of the actions taken by the Committee and shall submit copies of such minutes to the Board of
Directors for its approval or other action at its next meeting.
Section 3 — Chairman of the Board: The Chairman of the Board shall preside at all meetings of Directors and shareholders; and shall
perform and do all acts and things
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incident to the position of Chairman of the Board, and such other duties as may be assigned from time to time by the Board of Directors or
the Executive Committee.
Section 4 — President: The President shall be the chief executive officer of the Corporation and, subject to the supervision of the Board of
Directors and of the Executive Committee, shall have general charge of the business and affairs of the Corporation; shall perform and do all
acts and things incident to such position and such other duties as may be assigned from time to time by the Board of Directors, the
Executive Committee or the Chairman of the Board; in the absence of the Chairman of the Board and a Vice Chairman, shall preside at
meetings of Directors; and in the absence of the Chairman of the Board shall preside at meetings of shareholders.
Section 5 — Vice Chairman: A Vice Chairman, if any, shall perform such of the duties of the Chairman of the Board or the President on
behalf of the Corporation as may be respectively assigned from time to time by the Board of Directors, the Executive Committee, the
Chairman of the Board or the President; in the absence of the Chairman of the Board shall preside at meetings of Directors; and in the
absence of the Chairman of the Board and the President shall preside at meetings of shareholders.
Section 6 — Vice Presidents: Vice Presidents, if any, shall perform such of the duties of the Chairman of the Board or the President or the
Vice Chairman, if any, on behalf of the Corporation as may be respectively assigned to them from time to time by the Board of Directors, the
Executive Committee, the Chairman of the Board or the President or a Vice Chairman. The Board of Directors or Executive Committee may
designate one or more of the Vice Presidents as Executive Vice President or Senior Vice President.
Section 7 — Controller: Subject to the control of the Board of Directors, the Executive Committee, the Chairman of the Board, the President
and the Vice President having general charge of accounting, the Controller, if any, shall have charge of the supervision of the accounting
system of the Corporation, including the preparation and filing of all tax returns and financial reports required by law to be made to any and
all public authorities and officials; and shall perform such other duties as may be assigned, from time to time, by the Board of Directors, the
Executive Committee, the Chairman of the Board, the President, a Vice Chairman, if any, or Vice President having general charge of
accounting.
Section 8 — Treasurer: It shall be the duty of the Treasurer to have the care and custody of all the funds and securities, including the
investment thereof, of the Corporation which may come into the Treasurer’s hands, and to endorse checks, drafts and other instruments for
the payment of money for deposit or collection when necessary or proper and to deposit the same to the credit of the Corporation in such
bank or banks or depository as may be designated, may endorse all commercial documents requiring endorsements for or on behalf of the
Corporation, may sign all receipts and vouchers for the payments made to the Corporation, shall render an account of transactions to the
Board of Directors or the Executive Committee as often as the Board or the Committee shall require, and shall perform all acts incident to the
position of Treasurer, subject to the control of the Board of Directors, the Executive Committee, the Chairman of the Board, the President
and a Vice Chairman, if any.
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Section 9 — Secretary: The Secretary shall act as custodian of and record the minutes of all meetings of the Board of Directors, of the
Executive Committee, of the shareholders and of any Committees of the Board of Directors which keep formal minutes; shall attend to the
giving and serving of all notices of the Corporation; shall prepare or cause to be prepared the list of shareholders required to be produced
at any meeting; shall attest the seal of the Corporation upon all contracts and instruments executed under such seal, shall affix or cause to
be affixed the seal of the Corporation thereto and to all certificates of shares of the capital stock, shall have charge of the stock records of
the Corporation, and shall, in general, perform all the duties of Secretary, subject to the control of the Board of Directors, the Executive
Committee, the Chairman of the Board, the President and a Vice Chairman, if any.
Section 10 — General Counsel: The General Counsel, if any, shall have charge of all matters of a legal nature involving the Corporation.
Section 11 — Assistant Controllers, Assistant Secretaries and Assistant Treasurers: An Assistant Controller, an Assistant Secretary or an
Assistant Treasurer, if any, shall, in the absence or inability to act or at the request of the Controller, Secretary or Treasurer, respectively,
perform the duties of the Controller or Secretary or Treasurer, respectively, and shall perform such other duties as may from time to time be
assigned by the Board of Directors, the Executive Committee, the Chairman of the Board, the President or a Vice Chairman, if any. The
performance of any such duty shall be conclusive evidence of right to act.
Section 12 — Principal Financial Officer and Principal Accounting Officer: The Board of Directors or the Executive Committee may from time
to time designate officers of the Corporation to be the Principal Financial Officer and the Principal Accounting Officer of the Corporation.
ARTICLE XI: STOCK

Section 1 — Certificated and Uncertificated Shares: The shares of stock of the Corporation may be either certificated shares or
uncertificated shares or a combination thereof. A resolution approved by a majority of the directors may provide that some or all of any or
all classes and series of the shares of the Corporation will be uncertificated shares. Every owner of certificated shares of the Corporation
shall be entitled to a certificate, to be in such form as shall be prescribed by law, the Articles of Incorporation of the Corporation or by these
Bylaws. Each certificate shall be numbered and shall be entered on the stock records of the Corporation and registered as they are issued,
and shall be signed, in the name of the Corporation, by the Chairman of the Board, Vice Chairman, if any, President or one of the Vice
Presidents and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary; and shall be sealed with the seal of
the Corporation or a facsimile thereof, or by such officers as the Board of Directors may designate.
Section 2 — Facsimile Signatures: When a certificate is countersigned (1) by a transfer agent, or (2) by a transfer clerk acting on behalf of
the Corporation and a registrar, the signatures of any such Chairman of the Board, Vice Chairman, if any, President, Vice
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President, Treasurer, Assistant Treasurer, Secretary or Assistant Secretary may be facsimile. In case any officer or officers who have
signed, or whose facsimile signature or signatures have been used on any such certificate or certificates shall cease to be such officer or
officers of the Corporation before such certificate or certificates have been delivered by the Corporation, such certificate or certificates may
nevertheless be adopted by the Corporation and be issued and delivered as though the person or persons who signed such certificate or
certificates or whose facsimile signature or signatures have been used thereon had not ceased to be such officer or officers of the
Corporation.
Section 3 — Stock — Preferred and Common: The designations, relative rights, preferences, limitations and voting powers, or restrictions,
or qualifications of the shares of Preferred Stock and Common Stock shall be as set forth in the Articles of Incorporation of the Corporation.
Section 4 — Replacing Certificates: In case of the alleged loss, theft or destruction of any certificate of shares of stock and the submission
of proper proof thereof, a new certificate may be issued in lieu thereof upon delivery to the Corporation by the owner or legal representative
of a bond of indemnity against any claim that may be made against the Corporation on account of such alleged lost, stolen or destroyed
certificate or such issuance of a new certificate.
Section 5 — Stock Records and Transfers of Stock: Transfers of shares of stock of the Corporation shall be made by the transfer agent and
registrar on the Books of the Corporation after receipt of a request with proper evidence of succession, assignment, or authority to transfer
by the record holder of such stock, or by an attorney lawfully constituted in writing, and, in the case of stock represented by a certificate,
upon surrender of the certificate duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer.
Subject to the foregoing, the Board of Directors shall have power and authority to adopt resolutions as it shall deem necessary or
appropriate concerning the issue, transfer, and registration of shares of stock of the Corporation, and to appoint and remove transfer agents
and registrars of transfers.
The Board of Directors may fix a date preceding the date fixed for any meeting of the shareholders or any dividend payment date or the date
for the allotment of rights or the date when any change, conversion or exchange of stock shall go into effect or the date for any other
action, as the record date for the determination of the shareholders entitled to notice of and to vote at such meeting or to receive payment
of such dividend or to receive such allotment of rights or to exercise such rights in respect of any such change, conversion or exchange of
stock or to take such other action, as the case may be, notwithstanding any transfer of shares on the records of the Corporation or
otherwise after any such record date fixed as aforesaid. The record date so fixed by the Board shall not be more than sixty (60) nor less than
ten (10) days before the date of the meeting of the shareholders, nor more than sixty (60) days before any other action. If the Board of
Directors does not fix a date of record, as aforesaid, the record date shall be as provided by law.
Section 6 — Registered Shareholders: The Corporation shall be entitled to recognize the exclusive right of a person registered on its books
as the owner of shares to receive
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dividends, and to vote as such owner, and shall be entitled to hold liable for calls and assessments a person so registered on its books as
the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of
any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by applicable statute.
ARTICLE XII: AUTHORIZED SIGNATURES

Section 1 — Authorized Signatures: All checks, drafts and other negotiable instruments issued by the Corporation shall be made in the
name of the Corporation and shall be signed manually or signed by facsimile signature by such one of the officers of the Corporation or
such other person as the Chairman of the Board, the Vice Chairman of the Board, the President or the Treasurer may from time to time
designate.
ARTICLE XIII: INSURANCE

Section 1 — Insurance: The Corporation may purchase and maintain liability insurance, to the full extent permitted by law, on behalf of any
person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted
against such person and incurred by such person in any such capacity.
ARTICLE XIV: AMENDMENTS OF BYLAWS

Section 1 — Amendments, How Effected: These Bylaws may be amended or repealed, or new Bylaws may be adopted, either by the majority
vote of the votes cast by the shareholders entitled to vote thereon or by the majority vote of the Directors then in office at any meeting of
the Directors.
Amended and Restated
January 22, 2009
Exhibit (3)(d)

BYLAWS
ARTICLE I: LOCATION OF OFFICES

Section 1 — Registered Office: The registered office of Consumers Energy Company, (the “Company”) shall be at such place in the City of
Jackson, County of Jackson, Michigan, or elsewhere in the State of Michigan, as the Board of Directors may from time to time designate.
Section 2 — Other Offices: The Company may have and maintain other offices within or without the State of Michigan.
ARTICLE II: CORPORATE SEAL

Section 1 — Corporate Seal: The Company shall have a corporate seal bearing the name of the Company. The form of the corporate seal
may be altered by the Board of Directors.
ARTICLE III: FISCAL YEAR

Section 1 — Fiscal Year: The fiscal year of the Company shall begin with the first day of January and end with the thirty-first day of
December of each year.
ARTICLE IV: SHAREHOLDERS’ MEETINGS

Section 1 — Annual Meetings: An annual meeting of the shareholders for election of Directors and for such other business as may come
before the meeting shall be held at the registered office of the Company or at such other place within or without the State of Michigan, at
10:00 AM, Eastern Daylight Saving Time, or at such other time on the fourth Friday in May of each year or upon such other date as the
Board of Directors may designate, but in no event shall such date be more than ninety (90) days after the fourth Friday in May.
Section 2 — Special Meetings: Special meetings of the shareholders may be called by the Board of Directors or by the Chairman of the
Board. Such meetings shall be held at the registered office of the Company or at such other place within or without the State of Michigan as
the Board of Directors may designate.
Section 3 — Notices: Except as otherwise provided by law, written notice of any meeting of the shareholders shall be given, either
personally or by mail to each shareholder of record entitled to vote at such meeting, not less than ten (10) days nor more than sixty
(60) days prior to the date of the meeting, at their last known address as the same appears on the stock records of the Company. Written
notice shall be considered given when deposited, with postage thereon prepaid, in a post office or official depository under the control of
the United States Postal Service. Such notice shall specify the time and place of holding the meeting, the purpose or purposes for which
such meeting is called, and the record date fixed for the determination of shareholders entitled to notice
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of and to vote at such meeting. The Board of Directors shall fix a record date for determining shareholders entitled to notice of and to vote
at a meeting of shareholders, which record date shall not be more than sixty (60) days nor less than ten (10) days before the date of the
meeting. Such record date shall apply to any adjournment of the meeting unless the Board of Directors shall fix a new record date for
purposes of the adjourned meeting.
No notice of an adjourned meeting shall be necessary if the time and place to which the meeting is adjourned are announced at the
meeting at which the adjournment is taken. At the adjourned meeting only such business may be transacted as might have been transacted
at the original meeting. If, after an adjournment, the Board of Directors shall fix a new record date for the adjourned meeting, a notice of the
adjourned meeting shall be mailed, in conformity with the provisions of the first paragraph of this Section 3, to each shareholder of record
on the new record date entitled to vote at the adjourned meeting.
Section 4 — Quorum: Except as otherwise provided by law or by the Articles of Incorporation of the Company, the holders of the shares of
stock of the Company entitled to cast a majority of the votes at a meeting shall constitute a quorum for the transaction of business at the
meeting, but a lesser number may convene any meeting and, by a majority vote of the shares present at the meeting, may adjourn the same
from time to time until a quorum shall be present.
Section 5 — Voting: Shareholders may vote at all meetings in person or by proxy, but all proxies shall be filed with the Secretary of the
meeting before being voted upon.
The voting powers of the shares of Preferred Stock, Class A Preferred Stock, Preference Stock and Common Stock shall be as provided
by law or set forth in the Articles of Incorporation of the Company.
Section 6 — Inspectors: In advance of any meeting of shareholders the Board of Directors shall appoint one or more inspectors to act at
such meeting or any adjournment thereof. The inspectors shall have such powers and duties as are provided by law.
Section 7 — Notice of Shareholder Business and Director Nominations:
(A) Annual Meetings of Shareholders.
(1) Nominations of persons for election to the Board of Directors of the Company and the proposal of business to be considered by the
shareholders at an annual meeting of shareholders may be made (i) pursuant to the Company’s notice of meeting, (ii) by or at the direction
of the Board of Directors, or (iii) by any shareholder of the Company who (x) is a shareholder of record at the time of giving notice provided
for in this Bylaw and at the time of the annual meeting of shareholders, (y) is entitled to vote at the meeting, and (z) complies with the notice
procedures as to such business or nomination set forth in this Bylaw. Clause (iii) of this paragraph shall be the exclusive means for a
shareholder to make nominations or submit other business (other than
matters properly brought under Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and included in the
Company’s notice of meeting) before an annual meeting of shareholders.
(2) For nominations or other business to be properly brought before an annual meeting by a shareholder pursuant to clause (iii) of
paragraph (A)(1) of this Section 7, such other business must be a proper subject for shareholder action under Michigan corporation law,
and the shareholder must have given timely notice of such nomination or other business in writing to the Secretary of the Company. To be
timely, a shareholder’s notice shall be delivered to the Secretary at the principal executive offices of the Company not earlier than the
ninetieth (90th) day and not later than the sixtieth (60th) day prior to the first anniversary of the preceding year’s annual meeting date;
provided, however, that in the event that the date of the annual meeting is more than thirty (30) days before or after such anniversary date,
notice by the shareholder to be timely must be so delivered no later than the tenth (10th) day following the date on which public
announcement of the date of such meeting is first made by the Company. In no event shall the public announcement of an adjournment of
an annual meeting commence a new time period for the giving of a shareholder’s notice as described above.
To be in proper form, a shareholder’s notice to the Secretary must set forth:
(i) the following as to the shareholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or business
proposal is made:
(a) the name and address of such shareholder, as it appears on the Company’s books, and of the beneficial owner, if any;
(b) the class or series and number of shares of capital stock of the Company that are owned beneficially and of record by such
shareholder and beneficial owner, if any, as of the date of such notice (which information shall be supplemented by such shareholder
and beneficial owner, if any, not later than ten (10) days after the record date for the meeting to disclose such ownership as of the record
date);
(c) a description of any agreement, arrangement or understanding (including any derivative or short positions, profit interests,
options, hedging transactions, and borrowed or loaned shares) that has been entered into as of the date of such notice by, or on behalf
of, the shareholder or beneficial owner, if any, or any of their affiliates or associates, the effect or intent of which is to mitigate loss to,
manage risk or benefit of share price changes for, or increase or decrease the voting power of the shareholder or beneficial owner, if any,
or any of their affiliates or associates with respect to shares of stock of the Company, and a representation that the shareholder or
beneficial owner, if any, will notify the Company in writing of any such agreement, arrangement or understanding in effect as of the
record date for the meeting promptly following the later of the record date or the date notice of the record date is first publicly disclosed;
(d) any proxy, contract, arrangement, understanding or relationship pursuant to which shareholder or beneficial owner, if any, has a
right to vote any shares of any security of the Company; and
(e) any other information relating to such shareholder and beneficial owner, if any, that would be required to be disclosed in a proxy
statement or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or for the
election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated
thereunder;
(ii) the following additional information if the notice relates to any business other than the nomination of a director that the shareholder
proposes to bring before the meeting:
(a) a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the
meeting, the text of the proposal, and any material interest of such shareholder or beneficial owner, if any, in such business; and
(b) a description of all agreements, arrangements and understandings between such shareholder and beneficial owner, if any, and any
other person or persons (including their names) in connection with the proposal of such business by such shareholder;
(iii) the following additional information as to each person whom the shareholder proposes to nominate for election as a director:
(a) the name, age, and business and residential addresses of such person;
(b) the principal occupation or employment of such person;
(c) the number of shares of capital stock of the Company beneficially owned by such person;
(d) such person’s written consent to being named in the proxy statement as a nominee and serving as a director if elected;
(e) such other information relating to such person that would be required to be disclosed in a proxy statement or other filings required
to be made in connection with proxy solicitations of proxies for election of directors in a contested election pursuant to Section 14 of the
Exchange Act and the rules and regulations promulgated thereunder; and
(f) an undertaking to provide such other information as the Company may reasonably require to determine the eligibility of such
person to serve as an independent director of the Company or that could be material to a reasonable
shareholder’s understanding of the independence, or lack thereof, of such person;

(iv) a representation that the shareholder or beneficial owner, if any, intends to appear in person or by proxy at the meeting to propose
such business or make such nomination; and
(v) a representation whether the shareholder or beneficial owner, if any, intends or is part of a group which intends (a) to deliver a proxy
statement and/or form of proxy to holders of at least the percentage of the Company’s outstanding capital stock required to approve the
proposal or elect the nominee and/or (b) otherwise to solicit proxies from shareholders in support of such proposal or nomination.
(B) Special Meetings of Shareholders.
Only such business shall be conducted at a special meeting of shareholders as shall have been brought before the meeting of
shareholders pursuant to the Company’s notice of meeting. Nominations of persons for election to the Board of Directors may be made at a
special meeting of shareholders only if directors are to be elected at such meeting pursuant to the Company’s notice of meeting. To be
properly brought before a special meeting, nominations of persons for election to the Board of Directors must be (i) made by or at the
direction of the Board of Directors or (ii) provided that the Board of Directors has determined that directors shall be elected at such meeting,
made by any shareholder of the Company, who (x) is a shareholder of record at the time of giving of notice provided for in this Bylaw and at
the time of the special meeting, (y) is entitled to vote at the meeting, and (z) complies with the notice procedures set forth in this Bylaw.
Clause (ii) of this paragraph shall be the exclusive means for a shareholder to make nominations for director before a special meeting of
shareholders.
For nominations to be properly brought before a special meeting by a shareholder pursuant to clause (ii) of the preceding paragraph, the
shareholder must have given timely notice of the nomination to the Secretary of the Company in the form required by paragraph (A)(2) of
this section 7. To be timely, a shareholder’s notice shall be delivered to the Secretary at the principal executive offices of the Company not
earlier than the ninetieth (90th) day prior to such special meeting date and not later than the later of the sixtieth (60th) day prior to such
special meeting date and the tenth (10th) day following the day on which public announcement is first made of the date of the special
meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall the public announcement
of an adjournment of a special meeting commence a new time period for the giving of a shareholder’s notice as described above.
(C) General.
(1) Only such persons who are nominated in accordance with the procedures set forth in this Bylaw shall be eligible to be elected as
directors at a meeting of shareholders, and only such business shall be conducted at a meeting of shareholders as shall have been brought
before the meeting in accordance with the procedures set forth in this Bylaw. Except as otherwise provided by law, the Articles of
Incorporation or these
Bylaws, the Chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be
brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this Bylaw and, if any
proposed nomination or business is not in compliance with this Bylaw, to declare that such proposal shall be disregarded.
(2) For purposes of this Bylaw, “public announcement” shall mean disclosure in a press release reported by the PR Newswire or
comparable national news service or in a document publicly filed by the Company with the Securities and Exchange Commission pursuant
to Section 13, 14 or 15(d) of the Exchange Act and the rules and regulations promulgated thereunder.
(3) Nothing in this Bylaw shall be deemed to affect any rights of (i) shareholders to request inclusion of proposals in the Company’s
proxy statement pursuant to Rule 14a-8 under the Exchange Act or (ii) the holders of any series of preferred stock if and to the extent
provided for under law, the Articles of Incorporation or these Bylaws.
ARTICLE V: DIRECTORS
Section 1 — Number: The Board of Directors of the Company shall consist of not less than seven (7) nor more than seventeen
(17) members, as fixed from time to time by resolution of the Board of Directors.
Section 2 — Election: The Directors shall be elected annually at the annual meeting of the shareholders or at any adjournment thereof.
Section 3 — Term of Office: Subject to the provisions of the Articles of Incorporation of the Company and unless otherwise provided by
law, the Directors shall hold office from the date of their election until the next succeeding annual meeting and until their successors are
elected and shall qualify.
Section 4 — Vacancies: Any vacancy or vacancies in the Board of Directors arising from any cause may be filled by the affirmative vote of a
majority of the Directors then in office although less than a quorum. An increase in the number of members shall be construed as creating a
vacancy.
ARTICLE VI: DIRECTORS’ MEETINGS

Section 1 — Organization Meeting: As soon as possible after their election, the Board of Directors shall meet and organize and may also
transact other business.
Section 2 — Other Meetings: Meetings of the Board of Directors may be held at any time upon call of the Secretary or an Assistant
Secretary made at the direction of the Chairman of the Board, the President, a Vice Chairman, if any, or a Vice President.
Section 3 — Place of Meeting: All meetings of Directors shall be held at such place within or without the State of Michigan as may be
designated in the call therefor.
Section 4 — Notice: A reasonable notice of all meetings, in writing or otherwise, shall be given to each Director or sent to the Director’s
residence or place of business; provided, however, that no notice shall be required for an organization meeting if held on the same day as
the shareholders’ meeting at which the Directors were elected.
No notice of the holding of an adjourned meeting shall be necessary.
Notice of all meetings shall specify the time and place of holding the meeting and unless otherwise stated any and all business may be
transacted at any such meeting.
Notice of the time, place and purpose of any meeting may be waived in writing either before or after the holding thereof.
Section 5 — Quorum: At all meetings of the Board of Directors a majority of the Board then in office shall constitute a quorum but a majority
of the Directors present may convene and adjourn any such meeting from time to time until a quorum shall be present; provided, that if the
Board shall consist of ten (10) and not more than fifteen (15), then five (5) members shall constitute a quorum; and if the Board shall consist
of more than fifteen (15), then seven (7) members shall constitute a quorum.
Section 6 — Voting: All questions coming before any meeting of the Board of Directors for action shall be decided by a majority vote of the
Directors present at such meeting, unless otherwise provided by law, the Articles of Incorporation of the Company or by these Bylaws.
Section 7 — Participation by Communications Equipment: A Director or a member of a Committee designated by the Board of Directors may
participate in a meeting by means of conference telephone or similar communications equipment by means of which all persons participating
in the meeting can hear each other. Participation in a meeting by such means shall constitute presence in person at the meeting.
Section 8 — Action Without Meeting: Any action required or permitted to be taken pursuant to authorization voted at a meeting of the
Board of Directors or a Committee thereof, may be taken without a meeting if, before or after the action, all members of the Board or of the
Committee consent thereto in writing. The written consents shall be filed with the minutes of the proceedings of the Board or Committee,
and the consents shall have the same effect as a vote of the Board or Committee for all purposes.
ARTICLE VII: EXECUTIVE AND OTHER COMMITTEES

Section 1 — Number and Qualifications: By resolution passed by a majority of the whole Board, the Board of Directors may from time to
time designate one or more of their number to constitute an Executive or any other Committee of the Board, as the Board of Directors may
from time to time determine to be desirable, and may fix the number of members and designate the Chairperson of each such Committee,
except that the Audit
Committee shall consist of not less than three outside members of the Board of Directors. Except as provided by law, the powers of each
such Committee shall be as defined in the resolution or resolutions of the Board of Directors relating to the authorizations of such
Committee, and may include, if such resolution or resolutions so provide, the power and authority to declare a dividend or to authorize the
issuance of shares of stock of the Company.
Section 2 — Appointment: The appointment of members of each such Committee, or other action respecting any Committee, may take place
at any meeting of the Directors.
Section 3 — Term of Office: The members of each Committee shall hold office at the pleasure of the Board of Directors.
Section 4 — Vacancies: Any vacancy or vacancies in any such Committee arising from any cause shall be filled by resolution passed by a
majority of the whole Board of Directors. By like vote the Board may designate one or more Directors to serve as alternate members of a
Committee, who may replace an absent or disqualified member at a meeting of a Committee; provided, however, in the absence or
disqualification of a member of a Committee, the members of the Committee present at a meeting and not disqualified from voting, whether
or not constituting a quorum, may unanimously appoint another member of the Board of Directors to act in the place of the absent or
disqualified member.
Section 5 — Minutes: Except as provided in Section 2 of Article X hereof or as otherwise determined by the Board of Directors, each such
Committee shall make a written report or recommendation following its meetings or keep minutes of all its meetings.
Section 6 — Quorum: At all meetings of any duly authorized Committee of the Board of Directors, a majority of the members of such
Committee shall constitute a quorum but a majority of the members present may convene and adjourn any such meeting from time to time
until a quorum shall be present; provided, that with respect to any Committee of the Board other than the Executive Committee, if the
membership of such Committee is four (4) or less, then two (2) members of such Committee shall constitute a quorum and one member may
convene and adjourn any such meeting from time to time until a quorum shall be present.
ARTICLE VIII: OFFICERS

Section 1 — Election: The officers shall be chosen by the Board of Directors. The Company shall have a Chairman of the Board, a President,
a Secretary and a Treasurer, and such other officers as the Board of Directors may from time to time determine, who shall have respectively
such duties and authority as may be provided by these Bylaws or as may be provided by resolution of the Board of Directors not
inconsistent herewith. Any two (2) or more of such offices may be held by the same person but no officer shall execute, acknowledge or
verify any instrument in more than one capacity if such instrument is required by law, by the Articles of Incorporation of the Company or
by these Bylaws to be executed, acknowledged or verified by two (2) or more officers.
Section 2 — Qualifications: The Chairman of the Board and Vice Chairman, if any, shall be chosen from among the Board of Directors, but
the other officers need not be members of the Board.
Section 3 — Vacancies: Any vacancy or vacancies among the officers arising from any cause shall be filled by the Board of Directors. In
case of the absence of any officer of the Company or for any other reason that the Board of Directors may deem sufficient, the Board of
Directors may delegate, for the time being, the powers or duties, or any of them, of any officer to any other officer or to any Director.
Section 4 — Term of Office: Each officer of the Company shall hold office until the officer’s successor is chosen and qualified, or until the
officer’s resignation or removal. Any officer appointed by the Board of Directors may be removed at any time by the Board of Directors with
or without cause.
Section 5 — Compensation: The compensation of the officers shall be fixed by a committee of the Board of Directors composed of
independent directors as defined by applicable law and regulation.
ARTICLE IX: AGENTS

Section 1 — Resident Agent: The Company shall have and continuously maintain a resident agent, which may be either an individual
resident in the State of Michigan whose business office is identical with the Company’s registered office or a Michigan corporation or a
foreign corporation authorized to transact business in Michigan and having a business office identical with the Company’s registered
office. The Board of Directors shall appoint the resident agent.
Section 2 — Other Agents: The Board of Directors may appoint such other agents as may in their judgment be necessary for the proper
conduct of the business of the Company.
ARTICLE X: POWERS AND DUTIES

Section 1 — Directors: The business and affairs of the Company shall be managed by the Board of Directors which shall have and exercise
all of the powers and authority of the Company except as otherwise provided by law, by the Articles of Incorporation of the Company or by
these Bylaws.
Section 2 — Executive Committee: In the interim between meetings of the Board of Directors, the Executive Committee shall have and
exercise all the powers and authority of the Board of Directors except as otherwise provided by law. The Executive Committee shall meet
from time to time on the call of the Chairman of the Board or the Chairman of the Committee. The Secretary shall keep minutes in sufficient
detail to advise fully the Board of Directors of the actions taken by the Committee and shall submit copies of such minutes to the Board of
Directors for its approval or other action at its next meeting.
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Section 3 — Chairman of the Board: The Chairman of the Board shall preside at all meetings of Directors and shareholders; shall perform
and do all acts and things incident to the position of Chairman of the Board; and shall perform such other duties as may be assigned from
time to time by the Board of Directors or the Executive Committee.
Section 4 — Chief Executive Officer: The Chief Executive Officer, subject to the supervision of the Board of Directors and of the Executive
Committee, shall have general charge of the business and affairs of the Company. Unless otherwise provided by the Board or the Executive
Committee, the Chief Executive Officer shall have full power and authority on behalf of the Company to execute any shareholder, member or
partnership consents and to attend and act and to vote in person or by proxy at any meetings of shareholders, members or partners of any
entity in which the Company may own stock or an interest and at any such meeting shall possess and may exercise any and all the rights
and powers incident to the ownership of such stock or interest and which, as the owner thereof, the Company might have possessed and
exercised if present. If the Chief Executive Officer shall not exercise such powers, or in the absence or inability to act of the Chief Executive
Officer, the President may exercise such powers. In the absence or inability to act of the President, a Vice Chairman, if any, may exercise
such powers. In the absence or inability to act of a Vice Chairman, any Vice President may exercise such powers. The Board of Directors or
Executive Committee by resolution from time to time may confer like powers upon any other person or persons. In the absence of the
Chairman of the Board and a Vice Chairman, the Chief Executive Officer shall preside at meetings of Directors. In the absence of the
Chairman of the Board, the Chief Executive Officer shall preside at meetings of shareholders.
Section 5 — President: The President shall be the chief operating officer of the Company and shall perform and do all acts and things
incident to such position; and shall perform such other duties as may be assigned from time to time by the Board of Directors, the Executive
Committee, the Chairman of the Board or the Chief Executive Officer.
Section 6 — Vice Chairman: The Vice Chairman, if any, shall perform such of the duties of the Chairman of the Board or the President on
behalf of the Company as may be respectively assigned from time to time by the Board of Directors, the Executive Committee, the Chairman
of the Board or the President. In the absence of the Chairman of the Board, the Vice Chairman shall preside at meetings of Directors. In the
absence of the Chairman of the Board and the President, the Vice Chairman shall preside at meetings of shareholders.
Section 7 — Vice Presidents: Vice Presidents, if any, shall perform such of the duties of the Chairman of the Board or the President or the
Vice Chairman, if any, on behalf of the Company as may be respectively assigned from time to time by the Board of Directors, the Executive
Committee, the Chairman of the Board or the President or a Vice Chairman. The Board of Directors or Executive Committee may designate
one or more of the Vice Presidents as Executive Vice President or Senior Vice President.
Section 8 — Controller: Subject to the Board of Directors, the Executive Committee, the Chairman of the Board, the President and the Vice
President having general charge of accounting, the Controller, if any, shall have charge of the supervision of the accounting
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system of the Company, including the preparation and filing of all tax returns and financial reports required by law to be made to any and all
public authorities and officials; and shall perform such other duties as may be assigned, from time to time, by the Board of Directors, the
Executive Committee, the Chairman of the Board, the President, a Vice Chairman, if any, or Vice President having general charge of
accounting.
Section 9 — Treasurer: It shall be the duty of the Treasurer to have the care and custody of all the funds and securities, including the
investment thereof, of the Company which may come into the Treasurer’s hands, and to endorse checks, drafts and other instruments for
the payment of money for deposit or collection when necessary or proper and to deposit the same to the credit of the Company in such
bank or banks or depository as the Treasurer may designate, and the Treasurer may endorse all commercial documents requiring
endorsements for or on behalf of the Company. The Treasurer may sign all receipts and vouchers for the payments made to the Company;
shall render an account of transactions to the Board of Directors or the Executive Committee as often as the Board or the Committee shall
require; and shall perform all acts incident to the position of Treasurer, subject to the control of the Board of Directors, the Executive
Committee, the Chairman of the Board, the President and a Vice Chairman, if any.
Section 10 — Secretary: The Secretary shall act as custodian of and record the minutes of all meetings of the Board of Directors, of the
Executive Committee, of the shareholders and of any Committees of the Board of Directors which keep formal minutes; shall attend to the
giving and serving of all notices of the Company; shall prepare or cause to be prepared the list of shareholders required to be produced at
any meeting; shall attest the seal of the Company upon all contracts and instruments executed under such seal and shall affix or cause to be
affixed the seal of the Company thereto and to all certificates of shares of the capital stock; shall have charge of the stock records of the
Company and such other books and papers as the Board of Directors, the Executive Committee, the Chairman of the Board, the President or
a Vice Chairman, if any, may direct; and shall, in general, perform all the duties of Secretary, subject to the control of the Board of Directors,
the Executive Committee, the Chairman of the Board, the President and a Vice Chairman, if any.
Section 11 — General Counsel: The General Counsel, if any, shall have charge of all matters of a legal nature involving the Company.
Section 12 — Assistant Controllers, Assistant Secretaries and Assistant Treasurers: An Assistant Controller, an Assistant Secretary or an
Assistant Treasurer, if any, shall, in the absence or inability to act or at the request of the Controller, Secretary or Treasurer, respectively,
perform the duties of the Controller or Secretary or Treasurer, respectively, and shall perform such other duties as may from time to time be
assigned by the Board of Directors, the Executive Committee, the Chairman of the Board, the President or a Vice Chairman, if any. The
performance of any such duty shall be conclusive evidence of their right to act.
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Section 13 — Principal Financial Officer and Principal Accounting Officer: The Board of Directors or the Executive Committee may from time
to time designate officers of the Company to be the Principal Financial Officer and the Principal Accounting Officer of the Company.
ARTICLE XI: STOCK

Section 1 – Certificated and Uncertificated Shares: The shares of stock of the Corporation may be either certificated shares or uncertificated
shares or a combination thereof. A resolution approved by a majority of the directors may provide that some or all of any or all classes and
series of the shares of the Company will be uncertificated shares. Every owner of certificated shares of the Company shall be entitled to a
certificate, to be in such form as shall be prescribed by law, the Articles of Incorporation of the Company or by these Bylaws. Each
certificate shall be numbered and shall be entered on the stock records of the Company and registered as they are issued, and shall be
signed, in the name of the Company, by the Chairman of the Board, Vice Chairman, if any, President or one of the Vice Presidents and by the
Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary; and shall be sealed with the seal of the Company or a
facsimile thereof, or by such officers as the Board of Directors may designate.
Section 2 – Facsimile Signatures: When a certificate is countersigned (1) by a transfer agent, or (2) by a transfer clerk acting on behalf of the
Company and a registrar, the signatures of any such Chairman of the Board, Vice Chairman, if any, President, Vice President, Treasurer,
Assistant Treasurer, Secretary or Assistant Secretary may be facsimile. In case any officer or officers who have signed, or whose facsimile
signature or signatures have been used on any such certificate or certificates shall cease to be such officer or officers of the Company
before such certificate or certificates have been delivered by the Company, such certificate or certificates may nevertheless be adopted by
the Company and be issued and delivered as though the person or persons who signed such certificate or certificates or whose facsimile
signature or signatures have been used thereon had not ceased to be such officer or officers of the Company.
Section 3 — Stock – Preferred, Class A Preferred, Preference and Common: The designations, relative rights, preferences, limitations and
voting powers, or restrictions, or qualifications of the shares of Preferred Stock, Class A Preferred Stock, Preference Stock and Common
Stock shall be as set forth in the Articles of Incorporation of the Company.
Section 4 — Replacing Certificates: In case of the alleged loss, theft or destruction of any certificate of shares of stock and the submission
of proper proof thereof, a new certificate may be issued in lieu thereof upon delivery to the Company by the owner or legal representative of
a bond of indemnity against any claim that may be made against the Company on account of such alleged lost, stolen or destroyed
certificate or such issuance of a new certificate.
Section 5 – Stock Records and Transfers of Stock: Transfers of shares of stock of the Company shall be made by the transfer agent and
registrar on the Books of the
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Company after receipt of a request with proper evidence of succession, assignment, or authority to transfer by the record holder of such
stock, or by an attorney lawfully constituted in writing, and, in the case of stock represented by a certificate, upon surrender of the
certificate duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer. Subject to the foregoing,
the Board of Directors shall have power and authority to adopt resolutions as it shall deem necessary or appropriate concerning the issue,
transfer, and registration of shares of stock of the Corporation, and to appoint and remove transfer agents and registrars of transfers.
The Board of Directors may fix a date preceding the date fixed for any meeting of the shareholders or any dividend payment date or the date
for the allotment of rights or the date when any change, conversion or exchange of stock shall go into effect or the date for any other
action, as the record date for the determination of the shareholders entitled to notice of and to vote at such meeting or to receive payment
of such dividend or to receive such allotment of rights or to exercise such rights in respect of any such change, conversion or exchange of
stock or to take such other action, as the case may be, notwithstanding any transfer of shares on the records of the Company or otherwise
after any such record date fixed as aforesaid. The record date so fixed by the Board shall not be more than sixty (60) nor less than ten
(10) days before the date of the meeting of the shareholders, nor more than sixty (60) days before any other action. If the Board of Directors
does not fix a date of record, as aforesaid, the record date shall be as provided by law.
Section 6 — Registered Shareholders: The Company shall be entitled to recognize the exclusive right of a person registered on its books as
the owner of shares to receive dividends, and to vote as such owner, and shall be entitled to hold liable for calls and assessments a person
so registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided
by applicable statute.
ARTICLE XII: AUTHORIZED SIGNATURES

Section 1 — Authorized Signatures: All checks, drafts and other negotiable instruments issued by the Company shall be made in the name
of the Company and shall be signed manually or signed by facsimile signature by such one of the officers of the Company or such other
person as the Chairman of the Board, the Vice Chairman of the Board, President or the Treasurer may from time to time designate.
ARTICLE XIII: INSURANCE

Section 1 — Insurance: The Company may purchase and maintain liability insurance, to the full extent permitted by law, on behalf of any
person who is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against
such person and incurred by such person in any such capacity.
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ARTICLE XIV: AMENDMENTS OF BYLAWS

Section 1 — Amendments, How Effected: These Bylaws may be amended or repealed, or new Bylaws may be adopted, either by the majority
vote of the votes cast by the shareholders entitled to vote thereon or by the majority vote of the Directors then in office at any meeting of
the Directors.
Amended and Restated

January 22, 2009
Exhibit (4)(f)
Filed December 20, 2004
CERTIFICATE OF DESIGNATION
OF
4.50% CUMULATIVE CONVERTIBLE PREFERRED STOCK, SERIES B
OF
Pursuant to Section 302(4) of the Michigan Business Corporation Act, MCLA §450.1302(4):
CMS ENERGY CORPORATION, a Michigan corporation (the “Corporation”), does hereby certify that the following resolution was duly
adopted pursuant to the authority of the Board of Directors of the Corporation, with the provisions thereof fixing the number of shares of the
series and the dividend rate being set through a Special Financing Committee of the Board of Directors:
RESOLVED: That, pursuant to the authority expressly granted to and vested in the Board of Directors of the Corporation by the provisions
of Article III of the Restated Articles of Incorporation of the Corporation, as amended from time to time (the “Articles of Incorporation”), and
pursuant to Section 302(4) of the Michigan Business Corporation Act, the Board of Directors hereby establishes a series of the preferred stock
of the Corporation and hereby states that the series’ voting powers, designations, preferences and relative, participating, optional or other
special rights, and qualifications, limitations or restrictions thereof (in addition to the provisions set forth in the Articles of Incorporation
which are applicable to the preferred stock of all series), shall be as follows:
1. Designation and Amount; Ranking.
(a) There shall be created from the 10,000,000 shares of preferred stock, par value $0.01 per share, of the Corporation authorized to be issued
pursuant to the Articles of Incorporation, a series of preferred stock, designated as the “4.50% Cumulative Convertible Preferred Stock, Series
B,” par value $0.01 per share (the “Preferred Stock”), and the number of shares of such series shall be 4,910,000. Such number of shares may be
decreased by resolution of the Board of Directors; provided that no decrease shall reduce the number of shares of Preferred Stock to a number
less than that of the shares of Preferred Stock then outstanding plus the number of shares issuable upon exercise of options or rights then
outstanding. The Preferred Stock was exchanged for 4,910,000 of then outstanding shares of 4.50% Cumulative Convertible Preferred Stock,
par value $0.01 per share (the “Original Preferred Stock”), established pursuant to the Certificate of Designation of 4.50% Cumulative
Convertible Preferred Stock of CMS Energy Corporation dated December 4, 2003 pursuant to an exchange offer.
(b) The Preferred Stock will, with respect to both dividend rights and rights upon the liquidation, winding-up or dissolution of the
Corporation, rank (i) senior to all Junior Stock and (ii) on a parity with all other Parity Stock.
2. Definitions. As used herein, the following terms shall have the following meanings:
“Accumulated Dividends” shall mean, with respect to any share of Preferred Stock, as of any date, the aggregate accumulated and
unpaid dividends on such share from and including the most recent Dividend Payment Date to which dividends have been paid (or the
Issue Date, if such date is prior to the first Dividend Payment Date) to but not including such date.
“Additional Dividends” shall have the meaning given to it in Section 3(b).
“Additional Shares” shall have the meaning given to it in Section 7(f)(vi).
“Affiliate” shall have the meaning ascribed to it, on the date hereof, under Rule 405 of the Securities Act.
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“Agent Members” shall have the meaning given to it in Section 11(a)(ii).

“Board of Directors” shall mean the Board of Directors of the Corporation or, with respect to any action to be taken by the Board of
Directors, any committee (special or otherwise) of the Board of Directors duly authorized to take such action.
“Business Day” shall mean any day other than a Saturday, Sunday or other day on which commercial banks in The City of New York are
authorized or required by law or executive order to close.
“Certificate of Designation” means this certificate of designation designating the Preferred Stock.
“Certificated Preferred Stock” shall have the meaning given to it in Section 4(f).
“Common Equity” of any Person means capital stock of such Person that is generally entitled to (i) vote in the election of directors of
such Person or (ii) if such Person is not a corporation, vote or otherwise participate in the selection of the governing body, partners,
managers or others that will control the management or policies of such Person.
“Common Stock” shall mean the common stock, par value $0.01 per share, of the Corporation, or any other class of stock resulting from
successive changes or reclassifications of such common stock consisting solely of changes in par value, or from par value to no par value,
or as a result of a subdivision, combination or merger, consolidation or similar transaction in which the Corporation is a constituent
corporation.
“Continuing Director” means a director who either was a member of the Board of Directors on November 9, 2004 or who becomes a
member of the Board of Directors subsequent to that date and whose appointment, election or nomination for election by the Corporation’s
shareholders is duly approved by a majority of the Continuing Directors on the Board of Directors at the time of such approval, either by a
specific vote or by approval of the proxy statement issued by the Corporation on behalf of the Board of Directors in which such individual
is named as nominee for director.
“Conversion Agent” means the office or agency designated by the Corporation where Preferred Stock may be presented for conversion.
Initially, the Conversion Agent shall be the Corporation located at One Energy Plaza, Jackson, Michigan 49201.
“Conversion Date” shall have the meaning given to it in Section 7(b).
“Conversion Notice” shall have the meaning given to it in Section 7(a).
“Conversion Price” shall mean $9.893 per share of Common Stock.
“Conversion Rate” shall mean the number of shares of Common Stock issuable upon conversion of a share of Preferred Stock per
Liquidation Preference, subject to adjustment as herein set forth. The initial Conversion Rate is 5.0541 shares of Common Stock issuable
upon conversion of a share of Preferred Stock per Liquidation Preference.
“Conversion Value” shall have the meaning given to it in Section 7(m)(i).
“Corporation Notice” shall have the meaning given to it in Section 4(e).
“Corporation Notice Date” shall have the meaning given to it in Section 4(e).
“Determination Date” shall have the meaning given to it in Section 7(m).
“Distributed Assets or Securities” shall have the meaning given to it in Section 7(f)(iii).
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“Dividend Adjustment Amount” shall have the meaning given to it in Section 7(f)(iv)(B).
“Dividend Payment Date” shall mean March 1, June 1, September 1 and December 1 of each year, commencing March 1, 2005.
“Dividend Rate” shall have the meaning given to it in Section 3(a).
“Dividend Record Date” shall mean February 15, May 15, August 15 and November 15 of each year.
“DTC” or “Depository” means The Depository Trust Company.
“Effective Date” shall have the meaning given to it in Section 7(a)(iii).
“Equity Interests” means any capital stock, partnership, joint venture, member or limited liability or unlimited liability company interest,
beneficial interest in a trust or similar entity or other equity interest or investment of whatever nature.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Fair Market Value” means the amount which a willing buyer would pay a willing seller in an arm’s length transaction.
A “Fundamental Change” shall be deemed to have occurred at such time after the original issuance of the Preferred Stock that any of the
following occurs: (i) the Common Stock or other capital stock into which the Preferred Stock is convertible is neither listed for trading on a
United States national securities exchange nor approved for trading on the NASDAQ National Market or another established automated
over-the-counter trading market in the United States; (ii) a “person” or “group” within the meaning of Section 13(d) of the Exchange Act,
other than the Corporation, any subsidiary of the Corporation or any employee benefit plan of the Corporation or any such subsidiary, files
a Schedule TO (or any other schedule, form or report under the Exchange Act) disclosing that such person or group has become the direct
or indirect ultimate “beneficial owner” (as such term is used in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person or group
shall be deemed to have “beneficial ownership” of all shares that such Person or group has the right to acquire whether such right is
exercisable immediately or only after the passage of time) of Common Equity of the Corporation representing more than 50% of the voting
power of the Corporation’s Common Equity; (iii) consummation of any share exchange, consolidation or merger of the Corporation pursuant
to which the Common Stock will be converted into cash, securities or other property or any sale, lease or other transfer (in one transaction
or a series of transactions) of all or substantially all of the consolidated assets of the Corporation and its subsidiaries, taken as a whole, to
any Person (other than the Corporation or one or more of the Corporation’s subsidiaries); provided, however, that a transaction where the
holders of the Corporation’s Common Equity immediately prior to such transaction own, directly or indirectly, more than 50% of the
aggregate voting power of all classes of Common Equity of the continuing or surviving corporation or transferee immediately after such
event shall not be a Fundamental Change; or (iv) Continuing Directors cease to constitute at least a majority of the Board of Directors;
provided, however, that a Fundamental Change shall not be deemed to have occurred in respect of any of the foregoing if either (1) the Last
Reported Sale Price of Common Stock for any five Trading Days within the ten consecutive Trading Days ending immediately before the
later of the Fundamental Change or the public announcement thereof equals or exceeds 105% of the applicable Conversion Price of the
Preferred Stock in effect immediately before the Fundamental Change or the public announcement thereof or (2) at least 90% of the
consideration (excluding cash payments for fractional shares) in the transaction or transactions constituting the Fundamental Change
consists of shares of capital stock traded on a national securities exchange or quoted on the NASDAQ National Market (or which shall be
so traded or quoted when issued or exchanged in connection with such Fundamental Change) (such securities being referred to as
“Publicly Traded
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Securities”) and as a result of such transaction or transactions the Preferred Stock becomes convertible into such Publicly Traded Securities
(excluding cash payments for fractional shares).
“Fundamental Change Purchase Date” shall have the meaning given to it in Section 4(a).
“Fundamental Change Purchase Notice” shall have the meaning given to it in Section 4(c).
“Fundamental Change Purchase Price” shall have the meaning given to it in Section 4(a).
“Global Preferred Stock” shall have the meaning given to it in Section 11(a)(i).
“Holder” or “holder” shall mean a holder of record of the Preferred Stock.
“Issue Date” shall mean December 15, 2004, the original date of issuance of the Preferred Stock.
“Junior Stock” shall mean all classes of common stock of the Corporation and each other class of capital stock or series of preferred
stock established after the Issue Date, by the Board of Directors, the terms of which do not expressly provide that such class or series ranks
senior to or on parity with the Preferred Stock as to dividend rights or rights upon the liquidation, winding-up or dissolution of the
Corporation.
“Last Reported Sale Price” of the applicable security on any date means the closing sale price per share (or, if no closing sale price is
reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average ask prices)
on that date as reported in composite transactions for the principal U.S. securities exchange on which the applicable security is traded or, if
the applicable security is not listed on a U.S. national or regional securities exchange, as reported by the NASDAQ National Market. If the
applicable security is not listed for trading on a U.S. national or regional securities exchange and not reported by the NASDAQ National
Market on the relevant date, the Last Reported Sale Price shall be the last quoted bid price for the applicable security in the over-the-
counter market on the relevant date as reported by the National Quotation Bureau or similar organization. If the applicable security is not so
quoted, the Last Reported Sale Price will be the average of the mid-point of the last bid and ask prices for the applicable security on the
relevant date from each of at least three nationally recognized independent investment banking firms selected by the Corporation for this
purpose.
“Liquidation Preference” shall mean, with respect to each share of Preferred Stock, $50.00.
“Mandatory Conversion Date” shall have the meaning given to it in Section 8(b).
“Market Price” means the average of the Last Reported Sales Price per share of Common Stock for the 20 Trading Day period ending on
the applicable date of determination (if the applicable date of determination is a Trading Day or, if not, then on the last Trading Day prior to
such applicable date of determination), appropriately adjusted to take into account the occurrence, during the period commencing on the
first of the Trading Days during such 20 Trading Day period and ending on the applicable date of determination, of any event that would
result in an adjustment of the Conversion Rate under this Certificate of Designation.
“Market Value” shall mean the average closing price of the Common Stock for a five consecutive Trading Day period on the NYSE (or
such other national securities exchange or automated quotation system on which the Common Stock is then listed or authorized for
quotation or, if the Common Stock is not so listed or authorized for quotation, an amount determined in good faith by the Board of Directors
to be the fair value of the Common Stock).
“Maximum Conversion Rate” shall have the meaning given to it in Section 7(f)(xi).
“Net Shares” shall have the meaning given to it in Section 7(m)(ii)(B).
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“Net Share Amount” shall have the meaning given to it in Section 7(m)(ii)(B).
“NYSE” shall mean the New York Stock Exchange, Inc.
“Officer” means the Chairman of the Board of Directors, the President, any Vice President, the Treasurer, the Secretary or any Assistant
Secretary of the Corporation.
“Officers’ Certificate” means a certificate signed by two Officers.
“Opinion of Counsel’ means a written opinion from legal counsel who is acceptable to the Transfer Agent. The counsel may be an
employee of or counsel to the Corporation or the Transfer Agent.
“Original Preferred Stock” shall have the meaning given to it in Section 3(a).
“Parity Stock” shall mean any class of capital stock or series of preferred stock established as of or after the Issue Date by the Board of
Directors, the terms of which expressly provide that such class or series will rank on parity with the Preferred Stock as to dividend rights or
rights upon the liquidation, winding-up or dissolution of the Corporation.
“Paying Agent” means any Person authorized by the Corporation to pay the dividends or Fundamental Change Purchase Price on any of
the shares of Preferred Stock on behalf of the Corporation. Initially, the Paying Agent shall be the Corporation.
“Person” shall mean any individual, corporation, general partnership, limited partnership, limited liability partnership, joint venture,
association, joint-stock company, trust, limited liability company, unincorporated organization or government or any agency or political
subdivision thereof.
“Pre-Dividend Sale Price” shall have the meaning given to it in Section 7(f)(iv)(A).
“Principal Return” shall have the meaning given to it in Section 7(m)(ii)(A).
“Public Acquirer Change of Control” shall have the meaning given to it in Section 7(f)(vii).
“Public Acquirer Common Stock” shall have the meaning given to it in Section 7(f)(vii).
“Registration Default” shall have the meaning given to it in Section 3(b).
“Registration Rights Agreement” means the Registration Rights Agreement dated as of December 5, 2003, among the Corporation,
Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and the certain other initial purchasers of the Original
Preferred Stock.
“SEC” or “Commission” shall mean the Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended.
“Security Register” means the security register recording the holders of Preferred Stock kept at the offices of the Corporation.
“Security Registrar” shall be the Person holding the Security Register, and the Corporation will initially be designated as the Security
Registrar.
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“Senior Stock” shall mean each class of capital stock or series of preferred stock established after the Issue Date by the Board of
Directors, the terms of which expressly provide that such class or series will rank senior to the Preferred Stock as to dividend rights or rights
upon the liquidation, winding-up or dissolution of the Corporation.
“Share Price” means the price per share of Common Stock paid in connection with a corporate transaction described in Section 7(m)(v)
hereof, which shall be equal to (i) if holders of Common Stock receive only cash in such corporate transaction, the cash amount paid per
share of Common Stock and (ii) in all other cases, the average of the Last Reported Sale Prices of Common Stock on the five Trading Days
up to but not including the Effective Date.
“Shelf Registration Statement” shall mean the shelf registration statement on Form S-3 filed with the SEC on September 24, 2004 to cover
resales of Transfer Restricted Securities by holders thereof, as required by the Registration Rights Agreement.
“Spin-Off Market Price” per share of Common Stock or the Equity Interests in a Subsidiary or other business unit of the Corporation on
any day means the average of the daily Last Reported Sale Prices for the 10 consecutive Trading Days commencing on and including the
fifth Trading Day after the ex date with respect to the issuance or distribution requiring such computations. As used herein, the term “ex
date,” when used with respect to any issuance or distribution, shall mean the first date on which the security trades regular way on the
NYSE or such other national regional exchange or market in which the security trades without the right to receive such issuance or
distribution.
“Subsidiary” means a Person more than 50% of the outstanding voting stock of which is owned, directly or indirectly, by the
Corporation or by one or more other Subsidiaries, or by the Corporation and one or more other Subsidiaries. For the purposes of this
definition, “voting stock” means stock which ordinarily has voting power of the election of directors, whether at all times or only so long as
no senior class of stock has such voting power by reason of any contingency.
“Ten Day Average Closing Stock Price” shall have the meaning given to it in Section 7(m)(i)(B).
“Trading Day” means (i) if the applicable security is listed, admitted for trading or quoted on the NYSE, the NASDAQ National Market or
another national security exchange, a day on which the NYSE, the NASDAQ National Market or another national security exchange is open
for business or (ii) if the applicable security is not so listed, admitted for trading or quoted, any day other than a Saturday or Sunday or a
day on which banking institutions in the State of New York are authorized or obligated by law, regulation or executive order to close.
“Trading Exception” shall have the meaning given to it in Section 7(a)(ii).
“Trading Price” of the Preferred Stock on any date of determination means the average of the secondary market bid quotations per share
of Preferred Stock obtained by the Conversion Agent for $5,000,000 Liquidation Preference of the Preferred Stock at approximately 3:30 p.m.,
New York City time, on such determination date from three independent nationally recognized securities dealers the Corporation selects,
provided that if three such bids cannot reasonably be obtained by the Conversion Agent, but two such bids are obtained, then the average
of the two bids shall be used, and if only one such bid can reasonably be obtained by the Conversion Agent, this one bid shall be used. If
the Conversion Agent cannot reasonably obtain at least one bid for $5,000,000 Liquidation Preference of the Preferred Stock from a
nationally recognized securities dealer, then the Trading Price will be deemed to be less than 95% of the product of the sale price of
Common Stock and the then applicable Conversion Rate.
“Transfer Agent” shall mean the Corporation’s duly appointed transfer agent for the Preferred Stock. Initially, the Corporation will be the
Transfer Agent.
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“Transfer Restricted Securities” shall mean each share of Preferred Stock (or the shares of Common Stock into which such share of
Preferred Stock is convertible) until (i) the date on which such security or its predecessor has been effectively registered under the
Securities Act and disposed of in accordance with the Shelf Registration Statement, (ii) the date on which such security or predecessor is
distributed to the public pursuant to Rule 144 under the Securities Act or is saleable pursuant to Rule 144(k) under the Securities Act or
(iii) the date that such Preferred Stock ceases to be outstanding.
“Voting Rights Class” shall have the meaning given to it in Section 5(a)(i).
“Voting Rights Triggering Event” shall mean the failure of the Corporation to pay dividends on the Preferred Stock with respect to six or
more quarterly periods (whether or not consecutive).
“Voting Stock” shall mean, with respect to any Person, securities of any class or classes of Capital Stock in such Person entitling the
holders thereof (whether at all times or only so long as no senior class of stock has voting power by reason of contingency) generally to
vote in the election of members of the Board of Directors or other governing body of such Person. For purposes of this definition, “Capital
Stock” shall mean, with respect to any Person, any and all shares, interests, participations or other equivalents (however designated) of
corporate stock or partnership interests and any and all warrants, options and rights with respect thereto (whether or not currently
exercisable), including each class of common stock and preferred stock of such Person.
3. Dividends.
(a) The holders of shares of the outstanding Preferred Stock shall be entitled, when, as and if declared by the Board of Directors out of
funds of the Corporation legally available therefor, to receive cumulative cash dividends at the rate per annum of 4.50% per share on the
Liquidation Preference (equivalent to $2.25 per annum per share), payable quarterly in arrears (the “Dividend Rate”). The Dividend Rate may
be increased in the circumstances described in Section 3(b) below. Dividends payable for each full dividend period will be computed by
dividing the Dividend Rate by four and shall be payable in arrears on each Dividend Payment Date (commencing March 1, 2005) for the
quarterly period ending immediately prior to such Dividend Payment Date, to the holders of record of Preferred Stock at the close of business
on the Dividend Record Date applicable to such Dividend Payment Date. Such dividends shall be cumulative from the most recent date as to
which dividends shall have been paid on the Original Preferred Stock or, if no dividends have been paid, from the Issue Date (whether or not in
any dividend period or periods the Board of Directors shall have declared such dividends or there shall be funds of the Corporation legally
available for the payment of such dividends) and shall accumulate on a day-to-day basis, whether or not earned or declared, from and after the
Issue Date. Dividends payable for any partial dividend period shall be computed on the basis of days elapsed over a 360- day year consisting
of twelve 30-day months. Accumulated unpaid dividends accrue and cumulate dividends at the annual rate of 4.50% and are payable in the
manner provided in this Section 3.
(b) If (i) by March 5, 2005, the Shelf Registration Statement has not been amended to cover resales of the Preferred Stock and declared
effective by the Commission, (ii) after the Shelf Registration Statement has been declared effective the Corporation fails to file a post-effective
amendment, prospectus supplement, amendment or supplement to any document incorporated by reference into such prospectus or document
if required by applicable law with the SEC within five business days after a Holder provides the Corporation with certain required information,
if such filing is necessary to enable the Holder to deliver the prospectus to purchasers of such Holder’s Transfer Restricted Securities, (iii) the
Shelf Registration Statement ceases to be effective or fails to be usable without being succeeded within 30 days by a post-effective
amendment or an additional registration statement filed and declared effective (other than as permitted in (ii) above) pursuant to the Exchange
Act that cures the failure of the registration statement to be effective or usable, and (iv) the aggregate duration of any suspension periods in
any period exceeds certain limits described in the Registration Rights Agreement (each such event referred to in clauses (i), (ii), (iii) and (iv) a
“Registration Default”), additional dividends shall accumulate on the Preferred Stock, from and including the date on which any such
Registration Default shall occur to, but excluding, the date on which the Registration Default has been cured, at the rate of 0.25% per year for
the first 90 days following such date and at a
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rate of 0.50% per year thereafter (“Additional Dividends”). With respect to shares of Common Stock issued upon conversion of the Preferred
Stock, Additional Dividends will accumulate on the then applicable conversion price from and including the date on which any such
Registration Default shall occur to, but excluding, the date on which the Registration Default has been cured, at the rate of 0.25% per year for
the first 90 days following such date and at a rate of 0.50% per year thereafter. Except as mentioned above, the Corporation will have no other
liabilities for monetary damages with respect to its registration obligations. The receipt of Additional Dividends will be the sole monetary
remedy available to a Holder if the Corporation fails to meet these obligations.
(c) No dividend will be declared or paid upon, or any sum set apart for the payment of dividends upon, any outstanding share of the
Preferred Stock with respect to any dividend period unless all dividends for all preceding dividend periods have been declared and paid or
declared and a sufficient sum set apart for the payment of such dividend upon all outstanding shares of Preferred Stock.
(d) No dividends or other distributions (other than a dividend or distribution payable solely in shares of Parity Stock or Junior Stock (in the
case of Parity Stock) or Junior Stock (in the case of Junior Stock) and other than cash paid in lieu of fractional shares) may be declared, made
or paid, or set apart for payment upon, any Parity Stock or Junior Stock, nor may any Parity Stock or Junior Stock be redeemed, purchased or
otherwise acquired for any consideration (or any money paid to or made available for a sinking fund for the redemption of any Parity Stock or
Junior Stock) by or on behalf of the Corporation (except by conversion into or exchange for shares of Parity Stock or Junior Stock (in the case
of Parity Stock) or Junior Stock (in the case of Junior Stock)), unless full Accumulated Dividends shall have been or contemporaneously are
declared and paid, or are declared and a sum sufficient for the payment thereof is set apart for such payment, on the Preferred Stock and any
Parity Stock for all dividend payment periods terminating on or prior to the date of such declaration, payment, redemption, purchase or
acquisition. Notwithstanding the foregoing, if full dividends have not been paid on the Preferred Stock and any Parity Stock, dividends may be
declared and paid on the Preferred Stock and such Parity Stock so long as the dividends are declared and paid pro rata so that the amounts of
dividends declared per share on the Preferred Stock and such Parity Stock will in all cases bear to each other the same ratio that accumulated
and unpaid dividends per share on the shares of Preferred Stock and such other Parity Stock bear to each other.
(e) Holders of shares of Preferred Stock shall not be entitled to any dividends on the Preferred Stock, whether payable in cash, property or
stock, in excess of full cumulative dividends and Additional Dividends (if any).
(f) The holders of shares of Preferred Stock at the close of business on a Dividend Record Date will be entitled to receive the dividend
payment on those shares on the corresponding Dividend Payment Date notwithstanding the subsequent conversion thereof or the
Corporation’s default in payment of the dividend due on that Dividend Payment Date. However, shares of Preferred Stock surrendered for
conversion during the period between the close of business on any Dividend Record Date and the close of business on the Business Day
immediately preceding the applicable Dividend Payment Date must be accompanied by payment of an amount equal to the dividend payable
on the shares on that Dividend Payment Date; provided, however, that no such payment need be made if (1) the Corporation has specified a
Mandatory Conversion Date that is after a Dividend Record Date and on or prior to the immediately following Dividend Payment Date or
(2) any accumulated and unpaid dividends exist at the time of conversion with respect to such shares of Preferred Stock to the extent of such
accumulated and unpaid dividends. A holder of shares of Preferred Stock on a Dividend Record Date who (or whose transferee) tenders any
shares for conversion on the corresponding Dividend Payment Date will receive the dividend payable by the Corporation on the Preferred
Stock on that date, and the converting holder need not include payment in the amount of such dividend upon surrender of shares of Preferred
Stock for conversion. Except as provided above with respect to a voluntary conversion pursuant to Section 7, the Corporation shall make no
payment or allowance for unpaid dividends, whether or not in arrears, on converted shares or for dividends on the shares of Common Stock
issued upon conversion.
(g) In any case where any Dividend Payment Date or Conversion Date (including upon the occurrence of a Fundamental Change) of any
Preferred Stock shall not be a Business Day, at any place of payment, then payment of dividends (and Additional Dividends, if any) need not
be made on such date, but may be made on the next
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succeeding Business Day at such place of payment with the same force and effect as if made on the dividend payment date or Conversion
Date (including upon the occurrence of a Fundamental Change); and no dividends shall accumulate on the amount so payable for the period
from and after such Dividend Payment Date or Conversion Date, as the case may be, to such Business Day.
(h) The Paying Agent shall return to the Corporation upon written request any money or property held by it for the payment of any amount
with respect to the Preferred Stock that remains unclaimed for two years, provided, however, that the Paying Agent, before being required to
make any such return, shall at the expense of the Corporation cause to be published once in a newspaper of general circulation in The City of
New York or mail to each such Holder notice that such money or property remains unclaimed and that, after a date specified therein, which
shall not be less than 30 days from the date of such publication or mailing, any unclaimed money or property then remaining shall be returned
to the Corporation. After return to the Corporation, Holders entitled to the money or property must look to the Corporation for payment as
general creditors unless an applicable abandoned property law designates another Person.
4. Fundamental Change.
(a) Purchase at the Option of the Holder Upon a Fundamental Change. Each Holder shall have the right, at such Holder’s option, to require
the Corporation to purchase any or all of such Holder’s Preferred Stock for cash or a check on the date that is no earlier than 60 days nor later
than 90 days after the date of the Corporation Notice of the occurrence of such Fundamental Change (subject to extension to comply with
applicable law, as provided in Section 4(h) (the “Fundamental Change Purchase Date”). The Preferred Stock shall be repurchased in integral
multiples of $50.00 (representing the Liquidation Preference). The Corporation shall purchase such Preferred Stock at a price (the
“Fundamental Change Purchase Price”) equal to 100% of the Liquidation Price of the number of shares of Preferred Stock to be purchased plus
accumulated and unpaid dividends, including Additional Dividends, if any, to the Fundamental Change Purchase Date.
(b) Notice of Fundamental Change. The Corporation, or at its request (which must be received by the Paying Agent at least three Business
Days (or such lesser period as agreed to by the Paying Agent) prior to the date the Paying Agent is requested to give such notice as
described below), the Paying Agent, in the name of and at the expense of the Corporation, shall mail to all Holders a Corporation Notice of the
occurrence of a Fundamental Change and of the purchase right arising as a result thereof, including the information required by Section 4(e)
hereof, on or before the 30th day after the occurrence of such Fundamental Change.
(c) Exercise of Option. For Preferred Stock to be so purchased at the option of the Holder, the Paying Agent must receive at its office in
Jackson, Michigan, or any other offices of the Paying Agent maintained for such purposes, such shares of Preferred Stock duly endorsed for
transfer, together with a written notice of purchase in the form attached hereto as Exhibit A (a “Fundamental Change Purchase Notice”) duly
completed, on or before the 30th day prior to the Fundamental Change Purchase Date, subject to extension to comply with applicable law. The
Fundamental Change Purchase Notice shall state:
(i) if certificated, the certificate numbers of the shares of Preferred Stock which the Holder shall deliver to be purchased, or, if not
certificated, the Fundamental Change Purchase Notice must comply with appropriate Depository procedures;
(ii) the number of shares of Preferred Stock which the Holder shall deliver to be purchased, which portion must be $50.00 or an integral
multiple thereof; and
(iii) that such Preferred Stock shall be purchased as of the Fundamental Change Purchase Date pursuant to the terms and conditions
specified in the Preferred Stock and in this Certificate of Designation.
(d) Procedures. The Corporation shall purchase from a Holder, pursuant to this Section 4, shares of Preferred Stock or multiples of $50.00 if
so requested by such Holder.
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Any purchase by the Corporation contemplated pursuant to the provisions of this Section 4 shall be consummated by the delivery of the
Fundamental Change Purchase Price to be received by the Holder promptly following the later of the Fundamental Change Purchase Date or
the time of book-entry transfer or delivery of the Preferred Stock.
Notwithstanding anything herein to the contrary, any Holder delivering to the Paying Agent the Fundamental Change Purchase Notice
contemplated by Section 4(c) hereof shall have the right at any time prior to the close of business on the Business Day prior to the
Fundamental Change Purchase Date to withdraw such Fundamental Change Purchase Notice (in whole or in part) by delivery of a written
notice of withdrawal to the Paying Agent in accordance with Section 4(f) hereof.
The Paying Agent shall promptly notify the Corporation of the receipt by it of any Fundamental Change Purchase Notice or written notice
of withdrawal thereof.
On or before 10:00 a.m. (New York City time) on the Fundamental Change Purchase Date, the Corporation shall deposit with the Paying
Agent (or if the Corporation or an Affiliate of the Corporation is acting as the Paying Agent, shall segregate and hold in trust) money
sufficient to pay the aggregate Fundamental Change Purchase Price of the Preferred Stock to be purchased pursuant to this Section 4.
Payment by the Paying Agent of the Fundamental Change Purchase Price for such Preferred Stock shall be made promptly following the later
of the Fundamental Change Purchase Date or the time of book-entry transfer or delivery of such Preferred Stock. If the Paying Agent holds, in
accordance with the terms of this Certificate of Designation, money sufficient to pay the Fundamental Change Purchase Price of such Preferred
Stock on the Business Day following the Fundamental Change Purchase Date, then, on and after such date, such Preferred Stock shall cease
to be outstanding and dividends (including Additional Dividends, if any) on such Preferred Stock shall cease to accumulate, whether or not
book-entry transfer of such Preferred Stock is made or such Preferred Stock is delivered to the Paying Agent, and all other rights of the Holder
shall terminate (other than the right to receive the Fundamental Change Purchase Price upon delivery or transfer of the Preferred Stock).
Nothing herein shall preclude any withholding tax required by law.
The Corporation shall require each Paying Agent to agree in writing that the Paying Agent shall hold in trust for the benefit of Holders all
money held by the Paying Agent for the payment of the Fundamental Change Purchase Price. If the Corporation or an Affiliate of the
Corporation acts as Paying Agent, it shall segregate the money held by it as Paying Agent and hold it as a separate trust fund.
All questions as to the validity, eligibility (including time of receipt) and acceptance of any Preferred Stock pursuant to a Fundamental
Change shall be determined by the Corporation, whose determination shall be final and binding.
(e) Notice of Fundamental Change. The Corporation shall send notices (each, a “Corporation Notice”) to the Holders (and to beneficial
owners as required by applicable law) at their addresses shown in the Security Register maintained by the Security Registrar, and delivered to
the Paying Agent on or before the 30th day after the occurrence of the Fundamental Change (“Corporation Notice Date”). Each Corporation
Notice shall include a form of Fundamental Change Purchase Notice to be completed by a Holder and shall state:
(i) the applicable Fundamental Change Purchase Price, excluding accumulated and unpaid dividends, Conversion Rate at the time of
such notice (and any adjustments to the Conversion Rate) and, to the extent known at the time of such notice, the amount of
dividends (including Additional Dividends, if any), if any, that will be payable with respect to the Preferred Stock on the applicable
Fundamental Change Purchase Date;
(ii) the events causing the Fundamental Change and the date of the Fundamental Change;
(iii) the Fundamental Change Purchase Date;
(iv) the last date on which a Holder may exercise its purchase right;
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(v) the name and address of the Paying Agent and the Conversion Agent;
(vi) that the Preferred Stock must be surrendered to the Paying Agent to collect payment of the Fundamental Change Purchase Price;
(vii) that the Preferred Stock as to which a Fundamental Change Purchase Notice has been given may be converted only if the applicable
Fundamental Change Purchase Notice has been withdrawn in accordance with the terms of this Certificate of Designation;
(viii) that the Fundamental Change Purchase Price for any of the Preferred Stock as to which a Fundamental Change Purchase Notice has
been given and not withdrawn shall be paid by the Paying Agent promptly following the later of the Fundamental Change Purchase
Date or the time of book-entry transfer or delivery of such Preferred Stock;
(ix) the procedures the Holder must follow under this Section 4;
(x) briefly, the conversion rights of the Preferred Stock;
(xi) that, unless the Corporation defaults in making payment of such Fundamental Change Purchase Price on the Preferred Stock covered
by any Fundamental Change Purchase Notice, dividends (including Additional Dividends, if any) will cease to accumulate on and
after the Fundamental Change Purchase Date;
(xii) the CUSIP or ISIN number of the Preferred Stock; and
(xiii) the procedures for withdrawing a Fundamental Change Purchase Notice.
In connection with providing such Corporation Notice, the Corporation will issue a press release and publish a notice containing the
information in such Corporation Notice in a newspaper of general circulation in The City of New York or publish such information on the
Corporation’s then existing Web site or through such other public medium as the Corporation may use at the time.
At the Corporation’s request, made at least five Business Days prior to the date upon which such notice is to be mailed, and at the
Corporation’s expense, the Paying Agent shall give the Corporation Notice in the Corporation’s name; provided, however, that, in all cases,
the text of the Corporation Notice shall be prepared by the Corporation.
(f) Effect of Fundamental Change Purchase Notice. Upon receipt by the Corporation of the Fundamental Change Purchase Notice specified
in this Section 4, the Holder of the Preferred Stock in respect of which such Fundamental Change Purchase Notice was given shall (unless
such Fundamental Change Purchase Notice is withdrawn as specified in this Section 4(f)) thereafter be entitled to receive solely the
Fundamental Change Purchase Price with respect to such Preferred Stock. Such Fundamental Change Purchase Price shall be paid by the
Paying Agent to such Holder promptly following the later of (x) the Fundamental Change Purchase Date with respect to such Preferred Stock
(provided the conditions in this Section 4 have been satisfied) and (y) the time of delivery or book-entry transfer of such Preferred Stock to the
Paying Agent by the Holder thereof in the manner required by this Section 4. Preferred Stock in respect of which a Fundamental Change
Purchase Notice has been given by the Holder thereof may not be converted for shares of Common Stock on or after the date of the delivery of
such Fundamental Change Purchase Notice unless such Fundamental Change Purchase Notice has first been validly withdrawn as specified in
this Section 4(f). Payment of the Fundamental Change Purchase Price for shares of Preferred Stock in registered, certificated form (“Certificated
Preferred Stock”) for which a Fundamental Change Purchase Notice has been delivered and not withdrawn is conditioned upon delivery of
such Certificated Preferred Stock (together with necessary endorsements) to the Paying Agent at its office in Jackson, Michigan, or any other
office of the Paying Agent maintained for such purpose, at any time (whether prior to, on or after the Fundamental Change Purchase Date)
after the delivery of such Fundamental Change Purchase Notice. Payment of the
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Fundamental Change Purchase Price for such Certificated Preferred Stock will be made promptly following the later of the Fundamental Change
Purchase Date or the time of delivery of such Certificated Preferred Stock.
If the Paying Agent holds, in accordance with the terms of this Certificate of Designation, money sufficient to pay the Fundamental Change
Purchase Price of shares of Preferred Stock on the Business Day following the Fundamental Change Purchase Date for such Preferred Stock,
then, on and after such date, dividends on such Preferred Stock will cease to accumulate, whether or not such Preferred Stock is delivered to
the Paying Agent, and all other rights of the Holder shall terminate (other than the right to receive the Fundamental Change Purchase Price
upon delivery of the Preferred Stock).
A Fundamental Change Purchase Notice may be withdrawn by means of a written notice of withdrawal delivered to the office of the Paying
Agent at any time prior to 5:00 p.m. New York City time on the Business Day prior to the Fundamental Change Purchase Date to which it
relates specifying:
(i) if certificated, the certificate number of Preferred Stock in respect of which such notice of withdrawal is being submitted, or, if not
certificated, the written notice of withdrawal must comply with appropriate Depository procedures;
(ii) the number of shares of Preferred Stock with respect to which such notice of withdrawal is being submitted; and
(iii) the number of shares of Preferred Stock, if any, which remains subject to the original Fundamental Change Purchase Notice and which
have been or shall be delivered for purchase by the Corporation.
(g) Preferred Stock Purchased in Part. Any shares of Preferred Stock that are to be purchased only in part shall be surrendered (in physical
or book-entry form) at the office of the Paying Agent (with, if the Corporation so requires, due endorsement by, or a written instrument of
transfer in form satisfactory to the Corporation duly executed by, the Holder thereof or such Holder’s attorney duly authorized in writing) and
the Corporation shall execute and the Transfer Agent shall authenticate and deliver to the Holder of such Preferred Stock, without service
charge, new shares of Preferred Stock, as requested by such Holder in an amount equal to, and in exchange for, the portion of the Liquidation
Preference of the Preferred Stock so surrendered which is not purchased.
(h) Covenant to Comply with Securities Laws Upon Purchase of the Preferred Stock. In connection with any offer to purchase Preferred
Stock under this Section 4, the Corporation shall, to the extent applicable: (i) comply with Rules 13e-4 and 14e-1 (and any successor provisions
thereto) under the Exchange Act, if applicable; (ii) file the related Schedule TO (or any successor schedule, form or report) under the Exchange
Act, if applicable; and (iii) otherwise comply with all applicable federal and state securities laws so as to permit the rights and obligations
under this Section 4 hereof to be exercised in the time and in the manner specified in this Section 4.
(i) Repayment to the Corporation. The Paying Agent shall return to the Corporation any cash or property that remains unclaimed as
provided in the Preferred Stock, together with interest that the Paying Agent has agreed to pay, if any, held by it for the payment of a
Fundamental Change Purchase Price; provided, however, that to the extent that the aggregate amount of cash or property deposited by the
Corporation pursuant to this Section 4 exceeds the aggregate Fundamental Change Purchase Price of the Preferred Stock or portions thereof
which the Corporation is obligated to purchase as of the Fundamental Change Purchase Date, then promptly on and after the Business Day
following the Fundamental Change Purchase Date, the Paying Agent shall return any such excess to the Corporation together with interest
that the Paying Agent has agreed to pay, if any.
(j) Officers’ Certificate. At least five Business Days before the Corporation Notice Date, the Corporation shall deliver an Officers’ Certificate
to the Paying Agent (provided, that, at the Corporation’s option, the matters to be addressed in such Officers’ Certificate may be divided
among two such certificates) specifying:
(i) the manner of payment selected by the Corporation; and
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(ii) whether the Corporation desires the Paying Agent to give the Corporation Notice required by Section 4(e) hereof.
5. Voting.
(a) The shares of Preferred Stock shall have no voting rights except as set forth below or as otherwise required by Michigan law from time
to time:
(i) If and whenever at any time or times a Voting Rights Triggering Event occurs, then the holders of shares of Preferred Stock, voting as
a single class with any other preferred stock or preference securities having similar voting rights that are exercisable (the “Voting
Rights Class”), will be entitled at the next regular or special meeting of shareholders of the Corporation to elect two additional
directors of the Corporation, unless the Board of Directors is comprised of fewer than six directors at such time, in which case the
Voting Rights Class shall be entitled to elect one additional director. Upon the election of any such additional directors, the number of
directors that comprise the Board of Directors shall be increased by such number of additional directors.
(ii) Such voting rights may be exercised at a special meeting of the holders of the shares of the Voting Rights Class, called as hereinafter
provided, or at any annual meeting of shareholders held for the purpose of electing directors, and thereafter at each such annual
meeting until such time as all dividends in arrears on the shares of Preferred Stock shall have been paid in full, at which time or times
such voting rights and the term of the directors elected pursuant to Section 5(a)(i) shall terminate.
(iii) At any time when such voting rights shall have vested in holders of shares of the Voting Rights Class, an Officer of the Corporation
may call, and, upon written request of the record holders of shares representing at least twenty-five percent (25%) of the voting power
of the shares then outstanding of the Voting Rights Class, addressed to the Secretary of the Corporation, shall call a special meeting
of the holders of shares of the Voting Rights Class. Such meeting shall be held at the earliest practicable date upon the notice required
for annual meetings of shareholders at the place for holding annual meetings of shareholders of the Corporation, or, if none, at a place
designated by the Board of Directors. Notwithstanding the provisions of this Section 5(a)(iii), no such special meeting shall be called
during a period within the 60 days immediately preceding the date fixed for the next annual meeting of shareholders, in which such
case the election of directors pursuant to Section 5(a)(i) shall be held at such annual meeting of shareholders.
(iv) At any meeting held for the purpose of electing directors at which the holders of the Voting Rights Class shall have the right to elect
directors as provided herein, the presence in person or by proxy of the holders of shares representing more than fifty percent (50%) in
voting power of the then outstanding shares of the Voting Rights Class shall be required and shall be sufficient to constitute a
quorum of such class for the election of directors by such class. The affirmative vote of the holders of shares of Preferred Stock
constituting a majority of the shares of Preferred Stock present at such meeting, in person or by proxy shall be sufficient to elect any
such director.
(v) Any director elected pursuant to the voting rights created under this Section 5(a) shall hold office until the next annual meeting of
shareholders (unless such term has previously terminated pursuant to Section 5(a)(ii)) and any vacancy in respect of any such
director shall be filled only by vote of the remaining director so elected by holders of the Voting Rights Class, or, if there be no such
remaining director, by the holders of shares of the Voting Rights Class at a special meeting called in accordance with the procedures
set forth in this Section 5, or, if no such special meeting is called, at the next annual meeting of shareholders. Upon any termination of
such voting rights, the term of office of all directors elected pursuant to this Section 5 shall terminate.
(vi) So long as any shares of Preferred Stock remain outstanding, unless a greater percentage shall then be required by law, the
Corporation shall not, without the affirmative vote or consent of the holders of all
13
of the outstanding Preferred Stock voting or consenting, as the case may be, separately as one class, (i) create, authorize or issue any
class or series of Senior Stock (or any security convertible into Senior Stock) or (ii) amend the Articles of Incorporation so as to affect
adversely the specified rights, preferences, privileges or voting rights of holders of shares of Preferred Stock.
(vii) In exercising the voting rights set forth in this Section 5(a), each share of Preferred Stock shall be entitled to one vote.
(b) The Corporation may authorize, increase the authorized amount of, or issue any class or series of Parity Stock or Junior Stock, without
the consent of the holders of Preferred Stock, and in taking such actions the Corporation shall not be deemed to have affected adversely the
rights, preferences, privileges or voting rights of holders of shares of Preferred Stock.
6. Liquidation Rights.
(a) In the event of any liquidation, winding-up or dissolution of the Corporation, whether voluntary of involuntary, each holder of shares of
Preferred Stock shall be entitled to receive and to be paid out of the assets of the Corporation available for distribution to its shareholders the
Liquidation Preference plus Accumulated Dividends and Additional Dividends thereon in preference to the holders of, and before any
payment or distribution is made on, any Junior Stock, including, without limitation, on any Common Stock.
(b) Neither the sale, conveyance, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all
the assets or business of the Corporation (other than in connection with the liquidation, winding-up or dissolution of its business) nor the
merger or consolidation of the Corporation into or with any other Person shall be deemed to be a liquidation, winding-up or dissolution,
voluntary or involuntary, for the purposes of this Section 6.
(c) After the payment to the holders of the shares of Preferred Stock of full preferential amounts provided for in this Section 6, the holders
of Preferred Stock as such shall have no right or claim to any of the remaining assets of the Corporation.
(d) In the event the assets of the Corporation available for distribution to the holders of shares of Preferred Stock upon any liquidation,
winding-up or dissolution of the Corporation, whether voluntary or involuntary, shall be insufficient to pay in full all amounts to which such
holders are entitled pursuant to Section 6(a), no such distribution shall be made on account of any shares of Parity Stock upon such
liquidation, dissolution or winding-up unless proportionate distributable amounts shall be paid on account of the shares of Preferred Stock,
ratably, in proportion to the full distributable amounts for which holders of all Preferred Stock and of any Parity Stock are entitled upon such
liquidation, winding-up or dissolution.
7. Conversion.
(a) Conversion Rights. A Holder may convert Preferred Stock into cash and shares of Common Stock during the periods and upon
satisfaction of at least one of the conditions set forth below:
(i) in any calendar quarter (and only during such calendar quarter) if the Last Reported Sale Price for Common Stock for at least 20
Trading Days during the period of 30 consecutive Trading Days ending on the last Trading Day of the previous calendar quarter is
greater than or equal to 120% of the Conversion Price per share of Common Stock on such last Trading Day;
(ii) during the five Business Days immediately following any ten consecutive Trading Day period in which the Trading Price per
Liquidation Preference of Preferred Stock (as determined following a request by a Holder of Preferred Stock in accordance with the
procedures described herein) for each day of that period was less than 95% of the product of the sale price of Common Stock and the
then applicable Conversion Rate (the “Trading Exception”); provided, however, that a Holder may not convert its
14
Preferred Stock if the average closing sale price of Common Stock for such ten consecutive Trading Day period is between the then
current Conversion Price and 120% of the then applicable Conversion Price; in connection with any conversion upon satisfaction of
such Trading Price condition, the Conversion Agent shall have no obligation to determine the Trading Price unless the Corporation
has requested such determination; and the Corporation shall have no obligation to make such request unless the Holder provides
reasonable evidence that the Trading Price would be less than 95% of the product of the sale price of Common Stock and the then
applicable Conversion Rate; at which time, the Corporation shall instruct the Conversion Agent to determine the Trading Price
beginning on the next Trading Day and on each successive Trading Day until the Trading Price is greater than or equal to 95% of the
product of the sale price of Common Stock and the then applicable Conversion Rate;
(iii) the Corporation becomes a party to a consolidation, merger or binding share exchange pursuant to which the Common Stock would
be converted into cash or property (other than securities), in which case a Holder may surrender Preferred Stock for conversion at any
time from and after the date which is 15 days prior to the anticipated effective date for the transaction until 15 days after the actual
effective date (the “Effective Date”) of such transaction; or
(iv) the Corporation elects to (i) distribute to all holders of Common Stock assets, debt securities or rights to purchase securities of the
Corporation, which distribution has a per share value as determined by the Board of Directors exceeding 15% of the Last Reported
Sale Price of a share of Common Stock on the Trading Day immediately preceding the declaration date for such distribution, or
(ii) distribute to all holders of Common Stock rights entitling them to purchase, for a period expiring within 60 days after the date of
such distribution, shares of Common Stock at less than the Last Reported Sale Price of Common Stock on the Trading Day
immediately preceding the declaration date of the distribution. In the case of the foregoing clauses (i) and (ii), the Corporation must
notify the Holders at least 20 Business Days immediately prior to the ex-dividend date for such distribution. Once the Corporation has
given such notice, Holders may surrender their Preferred Stock for conversion at any time thereafter until the earlier of the close of
business on the Business Day immediately prior to the ex-dividend date or the Corporation’s announcement that such distribution
will not take place; provided, however, that a Holder may not exercise this right to convert if the Holder may participate in the
distribution without conversion. As used herein, the term “ex dividend date,” when used with respect to any issuance or distribution,
shall mean the first date on which the Common Stock trades regular way on such exchange or in such market without the right to
receive such issuance or distribution.
The initial Conversion Rate is 5.0541 shares of Common Stock per share of Preferred Stock, subject to adjustment in certain events as
described herein. The Corporation shall deliver cash or a check in lieu of any fractional share of Common Stock. A Holder may convert fewer
than all of its Preferred Stock so long as the Preferred Stock converted is an integral multiple of the Liquidation Preference.
Holders of Preferred Stock at the close of business on a Dividend Record Date will receive payment of dividends, payable on the
corresponding Dividend Payment Date notwithstanding the conversion of such Preferred Stock at any time after the close of business on such
Dividend Record Date. Preferred Stock surrendered for conversion by a Holder during the period from the close of business on any Dividend
Record Date to the opening of business on the immediately following Dividend Payment Date must be accompanied by payment of an amount
equal to the dividend that the Holder is to receive on such Preferred Stock; provided, however, that no such payment need be made if (1) the
Corporation has specified a Mandatory Conversion Date that is after a Dividend Record Date and on or prior to the immediately following
Dividend Payment Date or (2) any accumulated and unpaid dividends exist at the time of conversion with respect to such shares of Preferred
Stock to the extent of such accumulated and unpaid dividends.
To convert Preferred Stock a Holder must (i) complete and manually sign the irrevocable conversion notice in the form attached hereto as
Exhibit B (a “Conversion Notice”) (or complete and manually sign a facsimile of such notice) and deliver such notice to the Conversion Agent
at its office in Jackson, Michigan or any other offices
15
of the Conversion Agent maintained by the Conversion Agent for such purpose, (ii) surrender the shares of Preferred Stock to the Conversion
Agent, (iii) furnish appropriate endorsements and transfer documents if required by the Conversion Agent or the Corporation and (iv) pay any
transfer or similar tax, if required.
(b) Conversion Procedures. To convert Preferred Stock, a Holder must satisfy the requirements in this Section 7 and in the Preferred Stock.
The date on which the Holder satisfies all those requirements is the conversion date (the “Conversion Date”). Subject to the procedures set
forth in Section 7(f) hereof, as soon as practicable, but in no event later than the fifth Business Day following the Conversion Date, the
Corporation shall deliver the Conversion Value in cash and deliver the Common Stock by either of the following methods: (i) update the global
security representing the shares of Common Stock to record the Holder’s interest in the Common Stock, or (ii) deliver to the Holder, through
the Conversion Agent, a certificate for the number of full shares representing Net Shares, if any, together with, in either case, cash or a check
in lieu of any fractional share determined pursuant to Section 7(c) hereof. The Person in whose name the certificate is registered shall be
treated as a shareholder of record on and after the Conversion Date; provided, however, that no surrender of Preferred Stock on any date
when the stock transfer books of the Corporation shall be closed shall be effective to constitute the Person or Persons entitled to receive the
shares of Common Stock upon such conversion as the record holder or holders of such shares of Common Stock on such date, but such
surrender shall be effective to constitute the Person or Persons entitled to receive such shares of Common Stock as the record holder or
holders thereof for all purposes at the close of business on the next succeeding day on which such stock transfer books are open; such
conversion shall be at the Conversion Rate in effect on the date that such shares of Preferred Stock shall have been surrendered for
conversion, as if the stock transfer books of the Corporation had not been closed. Upon conversion of Preferred Stock, such Person shall no
longer be a Holder of such Preferred Stock.
No payment or adjustment shall be made for dividends on or other distributions with respect to any Common Stock except as provided in
Section 7(f) hereof or as otherwise provided in this Certificate of Designation.
On conversion of Preferred Stock, delivery of the Principal Return, the Net Shares and the cash or check payment, if any, in lieu of fractional
shares will be deemed to satisfy the Corporation’s obligation to pay the Liquidation Preference of the converted Preferred Stock, including
Accumulated Dividends, if any. Accumulated Dividends with respect to the converted Preferred Stock will be deemed canceled, extinguished
or forfeited, rather than paid in full to the Holder thereof.
Upon surrender of Preferred Stock that is converted in part, the Corporation shall execute, and the Transfer Agent shall authenticate and
deliver to the Holder, new shares of Preferred Stock in a number equal to the unconverted portion of the shares of Preferred Stock surrendered.
If the last day on which Preferred Stock may be converted is a legal holiday in a place where a Conversion Agent is located, the Preferred
Stock may be surrendered to that Conversion Agent on the next succeeding day that it is not a legal holiday.
(c) Cash or Check Payments in Lieu of Fractional Shares. The Corporation shall not issue a fractional share of Common Stock upon
conversion of Preferred Stock. Instead the Corporation shall deliver cash (or Corporation’s check) for the current market value of the fractional
share. The current market value of a fractional share shall be determined to the nearest 1/10,000th of a share by multiplying the Last Reported
Sale Price of a full share of Common Stock on the Trading Day immediately preceding the Conversion Date by the fractional amount and
rounding the product to the nearest whole cent.
(d) Taxes on Conversion. If a Holder converts Preferred Stock, the Corporation shall pay any documentary, stamp or similar issue or transfer
tax due on the issue of shares of Common Stock upon the conversion. However, the Holder shall pay any such tax which is due because the
Holder requests the shares to be issued in a name other than the Holder’s name. The Conversion Agent may refuse to deliver the certificates
representing the Common Stock being issued in a name other than the Holder’s name until the Conversion Agent receives a sum sufficient to
pay any tax which shall be due because the shares are to be issued in a name other than the Holder’s name. Nothing herein shall preclude any
withholding tax required by law.
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(e) Covenants of the Corporation. The Corporation shall, prior to issuance of any Preferred Stock hereunder, and from time to time as may
be necessary, reserve out of its authorized but unissued Common Stock a sufficient number of shares of Common Stock to permit the
conversion of the Preferred Stock.
All shares of Common Stock delivered upon conversion of the Preferred Stock shall be newly issued shares or treasury shares, shall be duly
and validly issued and fully paid and nonassessable and shall be free from preemptive rights and free of any lien or adverse claim.
The Corporation shall endeavor promptly to comply with all federal and state securities laws regulating the order and delivery of shares of
Common Stock upon the conversion of Preferred Stock, if any, and shall cause to have listed or quoted all such shares of Common Stock on
each United States national securities exchange or over-the-counter or other domestic market on which the Common Stock is then listed or
quoted.
(f) Adjustments to Conversion Rate. The Conversion Rate shall be adjusted from time to time, without duplication, as follows:
(i) In case the Corporation shall: (A) pay a dividend, or make a distribution, exclusively in shares of its capital stock, on the Common
Stock; (B) subdivide its outstanding Common Stock into a greater number of shares; (C) combine its outstanding Common Stock into
a smaller number of shares; or (D) reclassify its Common Stock, the Conversion Rate in effect immediately prior to the record date or
effective date, as the case may be, for the adjustment pursuant to this Section 7(f) as described below, shall be adjusted so that the
Holder of any Preferred Stock thereafter surrendered for conversion shall be entitled to receive the cash and number of shares of
Common Stock of the Corporation which such Holder would have owned or have been entitled to receive after the happening of any
of the events described above had such Preferred Stock been converted immediately prior to such record date or effective date, as the
case may be. An adjustment made pursuant to this Section 7(f) shall become effective immediately after the applicable record date in
the case of a dividend or distribution and shall become effective immediately after the applicable effective date in the case of
subdivision, combination or reclassification of the Corporation’s Common Stock. If any dividend or distribution of the type described
in clause (A) above is not so paid or made, the Conversion Rate shall again be adjusted to the Conversion Rate which would then be
in effect if such dividend or distribution had not been declared.
(ii) In case the Corporation shall issue rights or warrants to all holders of the Common Stock entitling them (for a period expiring within
60 days after the date of issuance of such rights or warrants) to subscribe for or purchase Common Stock at a price per share less than
the Market Price per share of Common Stock on the record date fixed for determination of shareholders entitled to receive such rights
or warrants, the Conversion Rate in effect immediately after such record date shall be adjusted so that the same shall equal the
Conversion Rate determined by multiplying the Conversion Rate in effect immediately after such record date by a fraction of which
(A) the numerator shall be the number of shares of Common Stock outstanding on such record date plus the number of additional
shares of Common Stock offered for subscription or purchase, and (B) the denominator shall be the number of shares of Common
Stock outstanding on such record date plus the number of shares which the aggregate offering price of the total number of shares so
offered would purchase at the Market Price per share of Common Stock on the earlier of such record date or the Trading Day
immediately preceding the ex-dividend date for such issuance of rights or warrants. Such adjustment shall be made successively
whenever any such rights or warrants are issued, and shall become effective immediately after the opening of business on the day
following the record date for the determination of shareholders entitled to receive such rights or warrants. To the extent that shares of
Common Stock are not delivered after the expiration of such rights or warrants, the Conversion Rate shall be readjusted to the
Conversion Rate which would then be in effect had the adjustments made upon the issuance of such rights or warrants been made on
the basis of delivery of only the number of shares of Common Stock actually delivered. If such rights or warrants are not so issued,
the Conversion Rate shall again be adjusted to be the Conversion Rate which would then be in effect if such record date for
17
the determination of shareholders entitled to receive such rights or warrants had not been fixed. In determining whether any rights or
warrants entitle the holders to subscribe for or purchase shares of Common Stock at less than such Market Price, and in determining
the aggregate offering price of such shares of Common Stock, there shall be taken into account any consideration received by the
Corporation for such rights or warrants, the value of such consideration, if other than cash, to be determined by the Board of
Directors.
(iii) In case the Corporation shall, by dividend or otherwise, distribute to all holders of Common Stock any assets, debt securities or rights
or warrants to purchase any of its securities (excluding (a) any dividend, distribution or issuance covered by those referred to in
Section 7(f)(i) or Section 7(f)(ii) hereof and (b) any dividend or distribution paid exclusively in cash) (any of the foregoing hereinafter
in this Section 7(f)(iii) called the “Distributed Assets or Securities”) in an aggregate amount per share of Common Stock that,
combined together with the aggregate amount of any other such distributions to all holders of its Common Stock made within the
12 months preceding the date of payment of such distribution, and in respect of which no adjustment pursuant to this Section 7(f)(iii)
has been made, exceeds 15% of the Market Price on the Trading Day immediately preceding the declaration of such distribution, then
the Conversion Rate shall be adjusted so that the same shall equal the Conversion Rate determined by multiplying the Conversion
Rate in effect immediately prior to the close of business on the record date mentioned below by a fraction of which (A) the numerator
shall be the Market Price per share of the Common Stock on the earlier of such record date or the Trading Day immediately preceding
the ex-dividend date for such dividend or distribution, and (B) the denominator shall be (1) the Market Price per share of the Common
Stock on the earlier of such record date or the Trading Day immediately preceding the ex-dividend date for such dividend or
distribution less (2) the Fair Market Value on the earlier of such record date or the Trading Day immediately preceding the ex-dividend
date for such dividend or distribution (as determined by the Board of Directors, whose determination shall be conclusive, and
described in a certificate filed with the Paying Agent) of the Distributed Assets or Securities so distributed applicable to one share of
Common Stock. Such adjustment shall become effective immediately after the record date for the determination of shareholders
entitled to receive such distribution; provided, however, that, if (a) the Fair Market Value of the portion of the Distributed Assets or
Securities so distributed applicable to one share of Common Stock is equal to or greater than the Market Price of the Common Stock
on the record date for the determination of shareholders entitled to receive such distribution or (b) the Market Price of the Common
Stock on the record date for the determination of shareholders entitled to receive such distribution is greater than the Fair Market
Value per share of such Distributed Assets or Securities by less than $1.00, then, in lieu of the foregoing adjustment, adequate
provision shall be made so that each Holder shall have the right to receive upon conversion, in addition to the cash and shares of
Common Stock, the kind and amount of assets, debt securities, or rights or warrants comprising the Distributed Assets or Securities
the Holder would have received had such Holder converted such Preferred Stock immediately prior to the record date for the
determination of shareholders entitled to receive such distribution. In the event that such distribution is not so paid or made, the
applicable Conversion Rate shall again be adjusted to the Conversion Rate which would then be in effect if such distribution had not
been declared.
(iv) In case the Corporation shall declare a cash dividend or cash distribution to all or substantially all of the holders of Common Stock,
the Conversion Rate shall be increased so that the applicable Conversion Rate shall equal the price determined by multiplying the
Conversion Rate in effect immediately prior to the record date for such dividend or distribution by a fraction,
(A) the numerator of which shall be the average of the Last Reported Sale Price of Common Stock for the five consecutive Trading
Days ending on the Trading Day immediately preceding the record date for such dividend or distribution (the “Pre-Dividend Sale
Price”), and
(B) the denominator of which shall be the Pre-Dividend Sale Price, minus the full amount of such cash dividend or cash distribution
applicable to one share of Common Stock (the “Dividend
18
Adjustment Amount”), with such adjustment to become effective immediately after the record date for such dividend or distribution;
provided that if the denominator of the foregoing fraction is less than $1.00 (including a negative amount), then in lieu of the
foregoing adjustment, adequate provision shall be made so that each Holder shall have the right to receive upon conversion, in
addition to the cash and Common Stock issuable upon such conversion, the amount of cash such Holder would have received had
such Holder converted its Preferred Stock solely into Common Stock at the then applicable Conversion Rate immediately prior to the
record date for such cash dividend or cash distribution. If such cash dividend or cash distribution is not so paid or made, the
applicable Conversion Rate shall again be adjusted to be the Conversion Rate that would then be in effect if such dividend or
distribution had not been declared.
(v) In the case the Corporation shall make (a) any distributions, by dividend or otherwise, during any quarterly fiscal periods consisting
exclusively of cash to all holders of outstanding shares of Common Stock in an aggregate amount that, together with (b) other all-cash
or all-check distributions made to all holders of outstanding shares of Common Stock during such quarterly fiscal period, and (c) any
cash and the Fair Market Value, as of the expiration of any tender or exchange offer (other than consideration payable in respect of
any odd-lot tender offer) of consideration payable in respect of any tender or exchange offer by the Corporation or any of the
Corporation’s Subsidiaries for all or any portion of shares of Common Stock concluded during such quarterly fiscal period, exceed the
product of $0 multiplied by the number of shares of Common Stock outstanding on the record date for such distribution, then, and in
each such case, the Conversion Rate shall be increased in accordance with the provisions of clause (iv) above.
(vi) If a Holder elects to convert Preferred Stock in connection with a corporate transaction that occurs on or prior to December 5, 2008
that constitutes a Fundamental Change (other than as described in clause (iv) of the definition of Fundamental Change) and 10% or
more of the Fair Market Value of the consideration for the Common Stock (as determined by the Board of Directors, whose
determination shall be conclusive evidence of such Fair Market Value) in the corporate transaction consists of (A) cash, (B) other
property or (C) securities that are not traded or scheduled to be traded immediately following such transaction on a U.S. national
securities exchange or the Nasdaq National Market, then the Conversion Rate for the Preferred Stock surrendered for conversion by
such Holder shall be adjusted so that such Holder will be entitled to receive cash and shares of Common Stock equal to the sum of
(1) the Conversion Value and (2) the number of additional shares of Common Stock (the “Additional Shares”) determined in the
manner set forth below, subject in each case to the Corporation’s payment elections as described in Section 7 hereof. For the
avoidance of doubt, the adjustment provided for in this Section 7(f)(vi) shall only be made with respect to the Preferred Stock being
converted in connection with such Fundamental Change and shall not be effective as to any Preferred Stock not so converted.
The number of Additional Shares will be determined by reference to the table below, based on the date on which such corporate
transaction becomes effective (the “Effective Date”) and the Share Price; provided that if the Share Price is between two Share Price
amounts in the table below or the Effective Date is between two Effective Dates in the table, the number of Additional Shares will be
determined by a straight-line interpolation between the number of Additional Shares set forth for the higher and lower Share Price
amounts and the two dates, as applicable, based on a 365-day year.
The Share Prices set forth in the first row of the table below (i.e., column headers) will be adjusted as of any date on which the
applicable Conversion Rate of the Preferred Stock is adjusted pursuant to this Section 7(f). The adjusted Share Prices will equal the
Share Prices applicable immediately prior to such adjustment, multiplied by a fraction, the numerator of which is the Conversion Rate
immediately prior to the adjustment giving rise to the Share Price adjustment and the denominator of which is the Conversion Rate as
so adjusted.
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The following table sets forth the hypothetical Share Price and number of Additional Shares to be received per Liquidation Preference
of the Preferred Stock:
Share Price
Effective Date $7.61 $8.00 $9.00 $10.00 $11.00 $12.00 $13.00 $14.00 $15.00 $20.00 $25.00 $30.00 $35.00 $40.00 $50.00
November 9, 2004 1.52 1.52 1.42 1.20 1.02 0.88 0.79 0.70 0.63 0.39 0.27 0.20 0.15 0.12 0.00
December 5, 2005 1.52 1.52 1.33 1.11 0.93 0.79 0.71 0.61 0.55 0.33 0.23 0.17 0.13 0.10 0.00
December 5, 2006 1.52 1.52 1.23 1.00 0.82 0.69 0.62 0.52 0.47 0.27 0.18 0.13 0.10 0.08 0.00
December 5, 2007 1.52 1.43 1.12 0.89 0.70 0.57 0.50 0.41 0.34 0.19 0.12 0.09 0.07 0.05 0.00
December 5, 2008 1.52 1.36 1.03 0.77 0.57 0.43 0.37 0.27 0.20 0.10 0.06 0.05 0.04 0.03 0.00
The Share Prices and Additional Share amounts set forth above are based upon an initial Conversion Rate per share of 5.0541 per
Liquidation Preference of the Preferred Stock.
If the Share Price is equal to or in excess of $50.00 per share (subject to adjustment), no Additional Shares will be issued upon
conversion.
If the Share Price is less than $7.61 per share (subject to adjustment), no Additional Shares will be issued upon conversion.
Notwithstanding the foregoing, any adjustment to the applicable Conversion Rate relating to the issuance of Additional Shares as
described in this Section 7(f)(vi) will not exceed the Maximum Conversion Rate.
(vii) Notwithstanding the foregoing, in the case of a Public Acquirer Change of Control, the Corporation may, in lieu of increasing the
applicable Conversion Rate by Additional Shares as described in Section 7(f)(vii) hereof, elect to adjust the applicable Conversion
Rate and the related conversion obligation such that upon conversion the Issuer will deliver cash and a number of shares of Public
Acquirer Common Stock such that by multiplying the Conversion Rate in effect immediately before the Public Acquirer Change of
Control shall be adjusted by a fraction:
(A) the numerator of which will be the average of the Last Reported Sale Price of the Common Stock for the five consecutive trading
days prior to but excluding the effective date of such Public Acquirer Change of Control; and
(B) the denominator of which will be the average of the Last Reported Sale Price of the Public Acquirer Common Stock for the five
consecutive trading days commencing on the Trading Day next succeeding the effective date of such Public Acquirer Change of
Control.
A “Public Acquirer Change of Control” means any event described in Section 7(f)(vi) hereof that would otherwise obligate the
Corporation to increase the Conversion Rate as described in Section 7(f)(vi) hereof and the acquirer (or any entity of which the
acquirer is a directly or indirectly wholly-owned Subsidiary and such entity provides a guarantee to the Preferred Stock) has a class of
common stock traded on a U.S. national securities exchange or quoted on the Nasdaq National Market or which will be so traded or
quoted when issued or exchanged in connection with such event (the ‘‘Public Acquirer Common Stock’’).
After the adjustment of the applicable Conversion Rate in connection with a Public Acquirer Change of Control, the applicable
Conversion Rate will be subject to further similar adjustments in the event that any of the events described in this Section 7(f) occur
thereafter.
The Corporation is required to notify Holders of its election in writing of such transaction, which notice shall be made five Business
Days prior to the effective date of such Public Acquirer Change of Control. In addition, the Holder can also, subject to certain
conditions, require the Corporation to repurchase all or a portion of its Preferred Stock as described under Section 4.
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(viii) With respect to Section 7(f)(iii) hereof, in the event that the Corporation makes any distribution to all holders of Common Stock
consisting of Equity Interests in a Subsidiary or other business unit of the Corporation, the Conversion Rate shall be adjusted so that
the same shall equal the Conversion Rate determined by multiplying the Conversion Rate in effect immediately prior to the close of
business on the record date fixed for the determination of holders of Common Stock entitled to receive such distribution by a fraction
of which (A) the numerator shall be (x) the Spin-off Market Price per share of the Common Stock on such record date plus (y) the
Spin-off Market Price per Equity Interest of the Subsidiary or other business unit of the Corporation on such record date and (B) the
denominator shall be the Spin-off Market Price per share of the Common Stock on such record date, such adjustment to become
effective 10 Trading Days after the effective date of such distribution of Equity Interests in a Subsidiary or other business unit of the
Corporation.
(ix) Upon conversion of the Preferred Stock, the Holders shall receive, in addition to the cash and Common Stock issuable upon such
conversion, the rights issued under any future shareholder rights plan the Corporation implements (notwithstanding the occurrence
of an event causing such rights to separate from the Common Stock at or prior to the time of conversion) unless, prior to conversion,
the rights have expired, terminated or been redeemed or exchanged in accordance with such rights plan. If, and only if, the Holders of
Preferred Stock receive rights under such shareholder rights plans as described in the preceding sentence upon conversion of their
Preferred Stock, then no other adjustment pursuant to this Section 7(f) shall be made in connection with such shareholder rights
plans.
(x) For purposes of this Section 7(f), the number of shares of Common Stock at any time outstanding shall not include shares held in the
treasury of the Corporation but shall include shares issuable in respect of scrip certificates issued in lieu of fractions of shares of
Common Stock. The Corporation shall not pay any dividend or make any distribution on shares of Common Stock held in the treasury
of the Corporation.
(xi) Notwithstanding the foregoing, in no event shall the Conversion Rate exceed the maximum conversion rate specified under this
Section 7(f)(xi) (the “Maximum Conversion Rate”) as a result of an adjustment pursuant to Sections 7(f)(iii), 7(f)(iv) or 7(f)(vi) hereof.
The Maximum Conversion Rate shall initially be 6.5703 and shall be appropriately adjusted from time to time for any stock dividends
on or subdivisions or combinations of the Common Stock. The Maximum Conversion Rate shall not apply to any adjustments made
pursuant to any of the events in Section 7(f)(i) or Section 7(f)(ii) hereof.
(g) Calculation Methodology. No adjustment in the Conversion Price need be made unless the adjustment would require an increase or
decrease of at least 1% in the Conversion Price then in effect, provided that any adjustment that would otherwise be required to be made shall
be carried forward and taken into account in any subsequent adjustment. Except as stated in this Section 7, the Conversion Rate will not be
adjusted for the issuance of Common Stock or any securities convertible into or exchangeable for Common Stock or carrying the right to
purchase any of the foregoing. Any adjustments that are made shall be carried forward and taken into account in any subsequent adjustment.
All calculations under Section 4 and Section 7(f) hereof and this Section 7(g) shall be made to the nearest cent or to the nearest 1/10,000th of a
share, as the case may be.
(h) When No Adjustment Required. No adjustment to the Conversion Rate need be made:
(i) upon the issuance of any shares of Common Stock pursuant to any present or future plan providing for the reinvestment of dividends
or interest payable on securities of the Corporation and the investment of additional optional amounts in shares of Common Stock
under any plan;
(ii) upon the issuance of any shares of Common Stock or options or rights to purchase those shares pursuant to any present or future
employee, director or consultant benefit plan or program of or assumed by the Corporation or any of its Subsidiaries;
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(iii) upon the issuance of any shares of Common Stock pursuant to any option, warrant, right, or exercisable, exchangeable or convertible
security not described in clause (ii) above and outstanding as of the date of this Certificate of Designation;
(iv) for a change in the par value or no par value of the Common Stock;
(v) for accumulated and unpaid dividends (including Additional Dividends, if any); or
(vi) if Holders are to participate in a merger or consolidation on a basis and with notice that the Board of Directors determines to be fair
and appropriate in light of the basis and notice on which holders of Common Stock participate in the transaction; provided that the
basis on which the Holders are to participate in the transaction shall not be deemed to be fair if it would require the conversion of
securities at any time prior to the expiration of the conversion period specified for such securities.
To the extent the Preferred Stock becomes convertible into cash, assets or property (other than capital stock of the Corporation or securities
to which Section 7(l) hereof applies), no adjustment shall be made thereafter as to the cash, assets or property. Interest shall not accumulate on
such cash.
(i) Notice of Adjustment. Whenever the Conversion Rate is adjusted, the Corporation shall promptly mail to Holders a notice of the
adjustment. The Corporation shall file with the Conversion Agent such notice. The certificate shall, absent manifest error, be conclusive
evidence that the adjustment is correct. No Conversion Agent shall be under any duty or responsibility with respect to any such certificate
except to exhibit the same to any Holder desiring inspection thereof.
(j) Voluntary Increase. The Corporation may make such increases in the Conversion Rate, in addition to those required by Section 7(f)
hereof, as the Board of Directors considers to be advisable to avoid or diminish any income tax to holders of Common Stock or rights to
purchase Common Stock resulting from any dividend or distribution of stock (or rights to acquire stock) or from any event treated as such for
income tax purposes. To the extent permitted by applicable law, the Corporation may from time to time increase the Conversion Rate by any
amount, temporarily or otherwise, for any period of at least 20 days if the increase is irrevocable during the period and the Board of Directors
shall have made a determination that such increase would be in the best interests of the Corporation, which determination shall be conclusive.
Whenever the Conversion Rate is so increased, the Corporation shall mail to Holders and file with the Conversion Agent a notice of such
increase. The Conversion Agent shall not be under any duty or responsibility with respect to any such notice except to exhibit the same to
any holder desiring inspection thereof. The Corporation shall mail the notice at least 15 days before the date the increased Conversion Rate
takes effect. The notice shall state the increased Conversion Rate and the period it shall be in effect.
(k) Notice to Holders Prior to Certain Actions. In case:
(i) the Corporation shall declare a dividend (or any other distribution) on its Common Stock that would require an adjustment in the
Conversion Rate pursuant to Section 7(f) hereof;
(ii) the Corporation shall authorize the granting to all or substantially all the holders of its Common Stock of rights or warrants to
subscribe for or purchase any share of any class or any other rights or warrants;
(iii) of any reclassification or reorganization of the Common Stock of the Corporation (other than a subdivision or combination of its
outstanding Common Stock, or a change in par value, or from par value to no par value, or from no par value to par value), or of any
consolidation or merger to which the Corporation is a party and for which approval of any shareholders of the Corporation is required,
or of the sale or transfer of all or substantially all of the assets of the Corporation; or
(iv) of the voluntary or involuntary dissolution, liquidation or winding-up of the Corporation, the Corporation shall cause to be filed with
the Conversion Agent and to be mailed to each Holder at its address
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appearing on the Security Register, as promptly as possible but in any event at least 15 days prior to the applicable date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution or rights or
warrants, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend,
distribution, or rights or warrants are to be determined or (y) the date on which such reclassification, reorganization, consolidation,
merger, sale, transfer, dissolution, liquidation or winding-up is expected to become effective or occur, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange their Common Stock for securities or other property
deliverable upon such reclassification, reorganization, consolidation, merger, sale, transfer, dissolution, liquidation or winding-up.
Failure to give such notice, or any defect therein, shall not affect the legality or validity of such dividend, distribution, reclassification,
reorganization, consolidation, merger, sale, transfer, dissolution, liquidation or winding-up.
(l) Effect of Reclassification, Consolidation, Merger, Binding Share Exchange or Sale. If any of the following events occur, namely: (i) any
reclassification or change of outstanding shares of Common Stock (other than a change in par value, or from par value to no par value, or from
no par value to par value, or as a result of a subdivision or combination); (ii) any consolidation, merger, combination or binding share
exchange of the Corporation with another Person as a result of which holders of Common Stock shall be entitled to receive stock, securities or
other property or assets (including cash) with respect to or in exchange for such Common Stock; or (iii) any sale or conveyance of the
properties and assets of the Corporation as, or substantially as, an entirety to any other Person as a result of which holders of Common Stock
shall be entitled to receive stock, securities or other property or assets (including cash) with respect to or in exchange for such Common Stock,
then the Corporation or the successor or purchasing Person, as the case may be, shall cause an amendment to this Certificate of Designation
to be executed and filed in accordance with Michigan law, providing that each share of Preferred Stock shall be convertible into the kind and
amount of shares of stock and other securities or property or assets (including cash) receivable upon such reclassification, change,
consolidation, merger, combination, binding share exchange, sale or conveyance by a holder of a number of shares of Common Stock issuable
upon conversion of such Preferred Stock immediately prior to such reclassification, change, consolidation, merger, combination, binding share
exchange, sale or conveyance. Such amended Certificate of Designation shall provide for adjustments which shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Section 7(l).
The Corporation shall cause notice of the execution of such amended Certificate of Designation to be mailed to each Holder, at its address
appearing on the Security Register, within 20 days after filing thereof. Failure to deliver such notice shall not affect the legality or validity of
such supplemental indenture.
The above provisions of this Section 7(l) shall similarly apply to successive reclassifications, changes, consolidations, mergers,
combinations, binding share exchanges, sales and conveyances.
If this Section 7(l) applies to any event or occurrence, Section 7(f) hereof shall not apply.
(m) Conversion Value of Preferred Stock Tendered.
(i) Subject to certain exceptions described in Sections 7(a)(ii), 7(a)(iii) and 7(a)(iv), Holders tendering the Preferred Stock for conversion
shall be entitled to receive, upon conversion of such Preferred Stock, per the Liquidation Preference, cash and shares of Common
Stock, the value of which (the “Conversion Value”) shall be equal to the product of:
(A) the then applicable Conversion Rate; and
(B) the average of the Common Stock prices for the ten consecutive Trading Days (appropriately adjusted to take into account the
occurrence during such period of stock splits, stock dividends and similar events) beginning on the second Trading Day
immediately following the day the Preferred Stock is tendered for conversion (the “Ten Day Average Closing Stock Price”).
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(ii) Subject to certain exceptions described below and under Sections 7(a)(ii), 7(a)(iii) and 7(a)(iv), the Corporation shall deliver the
Conversion Value to converting Holders as follows:
(A) an amount in cash (the “Principal Return”) equal to the lesser of (1) the Conversion Value of the Preferred Stock to be
converted and (2) the aggregate Liquidation Preference per share of Preferred Stock to be converted;
(B) if the aggregate Conversion Value of the Preferred Stock to be converted is greater than the Principal Return, an amount in
whole shares (the “Net Shares”), determined as set forth below, equal to such aggregate Conversion Value less the Principal
Return (the “Net Share Amount”); and
(C) an amount paid in cash, determined as set forth below, in lieu of any fractional shares of Common Stock.
The number of Net Shares to be paid shall be determined by dividing the Net Share Amount by the Ten Day Average Closing Stock Price.
Holders of Preferred Stock will not receive fractional shares upon conversion of Preferred Stock. In lieu of fractional shares, Holders will
receive cash for the value of the fractional shares, which cash payment shall be based on the Ten Day Average Closing Stock Price.
The Conversion Value, Principal Return, number of Net Shares and Net Share Amount shall be determined by the Corporation at the end of
the ten consecutive Trading Day period beginning on the second Trading Day immediately following the day the Preferred Stock are tendered
for conversion (the “Determination Date”).
The Corporation shall pay the Principal Return and cash for fractional shares and deliver the Net Shares, if any, as promptly as practicable
after the Determination Date, but in no event later than five Business Days thereafter. Except as provided in Section 7, delivery of the Principal
Return, Net Shares and cash in lieu of fractional shares shall be deemed to satisfy the Corporation’s obligation to pay the Liquidation
Preference, including Additional Dividends, if any. Any accumulated and unpaid dividends, including Additional Dividends, shall be deemed
canceled, extinguished or forfeited rather than paid in full.
(n) Responsibility of Conversion Agent. The Conversion Agent shall not at any time be under any duty or responsibility to any Holder to
either calculate the Conversion Rate or determine whether any facts exist which may require any adjustment of the Conversion Rate, or with
respect to the nature or extent or calculation of any such adjustment when made, or with respect to the method employed, or herein or in any
amended Certificate of Designation provided to be employed, in making the same and shall be protected in relying upon an Officers’ Certificate
with respect to the same. The Conversion Agent shall not be accountable with respect to the validity or value (or the kind or amount) of any
shares of Common Stock, or of any securities or property, which may at any time be issued or delivered upon the conversion of any Preferred
Stock and the Conversion Agent makes no representations with respect thereto. The Conversion Agent shall not be responsible for any
failure of the Corporation to issue, transfer or deliver any shares of Common Stock or stock certificates or other securities or property or cash
upon the surrender of any Preferred Stock for the purpose of conversion or to comply with any of the duties, responsibilities or covenants of
the Corporation contained in this Section 7(n). Without limiting the generality of the foregoing, the Conversion Agent shall not be under any
responsibility to determine the correctness of any provisions contained in any amended Certificate of Designation entered into pursuant to
this Section 7 relating either to the kind or amount of shares of stock or securities or property (including cash) receivable by Holders upon the
conversion of their Preferred Stock after any event referred to in this Section 7 or to any adjustment to be made with respect thereto, but may
accept as conclusive evidence of the correctness of any such provisions, and shall be protected in relying upon, the Officers’ Certificate
(which the Corporation shall be obligated to file with the Conversion Agent prior to the execution of any such amended Certificate of
Designation) with respect thereto.
(o) Simultaneous Adjustments. In the event that Section 7(f) hereof requires adjustments to the Conversion Rate under more than one of
Section 7(f)(i), Section 7(f)(ii), Section 7(f)(iii) or Section 7(f)(iv) hereof, and the Dividend Record Dates for the distributions giving rise to such
adjustments shall occur on the same date, then such adjustments shall be made by applying, first, the provisions of Section 7(f)(iii) hereof,
second, the
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provisions of Section 7(f)(i) hereof and third, the provisions of Section 7(f)(ii) hereof; provided, however, that nothing in this Section 7(o) shall
be done to evade the principle set forth in Section 7(f)(x) hereof that the Maximum Conversion Rate shall not apply to any adjustments made
with respect to any of the events in Section 7(f)(i) or Section 7(f)(ii) hereof.
(p) Successive Adjustments. After an adjustment to the Conversion Rate under Section 7(f) hereof, any subsequent event requiring an
adjustment under Section 7(f) shall cause an adjustment to the Conversion Rate as so adjusted.
(q) General Considerations. Whenever successive adjustments to the Conversion Rate are called for pursuant to this Section 7, such
adjustments shall be made to the Market Price as may be necessary or appropriate to effectuate the intent of this Section 7 and to avoid unjust
or inequitable results as determined in good faith by the Board of Directors.
(r) Corporation Determination Final. Any determination which the Board of Directors must make pursuant to this Section 7 shall be
conclusive and binding on the Holders.
8. Mandatory Conversion.
(a) At any time on or after December 5, 2008, the Corporation shall have the right, at its option, to cause the Preferred Stock, in whole but
not in part, to be automatically converted into cash and shares of Common Stock equal to the Conversion Value and in accordance with the
provisions of Section 7 hereof. The Corporation may exercise its right to cause a mandatory conversion pursuant to this Section 8(a) only if
the Last Reported Sale Price of the Common Stock equals or exceeds 130% of the Conversion Price then in effect for at least 20 Trading Days
in any consecutive 30-day trading period on the NYSE (or such other national securities exchange or automated quotation system on which
the Common Stock is then listed or authorized for quotation), including the last Trading Day of such 30-day period, ending on the Trading Day
prior to the Corporation’s issuance of a press release announcing the mandatory conversion as described in Section 8(b).
(b) To exercise the mandatory conversion right described in Section 8(a), the Corporation must issue a press release for publication on the
Dow Jones News Service prior to the opening of business on the first trading day following any date on which the conditions described in
Section 8(a) are met, announcing such a mandatory conversion. The Corporation shall also give notice by mail or by publication (with
subsequent prompt notice by mail) to the holders of Preferred Stock (not more than four Business Days after the date of the press release) of
the mandatory conversion announcing the Corporation’s intention to convert the Preferred Stock. The conversion date will be a date selected
by the Corporation (the “Mandatory Conversion Date”) and will be no more than five days after the date on which the Corporation issues the
press release described in this Section 8(b).
(c) In addition to any information required by applicable law or regulation, the press release and notice of a mandatory conversion
described in Section 8(b) shall state, as appropriate: (i) the Mandatory Conversion Date; (ii) the Conversion Value, including the Principal
Return, the Net Shares and the cash in lieu of fractional shares to be delivered upon conversion of the Preferred Stock; (iii) the number of
shares of Preferred Stock to be converted; and (iv) that dividends on the Preferred Stock to be converted will cease to accumulate on the
Mandatory Conversion Date.
(d) On and after the Mandatory Conversion Date, dividends will cease to accumulate on the Preferred Stock called for a mandatory
conversion pursuant to Section 8(a) and all rights of holders of such Preferred Stock will terminate except for the right to receive the cash and
whole shares of Common Stock issuable upon conversion thereof and cash, in lieu of any fractional shares of Common Stock in accordance
with Section 7(c). The dividend payment with respect to the Preferred Stock called for a mandatory conversion pursuant to Section 8(a) on a
date during the period between the close of business on any Dividend Record Date to the close of business on the corresponding Dividend
Payment Date will be payable on such Dividend Payment Date to the record holder of such share on such Dividend Record Date if such share
has been converted after such Dividend Record Date and prior to
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such Dividend Payment Date. Except as provided in the immediately preceding sentence with respect to a mandatory conversion pursuant to
Section 8(a), no payment or adjustment will be made upon conversion of Preferred Stock for Accumulated Dividends or for dividends with
respect to the Common Stock issued upon such conversion.
(e) The Corporation may not authorize, issue a press release or give notice of any mandatory conversion pursuant to Section 8(a) unless,
prior to giving the mandatory conversion notice, all Accumulated Dividends on the Preferred Stock for periods ended prior to the date of such
mandatory conversion notice shall have been paid in cash.
(f) In addition to the mandatory conversion right described in Section 8(a), if there are less than 250,000 shares of Preferred Stock
outstanding, the Corporation shall have the right, at any time on or after December 5, 2008, at its option, to cause the Preferred Stock to be
automatically converted into cash and shares of Common Stock equal to the Conversion Value and in accordance with the provisions of
Section 7 hereof.
9. Consolidation, Merger and Sale of Assets.
(a) The Corporation, without the consent of the Holders of any of the outstanding Preferred Stock, may consolidate with or merge into any
other Person or convey, transfer or lease all or substantially all its assets to any Person or may permit any Person to consolidate with or merge
into, or transfer or lease all or substantially all its properties to, the Corporation; provided, however, that: (i) the successor, transferee or lessee
is organized under the laws of the United States or any political subdivision thereof; (ii) the shares of Preferred Stock will become shares of
such successor, transferee or lessee, having in respect of such successor, transferee or lessee the same powers, designations, preferences and
relative, participating, optional or other rights on which, and the qualification, limitations or restrictions thereon, the Preferred Stock had
immediately prior to such transaction; and (iii) the Corporation delivers to the Transfer Agent an Officers’ Certificate and an Opinion of
Counsel stating that such transaction complies with this Certificate of Designation (including without limitation the requirements of
Section 7(l).
(b) Upon any consolidation by the Corporation with, or merger by the Corporation into, any other Person or any conveyance, transfer or
lease of all or substantially all the assets of the Corporation as described in Section 9(a), the successor resulting from such consolidation or
into which the Corporation is merged or the transferee or lessee to which such conveyance, transfer or lease is made will succeed to, and be
substituted for, and may exercise every right and power of, the Corporation under the shares of Preferred Stock, and, thereafter, except in the
case of a lease, the predecessor (if still in existence) will be released from its obligations and covenants with respect to the Preferred Stock.
10. SEC Reports.
Whether or not the Corporation is required to file reports with the Commission, if any shares of Preferred Stock are outstanding, the
Corporation shall file with the Commission all such reports and other information as it would be required to file with the Commission by
Section 13(a) or 15(d) under the Exchange Act. The Corporation shall supply each holder of Preferred Stock, upon request, without cost to
such holder, copies of such reports or other information.
11. Certificates.
(a) Form and Dating. The Preferred Stock and the Transfer Agent’s certificate of authentication shall be substantially in the form of
Exhibit C, which is hereby incorporated in and expressly made a part of this Certificate of Designation. The Preferred Stock certificate may have
notations, legends or endorsements required by law, stock exchange rule, agreements to which the Corporation is subject, if any, or usage
(provided that any such notation, legend or endorsement is in a form acceptable to the Corporation). Each Preferred Stock certificate shall be
dated the date of its authentication. The terms of the Preferred Stock certificate set forth in Exhibit C are part of the terms of this Certificate of
Designation.
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(i) Global Preferred Stock. The Preferred Stock shall be issued initially in the form of one or more fully registered global certificates with
the global securities legend and restricted securities legend set forth in Exhibit C hereto (the “Global Preferred Stock”), which shall be
deposited on behalf of the purchasers represented thereby with DTC (or with such custodian as DTC may direct), and registered in
the name of DTC or a nominee of DTC, duly executed by the Corporation and authenticated by the Transfer Agent as hereinafter
provided. The number of shares of Preferred Stock represented by Global Preferred Stock may from time to time be increased or
decreased by adjustments made on the records of the Transfer Agent and DTC or its nominee as hereinafter provided. With respect
to shares of Preferred Stock that are not “restricted securities” as defined in Rule 144 under the Securities Act on a Conversion Date,
all shares of Common Stock distributed on such Conversion Date will be freely transferable without restriction under the Securities
Act (other than by affiliates), and such shares will be eligible for receipt in global form through the facilities of DTC.
(ii) Book-Entry Provisions. In the event Global Preferred Stock is deposited with or on behalf of DTC, the Corporation shall execute and
the Transfer Agent shall authenticate and deliver initially one or more Global Preferred Stock certificates that (a) shall be registered in
the name of DTC as depository for such Global Preferred Stock or the nominee of DTC and (b) shall be delivered by the Transfer
Agent to DTC or pursuant to DTC’s instructions or held by the Transfer Agent as custodian for DTC.
Members of, or participants in, DTC (“Agent Members”) shall have no rights under this Certificate of Designation with respect to any
Global Preferred Stock held on their behalf by DTC or by the Transfer Agent as the custodian of DTC or under such Global Preferred
Stock, and DTC may be treated by the Corporation, the Transfer Agent and any agent of the Corporation or the Transfer Agent as the
absolute owner of such Global Preferred Stock for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Corporation, the Transfer Agent or any agent of the Corporation or the Transfer Agent from giving effect to any written
certification, proxy or other authorization furnished by DTC or impair, as between DTC and its Agent Members, the operation of
customary practices of DTC governing the exercise of the rights of a holder of a beneficial interest in any Global Preferred Stock.
(iii) Certificated Preferred Stock. Except as provided in Section 11(c), owners of beneficial interests in Global Preferred Stock will not be
entitled to receive Certificated Preferred Stock.
(b) Execution and Authentication. Two Officers shall sign the Preferred Stock certificate for the Corporation by manual or facsimile
signature.
If an Officer whose signature is on a Preferred Stock certificate no longer holds that office at the time the Transfer Agent authenticates the
Preferred Stock certificate, the Preferred Stock certificate shall be valid nevertheless.
A Preferred Stock certificate shall not be valid until an authorized signatory of the Transfer Agent and the Security Registrar manually signs
the certificate of authentication on the Preferred Stock certificate. The signature shall be conclusive evidence that the Preferred Stock
certificate has been authenticated under this Certificate of Designation.
The Transfer Agent shall authenticate and deliver certificates for 4,910,000 shares of Preferred Stock for original issue upon a written order
of the Corporation signed by two Officers or by an Officer and an Assistant Treasurer of the Corporation. Such order shall specify the number
of shares of Preferred Stock to be authenticated and the date on which the original issue of Preferred Stock is to be authenticated.
The Transfer Agent may appoint an authenticating agent reasonably acceptable to the Corporation to authenticate the certificates for
Preferred Stock. Unless limited by the terms of such appointment, an authenticating
27
agent may authenticate certificates for Preferred Stock whenever the Transfer Agent may do so. Each reference in this Certificate of
Designation to authentication by the Transfer Agent includes authentication by such agent. An authenticating agent has the same rights as
the Transfer Agent or agent for service of notices and demands.
(c) Transfer and Exchange of Global Preferred Stock. The transfer and exchange of Global Preferred Stock or beneficial interests therein shall
be effected through DTC, in accordance with this Certificate of Designation (including applicable restrictions on transfer set forth herein, if
any) and the procedures of DTC therefor.
(i) Restrictions on Transfer and Exchange of Global Preferred Stock.
(A) Notwithstanding any other provisions of this Certificate of Designation (other than the provisions set forth in Section 11(c)(ii)),
Global Preferred Stock may not be transferred as a whole except by DTC to a nominee of DTC or by a nominee of DTC to DTC or
another nominee of DTC or by DTC or any such nominee to a successor depository or a nominee of such successor depository.
(B) In the event that the Global Preferred Stock is exchanged for Preferred Stock in definitive registered form pursuant to
Section 11(c)(ii) prior to the effectiveness of a Shelf Registration Statement with respect to such securities, such Preferred Stock
may be exchanged only in accordance with such procedures as are substantially consistent with the provisions of this Section
11(c) (including the certification requirements set forth in the Exhibits to this Certificate of Designation intended to ensure that
such transfers comply with Rule 144A or such other applicable exemption from registration under the Securities Act, as the case
may be) and such other procedures as may from time to time be adopted by the Corporation.
(C) The Preferred Stock, and any shares of Common Stock distributed pursuant to the conversion of the Preferred Stock, may not be
sold until December 5, 2005, except (a) pursuant to registration under the Securities Act, (b) in accordance with Rule 144 (if
available) or Rule 144A under the Securities Act (if available) or (c) in offshore transactions in reliance on Regulation S, and will
bear a legend to this effect.
(ii) Authentication of Certificated Preferred Stock. If at any time:
(A) DTC notifies the Corporation that DTC is unwilling or unable to continue as depository for the Global Preferred Stock and a
successor depository for the Global Preferred Stock is not appointed by the Corporation within 90 days after delivery of such
notice;
(B) DTC ceases to be a clearing agency registered under the Exchange Act and a successor depository for the Global Preferred
Stock is not appointed by the Corporation within 90 days; or
(C) the Corporation, in its sole discretion, notifies the Transfer Agent in writing that it elects to cause the issuance of Certificated
Preferred Stock under this Certificate of Designation,
then the Corporation will execute, and the Transfer Agent, upon receipt of a written order of the Corporation signed by two
Officers or by an Officer and an Assistant Treasurer of the Corporation requesting the authentication and delivery of
Certificated Preferred Stock to the Persons designated by the Corporation, will authenticate and deliver Certificated Preferred
Stock equal to the number of shares of Preferred Stock represented by the Global Preferred Stock, in exchange for such Global
Preferred Stock.
(iii) Cancellation or Adjustment of Global Preferred Stock. At such time as all beneficial interests in Global Preferred Stock have either
been exchanged for Certificated Preferred Stock, converted or canceled, such Global Preferred Stock shall be returned to DTC for
cancellation or retained and canceled by the Transfer Agent. At any time prior to such cancellation, if any beneficial interest in
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Global Preferred Stock is exchanged for Certificated Preferred Stock, converted or canceled, the number of shares of Preferred Stock
represented by such Global Preferred Stock shall be reduced and an adjustment shall be made on the books and records of the
Transfer Agent with respect to such Global Preferred Stock, by the Transfer Agent or DTC, to reflect such reduction.
(iv) Obligations with Respect to Transfers and Exchanges of Preferred Stock.
(A) To permit registrations of transfers and exchanges, the Corporation shall execute and the Transfer Agent shall authenticate
Certificated Preferred Stock and Global Preferred Stock as required pursuant to the provisions of this Section 11(c).
(B) All Certificated Preferred Stock and Global Preferred Stock issued upon any registration of transfer or exchange of Certificated
Preferred Stock or Global Preferred Stock shall be the valid obligations of the Corporation, entitled to the same benefits under
this Certificate of Designation as the Certificated Preferred Stock or Global Preferred Stock surrendered upon such registration of
transfer or exchange.
(C) Prior to due presentment for registration of transfer of any shares of Preferred Stock, the Transfer Agent and the Corporation
may deem and treat the Person in whose name such shares of Preferred Stock are registered as the absolute owner of such
Preferred Stock and neither the Transfer Agent nor the Corporation shall be affected by notice to the contrary.
(D) No service charge shall be made to a Holder for any registration of transfer or exchange upon surrender of any Preferred Stock
certificate or Common Stock certificate at the office of the Transfer Agent maintained for that purpose. However, the
Corporation may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Preferred Stock certificates or Common Stock certificates.
(E) Upon any sale or transfer of shares of Preferred Stock (including any Preferred Stock represented by a Global Preferred Stock
certificate) or of certificated Common Stock pursuant to an effective registration statement under the Securities Act or pursuant
to Rule 144 or another exemption from registration under the Securities Act (and based upon an Opinion of Counsel reasonably
satisfactory to the Corporation if it so requests):
(1) in the case of any Certificated Preferred Stock or certificated Common Stock, the Corporation and the Transfer Agent shall
permit the holder thereof to exchange such Preferred Stock or certificated Common Stock for Certificated Preferred Stock or
certificated Common Stock, as the case may be, that does not bear the restrictive legend set forth on Exhibit C and rescind any
restriction on the transfer of such Preferred Stock or Common Stock issuable in respect of the conversion of the Preferred Stock;
and
(2) in the case of any Global Preferred Stock, such Preferred Stock shall not be required to bear the restrictive legend set forth
on Exhibit C; provided, however, that with respect to any request for an exchange of Preferred Stock that is represented by
Global Preferred Stock for Certificated Preferred Stock that does not bear a restrictive as set forth on Exhibit C in connection with
a sale or transfer thereof pursuant to Rule 144 or another exemption from registration under the Securities Act (and based upon
an Opinion of Counsel if the Corporation so requests), the Holder thereof shall certify in writing to the Transfer Agent that such
request is being made pursuant to such exemption (such certification to be substantially in the form of Exhibit D hereto).
29
(v) No Obligation of the Transfer Agent.

(A) The Transfer Agent shall have no responsibility or obligation to any beneficial owner of Global Preferred Stock, a member of, or
a participant in, DTC or any other Person with respect to the accuracy of the records of DTC or its nominee or of any participant
or member thereof, with respect to any ownership interest in the Preferred Stock or with respect to the delivery to any
participant, member, beneficial owner or other Person (other than DTC) of any notice or the payment of any amount, under or
with respect to such Global Preferred Stock. All notices and communications to be given to the Holders and all payments to be
made to Holders under the Preferred Stock shall be given or made only to the Holders (which shall be DTC or its nominee in the
case of the Global Preferred Stock). The rights of beneficial owners in any Global Preferred Stock shall be exercised only through
DTC subject to the applicable rules and procedures of DTC. The Transfer Agent may rely and shall be fully protected in relying
upon information furnished by DTC with respect to its members, participants and any beneficial owners.
(B) The Transfer Agent shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on
transfer imposed under this Certificate of Designation or under applicable law with respect to any transfer of any interest in any
Preferred Stock (including any transfers between or among DTC participants, members or beneficial owners in any Global
Preferred Stock) other than to require delivery of such certificates and other documentation or evidence as are expressly
required by, and to do so if and when expressly required by, the terms of this Certificate of Designation, and to examine the same
to determine substantial compliance as to form with the express requirements hereof.
(d) Replacement Certificates. If a mutilated Preferred Stock certificate is surrendered to the Transfer Agent or if the Holder of a Preferred
Stock certificate claims that the Preferred Stock certificate has been lost, destroyed or wrongfully taken, the Corporation shall issue and the
Transfer Agent shall countersign a replacement Preferred Stock certificate if the reasonable requirements of the Transfer Agent are met. If
required by the Transfer Agent or the Corporation, such Holder shall furnish an indemnity bond sufficient in the judgment of the Corporation
and the Transfer Agent to protect the Corporation and the Transfer Agent from any loss which either of them may suffer if a Preferred Stock
certificate is replaced. The Corporation and the Transfer Agent may charge the Holder for their expenses in replacing a Preferred Stock
certificate.
12. Additional Rights of Holders. In addition to the rights provided to Holders under this Certificate of Designation, Holders shall have the
rights set forth in the Registration Rights Agreement.
13. Other Provisions.
(a) With respect to any notice to a Holder of shares of Preferred Stock required to be provided hereunder, neither failure to mail such notice,
nor any defect therein or in the mailing thereof, to any particular Holder shall affect the sufficiency of the notice or the validity of the
proceedings referred to in such notice with respect to the other Holders or affect the legality or validity of any distribution, rights, warrant,
reclassification, consolidation, merger, conveyance, transfer, dissolution, liquidation or winding-up, or the vote upon any such action. Any
notice which was mailed in the manner herein provided shall be conclusively presumed to have been duly given whether or not the Holder
receives the notice.
(b) Shares of Preferred Stock issued and reacquired will be retired and canceled promptly after reacquisition thereof and, upon compliance
with the applicable requirements of Michigan law, have the status of authorized but unissued shares of preferred stock of the Corporation
undesignated as to series and may with any and all other authorized but unissued shares of preferred stock of the Corporation be designated
or redesignated and issued or reissued, as the case may be, as part of any series of preferred stock of the Corporation, except that any
issuance or reissuance of shares of Preferred Stock must be in compliance with this Certificate of Designation.
30
(c) The shares of Preferred Stock shall be issuable only in whole shares.
(d) All notice periods referred to herein shall commence on the date of the mailing of the applicable notice.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be signed and attested this 15th day of December, 2004.
(SEAL)
By: /s/ Michael D. VanHemert

Name: Michael D. VanHemert
Title: Vice President and Secretary
Attest: /s/ Joyce H. Norkey

Joyce H. Norkey
31
EXHIBIT A
FORM OF FUNDAMENTAL CHANGE PURCHASE NOTICE

To: CMS Energy Corporation
The undersigned registered holder of shares of Preferred Stock hereby acknowledges receipt of a notice from CMS Energy Corporation (the
“Corporation”) as to the occurrence of a Fundamental Change with respect to the Corporation and requests and instructs the Corporation to
repurchase the shares of Preferred Stock ($50.00 liquidation preference or an integral multiple thereof) designated below, in accordance with
the terms of the Certificate of Designation referred to in such Preferred Stock and directs that the check of the Corporation, in payment for
these shares of Preferred Stock, be issued and delivered to the registered holder hereof unless a different name has been indicated below. If
any portion of these shares of Preferred Stock are not repurchased and are to be issued in the name of a Person other than the undersigned,
the undersigned shall pay all transfer taxes payable with respect thereto.
Dated:
Signature(s)
Signature(s) must be guaranteed by a commercial bank or trust company or a
member firm of a major stock exchange if cash and shares of Preferred Stock
are to be delivered other than to or in the name of the registered holder.
Signature Guarantee
Fill in for registration of Preferred Stock if to be

issued other than to and in the name of
registered holder:
Number of shares of Preferred Stock to be purchased (if

(Name) less than all are to be purchased):
(Street Address)
(City, state and zip code) Certificate Number (if shares of Preferred Stock are
Please print name and address Certificated):
Social Security or other taxpayer number:
32
EXHIBIT B
FORM OF CONVERSION NOTICE

To: CMS Energy Corporation
The undersigned registered holder of these shares of Preferred Stock hereby exercises the option to convert these shares of Preferred
Stock, or portion hereof (which is $50.00 liquidation preference or an integral multiple thereof) designated below, for cash and shares of
Common Stock of CMS Energy Corporation in accordance with the terms of the Certificate of Designation referred to in the Preferred Stock,
and directs that the shares, if any, issuable and deliverable upon such conversion, together with any check for cash deliverable upon such
conversion, and any shares of Preferred Stock representing any unconverted shares hereof, be issued and delivered to the registered holder
hereof unless a different name has been indicated below. If shares or any portion of the Preferred Stock not converted are to be issued in the
name of a Person other than the undersigned, the undersigned shall pay all transfer taxes payable with respect thereto.
This notice shall be deemed to be an irrevocable exercise of the option to convert these shares of Preferred Stock.
Dated:
Signature(s)
Signature(s) must be guaranteed by a commercial bank or trust company or a
member firm of a major stock exchange if cash and shares of Common Stock
are to be issued, or shares of Preferred Stock to be delivered, other than to or
in the name of the registered holder.
Signature Guarantee
Fill in for registration of shares if to be delivered,

and shares of Preferred Stock if to be issued
other than to and in the name of registered
holder:
Number of shares of Preferred Stock to be converted (if

less than all):
(Name)
(Street Address)
(City, state and zip code) Certificate Number (if shares of Preferred Stock are
Please print name and address Certificated):
Social Security or other taxpayer number:
33
EXHIBIT C
FORM OF PREFERRED STOCK

FACE OF SECURITY
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND THIS SECURITY AND THE COMMON
STOCK ISSUABLE UPON CONVERSION HEREOF MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED
THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE
COMPANY THAT (A) THIS SECURITY AND THE COMMON STOCK ISSUABLE UPON CONVERSION HEREOF MAY BE OFFERED,
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (I) IN THE UNITED STATES TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT (“RULE
144A”)) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,
(II) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 UNDER THE
SECURITIES ACT, (III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE), (IV) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT, (V) TO CMS ENERGY CORPORATION OR (VI) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (VI) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY
ANY PURCHASER OF THE SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN CLAUSE (A) ABOVE.
THE HOLDER OF THIS SECURITY AGREES THAT SUCH HOLDER WILL NOT ENGAGE IN HEDGING TRANSACTIONS INVOLVING
THIS SECURITY AND THE COMMON STOCK ISSUABLE UPON CONVERSION HEREOF UNLESS IN COMPLIANCE WITH THE
SECURITIES ACT.
THIS SECURITY AND ANY RELATED DOCUMENTATION MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME TO
MODIFY THE RESTRICTIONS ON AND PROCEDURES FOR RESALES AND OTHER TRANSFERS OF THIS SECURITY TO REFLECT ANY
CHANGE IN APPLICABLE LAW OR REGULATION (OR THE INTERPRETATION THEREOF) OR IN PRACTICES RELATING TO THE
RESALE OR TRANSFER OF RESTRICTED SECURITIES GENERALLY. THE HOLDER OF THIS SECURITY SHALL BE DEEMED BY THE
ACCEPTANCE OF THIS SECURITY TO HAVE AGREED TO ANY SUCH AMENDMENT OR SUPPLEMENT.
THE HOLDER OF THIS SECURITY IS SUBJECT TO, AND ENTITLED TO THE BENEFITS OF, A REGISTRATION RIGHTS AGREEMENT,
DATED AS OF DECEMBER 5, 2003 ENTERED INTO BY THE COMPANY FOR THE BENEFIT OF CERTAIN HOLDERS OF SECURITIES
FROM TIME TO TIME.
34
Certificate Number Number of Shares

[ ] [ ]
CUSIP NO.:
4.50% Cumulative Convertible Preferred Stock, Series B (par value $0.01) (liquidation preference $50 per share)
of
CMS Energy Corporation, a Michigan corporation (the ‘Corporation”), hereby certifies that [ ] (the “Holder”) is the registered owner of
[ ] fully paid and non-assessable preferred securities of the Corporation designated the 4.50% Cumulative Convertible Preferred Stock,
Series B (par value $0.01) (liquidation preference $50 per share) (the “Preferred Stock”). The shares of Preferred Stock are transferable on the
books and records of the Transfer Agent, in person or by a duly authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designations, rights, privileges, restrictions, preferences and other terms and provisions of the Preferred Stock
represented hereby are issued and shall in all respects be subject to the provisions of the Certificate of Designation dated December 15, 2004,
as the same may be amended from time to time (the “Certificate of Designation”). Capitalized terms used herein but not defined shall have the
meaning given them in the Certificate of Designation. The Corporation will provide a copy of the Certificate of Designation to a Holder without
charge upon written request to the Corporation at its principal place of business.
Reference is hereby made to select provisions of the Preferred Stock set forth on the reverse hereof, and to the Certificate of Designation,
which select provisions and the Certificate of Designation shall for all purposes have the same effect as if set forth at this place.
Upon receipt of this certificate, the Holder is bound by the Certificate of Designation and is entitled to the benefits thereunder.
Unless the Transfer Agent’s Certificate of Authentication hereon has been properly executed, these shares of Preferred Stock shall not be
entitled to any benefit under the Certificate of Designation or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Corporation has executed this certificate this day of , 2004.
By:
Name:
Title:
By:
Name:
Title:
35
TRANSFER AGENT’S AND SECURITY REGISTRAR’S CERTIFICATE OF AUTHENTICATION
These are shares of the Preferred Stock referred to in the within-mentioned Certificate of Designation.
Dated: , 2004
CMS Energy Corporation, as Transfer Agent and

Security Registrar
By:
Authorized Signatory
REVERSE OF SECURITY
Cash dividends on each share of Preferred Stock shall be payable at a rate per annum set forth on the face hereof or as provided in the
Certificate of Designation.
The shares of Preferred Stock shall be convertible into cash and the shares of the Corporation’s Common Stock in the manner and
according to the terms set forth in the Certificate of Designation.
The Corporation will furnish without charge to each holder who so requests the powers, designations, preferences and relative,
participating, optional or other rights of each class of stock and the qualifications, limitations or restrictions of such preferences and/or rights.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers the shares of Preferred Stock evidenced hereby to:
(Insert assignee’s social security or tax identification number)
(Insert address and zip code of assignee)
and irrevocably appoints agent to transfer the shares of Preferred Stock evidenced hereby on the books of the Transfer Agent.
The agent may substitute another to act for him or her.
Date:
Signature:
(Sign exactly as your name appears on the other side of this Preferred Stock certificate)
Signature Guarantee: (1)
1 (Signature must be guaranteed by an “eligible guarantor institution” that is a bank, stockbroker, savings and
loan association or credit union meeting the requirements of the Transfer Agent, which requirements include
membership or participation in the Securities Transfer Agents Medallion Program (“STAMP”) or such other
“signature guarantee program” as may be determined by the Transfer Agent in addition to, or in
substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.)
36
EXHIBIT D
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR
REGISTRATION OF TRANSFER OF PREFERRED STOCK
Re: 4.50% Cumulative Convertible Preferred Stock, Series B (the “Preferred Stock”) of CMS Energy Corporation (the “Corporation”)
This Certificate relates to ___shares of Preferred Stock held in o */ book-entry or o */ definitive form by (the “Transferor”).
The Transferor*:
o has requested the Transfer Agent by written order to deliver in exchange for its beneficial interest in the Preferred Stock held by the
Depository cash and shares of Preferred Stock in definitive, registered form equal to its beneficial interest in such Preferred Stock (or the
portion thereof indicated above); or
o has requested the Transfer Agent by written order to exchange or register the transfer of Preferred Stock.
In connection with such request and in respect of such Preferred Stock, the Transferor does hereby certify that the Transferor is familiar
with the Certificate of Designation relating to the above-captioned Preferred Stock and that the transfer of this Preferred Stock does not require
registration under the Securities Act of 1933, as amended (the “Securities Act”) because */:
o Such Preferred Stock is being acquired for the Transferor’s own account without transfer.
o Such Preferred Stock is being transferred to the Corporation.
o Such Preferred Stock is being transferred to a qualified institutional buyer (as defined in Rule 144A under the Securities Act), in reliance
on Rule 144A.
o Such Preferred Stock is being transferred in reliance on and in compliance with another exemption from the registration requirements of
the Securities Act (and based on an Opinion of Counsel if the Corporation so requests).
* /Please check applicable box.
[NAME OF TRANSFEROR]
By:
Its:
Date:
37
Michigan Department of Labor & Economic Growth

Filing Endorsement
This is to Certify that the CERTIFICATE OF CORRECTION
for
ID NUMBER: 485283
received by facsimile transmission on February 27, 2006 is hereby endorsed Filed on February 27, 2006 by the Administrator.
The document is effective on the date filed, unless a

subsequent effective date within 90 days after
received date is stated in the document.
Effective Date: December 20, 2004
(SEAL) In testimony whereof, I have hereunto set my

hand and affixed the Seal of the Department,
Sent by Facsimile Transmission 06056 in the City of Lansing, this 27TH day
of February, 2006.
Director
(SIGNATURE)
Bureau of Commercial Services

BCS/CD-518 (Rev. 12/05)
MICHIGAN DEPARTMENT OF LABOR & ECONOMIC GROWTH

BUREAU OF COMMERCIAL SERVICES
Date Received (FOR BUREAU USE ONLY)
This document is effective on the date filed, unless a

subsequent effective date within 90 days after
received date is stated in the document.
Name
Joyce H Norkey, Assistant Secretary, CMS Energy Corporation
Address
One Energy Plaza, EP1-420
City State Zip Code
Jackson, MI 49201-2276 EFFECTIVE DATE:
Document will be returned to the name and address you enter above.~
If left blank document will be mailed to the registered office.
CERTIFICATE OF CORRECTION
For use by Corporations and Limited Liability Companies
(Please read information and instructions on last page)
Pursuant to the provisions of Act 284, Public Acts of 1972 (profit corporations), Act 162, Public Acts of 1982 (nonprofit
corporations), or Act 23, Public Acts of 1993 (limited liability companies), the undersigned corporation or limited liability company
executes the following Certificate:
1. The name of the corporation or limited liability company is:
2. The identification number assigned by the Bureau is: 485-283
3. The corporation or limited liability company is formed under the laws of the State of Michigan
4. That a Certificate of Designation of 4.50% Cumulative Convertible Preferred Stock, Series B
(Title of Document Being Corrected)
was filed by the Bureau on December 20, 2004 and that said document requires correction.
5. Describe the inaccuracy or defect contained in the above named document.
The amount of shares issued of the 4.50% Cumulative Convertible Preferred Stock, Series B, should have been 5,000,000 shares instead
of 4,910,000 shares in exchange for 5,000,000 shares, instead of 4,910,000 shares, of 4.50% Cumulative Convertible Preferred Stock. In
addition, a correction needs to be made to the definition of “Fundamental Change”.
6. The document is corrected as follows:
See Attachment.
7. This document is hereby executed in the same manner as the Act requires the document being corrected to be executed.
Signed this 27th day of February, 2006
-s- Michael D. VanHemert -s- Joyce H. Norkey/STAMP By

(Signature)
(Type or Print Name and Title) (Type or Print Name and Title) (Type or Print Name and Title)
Vice President, Corporate Secretary and
Chief Governance Officer
ATTACHMENT TO CERTIFICATE OF CORRECTION

OF CMS ENERGY CORPORATION
(CORPORATION IDENTIFICATION NUMBER 485-283)
6. The Certificate of Designation of 4.50% Cumulative Convertible Preferred Stock, Series B, of CMS Energy Corporation filed on December 20,
2004 is corrected as follows (corrections are in bold):
Page 1
1. Designation and Amount; Ranking.
(a) There shall be created from the 10,000,000 shares of preferred stock, par value $0.01 per share, of the Corporation authorized to be
issued pursuant to the Articles of Incorporation, a series of preferred stock, designated as the “4.50% Cumulative Convertible Preferred Stock,
Series B,” par value $0.01 per share (the “Preferred Stock”), and the number of shares of such series shall be 5,000,000. Such number of shares
may be decreased by resolution of the Board of Directors; provided that no decrease shall reduce the number of shares of Preferred Stock to a
number less than that of the shares of Preferred Stock then outstanding plus the number of shares issuable upon exercise of options or rights
then outstanding. The Preferred Stock was exchanged for 5,000,000 of then outstanding shares of 4.50% Cumulative Convertible Preferred
Stock, par value $0.01 per share (the “Original Preferred Stock”), established pursuant to the Certificate of Designation of 4.50% Cumulative
Convertible Preferred Stock of CMS Energy Corporation dated December 4, 2003 pursuant to an exchange offer.
***
Page 3
A “Fundamental Change” shall be deemed to have occurred at such time after the original issuance of the Preferred Stock...; provided,
however, that a Fundamental Change shall not be deemed to have occurred in respect of any of the foregoing if either (1) the Last Reported
Sale Price of Common Stock for any five Trading Days within the ten consecutive Trading Days ending immediately before the later of the
Fundamental Change or the public announcement thereof equals or exceeds 105% of the applicable Conversion Price of the Preferred Stock
in effect immediately before the Fundamental Change or the public announcement thereof (except that this clause (1) shall not apply to the
events described in Section 7(f)(vi) hereof) or (2) at least 90% of the consideration (excluding cash payments for fractional shares) in the
transaction or transactions constituting the Fundamental Change consists of shares of capital stock traded on a national securities
exchange or quoted on the NASDAQ National Market (or which shall be so traded or quoted when issued or exchanged in connection with
such Fundamental Change) (such securities being referred to as “Publicly Traded Securities”) and as a result of such transaction or
transactions the Preferred Stock becomes convertible into such Publicly Traded Securities (excluding cash payments for fractional shares).
***
Page 27
The Transfer Agent shall authenticate and deliver certificates for 5,000,000 shares of Preferred Stock for original issue upon a written
order of the Corporation signed by two Officers or by an Officer and an Assistant Treasurer of the Corporation. Such order shall specify the
number of shares of Preferred Stock to be authenticated and the date on which the original issue of Preferred Stock is to be authenticated.
***
Exhibit (10)(b)
EXECUTION COPY
AMENDMENT NO. 2
This AMENDMENT NO. 2, dated as of January 23, 2009 (this “Amendment”), is by and among CMS Energy Corporation, a Michigan
corporation (the “Borrower”), the financial institutions parties to the “Credit Agreement” (defined below) as lenders (the “Lenders”), and
Citicorp USA, Inc. (“CUSA”), as administrative agent (in such capacity, the “Administrative Agent”).
WHEREAS, the Borrower, the Lenders, the Administrative Agent and CUSA, as collateral agent, have entered into a Seventh Amended and
Restated Credit Agreement, dated as of April 2, 2007 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”; capitalized terms not defined herein are used as defined in the Credit Agreement);
WHEREAS, the Borrower, the requisite number of Lenders under Section 11.01 of the Credit Agreement and the Administrative Agent have
agreed, subject to the terms and conditions hereof, to amend the Credit Agreement as hereinafter set forth.
NOW, THEREFORE, in consideration of the premises set forth above, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower, the requisite number of Lenders under Section 11.01 of the Credit Agreement and
the Administrative Agent agree as follows:
1. Amendment to Credit Agreement. Subject to the conditions set forth in Paragraph 2 hereof, Section 9.01(e) of the Credit Agreement is
hereby amended by inserting immediately after the phrase “but excluding Debt incurred under this Agreement” the following phrase: “and
excluding Consumers’ accounts receivable securitization programs”.
2. Conditions to Effectiveness. The amendments contemplated by this Amendment shall become effective upon the satisfaction of the
following conditions:
(a) The Administrative Agent shall have received duly executed counterparts hereof from each of the requisite number of Lenders under
Section 11.01 of the Credit Agreement, the Administrative Agent and the Borrower.
(b) As of the date hereof, all representations and warranties contained in this Amendment shall be true and correct in all material
respects.
(c) As of the date hereof no event shall have occurred and be continuing which constitutes an Event of Default or a Default.
3. Reference to and Effect on the Loan Documents. On and after the effective date of this Amendment, each reference in the Credit
Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Credit Agreement shall mean and be a reference
to the Credit Agreement, as modified by this Amendment, and each reference in the other Loan Documents to “the Credit Agreement”,
“thereunder”, “thereof” or words of like import referring to the Credit Agreement shall mean and be a reference to the Credit Agreement,
as modified by this Amendment. Except as specifically set forth above, the Credit Agreement and all other Loan Documents are and shall
continue to be in full force and effect and are hereby in all respects ratified and confirmed.
4. Miscellaneous.
(a) Representations and Warranties. The Borrower represents and warrants that:
(i) The representations and warranties contained in Section 7.01 of the Credit Agreement (other than those contained in subsection (f)
thereof) are correct in all material respects on and as of the date hereof (unless such representation and warranty is made as of a specific
date, in which case such representation and warranty shall be true and correct as of such date), and no event has occurred and is
continuing that constitutes a Default or an Event of Default;
(ii) The Borrower is duly organized and validly existing and in good standing under the laws of the jurisdiction of its organization and
has the requisite power and authority to execute, deliver and carry out the terms and provisions of this Amendment and has taken or
caused to be taken all necessary corporate or limited liability company action to authorize the execution, delivery and performance of this
Amendment;
(iii) No consent of any other person, including, without limitation, shareholders or creditors of the Borrower, and no action of, or filing
with, any governmental or public body or authority, is required to authorize, or is otherwise required in connection with the execution,
delivery and performance of, this Amendment;
(iv) This Amendment has been duly executed and delivered by a duly authorized officer on behalf of the Borrower, and constitutes the
legal, valid and binding obligations of the Borrower, enforceable in accordance with its terms, except as enforcement thereof may be
subject to the effect of any applicable (A) bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditors’ rights
generally and (B) general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law); and
(v) The execution, delivery and performance of this Amendment will not violate any law, statute or regulation applicable to the
Borrower or any order or decree of any court or governmental instrumentality applicable to it, or conflict with, or result in the breach of,
or constitute a default under, any of its contractual obligations.
(b) No Waiver. Nothing herein contained shall constitute a waiver or be deemed to be a waiver, of any existing Defaults or Events of
Default, and the Lenders and the Administrative Agent reserve all rights and remedies granted to them by the Credit Agreement, by the
other Loan Documents, by law and otherwise.
2
(c) Costs and Expenses. The Borrower agrees to pay all reasonable costs and out-of-pocket expenses (including, without limitation,
reasonable attorneys’ fees) incurred by the Administrative Agent in connection with the preparation, execution and enforcement of this
Amendment.
(d) Headings. Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part
of this Amendment for any other purpose.
(e) Counterparts. This Amendment may be executed in any number of separate counterparts, each of which shall collectively and
separately constitute one agreement. Delivery of an executed counterpart of a signature page to this Amendment by facsimile shall be
effective as delivery of a manually executed counterpart of this Amendment.
(f) GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAWS OF THE STATE OF NEW YORK,
BUT OTHERWISE WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES).
[signature pages follow]
3
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
CMS ENERGY CORPORATION, as Borrower
By: /s/ Laura L. Mountcastle

Name: Laura L. Mountcastle
Title: Vice President & Treasurer
CITICORP USA, INC., as Administrative Agent
By: /s/ Amit Vasani

Name: Amit Vasani
Title: VP
CITIBANK, N.A., as a Lender
By: /s/ Amit Vasani

Name: Amit Vasani
Title: VP
Signature Page to Amendment No. 2 to

Seventh Amended and Restated Credit Agreement
(CMS Energy Corporation)
UNION BANK OF CALIFORNIA, N.A., as a Lender
By: /s/ Jeff Fesenmaier

Name: Jeff Fesenmaier
Title: Vice President

BARCLAYS BANK PLC, as a Lender
By: /s/ Alicia Borys

Name: Alicia Borys
Title: Assistant Vice President

JPMORGAN CHASE BANK, N.A., as a Lender
By: /s/ Juan Javellana

Name: Juan Javellana

WACHOVIA BANK, NATIONAL ASSOCIATION,

as a Lender
By: /s/ Frederick W. Price

Name: Frederick W. Price
Title: Managing Director

MERRILL LYNCH BANK USA, as a Lender
By: /s/ Louis Alder

Name: Louis Alder
Title: First Vice President

BNP PARIBAS, as a Lender
By: /s/ Francis J. Delaney

Name: FRANCIS J. DELANEY
By: /s/ Ravina Advani

Name: Ravina Advani

SUNTRUST BANK, as a Lender
By: /s/ Andrew Johnson

Name: Andrew Johnson
Title: Director

UBS LOAN FINANCE LLC, as a Lender
By: /s/ Richard L. Tavrow

Name: Richard L. Tavrow
Title: Director
By: /s/ Irja R. Otsa

Name: Irja R. Otsa
Title: Associate Director

DEUTSCHE BANK TRUST COMPANY AMERICAS,

as a Lender
By: /s/ Marcus M. Tarkington

Name: Marcus M. Tarkington
Title: Director
By: /s/ Anca Trifan

Name: Anca Trifan
Title: Director

KEYBANK NATIONAL ASSOCIATION, as a Lender
By: /s/ Sherrie I. Manson

Name: Sherrie I. Manson
Title: Senior Vice President

LASALLE BANK MIDWEST, N.A., as a Lender
By: /s/ Neil Hilton

Name: NEIL HILTON
Title: SENIOR VICE PRESIDENT

CREDIT SUISSE, CAYMAN ISLANDS BRANCH,

as a Lender
By: /s/ Mikhail Faybusovich

Name: Mikhail Faybusovich
By: /s/ Karim Blasetti

Name: Karim Blasetti

FIFTH THIRD BANK, as a Lender
By: /s/ Brian Jelinski

Name: Brian Jelinski
Title: Assistant Vice President

WELLS FARGO BANK, NATIONAL ASSOCIATION, as

a Lender
By: /s/ Scott Bjelde

Name: Scott Bjelde
Title: Senior Vice President

BAYERISCHE LANDESBANK, as a Lender
By: /s/ Gina Hoey

Gina Hoey
Vice President
By: /s/ John Gregory

John Gregory
First Vice President

HUNTINGTON NATIONAL BANK, as a Lender
By: /s/ Patrick Barbour

Name: Patrick Barbour

GOLDMAN SACHS CREDIT PARTNERS, L.P.,

as a Lender
By: /s/ Andrew Caditz

Name: Andrew Caditz

SUMITOMO MITSUI BANKING CORP.,

as a Lender
By: /s/ William M. Ginn

Name: William M. Ginn
Title: General Manager

THE ROYAL BANK OF SCOTLAND PLC,

as a Lender
By: /s/ Andrew Taylor

Name: Andrew Taylor

Exhibit (10)(l)
Amendment
to the
Deferred Salary
Savings Plan
(Amended and Restated as of December 1, 2007)
Whereas, CMS Energy Corporation maintains the Deferred Salary Savings Plan (the “Plan”); and
Whereas, the Board of Directors of CMS Energy Corporation has authorized Officers of the Company to modify the Plan to comply with
Section 409A of the Internal Revenue Code (“Section 409A) and as advisable to reflect guidance under Section 409A; and
Whereas, under the applicable Section 409A regulations the Plan may either accept the default standard for determining when a Separation
from Service has occurred or it may adopt prior to a standard of up to 49% of the average level of services performed over the prior 36 month
period of time; and
Whereas, legal counsel, human resources and the tax department recommend adoption of a 45% standard to provide a reasonable basis for
complying with the Section 409A requirement.
Now Therefore, The definition of Separation from Service in Section 1.1 of the Plan is amended effective to read as follows:
“Separation from Means the Employee retires or otherwise has a separation from service from the company as defined under Code
Service” 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 fide 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).
1
Signed this 21 day of December, 2008.
/s/ John M. Butler

John M. Butler
Senior Vice President — Human Resources and Administrative
Services
Attest:
/s/ Catherine M. Reynolds

Catherine M. Reynolds
Vice President and Secretary
Exhibit (10)(m)
ANNUAL OFFICER INCENTIVE

COMPENSATION PLAN FOR CMS ENERGY CORPORATION
AND ITS SUBSIDIARIES
ANNUAL OFFICER INCENTIVE

COMPENSATION PLAN FOR OFFICERS OF CMS ENERGY CORPORATION
AND ITS SUBSIDIARIES
I. GENERAL PROVISIONS
1.1 Purpose. The purpose of the Annual Officer Incentive Compensation Plan (“Plan”) is to:
(a) Provide an equitable and competitive level of compensation that will permit CMS Energy Corporation (“Company”) and its
subsidiaries to attract, retain and motivate highly competent Officers.
(b) No payments to Officers in the form of incentive compensation shall be made unless pursuant to a plan approved by the
Committee on Compensation and Human Resources of the Board of Directors of CMS Energy (the “Committee”) and after
express approval of the Committee.
1.2 Effective Date. The initial effective date of the Plan is January 1, 2004. The Plan, as described herein, is amended and restated effective
as of January 1, 2008.
1.3 Definitions. As used in this Plan, the following terms have the meaning described below:
(a) “Annual Award” means an annual incentive award granted under the Plan.
(b) “Base Salary” means the base salary on January 1 of a Performance Year, except as impacted by a Change in Status as defined in
Article V. For purposes of the Plan, an Officer’s Base Salary must be subject to annual review and annual approval by the
Committee.
(c) “CMS Energy” means CMS Energy Corporation.
(d) “Code” means the Internal Revenue Code of 1986, as amended.
(e) “Code Section 162(m) Employee” means an employee whose compensation is subject to the “Million Dollar Cap” under Code
Section 162(m). Generally, this is the CEO and the three highest paid executive officers of the Company (other than the CEO and
the CFO).
(f) “Committee” means the Committee on Compensation and Human Resources of the Board of Directors of CMS Energy
Corporation.
(g) “Company” means CMS Energy Corporation.
(h) “Deferred Annual Award” means the amount deferred by an Officer pursuant to Section 4.2
1
(i) “Disability” means that a participant has terminated employment with the Company or a Subsidiary and is disabled, as that term
is defined under Code Section 409A and any applicable regulations.(k) “Leave of Absence” for purposes of this Plan means a
leave of absence that has been approved by the Plan Administrator.
(l) “Officer” means an employee of the Company or a Subsidiary in Salary Grade “E-3” or higher.
(m) “Payment Event” means the time at which a Deferred Annual Award may be paid pursuant to Section 4.2.
(n) “Payment Term” means the length of time for payment of a Deferred Annual Award under Section 4.2.
(o) “Pension Plan” means the Pension Plan for Employees of Consumers Energy and Other CMS Energy Companies.
(p) “Performance Year” means the calendar year prior to the year in which an Annual Award is made by the Committee.
(q) “Plan Administrator” means the President and Chief Executive Officer of CMS Energy, under the general direction of the
Committee. For purposes of administering Deferred Amounts under Section 4.2, the Plan Administrator is the Benefits
Administration Committee appointed by the Chief Executive Officer and the Chief Financial Officer as authorized by the Board of
Directors.
(r) “Retirement” means that a Plan participant is no longer an active employee and qualifies for a retirement benefit other than a
deferred vested retirement benefit under the Pension Plan. For a participant ineligible for coverage under the Pension Plan and
covered instead under the Defined Company Contribution Plan, retirement occurs when there is a Separation from Service on or
after age 55 with 5 or more years of service.
(s) “Separation from Service” means an 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.
(t) “Subsidiary” means any direct or indirect subsidiary of the Company.
1.4 Eligibility. Officers are eligible for participation in the Plan.
2
1.5 Administration of the Plan.

(a) The Plan is administered by the President and Chief Executive Officer of CMS Energy under the general direction of the
Committee.
(b) The Committee, will normally approve performance goals in January of the Performance Year, but no later than March 30th of the
Performance Year.
(c) The Committee, no later than March 1st of the calendar year following the Performance Year, will review for approval proposed
Annual Awards for all Officer participants, taking into account the recommendations of the Chief Executive Officer of the
Company. All proposed Annual Awards are subject to approval of the Committee. Before the payment of any Annual Awards,
the Committee will certify in writing that the performance goals were in fact satisfied in accordance with Code Section 162(m).
(d) The Committee reserves the right to modify the performance goals with respect to unforeseeable circumstances or otherwise
exercise discretion with respect to proposed Annual Awards as it deems necessary to maintain the spirit and intent of the Plan,
provided that such discretion will be to decrease or eliminate, not increase, Annual Awards in the case of any Code Section
162(m) Employees. The Committee also reserves the right in its discretion to not pay Annual Awards for a Performance Year. All
decisions of the Committee are final.
II. CORPORATE PERFORMANCE GOALS
2.1 In General. The composite Plan Performance Factor will depend on corporate performance in two areas: (1) the adjusted net income
per outstanding CMS Energy share (BPS); and (2) the Corporate Free Cash Flow of CMS Energy (CFCF). Each Component as well as
the composite Plan Performance Factor to be used for payouts will be capped at a maximum of 200%. A table containing the corporate
performance goals and their use in determination of the composite Plan Performance Factor shall be created by the Committee for each
Performance Year.
III. ANNUAL AWARD FORMULA
3.1 Officers’ Annual Awards. Annual Awards for each eligible Officer will be based upon a standard award percentage of the Officer’s
Base Salary for the Performance Year. The standard award percentages are set forth in the table below. The maximum amount that can
be awarded under this Plan for any Code Section 162(m) Employee will not exceed $2.5 Million in any one Performance Year. The total
amount of an Officer’s Annual Award shall be computed according to the annual award formula set forth in Section 3.2.
3
S td Award
S alary Pe rce n tage
Position Grade of Base S alary
President & CEO E-9 100%
President, Consumers Energy E-8 60%
Ex Vice Pres E-7 55%
President, Subsidiary — Sr. Vice Pres E-6 50%
Senior Vice President E-5 45%
Vice President E-4 40%
Vice President E-3 35%
3.2 Annual Awards for Officers will be calculated and made as follows:
Annual Award = Base Salary times

Standard Award Percentage times Plan Performance Factor
In addition, each Annual Award for Officers of Consumers Energy Company will be modified based on the results achieved for the
Consumers Energy Annual Employee Incentive Compensation Plan. If the Consumers Energy Annual Employee Incentive
Compensation Plan pays out an award for the same Performance Year, then there is no modification of awards under this plan. If
however, there is no award under the Consumers Energy Annual Employee Incentive Compensation Plan, then the Annual Award, if
any, earned under this plan will be reduced by 25%.
IV. PAYMENT OF ANNUAL AWARDS

4.1 Cash Annual Award. All Annual Awards for a Performance Year will be paid in cash after certification by the outside auditors of the
Company and the Committee that the performance goals have been satisfied, but not later than March 15th of the calendar year
following the Performance Year provided that the Annual Award for a particular Performance Year has not been deferred voluntarily
pursuant to Section 4.2. The amounts required by law to be withheld for income and employment taxes will be deducted from the
Annual Award payments. All Annual Awards become the obligation of the company on whose payroll the Officer is enrolled at the
time the Committee makes the Annual Award.
4.2 Deferred Annual Awards.
(a) The payment of all or any portion (rounded to an even multiple of 10%) of a cash Annual Award may be deferred voluntarily at
the election of an individual Plan participant. Any such deferral will be net of any applicable FICA or FUTA taxes. A separate
irrevocable election must be made prior to the Performance Year. Any Annual Award made by the Committee after termination of
employment of a participant or retirement of a participant will be paid in accordance with any deferral election made within the
enrollment period.
4
(b) At the time the participant makes a deferral election he or she must select the payment options (including the Payment Event as
set forth at (c) below and the Payment Term as set forth at (d) below) applicable to the Deferred Annual Award for the
Performance Year, as well as any earnings or income attributable to such amounts. The payment options elected will apply only
to that year’s Deferred Annual Award and will not apply to any previous Deferred Annual Award or to any subsequent
Deferred Annual Award. Any participant who elects to defer all or a portion of an Annual Award and who fails to select a
Payment Event or a Payment Term will be presumed to have elected a Payment Event of Separation from Service in accordance
with paragraph (c)(i) below and/or a Payment Term of a single sum.
(c) The Payment Event elected can be either:
(i) Separation from Service for any reason other than death. Payment will be made, or begin, in the later of: (1) January of the
year following the year of the Separation from Service; or (2) the seventh month after the month of the 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 1 year after the last day of the applicable Performance Year.
Later installments, if any, will be paid in January of the succeeding years; or
(iii) The earlier of (i) or (ii) above.
(d) Payment Term. At the time of electing to defer an Annual Award, 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 payment shall be equal to a fractional amount of the balance in the account the numerator
of which is one and the denominator of which is the number of installment payments remaining. Although initially such
installment payments will be identical, actual payments may vary based upon investment performance. For example, a
series of 5 installment payments will result in a payout of 1/5 of the account balance in the first installment, 1/4 of the
account balance (including investment gains or losses since the first installment date) in the second installment, etc.
5
(e) 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 only be made when all of the
following conditions are satisfied:
(i) such election may not take effect until at least 12 months after the date on which the election is made;
(ii) 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 4.2(d)(ii), 5 years
from the date the first installment was scheduled to be paid); and
(iii) 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 4.2(d)(ii), 12 months before the first installment was scheduled to be
paid), if the participant’s previous commencement date was a specified date.
(f) Investments. At the time of electing to voluntarily defer payment, the participant must elect how the Deferred Annual Award will
be treated by the Company or Subsidiary. To the extent that any amounts deferred are placed in a rabbi trust with an
independent record keeper, a participant who has previously deferred amounts under this Plan will automatically have his or her
existing investment profile apply to this deferral also. All determinations of the available investment options by the Plan
Administrator are final and binding upon participants. A participant may change the investment elections at anytime prior to the
payment of the benefit, subject to any restrictions imposed by the Plan Administrator, the Benefit Administration Committee, the
plan record keeper or by any applicable laws and regulations. A participant not making an election will have amounts deferred
treated as if in a Lifestyle Fund applicable to the participant’s age 65, rounded up, or such other investment as determined by
the Benefit Administration Committee. All gains and losses will be based upon the performance of the investments selected by
the participant from the date the deferral is first credited to the nominal account. If the Company elects to fund its obligation as
discussed below, then investment performance will be based on the balance as determined by the record keeper.
(g) The amount of any Deferred Annual Award is to be satisfied from the general corporate funds of the company on whose payroll
the Plan participant was enrolled prior to the payout beginning and are subject to the claims of general creditors. This is an
unfunded nonqualified deferred compensation plan. To the
6
extent the Committee 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 or Subsidiary, remain the property of the Company or Subsidiary 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 remain subject to the claims of the creditors of the Company or Subsidiary.
(h) Payment in the Event of an Unforeseeable Emergency. The participant may request that payments 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 participant or
the participant’s spouse or dependent, loss of the participant’s property due to casualty, or other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond the control of the participant. 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 participant’s assets (without causing severe financial
hardship), or by cessation of deferrals under this arrangement, the Savings Plan for Employees of Consumers Energy and other
CMS Energy Companies (the “Savings Plan”) or other arrangements. Distributions because of an unforeseeable emergency shall
not exceed the amount permitted under Section 409A and accordingly 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 Performance Year will cease and the participant will not be eligible to make any deferral elections under
this Plan for the following Performance Year. For any participant receiving a hardship withdrawal under the Savings Plan, all
deferral elections under this Plan for the current Performance Year will cease and the participant will not be eligible to make any
deferral elections under this Plan for the following Performance Year.
4.3 Payment in the Event of Death.
(a) A participant may name the beneficiary of his or her choice on a beneficiary form provided by the Company or record keeper,
and the beneficiary shall receive, within 90 days of the participant’s death, in a single sum, all payments credited to the
participant in the event that the participant dies prior to receipt of Deferred Annual Awards. If a beneficiary is not named or
does not survive the participant, the payment will be made to the participant’s estate. In no event
7
may any recipient designate a year of payment for an amount payable upon the death of the participant.
(b) A participant may change beneficiaries at any time, and the change will be effective as of the date the plan record keeper or
Company accepts the form as complete. Neither the Company nor the applicable Subsidiary will be liable for any payments made
before receipt and acceptance of a written beneficiary request.
V. CHANGE OF STATUS
Payments in the event of a change in status will not be made if no Annual Awards are made for the Performance Year.
5.1 Pro-Rata Annual Awards. A new Officer, whether hired or promoted to the position, or an Officer promoted to a higher salary grade
during the Performance Year will receive a pro rata Annual Award based on the percentage of the Performance Year in which the
employee is in a particular salary grade. An Officer whose salary grade has been lowered, but whose employment is not terminated,
during the Performance Year will receive a pro rata Annual Award based on the percentage of the Performance Year in which the
employee is in a particular salary grade.
5.2 Termination. An Officer whose employment is terminated pursuant to a violation of the Company code of conduct or other corporate
policies will not be considered for or receive an Annual Award.
5.3 Resignation. An Officer who resigns prior to payment (during or after a Performance Year) will not be eligible for an Annual Award. If
the resignation is due to reasons such as a downsizing or reorganization, or the ill health of the Officer or ill health in the immediate
family, the Officer may petition the Committee and may be considered, in the discretion of the Committee, for a pro rata Annual Award.
The Committee’s decision to approve or deny the request for a pro rata Annual Award shall be final.
5.4 Death, Disability, Retirement, Leave of Absence. An Officer whose status as an active employee is changed during the Performance
Year due to death, Disability, Retirement, or Leave of Absence will receive a pro rata Annual Award. An Officer whose employment is
terminated following the Performance Year but prior to payment due to death, Disability or Retirement will continue to be eligible for
an Annual Award for the Performance Year. Any such payment or Annual Award payable due to the death of the Officer will be made
to the named beneficiary, or if no beneficiary is named or if the beneficiary doesn’t survive the Officer, then to the Officer’s estate no
later than March15 following the applicable Performance Year. Notwithstanding the above, an Officer who retires, is on disability or
leave of absence and who becomes employed by a competitor of CMS Energy or Consumers
8
Energy or their subsidiaries or affiliates prior to award payout will forfeit all rights to an Annual Award, unless prior approval of such
employment has been granted by the Committee. A “competitor” shall mean an entity engaged in the business of (1) selling
(a) electric power or natural gas at retail or wholesale within the State of Michigan or (b) electric power at wholesale within the market
area in which an electric generating plant owned by a subsidiary or affiliate of CMS Enterprises is located or (2) developing an electric
generating plant within the State of Michigan or a market area in which an electric generating plant owned by a subsidiary or affiliate
of CMS Enterprises is located.
VI. MISCELLANEOUS
6.1 Impact on Benefit Plans. Payments made under the Plan will be considered as earnings for the Supplemental Executive Retirement
Plans (Salary Grades E-3 through E-9) but not for purposes of the Savings Plan, Pension Plan, or other employee benefit programs.
6.2 Impact on Employment. Neither the adoption of the Plan nor the granting of any Annual Award under the Plan will be deemed to
create any right in any individual to be retained or continued in the employment of the Company or any corporation within the
Company’s control group.
6.3 Termination or Amendment of the Plan. The Board of Directors of the CMS Energy Corporation may amend or terminate the Plan at
any time. Upon termination, any amount accrued under the Plan will remain in the Plan and be paid out in accordance with the
payment options previously selected. Notwithstanding the foregoing, the Board of Directors of CMS Energy Corporation may
terminate the Plan and accelerate payment of any deferred benefits under the Plan if it acts consistent in all respects with the
requirements of Code Section 409A and any applicable regulations with respect to when a terminated plan may accelerate payment to
a participant.
6.4 Governing Law. The Plan will be governed and construed in accordance with the laws of the State of Michigan.
6.5 Dispute Resolution. Any disputes related to the Plan must be brought to the Plan Administrator. The Plan Administrator 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 the Plan. If the Plan Administrator makes a determination and the participant disagrees with or wishes
to appeal the determination, the participant must appeal the decision to the Plan Administrator, in writing and not later than 60 days
from when the determination was mailed to the participant. If the participant does not timely appeal the original determination, the
participant has no further rights under the Plan with respect to the matter presented in the claim. If the participant appeals the original
determination and that appeal does not result in a mutually agreeable resolution, then the dispute shall be subject to
9
final and binding arbitration before a single arbitrator selected by the parties to be conducted in Jackson, Michigan, provided the
participant makes such request for arbitration in writing within 30 days of the final decision by the Plan Administrator. The arbitration
will be conducted and finished within 90 days of the selection of the arbitrator. The parties shall share equally the cost of the
arbitrator and of conducting the arbitration proceeding, but each party shall bear the cost of its own legal counsel and experts and
other out-of-pocket expenditures. The arbitrator must use an arbitrary and capricious standard of review when considering any
determinations and findings by the Plan Administrator.
VII. AMENDMENT TO REFLECT CODE SECTION 409A
7.1 Code Section 409A. This Plan has been amended, effective as of January 1, 2005, to comply with the requirements of Section 409A of
the Code. To the extent counsel determines additional amendments may be reasonable or desirable in order to comply with Code
Section 409A, and any other applicable rules, laws and regulations, such changes shall be authorized with the approval of the Plan
Administrator.
10
CORPORATE PERFORMANCE GOALS -2008
The composite Plan Performance Factor (as used in Section II of the Incentive Compensation Plan) will depend on corporate performance in
two areas: (1) the adjusted net income per outstanding CMS Energy share (EPS); and (2) the Corporate Free Cash Flow of CMS Energy (CFCF).
Each Component as well as the composite Plan Performance Factor to be used for payouts will be capped at a maximum of 200%. The table for
Performance Year 2008 is set forth below.
(a) EPS Component. EPS performance shall constitute 50% of the composite Plan Performance Factor. The 100% EPS goal for the 2008
performance year is $1.20 per share, and the EPS component shall increase or decrease by 25% for each $.05 per share change in performance.
(Mathematical extrapolation shall be used for actual results not shown in the table.) There will be no payout under the EPS Component unless
at least $1.10 per share is achieved.
(b) CFCF Component. CFCF performance shall constitute 50% of composite Plan Performance Factor. The 100% CFCF goal for the 2008
performance year is negative $525 million, and the CFCF component shall increase or decrease by 1% for each $2 million change in
performance from $50 million. (Mathematical extrapolation shall be used for actual results not shown in the table.) There will be no payout
under the CFCF component unless at least negative $625 million is achieved.
Plan Performance Factor for 2008 Performance Year
C FC F
C om pone n t
(Millions) <$(625) $(625) $(575) $(525) $(475) $(425) $(375) $(325)
EPS
Component
$1.09 No Payout 25% 38% 50% 63% 75% 88% 100%
$1.10 25% 50% 63% 75% 88% 100% 113% 125%
$1.15 38% 63% 75% 88% 100% 113% 125% 138%
$1.20 50% 75% 88% 100% 113% 125% 138% 150%
$1.25 63% 88% 100% 113% 125% 138% 150% 163%
$1.30 75% 100% 113% 125% 138% 150% 163% 175%
$1.35 88% 113% 125% 138% 150% 163% 175% 188%
$1.40 100% 125% 138% 150% 163% 175% 188% 200%
Notes: Mathematical extrapolation shall be used for actual results not shown in the table.
Target Award is Bolded 100% and Maximum Award is Bolded 200%
“Adjusted Net Income” means generally accepted accounting practices income excluding asset sales, changes to accounting principles from
those used in the budget, large restructuring and severance, legal and settlement cost or gains related to previously sold assets, and
regulatory recovery for prior year changes.
“Corporate Free Cash Flow” (CFCF) means CMS Consolidated Cash Flow from operating activities, excluding restricted cash flow, common
dividends, financing, major post budget transactions like mergers and acquisitions in excess of $25 million and recovery for gas price changes
(favorable or unfavorable) related to GCR recovery in January/February of the following performance year.
“Earnings Per Share” (EPS) means the amount of adjusted net income per outstanding CMS Energy Share.
“GCR Recovery” means actual/forecast incremental GCR recovery during January and February calculated as actual/forecast GCR cycle billed
sales times above budget GCR factor.
Exhibit (10)(n)
Amendment
to the
Officer’s Incentive
Compensation Plan
(Amended and Restated as of January 1, 2008)
Whereas, CMS Energy Corporation maintains the Officers Incentive Compensation Plan (the “Plan”); and
from Service has occurred or it may adopt a standard of up to 49% of the average level of services performed over the prior 36 month period of
time; and
Now Therefore, The definition of Separation from Service in Section 1.3(s) of the Plan is amended to read as follows:
(s) “Separation from Service” means an 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 requirements 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 fide
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).
1
/s/ John M. Butler

John M. Butler
Senior Vice President — Human Resources and Administrative Services
Attest:

Exhibit (10)(p)
Amendment
to the
Defined Benefit
Supplemental Executive Retirement Plan
Whereas, CMS Energy Corporation maintains the Supplemental Executive Retirement Plan (the “Plan”); and
time; and
Now Therefore, The definition of Separation from Service in Section I of the Plan is amended to read as follows:
Notwithstanding the above, a Separation from Service will occur consistent with the requirements of Code
1
/s/ John M. Butler

John M. Butler
Services
Attest:

Exhibit (10)(r)
Amendment
to the
Defined Contribution
Supplemental Executive Retirement Plan
Whereas, CMS Energy Corporation maintains the Defined Contribution Supplemental Executive Retirement Plan (the “Plan”); and
time; and
Now Therefore, The definition of Separation from Service in Section I of the Plan is amended effective to read as follows:
Notwithstanding the above, a Separation from Service will occur consistent with the requirements of Code
1
/s/ John M. Butler

John M. Butler
Services
Attest:

Exhibit (10)(s)
Change in Control Agreement
Tier IV
Tier IV Change in Control as of August, 2008

Contents
Article 1. Establishment, Term, and Purpose 1
Article 2. Definitions 2
Article 3. Change in Control Severance Benefits 9
Article 4. Notice of Termination; Resignation as Officer and Director 12
Article 5. Restrictive Covenants and Clawback 13
Article 6. Excise Tax Equalization Payment 16
Article 7. Dispute Resolution and Notice 17
Article 8. Successors and Assignment 18
Article 9. Miscellaneous 19
Exhibit A. General Release Agreement 23

Change in Control Agreement

THIS CHANGE IN CONTROL AGREEMENT (hereinafter referred to as this “Agreement”) is made, entered into, and effective as of
, 20 (hereinafter referred to as the “Effective Date”), by and between , a Michigan corporation, (hereinafter referred to
as the “Employer”) and (hereinafter referred to as the “Executive”).
WHEREAS, the Board of Directors of CMS Energy Corporation, a Michigan corporation (hereinafter referred to as “CMS Energy
Corporation”) has approved entering into change in control agreements with certain key executives as being necessary and advisable for the
success of CMS Energy Corporation;
WHEREAS, the Executive is currently employed at , by the Employer in a key management position as ;
WHEREAS, the Board of Directors of CMS Energy Corporation wants to provide the Executive with a measure of financial security in the
event of a change in control of CMS Energy Corporation as defined in this Agreement; and
WHEREAS, both the Executive and the Employer seek to have any proposal involving a change in control of CMS Energy Corporation as
defined in this Agreement be considered by the Executive objectively and with reference only to the business interests of CMS Energy
Corporation and its shareholders.
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements of the Executive and the Employer and
of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Executive and the Employer,
intending to be legally bound, agree as follows:
Article 1. Establishment, Term, and Purpose

This Agreement will commence on the Effective Date and shall continue in effect until December 31, 2010. However, at December 31, 2010,
and, if extended, at the end of each additional year thereafter, the term of this Agreement shall be extended automatically for one (1) additional
year, unless the Committee (as defined in Section 2.13 herein) delivers notice six (6) months prior to the end of such term, or extended term, to
the Executive, stating that the Agreement will not be extended. In such case, the Agreement will terminate at the end of the term, or extended
term, then in progress. However, in the event of a Change in Control (as defined in Section 2.10 herein) of CMS Energy Corporation, the term
of this Agreement shall automatically be extended to the earlier of (i) the date that is two (2) years from the date of the Change in Control if the
current term of this Agreement has less than two (2) full years
1
remaining until its expiration or (ii) the date the Executive attains age 65. If the term of this Agreement is not extended, the Employer is not
obligated to pay any severance benefits under Section 3.2 herein for a Change in Control that happens after the expiration of the term of this
Agreement. In addition, notwithstanding the above, any obligation of the Employer arising during the term of this Agreement shall survive the
termination of this Agreement until paid in full, provided that the Executive has provided or received a Notice of Termination within the
applicable time limitations under Section 2.26 herein. Notwithstanding the forgoing, the obligations of the Executive under Article 5 herein
shall continue in effect and survive the expiration of the term of this Agreement.
Article 2. Definitions
Whenever used in this Agreement, the following terms shall have the meanings set forth below:
2.1 “Affiliate” has the meaning set forth in Rule 12b-2 under the Exchange Act.
2.2 “Agreement” means this agreement, including the “whereas” clauses and Exhibit A.
2.3 “Base Annual Salary” means the greater of the Executive’s full annual salary, whether or not any portion thereof is paid on a
deferred basis, at: (i) the Effective Date of Termination, or (ii) at the date of the Change in Control. It does not include any incentive
compensation in any form, bonuses of any type or any other form of monetary or nonmonetary compensation other than salary.
2.4 “Beneficial Owner” has the meaning set forth in Rule 13d-3 under the Exchange Act.
2.5 “Beneficiary” means the persons or Entities designated by the Executive pursuant to Section 9.5 herein.
2.6 “Benefit plan clawback provision” has the meaning set forth in Section 5.1(g) herein.
2.7 “Bonus-based payment” has the meaning set forth in Section 5.1(g) herein.
2.8 “Board” means the Board of Directors of CMS Energy Corporation.
2.9 “Cause” is determined solely by the Committee in the exercise of good faith and reasonable judgment, and means the occurrence of
any one or more of the following:
(a) The continued failure by the Executive to substantially perform his or her duties of employment (other than any such failure
resulting from the Executive’s Disability), after a demand for substantial performance is delivered to the Executive that identifies
the manner in which the Committee believes that the Executive has not substantially performed his or her duties,
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and the Executive 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 Executive’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 Executive’s (i) gross negligence, (ii) failure or refusal, on request or demand by the Employer or any governmental authority,
to provide testimony to or to cooperate with any governmental regulatory authority, or any other similar non-cooperation by the
Executive, (iii) willful engaging in misconduct materially or demonstrably injurious to the business or reputation (by adverse
publicity or otherwise) of CMS Energy Corporation or its Affiliates, monetarily or otherwise, or (iv) violation of a material
provision of the Employer’s code of conduct and code of ethics, including but not limited to violations of the Employer’s
policies relating to substance abuse and discrimination; or
(d) The Executive’s breach of the terms of Article 5 herein.
However, for purposes of clause (c), no act or failure to act on the Executive’s part shall be considered “willful” if done, or omitted to
be done, by the Executive (i) in good faith and (ii) with reasonable belief that his or her action or omission was in the best interest of
CMS Energy Corporation or its Affiliates.
2.10 “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
Section 2.10 (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, 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
3

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
4

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.
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.
2.11 “Change in Control Severance Benefits” has the meaning ascribed to the same in Article 3 herein.
2.12 “Code” means the United States Internal Revenue Code of 1986, as amended, and any successors thereto.
2.13 “Committee” means the Compensation and Human Resources Committee of the Board or any other committee appointed by the
Board to perform the functions of the Compensation and Human Resources Committee. The Committee is responsible for the
administration of this Agreement and shall interpret and apply the provisions of this Agreement. Notwithstanding the above, the
Committee may obtain and rely upon advice from consultants, attorneys and advisors of its choice in making determinations
concerning this Agreement.
2.14 “Direct Competitor” has the meaning set forth in Section 5.1(a) herein.
2.15 “Disability” means a determination by the insurer or third-party administrator under an individual and/or group disability policy
covering the Executive that the Executive 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 Section 22(e) of the Code.
2.16 “Effective Date” means the date of this Agreement set forth in the first paragraph of this Agreement.
2.17 “Effective Date of Termination” means the first day of any month following the date on which a Qualifying Termination occurs, as
provided under Section 2.28
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herein, which triggers the payment of Change in Control Severance Benefits hereunder. Such first day of such month shall be
specified in the Notice of Termination. If Executive is otherwise eligible for retirement, he or she may elect to retire on the Effective
Date of Termination without waiving any Change in Control Severance Benefits to which he or she may be entitled pursuant to this
Agreement.
2.18 “Employer” means the corporation named in the first paragraph of this Agreement as the Employer.
2.19 “Entity” means any corporation, partnership, limited liability company, joint venture, sole proprietorship or firm.
2.20 “Exchange Act” means the United States Securities Exchange Act of 1934, as amended.
2.21 “Excise Tax” has the meaning set forth in Section 6.1 herein.
2.22 “Executive” means the individual named in the first paragraph of this Agreement.
2.23 “Exempt Person” has the meaning set forth in Section 5.1(b) herein.
2.24 “Good Reason” exists only on the date of a Change in Control or during the twenty-four (24) months which follow a Change in
Control and means, without the Executive’s express prior consent, the occurrence of any one or more of the following:
(a) The assignment to the Executive of duties materially inconsistent with the Executive’s position (including status, offices, titles,
and reporting requirements), authority, duties or responsibilities as in effect on the Effective Date, or any action by the Employer
which results in a material diminution of the Executive’s position, authority, duties, or responsibilities as constituted as of the
Effective Date (excluding an isolated, insubstantial, and inadvertent action which is remedied by the Employer promptly after
receipt of notice thereof given by the Executive), provided, however that a Change in Control which results in the Employer
becoming controlled by another Entity, after which the Executive’s position, authority, duties or responsibilities do not, taken as
a whole, change (except in respect of the Persons or Entities to which he or she reports or the duties he or she performs due to
becoming controlled by such other Entity), shall not constitute a material change in the Executive’s position, authority, duties or
responsibilities; or
(b) Materially reducing the Executive’s Base Salary; or
(c) Materially reducing the Executive’s targeted annual incentive opportunity; or
6

(d) Materially reducing the Executive’s targeted long-term incentive opportunity; or
(e) A material failure to maintain the Executive’s aggregate amount of benefits under, or relative level of participation in, employee
benefit or retirement plans, policies, practices, or arrangements of a material nature available to employees of CMS Energy
Corporation and its Affiliates and in which the Executive participates as of the date of a Change in Control; or
(f) A material breach of this Agreement by the Employer which is not remedied by the Employer after receipt of notice of such
breach delivered by the Executive to the Committee; or
(g) Any successor company fails or refuses to assume the obligations owed to Executive under this Agreement in their entirety, as
required by Section 8.1 herein; or
(h) The Executive is required to be based at a location in excess of thirty-five (35) miles from both (i) the Executive’s primary
residence and (ii) the location of the Executive’s principal job location or office, both immediately prior to a Change in Control,
except for required travel on the Employer’s or CMS Energy Corporation’s business to an extent substantially consistent with
the Executive’s prior business travel obligations.
Notwithstanding the above, (i) no amendment of, or termination and replacement of, any annual or long term incentive plan, or benefit
or retirement plan, policy, practice or arrangement referred to in (c) (d) or (e) above, shall be deemed to constitute Good Reason so
long as the opportunities or amounts referred to therein remain unchanged after such amendment or such termination and
replacement; and (ii) the Executive must provide notice to the Employer of the existence of Good Reason not more than ninety
(90) days after the initial existence of the circumstance that constitutes Good Reason as set forth above and provide a period of thirty
(30) days for the Employer to remedy the circumstance giving rise to the Good Reason and thus not have to pay the Change in
Control Severance Benefits as provided for under Section 3.2 herein; provided, however, that the failure by the Executive to give such
notice within such ninety (90) days shall constitute a waiver of such Good Reason by the Executive in that instance. The remedying
of any circumstances by Employer or the failure of the Executive to give such notice as aforesaid, shall not impair Executive’s right to
claim Good Reason based upon a recurrence of such circumstances or the occurrence of different circumstances within the time
period (twenty-four (24) months following a Change in Control) specified in the first sentence of this section. All provisions and
interpretations relating to Good Reason are to be applied consistent with Section 409A of the Code and the applicable Treasury
Regulations at Section 1.409A-1(n)(2), and their successors (“Section 409A”).
2.25 “Gross-Up Payment” has the meaning set forth in Section 6.1 herein.
7

2.26 “Notice of Termination” shall be provided for a Qualifying Termination and shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon, and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for a Qualifying Termination. The notice shall provide a specific date (i) on which a Qualifying Termination has
occurred and (ii) designated as the Effective Date of Termination. Such Notice of Termination when provided by the Executive for
Good Reason as set forth in Section 2.24 herein (prior to the expiration of the ninety (90) day notice and after the thirty (30) day cure
period described in Section 2.24 herein) shall be consistent with the requirements of Section 409A.
2.27 “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).
2.28 “Qualifying Termination” means:
(a) A termination of the Executive’s employment by the Employer on the date of a Change in Control or during the twenty-four
(24) months which follow a Change in Control for reasons other than death, Disability, or Cause pursuant to a Notice of
Termination delivered to the Executive by the Employer; or
(b) A termination by the Executive for Good Reason on the date of a Change in Control or during the twenty-four (24) months which
follow a Change in Control pursuant to a Notice of Termination delivered to the Employer by the Executive.
2.29 “Release” means the signed release of claims and resignation of all positions as an officer or director of the Employer and any
company affiliated with the Employer, which shall be substantially in the form attached hereto as Exhibit A.
2.30 “Section 409A” has the meaning set forth in Section 2.24 herein.
2.31 “SERP” means the retirement plan applicable to the Executive and entitled “Supplemental Executive Retirement Plan for the
Employees of CMS Energy/Consumers Energy Company,” dated December 1, 2007, as amended, or under the successor or
replacement of such retirement plan if it is then no longer in effect. [For the Executives covered under the defined contribution
supplemental executive retirement plan, the following definition shall be used: “means the retirement plan applicable to the Executive
and entitled “Defined Contribution Supplemental Executive Retirement Plan” dated December 1, 2007, as amended, or under the
successor or replacement of such retirement plan if it is then no longer in effect.]
2.32 “Total Payments” has the meaning set forth in Section 6.1 herein.
8

Article 3. Change in Control Severance Benefits
3.1 Right to Change in Control Severance Benefits.
(a) Change in Control Severance Benefits. The Executive shall be entitled to receive from the Employer Change in Control
Severance Benefits, as described in Section 3.2 herein, if a Qualifying Termination of the Executive’s employment satisfying the
definitions contained in Section 2.28(a) or (b) herein has occurred on the date of a Change in Control or within twenty-four
(24) months immediately following a Change in Control. Benefits received by the Executive under the pension plan and SERP (or
any replacement or successor plans thereto) shall not be used as an offset to the level of Change in Control Severance Benefits
owed to Executive. The Effective Date of Termination will be the date the Executive experiences a separation from service with
the service recipient, as those terms are defined under Section 409A.
(b) No Change in Control Severance Benefits. The Executive shall not be entitled to receive Change in Control Severance Benefits
under this Agreement if the Executive’s employment with the Employer ends for reasons other than a Qualifying Termination.
(c) Waiver and Release. The Executive shall sign and return to the Employer a Release to be eligible for payment of Change in
Control Severance Benefits under Section 3.2 herein. Attached hereto as Exhibit A and incorporated by reference in this
Agreement is the form of release Executive shall sign and return to qualify for Change in Control Severance Benefits under this
Agreement. No payment will be made until the seven (7) day right to revocation of the Release has elapsed.
(d) No Duplication of Severance Benefits. If the Executive receives Change in Control Severance Benefits, any other severance
benefits received by employees not covered by this Agreement, if any, to which the Executive is entitled shall be reduced on a
dollar-for-dollar basis with respect to Change in Control Severance Benefits paid pursuant to this Agreement so that there is no
duplication of severance benefits.
3.2 Description of Change in Control Severance Benefits. In the event the Executive becomes entitled to receive Change in Control
Severance Benefits, as provided in Section 3.1(a) herein, the Employer (subject to Section 3.1(c)) shall provide the Executive with the
following:
(a) A lump-sum amount paid within thirty (30) calendar days following the Effective Date of Termination equal to the sum of the
Executive’s unpaid salary, unreimbursed business expenses, and unreimbursed allowances owed to
9

the Executive through and including the Effective Date of Termination. In the event the Executive is terminated following a
performance year under the Officer Incentive Compensation Plan but prior to payment of a bonus for such year, the Executive
will not forfeit such bonus but shall receive any payment when the same is paid to active employees. To the extent, if any, the
Executive has elected to defer any bonus, any payments due under this provision corresponding to the amount of the deferral
shall be paid or deferred in accordance with the terms elected by the Executive with respect to said plan under which the bonus
is deferred.
(b) A lump-sum amount, paid within thirty (30) calendar days following return of the signed Release (but not prior to the lapse of
the seven (7) day revocation period), which shall be provided not more than fifteen (15) days after delivery to the Employer or
delivery to the Executive, as applicable, of a Notice of Termination, equal to [three (3)] [two (2)] times the sum of the following:
(A) the Executive’s Base Annual Salary and (B) the Executive’s annual target bonus opportunity for the plan year in which the
Qualifying Termination occurs. Notwithstanding the above, to the extent that at the time of the Qualifying Termination the
Executive is age [62] [63] or older, the amount payable under this provision shall be equal to the product of (x) the sum of A and
B above, multiplied by (y) a fraction the numerator of which shall be equal to the number of full and partial months during the
period commencing on the Effective Date of Termination and ending on the Executive’s 65th birthday and the denominator of
which shall be [thirty-six (36)] [twenty-four (24)]. . Prior to such reduction, the Committee shall determine that the Executive is a
bona fide executive as that term is defined in the Age Discrimination in Employment Act (“ADEA”) and that the other
provisions relating to mandatory retirement of an executive under ADEA are satisfied.
(c) A lump-sum amount, paid within thirty (30) calendar days following return of the signed Release (but not prior to the lapse of
the seven (7) day revocation period), which shall be provided not more than fifteen (15) days after delivery to the Employer (but
not earlier than the expiration of the thirty (30) day cure period, if applicable) or delivery to the Executive, as the case may be, of
a Notice of Termination, equal to the Executive’s annual target bonus opportunity for the plan year in which the Qualifying
Termination occurs adjusted on a pro rata basis for the number of days that have elapsed to the Effective Date of Termination
during such plan year (as compared to the total plan year, 365 days.) To the extent, if any, the Executive has elected to defer any
bonus under the applicable bonus plan, any payments due under this provision corresponding to the amount of the deferral
shall be paid in accordance with the payment terms elected by the Executive with respect to the plan under which the bonus is
deferred.
(d) The Executive and the Employer agree that a portion of the lump-sum amount, payable under (b) above, shall be as
consideration for the Executive entering
10

into the noncompete and other restrictive covenants as described in Article 5 herein. The value of the consideration for the
noncompete and other restrictive covenants will be determined by an independent valuation consultant selected by the
Committee for the sole purpose of determining what portion of the total consideration (which total shall not change as a result of
such computation) should, on the basis of value, be allocated to the noncompete and other restrictive covenants as described in
Article 5 herein.
(e) The Employer shall provide the Executive continued health coverage or, at Employer’s option, payments to defray the cost of
continued health coverage for [twenty-four (24)] [thirty-six (36] months following the Effective Date of Termination, generally in
accordance with rules and provisions under the Consolidated Omnibus Budget Reconciliation Act of 1985, provided that (i) the
Employer shall pay 100% of the monthly cost of such continued health coverage during such [twenty-four (24)] [thirty-six (36)]
– month period and (ii) such continued health coverage shall terminate when the Executive becomes eligible for comparable
health coverage under a new employer.
(f) Immediate extension (as allowable by Section 6.10 of Article VI of the plan entitled “CMS Energy Corporation Performance
Incentive Stock Plan,” dated December 3, 1999, as amended) by one (1) year after the Effective Date of Termination of the period
for the Executive to exercise any outstanding stock options or stock appreciation rights granted by the Committee to Executive
pursuant to said Article VI, subject to earlier termination of such option or stock appreciation right in accordance with the terms
of such plan.
(g) Immediate vesting and distribution to the Executive (as allowable by the second sentence of Section 7.2(h) of Article VII of the
plan entitled “CMS Energy Corporation Performance Incentive Stock Plan (PISP))” dated December 3, 1999, as amended) within
forty-five (45) days after delivery of the Notice of Termination of all outstanding shares of restricted stock previously awarded
to Executive pursuant to said Article VII. Any portion of an award of restricted stock subject to future performance goals based
on absolute total shareholder return, will vest as if the target performance had been achieved. The portion of any award based
on relative shareholder return will vest pro rata based upon the number of days into the performance period up to the Change in
Control date, using the target number of shares as the basis for the pro ration. For any award of restricted stock that is tenure
based, the number of shares distributed to the Executive shall assume that all requirements with respect to tenure are satisfied
by the Executive. Otherwise, the terms of said plan shall govern and be applied.
(h) If the Executive is a participant in the SERP, the Executive’s retirement benefits under the SERP will become fully vested as of
the Effective Date of Termination and shall not be subject to further vesting requirements or to any forfeiture provisions. In
addition the Executive shall be provided the
11

following: (i) an additional thirty-six (36) [24] months of Preference Service (as defined in the SERP) for purposes of the SERP in
accordance with Section III of the SERP, subject, however, to the total of Preference Service plus Accredited Service being
limited to a maximum of thirty-five (35) years under the SERP, and (ii) one third [half] of the amount paid to the Executive
pursuant to clause (b) of this Section 3.2 shall be considered a year of Earnings plus Incentive Compensation (as the terms are
defined in the SERP) for each of three [two] (3)[(2)] plan years and shall be included when determining the highest five years for
purposes of computing Final Executive Pay under the SERP (as defined in the SERP). [Note: For persons with 2 years of benefits
under section 3.2(b), use bracketed substitute items in prior sentence] [For an executive in the defined contribution
supplemental executive retirement plan the following replaces the above: “If the Executive is a participant in the SERP, the
Executive’s account balance under the SERP will become fully vested as of the Effective Date of Termination and shall not be
subject to further vesting requirements or to any forfeiture provisions. The Executive shall have added to his or her account
balance under the SERP, within fifteen (15) days of delivery of the Notice of Termination, an amount equal to fifteen percent
(15%) [10% in the case of those Executives in salary grades E-3 or E-4] of the amount paid to the Executive under clauses (b) and
(c) of this Section 3.2. ”]
(i) For purposes of (1) the Executive’s retirement, (2) the SERP and (3) benefits not expressly discussed in clauses (a) through (h) of
this Section 3.2, but which are available to the general employee population or available only to officers and implemented with
contracts with third parties, the benefit plan descriptions covering all employees and the retirement plan and the SERP plan
descriptions and contracts with third parties covering officers in place at the time of the Effective Date of Termination control
the Executive’s treatment under those plans and contracts. All rights of the Executive to indemnification as an officer or an
employee will be determined under any applicable indemnification policy in effect at the time the matter giving rise to the need
for indemnification is alleged to have occurred, or at the time immediately before the Change in Control, at the election of the
Executive. For any other benefits only available to officers, if those benefits are not expressly discussed in clauses (a) through
(h) of this Section 3.2, those benefits are terminated for the Executive as of the Effective Date of Termination.
Article 4. Notice of Termination; Resignation As Officer and Director

4.1 Any Qualifying Termination of the Executive’s employment shall be communicated by a Notice of Termination which shall indicate
the specific termination provision in this Agreement relied upon, and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for a Qualifying Termination. The Notice of Termination shall also provide a specific date (i) on which a
Qualifying
12

Termination has occurred and (ii) that is designated as the Effective Date of Termination.
4.2 On or before the Effective Date of Termination, the Executive shall submit to the Employer his or her written resignation as (i) an
officer of the Employer and of all Affiliates and (ii) a member of the board of directors of the Employer and of all Affiliates.
Article 5. Restrictive Covenants and Clawback

5.1 The following shall apply after any termination (including, without limitation, due to retirement, disability or resignation for any
reason) of the Executive’s employment, whether prior to or following a Change in Control:
(a) Noncompetition. During the term of employment and for a period of twenty-four (24) months after the date of the termination of
the Executive’s employment, the Executive shall not: (i) directly or indirectly, separately or acting or conspiring with any Person
or Entity whether or not employed by CMS Energy Corporation or any of its Affiliates, engage in or prepare to engage in or
have a financial or other interest in any business which is a Direct Competitor (as defined below); or (ii) serve as an employee,
agent, partner, member, shareholder, director, or consultant, or in any other capacity whatsoever participate, engage, or have a
financial or other interest in, any business which is a Direct Competitor; provided, however, that notwithstanding anything to
the contrary contained in this Agreement, the Executive may own up to two percent (2%) of the outstanding shares of the
capital stock of an Entity whose shares are registered under Section 12 of the Exchange Act.
A “Direct Competitor” means an Entity engaged in the business of (1)(a) selling electric power or natural gas at retail or
wholesale within the State of Michigan or (b) selling electric power at wholesale within the market area in which an electric
generating plant owned by an Affiliate of CMS Enterprises Company is located or (c) storing natural gas within the State of
Michigan or (d) generating, transmitting or distributing electricity or natural gas within the State of Michigan, or (2) developing
an electric generating plant within the State of Michigan or a market area in which an electric generating plant owned by an
Affiliate of CMS Enterprises Company is located. A “Direct Competitor” also means any Entity that the Committee designates as
a Direct Competitor, prior to the termination date specified in a Notice of Termination, that it believes, in good faith, is a
competitor to CMS Energy Corporation or its Affiliates.
(b) Confidentiality. The Employer has advised the Executive and the Executive acknowledges that it is the policy of CMS Energy
Corporation and its Affiliates to maintain as secret and confidential all Protected Information (as defined below), and that
Protected Information has been and will be developed at substantial cost and effort to CMS Energy Corporation and its
Affiliates. The Executive shall not at any time, directly or indirectly, divulge, furnish, or make
13

accessible to any person or Entity (other than as may be required in the regular course of the Executive’s employment), nor use
in any manner, either during the term of employment or after termination, for any reason, any Protected Information, or cause
any such information of CMS Energy Corporation and its Affiliates to enter the public domain.
“Protected Information” means trade secrets, confidential and proprietary business information of CMS Energy Corporation and
its Affiliates and any other information of CMS Energy Corporation and its Affiliates, including, but not limited to, customer lists
(including potential customers), sources of supply, processes, plans, materials, pricing information, internal memoranda,
marketing plans, internal policies, and products and services which may be developed from time to time by CMS Energy
Corporation and its Affiliates and their agents or employees, including the Executive; provided, however, that information that is
in the public domain (other than as a result of a breach of this Agreement), approved for release by CMS Energy Corporation or
its Affiliates or lawfully obtained from third parties who are not bound by a confidentiality agreement with CMS Energy
Corporation or its Affiliates, is not Protected Information. Notwithstanding the foregoing, nothing in this subsection is to be
construed as prohibiting the Executive from providing information to a state or federal agency, legislative body or one of its
committees or a court with jurisdiction when the Executive is legally required to do so, provided that promptly after being
notified of such requirement the Executive notifies the Employer, or from disclosing Protected Information to the Executive’s
spouse, attorney and/or his or her personal tax and financial advisors as reasonably necessary or appropriate to advance the
Executive’s tax, financial and other personal planning (each an “Exempt Person”), provided, however, that any disclosure or use
(beyond the specific purpose for which it was released to such Exempt Person) of Protected Information by an Exempt Person
shall be deemed to be a breach of this Section 5.1(b) by the Executive.
(c) Nonsolicitation. During the term of employment and for a period of twelve (12) months after the date of the termination of the
Executive’s employment, the Executive shall not: (i) employ or retain or solicit for employment or arrange to have any other
person or Entity employ or retain or solicit for employment or otherwise participate in the employment or retention of any person
who (x) is an employee or consultant of CMS Energy Corporation or its Affiliates or (y) was an employee or consultant of CMS
Energy Corporation or its Affiliates at any time during the twelve (12) month period immediately preceding the date of the
occurrence of the activity described in clause (i); or (ii) solicit suppliers or customers of CMS Energy Corporation or its
Affiliates or induce any such person to terminate their relationship with them.
(d) Cooperation. The Executive shall fully and unconditionally cooperate with CMS Energy Corporation and its Affiliates and their
attorneys in connection with any and all lawsuits, claims, investigations, or similar proceedings that
14

have been or could be asserted at any time arising out of or related in any way to the Executive’s employment or activities on
behalf of CMS Energy Corporation and its Affiliates.
(e) Nondisparagement. The provisions of this Section 5.1(e) apply at all times following the termination of the Executive’s
employment for any reason: The Executive shall not disparage CMS Energy Corporation or its Affiliates or their officers and/or
directors, or otherwise make comments harmful to their reputations. The Executive further shall not testify or act in any capacity
as a paid or unpaid expert witness, advisor or consultant or otherwise on behalf of any person or Entity that has or may have
any claim, demand, action, suit, cause of action, or judgment against CMS Energy Corporation or its Affiliates, or in any
regulatory agency proceeding in a manner adverse to their interests. The executive officers and directors of CMS Energy
Corporation and its Affiliates shall not disparage the Executive or otherwise make comments harmful to the Executive’s
reputation. Notwithstanding the foregoing, nothing in this Section 5.1(e) prohibits the Executive or representatives of CMS
Energy Corporation or its Affiliates from testifying truthfully under oath in any judicial, administrative or legislative proceedings
or in any arbitration, mediation or other similar proceedings where his or her testimony has been legally compelled or pursuant
to Section 7.1 herein.
(f) Return of the Employer Property. The Executive agrees that upon termination of employment he or she shall return all property
of the Employer or any Affiliate now in his or her possession.
(g) Clawback Relating to Illegal Acts or Restatement of Corporation’s Financial Statements. If, due to a restatement of CMS
Energy Corporation’s or an Affiliate’s publicly disclosed financial statements or otherwise, the Executive is subject to an
obligation to make a repayment to CMS Energy Corporation or an Affiliate pursuant to a clawback provision contained in a
SERP Plan, the PISP, a bonus plan or other benefit plan (a “benefit plan clawback provision”) of CMS Energy Corporation or its
Affiliate, it shall be a precondition to the obligation of Employer to make any payment under this Agreement, that the Executive
fully repay to CMS Energy Corporation or its Affiliate any amounts owing under such benefit plan clawback provision. The
payments under this Agreement are further subject to any provision of law which may require the Executive to forfeit or repay
any benefits provided hereunder that are based upon a bonus or incentive compensation, or equity compensation, in the event
of a restatement of 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 an Affiliate lists its traded shares. To the degree any benefits
hereunder are not otherwise forfeitable pursuant to the preceding sentences of this Section 5.1(g),
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the Board or Committee may require the Executive to repay to Employer any amounts paid under this Agreement that are
computed on the basis of a target bonus or actual bonus under a bonus plan applicable to the Executive (a “bonus-based
payment”), if the Board or Committee determines, on the basis of the clawback provisions in the bonus plan under which such
bonus-based payments are computed, that the Executive would have been required to make a repayment of such bonus-based
payments had they been paid to the Executive directly under such bonus plan rather than under this Agreement. The rights set
forth in this Agreement concerning the right of CMS Energy Corporation, an Affiliate and/or Employer 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.
(h) Enforcement. The parties to this Agreement acknowledge that the services of the Executive are unique and extraordinary and
that a breach of any provision of this Section 5.1 will cause irreparable harm to the Employer. Accordingly, the Executive agrees
that notwithstanding the provisions of Section 7.1 herein, the Employer has the right to seek to enforce the noncompete and
other restrictive covenants contained in this Section 5.1 in a court of law or equity and the Executive hereby consents to the
imposition of an injunction or a temporary restraining order or such other equitable relief as necessary to protect the rights of
the Employer under this Agreement.
Article 6. Excise Tax Equalization Payment

6.1 Excise Tax Equalization Payment. In the event that the Executive becomes entitled to Change in Control Severance Benefits or any
other payment or benefit under this Agreement, or under any other agreement, plan or arrangement for which Executive is eligible with
(1) the Employer, (2) any Person or Entity whose actions result in a Change in Control, or (3) CMS Energy Corporation or any of its
Affiliates (all of such payments and benefits collectively referred to as the “Total Payments”), and if all or any part of the Total
Payments will be subject to the tax (the “Excise Tax”) imposed by Sections 280G and 4999 of the Code (or any similar tax that may
hereafter be imposed), the Employer shall pay to the Executive or on his or her behalf in cash an additional amount (the “Gross-Up
Payment”) such that the net amount retained by the Executive after deduction of any Excise Tax upon the Total Payments and any
federal, state, and local income and employment tax, penalties, interest, and Excise Tax upon the Gross-Up Payment provided for by
this Section 6.1 (including FICA and FUTA), shall be equal to the Total Payments. Such payment shall be made by the Employer to
the Executive by the end of the taxable year of the Executive next following the taxable year in which the Executive remits the related
taxes.
For purposes of determining the amount of the Gross-Up Payment, the Committee shall select in its sole discretion an accounting or
other consulting firm (other than the Employer’s and CMS Energy Corporation’s auditors) to perform such calculation. In addition,
the Executive shall be deemed to pay federal income taxes at the highest
16

marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made, and state and local income
taxes at the highest marginal rate of taxation in the state and locality of the Executive’s residence on the Effective Date of Termination,
net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
6.2 Subsequent Recalculation. In the event the Internal Revenue Service adjusts the computation under Section 6.1 herein so that the
Executive did not receive the greatest net benefit, the Employer shall reimburse the Executive for the full amount necessary to make
the Executive whole, plus interest on the reimbursed amount at 120% of the rate provided in Section 1274(b)(2)(B) of the Code. In the
event that the Excise Tax is finally determined to be less than the amount taken into account hereunder in calculating the Gross-Up
Payment, the Executive shall repay the Employer within thirty (30) business days following the time that the amount of such reduction
in the Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the
Gross-Up Payment attributable to the Excise Tax and federal, state and local income and employment taxes imposed on the Gross-Up
Payment being repaid by the Executive) to the extent that such repayment results in a reduction in the Excise Tax and a dollar-for-
dollar reduction in the Executive’s taxable income and wages for purposes of federal, state and local income and employment taxes,
plus interest on the amount of such repayment at 120% of the rate provided in Section 1274(b)(2)(B) of the Code.
6.3 Reduction to Avoid Excise Tax. The payments to the Executive under Section 3.2 herein shall be reduced in the aggregate by up to
10%, if such a reduction will cause there to be no Excise Tax incurred. Any such reduction shall be the minimum amount necessary to
eliminate the Excise Tax, and if the amount to eliminate the Excise Tax is in excess of 10% of said payments, then no reduction will be
made. In making the reduction, the Executive may select in his or her sole discretion which of the applicable payments will be reduced.
Article 7. Dispute Resolution and Notice

7.1 Dispute Resolution. Any dispute or controversy between the Executive and the Employer arising under or in connection with this
Agreement (other than Article 5 of this Agreement) shall first be submitted in writing to the Committee for attempted resolution. If
such submission does not result in mutually agreeable resolution within sixty (60) days thereof, such dispute or controversy shall be
settled by final and binding arbitration. Such arbitration shall be conducted before a single arbitrator selected by the parties to be
conducted in Jackson, Michigan. The arbitration will be conducted in accordance with the rules of the American Arbitration
Association then in effect and be finished within ninety (90) days after the selection of the arbitrator, and if the Executive and the
Employer are unable to agree within thirty (30) days on such a single arbitrator, such Association shall select such arbitrator. The
arbitrator shall not have authority to fashion a remedy that includes consequential, exemplary or
17

punitive damages of any type whatsoever, and the arbitrator is hereby prohibited from awarding injunctive relief of any kind, whether
mandatory or prohibitory. Judgment may be entered on the award of the arbitrator in any court having competent jurisdiction. The
Executive and the Employer shall share equally the cost of the arbitrator and of conducting the arbitration proceeding, but each party
shall bear the cost of its own legal counsel and experts and other out-of-pocket expenditures. Notwithstanding the foregoing, the
Executive and the Employer acknowledge that the enforcement of the Employer’s rights under Article 5 herein are unique and agree
that the Employer is not limited to the remedy of arbitration but may elect the remedy of its choice including filing suit in a court of law
or equity and the Executive agrees that the Employer has the right to obtain an injunction and/or a temporary restraining order to
protect its rights.
7.2 Notice. Any notices, requests, demands, or other communications provided for by this Agreement shall be in writing and sent by
registered or certified mail to the Executive at the address set forth beneath his or her signature on the last page of this Agreement or,
to the Employer, at One Energy Plaza, Jackson, Michigan 49201, Attention: Corporate Secretary. Notices, requests, demands or other
communications may also be delivered by messenger, courier service or other electronic means and are sufficient if actually received
by the party for whom it is intended.
Article 8. Successors and Assignment

8.1 Successors. Any successor (whether direct or indirect, by purchase, merger, reorganization, consolidation, acquisition of property or
stock, liquidation, or otherwise) to the business of CMS Energy Corporation or purchaser of all or substantially all of the assets of
CMS Energy Corporation shall be required to expressly assume and agree to perform under this Agreement in the same manner and to
the same extent that the Employer would be required to perform if no such succession had taken place. This Agreement shall be
binding upon any successor in accordance with the operation of law.
8.2 Assignment by the Executive. This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal
representatives, executors, administrators, successors, heirs, distributees, devisees, and legatees. If the Executive dies while any
amount would still be payable to him or her hereunder had he or she continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to the Executive’s Beneficiary. If the Executive has not named a
Beneficiary, then such amounts shall be paid to the Executive’s devisee, legatee, or other designee, or if there is no such designee, to
the Executive’s estate.
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Article 9. Miscellaneous
9.1 Employment Status. The employment of the Executive by the Employer is “at will” and, subject to the Executive’s rights pursuant to
this Agreement or any separate written separation agreement entered into by the Executive and CMS Energy Corporation, may be
terminated by either the Executive or the Employer at any time, subject to applicable law. Further, the Executive has no right to be an
officer of CMS Energy Corporation or any of its Affiliates and serves as an officer entirely at the discretion of the Board.
9.2 Entire Agreement. This Agreement supersedes any prior agreements or understandings, oral or written, between the parties hereto,
with respect to the subject matter hereof, and this Agreement (including the “whereas” clauses and Exhibit A) constitutes the entire
agreement of the parties with respect thereto. Without limiting the generality of the foregoing sentence, this Agreement completely
supersedes, cancels, voids and renders of no further force and effect any and all other change in control agreements, and other similar
agreements, communications, representations, promises, covenants and arrangements, whether oral or written, between the Employer
and the Executive and between the Executive and CMS Energy Corporation or any of its Affiliates that may have taken place or been
executed prior to the Effective Date and which may address the subject matters contained herein. Notwithstanding the above, this
Agreement is supplemental to and does not replace any written separation agreement entered into between the parties that is not
contingent on a Change in Control, provided however that in no event will the Executive be entitled to payments under this
Agreement that would be duplicative of any payment and/or benefits due under such other written separation agreement.
9.3 Severability. In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any
reason, the remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect, and the
parties shall negotiate in good faith to accomplish the purposes and amend this Agreement so as, to the extent possible under the
law, to carry out the original intent of the provision or portion determined to be invalid or unenforceable.
9.4 Tax. The Employer may withhold from any benefits payable under this Agreement any authorized deductions and all federal, state,
city, or other taxes as may be required pursuant to any law or governmental regulation or ruling. Notwithstanding anything contained
in this Agreement to the contrary, if the Executive is a “specified employee” (determined in accordance with Section 409A and
Treasury Regulation Section 1.409A-3(i)(2)) as of the Effective Date of Termination, and if any payment, benefit or entitlement
provided for in this Agreement or otherwise both (i) constitutes a “deferral of compensation” within the meaning of Section 409A and
(ii) cannot be paid or provided in a manner otherwise provided herein or otherwise without subjecting the Executive to additional tax,
interest and/or penalties under Section 409A, then any such payment, benefit or entitlement that is payable during the first 6 months
19

following the Effective Date of Termination shall be paid or provided to the Executive in a lump sum cash payment to be made on the
earlier of (x) the Executive’s death or (y) the first day that is more than six (6) months immediately following the Effective Date of
Termination (or, if different, the date that qualifies as a “separation from service” (as such term is used under Section 409A)). Each
payment to be made under this Agreement shall be treated as a separate payment for purposes of Section 409A. Notwithstanding
anything contained in this Agreement to the contrary, the Employer shall have the unilateral right to amend this Agreement at any
time for the sole purpose of complying with Section 409A.
9.5 Beneficiaries. The Executive may designate one (1) or more persons or Entities as the primary and/or contingent beneficiaries of any
amounts to be received under this Agreement. Such designation must be in the form of a signed writing on a form provided by the
Employer. The Executive may make or change such designation at any time.
9.6 Payment Obligation Absolute. Except as otherwise provided in this Agreement and as provided in the last sentence of this paragraph,
the Employer’s and CMS Energy Corporation’s obligations to make the payments and provide the benefits to the Executive specified
herein shall be absolute and unconditional, and shall not be affected by any circumstances, including, without limitation, any offset,
counterclaim, defense, or other right which the Employer, CMS Energy Corporation or any of its Affiliates may have against the
Executive or anyone else. Except as otherwise provided in this Agreement, all amounts payable by the Employer hereunder shall be
paid without notice or demand. Each and every payment made hereunder by the Employer shall be final, but subject to the provisions
of the next sentence. If the Executive should seek to litigate this Agreement or the subject matters addressed herein in a state or
federal court, subject to the requirements of Section 409A, to the extent applicable, (i) the Executive at least ten (10) days prior to filing
in court shall tender back to the Employer all cash consideration paid to the Executive under this Agreement prior thereto and (ii) any
payments then or thereafter due to the Executive under this Agreement shall be withheld until said litigation is finally resolved.
The Executive shall not be obligated to seek other employment in mitigation of the amounts payable or arrangements made under any
provision of this Agreement, and the obtaining of any such other employment, provided such other employment is not a violation of
the provisions of Article 5 herein, shall in no event effect any reduction of the Employer’s obligations to make the payments and
arrangements required to be made under this Agreement.
9.7 Contractual Rights to Benefits. Subject to approval and ratification by the Committee, this Agreement establishes and vests in the
Executive a contractual right to the benefits to which he or she is entitled hereunder. However, nothing herein contained shall require
or be deemed to require, or prohibit or be deemed to prohibit, the Employer to segregate, earmark, or otherwise set aside any funds or
other assets, in trust or otherwise, to provide for any payments to be made or required hereunder.
20

9.8 Modification. Except as otherwise provided in this Agreement, this Agreement shall not be varied, altered, modified, canceled,
changed, or in any way amended except by mutual agreement of the parties in a written instrument executed by the parties hereto or
their legal representatives.
9.9 Counterparts and Headings. This Agreement may be executed in one (1) or more counterparts, each of which shall be deemed to be
an original, but all of which together will constitute one and the same Agreement. Signatures transmitted via facsimile shall be
regarded by the parties as original signatures. The headings of the various sections and subsections of this Agreement shall not limit
or affect the terms and provisions of this Agreement.
9.10 Representation. Each of the Executive and the Employer represents and warrants that this Agreement is a legal, valid and binding
agreement, enforceable in accordance with its terms, and does not conflict with any other agreement to which he, she or it is a party.
The Executive acknowledges that he or she has had an opportunity to consult with his or her legal and financial advisors before
executing and delivering this Agreement, and has read and understands this Agreement.
9.11 Applicable Law. This Agreement shall be governed and construed in accordance with the laws of the State of Michigan, without
regard to its conflicts of laws principles.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
21

IN WITNESS WHEREOF, the parties have executed this Agreement as of this day of , 20 .
[CMS ENERGY CORPORATION or EMPLOYER] EXECUTIVE:
By: Signature:
Its: Printed Name:
Address:
22
EXHIBIT A
GENERAL RELEASE AGREEMENT
This General Release Agreement (“Agreement”), made as of the day of , 20 , pursuant to Michigan law, among (the
“Executive”), an individual, and , a Michigan corporation (the “Employer”) is a general release of claims against the Employer, CMS
Energy Corporation and all of their subsidiaries and affiliates (collectively the “CMS Companies”).
WHEREAS, the Executive’s employment with the Employer [will end] [has ended] on , 20 and [he] [she] is eligible for the receipt of
severance benefits under a Change in Control Agreement. dated as of , 20 between the Executive and the Employer (the “CIC
Agreement”) provided that the Executive first executes and delivers to the Employer a prescribed form of general release attached as Exhibit A
to the CIC Agreement;
WHEREAS, terms used in this Agreement that are also used and defined in the CIC Agreement shall have the same definition in this
Agreement if not separately and differently defined herein, such terms being recognizable by initial caps; and
WHEREAS, this General Release Agreement satisfies the condition for receipt of Change in Control Severance Benefits under Article 3 of the
CIC Agreement.
NOW THEREFORE, in consideration of the covenants undertaken and the releases contained in this Agreement, the Executive and the
Employer agree as follows:
1. MONETARY AND OTHER CONSIDERATION
In consideration for the releases and the other covenants in this Agreement, the Executive agrees and reaffirms that the only monetary and
other consideration to which [he] [she] is entitled due to the termination of employment is that provided to the Executive pursuant to the CIC
Severance Agreement, as set forth on Attachment A attached to this Agreement.
2. RETURN OF COMPANY PROPERTY
By signing this Agreement, the Executive represents and warrants that [he] [she] has returned to the Employer all of its property and all the
property of any of the CMS Companies which the Executive had in [his] [her] possession.
3. GENERAL RELEASE AND DISCHARGE BY EXECUTIVE
In consideration of the payments and commitments made by the Employer to the Executive (described in Section 1 above), the Executive on
[his] [her] own behalf, and [his] [her] descendants, ancestors, dependents, heirs, executors, administrators, assigns, and successors,
23
and each of them, hereby covenants not to sue and fully releases and discharges the Employer, CMS Energy Corporation, and all of their
subsidiaries and affiliates, past and present, and each of them as well as its and their trustees, directors, officers, agents, attorneys, insurers,
employees, stockholders, representatives, assigns, and successors, past and present, and each of them, hereinafter together and collectively
referred to as “Releasees,” with respect to and from any and all claims, wages, demands, rights, liens, agreements, contracts, covenants,
actions, suits, causes of action, obligations, debts, costs, expenses, attorneys’ fees, damages, judgments, orders and liabilities of whatever
kind or nature in law, equity or otherwise, whether now known or unknown, suspected or unsuspected, and whether or not concealed or
hidden, which the Executive now owns or holds or has at any time on or prior to the Effective Date of Termination owned or held as against
said Releasees, arising out of or in any way connected with the Executive’s employment relationship with the Employer or the Releasees, or
the Executive’s termination of employment or any other transactions, occurrences, acts or omissions or any loss, damage or injury whatsoever,
known or unknown, suspected or unsuspected, resulting from any act or omission by or on the part of said Releasees, or any of them,
committed or omitted prior to the date of this Agreement, including but not limited to, claims based on any express or implied contract of
employment which may have been alleged to exist between the Employer, the Releasees and the Executive, or under the Age Discrimination in
Employment Act of 1967 (“ADEA”), 29 U.S.C. §621, et seq, as amended by the Older Workers Benefit Protection Act of 1990, Title VII of the
Civil Rights Act of 1964, 42 U.S.C. §2000e, et seq, as amended, the Civil Rights Act of 1991, P. L. 102-1 66, the Elliott-Larsen Civil Rights Act,
MCLA §37.2101, et seq, the Rehabilitation Act of 1973, 29 U.S.C. §701, et seq, as amended, the Americans with Disabilities Act of 1990, 42
U.S.C. §12206, et seq, as amended, or the Persons with Disabilities Civil Rights Act, MCLA §37.1101, et seq, as amended, or any other federal,
state or local law, rule, regulation or ordinance, and claims for severance pay, sick leave, holiday pay, and any other fringe benefit provided to
the Executive by the Employer or Releasees except for those rights preserved by Section 3.2(i) of the CIC Agreement. Nothing in this
Agreement is intended to, nor do the Executive and the Employer, waive the right to enforce the CIC Agreement.
4. REVOCATION OF RELEASE BY EXECUTIVE
The Executive specifically acknowledges for purposes of this Agreement that: (1) the Executive has been advised by the Employer to consult
with an attorney prior to signing this Agreement; (2) the Executive has been given [21] [45] days to consider the release; and (3) the Executive
may revoke this Agreement within 7 days of signing this Agreement. In the event of such a revocation, the Executive will repay to Employer all
funds already received under the CIC Agreement and waive [his] [her] rights to receive any additional funds under the CIC Agreement. Such a
revocation, to be effective, must be in writing and either (i) postmarked within 7 days of execution of this Agreement and addressed to the
attention of , CMS Energy Corporation, at One Energy Plaza, Jackson, Michigan 49201, or (ii) hand delivered to within 7 days of
execution of this Agreement. The Executive understands that if revocation is made by mail, mailing by certified mail, return receipt requested, is
recommended to show proof of mailing. IF THE EXECUTIVE SIGNS THIS AGREEMENT PRIOR TO THE END OF THE [21] [45] DAY PERIOD,
THE EXECUTIVE CERTIFIES
24
THAT THE EXECUTIVE KNOWINGLY AND VOLUNTARILY DECIDED TO SIGN THE AGREEMENT AFTER CONSIDERING IT LESS THAN
[21] [45] DAYS AND [HIS] [HER] DECISION TO DO SO WAS NOT INDUCED BY THE EMPLOYER THROUGH FRAUD,
MISREPRESENTATION OR A THREAT TO WITHDRAW OR ALTER THE OFFER THE SEVERANCE BENEFITS PAYABLE UNDER THE
CIC AGREEMENT PRIOR TO THE EXPIRATION OF THE [21] [45] DAY TIME PERIOD.
THIS AGREEMENT AND THE RELEASE CONTAINED IN THIS AGREEMENT SHALL BECOME EFFECTIVE AND ENFORCEABLE ONLY
AFTER THE REVOCATION PERIOD HAS PASSED.
5. GOVERNING LAW AND SEVERABILITY OF INVALID PROVISIONS
This Agreement will be governed by and construed in accordance with the laws of the State of Michigan, without regard to its conflicts of law
principles. In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, the
remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect, and the parties shall negotiate in
good faith to accomplish the purposes and amend this Agreement so as, to the extent possible under the law, to carry out the original intent of
the provision or portion determined to be invalid or unenforceable.
6. FULL UNDERSTANDING AND VOLUNTARY ACCEPTANCE
In entering this Agreement, the Employer and the Executive represent that they have had the opportunity to consult with attorneys of their
own choice, that the Employer and the Executive have read the terms of this Agreement and that those terms are fully understood and
voluntarily accepted by them.
7. DISPUTE RESOLUTION
The provisions of Article 7, Dispute Resolution and Notice, of the CIC Agreement, shall apply to and govern any dispute arising under this
Agreement.
8. MODIFICATION
Except as otherwise provided in this Agreement, this Agreement shall not be varied, altered, modified, canceled, changed, or in any way
amended except by mutual agreement of the parties in a written instrument executed by the parties hereto or their legal representatives.
9. COUNTERPARTS AND HEADINGS
This Agreement may be executed in one (1) or more counterparts, each of which shall be deemed to be an original, but all of which together will
constitute one and the same Agreement. Signatures transmitted via facsimile shall be regarded by the parties as original signatures. The
headings of the various sections and subsections of this Agreement shall not limit or affect the terms and provisions of this Agreement.
25
Signed this day of , 20 .
[EXECUTIVE’S NAME]
[EMPLOYER’S NAME]
By:
Its:
26
ATTACHMENT A
27
Exhibit (10)(t)
Officer Separation Agreement

Contents
Article 1. Establishment, Term, and Purpose 1
Article 2. Definitions 2
Article 3. Severance Benefits 5
Article 4 Notice of Termination; Resignation As Officer and Director 7
Article 5. Restrictive Covenants and Clawback 7
Article 6. Dispute Resolution and Notice 10
Article 7. Successors and Assignment 11
Article 8. Miscellaneous 11
Exhibit A General Release Agreement 15
i
Officer Separation Agreement

THIS OFFICER SEPARATION AGREEMENT (“Agreement”) is made, entered into, and effective as of (hereinafter referred to as
the “Effective Date”), by and between, , a Michigan corporation, (hereinafter referred to as the “Employer”) and
(hereinafter referred to as the “Officer”).
WHEREAS, the Board of Directors of CMS Energy Corporation, a Michigan corporation (hereinafter referred to as “CMS Energy
Corporation”) has approved entering into severance agreements with certain officers as being necessary and advisable for the success of
CMS Energy Corporation; and
WHEREAS, the Officer is currently employed at , by the Employer in a key management position as
;
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements of the Officer and the Employer and of
other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Officer and the Employer, intending
to be legally bound, agree as follows:
Article 1. Establishment, Term, and Purpose

This Agreement will commence on the Effective Date and shall continue in effect until December 31, 2010. However, at December 31, 2010,
and if extended, at the end of each additional year thereafter, the term of this Agreement shall be extended automatically for one (1) additional
year, unless the Committee (as defined in Section 2.9 herein) delivers notice six (6) months prior to the end of such term, or extended term, to
the Officer, stating that the Agreement will not be extended. In such case, the Agreement will terminate at the end of the term, or extended term,
then in progress. If the term of this Agreement is not extended, the Employer is not obligated to pay any severance benefits under Section 3.2
herein for a Qualifying Termination that happens after the expiration of the term of this Agreement. Notwithstanding the above, the Officer
acknowledges that this Agreement will expire on the first of the month following his or her 65th birthday to the extent that it is permitted under
Section 631(c) of the Age Discrimination in Employment Act, and the Officer agrees to submit a resignation to the Committee not less than six
(6) months prior to his or her 65th birthday to be effective the first of the month following the Officer’s 65th birthday. In addition,
notwithstanding the above, any obligation of the Employer arising during the term of this Agreement shall survive the termination of this
Agreement until paid in full, provided that the Officer has received a Notice of Termination under 2.18 herein. Notwithstanding the forgoing,
the obligations of the Officer under Article 5 herein shall continue in effect and survive the expiration of the term of this Agreement.
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Article 2. Definitions
Whenever used in this Agreement, the following terms shall have the meanings set forth below:
2.1 “Affiliate” has the meaning set forth in Rule 12b-2 under of the Exchange Act.
2.2 “Agreement” means this agreement, including the “whereas” clauses and Exhibit A.
2.3 “Base Annual Salary” means the Officer’s full annual salary, whether or not any portion thereof is paid on a deferred basis, at the
Effective Date of Termination. It does not include any incentive compensation in any form, bonuses of any type or any other form of
monetary or nonmonetary compensation other than salary.
2.4 “Beneficiary” means the persons or Entities designated by the Officer pursuant to Section 8.5.
2.5 “Benefit plan clawback provision” has the meaning set forth in Section 5.1(g) herein.
2.6 “Board” means the Board of Directors of CMS Energy Corporation.
2.7 “Cause” is determined solely by the Committee in the exercise of good faith and reasonable judgment, and means the occurrence of
any one or more of the following:
(a) The continued failure by the Officer to substantially perform his or her duties of employment (other than any such failure
resulting from the Officer’s Disability), after a demand for substantial performance is delivered to the Officer that identifies the
manner in which the Committee believes that the Officer has not substantially performed his or her duties, and the Officer 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 Officer’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 Officer’s (i) gross negligence, (ii) failure or refusal, on request or demand by the Employer or any governmental authority, to
provide testimony to or cooperate with any governmental regulatory authority, or any other similar non-cooperation by the
Officer, (iii) willful engaging in misconduct materially or demonstrably injurious to the business or reputation (by adverse
publicity or otherwise) of CMS Energy Corporation or its Affiliates, monetarily or otherwise, or (iv) violation of a material
provision of the Employer’s code of conduct and code of ethics, including but not limited to violations of the Employer’s
policies relating to substance abuse and discrimination; or
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(d) The Officer’s breach of the terms of Article 5 herein.

However, for purposes of clause (c), no act or failure to act on the Officer’s part shall be considered “willful” if done, or omitted to be
done, by the Officer (i) in good faith and (ii) with reasonable belief that his or her action or omission was in the best interest of CMS
Energy Corporation or its Affiliates.
2.8 “Code” means the United States Internal Revenue Code of 1986, as amended, and any successors thereto.
2.9 “Committee” means the Compensation and Human Resources Committee of the Board or any other committee appointed by the
Board to perform the functions of the Compensation and Human Resources Committee. The Committee is responsible for the
administration of this Agreement and shall interpret and apply the provisions of this Agreement. Notwithstanding the above, the
Committee may obtain and rely upon advice from consultants, attorneys and advisors of its choice in making determinations
concerning this Agreement.
2.10 “Direct Competitor” has the meaning set forth in Section 5.1(a) herein.
2.11 “Disability” means a determination by the insurer or third-party administrator under an individual and/or group disability policy
covering the Officer that the Officer 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 Section 22(e) of the Code.
2.12 “Effective Date” means the date of this Agreement set forth in the first paragraph of this Agreement.
2.13 “Effective Date of Termination” means the first day of any month following the date on which a Qualifying Termination occurs, as
provided under Section 2.21 herein, which triggers the payment of Severance Benefits hereunder. Such first day of such month shall
be specified in the Notice of Termination If the Officer is otherwise eligible for retirement, he or she may elect to retire on the Effective
Date of Termination without waiving Severance Benefits to which he or she may be entitled pursuant to this Agreement.
2.14 “Employer” means the corporation named in the first paragraph of this Agreement as the Employer.
2.15 “Entity” means any corporation, partnership, limited liability company, joint venture, sole proprietorship or firm.
2.16 “Exchange Act” means the United States Securities Exchange Act of 1934, as amended.
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2.17 “Exempt Person” has the meaning set forth in Section 5.1(b) herein.
2.18 “Notice of Termination” shall be provided for a Qualifying Termination and shall mean a notice which shall provide a specific date
(i) on which a Qualifying Termination will occur and (ii) designated as the Effective Date of Termination.
2.19 “Officer” means the individual named in the first paragraph of this Agreement.
2.20 “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).
2.21 “Qualifying Termination” means a termination (not involving death, Disability, Retirement or Cause), pursuant to a Notice of
Termination delivered to the Officer by the Employer or pursuant to a request that the Officer submit a resignation as an officer and
employee (other than as provided for in Article 1 herein).
2.22 “Release” means the signed release of claims and resignation of all positions as an officer or director of the Employer and any
company affiliated with Employer, which shall be substantially in the form attached hereto as Exhibit A.
2.23 “Section 409A” means Section 409A of the Code and applicable Treasury Regulations, and their successors.
2.24 “SERP” means the retirement plan applicable to the Officer and entitled “Supplemental Executive Retirement Plan for the Employees
of CMS Energy/Consumers Energy Company” dated December 1, 2007, as amended or under the successor or replacement of such
retirement plan if it is no longer in effect. [For Officers covered under the defined contribution supplemental executive retirement plan,
the following definition shall be used: “means the retirement plan applicable to the Officer and entitled “Defined Contribution
Supplemental Executive Retirement Plan” dated December 1, 2007, as amended or under the successor or replacement of such
retirement plan if it is then no longer in effect.].
2.25 “Severance Benefits” has the meaning set forth in Article 3 herein.
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Article 3. Severance Benefits

3.1 Severance Benefits.
(a) Right to Severance Benefits. The Officer shall be entitled to receive from the Employer Severance Benefits, as described in
Section 3.2 herein, if a Qualifying Termination of the Officer’s employment satisfying the definition contained in Section 2.21 has
occurred. Benefits received by the Officer under the pension plan and SERP (or any replacement or successor plans thereto)
shall not be used as an offset to the level of Severance Benefits owed to the Officer. The Effective Date of Termination will be
the date the Officer experiences a separation from service with the service recipient, as those terms are defined under
Section 409A.
(b) No Severance Benefits. The Officer shall not be entitled to receive Severance Benefits under this Agreement if the Officer’s
employment with the Employer ends for reasons other than a Qualifying Termination.
(c) Waiver and Release. The Officer shall sign and return to the Employer a Release to be eligible for payment of Severance
Benefits under Section 3.2 herein. Attached hereto as Exhibit A and incorporated by reference in this Agreement is the form of
release the Officer shall sign and return to qualify for Severance Benefits under this Agreement. No payment will be made until
the seven (7) day right to revocation of the Release has elapsed.
(d) No Duplication of Severance Benefits. If the Officer receives Severance Benefits, any other severance benefits received by
employees not covered by this Agreement, if any, to which the Officer is entitled shall be reduced on a dollar-for-dollar basis
with respect to Severance Benefits paid pursuant to this Agreement so that there is no duplication of severance benefits.
3.2 Description of Severance Benefits. In the event the Officer becomes entitled to receive Severance Benefits as provided in
Section 3.1(a) herein, the Employer (subject to Section 3.1(c)) shall provide the Officer with the following:
(a) A lump-sum amount paid within thirty (30) calendar days following the Effective Date of Termination equal to the sum of the
Officer’s unpaid salary, unreimbursed business expenses, and unreimbursed allowances owed to the Officer through and
including the Effective Date of Termination. In the event the Officer is terminated following a performance year under the Officer
Incentive Compensation Plan but prior to the payment of a bonus for such year, the Officer will not forfeit such bonus but shall
receive any payment when the same is paid to active employees. To the extent, if any, the Officer has elected to defer any
bonus, any payments due under this provision corresponding to the amount of the deferral shall be paid or deferred in
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accordance with the terms elected by the Officer with respect to said plan under which the bonus is deferred.
(b) A lump-sum amount, paid within thirty (30) calendar days following return of the signed Release (but not prior to the lapse of
the seven (7) day revocation period), which shall be provided not more than fifteen (15) days after delivery to the Officer of a
Notice of Termination, equal to [insert applicable amount based upon salary grade from the following: for E-3 through E-7 1.50
times Base Annual Salary; for E-8 and above 1.75 times Base Annual Salary].
(c) The Officer’s termination of employment pursuant to the Notice of Termination shall be treated as a resignation under the
applicable bonus plan and the Officer shall be entitled to consideration for a pro-rata bonus to the extent provided for in the
bonus plan.
(d) Outstanding stock options and stock appreciation rights previously granted by the Committee to the Officer pursuant to
Article VI of the plan entitled “CMS Energy Corporation Performance Incentive Stock Plan,” dated December 3, 1999, as
amended, or any replacement thereof, shall be treated in accordance with applicable provisions of the plan. Restricted Stock
awarded to the Officer shall not be forfeited, but rather shall immediately vest and be paid out if subject only to a time based
vesting requirement, and otherwise shall continue to be subject to any applicable performance based vesting requirement and
shall be paid out in the future in conformance therewith.
(e) If the Officer is a participant in the SERP, the Officer’s retirement benefits under the SERP will become fully vested as of the
Effective Date of Termination and shall not be subject to further vesting requirements or to any forfeiture provisions.
(f) For purposes of (1) the Officer’s retirement, (2) the SERP and (3) benefits not expressly discussed in clauses (a) through (e) of
this Section 3.2, but which are available to the general employee population or available only to officers and implemented with
contracts with third parties, the benefit plan descriptions covering all employees and the retirement plan and SERP plan
descriptions and contracts with third parties covering officers in place at the time of the Effective Date of Termination control
the Officer’s treatment under those plans and contracts. All rights of the Officer to indemnification as an officer or an employee
will be determined under any applicable indemnification policy in effect at the time the matter giving rise to the need for
indemnification is alleged to have occurred. For any other benefits only available to officers, if those benefits are not expressly
discussed in clauses (a) through (e) of this Section 3.2, those benefits are terminated for the Officer as of the Effective Date of
Termination.
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Article 4. Notice of Termination; Resignation as Officer and Director

4.1 Any Qualifying Termination of the Officer’s employment shall be communicated by a Notice of Termination which shall provide a
specific date (i) on which a Qualifying Termination has occurred or will occur, and (ii) that is designated as the Effective Date of
Termination.
4.2 On or before the Effective Date of Termination, the Officer shall submit to the Employer his or her written resignation as (i) an officer
of the Employer and of all Affiliates and (ii) a member of the board of directors of the Employer and of all Affiliates.
Article 5. Restrictive Covenants and Clawback

5.1 The following shall apply after any termination (including without limitation due to retirement, disability or resignation for any reason)
of the Officer’s employment:
(a) Noncompetition: During the term of employment and for a period of twelve (12) months after the date of the termination of the
Officer’s employment, the Officer shall not: (i) directly or indirectly, separately or acting or conspiring with any Person or Entity
whether or not employed by CMS Energy Corporation or any of its Affiliates, engage in or prepare to engage in or have a
financial or other interest in any business which is a Direct Competitor (as defined below); or (ii) serve as an employee, agent,
partner, member, shareholder, director or consultant, or in any other capacity whatsoever participate, engage, or have a financial
or other interest in, any business which is a Direct Competitor; provided, however, that notwithstanding anything to the
contrary contained in this Agreement, the Officer may own up to two percent (2%) of the outstanding shares of the capital stock
of an Entity whose shares are registered under Section 12 of the Exchange Act.
A “Direct Competitor” means an Entity engaged in the business of (1)(a) selling electric power or natural gas at retail or
wholesale within the State of Michigan, or (b) selling electric power at wholesale within the market area in which an electric
generating plant owned by an Affiliate of CMS Enterprises Company is located or (c) storing natural gas within the State of
Michigan or (d) generating, transmitting or distributing electricity or natural gas within the State of Michigan, or (2) developing
an electric generating plant within the State of Michigan or a market area in which an electric generating plant owned by an
Affiliate of CMS Enterprises Company is located. A “Direct Competitor” also means any Entity that the Committee designates as
a Direct Competitor, prior to the termination date specified in a Notice of Termination, that it believes, in good faith, is a
competitor to CMS Energy Corporation or its Affiliates.
(b) Confidentiality. The Employer has advised the Officer and the Officer acknowledges that it is the policy of CMS Energy
Corporation and its Affiliates
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to maintain as secret and confidential all Protected Information (as defined below), and that Protected Information has been and
will be developed at substantial cost and effort to CMS Energy Corporation and its Affiliates. The Officer shall not at any time,
directly or indirectly, divulge, furnish, or make accessible to any person or Entity (other than as may be required in the regular
course of the Officer’s employment), nor use in any manner, either during the term of employment or after termination, for any
reason, any Protected Information, or cause any such information of CMS Energy Corporation and its Affiliates to enter the
public domain.
“Protected Information” means trade secrets, confidential and proprietary business information of CMS Energy Corporation and
its Affiliates and any other information of CMS Energy Corporation and its Affiliates, including, but not limited to, customer lists
(including potential customers), sources of supply, processes, plans, materials, pricing information, internal memoranda,
marketing plans, internal policies, and products and services which may be developed from time to time by CMS Energy
Corporation and its Affiliates and their agents or employees, including the Officer; provided, however, that information that is in
the public domain (other than as a result of a breach of this Agreement), approved for release by CMS Energy Corporation or its
Affiliates or lawfully obtained from third parties who are not bound by a confidentiality agreement with CMS Energy
Corporation or its Affiliates, is not Protected Information. Notwithstanding the foregoing, nothing in this subsection is to be
construed as prohibiting the Officer from providing information to a state or federal agency, legislative body or one of its
committees or a court with jurisdiction when the Officer is legally required to do so, provided that promptly after being notified
of such requirement the Officer notifies the Employer, or from disclosing Protected Information to the Officer’s spouse, attorney
and/or his or her personal tax and financial advisors as reasonably necessary or appropriate to advance the Officer’s tax,
financial and other personal planning (each an “Exempt Person”), provided, however, that any disclosure or use (beyond the
specific purpose for which it was released to such Exempt Person) of Protected Information by an Exempt Person shall be
deemed to be a breach of this Section 5.1(b) by the Officer.
(c) Nonsolicitation. During the term of employment and for a period of twelve (12) months after the date of the termination of the
Officer’s employment, the Officer shall not: (i) employ or retain or solicit for employment or arrange to have any other person or
Entity employ or retain or solicit for employment or otherwise participate in the employment or retention of any person who (x) is
an employee or consultant of CMS Energy Corporation or its Affiliates or (y) was an employee or consultant of CMS Energy
Corporation or its Affiliates at any time during the twelve (12) month period immediately preceding the date of the occurrence of
the activity described in clause (i); or (ii) solicit suppliers or customers of CMS Energy Corporation or its Affiliates or induce
any such person to terminate their relationship with them.
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(d) Cooperation. The Officer shall fully and unconditionally cooperate with CMS Energy Corporation and its Affiliates and their
attorneys in connection with any and all lawsuits, claims, investigations, or similar proceedings that have been or could be
asserted at any time arising out of or related in any way to the Officer’s employment or activities on behalf of CMS Energy
Corporation and its Affiliates.
(e) Nondisparagement. The provisions of this Section 5.1(e) apply at all times following the termination of the Officer’s employment
for any reason: The Officer shall not disparage CMS Energy Corporation or its Affiliates or their officers and/or directors, or
otherwise make comments harmful to their reputations. The Officer further shall not testify or act in any capacity as a paid or
unpaid expert witness, advisor or consultant or otherwise on behalf of any person, or Entity that has or may have any claim,
demand, action, suit, cause of action, or judgment against CMS Energy Corporation or its Affiliates, or in any regulatory agency
proceeding in a manner adverse to their interests. The executive officers and directors of CMS Energy Corporation and its
Affiliates shall not disparage the Officer or otherwise make comments harmful to the Officer’s reputation. Notwithstanding the
foregoing, nothing in this Section 5.1(e) prohibits the Officer or representatives of CMS Energy Corporation or its Affiliates from
testifying truthfully under oath in any judicial, administrative or legislative proceedings or in any arbitration, mediation or other
similar proceedings where his or her testimony has been legally compelled or pursuant to Section 6.1 herein.
(f) Return of the Employer Property. The Officer agrees that upon termination of employment he or she shall return all property of
the Employer or any Affiliate now in his or her possession.
(g) Clawback Relating to Illegal Acts or Restatement of Corporation’s Financial Statements. If, due to a restatement of CMS
Energy Corporation’s or an Affiliate’s publicly disclosed financial statements or otherwise, the Officer is subject to an obligation
to make a repayment to CMS Energy Corporation or an Affiliate pursuant to a clawback provision contained in a SERP Plan, the
PISP, a bonus plan or other benefit plan (a “benefit plan clawback provision”) of CMS Energy Corporation or its Affiliate, it shall
be a precondition to the obligation of Employer to make any payment under this Agreement, that the Officer fully repay to CMS
Energy Corporation or its Affiliate any amounts owing under such benefit plan clawback provision. The payments under this
Agreement are further subject to any provision of law which may require the Officer to forfeit or repay any benefits provided
hereunder that are based upon a bonus or incentive compensation, or equity compensation, in the event of a restatement of
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
9
law, or any rule or regulation promulgated by the applicable listing exchange or system on which CMS Energy Corporation or an
Affiliate lists its traded shares. To the degree any benefits hereunder are not otherwise forfeitable pursuant to the preceding
sentences of this Section 5.1(g), the Board or Committee may require the Officer to repay to Employer any amounts paid under
this Agreement that are computed on the basis of an actual bonus under a bonus plan applicable to the Officer, if the Board or
Committee determines, on the basis of the clawback provisions in the bonus plan under which such bonus payments are made,
that the Officer would have been required to make a repayment of such bonus. The rights set forth in this Agreement
concerning the right of CMS Energy Corporation, an Affiliate and/or Employer 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.
(h) Enforcement. The parties to this Agreement acknowledge that the services of the Officer are unique and extraordinary and that a
breach of any provision of this Section 5.1 will cause irreparable harm to the Employer. Accordingly, the Officer agrees that
notwithstanding the provisions of Section 6.1 herein, the Employer has the right to seek to enforce the noncompete and other
restrictive covenants contained in this Section 5.1 in a court of law or equity and the Officer hereby consents to the imposition
of an injunction or a temporary restraining order or such other equitable relief as necessary to protect the rights of the Employer
under this Agreement.
Article 6. Dispute Resolution and Notice

6.1 Dispute Resolution. Any dispute or controversy between the Officer and the Employer arising under or in connection with this
Agreement (other than Article 5 of this Agreement) shall first be submitted in writing to the Committee for attempted resolution. If
such submission does not result in mutually agreeable resolution within sixty (60) days thereof, such dispute or controversy shall be
settled by final and binding arbitration. Such arbitration shall be conducted before a single arbitrator selected by the parties to be
conducted in Jackson, Michigan. The arbitration will be conducted in accordance with the rules of the American Arbitration
Association then in effect and be finished within ninety (90) days after the selection of the arbitrator, and if the Officer and the
Employer are unable to agree within thirty (30) days on such a single arbitrator, such Association shall select such arbitrator. The
arbitrator shall not have authority to fashion a remedy that includes consequential, exemplary or punitive damages of any type
whatsoever, and the arbitrator is hereby prohibited from awarding injunctive relief of any kind, whether mandatory or prohibitory.
Judgment may be entered on the award of the arbitrator in any court having competent jurisdiction. The Officer and the Employer
shall share equally the cost of the arbitrator and of conducting the arbitration proceeding, but each party shall bear the cost of its own
legal counsel and experts and other out-of-pocket expenditures. Notwithstanding the foregoing, the Officer and the Employer
acknowledge that the enforcement of the Employer’s rights under Article 5 herein are unique and agree that the Employer is not
limited to the remedy of
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arbitration but may elect the remedy of its choice including filing suit in a court of law or equity and the Officer agrees that the
Employer has the right to obtain an injunction and/or a temporary restraining order to protect its rights.
6.2 Notice. Any notices, requests, demands, or other communications provided for by this Agreement shall be in writing and sent by
registered or certified mail to the Officer at the address set forth beneath his or her signature on the last page of this Agreement or, to
the Employer, at One Energy Plaza, Jackson, Michigan 49201, Attention: Corporate Secretary. Notices, requests, demands or other
communications may also be delivered by messenger, courier service or other electronic means and are sufficient if actually received
by the party for whom it is intended.
Article 7. Successors and Assignment

7.1 Successors. Any successor (whether direct or indirect, by purchase, merger, reorganization, consolidation, acquisition of property or
stock, liquidation, or otherwise) to the business of CMS Energy Corporation or purchaser of all or substantially all of the assets of
CMS Energy Corporation shall be required to expressly assume and agree to perform under this Agreement in the same manner and to
the same extent that the Employer would be required to perform if no such succession had taken place. This Agreement shall be
binding upon any successor in accordance with the operation of law.
7.2 Assignment by the Officer. This Agreement shall inure to the benefit of and be enforceable by the Officer’s personal or legal
representatives, executors, administrators, successors, heirs, distributees, devisees, and legatees. If the Officer dies while any amount
would still be payable to him or her hereunder had he or she continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to the Officer’s Beneficiary. If the Officer has not named a Beneficiary,
then such amounts shall be paid to the Officer’s devisee, legatee, or other designee, or if there is no such designee, to the Officer’s
estate.
Article 8. Miscellaneous
8.1 Employment Status. The employment of the Officer by the Employer is “at will” and, subject to the Officer’s rights pursuant to this
Agreement or any separate written change in control agreement entered into by the Officer and CMS Energy Corporation/or the
Employer, may be terminated by either the Officer or the Employer at any time, subject to applicable law. Further, the Officer has no
right to be an officer of CMS Energy Corporation or any of its Affiliates and serves as an officer entirely at the discretion of the Board.
8.2 Entire Agreement. This Agreement supersedes any prior agreements or understandings, oral or written, between the parties hereto,
with respect to the subject
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matter hereof, and this Agreement (including the “whereas” clauses and Exhibit A) constitutes the entire agreement of the parties with
respect thereto. Without limiting the generality of the foregoing sentence, this Agreement completely supersedes, cancels, voids and
renders of no further force and effect any and all other employment agreements, and other similar agreements, communications,
representations, promises, covenants and arrangements, whether oral or written, between the Employer and the Officer and between
the Officer and CMS Energy Corporation or any of its Affiliates that may have taken place or been executed prior to the Effective Date
and which may address the subject matters contained herein. Notwithstanding the above, this Agreement is supplemental to and
does not replace any written separation agreement entered into between the parties that is contingent on a change in control, and if
change in control benefits under the separate agreement that are contingent on a change in control, as defined in the separate written
change in control agreement, are paid or payable to the Officer, then this Agreement shall be void, null and of no effect, and no
Severance Benefits shall be paid hereunder.
8.3 Severability. In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any
reason, the remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect, and the
parties shall negotiate in good faith to accomplish the purposes and amend this Agreement so as, to the extent possible under the
law, to carry out the original intent of the provision or portion determined to be invalid or unenforceable.
8.4 Tax. The Employer may withhold from any benefits payable under this Agreement any authorized deductions and all federal, state,
city, or other taxes as may be required pursuant to any law or governmental regulation or ruling. Notwithstanding anything contained
in this Agreement to the contrary, if the Executive is a “specified employee” (determined in accordance with Section 409A and
Treasury Regulation Section 1.409A-3(i)(2)) as of the Effective Date of Termination, and if any payment, benefit or entitlement
provided for in this Agreement or otherwise both (i) constitutes a “deferral of compensation” within the meaning of Section 409A and
(ii) cannot be paid or provided in a manner otherwise provided herein or otherwise without subjecting the Executive to additional tax,
interest and/or penalties under Section 409A, then any such payment, benefit or entitlement that is payable during the first 6 months
following the Effective Date of Termination shall be paid or provided to the Executive in a lump sum cash payment to be made on the
earlier of (x) the Executive’s death or (y) the first day that is more than six (6) months immediately following the Effective Date of
Termination (or, if different, the date that qualifies as a “separation from service” (as such term is used under Section 409A)). Each
payment to be made under this Agreement shall be treated as a separate payment for purposes of Section 409A. Notwithstanding
anything contained in this Agreement to the contrary, the Employer shall have the unilateral right to amend this Agreement at any
time for the sole purpose of complying with Section 409A.
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8.5 Beneficiaries. The Officer may designate one (1) or more persons or Entities as the primary and/or contingent beneficiaries of any
amounts to be received under this Agreement. Such designation must be in the form of a signed writing on a form provided by the
Employer. The Officer may make or change such designation at any time.
8.6 Payment Obligation Absolute. Except as otherwise provided in this Agreement and as provided in the last sentence of this
paragraph, the Employer’s and CMS Energy Corporation’s obligations to make the payments and provide the benefits to the Officer
specified herein shall be absolute and unconditional, and shall not be affected by any circumstances, including, without limitation,
any offset, counterclaim, defense, or other right which the Employer, CMS Energy Corporation or any of its Affiliates may have
against the Officer or anyone else. Except as otherwise provided in this Agreement, all amounts payable by the Employer hereunder
shall be paid without notice or demand. Each and every payment made hereunder by the Employer shall be final, but subject to the
provisions of the next sentence. If the Officer should seek to litigate this Agreement or the subject matters addressed herein in a state
or federal court, subject to the requirements of Section 409A, to the extent applicable, (i) the Officer at least ten (10) days prior to filing
in court shall tender back to the Employer all cash consideration paid to the Officer under this Agreement prior thereto and (ii) any
payments then or thereafter due to the Officer under this Agreement shall be withheld until said litigation is finally resolved.
The Officer shall not be obligated to seek other employment in mitigation of the amounts payable or arrangements made under any
provision of this Agreement, and the obtaining of any such other employment, provided such other employment is not a violation of
the provisions of Article 5 herein, shall in no event effect any reduction of the Employer’s obligations to make the payments and
arrangements required to be made under this Agreement.
8.7 Contractual Rights to Benefits. Subject to approval and ratification by the Committee, this Agreement establishes and vests in the
Officer a contractual right to the benefits to which he or she is entitled hereunder. However, nothing herein contained shall require or
be deemed to require, or prohibit or be deemed to prohibit, the Employer to segregate, earmark, or otherwise set aside any funds or
other assets, in trust or otherwise, to provide for any payments to be made or required hereunder.
8.8 Modification. Except as otherwise provided in this Agreement, this Agreement shall not be varied, altered, modified, canceled,
changed, or in any way amended except by mutual agreement of the parties in a written instrument executed by the parties hereto or
their legal representatives, provided however, that the consent of the Employer shall only be given with the prior approval of the
Committee and no person acting on behalf of the Employer, or purporting to do so, shall have any authority to do so without such
prior approval.
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8.9 Counterparts and Headings. This Agreement may be executed in one (1) or more counterparts, each of which shall be deemed to be
an original, but all of which together will constitute one and the same Agreement. Signatures transmitted via facsimile shall be
regarded by the parties as original signatures. The headings of the various sections and subsections of this Agreement shall not
limit or affect the terms and provisions of the Agreement.
8.10 Representation. Each of the Officer and the Employer represents and warrants that this Agreement is a legal, valid and binding
agreement, enforceable in accordance with its terms and does not conflict with any other agreement to which he, she or it is a party.
The Officer acknowledges that he or she has had an opportunity to consult with his or her legal and financial advisors before
executing and delivering this Agreement, and has read and understands this Agreement.
8.11 Applicable Law. This Agreement shall be governed and construed in accordance with the laws of the State of Michigan, without
regard to its conflicts of laws principles.
IN WITNESS WHEREOF, the parties have executed this Agreement as of this ___ day of , 200_.
CMS ENERGY CORPORATION or Employer OFFICER:
By: Signature:
Its: Printed Name:
Address:
14
EXHIBIT A
GENERAL RELEASE AGREEMENT

This General Release Agreement (“Agreement”), made as of the ___ day of , 20___, pursuant to Michigan law, among
(the “Officer”), an individual, and , a Michigan corporation (the “Employer”) is a general release of claims against the Employer,
CMS Energy Corporation and all of their subsidiaries and affiliates (collectively the “CMS Companies”).
WHEREAS, the Officer’s employment with the Employer [will end] [has ended] on , 20___ and [he] [she] is eligible for the receipt
of severance benefits under an Officer Separation Agreement (the “Separation Agreement”), provided that the Officer first executes and
delivers to the Employer a prescribed form of general release attached as Exhibit A to the Separation Agreement;
WHEREAS, terms used in this Agreement that are also used and defined in the Separation Agreement shall have the same definition in this
Agreement if not separately and differently defined herein, such terms being recognizable by initial caps; and
WHEREAS, this General Release Agreement satisfies the condition for receipt of Severance Benefits under Article 3 of the Separation
Agreement.
NOW THEREFORE, in consideration of the covenants undertaken and the releases contained in this Agreement, the Officer and the Employer
agree as follows:
1. MONETARY AND OTHER CONSIDERATION

In consideration for the releases and the other covenants in this Agreement, the Officer agrees and reaffirms that the only monetary and other
consideration to which [he] [she] is entitled due to the termination of employment is that provided to the Officer pursuant to the Separation
Agreement, as set forth on Attachment A attached to this Agreement.
2. RETURN OF COMPANY PROPERTY

By signing this Agreement, the Officer represents and warrants that [he] [she] has returned to the Employer all of its property and all the
property of any of the CMS Companies which the Officer had in [his] [her] possession.
3. GENERAL RELEASE AND DISCHARGE BY OFFICER

In consideration of the payments and commitments made by the Employer to the Officer (described in Section 1 above), the Officer on [his]
[her] own behalf, and [his] [her] descendants, ancestors, dependents, heirs, executors, administrators, assigns, and successors,
15
and each of them, hereby covenants not to sue and fully releases and discharges the Employer, CMS Energy Corporation, and all of their
subsidiaries and affiliates, past and present, and each of them as well as its and their trustees, directors, officers, agents, attorneys, insurers,
employees, stockholders, representatives, assigns, and successors, past and present, and each of them, hereinafter together and collectively
referred to as “Releasees,” with respect to and from any and all claims, wages, demands, rights, liens, agreements, contracts, covenants,
actions, suits, causes of action, obligations, debts, costs, expenses, attorneys’ fees, damages, judgments, orders and liabilities of whatever
kind or nature in law, equity or otherwise, whether now known or unknown, suspected or unsuspected, and whether or not concealed or
hidden, which the Officer now owns or holds or has at any time on or prior to the Effective Date of Termination owned or held as against said
Releasees, arising out of or in any way connected with the Officer’s employment relationship with the Employer or the Releasees, or the
Officer’s termination of employment or any other transactions, occurrences, acts or omissions or any loss, damage or injury whatsoever,
known or unknown, suspected or unsuspected, resulting from any act or omission by or on the part of said Releasees, or any of them,
committed or omitted prior to the date of this Agreement, including but not limited to, claims based on any express or implied contract of
employment which may have been alleged to exist between the Employer, the Releasees and the Officer, or under the Age Discrimination in
Employment Act of 1967 (“ADEA”), 29 U.S.C. §621, et seq, as amended by the Older Workers Benefit Protection Act of 1990, Title VII of the
Civil Rights Act of 1964, 42 U.S.C. §2000e, et seq, as amended, the Civil Rights Act of 1991, P. L. 102-1 66, the Elliott-Larsen Civil Rights Act,
MCLA §37.2101, et seq, the Rehabilitation Act of 1973, 29 U.S.C. §701, et seq, as amended, the Americans with Disabilities Act of 1990, 42
U.S.C. §12206, et seq, as amended, or the Persons with Disabilities Civil Rights Act, MCLA §37.1101, et seq, as amended, or any other federal,
state or local law, rule, regulation or ordinance, and claims for severance pay, sick leave, holiday pay, and any other fringe benefit provided to
the Officer by the Employer or Releasees except for those rights preserved by Section 3.2(f) of the Separation Agreement. Nothing in this
Agreement is intended to, nor do the Officer and the Employer, waive the right to enforce the Separation Agreement.
4. REVOCATION OF RELEASE BY OFFICER

The Officer specifically acknowledges for purposes of this Agreement that: (1) the Officer has been advised by the Employer to consult with
an attorney prior to signing this Agreement; (2) the Officer has been given [21] [45] days to consider the release; and (3) the Officer may
revoke this Agreement within 7 days of signing this Agreement. In the event of such a revocation, the Officer will repay to Employer all funds
already received under the Separation Agreement and waive [his] [her] rights to receive any additional funds under the Separation Agreement.
Such a revocation, to be effective, must be in writing and either (i) postmarked within 7 days of execution of this Agreement and addressed to
the attention of , CMS Energy Corporation, at One Energy Plaza, Jackson, Michigan 49201, or (ii) hand delivered to
within 7 days of execution of this Agreement. The Officer understands that if revocation is made by mail, mailing by certified mail, return
receipt requested, is recommended to show proof of mailing. IF THE OFFICER SIGNS THIS AGREEMENT PRIOR TO THE END OF THE [21]
[45] DAY PERIOD, THE OFFICER CERTIFIES THAT THE OFFICER
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KNOWINGLY AND VOLUNTARILY DECIDED TO SIGN THE AGREEMENT AFTER CONSIDERING IT LESS THAN [21] [45] DAYS AND
[HIS] [HER] DECISION TO DO SO WAS NOT INDUCED BY THE EMPLOYER THROUGH FRAUD, MISREPRESENTATION OR A THREAT
TO WITHDRAW OR ALTER THE OFFER THE SEVERANCE BENEFITS PAYABLE UNDER THE SEPARATION AGREEMENT PRIOR TO
THE EXPIRATION OF THE [21] [45] DAY TIME PERIOD.
THIS AGREEMENT AND THE RELEASE CONTAINED IN THIS AGREEMENT SHALL BECOME EFFECTIVE AND ENFORCEABLE ONLY
AFTER THE REVOCATION PERIOD HAS PASSED.
5. GOVERNING LAW AND SEVERABILITY OF INVALID PROVISIONS

This Agreement will be governed by and construed in accordance with the laws of the State of Michigan, without regard to its conflicts of law
principles. In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, the
remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect, and the parties shall negotiate in
good faith to accomplish the purposes and amend this Agreement so as, to the extent possible under the law, to carry out the original intent of
the provision or portion determined to be invalid or unenforceable.
6. FULL UNDERSTANDING AND VOLUNTARY ACCEPTANCE

In entering this Agreement, the Employer and the Officer represent that they have had the opportunity to consult with attorneys of their own
choice, that the Employer and the Officer have read the terms of this Agreement and that those terms are fully understood and voluntarily
accepted by them.
7. DISPUTE RESOLUTION
The provisions of Article 6, Dispute Resolution and Notice, of the Separation Agreement, shall apply to and govern any dispute arising under
this Agreement.
8. MODIFICATION
Except as otherwise provided in this Agreement, this Agreement shall not be varied, altered, modified, canceled, changed, or in any way
amended except by mutual agreement of the parties in a written instrument executed by the parties hereto or their legal representatives.
9. COUNTERPARTS AND HEADINGS

This Agreement may be executed in one (1) or more counterparts, each of which shall be deemed to be an original, but all of which together will
constitute one and the same Agreement. Signatures transmitted via facsimile shall be regarded by the parties as original signatures. The
headings of the various sections and subsections of this Agreement shall not limit or affect the terms and provisions of this Agreement.
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Signed this ___ day of , 20 .
[OFFICER’S NAME]
[EMPLOYER’S NAME]
By:
Its:
18
ATTACHMENT A
19
Exhibit (10)(tt)
EXECUTION VERSION
September 25, 2008

One Energy Plaza
Jackson, MI 49201
Attention: Beverly S. Burger
Re: First Amendment to Reimbursement Agreement
Ladies/Gentlemen:
Please refer to the Letter of Credit Reimbursement Agreement dated as of November 30, 2007 (the “Reimbursement Agreement”) between
Consumers Energy Company (the “Company”) and The Bank of Nova Scotia (the “Bank”). Capitalized terms used but not defined herein have
the respective meanings set forth in the Reimbursement Agreement.
The Company and the Bank agree as follows:
1. Amendments. The Reimbursement Agreement is amended as follows:
(a) The definition of “Expiration Date” in Section 1.1 is amended in its entirety to
read as follows:
“Expiration Date” means November 30, 2009.
(b) Effective on November 30, 2008, the definition of “Commitment Amount” in Section 1.1 is amended by replacing the reference therein to
“$200,000,000” with “$192,000,000”.
(c) Schedule 1 is deleted in its entirety and replaced by Schedule 1 hereto.
2. Confirmation. The Company confirms to the Bank that each Transaction Document (a) continues in full force and effect on the date
hereof after giving effect to this letter agreement and (b) is the legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to bankruptcy, insolvency and similar laws affecting the enforceability of creditors’ rights
generally and to general principles of equity.
3. Effectiveness. This letter amendment shall become effective on the date on which the Bank has received counterparts of this letter
amendment signed by the Company.
4. Reference in Other Documents. After the date of the effectiveness hereof, references to the Reimbursement Agreement in any other
agreement or document (including any other Transaction Document) shall be references to the Reimbursement Agreement as amended hereby.
EXECUTION VERSION
5. Miscellaneous. Except to the extent expressly set forth herein, all of the terms and conditions of the Reimbursement Agreement and the
other Transaction Documents shall remain unchanged and in full force and effect.
6. Counterparts. This letter amendment may be executed in any number of counterparts and by the parties hereto on separate counterparts,
and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same
agreement.
7. Governing Law. This letter amendment shall be a contract made under and governed by the internal laws of the State of New York.
Please evidence your agreement to the foregoing by signing and returning a counterpart of this letter agreement to the Bank.
THE BANK OF NOVA SCOTIA
By: /s/ Thane Rattew

Name: Thane Rattew
Signature Page to
Consumers First Amendment
S-1

Title: Vice President and Treasurer
Signature Page to
Consumers First Amendment
S-2
SCHEDULE 1
FEES
The Commitment Fee Rate and the LC Commission Fee Rate shall be determined pursuant to the applicable table below.
Table 1: Applicable until November 30, 2008:
Commitment Fee LC Commission Fee

Specified Rating Rate (per annum) Rate (per annum)
Level 1 A-/A-/A3 6.0 bps 25.0 bps
Level 2 BBB+/BBB+/Baal 7.0 bps 30.0 bps
Level 3 BBB/BBB/Baa2 9.0 bps 37.5 bps
Level 4 BBB-/BBB-/Baa3 12.5 bps 55.0 bps
Level 5 BB+/BB+/Bal 17.5 bps 82.5 bps
Level 6 <BB/BB/Ba2 22.5 bps 122.5 bps
Table 2: Applicable thereafter:
Commitment Fee LC Commission Fee

Specified Rating Rate (per annum) Rate (per annum)
Level 1 A-/A-/A3 21.0 bps 103.0 bps
Level 2 BBB+/BBB+/Baal 29.0 bps 115.0 bps
Level 3 BBB/BBB/Baa2 32.0 bps 130.0 bps
Level 4 BBB-/BBB-/Baa3 39.0 bps 157.5 bps
Level 5 <BB+/BB+/Bal 50.0 bps 200.0 bps
The “Rating” from S&P, Fitch or Moody’s shall mean (a) at any time prior to the FMB Release Date, the rating issued by such rating agency
and then in effect with respect to the Senior Debt, and (b) at any time thereafter, the rating issued by such rating agency and then in effect
with respect to the Company’s senior unsecured long-term debt (without credit enhancement).
(a) If each of S&P, Fitch and Moody’s shall issue a Rating, the Specified Rating shall be (i) if two of such Ratings are the same, such
Ratings; and (ii) if all such Ratings are different, the middle of such Ratings.
(b) If only two of S&P, Fitch and Moody’s shall issue a Rating, the Specified Rating shall be the higher of such Ratings; provided that if a
split of greater than one ratings category occurs between such Ratings, the Specified Rating shall be the ratings category that is one category
below the higher of such Ratings.
(c) If only one of S&P, Fitch and Moody’s shall issue a Rating, the Specified Rating shall be such Rating.
(d) If none of S&P, Fitch and Moody’s shall issue a Rating, the Specified Rating shall be BB/BB/Ba2.
Schedule 1 to
First Amendment to
Reimbursement Agreement
Schedule 1 - 1
Exhibit 10(ww)
RECEIVABLES PURCHASE AGREEMENT
dated as of May 22, 2003
Among
CONSUMERS RECEIVABLES FUNDING II, LLC, as Seller,
CONSUMERS ENERGY COMPANY, as Servicer,
FALCON ASSET SECURITIZATION CORPORATION,
THE FINANCIAL INSTITUTIONS FROM TIME TO TIME PARTIES HERETO,

as Financial Institutions,
and
BANK ONE, NA (MAIN OFFICE CHICAGO)
as Administrative Agent
CONSUMERS RECEIVABLES FUNDING II, LLC

This Receivables Purchase Agreement dated as of May 22, 2003 is among Consumers Receivables Funding II, LLC, a Delaware limited
liability company (“Seller”), Consumers Energy Company, a Michigan corporation (“Consumers”), as initial Servicer (the Servicer together with
Seller, the “Seller Parties” and each a “Seller Party”), the entities listed on Schedule A to this Agreement (together with any of their respective
successors and assigns hereunder, the “Financial Institutions”), Falcon Asset Securitization Corporation (“Conduit”) and Bank One, NA
(Main Office Chicago), as agent for the Purchasers hereunder or any successor agent hereunder (together with its successors and assigns
hereunder, the “Administrative Agent”). Unless defined elsewhere herein, capitalized terms used in this Agreement shall have the meanings
assigned to such terms in Exhibit I.
PRELIMINARY STATEMENTS
Seller desires to transfer and assign Purchaser Interests to the Purchasers from time to time.
Conduit may, in its absolute and sole discretion, purchase Purchaser Interests from Seller from time to time.
In the event that Conduit declines to make any purchase, the Financial Institutions shall, at the request of Seller, purchase Purchaser
Interests from time to time. In addition, the Financial Institutions have agreed to provide a liquidity facility to Conduit in accordance with the
terms of the Liquidity Agreement entered into by Conduit with such Financial Institutions.
Bank One, NA (Main Office Chicago) has been requested and is willing to act as Administrative Agent on behalf of Conduit and the
Financial Institutions in accordance with the terms hereof.
ARTICLE I
PURCHASE ARRANGEMENTS
Section 1.1 Purchase Facility.
(a) Upon the terms and subject to the conditions hereof, Seller hereby sells and assigns Purchaser Interests to the Administrative Agent
for the benefit of one or more of the Purchasers. In accordance with the terms and conditions set forth herein, Conduit may, at its option,
instruct the Administrative Agent to purchase on its behalf, or if Conduit shall decline to purchase, the Administrative Agent shall purchase,
on behalf of the Financial Institutions, Purchaser Interests from time to time in an aggregate amount not to exceed at such time the
lesser of (i) the Purchase Limit and (ii) the aggregate amount of the Commitments during the period from the date hereof to but not including
the Amortization Date.
(b) Seller may, upon at least 15 Business Days’ notice to the Administrative Agent, terminate in whole or reduce in part, ratably among
the Financial Institutions, the unused portion of the Purchase Limit; provided that each partial reduction of the Purchase Limit shall be in an
amount equal to $5,000,000 or an integral multiple thereof.
Section 1.2 Increases.
Seller shall provide the Administrative Agent with at least two Business Days’ prior notice in the form set forth as Exhibit II hereto of
each Incremental Purchase (a “Purchase Notice”). Each Purchase Notice shall be subject to Section 6.2 hereof and, except as set forth below,
shall be irrevocable and shall specify the requested Purchase Price (which shall not be less than $1,000,000), date of purchase and, in the case
of an Incremental Purchase to be funded by the Financial Institutions, the requested Bank Rate and Tranche Period. Following receipt of a
Purchase Notice, the Administrative Agent will determine whether Conduit agrees to make the purchase. If Conduit declines to make a
proposed purchase, Seller may cancel the Purchase Notice or, in the absence of such a cancellation, the Incremental Purchase of the Purchaser
Interest will be made by the Financial Institutions. On the date of each Incremental Purchase, upon satisfaction of the applicable conditions
precedent set forth in Article VI, Conduit or the Financial Institutions, as applicable, shall deposit to the account of the Seller (or its designee)
designated in the Purchase Notice, in immediately available funds, no later than 1:00 p.m. (New York time), an amount equal to (i) in the case of
Conduit, the aggregate Purchase Price of the Purchaser Interests then being purchased by Conduit or (ii) in the case of a Financial Institution,
such Financial Institution’s Pro Rata Share of the aggregate Purchase Price of the Purchaser Interests then being purchased by the Financial
Institutions.
Section 1.3 Decreases. Seller shall provide the Administrative Agent with prior written notice in conformity with the Required Notice
Period in substantially the form set forth on Exhibit X hereto (each, a “Reduction Notice”) of any proposed reduction of Aggregate Capital
from Collections. Such Reduction Notice shall designate (i) the date (the “Proposed Reduction Date”) upon which any such reduction of
Aggregate Capital shall occur (which date shall give effect to the applicable Required Notice Period), and (ii) the amount of Aggregate Capital
to be reduced which shall be applied ratably to the Purchaser Interests of Conduit and the Financial Institutions in accordance with the
amount of Capital (if any) owing to Conduit, on the one hand, and the amount of Capital (if any) owing to the Financial Institutions (ratably,
based on their respective Pro Rata Shares), on the other hand (the “Aggregate Reduction”). Only one (1) Reduction Notice shall be
outstanding at any time.
Section 1.4 Payment Requirements. All amounts to be paid or deposited by any Seller Party pursuant to any provision of this Agreement
shall be paid or deposited in accordance with the terms hereof no later than 12:00 noon (New York time) on the day when due in immediately
available funds, and if not received before 12:00 noon (New York time) shall be deemed to be received on the next succeeding Business Day. If
such amounts are payable to a Purchaser they shall be paid to the Administrative Agent, for the account of such Purchaser, at 1
2
Bank One Plaza, Chicago, Illinois 60670 until otherwise notified by the Administrative Agent. All computations of Yield (other than Yield
calculated using the Prime Rate), per annum fees hereunder and per annum fees under the Fee Letter shall be made on the basis of a year of
360 days for the actual number of days elapsed. All computations of Yield calculated using the Prime Rate shall be made on the basis of a year
of 365 or 366 days, as applicable, for the actual number of days elapsed. If any amount hereunder shall be payable on a day which is not a
Business Day, such amount shall be payable on the next succeeding Business Day.
ARTICLE II
PAYMENTS AND COLLECTIONS
Section 2.1 Payments. Notwithstanding any limitation on recourse contained in this Agreement, Seller shall immediately pay to the
Administrative Agent when due, for the account of the relevant Purchaser or Purchasers on a full recourse basis, (i) such fees as set forth in
the Fee Letter (which fees shall be sufficient to pay all fees owing to the Financial Institutions), (ii) all amounts payable as Yield, (iii) all
amounts payable as Deemed Collections (which shall be immediately due and payable by Seller and applied to reduce outstanding Aggregate
Capital hereunder in accordance with Sections 2.2 and 2.4 hereof), (iv) all amounts payable pursuant to Section 2.7, (v) all amounts payable
pursuant to Article X, if any, (vi) all Servicer costs and expenses, including the Servicing Fee, in connection with servicing, administering and
collecting the Receivables, (vii) all Broken Funding Costs and (viii) all Default Fees (collectively, the “Obligations”). If Seller fails to pay any of
the Obligations when due, or if Servicer fails to make any deposit required to be made by it under this Agreement when due, such Person
agrees to pay, on demand, the Default Fee in respect thereof until paid. Notwithstanding the foregoing, no provision of this Agreement or the
Fee Letter shall require the payment or permit the collection of any amounts hereunder in excess of the maximum permitted by applicable law. If
at any time Seller receives any Collections or is deemed to receive any Collections, Seller shall immediately pay such Collections or Deemed
Collections to the Servicer for application in accordance with the terms and conditions hereof and, at all times prior to such payment, such
Collections or Deemed Collections shall be held in trust by Seller for the exclusive benefit of the Purchasers and the Administrative Agent.
Section 2.2 Collections Prior to Amortization.
(a) Subject to the following paragraph (b), prior to the Amortization Date, any Collections and/or Deemed Collections received by the
Servicer shall be set aside and held in trust by the Servicer for the payment of any accrued and unpaid Aggregate Unpaids or for a
Reinvestment as provided in this Section 2.2.
(b) At any time any Collections or Deemed Collections are received by the Servicer prior to the Amortization Date:
(i) the Servicer shall set aside the Termination Percentage of Collections and Deemed Collections evidenced by the Purchaser Interests of
each Terminating Financial Institution, and
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(ii) Seller hereby requests and the Purchasers (other than any Terminating Financial Institutions) hereby agree to make (subject to the
conditions precedent set forth in Section 6.2 and the requirements of Section 2.7), simultaneously with such receipt, a reinvestment (each a
“Reinvestment”) with that portion of the balance of each and every Collection received or Deemed Collection deemed received by the
Servicer that is part of any Purchaser Interest, such that after giving effect to such Reinvestment, the amount of Aggregate Capital
immediately after such receipt and corresponding Reinvestment shall be equal to the amount of Aggregate Capital immediately prior to such
receipt.
(c) On each Settlement Date prior to the occurrence of the Amortization Date, the Servicer shall remit to the Administrative Agent’s
account the amounts set aside during the preceding Settlement Period that have not been subject to a Reinvestment and apply such amounts
(if not previously paid in accordance with Section 2.1):
first, to the payment of the Servicer’s reasonable out-of-pocket costs and expenses in connection with servicing, administering and
collecting the Receivables, including the Servicing Fee, if an Affiliate of the Seller is not then acting as the Servicer,
second, ratably to the payment of all accrued and unpaid Yield,
third, ratably to the payment of all accrued and unpaid fees under the Fee Letter,
fourth, to reduce the Capital of all Purchaser Interests of Terminating Financial Institutions to zero, applied ratably to each Terminating
Financial Institution according to its respective Termination Percentage,
fifth, to reduce Capital of outstanding Purchaser Interests in an amount, if any, necessary so that the aggregate of the Purchaser
Interests does not exceed the Applicable Maximum Purchaser Interest applied ratably in accordance with the Capital Pro Rata Share of the
Purchasers,
sixth, for the ratable payment of all other unpaid Obligations, provided that to the extent such Obligations relate to the payment of
Servicer costs and expenses, including the Servicing Fee, when Seller or one of its Affiliates is acting as the Servicer, such costs and expenses
will not be paid until after the payment in full of all other Obligations,
seventh, to fund any Aggregate Reduction on such Settlement Date applied ratably in accordance with the Capital Pro Rata Share of the
Purchasers, and
eighth, any balance remaining thereafter shall be remitted from the Servicer to Seller on such Settlement Date.
In the event that, pursuant to Section 1.3, an Aggregate Reduction is to take place on a date other than a Settlement Date, on the date of
such Aggregate Reduction, the Servicer shall remit to the Administrative Agent’s account, out of the amounts set aside pursuant to this
Section 2.2, an amount equal to such Aggregate Reduction to be applied in accordance with Section 1.3.
4
Section 2.3 Terminating Financial Institutions. Each Terminating Financial Institution shall be allocated a ratable portion of Collections
and Deemed Collections from the date of its becoming a Terminating Financial Institution (the “Termination Date”) until such Terminating
Financial Institution’s Capital shall be paid in full. This ratable portion shall be calculated on the Termination Date of each Terminating
Financial Institution as a percentage equal to (i) Capital of such Terminating Financial Institution outstanding on its Termination Date, divided
by (ii) the Aggregate Capital outstanding on such Termination Date (the “Termination Percentage”). Each Terminating Financial Institution’s
Termination Percentage shall remain constant prior to the Amortization Date. On and after the Amortization Date, each Termination Percentage
shall be disregarded, and each Terminating Financial Institution’s Capital shall be reduced ratably with all Purchasers in accordance with
Section 2.4.
Section 2.4 Collections Following Amortization. On the Amortization Date and on each day thereafter, the Servicer shall set aside and
hold in trust, for the holder of each Purchaser Interest, all Collections and Deemed Collections received on such day and an additional amount
of funds of the Seller for the payment of any accrued and unpaid Obligations owed by Seller and not previously paid by Seller in accordance
with Section 2.1. On and after the Amortization Date, the Servicer shall (i) remit to the Administrative Agent’s account the amounts set aside
pursuant to the preceding sentence, and (ii) apply such amounts to reduce the Aggregate Capital and any other Aggregate Unpaids.
Section 2.5 Application of Collections. If there shall be insufficient funds on deposit for the Servicer to distribute funds in payment in full
of the aforementioned amounts pursuant to Section 2.4, the Servicer shall distribute funds:
first, to the payment of the Servicer’s reasonable out-of-pocket costs and expenses in connection with servicing, administering and
collecting the Receivables, including the Servicing Fee, if an Affiliate of the Seller is not then acting as the Servicer,
second, to the reimbursement of the Administrative Agent’s costs of collection and enforcement of this Agreement,
third, ratably to the payment of all accrued and unpaid fees under the Fee Letter and Yield,
fourth, (to the extent applicable) to the ratable reduction of the Aggregate Capital (without regard to any Termination Percentage),
fifth, for the ratable payment of all other unpaid Obligations, provided that to the extent such Obligations relate to the payment of
Servicer costs and expenses, including the Servicing Fee, when Seller or one of its Affiliates is acting as the Servicer, such costs and
expenses will not be paid until after the payment in full of all other Obligations, and
sixth, after the Aggregate Unpaids have been indefeasibly reduced to zero, to Seller.
5
Collections applied to the payment of Aggregate Unpaids shall be distributed in accordance with the aforementioned provisions, and,
giving effect to each of the priorities set forth above in this Section 2.5, shall be shared ratably (within each priority) among the Administrative
Agent and the Purchasers in accordance with the amount of such Aggregate Unpaids owing to each of them in respect of each such priority.
Section 2.6 Payment Rescission. No payment of any of the Aggregate Unpaids shall be considered paid or applied hereunder to the
extent that, at any time, all or any portion of such payment or application is rescinded by application of law or judicial authority, or must
otherwise be returned or refunded for any reason. Seller shall remain obligated for the amount of any payment or application so rescinded,
returned or refunded, and shall promptly pay to the Administrative Agent (for application to the Person or Persons who suffered such
rescission, return or refund) the full amount thereof, plus the Default Fee from the date of any such rescission, return or refunding.
Section 2.7 Maximum Purchaser Interests. Seller shall ensure that the Purchaser Interests of the Purchasers shall at no time exceed in the
aggregate the Applicable Maximum Purchaser Interest. If the aggregate of the Purchaser Interests of the Purchasers exceeds the Applicable
Maximum Purchaser Interest, Seller shall pay to the Administrative Agent, within (i) at any time a Level One Enhancement Period is in effect,
two (2) Business Days, and (ii) at any time a Level Two or Level Three Enhancement Period is in effect, one (1) Business Day, an amount such
that, after giving effect to such payment, the aggregate of the Purchaser Interests equals or is less than the Applicable Maximum Purchaser
Interest. Amounts paid by the Seller under this Section 2.7 shall be applied to the outstanding Capital of the Purchasers ratably in accordance
with such Purchasers’ respective Capital Pro Rata Shares.
Section 2.8 Clean Up Call. In addition to Seller’s rights pursuant to Section 1.3, Seller shall have the right (after providing written notice
to the Administrative Agent in accordance with the Required Notice Period), at any time following the reduction of the Aggregate Capital to a
level that is less than 10.0% of the original Purchase Limit, to repurchase from the Purchasers all, but not less than all, of the then outstanding
Purchaser Interests. The purchase price in respect thereof shall be an amount equal to the Aggregate Unpaids through the date of such
repurchase, payable in immediately available funds. Such repurchase shall be without representation, warranty or recourse of any kind by, on
the part of, or against any Purchaser or the Administrative Agent.
Section 2.9 Payment Allocations. The Servicer shall, upon receipt of payments of amounts billed and collected from Obligors on their
utility bills, allocate those receipts on a daily basis between Collections of Receivables and Securitization Charge Collections in accordance
with the allocation methodology specified in Annex 2 to the Servicing Agreement. The Servicer will apply the Collections from Receivables as
provided in this Article II.
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ARTICLE III
COMPANY FUNDING
Section 3.1 Yield. Seller shall pay Yield with respect to the Capital associated with each Purchaser Interest of Conduit for each day that
any Capital in respect of such Purchaser Interest is outstanding; provided, that any Purchaser Interest, or portion thereof, which, or an
undivided interest in which, is being funded by the Financial Institutions pursuant to the Liquidity Agreement will accrue Yield pursuant to
Article IV. Each Purchaser Interest funded substantially with Pooled Commercial Paper will accrue Yield at the CP Rate for each day.
Section 3.2 Payments. On each Yield Payment Date, Seller shall pay to the Administrative Agent (for the benefit of Conduit) an aggregate
amount equal to all accrued and unpaid Yield in respect of the Capital associated with all Purchaser Interests of Conduit for the immediately
preceding Accrual Period in accordance with Article II.
Section 3.3 Calculation of Yield. On the third (3rd) Business Day immediately preceding each Yield Payment Date, Conduit shall calculate
the aggregate amount of Yield in respect of the Capital associated with all Purchaser Interests of Conduit for the immediately preceding
Accrual Period and shall notify Seller of such aggregate amount.
ARTICLE IV
FINANCIAL INSTITUTION FUNDING
Section 4.1 Financial Institution Funding. Each Purchaser Interest of the Financial Institutions shall accrue Yield for each day during its
Tranche Period at either the LIBO Rate or the Prime Rate in accordance with the terms and conditions hereof. Until Seller gives notice to the
Agent of another Bank Rate in accordance with Section 4.4, the initial Bank Rate for any Purchaser Interest transferred to the Financial
Institutions pursuant to the terms and conditions hereof shall be the Prime Rate. If the Financial Institutions acquire by assignment from
Conduit all or any portion of a Purchaser Interest (or an undivided interest therein) pursuant to the Liquidity Agreement, each Purchaser
Interest so assigned shall each be deemed to have a new Tranche Period commencing on the date of any such assignment.
Section 4.2 Yield Payments. On each Yield Payment Date for each Purchaser Interest of the Financial Institutions, Seller shall pay to the
Administrative Agent (for the benefit of the Financial Institutions) an aggregate amount equal to the accrued and unpaid Yield for the entire
Tranche Period of such Purchaser Interest in accordance with Article II.
Section 4.3 Selection and Continuation of Tranche Periods.
(a) With consultation from and adequate prior notice to the Administrative Agent, Seller shall from time to time request Tranche Periods
for the Purchaser Interests of the Financial Institutions, provided that, (i) if at any time the Financial Institutions shall have a Purchaser
Interest, Seller shall always request Tranche Periods such that at least one Tranche Period shall end on the date specified in clause (A) of the
definition of Yield Payment Date and (ii) no more than three (3) Tranche Periods shall be outstanding at any time.
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(b) Seller upon notice to and consultation with the Administrative Agent received at least three (3) Business Days prior to the last day of
a Tranche Period (the “Terminating Tranche”) for any Purchaser Interest, may, effective on such last day of the Terminating Tranche: (i) divide
any such Purchaser Interest into multiple Purchaser Interests or (ii) combine any such Purchaser Interest with one or more other Purchaser
Interests which either have a Terminating Tranche ending on such day or are newly created on such day (subject to Conduit’s ability to
accommodate such division or combination), provided, that in no event may a Purchaser Interest of Conduit be combined with a Purchaser
Interest of the Financial Institutions.
Section 4.4 Financial Institution Bank Rates. Seller may select the LIBO Rate or the Prime Rate for each Purchaser Interest of the Financial
Institutions. Seller shall by 12:00 noon (New York time): (i) at least three (3) Business Days prior to the expiration of any Terminating Tranche
with respect to which the LIBO Rate is being requested as a new Bank Rate and (ii) at least one (1) Business Day prior to the expiration of any
Terminating Tranche with respect to which the Prime Rate is being requested as a new Bank Rate, give the Agent irrevocable notice of the new
Bank Rate for the Purchaser Interest associated with such Terminating Tranche. Until Seller gives notice to the Agent of another Bank Rate,
the initial Bank Rate for any Purchaser Interest transferred to the Financial Institutions pursuant to the terms and conditions hereof shall be
the Prime Rate.
Section 4.5 Suspension of the LIBO Rate. (a) If any Financial Institution notifies the Administrative Agent that it has determined that
funding its Pro Rata Share of the Purchaser Interests of the Financial Institutions at a LIBO Rate would violate any applicable law, rule,
regulation, or directive of any governmental or regulatory authority, whether or not having the force of law, or that (i) deposits of a type and
maturity appropriate to fund its Purchaser Interests at such LIBO Rate are not available or (ii) such LIBO Rate does not accurately reflect the
cost of acquiring or maintaining a Purchaser Interest at such LIBO Rate, then the Administrative Agent shall suspend the availability of such
LIBO Rate and select the Prime Rate for any Purchaser Interest accruing Yield at such LIBO Rate, and the then current Tranche Period for such
Purchaser Interest shall thereupon be terminated and a new Tranche Period based upon the Prime Rate shall commence.
(b) If less than all of the Financial Institutions give a notice to the Administrative Agent pursuant to Section 4.5(a), each Financial
Institution which gave such a notice shall be obligated, at the request of Seller, Conduit or the Administrative Agent, to assign all of its rights
and obligations hereunder to (i) another Financial Institution or (ii) another funding entity nominated by Seller or the Administrative Agent
that is acceptable to Conduit and willing to participate in this Agreement and the related Liquidity Agreement through the Liquidity
Termination Date in the place of such notifying Financial Institution; provided that (i) the notifying Financial Institution receives payment in
full, pursuant to an Assignment Agreement, of an amount equal to such notifying Financial Institution’s Capital Pro Rata Share of the Capital
and Yield owing to all of the Financial Institutions and all accrued but unpaid fees and other costs and expenses payable in respect of its
Capital Pro Rata Share of the Purchaser Interests of the Financial Institutions, and (ii) the replacement Financial Institution otherwise satisfies
the requirements of Section 12.1(b).
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Section 4.6 Liquidity Agreement Fundings. The parties hereto acknowledge that Conduit may put all or any portion of its Purchaser
Interests to the Financial Institutions at any time pursuant to the Liquidity Agreement to finance or refinance the necessary portion of its
Purchaser Interests through a funding under the Liquidity Agreement to the extent available. The fundings under the Liquidity Agreement will
accrue interest at the Bank Rate in accordance with this Article IV. Regardless of whether a funding of Purchaser Interests by the Financial
Institutions constitutes the direct purchase of a Purchaser Interest hereunder, an assignment under the Liquidity Agreement of a Purchaser
Interest originally funded by Conduit or the sale of one or more participations under the Liquidity Agreement in a Purchaser Interest originally
funded by Conduit, each Financial Institution participating in a funding of a Purchaser Interest shall have the rights and obligations of a
“Purchaser” hereunder with the same force and effect as if it had directly purchased such Purchaser Interest from Seller hereunder.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.1 Representations and Warranties of The Seller Parties. Each Seller Party hereby represents and warrants to the Administrative
Agent and the Purchasers, as to itself, as of the date hereof and as of the date of each Incremental Purchase and the date of each
Reinvestment that:
(a) Corporate Existence and Power. Such Seller Party is duly formed, validly existing and in good standing under the laws of its state of
formation. Seller is duly qualified to do business and is in good standing, and has and holds all power and all governmental licenses,
authorizations, consents and approvals required to carry on its business in each jurisdiction in which its business is conducted, except where
the failure to so qualify or so hold could not reasonably be expected to have a Material Adverse Effect.
(b) Power and Authority; Due Authorization, Execution and Delivery. The execution and delivery by such Seller Party of this Agreement
and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder and, in the case
of Seller, Seller’s use of the proceeds of purchases made hereunder, are within its powers and authority and have been duly authorized by all
necessary action on its part.
(c) No Conflict. The execution and delivery by such Seller Party of this Agreement and each other Transaction Document to which it is a
party, and the performance of its obligations hereunder and thereunder do not contravene or violate (i) (A) its certificate or articles of
incorporation or by-laws or (B) limited liability company agreement or certificate of formation, as applicable, (ii) any law, rule or regulation
applicable to it, including, without limitation, the Public Utility Holding Company Act of 1935, as amended, (iii) any restrictions under any
material agreement, contract or instrument to which it is a party or by which it or any of its property is bound, or (iv) any order, writ, judgment,
award, injunction or decree binding on or affecting it or its property, and do not result in the creation or imposition of any Adverse Claim on
assets of such Seller Party or its Subsidiaries (except as created hereunder); and no transaction contemplated hereby requires compliance with
any bulk sales act or similar law.
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(d) Governmental Authorization. Other than (i) the filing of the financing statements required hereunder or (ii) such authorizations,
approvals, notices, filings or other actions as have been obtained, made or taken prior to the date hereof, no authorization or approval or other
action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution and delivery by
such Seller Party of this Agreement and each other Transaction Document to which it is a party and the performance of its obligations
hereunder and thereunder.
(e) Actions, Suits. Except (i) to the extent described in Consumers’ Annual Report on Form 10-K for the year ended December 31, 2002, as
filed with the SEC, and (ii) such other similar actions, suits and proceedings predicated on the occurrence of the same events giving rise to any
actions, suits and proceedings described in the Annual Reports referred to in the foregoing clause (i), there are no actions, suits or
proceedings pending, or to the best of such Seller Party’s knowledge, threatened, against or affecting such Seller Party, or any of its
properties, in or before any court, arbitrator or other body, that (i) relate to the transactions under this Agreement or (ii) could reasonably be
expected to have a Material Adverse Effect. Such Seller Party is not in default with respect to any order of any court, arbitrator or
governmental body.
(f) Binding Effect. This Agreement and each other Transaction Document to which such Seller Party is a party constitute the legal, valid
and binding obligations of such Seller Party enforceable against such Seller Party in accordance with their respective terms, except as such
enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors’ rights
generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).
(g) Accuracy of Information. All information heretofore furnished by such Seller Party or any of its Affiliates to the Administrative Agent
or the Purchasers for purposes of or in connection with this Agreement, any Monthly Report, any of the other Transaction Documents or any
transaction contemplated hereby or thereby is, and all such information hereafter furnished by such Seller Party or any of its Affiliates to the
Administrative Agent or the Purchasers will be, true and accurate in every material respect on the date such information is stated or certified
and does not and will not contain any material misstatement of fact or omit to state a material fact or any fact necessary to make the statements
contained therein not materially misleading.
(h) Use of Proceeds. No proceeds of any purchase hereunder will be used (i) for a purpose that violates, or would be inconsistent with,
Regulation T, U or X promulgated by the Board of Governors of the Federal Reserve System from time to time or (ii) to acquire any security in
any transaction which is subject to Section 12, 13 or 14 of the Securities Exchange Act of 1934, as amended.
(i) Good Title. Immediately prior to each purchase hereunder, Seller shall be the legal and beneficial owner of the Receivables and Related
Security with respect thereto, free and clear of any Adverse Claim, except as created by the Transaction Documents. There have been duly
filed all financing statements or other similar instruments or documents necessary
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under the UCC (or any comparable law) of all appropriate jurisdictions to perfect Seller’s ownership interest in each Receivable, its Collections
and the Related Security.
(j) Perfection. This Agreement, together with the filing of the financing statements contemplated hereby, is effective to, and shall, upon
each purchase hereunder, transfer to the Administrative Agent for the benefit of the relevant Purchaser or Purchasers (and the Administrative
Agent for the benefit of such Purchaser or Purchasers shall acquire from Seller) a valid and perfected first priority undivided percentage
ownership or security interest in each Receivable existing or hereafter arising and in the Related Security and Collections with respect thereto,
free and clear of any Adverse Claim, except as created by the Transactions Documents. There have been duly filed all financing statements or
other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect the
Administrative Agent’s (on behalf of the Purchasers) ownership or security interest in the Receivables, the Related Security and the
Collections.
(k) Places of Business and Locations of Records. The principal places of business and chief executive office of such Seller Party and the
offices where it keeps all of its Records are located at the address(es) listed on Exhibit III or such other locations of which the Administrative
Agent has been notified in accordance with Section 7.2(a) in jurisdictions where all action required by Section 7.2(a) has been taken and
completed. Seller is a limited liability company organized solely in the State of Delaware. Seller’s Delaware organizational identification number
and Federal Employer Identification Number are correctly set forth on Exhibit III.
(l) Collections. The conditions and requirements set forth in Section 7.1(j) and Section 8.2 have at all times been satisfied and duly
performed. The names and addresses of all Collection Banks, together with the account numbers of the Collection Accounts of Seller at each
Collection Bank and the special zip code number of each Lock-Box, are listed on Exhibit IV. Seller has not granted any Person, other than the
Administrative Agent as contemplated by this Agreement and the Intercreditor Agreement, dominion and control of any Lock-Box or
Collection Account, or the right to take dominion and control of any such Lock-Box or Collection Account at a future time or upon the
occurrence of a future event.
(m) Material Adverse Effect. (i) The initial Servicer represents and warrants that since December 31, 2002, no event has occurred that
would have a material adverse effect on the financial condition or operations of the initial Servicer and its Subsidiaries, taken as a whole, or the
ability of the initial Servicer to perform its obligations under this Agreement, and (ii) Seller represents and warrants that since the date of this
Agreement, no event has occurred that would have a material adverse effect on (A) the financial condition or operations of Seller, (B) the
ability of Seller to perform its obligations under the Transaction Documents, or (C) the collectibility of the Receivables generally or any
material portion of the Receivables.
(n) Names. Seller has not used any names, trade names or assumed names other than the name in which it has executed this Agreement.
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(o) Ownership of Seller. Consumers owns, directly or indirectly, 100% of the issued and outstanding membership interests of Seller, free
and clear of any Adverse Claim. There are no options, warrants or other rights to acquire securities of Seller.
(p) Public Utility Holding Company Act; Investment Company Act. Such Seller Party is exempt from the registration requirements of the
Public Utility Holding Company Act of 1935, as amended, or any successor statute. Such Seller Party is not an “investment company” within
the meaning of the Investment Company Act of 1940, as amended, or any successor statute.
(q) Compliance with Law. Such Seller Party has complied in all respects with all applicable laws, rules, regulations, orders, writs,
judgments, injunctions, decrees or awards to which it may be subject, except where the failure to so comply could not reasonably be expected
to have a Material Adverse Effect. Each Receivable, together with the Contract related thereto, does not contravene any laws, rules or
regulations applicable thereto (including, without limitation, laws, rules and regulations relating to truth in lending, fair credit billing, fair credit
reporting, equal credit opportunity, fair debt collection practices and privacy), and no part of such Contract is in violation of any such law, rule
or regulation.
(r) Compliance with Credit and Collection Policy. Such Seller Party has complied in all material respects with the Credit and Collection
Policy with regard to each Receivable and the related Contract, and has not made any change to such Credit and Collection Policy, other than
as permitted under Section 7.2 and in compliance with the notification requirements of Section 7.1(a)(vii).
(s) Payments to Transferors. With respect to each Receivable transferred to Seller under the Sale Agreements, Seller has given
reasonably equivalent value to the applicable Transferor in consideration therefor and such transfer was not made for or on account of an
antecedent debt. No transfer by either Transferor of any Receivable under the applicable Sale Agreement is or may be voidable under any
section of the Bankruptcy Reform Act of 1978 (11 U.S.C. §§ 101 et seq.), as amended.
(t) Enforceability of Contracts. Each Contract with respect to each Receivable is effective to create, and has created, a legal, valid and
binding obligation of the related Obligor to pay the Outstanding Balance of the Receivable created thereunder and any accrued interest
thereon, enforceable against the Obligor in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws relating to or limiting creditors’ rights generally and by general principles of equity (regardless
of whether enforcement is sought in a proceeding in equity or at law).
(u) Eligible Receivables. Each Receivable included in the Net Receivables Balance as an Eligible Receivable on the date of its purchase
under the applicable Sale Agreement was an Eligible Receivable on such purchase date.
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(v) Net Receivables Balance. Seller has determined that, immediately after giving effect to each purchase hereunder, the Net Receivables
Balance is at least equal to the sum of (i) the Aggregate Capital, plus (ii) the Aggregate Reserves.
(w) Accounting. In the case of the Seller, the Seller is treating the conveyance of the ownership interest in the Receivables and the
Collections as a sale for purposes of GAAP.
Section 5.2 Financial Institution Representations and Warranties. Each Financial Institution hereby represents and warrants to the
Administrative Agent and Conduit that:
(a) Existence and Power. Such Financial Institution is a corporation or a banking association duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization, and has all corporate power to perform its obligations hereunder.
(b) No Conflict. The execution and delivery by such Financial Institution of this Agreement and the performance of its obligations
hereunder are within its corporate powers, have been duly authorized by all necessary corporate action, do not contravene or violate (i) its
certificate or articles of incorporation or association or by-laws, (ii) any law, rule or regulation applicable to it, (iii) any restrictions under any
agreement, contract or instrument to which it is a party or any of its property is bound, or (iv) any order, writ, judgment, award, injunction or
decree binding on or affecting it or its property, and do not result in the creation or imposition of any Adverse Claim on its assets. This
Agreement has been duly authorized, executed and delivered by such Financial Institution.
(c) Governmental Authorization. No authorization or approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body is required for the due execution and delivery by such Financial Institution of this Agreement and the
performance of its obligations hereunder.
(d) Binding Effect. This Agreement constitutes the legal, valid and binding obligation of such Financial Institution enforceable against
such Financial Institution in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws relating to or limiting creditors’ rights generally and by general principles of equity (regardless of whether
such enforcement is sought in a proceeding in equity or at law).
ARTICLE VI
CONDITIONS OF PURCHASES
Section 6.1 Conditions Precedent to Initial Incremental Purchase. The initial Incremental Purchase of a Purchaser Interest under this
Agreement is subject to the conditions precedent (a) that the Administrative Agent shall have received on or before the date of such
purchase: (i) the satisfactory report of the Administrative Agent’s auditors; (ii) those documents listed on Schedule B; (iii) a pro forma
Monthly Report covering the immediately preceding
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Accrual Period and (iv) all fees and expenses required to be paid on such date pursuant to the terms of this Agreement and the Fee Letter and
(b) the Servicer shall have complied (and have caused Transferors to comply) with the requirements of Section 7.1(e).
Section 6.2 Conditions Precedent to All Purchases and Reinvestments. Each purchase of a Purchaser Interest (other than pursuant to
Section 12.1) and each Reinvestment shall be subject to the further conditions precedent that in the case of each such purchase or
Reinvestment: (a) the Servicer shall have delivered to the Administrative Agent on or prior to the date of such purchase, in form and
substance satisfactory to the Administrative Agent, all Monthly Reports as and when due under Section 8.5 and upon the Administrative
Agent’s request; (b) upon the Administrative Agent’s reasonable request, the Servicer shall have delivered to the Administrative Agent at
least three (3) days prior to such purchase or Reinvestment an interim report, in a form agreed to by the Servicer and the Administrative Agent,
showing the amount of Eligible Receivables; (c) the Amortization Date shall not have occurred; (d) the Administrative Agent shall have
received such other approvals, opinions or documents as it may reasonably request if the Administrative Agent reasonably believes there has
been a change in law or circumstance that affects the status or characteristics of the Receivables, Related Security or Collections, any Seller
Party or the Administrative Agent’s first priority perfected security interest in the Receivables, Related Security and Collections and (e) on the
date of each such Incremental Purchase or Reinvestment, the following statements shall be true (and acceptance of the proceeds of such
Incremental Purchase or Reinvestment shall be deemed a representation and warranty by Seller that such statements are then true):
(i) the representations and warranties set forth in Section 5.1 are true and correct on and as of the date of such Incremental Purchase or
Reinvestment as though made on and as of such date;
(ii) no event has occurred and is continuing, or would result from such Incremental Purchase or Reinvestment, that will constitute an
Amortization Event, and no event has occurred and is continuing, or would result from such Incremental Purchase or Reinvestment, that
would constitute a Potential Amortization Event; and
(iii) the Aggregate Capital does not exceed the Purchase Limit and the aggregate Purchaser Interests do not exceed the Applicable
Maximum Purchaser Interest.
It is expressly understood that each Reinvestment shall, unless otherwise directed by the Administrative Agent or any Purchaser, occur
automatically on each day that the Servicer shall receive any Collections without the requirement that any further action be taken on the part
of any Person and notwithstanding the failure of Seller to satisfy any of the foregoing conditions precedent in respect of such Reinvestment.
The failure of Seller to satisfy any of the foregoing conditions precedent in respect of any Reinvestment shall give rise to a right of the
Administrative Agent, which right may be exercised at any time on demand of the Administrative Agent, to rescind the related purchase and
direct Seller to pay to the Administrative Agent for the benefit of the Purchasers an amount equal to the Collections prior to the Amortization
Date that shall have been applied to the affected Reinvestment.
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ARTICLE VII
COVENANTS
Section 7.1 Affirmative Covenants of The Seller Parties. Until the date on which the Aggregate Unpaids have been indefeasibly paid in
full and this Agreement terminates in accordance with its terms, each Seller Party hereby covenants, as to itself, as set forth below:
(a) Financial Reporting. Such Seller Party will maintain, for itself and each of its Subsidiaries, a system of accounting established and
administered in accordance with GAAP, and furnish or cause to be furnished to the Administrative Agent:
(i) Annual Reporting. Within 120 days after the close of (A) each of Consumer’s fiscal years, a copy of the Annual Report on Form 10-K
(or any successor form) for Consumers for such year, including therein the consolidated balance sheet of Consumers and its consolidated
Subsidiaries as at the end of such year and the consolidated statements of income, cash flows and common stockholder’s equity of
Consumers and its consolidated Subsidiaries as at the end of and for such year, or statements providing substantially similar information, in
each case certified by independent public accountants of recognized national standing selected by Consumers (and not objected to by the
Administrative Agent), together with a certificate of such accounting firm addressed to the Administrative Agent stating that, in the course
of its examination of the consolidated financial statements of Consumers and its consolidated Subsidiaries, which examination was
conducted by such accounting firm in accordance with GAAP, (1) such accounting firm has obtained no knowledge that an Amortization
Event, insofar as such Amortization Event related to accounting or financial matters, has occurred and is continuing, or if, in the opinion of
such accounting firm, such an Amortization Event has occurred and is continuing, a statement as to the nature thereof, and (2) such
accounting firm has examined a certificate prepared by Consumers setting forth the computations made by Consumers in determining, as of
the end of such fiscal year, the ratios specified in Section 9.1(k), which certificate shall be attached to the certificate of such accounting firm,
and such accounting firm confirms that such computations accurately reflect such ratios, and (B) each of Seller’s fiscal years, unaudited
financial statements (which shall include balance sheets, statements of income and retained earnings and a statement of cash flows) for
such fiscal year, all certified by a Responsible Officer of the Seller as fairly presenting in all material respects the financial condition and
results of operations of the Seller in accordance with GAAP.
(ii) Quarterly Reporting. Within 60 days after the close of the first three (3) quarterly periods of each of its respective fiscal years, balance
sheets of each of Originator and its consolidated Subsidiaries and Seller as at the close of each such period and statements of income and
retained earnings and a statement of cash flows for each such Person (and, in the case of the Originator, its consolidated Subsidiaries) for
the period from the beginning of such fiscal year to the end of such quarter, all certified by its respective chief financial officer.
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(iii) Compliance Certificate. Together with the financial statements required hereunder, a compliance certificate in substantially the form
of Exhibit V signed by such Seller Party’s Responsible Officer and dated the date of such annual financial statement or such quarterly
financial statement, as the case may be.
(iv) Shareholders Statements and Reports. Promptly upon the furnishing thereof to the shareholders of such Seller Party copies of all
financial statements, reports and proxy statements (other than those which relate solely to employee benefit plans) so furnished which
Consumers files with the Securities and Exchange Commission.
(v) Bond Servicing Reports; S.E.C. Filings. Promptly upon the execution, delivery or filing thereof, (i) copies of all reports, statements,
notices and certificates delivered or received by the Servicer (in its capacity as Servicer under the Servicing Agreement or otherwise)
pursuant to Sections 3.05, 3.06, 3.07, 6.02, Annex 1 and Annex 2 of the Servicing Agreement (excluding any “Daily Servicer’s Report”
delivered pursuant to Annex 2 of the Servicing Agreement), (ii) copies of all reports and notices delivered to the holders of the
Securitization Bonds, (iii) copies of all amendments, waivers or other modifications to any of the Basic Documents (as defined in the
Servicing Agreement), (iv) copies of all reports which the Servicer sends to the holders of any of its securities or its creditors generally and
(v) copies of all registration statements and annual, quarterly, monthly or other regular reports which Originator or any of its Subsidiaries
files with the Securities and Exchange Commission.
(vi) Copies of Notices. Promptly upon its receipt of any notice, request for consent, financial statements, certification, report or other
communication under or in connection with any Transaction Document from any Person other than the Administrative Agent or Conduit,
copies of the same.
(vii) Change in Credit and Collection Policy. At least thirty (30) days prior to the effectiveness of any material change in or material
amendment to the Credit and Collection Policy, a copy of the Credit and Collection Policy then in effect and a notice (A) indicating such
change or amendment, and (B) if such proposed change or amendment would be reasonably likely to adversely affect the collectibility of
the Receivables or decrease the credit quality of any newly created Receivables, requesting the Administrative Agent’s consent thereto,
such consent not to be unreasonably withheld.
(viii) Other Information. Promptly, from time to time, such other information, documents, records or reports relating to the Receivables or
the condition or operations, financial or otherwise, of such Seller Party as the Administrative Agent may from time to time reasonably
request in order to protect the interests of the Administrative Agent and the Purchasers under or as contemplated by this Agreement
(including, without limitation, any information relevant to the calculation and allocations described in the Servicing Agreement and the
Intercreditor Agreement).
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(b) Notices. Such Seller Party will notify the Administrative Agent in writing of any of the following promptly upon learning of the
occurrence thereof, describing the same and, if applicable, the steps being taken with respect thereto:
(i) Amortization Events or Potential Amortization Events. The occurrence of each Amortization Event and each Potential Amortization
Event, by a statement of a Responsible Officer of such Seller Party.
(ii) Judgment and Proceedings. (A) (1) The entry of any judgment or decree against the Servicer if the aggregate amount of all judgments
and decrees then outstanding against the Servicer exceeds $25,000,000 and (2) the institution of any litigation, arbitration proceeding or
governmental proceeding against the Servicer which, individually or in the aggregate, could reasonably be expected to have a Material
Adverse Effect; and (B) the entry of any judgment or decree or the institution of any litigation, arbitration proceeding or governmental
proceeding against Seller.
(iii) Material Adverse Effect. The occurrence of any event or condition that has had, or could reasonably be expected to have, a Material
Adverse Effect.
(iv) Termination Date. The occurrence of the “Termination Date” under and as defined in the Receivables Sale Agreement.
(v) Defaults Under Other Agreements. With respect to the Seller, the occurrence of a default or an event of default under any other
financing arrangement pursuant to which Seller is a debtor or an obligor.
(vi) Downgrade of Originator. Any downgrade in the rating of any Indebtedness of Originator by S&P or by Moody’s, setting forth the
Indebtedness affected and the nature of such change.
(vii) Servicer Default. The occurrence of any event or circumstance which constitutes a Servicer Default (as defined in the Servicing
Agreement) or which, with the giving of notice or the passage of time, would become a Servicer Default.
(c) Compliance with Laws and Preservation of Corporate Existence. Such Seller Party will comply in all respects with all applicable laws,
rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject, except where the failure to so comply
could not reasonably be expected to have a Material Adverse Effect. Such Seller Party will preserve and maintain its existence, rights and
franchises in the jurisdiction of its organization, and qualify and remain qualified in good standing as a foreign corporation or limited liability
company, as applicable, in each jurisdiction in which such qualification is necessary in view of its businesses and operations or the ownership
of its properties, provided that such Seller Party shall not be required to preserve any such right or franchise or to remain so qualified unless
the failure to do so could reasonably be expected to have a Material Adverse Effect.
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(d) Audits. Such Seller Party will furnish to the Administrative Agent from time to time such information with respect to it and the
Receivables as the Administrative Agent may reasonably request. Such Seller Party will, from time to time during regular business hours as
requested by the Administrative Agent upon reasonable notice, subject to any necessary approval of the Nuclear Regulatory Commission,
permit the Administrative Agent, or its agents or representatives (and shall cause Transferors to permit the Administrative Agent or its agents
or representatives), (i) to examine and make copies of and abstracts from all Records in the possession or under the control of such Person
relating to the Receivables, the Related Security, the Securitization Property and the Servicing Agreement, including, without limitation, the
related Contracts, and (ii) to visit the offices and properties of such Person for the purpose of examining such materials described in clause
(i) above, and to discuss matters relating to such Person’s financial condition or the Receivables and the Related Security or any Person’s
performance under any of the Transaction Documents or any Person’s performance under the Contracts and, in each case, with any of the
officers or employees of Seller or the Servicer having knowledge of such matters. Each such audit shall be at the sole cost of such Seller Party,
provided that such Seller Party shall be required to pay for (i) during a Level One Enhancement Period, not more than one such audit per year,
(ii) during a Level Two Enhancement Period, not more than two such audits per year and (iii) during a Level Three Enhancement Period, an
unlimited number of such audits per year.
(e) Keeping and Marking of Records and Books.
(i) The Servicer will (and will cause Transferors to) maintain and implement administrative and operating procedures (including, without
limitation, an ability to recreate records evidencing Receivables in the event of the destruction of the originals thereof), and keep and
maintain all documents, books, records and other information reasonably necessary or advisable for the collection of all Receivables and
the performance of each Seller Party’s duties under the Transaction Documents and the Servicing Agreement (including, without limitation,
records adequate to permit (A) the immediate identification of each new Receivable and all Collections of and adjustments to each existing
Receivable and (B) the performance of the calculations and allocations required by the Intercreditor Agreement and the Servicing
Agreement). The Servicer will (and will cause the Transferors to) give the Administrative Agent notice of any material change in the
administrative and operating procedures referred to in the previous sentence.
(ii) Such Seller Party will (and will cause Transferors to) (A) on or prior to the date hereof, mark its master data processing records and
other books and records relating to the Purchaser Interests with a legend, acceptable to the Administrative Agent, describing the Purchaser
Interests and (B) at any time after the occurrence of an Amortization Event, upon the request of the Administrative Agent, deliver to the
Administrative Agent all Contracts (including, without limitation, all multiple originals of any such Contract) relating to the Receivables,
provided, that the requirements of this clause (B) shall apply solely to any Contract consisting of or evidenced by an instrument or chattel
paper.
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(f) Compliance with Contracts and Credit and Collection Policy. Such Seller Party will (and will cause Transferors to) timely and fully
(i) perform and comply with all provisions, covenants and other promises required to be observed by it under the Contracts related to the
Receivables, except where the failure to so perform or comply could not reasonably be expected to have a Material Adverse Effect, and
(ii) comply in all respects with the Credit and Collection Policy in regard to each Receivable and the related Contract, except where the failure to
so comply could not reasonably be expected to have a Material Adverse Effect.
(g) Performance and Enforcement of Sale Agreements. Seller will, and will require each Transferor to, perform each of their respective
obligations and undertakings under and pursuant to the Sale Agreements, will purchase Receivables thereunder in compliance with the terms
thereof and will enforce the rights and remedies accorded to Seller under the Sale Agreements. Seller will take all actions to perfect and enforce
its rights and interests (and the rights and interests of the Administrative Agent and the Purchasers as assignees of Seller) under the Sale
Agreements as the Administrative Agent may from time to time reasonably request, including, without limitation, making claims to which it
may be entitled under any indemnity, reimbursement or similar provision contained in the Sale Agreements and the Purchase and Contribution
Agreement dated as of April 1, 2002 between Consumers and CRF I (as the same may be amended, restated or otherwise modified from time to
time).
(h) Ownership. Seller will (or will cause each Transferor to) take all necessary action to (i) vest legal and equitable title to the Receivables,
the Related Security and the Collections purchased under the Sale Agreements irrevocably in Seller, free and clear of any Adverse Claims
other than Adverse Claims in favor of the Administrative Agent and the Purchasers (including, without limitation, the filing of all financing
statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to
perfect Seller’s interest in such Receivables, Related Security and Collections and such other action to perfect, protect or more fully evidence
the interest of Seller therein as the Administrative Agent may reasonably request), and (ii) establish and maintain, in favor of the
Administrative Agent, for the benefit of the Purchasers, a valid and perfected first priority undivided percentage ownership interest (and/or a
valid and perfected first priority security interest) in all Receivables, Related Security and Collections to the full extent contemplated herein,
free and clear of any Adverse Claims other than Adverse Claims in favor of the Administrative Agent for the benefit of the Purchasers
(including, without limitation, the filing of all financing statements or other similar instruments or documents necessary under the UCC (or any
comparable law) of all appropriate jurisdictions to perfect the Administrative Agent’s (for the benefit of the Purchasers) interest in such
Receivables, Related Security and Collections and such other action to perfect, protect or more fully evidence the interest of the
Administrative Agent for the benefit of the Purchasers as the Administrative Agent may reasonably request).
(i) Purchasers’ Reliance. Seller acknowledges that the Purchasers are entering into the transactions contemplated by this Agreement in
reliance upon Seller’s identity as a legal entity that is separate from Originator or any Affiliate thereof (each, a “CMS Entity”). Therefore, from
and after the date of execution and delivery of this Agreement, Seller shall take all reasonable steps, including, without limitation, all steps that
the Administrative Agent or any Purchaser may from time to time reasonably request, to maintain Seller’s identity as a separate
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legal entity and to make it manifest to third parties that Seller is an entity with assets and liabilities distinct from those of any CMS Entity and
not just a division of a CMS Entity. Without limiting the generality of the foregoing and in addition to the other covenants set forth herein,
Seller will:
(i) conduct its own business in its own name and require that all full-time employees of Seller, if any, identify themselves as such and not
as employees of any CMS Entity (including, without limitation, by means of providing appropriate employees with business or
identification cards identifying such employees as Seller’s employees);
(ii) compensate all employees, consultants and agents directly, from Seller’s own funds, for services provided to Seller by such
employees, consultants and agents and, to the extent any employee, consultant or agent of Seller is also an employee, consultant or agent
of any CMS Entity, allocate the compensation of such employee, consultant or agent between Seller and such CMS Entity, as applicable, on
a basis that reflects the services rendered to Seller and such CMS Entity, as applicable;
(iii) maintain separate offices and, if such office is located in the offices of any CMS Entity, Seller shall lease such office at a fair market
rent;
(iv) have separate stationery, invoices and checks in its own name;
(v) conduct all transactions with each CMS Entity (including, without limitation, any delegation of its obligations hereunder as Servicer)
strictly on an arm’s-length basis, allocate all overhead expenses for items shared between Seller and any CMS Entity fairly and reasonably;
(vi) at all times have at least three Managers, at least one of which is an Independent Manager;
(vii) observe all limited liability company formalities as a distinct entity, and ensure that all limited liability company actions relating to
(A) the selection, maintenance or replacement of the Independent Manager, (B) the dissolution or liquidation of Seller or (C) the initiation
of, participation in, acquiescence in or consent to any bankruptcy, insolvency, reorganization or similar proceeding involving Seller, are
duly authorized by unanimous vote of its Managers (including the Independent Manager);
(viii) maintain Seller’s books and records separate from those of any CMS Entity thereof and otherwise readily identifiable as its own
assets rather than assets of a CMS Entity;
(ix) prepare its financial statements separately from those of any CMS Entity and insure that any consolidated financial statements of any
CMS Entity that include Seller and that are filed with the Securities and Exchange
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Commission or any other governmental agency have notes clearly stating that Seller is a separate corporate entity and that its assets will be
available first and foremost to satisfy the claims of the creditors of Seller;
(x) except as herein specifically otherwise provided, maintain the funds or other assets of Seller separate from, and not commingled with,
those of any CMS Entity and only maintain bank accounts or other depository accounts to which Seller alone is the account party, into
which only Seller or Servicer makes deposits and from which only Seller or Servicer (or the Administrative Agent hereunder) has the power
to make withdrawals;
(xi) pay all of Seller’s operating expenses from Seller’s own assets (except for certain payments by a CMS Entity or other Persons
pursuant to allocation arrangements that comply with the requirements of this Section 7.1(i));
(xii) maintain its corporate separateness such that it does not merge or consolidate with or into, or convey, transfer, lease or otherwise
dispose of (whether in one transaction or in a series of transactions, and except as otherwise contemplated herein) all or substantially all of
its assets (whether now owned or hereafter acquired) to, or acquire all or substantially all of the assets of, any Person, nor at any time
create, have, acquire, maintain or hold any interest in any Subsidiary; and
(xiii) take such other actions as are necessary on its part to ensure that the facts and assumptions set forth in the opinion issued by
Skadden, Arps, Slate, Meagher & Flom, LLP, as counsel for Seller, in connection with the closing or initial Incremental Purchase under this
Agreement and relating to substantive consolidation issues, and in the certificates accompanying such opinion, remain true and correct in
all material respects at all times.
(j) Collections. Such Seller Party will cause (i) all checks representing Collections and Securitization Charge Collections to be remitted to a
Lock-Box, (ii) all other amounts in respect of Collections and Securitization Charge Collections to be deposited directly to a Collection
Account, (iii) all proceeds from all Lock-Boxes to be deposited by the Servicer into a Collection Account, (iv) all funds in each Collection
Account which is not a Specified Account to be remitted to a Specified Account as soon as is reasonably practicable and (v) each Specified
Account to be subject at all times to a Collection Account Agreement that is in full force and effect. In the event any payments relating to
Receivables are remitted directly to Seller or any Affiliate of Seller, Seller will remit (or will cause all such payments to be remitted) directly to a
Collection Bank and deposited into a Collection Account within two (2) Business Days following receipt thereof, and, at all times prior to such
remittance, Seller will itself hold or, if applicable, will cause such payments to be held in trust for the exclusive benefit of the Administrative
Agent and the Purchasers. Seller will maintain exclusive ownership, dominion and control (subject to the terms of this Agreement) of each
Lock-Box and Collection Account and shall not grant the right to take dominion and control of any Lock-Box or Collection Account at a future
time or upon the occurrence of a future event to any Person, except to the
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Administrative Agent as contemplated by this Agreement and the Intercreditor Agreement. Upon not less than 30 days prior written notice to
the Seller and the Servicer, the Administrative Agent may, in its reasonable discretion, designate additional Collection Accounts as Specified
Accounts and such Specified Accounts shall be subject to the requirement set forth in clause (v) above. On the date which is 30 days after the
first day of a Level Three Enhancement Period, all Collection Accounts shall be Specified Accounts and such Specified Accounts shall be
subject to the requirement set forth in clause (v) above.
(k) Taxes. Seller will file all tax returns and reports required by law to be filed by it and will promptly pay all taxes and governmental
charges at any time owing, except any such taxes which are not yet delinquent or are being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books. Seller will pay when due any
taxes payable in connection with the Receivables, exclusive of taxes on or measured by income or gross receipts of Conduit, the
Administrative Agent or any Financial Institution. Servicer will pay and discharge before the same shall become delinquent, all taxes and
governmental charges imposed upon it or its property, provided that Servicer shall not be required to pay or discharge any such tax or
governmental charge (i) which is being contested by it in good faith and by proper procedures or (ii) the non-payment of which will not have a
Material Adverse Effect.
(l) Insurance. Seller will maintain in effect, or cause to be maintained in effect, at Seller’s own expense, such casualty and liability
insurance as Seller shall deem appropriate in its good faith business judgment.
(m) Payment to Transferors. With respect to any Receivable purchased by Seller from a Transferor, such sale shall be effected under, and
in compliance with the terms of, the applicable Sale Agreement, including, without limitation, the terms relating to the method of payment and
amount and timing of payments to be made to such Transferor in respect of the purchase price for such Receivable.
(n) Restrictions on Activities. Seller will operate its business and activities such that: it does not engage in any business or activity of
any kind, or enter into any transaction or indenture, mortgage, instrument, agreement, contract, lease or other undertaking, other than the
transactions contemplated and authorized by this Agreement and the Sale Agreements; and does not create, incur, guarantee, assume or
suffer to exist any indebtedness or other liabilities, whether direct or contingent, other than (i) as a result of the endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary course of business, (ii) the incurrence of obligations under this
Agreement, (iii) the incurrence of obligations, as expressly contemplated in the Sale Agreements, to make payment to the applicable Transferor
thereunder for the purchase of Receivables under the applicable Sale Agreement, and (iv) the incurrence of operating expenses in the ordinary
course of business of the type otherwise contemplated by this Agreement.
(o) Modification of Limited Liability Company Agreement. Seller will maintain its limited liability company agreement in conformity with
this Agreement, such that it does not amend, restate, supplement or otherwise modify its limited liability company agreement
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in any respect that would impair its ability to comply with the terms or provisions of any of the Transaction Documents, including, without
limitation, Section 7.1(i) of this Agreement;
(p) Modification of Sale Agreements. Seller will maintain the effectiveness of, and continue to perform under the Sale Agreements, such
that it does not amend, restate, supplement, cancel, terminate or otherwise modify either Sale Agreement, or give any consent, waiver, directive
or approval thereunder or waive any default, action, omission or breach under either Sale Agreement or otherwise grant any indulgence
thereunder, without (in each case) the prior written consent of the Administrative Agent.
(q) Maintenance of Required Capital Amount. Seller will maintain at all times the Required Capital Amount (as defined in the Receivables
Sale Agreement) and refrain from making any dividend, distribution, redemption of capital stock or payment of any subordinated indebtedness
which would cause the Required Capital Amount to cease to be so maintained.
(r) Performance under Servicing Agreement. Servicer will perform and comply with all obligations of the Servicer as “Servicer” under the
Servicing Agreement, including, without limitation, its duties and responsibilities relating to the calculations and allocations required by the
Intercreditor Agreement and the Servicing Agreement.
(s) Financing Statements for Supplement Indentures. Seller will (or will cause Originator to) cause the collateral description in each UCC-1
Financing Statement filed pursuant to any Supplement Indenture to expressly exclude all Receivables, all Related Security, all Collections, each
Lock-Box, each Collection Account and the proceeds thereof in a manner acceptable to the Administrative Agent.
Section 7.2 Negative Covenants of the Seller Parties. Until the date on which the Aggregate Unpaids have been indefeasibly paid in full
and this Agreement terminates in accordance with its terms, each Seller Party hereby covenants, as to itself, that:
(a) Name Change, Offices and Records. Seller will not (and will not permit any Transferor to) (i) make any change to its name (within the
meaning of Section 9-507(c) of any applicable enactment of the UCC), identity, corporate structure or location of books and records unless, at
least thirty (30) days prior to the effective date of any such name change, change in corporate structure, or change in location of its books and
records Seller notifies the Administrative Agent thereof and delivers to the Administrative Agent such financing statements (Forms UCC-1
and UCC-3) authorized or executed by Seller (if required under applicable law) which the Administrative Agent may reasonably request to
reflect such name change, location change, or change in corporate structure, together with such other documents and instruments that the
Administrative Agent may reasonably request in connection therewith and has taken all other steps to ensure that the Administrative Agent,
for the benefit of itself and the Purchasers, continues to have a first priority, perfected ownership or security interest in the Receivables, the
Related Security related thereto and any Collections thereon, or (ii) change its jurisdiction of organization unless the Administrative Agent
shall have received from the Seller, prior to such change, (A) those items described in clause (i) hereof, and (B) if the Administrative Agent or
any
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Purchaser shall so request, an opinion of counsel, in form and substance reasonably satisfactory to such Person, as to such organization and
the Seller’s or the applicable Transferor’s, as applicable, valid existence and good standing and the perfection and priority of the
Administrative Agent’s ownership or security interest in the Receivables, the Related Security and Collections.
(b) Change in Payment Instructions to Obligors. Except as may be required by the Administrative Agent pursuant to Section 8.2(b), such
Seller Party will not add or terminate any bank as a Collection Bank, or make any change in the instructions to Obligors regarding payments to
be made to any Lock-Box or Collection Account, unless the Administrative Agent shall have received, at least ten (10) days before the
proposed effective date therefor, (i) written notice of such addition, termination or change and (ii) (A) with respect to the addition of a
Collection Bank or a Collection Account or Lock-Box, an executed Collection Account Agreement with respect to the new Collection Account
if a Specified Account, or Lock-Box if linked to a Specified Account and (B) with respect to the addition of a Lock-Box, an executed P.O. Box
Transfer Notice with respect to the new Lock-Box; provided, however, that the Servicer may make changes in instructions to Obligors
regarding payments without notice to the Administrative Agent if such new instructions require such Obligor to make payments to an existing
Specified Account or Lock-Box.
(c) Modifications to Contracts and Credit and Collection Policy. Such Seller Party will not, and will not permit Transferors to, make any
change to the Credit and Collection Policy that would be reasonably likely to adversely affect the collectibility of the Receivables. Except as
provided in Section 8.2(d), the Servicer will not, and will not permit Transferors to, extend, amend or otherwise modify the terms of any
Receivable or any Contract related thereto other than in accordance with the Credit and Collection Policy.
(d) Sales, Liens. Seller will not sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to,
or create or suffer to exist any Adverse Claim upon (including, without limitation, the filing of any financing statement) or with respect to, any
Receivable, Related Security or Collections, or upon or with respect to any Contract under which any Receivable arises, or any Lock-Box or
Collection Account, or assign any right to receive income with respect thereto (other than, in each case, the creation of the interests therein in
favor of the Administrative Agent and the Purchasers provided for herein), and Seller will defend the right, title and interest of the
Administrative Agent and the Purchasers in, to and under any of the foregoing property, against all claims of third parties claiming through or
under Seller or either Transferor. Seller will not create or suffer to exist any mortgage, pledge, security interest, encumbrance, lien, charge or
other similar arrangement on any of its inventory, except as contemplated in an Inventory Facility Intercreditor Agreement.
(e) Net Receivables Balance. At no time prior to the Amortization Date shall Seller permit the Net Receivables Balance to be less than an
amount equal to the sum of (i) the Aggregate Capital plus (ii) the Aggregate Reserves.
(f) Termination Date Determination. Seller will not designate the Termination Date (as defined in the Receivables Sale Agreement), or
send any written notice to
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Originator in respect thereof, without the prior written consent of the Administrative Agent, except with respect to the occurrence of such
Termination Date arising pursuant to Section 5.1(d) of the Receivables Sale Agreement.
(g) Restricted Junior Payments. During the continuation of any Amortization Event, Seller will not make any Restricted Junior Payment if,
after giving effect thereto, Seller would fail to meet its obligations set forth in Section 7.2(e).
(h) Collection Accounts not Subject to Collection Account Agreement. At any time after the 30th day following the first day of a Level
Three Enhancement Period, such Seller Party will not, and will not permit Transferors to, direct any Collections to be remitted to any Collection
Account not subject at all times to a Collection Account Agreement.
(i) Commingling. Such Seller Party shall not deposit or otherwise credit, or cause or permit to be so deposited or credited, to any Lock-
Box or Collection Account cash or cash proceeds other than Collections and Securitization Charge Collections.
(j) Servicing Agreement. Without the consent of the Administrative Agent, Servicer will not amend, modify or waive any term or
condition of (i) Section 3.02 or Section 5.04 of the Servicing Agreement, (ii) Annex 2 to the Servicing Agreement, (iii) the definition of the term
“Securitization Charges”, “Securitization Charge Collections” or “Transferred Securitization Property” in the Servicing Agreement or (iv) to the
extent relating to any of the foregoing, any definition used directly or indirectly in any of the foregoing terms or conditions.
ARTICLE VIII
ADMINISTRATION AND COLLECTION
Section 8.1 Designation of Servicer. (a) The servicing, administration and collection of the Receivables shall be conducted by such
Person (the “Servicer”) so designated from time to time in accordance with this Section 8.1. Consumers is hereby designated as, and hereby
agrees to perform the duties and obligations of, the Servicer pursuant to the terms of this Agreement. The Administrative Agent may at any
time designate as Servicer any Person to succeed Consumers or any successor Servicer.
(b) Without the prior written consent of the Administrative Agent and the Required Financial Institutions, Consumers shall not be
permitted to delegate any of its duties or responsibilities as Servicer to any Person other than (i) Seller and (ii) with respect to certain
delinquent Receivables, outside collection agencies in accordance with its customary practices. Seller shall not be permitted to further delegate
to any other Person any of the duties or responsibilities of the Servicer delegated to it by Consumers. If at any time the Administrative Agent
shall designate as Servicer any Person other than Consumers, all duties and responsibilities theretofore delegated by Consumers to Seller may,
at the discretion of the Administrative Agent, be terminated forthwith on notice given by the Administrative Agent to Consumers and to
Seller.
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(c) Notwithstanding any delegation by Consumers pursuant to the foregoing subsection (b), (i) Consumers shall be and remain primarily
liable to the Administrative Agent and the Purchasers for the full and prompt performance of all duties and responsibilities of the Servicer
hereunder and (ii) the Administrative Agent and the Purchasers shall be entitled to deal exclusively with Consumers in matters relating to the
discharge by the Servicer of its duties and responsibilities hereunder. The Administrative Agent and the Purchasers shall not be required to
give notice, demand or other communication to any Person other than Consumers in order for communication to the Servicer and its sub-
servicer or other delegate with respect thereto to be accomplished. Consumers, at all times that it is the Servicer, shall be responsible for
providing any sub-servicer or other delegate of the Servicer with any notice given to the Servicer under this Agreement.
Section 8.2 Duties of Servicer. (a) The Servicer shall take or cause to be taken all such actions as may be necessary or advisable to collect
each Receivable from time to time, all in accordance with applicable laws, rules and regulations, with reasonable care and diligence, and in
accordance with the Credit and Collection Policy.
(b) The Servicer will instruct all Obligors to pay all Collections and all Securitization Charge Collections directly to a Lock-Box or
Collection Account. The Servicer shall effect (i) except as agreed to between the Servicer and the Administrative Agent (such agreement not
to be unreasonably withheld), a Collection Account Agreement substantially in the form of Exhibit VI with each bank maintaining a Collection
Account at any time and (ii) a P.O. Box Transfer Notice substantially in the form of Exhibit XI with respect to each Lock-Box. In the case of any
remittances received in any Lock-Box or Collection Account that shall have been identified, to the satisfaction of the Servicer, to not
constitute Collections or other proceeds of the Receivables or the Related Security, the Servicer shall promptly remit such items to the Person
identified to it as being the owner of such remittances. From and after the date the Administrative Agent delivers to any Collection Bank a
Collection Notice pursuant to Section 8.3, the Administrative Agent may request that the Servicer, and the Servicer thereupon promptly shall
instruct all Obligors with respect to the Receivables, to remit all payments thereon to a new depositary account specified by the Administrative
Agent and, at all times thereafter, Seller and the Servicer shall not deposit or otherwise credit, and shall not permit any other Person to deposit
or otherwise credit to such new depositary account any cash or payment item other than Collections.
(c) The Servicer shall administer the Collections in accordance with the procedures described herein and in Article II. The Servicer shall
set aside and hold in trust for the account of Seller and the Purchasers their respective shares of the Collections in accordance with Article II.
The Servicer shall, upon the request of the Administrative Agent, segregate, in a manner acceptable to the Administrative Agent, all cash,
checks and other instruments received by it from time to time constituting Collections from the general funds of the Servicer or Seller prior to
the remittance thereof in accordance with Article II. If the Servicer shall be required to segregate Collections pursuant to the preceding
sentence, the Servicer shall segregate and deposit with a bank designated by the Administrative Agent such allocable share of Collections of
Receivables set aside for the Purchasers on the first Business Day following receipt by the Servicer of such Collections, duly endorsed or with
duly executed instruments of transfer.
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(d) The Servicer may, in accordance with the Credit and Collection Policy, extend the maturity of any Receivable or adjust the
Outstanding Balance of any Receivable as the Servicer determines to be appropriate to maximize Collections thereof; provided, however, that
such extension or adjustment shall not alter the status of such Receivable as a Delinquent Receivable or Charged-Off Receivable or limit the
rights of the Administrative Agent or the Purchasers under this Agreement. Notwithstanding anything to the contrary contained herein, the
Administrative Agent shall have the absolute and unlimited right to direct the Servicer to commence or settle any legal action with respect to
any Receivable or to foreclose upon or repossess any Related Security.
(e) The Servicer shall hold in trust for Seller and the Purchasers all Records that (i) evidence or relate to the Receivables, the related
Contracts and Related Security or (ii) are otherwise necessary or desirable to collect the Receivables and shall, as soon as practicable upon
demand of the Administrative Agent, deliver or make available to the Administrative Agent all such Records, at a place selected by the
Administrative Agent. The Servicer shall, as soon as practicable following receipt thereof turn over to Seller any cash collections or other cash
proceeds received with respect to Indebtedness not constituting Receivables. The Servicer shall, from time to time at the request of any
Purchaser, furnish to the Purchasers (promptly after any such request) a calculation of the amounts set aside for the Purchasers pursuant to
Article II.
(f) Any payment by an Obligor in respect of any indebtedness owed by it to a Transferor or Seller shall, except as otherwise specified by
such Obligor or otherwise required by contract or law, be applied as a Collection of any Receivable of such Obligor (starting with the oldest
such Receivable) to the extent of any amounts then due and payable thereunder before being applied to any other receivable or other
obligation of such Obligor.
Section 8.3 Collection Notices. The Administrative Agent is authorized at any time (i) when an Amortization Event exists or (ii) during a
Level Three Enhancement Period, to date and to deliver to the Collection Banks the Collection Notices. Seller hereby transfers to the
Administrative Agent for the benefit of the Purchasers, effective when the Administrative Agent delivers such notice, the exclusive ownership
and control of each Collection Account and control of each Lock-Box. In case any authorized signatory of Seller whose signature appears on a
Collection Account Agreement shall cease to have such authority before the delivery of such notice, such Collection Notice shall
nevertheless be valid as if such authority had remained in force. Seller hereby authorizes the Administrative Agent, and agrees that the
Administrative Agent shall be entitled (i) when an Amortization Event exists or (ii) during a Level Three Enhancement Period to (A) endorse
Seller’s name on checks and other instruments representing Collections, (B) enforce the Receivables, the related Contracts and the Related
Security and (C) take such action as shall be necessary or desirable to cause all cash, checks and other instruments constituting Collections of
Receivables to come into the possession of the Administrative Agent rather than Seller.
Section 8.4 Responsibilities of Seller. Anything herein to the contrary notwithstanding, the exercise by the Administrative Agent and the
Purchasers of their rights hereunder shall not release the Servicer, any Transferor or Seller from any of their duties or obligations with respect
to any Receivables or under the related Contracts. Neither the
27
Administrative Agent nor the Purchasers shall have any obligation or liability with respect to any Receivables or related Contracts, nor shall
any of them be obligated to perform the obligations of Seller.
Section 8.5 Reports. The Servicer shall prepare and forward to the Administrative Agent (i) on the tenth (10th ) Business Day of each
month and at such times as the Agent shall request, a Monthly Report and (ii) at such times as the Administrative Agent shall reasonably
request, an aging of Receivables.
Section 8.6 Servicing Fees. In consideration of Consumers’ agreement to act as Servicer hereunder, the Purchasers hereby agree that, so
long as Consumers shall continue to perform as Servicer hereunder, Seller shall pay over to Consumers a fee (the “Servicing Fee”) on the first
calendar day of each month, in arrears for the immediately preceding month, equal to 1.0% per annum of the average aggregate Outstanding
Balance of all Receivables during such period, as compensation for its servicing activities.
ARTICLE IX
AMORTIZATION EVENTS
Section 9.1 Amortization Events. The occurrence of any one or more of the following events shall constitute an Amortization Event:
(a) Any Seller Party shall fail (i) (A) during a Level One Enhancement Period, to make any payment or deposit required hereunder when
due and such failure shall continue for two (2) Business Days and (B) during a Level Two Enhancement Period or a Level Three Enhancement
Period, to make any payment or deposit required hereunder when due and such failure shall continue for one (1) Business Day, or (ii) to
perform or observe any term, covenant or agreement hereunder (other than as referred to in clause (i) of this paragraph (a) and Section 9.1(b)
through (k)) and such failure shall continue for five (5) consecutive Business Days or a “Servicer Default” shall occur under (and as such term
is defined in) the Servicing Agreement.
(b) Any representation, warranty, certification or statement made by any Seller Party in this Agreement, any other Transaction Document
or in any other document delivered pursuant hereto or thereto shall prove to have been (i) with respect to any representations, warranties,
certifications or statements which contain a materiality qualifier, incorrect in any respect when made or deemed made and (ii) with respect to
any representations, warranties, certifications or statements which do not contain a materiality qualifier, incorrect in any material respect when
made or deemed made.
(c) (i) Failure of Seller to pay any Indebtedness when due or the failure of Servicer to pay Indebtedness when due in excess of
$25,000,000 and such failure shall continue after any applicable grace period; or (ii) the default by any Seller Party in the performance of any
term, provision or condition contained in any agreement under which any such Indebtedness was created or is governed, the effect of which is
to cause, or to permit the holder or holders of such Indebtedness to cause, such Indebtedness to become due prior to its stated maturity,
unless the
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obligor under or holder of such Indebtedness shall have waived in writing such circumstance, or such circumstance has been cured so that
such circumstance is no longer continuing; or (iii) any such Indebtedness of any Seller Party shall be declared to be due and payable or
required to be prepaid (other than by a regularly scheduled payment) prior to the date of maturity thereof; or (iv) any Indenture Event of
Default shall occur.
(d) (i) Any Seller Party shall generally not pay its debts as such debts become due or shall admit in writing its inability to pay its debts
generally or shall make a general assignment for the benefit of creditors; or (ii) any proceeding shall be instituted by or against any Seller Party
seeking to adjudicate it bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or
composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee or other similar official for it or any substantial part of its property and, in the case of
any such proceeding instituted against it (but not instituted by it), any such proceeding shall remain undismissed or unstayed for a period of
30 days, or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief against, or the
appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) shall occur or (iii) any
Seller Party shall take any corporate action to authorize any of the actions set forth in clauses (i) or (ii) above in this subsection (d).
(e) Seller shall fail to comply with the terms of Section 2.7 hereof.
(f) As at the end of any Accrual Period, (i) the average of the Dilution Ratios as of the end of such Accrual Period and the two preceding
Accrual Periods shall exceed 2.75%, (ii) the average of the Default Ratios as of the end of such Accrual Period and the two preceding Accrual
Periods shall exceed 3.50%, (iii) the average of the Past Due Ratios as of the end of such Accrual Period and the two preceding Accrual
Periods shall exceed 7.25% and (iv) the average of the Days Sales Outstanding Ratios as of the end of such Accrual Period and the two
preceding Accrual Periods shall exceed 55 days.
(g) A Change of Control shall occur.
(h) (i) One or more final judgments for the payment of money in an amount in excess of $10,000 shall be entered against Seller or (ii) one
or more final judgments for the payment of money in an amount in excess of $25,000,000 in the aggregate, shall be entered against the Servicer
on claims not covered by insurance or as to which the insurance carrier has denied its responsibility, and (i) enforcement proceedings have
been commenced by any creditor upon any such judgment or (ii) such judgment shall continue unsatisfied and in effect for thirty
(30) consecutive days without a stay of execution.
(i) The “Termination Date” under and as defined in the Receivables Sale Agreement shall occur under the Receivables Sale Agreement or
Originator shall for any reason cease to transfer Receivables to Seller under the Receivables Sale Agreement.
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(j) This Agreement shall terminate in whole or in part (except in accordance with its terms), or shall cease to be effective or to be the
legally valid, binding and enforceable obligation of Seller, or the Administrative Agent for the benefit of the Purchasers shall cease to have a
valid and perfected first priority security interest in the Receivables, the Related Security and the Collections with respect thereto and the
Specified Accounts.
(k) Either of the following events shall occur: (i) Consumers shall fail to maintain a ratio of Total Consolidated Debt to Total Consolidated
Capitalization of not greater than 0.65 to 1.0 or (ii) Consumers shall permit the ratio, determined as of the end of each of its fiscal quarters for
the then most-recently ended four fiscal quarters, of (A) Consolidated EBIT to (B) Consolidated Interest Expense to be less than 2.0 to 1.0.
Defined terms used in this Section 9.1(k) shall have the meanings given to such terms in Schedule C.
(l) Any term or provision of the Securitization Charge Sale Agreement or the Servicing Agreement shall be amended, waived or otherwise
modified in any manner which, in the judgment of the Administrative Agent, has an adverse effect on the Administrative Agent’s or the
Purchasers’ interests under this Agreement.
(m) Originator shall fail to provide the Administrative Agent (as assignee of Buyer), within fifteen (15) days of the Closing Date,
acknowledgement copies evidencing the filing of UCC-3 financing statements substantially in the form of Exhibit VII to the Receivables Sale
Agreement amending the UCC-1 Financing Statements filed pursuant to the Supplement Indentures Sixty-Eighth through Seventy-Fifth,
Seventy-Seventh, Seventy-Ninth, Eightieth, Eighty-Third, and Eighty-Seventh through Ninety.
Section 9.2 Remedies. Upon the occurrence and during the continuation of an Amortization Event, the Administrative Agent may, or
upon the direction of the Required Financial Institutions shall take any of the following actions: (i) replace the Person then acting as Servicer,
(ii) declare the Amortization Date to have occurred, whereupon the Amortization Date shall forthwith occur, without demand, protest or further
notice of any kind, all of which are hereby expressly waived by each Seller Party; provided, however, that upon the occurrence of an
Amortization Event described in Section 9.1(d), the Amortization Date shall automatically occur, without demand, protest or any notice of any
kind, all of which are hereby expressly waived by each Seller Party, (iii) to the fullest extent permitted by applicable law, declare that the Default
Fee shall accrue with respect to any of the Aggregate Unpaids outstanding at such time, (iv) deliver the Collection Notices to the Collection
Banks and/or instruct the Postmaster General of the applicable Post Office to restrict access to the Lock-Boxes, and (v) notify Obligors of the
Purchasers’ interest in the Receivables. The aforementioned rights and remedies shall be without limitation, and shall be in addition to all other
rights and remedies of the Administrative Agent and the Purchasers otherwise available under any other provision of this Agreement, by
operation of law, at equity or otherwise, all of which are hereby expressly preserved, including, without limitation, all rights and remedies
provided under the UCC, all of which rights shall be cumulative.
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ARTICLE X
INDEMNIFICATION
Section 10.1 Indemnities by the Seller. Without limiting any other rights that the Administrative Agent or any Purchaser may have
hereunder or under applicable law, Seller hereby agrees to indemnify (and pay upon demand to) the Administrative Agent and each Purchaser
and their respective assigns, officers, directors, agents and employees (each an “Indemnified Party”) from and against any and all damages,
losses, claims, taxes, liabilities, costs, expenses and for all other amounts payable, including reasonable attorneys’ fees (which attorneys may
be employees of the Administrative Agent or such Purchaser) and disbursements (all of the foregoing being collectively referred to as
“Indemnified Amounts”) awarded against or incurred by any of them arising out of or as a result of this Agreement or the acquisition, either
directly or indirectly, by a Purchaser of an interest in the Receivables, excluding, however, in all of the foregoing instances:
(a) Indemnified Amounts to the extent a final judgment of a court of competent jurisdiction holds that such Indemnified Amounts
resulted from gross negligence or willful misconduct on the part of the Indemnified Party seeking indemnification;
(b) Indemnified Amounts to the extent the same includes losses in respect of Receivables that are uncollectible on account of the
insolvency, bankruptcy or lack of creditworthiness of the related Obligor; or
(c) taxes imposed by the jurisdiction in which such Indemnified Party’s principal executive office is located, on or measured by the
overall net income of such Indemnified Party to the extent that the computation of such taxes is consistent with the intended
characterization for income tax purposes of the acquisition by the Purchasers of Purchaser Interests as a loan or loans by the Purchasers to
Seller secured by the Receivables, the Related Security, the Collection Accounts and the Collections;
provided, however, that nothing contained in this sentence shall limit the liability of Seller or limit the recourse of the Purchasers to Seller for
amounts otherwise specifically provided to be paid by Seller under the terms of this Agreement. Without limiting the generality of the
foregoing indemnification, but subject to the exclusions in clauses (a), (b) and (c) above, Seller shall indemnify the Indemnified Parties for
Indemnified Amounts (including, without limitation, losses in respect of uncollectible receivables, regardless of whether reimbursement
therefor would constitute recourse to Seller) relating to or resulting from:
(i) the failure of any Receivable included in the calculation of the Net Receivables Balance as an Eligible Receivable to be an Eligible
Receivable at the time so included;
(ii) any representation or warranty made by Seller, CRF I or Originator (or any officers of any such Person) under or in connection with
this Agreement, any other Transaction Document or any other written information or report delivered by any such
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Person pursuant hereto or thereto, which shall have been false or incorrect when made or deemed made;
(iii) the failure by Seller, CRF I or Originator to comply with any applicable law, rule or regulation with respect to any Receivable or
Contract related thereto, or the nonconformity of any Receivable or Contract included therein with any such applicable law, rule or
regulation, the violation of which shall cause the Receivables to be uncollectible or unenforceable by Seller, the Administrative Agent or
the Purchasers in whole or in part, or any failure of CRF I or Originator to keep or perform any of its obligations, express or implied, with
respect to any Contract;
(iv) any failure of Seller, CRF I or Originator to perform its duties, covenants or other obligations in accordance with the provisions of
this Agreement or any other Transaction Document;
(v) any products liability, personal injury or damage suit, or other similar claim arising out of or in connection with merchandise,
insurance or services that are the subject of any Contract or any Receivable;
(vi) any dispute, claim, offset or defense (other than discharge in bankruptcy of the Obligor) of the Obligor to the payment of any
Receivable (including, without limitation, a defense based on such Receivable or the related Contract not being a legal, valid and binding
obligation of such Obligor enforceable against it in accordance with its terms), or any other claim resulting from the provision of goods,
electricity, gas or services related to such Receivable or the furnishing or failure to furnish such goods, electricity, gas or services;
(vii) the commingling of Collections of Receivables at any time with other funds;
(viii) any investigation, litigation or proceeding initiated by a party other than a Purchaser or the Administrative Agent related to or
arising from this Agreement, any other Transaction Document, the Servicing Agreement or any other Basic Document (as defined in the
Servicing Agreement), the transactions contemplated hereby, the use of the proceeds of an Incremental Purchase or a Reinvestment, the
ownership of the Purchaser Interests or any other investigation, litigation or proceeding relating to Seller, CRF I or Originator in which any
Indemnified Party becomes involved as a result of any of the transactions contemplated hereby, provided that Seller shall have no
obligation to indemnify any Indemnified Party under this paragraph (viii) for Indemnified Amounts to the extent a final judgment of a court
of competent jurisdiction holds that such Indemnified Amounts resulted from gross negligence or willful misconduct on the part of the
Indemnified Party seeking indemnification;
(ix) any inability to litigate any claim against any Obligor in respect of any Receivable as a result of such Obligor being immune from civil
and commercial law and suit on the grounds of sovereignty or otherwise from any legal action, suit or proceeding;
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(x) any Amortization Event described in Section 9.1(d);

(xi) any failure of Seller to acquire and maintain legal and equitable title to, and ownership of any Receivable and the Related Security and
Collections with respect thereto from the applicable Transferor, free and clear of any Adverse Claim (other than as created hereunder); or
any failure of Seller to give reasonably equivalent value to a Transferor under the applicable Sale Agreement in consideration of the transfer
by such Transferor of any Receivable, or any attempt by any Person to void such transfer under statutory provisions or common law or
equitable action;
(xii) any failure to vest and maintain vested in the Administrative Agent for the benefit of the Purchasers, or to transfer to the
Administrative Agent for the benefit of the Purchasers, legal and equitable title to, and ownership of, a first priority perfected undivided
percentage ownership interest (to the extent of the Purchaser Interests contemplated hereunder) or security interest in the Receivables, the
Related Security and the Collections, free and clear of any Adverse Claim (except as created by the Transaction Documents);
(xiii) the failure to have filed, or any delay in filing, financing statements or other similar instruments or documents under the UCC of any
applicable jurisdiction or other applicable laws with respect to any Receivable, the Related Security and Collections with respect thereto,
and the proceeds of any thereof, whether at the time of any Incremental Purchase or Reinvestment or at any subsequent time;
(xiv) any action or omission by Seller (other than in accordance with or as contemplated by this Agreement or any other Transaction
Document) which reduces or impairs the rights of the Administrative Agent or the Purchasers with respect to any Receivable and the
Related Security and Collections with respect thereto or the value of any such Receivable and the Related Security and Collections with
respect thereto; and
(xv) any attempt by any Person to void any Incremental Purchase or Reinvestment hereunder under statutory provisions or common law
or equitable action.
Section 10.2 Indemnities by the Servicer. Without limiting any other rights that an Indemnified Party may have hereunder or under
applicable law, the Servicer hereby agrees to indemnify each Indemnified Party from and against any and all Indemnified Amounts that may be
imposed on, incurred by or asserted against an Indemnified Party in any way arising out of or relating to:
(a) any representation or warranty made by the Servicer (or any officers of Servicer) under or in connection with this Agreement, any
other Transaction Document or any other written information or report delivered by the Servicer pursuant hereto or thereto, which shall have
been false or incorrect when made or deemed made;
(b) the failure by the Servicer to comply with any applicable law, rule or regulation with respect to any Receivable or Contract related
thereto, the violation of which shall
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cause the Receivables to be uncollectible or unenforceable by Seller, the Administrative Agent or the Purchasers in whole or in part;
(c) any failure of Servicer to perform its duties, covenants or other obligations in accordance with the provisions of this Agreement or
any other Transaction Document;
(d) the commingling of Collections of Receivables at any time with other funds;
(e) any action or omission by Servicer (other than in accordance with or as contemplated by this Agreement or any other Transaction
Document) which reduces or impairs the rights of the Administrative Agent or the Purchasers with respect to any Receivable and the Related
Security and Collections with respect thereto or the value of any Receivable and the Related Security and Collections with respect thereto; and
(f) the failure of any Receivable treated as or represented by the Servicer to be an Eligible Receivable to be an Eligible Receivable at the
time so treated or represented;
excluding, however, in all of the foregoing instances Indemnified Amounts to the extent a final judgment of a court of competent jurisdiction
holds that such Indemnified Amounts resulted from gross negligence or willful misconduct on the part of the Indemnified Party seeking
indemnification.
Section 10.3 Increased Cost and Reduced Return. If after the date hereof, any Funding Source shall be charged any fee, expense or
increased cost on account of the adoption of any applicable law, rule or regulation (including any applicable law, rule or regulation regarding
capital adequacy) or any change in any of the foregoing, or any change in the interpretation or administration thereof by any governmental
authority, any central bank or any comparable agency charged with the interpretation or administration thereof, or compliance with any
request or directive (whether or not having the force of law) of any such authority or agency (a “Regulatory Change”): (i) that subjects any
Funding Source to any charge or withholding on or with respect to any Funding Agreement or a Funding Source’s obligations under a
Funding Agreement, or on or with respect to the Receivables, or changes the basis of taxation of payments to any Funding Source of any
amounts payable under any Funding Agreement (except for changes in the rate of tax on the overall net income of a Funding Source or taxes
excluded by Section 10.1) or (ii) that imposes, modifies or deems applicable any reserve, assessment, insurance charge, special deposit or
similar requirement against assets of, deposits with or for the account of a Funding Source, or credit extended by a Funding Source pursuant
to a Funding Agreement or (iii) that imposes any other condition the result of which is to increase the cost to a Funding Source of performing
its obligations under a Funding Agreement, or to reduce the amount of any sum received or receivable by a Funding Source under a Funding
Agreement or to require any payment calculated by reference to the amount of interests or loans held or interest received by it, then, upon
presentation to the Seller of a certificate setting forth the basis for such determination and the additional amounts reasonably determined by
the Administrative Agent to reasonably compensate such Funding Source for the period of up to 90 days prior to the date on which such
certificate is delivered to Seller, Seller shall pay to the Administrative Agent, for the
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benefit of the relevant Funding Source, such amounts charged to such Funding Source or such amounts to otherwise compensate such
Funding Source for such increased cost or such reduction.
Section 10.4 Other Costs and Expenses. Seller shall pay to the Administrative Agent and Conduit on demand all reasonable costs and
out-of-pocket expenses in connection with the preparation, execution, delivery and administration of this Agreement, the transactions
contemplated hereby and the other documents to be delivered hereunder, including without limitation, the reasonable cost of Conduit’s
auditors auditing the books, records and procedures of Seller, reasonable fees and out-of-pocket expenses of legal counsel for Conduit and
the Administrative Agent (which such counsel may be employees of Conduit or the Administrative Agent) with respect thereto and with
respect to advising Conduit and the Administrative Agent as to their respective rights and remedies under this Agreement. Seller shall pay to
the Administrative Agent on demand any and all reasonable costs and expenses of the Administrative Agent and the Purchasers, if any,
including reasonable counsel fees and expenses in connection with the enforcement of this Agreement and the other documents delivered
hereunder and in connection with any restructuring or workout of this Agreement or such documents (including any amendments hereto or
thereto), or the administration of this Agreement following an Amortization Event.
ARTICLE XI
THE AGENT
Section 11.1 Authorization and Action. Each Purchaser hereby designates and appoints Bank One to act as its agent hereunder and
under each other Transaction Document, and authorizes the Administrative Agent to take such actions as agent on its behalf and to exercise
such powers as are delegated to the Administrative Agent by the terms of this Agreement and the other Transaction Documents together with
such powers as are reasonably incidental thereto. The Administrative Agent shall not have any duties or responsibilities, except those
expressly set forth herein or in any other Transaction Document, nor any fiduciary relationship with any Purchaser, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities on the part of the Administrative Agent shall be read into this Agreement or any
other Transaction Document or otherwise exist for the Administrative Agent. In performing its functions and duties hereunder and under the
other Transaction Documents, the Administrative Agent shall act solely as agent for the Purchasers and does not assume nor shall be deemed
to have assumed any obligation or relationship of trust or agency with or for any Seller Party or any of such Seller Party’s successors or
assigns. The Administrative Agent shall not be required to take any action that exposes the Administrative Agent to personal liability or that
is contrary to this Agreement, any other Transaction Document or applicable law. The appointment and authority of the Administrative Agent
hereunder shall terminate upon the indefeasible payment in full of all Aggregate Unpaids. Each Purchaser hereby authorizes the
Administrative Agent to execute each of the UCC financing statements, the Intercreditor Agreement and such other Transaction Documents
as may require the Administrative Agent’s signature on behalf of such Purchaser (the terms of which shall be binding on such Purchaser).
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Section 11.2 Delegation of Duties. The Administrative Agent may execute any of its duties under this Agreement and each other
Transaction Document by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to
such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected
by it with reasonable care.
Section 11.3 Exculpatory Provisions. Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be
(i) liable for any action lawfully taken or omitted to be taken by it or them under or in connection with this Agreement or any other Transaction
Document (except for its, their or such Person’s own gross negligence or willful misconduct), or (ii) responsible in any manner to any of the
Purchasers for any recitals, statements, representations or warranties made by any Seller Party contained in this Agreement, any other
Transaction Document or any certificate, report, statement or other document referred to or provided for in, or received under or in connection
with, this Agreement, or any other Transaction Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement, or any other Transaction Document or any other document furnished in connection herewith or therewith, or for any failure of
any Seller Party to perform its obligations hereunder or thereunder, or for the satisfaction of any condition specified in Article VI, or for the
perfection, priority, condition, value or sufficiency of any collateral pledged in connection herewith. The Administrative Agent shall not be
under any obligation to any Purchaser to ascertain or to inquire as to the observance or performance of any of the agreements or covenants
contained in, or conditions of, this Agreement or any other Transaction Document, or to inspect the properties, books or records of the Seller
Parties. The Administrative Agent shall not be deemed to have knowledge of any Amortization Event or Potential Amortization Event unless
the Administrative Agent has received notice of such Amortization Event or Potential Amortization Event from Seller or a Purchaser.
Section 11.4 Reliance by Administrative Agent. The Administrative Agent shall in all cases be entitled to rely, and shall be fully
protected in relying, upon any document or conversation believed by it to be genuine and correct and to have been signed, sent or made by
the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to Seller), independent
accountants and other experts selected by the Administrative Agent. The Administrative Agent shall in all cases be fully justified in failing or
refusing to take any action under this Agreement or any other Transaction Document unless it shall first receive such advice or concurrence
of Conduit or the Required Financial Institutions or all of the Purchasers, as applicable, as it deems appropriate and it shall first be indemnified
to its satisfaction by the Purchasers, provided that unless and until the Administrative Agent shall have received such advice, the
Administrative Agent may take or refrain from taking any action, as the Administrative Agent shall deem advisable and in the best interests of
the Purchasers. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, in accordance with a
request of Conduit or the Required Financial Institutions or all of the Purchasers, as applicable, and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Purchasers.
Section 11.5 Non-Reliance on Administrative Agent and Other Purchasers. Each Purchaser expressly acknowledges that neither the
Administrative Agent, nor any of its
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officers, directors, employees, agents, attorneys-in-fact or affiliates has made any representations or warranties to it and that no act by the
Administrative Agent hereafter taken, including, without limitation, any review of the affairs of any Seller Party, shall be deemed to constitute
any representation or warranty by the Administrative Agent. Each Purchaser represents and warrants to the Administrative Agent that it has
and will, independently and without reliance upon the Administrative Agent or any other Purchaser and based on such documents and
information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, prospects,
financial and other conditions and creditworthiness of Seller and made its own decision to enter into this Agreement, the other Transaction
Documents and all other documents related hereto or thereto.
Section 11.6 Reimbursement and Indemnification. The Financial Institutions agree to reimburse and indemnify the Administrative Agent
and its officers, directors, employees, representatives and agents ratably according to their Pro Rata Shares, to the extent not paid or
reimbursed by the Seller Parties (i) for any amounts for which the Administrative Agent, acting in its capacity as Administrative Agent, is
entitled to reimbursement by the Seller Parties hereunder and (ii) for any other expenses incurred by the Administrative Agent, in its capacity
as Administrative Agent and acting on behalf of the Purchasers, in connection with the administration and enforcement of this Agreement and
the other Transaction Documents.
Section 11.7 Administrative Agent in its Individual Capacity. The Administrative Agent and its Affiliates may make loans to, accept
deposits from and generally engage in any kind of business with Seller or any Affiliate of Seller as though the Administrative Agent were not
the Administrative Agent hereunder. With respect to the acquisition of Purchaser Interests pursuant to this Agreement, the Administrative
Agent shall have the same rights and powers under this Agreement in its individual capacity as any Purchaser and may exercise the same as
though it were not the Administrative Agent, and the terms “Financial Institution,” “Purchaser,” “Financial Institutions” and “Purchasers”
shall include the Administrative Agent in its individual capacity.
Section 11.8 Successor Administrative Agent. The Administrative Agent may, upon five (5) days’ notice to Seller and the Purchasers,
and the Administrative Agent will, upon the direction of all of the Purchasers (other than the Administrative Agent, in its individual capacity)
resign as Administrative Agent. If the Administrative Agent shall resign, then the Required Financial Institutions during such five-day period
shall appoint from among the Purchasers a successor agent. If for any reason no successor Administrative Agent is appointed by the
Required Financial Institutions during such five-day period, then effective upon the termination of such five day period, the Purchasers shall
perform all of the duties of the Administrative Agent hereunder and under the other Transaction Documents and Seller and the Servicer (as
applicable) shall make all payments in respect of the Aggregate Unpaids directly to the applicable Purchasers and for all purposes shall deal
directly with the Purchasers. After the effectiveness of any retiring Administrative Agent’s resignation hereunder as Administrative Agent,
the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Transaction Documents
and the provisions of this Article XI and Article X shall continue in effect for its benefit with respect to any actions taken or omitted to be
37
taken by it while it was Administrative Agent under this Agreement and under the other Transaction Documents.
ARTICLE XII
ASSIGNMENTS; PARTICIPATIONS
Section 12.1 Assignments. (a) Seller and each Financial Institution hereby agree and consent to the complete or partial assignment by
each Conduit of all or any portion of its rights under, interest in, title to and obligations under this Agreement (i) to the Financial Institutions
pursuant to this Agreement or pursuant to the Liquidity Agreement, (ii) to any other issuer of commercial paper notes sponsored or
administered by Bank One or (iii) to any other Person; provided that, except (A) after the occurrence and during the continuation of an
Amortization Event or (B) during a Level Two Enhancement Period or a Level Three Enhancement Period, such Conduit may not make any
such assignment pursuant to this clause (iii), except in the event that the circumstances described in Section 12.1(c) occur, without the
consent of the Seller (which consent shall not be unreasonably withheld or delayed). Upon such assignment, such Conduit shall be released
from its obligations so assigned. Further, Seller and each Financial Institution hereby agree that any assignee of Conduit of this Agreement or
all or any of the Purchaser Interests of Conduit shall have all of the rights and benefits under this Agreement as if the term “Conduit” explicitly
referred to such party, and no such assignment shall in any way impair the rights and benefits of Conduit hereunder. Neither Seller nor the
Servicer shall have the right to assign its rights or obligations under this Agreement.
(b) Any Financial Institution may at any time and from time to time assign to one or more Persons (“Purchasing Financial Institutions”)
all or any part of its rights and obligations under this Agreement pursuant to an assignment agreement, substantially in the form set forth in
Exhibit VII hereto (the “Assignment Agreement”) executed by such Purchasing Financial Institution and such selling Financial Institution,
provided, that an assignment made by an Affected Financial Institution pursuant to paragraph (c) below may occur at any time. The consent
of Conduit and, other than (A) after the occurrence and during the continuation of an Amortization Event or (B) during a Level Two
Enhancement Period or a Level Three Enhancement Period, the Seller (such consent not to be unreasonably withheld) shall be required prior to
the effectiveness of any such assignment. Notwithstanding the foregoing, an assignment made by an Affected Financial Institution pursuant
to paragraph (c) below may occur without the consent of Seller; provided that if the Affected Financial Institution is not Bank One or an
Affiliate of Bank One, the Administrative Agent agrees to use reasonable efforts to choose an assignee of such Affected Financial Institution
that is acceptable to Seller; provided further however, that if the Administrative Agent and Seller do not agree on such an assignee within ten
(10) Business Days after such Affected Financial Institution becomes an Affected Financial Institution, the Administrative Agent may choose
an assignee in its sole discretion. Each assignee of a Financial Institution must (i) have a short-term debt rating of A-1 or better by S&P and P-
1 by Moody’s and (ii) agree to deliver to the Administrative Agent, promptly following any request therefor by the Administrative Agent or
Conduit, an enforceability opinion in form and substance satisfactory to the Administrative Agent and Conduit. Upon delivery of the executed
Assignment Agreement to the Administrative Agent, such selling Financial Institution
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shall be released from its obligations hereunder to the extent of such assignment. Thereafter the Purchasing Financial Institution shall for all
purposes be a Financial Institution party to this Agreement and shall have all the rights and obligations of a Financial Institution under this
Agreement to the same extent as if it were an original party hereto and no further consent or action by Seller, the Purchasers or the
Administrative Agent shall be required.
(c) Each of the Financial Institutions agrees that in the event that it shall cease to have a short-term debt rating of A-1 or better by S&P
and P-1 by Moody’s (an “Affected Financial Institution”), such Affected Financial Institution shall be obligated, at the request of Conduit or
the Administrative Agent, to assign all of its rights and obligations hereunder to (x) another Financial Institution or (y) another funding entity
nominated by the Administrative Agent and acceptable to Conduit, and willing to participate in this Agreement through the Liquidity
Termination Date in the place of such Affected Financial Institution; provided that the Affected Financial Institution receives payment in full,
pursuant to an Assignment Agreement, of an amount equal to such Financial Institution’s Pro Rata Share of the Aggregate Capital and Yield
owing to the Financial Institutions and all accrued but unpaid fees and other costs and expenses payable in respect of its Pro Rata Share of the
Purchaser Interests of the Financial Institutions.
Section 12.2 Participations. Any Financial Institution may, in the ordinary course of its business at any time sell to one or more Persons
(each a “Participant”) participating interests in its Pro Rata Share of the Purchaser Interests of the Financial Institutions, its obligation to pay
Conduit its Acquisition Amounts or any other interest of such Financial Institution hereunder. Notwithstanding any such sale by a Financial
Institution of a participating interest to a Participant, such Financial Institution’s rights and obligations under this Agreement shall remain
unchanged, such Financial Institution shall remain solely responsible for the performance of its obligations hereunder, and Seller, Conduit and
the Administrative Agent shall continue to deal solely and directly with such Financial Institution in connection with such Financial
Institution’s rights and obligations under this Agreement. Each Financial Institution agrees that any agreement between such Financial
Institution and any such Participant in respect of such participating interest shall not restrict such Financial Institution’s right to agree to any
amendment, supplement, waiver or modification to this Agreement, except for any amendment, supplement, waiver or modification described in
Section 13.1(b)(i).
Section 12.3 Extension of Liquidity Termination Date. The Seller may advise the Administrative Agent in writing of its desire to extend
the Liquidity Termination Date for an additional 364 days, provided such request is made not more than 90 days prior to, and not less than
60 days prior to, the then current Liquidity Termination Date. The Administrative Agent, upon being so advised by the Seller, shall promptly
notify each Financial Institution of any such request and each such Financial Institution shall notify the Administrative Agent and the Seller
of its decision to accept or decline the request for such extension no later than 30 days prior to the then current Liquidity Termination Date (it
being understood that each Financial Institution may accept or decline such request in its sole discretion and on such terms as it may elect,
and the failure to so notify the Administrative Agent and the Seller shall be deemed an election not to extend by such Financial Institution). In
the event that at least one Financial Institution agrees to extend the Liquidity Termination Date, the Seller Parties, the Administrative Agent,
the
39
extending Financial Institutions shall enter into such documents as such extending Financial Institutions may deem necessary or appropriate
to reflect such extension, and all reasonable costs and expenses incurred by such Financial Institutions and the Administrative Agent
(including reasonable attorneys’ fees) shall be paid by the Seller. In the event that any Financial Institution declines the request to extend the
Liquidity Termination Date (each such Financial Institution being referred to herein as a “Non-Renewing Financial Institution”), and, in the
case of a Non-Renewing Financial Institution described in clause (a), the Commitment of such Non-Renewing Financial Institution is not
assigned to another Person in accordance with the terms of this Article XII prior to the then current Liquidity Termination Date, the Purchase
Limit shall be reduced by an amount equal to each such Non-Renewing Financial Institution’s Commitment on the then current Liquidity
Termination Date.
Section 12.4 Terminating Financial Institutions.
(a) Any Affected Financial Institution or Non-Renewing Financial Institution which has not assigned its rights and obligations
hereunder if requested pursuant to this Article XII shall be a “Terminating Financial Institution” for purposes of this Agreement as of the then
current Liquidity Termination Date (or, in the case of any Affected Financial Institution, such earlier date as declared by the Administrative
Agent).
(b) The Commitment of any Financial Institution shall terminate on the date it becomes a Terminating Financial Institution. Upon
reduction to zero of the Capital of all of the Purchaser Interests of a Terminating Financial Institution (after application of Collections thereto
pursuant to Sections 2.2 and 2.4) all rights and obligations of such terminating Financial Institution hereunder shall be terminated and such
terminating Financial Institution shall no longer be a “Financial Institution” hereunder; provided, however, that the provisions of Article X
shall continue in effect for its benefit with respect to Purchaser Interests or the Commitment held by such Terminating Financial Institution
prior to its termination as a Financial Institution.
ARTICLE XIII
MISCELLANEOUS
Section 13.1 Waivers and Amendments. (a) No failure or delay on the part of the Administrative Agent or any Purchaser in exercising
any power, right or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such power,
right or remedy preclude any other further exercise thereof or the exercise of any other power, right or remedy. The rights and remedies herein
provided shall be cumulative and nonexclusive of any rights or remedies provided by law. Any waiver of this Agreement shall be effective
only in the specific instance and for the specific purpose for which given.
(b) No provision of this Agreement may be amended, supplemented, modified or waived except in writing in accordance with the
provisions of this Section 13.1(b). Conduit, Seller and the Administrative Agent, at the direction of the Required Financial Institutions, may
enter into written modifications or waivers of any provisions of this Agreement, provided, however, that no such modification or waiver shall:
40
(i) without the consent of each affected Purchaser, (A) extend the Liquidity Termination Date or the date of any payment or deposit of
Collections by Seller or the Servicer, (B) reduce the rate or extend the time of payment of Yield (or any component thereof), (C) reduce any
fee payable to the Administrative Agent for the benefit of the Purchasers, (D) except pursuant to Article XII hereof, change the amount of
the Capital of any Purchaser, any Financial Institution’s Pro Rata Share (except as may be required pursuant to the Liquidity Agreement) or
any Financial Institution’s Commitment, (E) amend, modify or waive any provision of the definition of Required Financial Institutions, this
Section 13.1(b) or Section 9.1, (F) consent to or permit the assignment or transfer by Seller of any of its rights and obligations under this
Agreement, (G) change the definition of “Applicable Maximum Purchaser Interest,” “Applicable Stress Factor,” “Dilution Percentage,”
“Dilution Reserve,” “Eligible Receivable,” “Level One Enhancement Period,” “Level Two Enhancement Period,” “Level Three Enhancement
Period,” “Loss Reserve,” “Loss Percentage,” “Yield and Servicer Fee Reserve,” or “Yield and Servicer Fee Percentage,” or (H) amend or
modify any defined term (or any defined term used directly or indirectly in such defined term) used in clauses (A) through (G) above in a
manner that would circumvent the intention of the restrictions set forth in such clauses; or
(ii) without the written consent of the then Administrative Agent, amend, modify or waive any provision of this Agreement if the effect
thereof is to affect the rights or duties of the Administrative Agent.
Any modification or waiver made in accordance with this Section 13.1 shall apply to each of the Purchasers equally and shall be binding upon
Seller, the Purchasers and the Administrative Agent.
Section 13.2 Notices. Except as provided in this Section 13.2, all communications and notices provided for hereunder shall be in writing
(including bank wire, telecopy or electronic facsimile transmission or similar writing) and shall be given to the other parties hereto at their
respective addresses or telecopy numbers set forth on the signature pages hereof or at such other address or telecopy number as such Person
may hereafter specify for the purpose of notice to each of the other parties hereto. Each such notice or other communication shall be effective
if given by facsimile transmission, upon confirmation of receipt thereof, if given by mail, three (3) Business Days after the time such
communication is deposited in the mail with first class postage prepaid or if given by any other means, when received at the address specified
in this Section 13.2. Seller and Servicer hereby authorize the Administrative Agent to effect purchases and Tranche Period and Bank Rate
selections based on telephonic notices made by any Person whom the Administrative Agent in good faith believes to be acting on behalf of
Seller. Seller agrees to deliver promptly to the Administrative Agent a written confirmation of each telephonic notice signed by an authorized
officer of Seller; provided, however, the absence of such confirmation shall not affect the validity of such notice. If the written confirmation
differs from the action taken by the Administrative Agent, the records of the Administrative Agent shall govern absent manifest error.
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Section 13.3 Ratable Payments. If any Purchaser, whether by setoff or otherwise, has payment made to it with respect to any portion of
the Aggregate Unpaids owing to such Purchaser (other than payments received pursuant to Section 10.3 or 10.4) in a greater proportion than
that received by any other Purchaser entitled to receive a ratable share of such Aggregate Unpaids, such Purchaser agrees, promptly upon
demand, to purchase for cash without recourse or warranty a portion of such Aggregate Unpaids held by the other Purchasers so that after
such purchase each Purchaser will hold its ratable proportion of such Aggregate Unpaids; provided that if all or any portion of such excess
amount is thereafter recovered from such Purchaser, such purchase shall be rescinded and the purchase price restored to the extent of such
recovery, but without interest.
Section 13.4 Protection of Ownership Interests of the Purchasers. (a) Seller agrees that from time to time, at its expense, it will promptly
execute and deliver all instruments and documents, and take all actions, that may be necessary or desirable, or that the Administrative Agent
may request, to perfect, protect or more fully evidence the Purchaser Interests, or to enable the Administrative Agent or the Purchasers to
exercise and enforce their rights and remedies hereunder. At any time after the occurrence and during the continuation of an Amortization
Event, the Administrative Agent may, or the Administrative Agent may direct Seller or the Servicer to, notify the Obligors of Receivables, at
Seller’s expense, of the ownership or security interests of the Purchasers under this Agreement and may also direct that payments of all
amounts due or that become due under any or all Receivables be made directly to the Administrative Agent or its designee. Seller or the
Servicer (as applicable) shall, at any Purchaser’s request, withhold the identity of such Purchaser in any such notification.
(b) If any Seller Party fails to perform any of its obligations hereunder, the Administrative Agent or any Purchaser may (but shall not be
required to), after providing notice to such Seller Party, perform, or cause performance of, such obligations, and the Administrative Agent’s or
such Purchaser’s costs and expenses incurred in connection therewith shall be payable by Seller as provided in Section 10.4. Each Seller Party
irrevocably authorizes the Administrative Agent at any time and from time to time in the sole discretion of the Administrative Agent, and
appoints the Administrative Agent as its attorney-in-fact, to act on behalf of such Seller Party (i) to execute on behalf of Seller as debtor and to
file financing statements necessary or desirable in the Administrative Agent’s sole discretion, after providing notice to such Seller Party, to
perfect and to maintain the perfection and priority of the interest of the Purchasers in the Receivables and (ii) to file a carbon, photographic or
other reproduction of this Agreement or any financing statement with respect to the Receivables as a financing statement in such offices as
the Administrative Agent in its sole discretion deems necessary or desirable to perfect and to maintain the perfection and priority of the
interests of the Purchasers in the Receivables. This appointment is coupled with an interest and is irrevocable.
Section 13.5 Confidentiality. (a) Each Seller Party and each Purchaser shall maintain and shall cause each of its employees and officers to
maintain the confidentiality of this Agreement and the other confidential or proprietary information with respect to the Administrative Agent
and Conduit and their respective businesses obtained by it or them in connection with the structuring, negotiating and execution of the
transactions contemplated herein, except that such Seller Party and such Purchaser and its officers and employees may
42
disclose such information to such Seller Party’s and such Purchaser’s external accountants and attorneys and as required by any applicable
law, regulation or order of any judicial, regulatory or administrative proceeding (whether or not having the force of law). Anything herein to
the contrary notwithstanding, each Seller Party, each Purchaser, the Administrative Agent, each Indemnified Party and any successor or
assign of any of the foregoing (and each employee, representative or other agent of any of the foregoing) may disclose to any and all Persons,
without limitation of any kind, the “tax treatment” and “tax structure” (in each case, within the meaning of Treasury Regulation Section 1.6011-
4) of the transactions contemplated herein and all materials of any kind (including opinions or other tax analyses) that are or have been
provided to any of the foregoing relating to such tax treatment or tax structure, and it is hereby confirmed that each of the foregoing have been
so authorized since the commencement of discussions regarding the transactions.
(b) Anything herein to the contrary notwithstanding, each Seller Party hereby consents to the disclosure of any nonpublic information
with respect to it (i) to the Administrative Agent, the Financial Institutions or Conduit by each other, (ii) by the Administrative Agent or the
Purchasers to any prospective or actual assignee or participant of any of them and (iii) by the Administrative Agent to any rating agency,
Commercial Paper dealer or provider of a surety, guaranty or credit or liquidity enhancement to Conduit or any entity organized for the purpose
of purchasing, or making loans secured by, financial assets for which Bank One acts as the administrative agent and to any officers, directors,
employees, outside accountants and attorneys of any of the foregoing, provided each such Person is informed of the confidential nature of
such information. In addition, the Purchasers and the Administrative Agent may disclose any such nonpublic information pursuant to any law,
rule, regulation, direction, request or order of any judicial, administrative or regulatory authority or proceedings (whether or not having the
force or effect of law).
Section 13.6 Bankruptcy Petition. Seller, the Servicer, the Administrative Agent and each Financial Institution hereby covenants and
agrees that, prior to the date that is one year and one day after the payment in full of all outstanding senior indebtedness of Conduit, it will not
institute against, or join any other Person in instituting against, Conduit any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other similar proceeding under the laws of the United States or any state of the United States.
Section 13.7 Limitation of Liability. (a) No claim may be made by any party to this Agreement or any other Person against any other party
hereto or any Financial Institution or their respective Affiliates, directors, officers, employees, attorneys or agents for any special, indirect,
consequential or punitive damages in respect of any claim for breach of contract or any other theory of liability arising out of or related to the
transactions contemplated by this Agreement, or any act, omission or event occurring in connection therewith; and each party to this
Agreement hereby waives, releases, and agrees not to sue upon any claim for any such damages, whether or not accrued and whether or not
known or suspected to exist in its favor, except, with respect to any claim against any party hereto (other than the Conduit) arising due to such
Person’s gross negligence or willful misconduct.
43
(b) Notwithstanding any provisions contained in this Agreement or any other Transaction Document to the contrary, Conduit shall not
be obligated to pay any amount pursuant to this Agreement or any other Transaction Document unless Conduit has excess cash flow from
operations or has received funds which may be used to make such payment and which funds or excess cash flow are not required to repay any
of Conduit’s Commercial Paper when due. Any amount which Conduit does not pay pursuant to the operation of the preceding sentence shall
not constitute a claim against Conduit for any such insufficiency. The agreements in this section shall survive the termination of this
Agreement and the other Transaction Documents.
Section 13.8 CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS (INCLUDING, WITHOUT LIMITATION, SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF NEW YORK, BUT
OTHERWISE WITHOUT REGARD TO THE LAW OF CONFLICTS) OF THE STATE OF NEW YORK, BUT GIVING EFFECT TO FEDERAL
LAWS APPLICABLE TO NATIONAL BANKS.
Section 13.9 CONSENT TO JURISDICTION. EACH SELLER PARTY HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK, NEW YORK IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH PERSON
PURSUANT TO THIS AGREEMENT AND EACH SELLER PARTY HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF
SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY
OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN
SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT
OR ANY PURCHASER TO BRING PROCEEDINGS AGAINST ANY SELLER PARTY IN THE COURTS OF ANY OTHER JURISDICTION. ANY
JUDICIAL PROCEEDING BY ANY SELLER PARTY AGAINST THE AGENT OR ANY PURCHASER OR ANY AFFILIATE OF THE AGENT
OR ANY PURCHASER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH SELLER PARTY PURSUANT TO THIS AGREEMENT
SHALL BE BROUGHT ONLY IN A COURT IN NEW YORK, NEW YORK.
Section 13.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY
ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT, ANY DOCUMENT EXECUTED BY ANY SELLER PARTY
PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER.
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Section 13.11 Integration; Binding Effect; Survival of Terms.

(a) This Agreement and each other Transaction Document contain the final and complete integration of all prior expressions by the
parties hereto with respect to the subject matter hereof and shall constitute the entire agreement among the parties hereto with respect to the
subject matter hereof superseding all prior oral or written understandings.
(b) This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted
assigns (including any trustee in bankruptcy). This Agreement shall create and constitute the continuing obligations of the parties hereto in
accordance with its terms and shall remain in full force and effect until terminated in accordance with its terms; provided, however, that the
rights and remedies with respect to (i) any breach of any representation and warranty made by any Seller Party pursuant to Article V, (ii) the
indemnification and payment provisions of Article X, and Sections 13.5, 13.6 and 13.7 shall be continuing and shall survive any termination of
this Agreement.
Section 13.12 Counterparts; Severability; Section References. This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when
taken together shall constitute one and the same Agreement. Any provisions of this Agreement which are prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision
in any other jurisdiction. Unless otherwise expressly indicated, all references herein to “Article,” “Section,” “Schedule” or “Exhibit” shall mean
articles and sections of, and schedules and exhibits to, this Agreement.
Section 13.13 Bank One Roles. Each of the Financial Institutions acknowledges that Bank One acts, or may in the future act, (i) as
administrative agent for Conduit or any Financial Institution, (ii) as issuing and paying agent for the Commercial Paper, (iii) to provide credit or
liquidity enhancement for the timely payment for the Commercial Paper and (iv) to provide other services from time to time for Conduit or any
Financial Institution (collectively, the “Bank One Roles”). Without limiting the generality of this Section 13.13, each Financial Institution
hereby acknowledges and consents to any and all Bank One Roles and agrees that in connection with any Bank One Role, Bank One may take,
or refrain from taking, any action that it, in its discretion, deems appropriate, including, without limitation, in its role as administrative agent for
Conduit.
Section 13.14 Characterization. (a) It is the intention of the parties hereto that each purchase hereunder shall constitute and be treated as
an absolute and irrevocable sale, which purchase shall provide the applicable Purchaser with the full benefits of ownership of the applicable
Purchaser Interest. Except as specifically provided in this Agreement, each sale of a Purchaser Interest hereunder is made without recourse to
Seller; provided, however, that (i) Seller shall be liable to each Purchaser and the Administrative Agent for all representations, warranties,
covenants and indemnities made by Seller pursuant to the terms of this Agreement, and (ii) such sale does not constitute and is not intended
to result in an assumption by any
45
Purchaser or the Administrative Agent or any assignee thereof of any obligation of Seller, CRF I, Originator or any other Person arising in
connection with the Receivables, the Related Security, or the related Contracts, or any other obligations of Seller, CRF I or Originator.
(b) In addition to any ownership interest which the Administrative Agent may from time to time acquire pursuant hereto, Seller hereby
grants to the Administrative Agent for the ratable benefit of the Purchasers a valid and perfected security interest in all of Seller’s right, title
and interest in, to and under all Receivables now existing or hereafter arising, the Collections, each Lock-Box, each Collection Account, all
Related Security, all other rights and payments relating to such Receivables, all of Seller’s rights, title and interest in, to and under the Sale
Agreements (including, without limitation, (a) all rights to indemnification arising thereunder and (b) all UCC financing statements filed
pursuant thereto), and all proceeds of any thereof and all other assets in which the Administrative Agent on behalf of the Purchasers has
acquired, may hereafter acquire and/or purports to have acquired an interest under this Agreement prior to all other liens on and security
interests therein to secure the prompt and complete payment of the Aggregate Unpaids. The Administrative Agent and the Purchasers shall
have, in addition to the rights and remedies that they may have under this Agreement, all other rights and remedies provided to a secured
creditor under the UCC and other applicable law, which rights and remedies shall be cumulative. The Seller hereby authorizes the
Administrative Agent, within the meaning of 9-509 of any applicable enactment of the UCC, as secured party for the benefit of itself and of the
Purchasers, to file, without the signature of the Seller, CRF I or Originator, as debtors, the UCC financing statements contemplated herein and
under the Sale Agreements. The Administrative Agent shall promptly deliver a copy of any such UCC financing statements so filed to the
Seller, provided that the Administrative Agent’s failure to deliver such copy shall not effect the validity of such filing.
(c) In connection with Seller’s transfer of its right, title and interest in, to and under the Sale Agreements, from and after the occurrence
of an Amortization Event and during the continuation thereof, the Seller agrees that the Administrative Agent shall have the right to enforce
the Seller’s rights and remedies under the Sale Agreements, to receive all amounts payable thereunder or in connection therewith, to consent
to amendments, modifications or waivers thereof, and to direct, instruct or request any action thereunder, but in each case without any
obligation on the part of the Administrative Agent or any Purchaser or any of its or their respective Affiliates to perform any of the obligations
of the Seller under the Sale Agreements. To the extent that the Seller enforces the Seller’s rights and remedies under the Sale Agreements, from
and after the occurrence of an Amortization Event, and during the continuance thereof, the Administrative Agent shall have the exclusive right
to direct such enforcement by the Seller.
Section 13.15 Intercreditor Agreement. Each Purchaser hereby agrees to be bound by the terms of, and the Administrative Agent’s
covenants, agreements, waivers and acknowledgements under, the Intercreditor Agreement.
[SIGNATURE PAGES FOLLOW]
46
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered by their duly authorized officers as
of the date hereof.

Title: President
Address: Consumers Receivables Funding II, LLC

One Energy Plaza
Jackson, Michigan 49201
FAX: (517) 788-8233
CONSUMERS ENERGY COMPANY, as Servicer

Address: Consumers Energy Company

One Energy Plaza
FAX: (517) 788-8233
Signature Page to Receivables Purchase Agreement

FALCON ASSET SECURITIZATION CORPORATION
By: /s/ Leo V. Loughead

Leo V. Loughead, Authorized Signatory
Address: c/o Bank One, NA (Main Office Chicago),

as Administrative Agent
Asset Backed Finance
Suite IL1-1729, 1-19
1 Bank One Plaza
Chicago, Illinois 60670-1729
FAX: (312) 732-1844

BANK ONE, NA (MAIN OFFICE CHICAGO), as a Financial

Financial Institution and as Administrative Agent

Name: Leo V. Loughead
Title: Managing Director, Capital Markets
Address: Bank One, NA (Main Office Chicago)

Asset Backed Finance
Suite IL1-1729, 1-19
1 Bank One Plaza
Chicago, Illinois 60670-1729
Fax: (312) 732-3600

EXHIBIT I
DEFINITIONS
As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):
“Accrual Period” means each calendar month, provided that the initial Accrual Period hereunder means the period from (and including)
the date of the initial purchase hereunder to (and including) the last day of the calendar month thereafter.
“Administrative Agent” has the meaning set forth in the preamble to this Agreement.
“Adverse Claim” means a lien, security interest, financing statement, charge or encumbrance, or other right or claim in, of or on any
Person’s assets or properties in favor of any other Person.
“Affected Financial Institution” has the meaning specified in Section 12.1(c).
“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person or any Subsidiary of such Person. A Person shall be deemed to control another Person if the controlling
Person owns 10% or more of any class of voting securities of the controlled Person or possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies of the controlled Person, whether through ownership of stock, by contract or otherwise.
“Aggregate Capital” means, at any time, the aggregate amount of Capital of all Purchaser Interests outstanding on such date.
“Aggregate Reduction” means any reduction to Aggregate Capital pursuant to Section 1.3.
“Aggregate Reserves” means, at any time, the sum of the Loss Reserve, the Yield and Servicer Fee Reserve and the Dilution Reserve.
“Aggregate Unpaids” means, at any time, an amount equal to the sum of all Aggregate Capital and all other unpaid Obligations (whether
due or accrued) at such time.
“Agreement” means this Receivables Purchase Agreement, as it may be amended or modified and in effect from time to time.
“Amortization Date” means the earliest to occur of (i) the day on which any of the conditions precedent set forth in Section 6.2 are not
satisfied, (ii) the Business Day immediately
Exh I - 1
prior to the occurrence of an Amortization Event set forth in Section 9.1(d), (iii) the Business Day specified in a written notice from the
Administrative Agent following the occurrence of any other Amortization Event, (iv) the Liquidity Termination Date and (v) the date which is
at least fifteen (15) Business Days after the Administrative Agent’s receipt of written notice from Seller that it wishes to terminate the facility
evidenced by this Agreement, provided that any prepayment resulting from such declaration of the Amortization Date shall be subject to the
provisions of Section 2.1.
“Amortization Event” has the meaning specified in Article IX.
“Applicable Margin” has the meaning set forth in the Fee Letter.
“Applicable Maximum Purchaser Interest” means the percentage as set forth in the schedule below based upon the Monthly Report
Coverage Period then in effect.
Monthly Report Coverage P eriod Applicable Maximum P urchaser Interest

January 95%
February 92.5%
March 85%
April 85%
May 100%
June 100%
July 100%
August 95%
September 95%
October 100%
November 100%
December 100%
“Applicable Stress Factor” means, at any time, the amount set forth below based on the Debt Rating of Consumers by each of S&P and
Moody’s, respectively; provided, however, that (a) if the ratings established or deemed to have been established by S&P and Moody’s,
respectively, fall within different levels, the Applicable Stress Factor will be based on
Exh I - 2
the lower of the two ratings and (b) if S&P or Moody’s (but not both) is then rating Consumers, the Applicable Stress Factor will be based on
the single rating then in effect:
Debt Rating by S&P /Moody’s Applicable Stress Factor

Greater than or equal to BBB-/Baa3 2.0
Less than BBB-/Baa3, but greater than or equal to BB/Ba2 2.25
Less than BB/Ba2 or unrated 2.5
“Applicable Unbilled Receivables Limit” means (i) at any time during a Level One Enhancement Period, 50%, (ii) at any time during a
Level Two Enhancement Period, 35%, and (iii) at any time during a Level Three Enhancement Period, 25%.
“Assignment Agreement” has the meaning set forth in Section 12.1(b).
“Bank One” means Bank One, NA (Main Office Chicago) in its individual capacity and its successors.
“Bank Rate” means, the LIBO Rate or the Prime Rate, as applicable, with respect to each Purchaser Interest of the Financial Institutions
and any Purchaser Interest of Conduit, an undivided interest in which has been assigned by Conduit to a Financial Institution pursuant to the
Liquidity Agreement.
“Billed Receivable” means a Receivable for which, as of the time of determination, an invoice addressed to the Obligor thereof has been
sent.
“Broken Funding Costs” means for any Tranche Period or any tranche period for Commercial Paper for any Purchaser Interest which:
(i) has its Capital reduced without compliance by Seller with the notice requirements hereunder, (ii) does not become subject to an Aggregate
Reduction following the delivery of any Reduction Notice, or (iii) is assigned under the Liquidity Agreement or terminated prior to the date on
which it was originally scheduled to end, including by the written notice of Seller that it wishes to terminate the facility evidenced by this
Agreement; an amount equal to the excess, if any, of (A) the Yield that would have accrued during the remainder of the Tranche Period or the
tranche period for Commercial Paper determined by the Administrative Agent to relate to such Purchaser Interest (as applicable) subsequent
to the date of such reduction, assignment or termination (or in respect of clause (ii) above, the date such Aggregate Reduction was designated
to occur pursuant to the Reduction Notice) of the Capital of such Purchaser Interest if such reduction, assignment or termination had not
occurred or such Reduction Notice had not been delivered, over (B) the sum of (x) to the extent all or a portion of such Capital is allocated to
another Purchaser Interest, the amount of Yield actually accrued during the remainder of such period on such Capital for the new Purchaser
Interest, and (y) to the extent such Capital is not allocated to another Purchaser Interest, the income, if any, actually received during the
remainder of such period by the holder
Exh I - 3
of such Purchaser Interest from investing the portion of such Capital not so allocated. In the event that the amount referred to in clause
(B) exceeds the amount referred to in clause (A), the relevant Purchaser or Purchasers agree to pay to Seller the amount of such excess. All
Broken Funding Costs shall be due and payable hereunder upon demand.
“Business Day” means any day on which banks are not authorized or required to close in New York, New York or Chicago, Illinois and
The Depository Trust Company of New York is open for business, and, if the applicable Business Day relates to any computation or payment
to be made with respect to the LIBO Rate, any day on which dealings in dollar deposits are carried on in the London interbank market.
“Capital” of any Purchaser Interest means, at any time, (A) the Purchase Price of such Purchaser Interest, minus (B) the sum of the
aggregate amount of Collections and other payments received by the Administrative Agent which in each case are applied to reduce such
Capital in accordance with the terms and conditions of this Agreement; provided that such Capital shall be restored (in accordance with
Section 2.6) in the amount of any Collections or other payments so received and applied if at any time the distribution of such Collections or
payments are rescinded, returned or refunded for any reason.
“Capital Pro Rata Share” means, for any Purchaser at any time, the amount of Capital allocated to the Purchaser Interests of such
Purchaser at such time divided by the Aggregate Capital at such time.
“Change of Control” means (a) with respect to Originator, the acquisition by any Person, or two or more Persons acting in concert, of
beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934)
of 50% or more of the outstanding shares of voting stock of Originator and (b) with respect to Seller or CRF I, Originator’s failure to own,
directly or indirectly, 100% of the issued and outstanding equity of the Seller.
“Charged-Off Receivable” means a Receivable which, consistent with the Credit and Collection Policy, would be written off Seller’s
books as uncollectible.
“Closing Date” means May 22, 2003.
“CMS Entity” has the meaning set forth in Section 7.1(i).
“Collection Account” means each concentration account, depositary account, lock-box account or similar account in which any
Collections are collected or deposited and which is listed on Exhibit IV.
“Collection Account Agreement” means an agreement substantially in the form of Exhibit VI among CRF I, Servicer, Seller, the
Administrative Agent and a Collection Bank.
“Collection Bank” means, at any time, any of the banks holding one or more Collection Accounts.
Exh I - 4
“Collection Notice” means a notice, in substantially the form of Annex A to Exhibit VI, from the Administrative Agent to a Collection
Bank.
“Collections” means, with respect to any Receivable, all cash collections and other cash proceeds in respect of such Receivable,
including, without limitation, all yield, Finance Charges or other related amounts accruing in respect thereof and all cash proceeds of Related
Security with respect to such Receivable.
“Commercial Paper” means promissory notes of Conduit issued by Conduit in the commercial paper market.
“Commitment” means, for each Financial Institution, the commitment of such Financial Institution to purchase Purchaser Interests from
(i) Seller and (ii) Conduit, in an amount not to exceed (i) in the aggregate, the amount set forth opposite such Financial Institution’s name on
Schedule A to this Agreement, as such amount may be modified in accordance with the terms hereof and (ii) with respect to any individual
purchase hereunder, its Pro Rata Share of the Purchase Price therefor.
“Conduit” has the meaning set forth in the preamble to this Agreement.
“Concentration Limit” means, at any time, for any Obligor, 2% of the Outstanding Balance of all Eligible Receivables, or such other
amount (a “Special Concentration Limit”) for such Obligor designated by the Administrative Agent; provided, that in the case of an Obligor
and any Affiliate of such Obligor, the Concentration Limit shall be calculated as if such Obligor and such Affiliate are one Obligor; and
provided, further, that Conduit or the Required Financial Institutions may, upon not less than three Business Days’ notice to Seller, cancel any
Special Concentration Limit.
“Consumers” means Consumers Energy Company, a Michigan corporation.
“Contingent Obligation” of a Person means any agreement, undertaking or arrangement by which such Person assumes, guarantees,
endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise becomes or is contingently liable upon, the
obligation or liability of any other Person, or agrees to maintain the net worth or working capital or other financial condition of any other
Person, or otherwise assures any creditor of such other Person against loss, including, without limitation, any comfort letter, operating
agreement, take-or-pay contract or application for a letter of credit.
“Contract” means, with respect to any Receivable, the invoices and any instruments, agreements or other writings pursuant to which
such Receivable arises or which evidences such Receivable.
“CP Rate” means, for any Accrual Period for any Purchaser Interest owned by Conduit if and to the extent Conduit funds the Purchase or
maintenance of its Purchaser Interest by the issuance of commercial paper notes during such Settlement Period, the per annum rate that
reflects, for each day during such Settlement Period, the sum of (i) discount or yield accrued on Pooled Commercial Paper on such day, plus
(ii) any and all accrued commissions in respect
Exh I - 5
of placement agents and Commercial Paper dealers, and issuing and paying agent fees incurred, in respect of such Pooled Commercial Paper
for such day, plus (iii) other costs associated with funding small or odd-lot amounts with respect to all receivable purchase facilities which are
funded by Pooled Commercial Paper for such day, minus (iv) any accrual of income net of expenses received on such day from investment of
collections received under all receivable purchase facilities funded substantially with Pooled Commercial Paper, minus (v) any payment
received on such day net of expenses in respect of Broken Funding Costs related to the prepayment of any Purchaser Interest of Conduit
pursuant to the terms of any receivable purchase facilities funded substantially with Pooled Commercial Paper. In addition to the foregoing
costs, if Seller shall request any Incremental Purchase during any period of time determined by the Administrative Agent in its sole discretion
to result in an incrementally higher CP Rate applicable to such additional Purchase, the Capital associated with any such Incremental Purchase
shall, during such period, be deemed to be funded by Conduit in a special pool (which may include capital associated with other receivable
purchase facilities) for purposes of determining such higher CP Rate applicable only to such special pool and charged each day during such
period against such Capital.
“Credit and Collection Policy” means Originator’s credit and collection policies and practices relating to Contracts and Receivables
existing on the date hereof and summarized in Exhibit VIII hereto, as modified from time to time in accordance with this Agreement, or as
required under regulatory directive.
“CRF I” means Consumers Receivables Funding, LLC, a Delaware limited liability company.
“CRF I Agreement” means that certain Sale Agreement dated May 1, 2003 between CRF I and Seller, as the same may be amended,
restated or otherwise modified from time to time.
“Customer Deposits” means, at any time, the aggregate amount of cash deposits held by Consumers against Obligors’ accounts.
“Days Sales Outstanding Ratio” means, for any Accrual Period, (i) the aggregate Outstanding Balance of all Receivables as of the last
day of the Accrual Period ending one Accrual Period prior to such Accrual Period, divided by (ii) the aggregate amount of Collections received
during such Accrual Period, multiplied by (iii) 30.
“Debt Rating” means, at any time, the rating then assigned by S&P and/or Moody’s to the applicable entity’s senior secured long-term
debt securities without third party credit enhancement.
“Deemed Collections” means the aggregate of all amounts Seller shall have been deemed to have received as a Collection of a
Receivable. Seller shall be deemed to have received a Collection of a Receivable to the extent that (i) the Outstanding Balance of any such
Receivable is either (x) reduced as a result of any defective or rejected goods or services, any discount or any adjustment or otherwise by
Seller (other than cash Collections on account of
Exh I - 6
such Receivable) or (y) reduced or canceled as a result of a setoff in respect of any claim by any Person (whether such claim arises out of the
same or a related transaction or an unrelated transaction) or (ii) any of the representations or warranties in Article V are no longer true with
respect to such Receivable.
“Default Fee” means with respect to any amount due and payable by Seller (or required to be deposited by Servicer) in respect of any
Aggregate Unpaids, an amount equal to the greater of (i) $1000 and (ii) interest on any such unpaid Aggregate Unpaids at a rate per annum
equal to 2% above the Prime Rate.
“Default Ratio” means, for any Accrual Period, a ratio (expressed as a percentage) equal to (i) the aggregate Outstanding Balance of all
Billed Receivables which are more than sixty (60) and less than ninety-one (91) days past due as of the last day of the most recently ended
Accrual Period plus all Charged-Off Receivables written off during such Accrual Period divided by (ii) the aggregate Original Balance of all
Receivables originated during the Accrual Period which ended three Accrual Periods prior to such Accrual Period.
“Delinquent Receivable” means a Billed Receivable as to which any payment, or part thereof, remains unpaid for sixty-one (61) days or
more from the original due date for such payment.
“Dilution Horizon Factor” means, at any time, a fraction, the numerator of which equals the sum of (a) the aggregate Original Balance of
all Billed Receivables originated during the Accrual Period ending immediately prior to the last day of such Accrual Period and (b) the
aggregate Original Balance of Unbilled Receivables as of the end of such Accrual Period, and the denominator of which equals the Net
Receivables Balance as of the end of the most recently ended Accrual Period.
“Dilution Percentage” means as of any date of determination the greater of (i) 6% and (ii) a percentage calculated in accordance with the
following formula:
DP = [(ASF x ADR) + [(HDR — ADR) x (HDR/ADR)]] x DHF
where:
DP = the Dilution Percentage;
ADR = the average of the monthly Dilution Ratios occurring during the 12 most recent Accrual Periods;
ASF = Applicable Stress Factor;
HDR = the highest Dilution Ratio occurring during the 12 most recent Accrual Periods; and
DHF = the Dilution Horizon Factor at such time.

“Dilution Ratio” means, for any Accrual Period, a percentage equal to (i) the aggregate amount of Dilutions which occurred during such
Accrual Period less the positive difference, if any, between (a) the aggregate amount of debit adjustments which occurred during such Accrual
Period and (b) the aggregate amount of debit adjustments relating to electric
Exh I - 7
wholesale customer sales during such Accrual Period, divided by (ii) the aggregate Original Balance of all Receivables generated by the
Originator during such Accrual Period.
“Dilution Reserve” means, at any time, an amount equal to the product of (a) the Net Receivables Balance as of the close of business on
such date, times (b) the Dilution Percentage.
“Dilutions” means, at any time or for any period, the aggregate amount of reductions or cancellations described in clause (i) of the
definition of “Deemed Collections” provided, that for the month of March, 2002, “Dilutions” shall mean $7,000,000.
“Eligible Receivable” means, at any time, a Receivable:
(i) which is not a Charged-Off Receivable or a Delinquent Receivable,
(ii) which by its terms is due and payable within 30 days of the original billing date therefor and has not had its payment terms extended,
(iii) which is an “account” within the meaning of Section 9-102 of the UCC of all applicable jurisdictions,
(iv) which is denominated and payable only in United States dollars in the United States,
(v) the Obligor of which, if a natural person, maintains a service address in the United States, or if a corporation or other business
organization, maintains a place of business in the United States,
(vi) the Obligor of which is not an Affiliate of (i) any party hereto or (ii) Originator,
(vii) which arises under a Contract which, together with such Receivable, is in full force and effect and constitutes the legal, valid and
binding obligation of the related Obligor enforceable against such Obligor in accordance with its terms subject to no offset, rescission,
counterclaim or other defense, except as limited by bankruptcy, insolvency or other similar laws,
(viii) which arises under a Contract which (A) does not require the Obligor under such Contract to consent to the transfer, sale or
assignment of the rights to payment of Originator or any of its assignees under such Contract and (B) does not contain a confidentiality
provision that purports to restrict the ability of any Purchaser to exercise its rights under this Agreement, including, without limitation, its
right to review the Contract,
(ix) which arises under a Contract that contains an obligation to pay a specified sum of money, contingent only upon the sale of goods,
electricity or gas or provision of services by Originator and not by any other person (in whole or in part),
Exh I - 8
(x) which, if an Unbilled Receivable, has been included on a Monthly Report as an Eligible Receivable during a period of not more than
thirty-six (36) consecutive calendar days,
(xi) which, together with the Contract related thereto, does not contravene any law, rule or regulation applicable thereto (including,
without limitation, any law, rule and regulation relating to truth in lending, fair credit billing, fair credit reporting, equal credit opportunity,
fair debt collection practices and privacy) and with respect to which no part of the Contract related thereto is in violation of any such law,
rule or regulation,
(xii) which satisfies in all material respects all applicable requirements of the applicable Credit and Collection Policy,
(xiii) which was originated in the ordinary course of Originator’s business,
(xiv) which is not subject to any right of rescission, set-off, counterclaim, any other defense (including defenses arising out of violations
of usury laws) of the applicable Obligor against Originator or CRF I (it being understood that only a portion of a Receivable equal to the
amount of such partial rescission, set-off, counterclaim or defense, if the amount of such partial rescission, set-off, counterclaim or defense
can be quantified, shall be deemed not to be an Eligible Receivable) or any other Adverse Claim, and the Obligor thereon holds no right as
against Originator or CRF I,
(xv) as to which Originator has satisfied and fully performed all obligations on its part with respect to such Receivable required to be
fulfilled by it, and no further action is required to be performed by any Person with respect thereto other than payment thereon by the
applicable Obligor, and
(xvi) all right, title and interest to and in which has been validly transferred by the applicable Transferor directly to Seller under and in
accordance with the applicable Sale Agreement, and Seller has good and marketable title thereto free and clear of any Adverse Claim.
“EMPP Receivable” means a Receivable arising under an Obligor’s account which is subject to a balanced or levelized payment plan of
Originator.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.
“Excess Government Receivables Amount” means at any time, an amount equal to the positive difference, if any, between (i) the
aggregate Outstanding Balance of the Eligible Receivables consisting of Government Receivables at such time and (ii) the Government
Receivable Concentration Limit at such time.
“Excess Non-Energy Receivables Amount” means at any time, an amount equal to the positive difference, if any, between (i) the sum of
(A) the aggregate Original Balance of the Eligible Receivables consisting of Non-Energy Receivables originated during the
Exh I - 9
immediately preceding Accrual Period plus (B), without duplication of the amount set forth in clause (A), the aggregate amount of Finance
Charges then due and owing with respect to all Eligible Receivables at such time and (ii) the Non-Energy Receivables Limit at such time.
“Excess Unbilled Receivables Amount” means at any time, an amount equal to the positive difference, if any, between (i) the aggregate
Outstanding Balance of the Eligible Receivables consisting of Unbilled Receivables as of the last day of the most recently ended Accrual
Period and (ii) the product of (a) the Applicable Unbilled Receivables Limit at such time, multiplied by (b) the aggregate Outstanding Balance
of all Receivables as of the last day of the most recently ended Accrual Period.
“Excess WPP Receivables Amount” means, at any time, an amount equal to the positive difference, if any, between (i) the aggregate
Outstanding Balance of the Eligible Receivables consisting of WPP Receivables as of the last day of the most recently ended Accrual Period
and (ii) the WPP Limit at such time.
“Federal Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy,” as amended and any successor statute
thereto.
“Federal Funds Effective Rate” means, for any period, a fluctuating interest rate per annum for each day during such period equal to
(a) the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal
funds brokers, as published for such day (or, if such day is not a Business Day, for the preceding Business Day) by the Federal Reserve Bank
of New York in the Composite Closing Quotations for U.S. Government Securities; or (b) if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 11:30 a.m. (New York time) for such day on such transactions received by Bank
One from three federal funds brokers of recognized standing selected by it.
“Fee Letter” means that certain letter agreement dated as of the date hereof among Seller, the Conduit and the Administrative Agent, as it
may be amended or modified and in effect from time to time.
“Finance Charges” means, with respect to a Contract, any finance, interest, late payment charges or similar charges owing by an Obligor
pursuant to such Contract.
“Financial Institutions” has the meaning set forth in the preamble in this Agreement.
“Financing Order” means the financing order issued by the Michigan Public Service Commission on October 24, 2000, as amended.
“Funding Agreement” means this Agreement and any agreement or instrument executed by any Funding Source with or for the benefit
of Conduit (including the Liquidity Agreement).
Exh I - 10
“Funding Source” means (i) any Financial Institution or (ii) any insurance company, bank or other funding entity providing liquidity,
credit enhancement or back-up purchase support or facilities to Conduit.
“GAAP” means generally accepted accounting principles in the United States of America as in effect on the date hereof, applied on a
basis consistent with those used in the preparation of the financial statements of Consumers for the period ending December 31, 2002 (except,
for purposes of the financial statements required to be delivered pursuant to Sections 7.1, for changes concurred in by the Consumers’
independent public accountants).
“Government Receivable” means a Receivable the Obligor of which is a federal, state or local government, or an agency, branch, division,
district or other political subdivision thereof.
“Government Receivable Concentration Limit” means, at any time, with respect to Government Receivables that are otherwise Eligible
Receivables, an amount equal to the lesser of (A) $20,000,000 and (B) 5% of the aggregate Outstanding Balance of all Eligible Receivables at
such time.
“Incremental Purchase” means a purchase of one or more Purchaser Interests which increases the total outstanding Aggregate Capital
hereunder.
“Indebtedness” of a Person means such Person’s (i) obligations for borrowed money, (ii) obligations representing the deferred purchase
price of property or services (other than accounts payable arising in the ordinary course of such Person’s business payable on terms
customary in the trade), (iii) obligations, whether or not assumed, secured by liens or payable out of the proceeds or production from property
now or hereafter owned or acquired by such Person, (iv) obligations which are evidenced by notes, acceptances, or other instruments,
(v) capitalized lease obligations, (vi) net liabilities under interest rate swap, exchange or cap agreements, (vii) Contingent Obligations and
(viii) liabilities in respect of unfunded vested benefits under plans covered by Title IV of ERISA.
“Independent Manager” has the meaning specified in the Limited Liability Company Agreement of the Seller.
“Intercreditor Agreement” means the Intercreditor Agreement dated as of May 22, 2003 among Bank One, NA (Main Office Chicago),
Falcon Asset Securitization Corporation, The Bank of New York, as trustee, Consumers Funding LLC, Consumers Receivables Funding II, LLC
and Consumers Energy Company.
“Inventory Facility Intercreditor Agreement” means an intercreditor agreement, in form and substance acceptable to the Administrative
Agent, among the Seller, Servicer, Administrative Agent and any financial institutions, or agent thereof, providing to Consumers a credit
facility secured by its inventory.
“Level One Enhancement Period” means any period during which Consumers’ Debt Rating shall be BBB- or higher as rated by S&P and
Baa3 or higher as rated by Moody’s.
Exh I - 11
“Level Two Enhancement Period” means any period during which Consumers’ Debt Rating shall be lower than BBB- as rated by S&P or
Baa3 as rated by Moody’s but higher than BB- by S&P and Ba3 by Moody’s.
“Level Three Enhancement Period” means any period during which Consumers’ Debt Rating shall be BB- or lower as rated by S&P or
Ba3 or lower as rated by Moody’s.
“LIBO Rate” means the rate per annum equal to the sum of (i) (a) the applicable British Bankers’ Association Interest Settlement Rate for
deposits in U.S. dollars appearing on Reuters Screen FRBD as of 11:00 a.m. (London time) two (2) Business Days prior to the first day of the
relevant Tranche Period, and having a maturity equal to such Tranche Period, provided that, (A) if Reuters Screen FRBD is not available to the
Administrative Agent for any reason, the applicable LIBO Rate for the relevant Tranche Period shall instead be the applicable British Bankers’
Association Interest Settlement Rate for deposits in U.S. dollars as reported by any other generally recognized financial information service as
of 11:00 a.m. (London time) two (2) Business Days prior to the first day of such Tranche Period, and having a maturity equal to such Tranche
Period, and (B) if no such British Bankers’ Association Interest Settlement Rate is available to the Administrative Agent, the applicable LIBO
Rate for the relevant Tranche Period shall instead be the rate determined by the Administrative Agent to be the rate at which Bank One offers
to place deposits in U.S. dollars with first-class banks in the London interbank market at approximately 11:00 a.m. (London time) two
(2) Business Days prior to the first day of such Tranche Period, in the approximate amount to be funded at the LIBO Rate and having a
maturity equal to such Tranche Period, divided by (b) one minus the maximum aggregate reserve requirement (including all basic,
supplemental, marginal or other reserves) which is imposed against the Administrative Agent in respect of Eurocurrency liabilities, as defined
in Regulation D of the Board of Governors of the Federal Reserve System as in effect from time to time (expressed as a decimal), applicable to
such Tranche Period plus (ii) the Applicable Margin. The LIBO Rate shall be rounded, if necessary, to the next higher 1/16 of 1%.
“Liquidity Agreement” means the agreement entered into by Conduit with the Financial Institutions in connection herewith for the
purpose of providing liquidity with respect to the Capital funded by Conduit under this Agreement.
“Liquidity Termination Date” means May 20, 2004.
“Lock-Box” means each postal box or code listed on Exhibit IV over which the Administrative Agent has been granted control pursuant
to a P.O. Box Transfer Notice.
“Loss Horizon Factor” means, at any time, a fraction, the numerator of which equals the sum of (a) the aggregate Original Balance of all
Billed Receivables originated during the three Accrual Periods ending immediately prior to the last day of the most recently ended Accrual
Period and (b) the aggregate Original Balance of Unbilled Receivables as of the last day of the most recently ended Accrual Period, and the
denominator of which equals the Net Receivables Balance as of the end of the most recently ended Accrual Period.
Exh I - 12
“Loss Percentage” means at any time the greater of (i) 8% and (ii) a percentage calculated in accordance with the following formula:
LP = ASF x LHF x LR
where:
ASF = Applicable Stress Factor;
LP = the Loss Percentage;
LHF = the Loss Horizon Factor; and
LR = the highest three month rolling average of the Loss Ratios occurring during the 12 most recent Accrual Periods.
“Loss Ratio” means, at any time, a ratio (expressed as a percentage) equal to (i) the product of (a) the aggregate Outstanding Balance of
all Billed Receivables which are more than sixty (60) and less than ninety-one (91) days past due as of the last day of the most recently ended
Accrual Period plus all Charged-Off Receivables written off during such Accrual Period and (b) 0.5 divided by (ii) the aggregate Original
Balance of all Receivables originated during the Accrual Period which ended three Accrual Periods prior to such Accrual Period.
“Loss Reserve” means, at any time, an amount equal to the Loss Percentage multiplied by the Net Receivables Balance as of the close of
business of the Servicer on such date.
“Manager” has the meaning specified in the Limited Liability Company Agreement of the Seller.
“Material Adverse Effect” means a material adverse effect on (i) the financial condition or operations of either Seller Party and its
Subsidiaries, taken as a whole (except that a downgrade in any debt rating of either Seller Party or any of its Subsidiaries shall not by itself
have any such material adverse effect), (ii) the ability of any Seller Party to perform its obligations under this Agreement or any other
Transaction Document, (iii) the legality, validity or enforceability of this Agreement or any other Transaction Document, (iv) any Purchaser’s
interest in the Receivables generally or in any significant portion of the Receivables, the Related Security or the Collections with respect
thereto, or (v) the collectibility of the Receivables generally or of any material portion of the Receivables.
“Monthly Report Coverage Period” means a period of time commencing on each due date for a Monthly Report and ending on the day
occurring immediately prior to the due date for the next Monthly Report.
“Monthly Report” means a report, in substantially the form of Exhibit IX hereto (appropriately completed), furnished by the Servicer to
the Administrative Agent pursuant to Section 8.5.
“Moody’s” means Moody’s Investors Service, Inc.
Exh I - 13
“1945 Indenture” means that certain Indenture (as the same has been amended, restated, supplemented or otherwise modified from time
to time) dated as of September 1, 1945 between Originator (formerly known as Consumers Power Company) and JPMorgan Chase Bank (as
successor to City Bank Farmers Trust Company), as Trustee.
“Non-Energy Receivable” means a Receivable arising from the sale of goods other than electricity or gas.
“Non-Energy Receivables Limit” means, at any time, with respect to Non-Energy Receivables that are otherwise Eligible Receivables, an
amount equal to the lesser of (A) $8,000,000 and (B) 2% of the aggregate Outstanding Balance of all Eligible Receivables at such time.
“Net Receivables Balance” means, at any time, the aggregate Outstanding Balance of all Eligible Receivables at such time, minus the sum
(without duplication) of (i) the aggregate amount by which the Outstanding Balance of all Eligible Receivables of each Obligor and its
Affiliates exceeds the Concentration Limit for such Obligor, (ii) the Excess Unbilled Receivables Amount at such time, (iii) the aggregate
Outstanding Balance of Unapplied Cash and Credits at such time, (iv) the Customer Deposits as such time, (v) the Unbilled Receivables Offset
Amount at such time, (vi) the Excess Government Receivables Amount at such time, (vii) the Excess Non-Energy Receivables Amount at such
time and (viii) the Excess WPP Receivables Amount at such time.
“Non-Renewing Financial Institution” has the meaning set forth in Section 12.3.
“Obligations” shall have the meaning set forth in Section 2.1.
“Obligor” means a Person obligated to make payments pursuant to a Contract.
“Original Balance” means, with respect to any Receivable, the Outstanding Balance of such Receivable on the date it was originated.
“Originator” means Consumers, in its capacity as seller under the Receivables Sale Agreement.
“Outstanding Balance” of any Receivable at any time means the then outstanding principal balance thereof.
“Participant” has the meaning set forth in Section 12.2.
“Past Due Ratio” means, for any Accrual Period, (i) the aggregate Outstanding Balance of all Receivables which are more than 60 days
past due as of the last day of such Accrual Period divided by (ii) the aggregate Outstanding Balance of all Receivables.
“Person” means an individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof.
Exh I - 14
“P.O. Box Transfer Notice” means an agreement substantially in the form of Exhibit XI, or such other agreement in form and substance
reasonably acceptable to the Administrative Agent.
“Pooled Commercial Paper” means Commercial Paper notes of Conduit subject to any particular pooling arrangement by Conduit, but
excluding Commercial Paper issued by Conduit for a tenor and in an amount specifically requested by any Person in connection with any
agreement effected by Conduit.
“Potential Amortization Event” means an event which, with the passage of time or the giving of notice, or both, would constitute an
Amortization Event.
“Prime Rate” means a per annum rate equal to the higher of (i) the “prime rate” announced by the Administrative Agent from time to time,
changing when and as such rate changes or (ii) the Federal Funds Effective Rate plus .50%.
“Proposed Reduction Date” has the meaning set forth in Section 1.3.
“Pro Rata Share” means, for each Financial Institution, a percentage equal to (i) the Commitment of such Financial Institution, divided by
(ii) the aggregate amount of all Commitments of all Financial Institutions hereunder, adjusted as necessary to give effect to any assignments
pursuant to Article XII.
“Purchase Limit” means $325,000,000, as such amount may be decreased in accordance with Section 1.1(b).
“Purchase Notice” has the meaning set forth in Section 1.2.
“Purchase Price” means, with respect to any Incremental Purchase of a Purchaser Interest, the amount paid to Seller for such Purchaser
Interest which shall not exceed the least of the amount requested by Seller in the applicable Purchase Notice, the unused portion of the
Purchase Limit on the applicable purchase date and the excess, if any, of the Net Receivables Balance (less the Aggregate Reserves) on the
applicable purchase date over the aggregate outstanding amount of Aggregate Capital determined as of the date of the most recent Monthly
Report, taking into account such proposed Incremental Purchase.
“Purchasers” means Conduit and each Financial Institution.
“Purchaser Interest” means, at any time, an undivided percentage ownership interest (computed as set forth below) associated with a
designated amount of Capital, selected pursuant to the terms and conditions hereof in (i) each Receivable arising prior to the time of the most
recent computation or recomputation of such undivided interest, (ii) all Related Security with respect to each such Receivable, and (iii) all
Collections with respect to, and other proceeds of, each such Receivable. Each such undivided percentage interest shall equal:
Exh I - 15
C
NRB — AR
where:
C = the Capital of such Purchaser Interest.
AR = the Aggregate Reserves.
NRB = the Net Receivables Balance.
Such undivided percentage ownership interest shall be initially computed on its date of purchase. Thereafter, until the Amortization Date, each
Purchaser Interest shall be automatically recomputed (or deemed to be recomputed) on each day prior to the Amortization Date. The variable
percentage represented by any Purchaser Interest as computed (or deemed recomputed) as of the close of the Business Day immediately
preceding the Amortization Date shall remain constant at all times thereafter.
“Purchasing Financial Institution” has the meaning set forth in Section 12.1(b).
“Receivable” means all indebtedness and other obligations owed to Seller, CRF I or Originator (at the time it arises, and before giving
effect to any transfer or conveyance under the applicable Sale Agreement or hereunder) or in which Seller, CRF I or Originator has a security
interest or other interest, including, without limitation, any indebtedness, obligation or interest constituting an account, chattel paper,
instrument or general intangible, arising in connection with the sale of goods, electricity or gas or the rendering of services by Originator, and
further includes, without limitation, the obligation to pay any Finance Charges with respect thereto. Indebtedness and other rights and
obligations arising from any one transaction, including, without limitation, indebtedness and other rights and obligations represented by an
individual invoice, shall constitute a Receivable separate from a Receivable consisting of the indebtedness and other rights and obligations
arising from any other transaction; provided, that any indebtedness, rights or obligations referred to in the immediately preceding sentence
shall be a Receivable regardless of whether the account debtor, Seller, CRF I or Originator treats such indebtedness, rights or obligations as a
separate payment obligation. Notwithstanding the foregoing, “Receivable” does not include (i) Transferred Securitization Property or (ii) the
books and records relating solely to the Transferred Securitization Property; provided that the determination of what constitutes collections of
the Securitization Charges in respect of Transferred Securitization Property shall be made in accordance with the allocation methodology
specified in Annex 2 to the Servicing Agreement.
“Receivables Sale Agreement” means that certain Receivables Sale Agreement, dated as of May 22, 2003, between Originator and Seller,
as the same may be amended, restated or otherwise modified from time to time.
“Records” means, with respect to any Receivable, all Contracts and other documents, books, records and other information (including,
without limitation, computer
Exh I - 16
programs, tapes, disks, punch cards, data processing software and related property and rights) relating to such Receivable, any Related
Security therefor and the related Obligor.
“Reduction Notice” has the meaning set forth in Section 1.3.
“Regulatory Change” has the meaning set forth in Section 10.3(a).
“Reinvestment” has the meaning set forth in Section 2.2.
“Related Security” means, with respect to any Receivable:
(i) all of Seller’s interest in the inventory and goods (including returned or repossessed inventory and goods), if any, the sale of which
by Originator gave rise to such Receivable, and all insurance contracts with respect thereto,
(ii) all other security interests or liens and property subject thereto from time to time, if any, purporting to secure payment of such
Receivable, whether pursuant to the Contract related to such Receivable or otherwise, together with all financing statements and security
agreements describing any collateral securing such Receivable,
(iii) all guaranties, letters of credit, letter of credit rights, supporting obligations, insurance and other agreements or arrangements of
whatever character from time to time supporting or securing payment of such Receivable whether pursuant to the Contract related to such
Receivable or otherwise,
(iv) all service contracts and other contracts and agreements associated with such Receivable,
(v) all Records related to such Receivable,
(vi) all of Seller’s right, title and interest in, to and under any contracts or agreements providing for the servicing of such Receivable,
(vii) all of Seller’s right, title and interest in, to and under the applicable Sale Agreement in respect of such Receivable, and
(viii) all proceeds of any of the foregoing.
“Required Financial Institutions” means, at any time, Financial Institutions with Commitments in excess of 51% of the Purchase Limit.
“Required Notice Period” means the number of days required notice set forth below applicable to the Aggregate Reduction indicated
below:
Exh I - 17
Aggregate Reduction Required Notice Period

<$50,000,000 one Business Days
$50,000,000 to $99,999,999.99 two Business Days
$100,000,000 to $250,000,000 five Business Days
>$250,000,000 ten Business Days
“Responsible Officer” means, with respect to any Person, its chief financial officer, the chief accounting officer, the senior vice president-
finance, the treasurer, an assistant treasurer, or corporate controller, or any other officer of whose primary duties are similar to the duties of
any of the previously listed officers.
“Restricted Junior Payment” means (i) any dividend or other distribution, direct or indirect, on account of any shares of any class of
capital stock of Seller now or hereafter outstanding, except a dividend payable solely in shares of that class of stock or in any junior class of
stock of Seller, (ii) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any
shares of any class of capital stock of Seller now or hereafter outstanding, (iii) any payment or prepayment of principal of, premium, if any, or
interest, fees or other charges on or with respect to, and any redemption, purchase, retirement, defeasance, sinking fund or similar payment
and any claim for rescission with respect to the Subordinated Loans (as defined in the Receivables Sale Agreement), (iv) any payment made to
redeem, purchase, repurchase or retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any
class of capital stock of Seller now or hereafter outstanding, and (v) any payment of management fees by Seller (except for reasonable
management fees to Originator or its Affiliates in reimbursement of actual management services performed).
“S&P” means Standard & Poor’s Ratings Service, a division of The McGraw-Hill Companies, Inc.
“Sale Agreements” means the Receivables Sale Agreement and the CRF I Agreement.
“Securitization Charge” has the meaning specified in Appendix A to the Servicing Agreement.
“Securitization Charge Collections” has the meaning specified in Appendix A to the Servicing Agreement.
“Securitization Charge Sale Agreement” means the Sale Agreement dated as of November 8, 2001 between Consumers and Consumers
Funding LLC, as the same may from time to time be amended, restated, supplemented or otherwise modified with the consent of the
Administrative Agent.
“Securitization Property” means “securitization property” within the meaning of the Michigan Customer Choice and Electricity Reliability
Act, 2000 PA 141 and 2000 PA 142 as approved in the Financing Order.
“Seller” has the meaning set forth in the preamble to this Agreement.
Exh I - 18
“Seller Parties” has the meaning set forth in the preamble to this Agreement.
“Servicer” means at any time the Person (which may be the Administrative Agent) then authorized pursuant to Article VIII to service,
administer and collect Receivables.
“Servicing Agreement” means the Servicing Agreement dated as of November 8, 2001 between Consumers Funding LLC and Consumers
Energy Company, as the same may be amended and supplemented from time to time with the consent of the Administrative Agent (to the
extent such consent is required by the terms of this Agreement).
“Servicing Fee” has the meaning set forth in Section 8.6.
“Settlement Date” means the date which is two (2) Business Days after a Monthly Report is due.
“Settlement Period” means (A) in respect of each Purchaser Interest funded by Conduit, the immediately preceding Accrual Period, and
(B) in respect of each Purchaser Interest funded by the Financial Institutions, the entire Tranche Period of such Purchaser Interest.
“Specified Accounts” means each Collection Account identified as a “Specified Account” on Exhibit IV and each other Collection
Account designated by the Administrative Agent as a Specified Account in accordance with Section 7.1(j).
“Subsidiary” of a Person means (i) any corporation more than 50% of the outstanding securities having ordinary voting power of which
shall at the time be owned or controlled, directly or indirectly, by such Person or by one or more of its Subsidiaries or by such Person and one
or more of its Subsidiaries, or (ii) any partnership, association, limited liability company, joint venture or similar business organization more
than 50% of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled. Unless otherwise
expressly provided, all references herein to a “Subsidiary” shall mean a Subsidiary of Seller.
“Supplement Indenture” means each Supplement Indenture made and entered into by Originator (formerly known as Consumers Power
Company) and JPMorgan Chase Bank (as successor to City Bank Farmers Trust Company) under the 1945 Indenture.
“Termination Date” has the meaning set forth in Section 2.3.
“Terminating Financial Institution” has the meaning set forth in Section 12.4.
“Termination Percentage” has the meaning set forth in Section 2.3.
“Terminating Tranche” has the meaning set forth in Section 2.3(b).
“Tranche Period” means, with respect to any Purchaser Interest funded by a Financial Institution, including any Purchaser Interest or
undivided interest in a Purchaser Interest assigned to a Financial Institution pursuant to the Liquidity Agreement:
Exh I - 19
(a) if Yield for such Purchaser Interest is calculated on the basis of the LIBO Rate, a period of one, two, three or six months, or such other
period as may be mutually agreeable to the Administrative Agent and Seller, commencing on a Business Day selected by Seller or the
Administrative Agent pursuant to this Agreement. Such Tranche Period shall end on the day in the applicable succeeding calendar month
which corresponds numerically to the beginning day of such Tranche Period, provided, however, that if there is no such numerically
corresponding day in such succeeding month, such Tranche Period shall end on the last Business Day of such succeeding month; or
(b) if Yield for such Purchaser Interest is calculated on the basis of the Prime Rate, a period commencing on a Business Day selected by
Seller and agreed to by the Administrative Agent, provided no such period shall exceed one month.
If any Tranche Period would end on a day which is not a Business Day, such Tranche Period shall end on the next succeeding Business Day,
provided, however, that in the case of Tranche Periods corresponding to the LIBO Rate, if such next succeeding Business Day falls in a new
month, such Tranche Period shall end on the immediately preceding Business Day. In the case of any Tranche Period for any Purchaser
Interest which commences before the Amortization Date and would otherwise end on a date occurring after the Amortization Date, such
Tranche Period shall end on the Amortization Date. The duration of each Tranche Period which commences after the Amortization Date shall
be of such duration as selected by the Administrative Agent.
“Transaction Documents” means, collectively, this Agreement, each Purchase Notice, the Sale Agreements, the Intercreditor Agreement,
each Collection Account Agreement, each P.O. Box Transfer Notice, the Fee Letter, the Subordinated Note (as defined in the Receivables Sale
Agreement) and all other instruments, documents and agreements executed and delivered in connection herewith.
“Transferred Securitization Property” has the meaning specified in Appendix A to the Servicing Agreement.
“Transferors” means the Originator and CRF I.
“UCC” means the Uniform Commercial Code as from time to time in effect in the specified jurisdiction.
“Unapplied Cash and Credits” means, at any time, the aggregate amount of Collections or other cash or credits then held by or for the
account of the Servicer, Originator, CRF I or the Seller in respect of the payment of Billed Receivables, but not yet applied to the payment of
such Receivables.
“Unbilled Receivables” means Receivables in respect of which an invoice addressed to the Obligor thereof has not been sent.
“Unbilled Receivables Offset Amount” means, at any time, an amount equal to the lesser of (a) the credit balance of all EMPP
Receivables and WPP Receivables as of the last
Exh I - 20
day of the immediately preceding Accrual Period and (b) the product of (i) the greater of (A) 7% and (B) the ratio of (1) the total number of
Obligors whose accounts are subject to a balanced or levelized payment plan or a payment plan based on a percentage of such Obligor’s
income (giving rise to EMPP Receivables or WPP Receivables) as of the last day of the immediately preceding Accrual Period divided by
(2) the total number of Obligors as of the last day of the immediately preceding Accrual Period multiplied by (ii) the aggregate amount of
Unbilled Receivables for such Accrual Period.
“WPP Limit” means, (i) during any Level One Enhancement Period, the lesser of (a) $8,000,000 and (b) the product of 2.0% multiplied by
the aggregate Outstanding Balance of all Eligible Receivables as of the last day of the most recently ended Accrual Period and (ii) during any
Level Two Enhancement Period or Level Three Enhancement Period $0.
“WPP Receivable” means a Receivable arising under an Obligor’s account which is subject to a payment plan requiring payments based
on a percentage of such Obligor’s income.
“Yield” means (a) for each respective Tranche Period relating to Purchaser Interests funded by the Financial Institutions, including any
Purchaser Interests or undivided interest in a Purchaser Interest assigned to a Financial Institution pursuant to the Liquidity Agreement, an
amount equal to the product of the applicable Bank Rate for each Purchaser Interest multiplied by the Capital of such Purchaser Interest for
each day elapsed during such Tranche Period, annualized on a 360 day basis (or a 365 or 366 day basis, as applicable, in the case of the Prime
Rate), and (b) for each respective Settlement Period relating to Purchaser Interests funded by Conduit, other than a Purchaser Interest which,
or an undivided interest in which, has been assigned by Conduit to a Financial Institution pursuant to the Liquidity Agreement, an amount
equal to the product of the applicable CP Rate multiplied by the Capital of such Purchaser Interest for each day elapsed during such Settlement
Period, annualized on a 360 day basis.
“Yield and Servicer Fee Percentage” means, at any time, an amount equal to the greater of (i) 1.5% and (ii) the ratio (expressed as a
percentage) equal to (a) the product of (x) 1.5, multiplied by (y) the Prime Rate (measured as of the close of business as of the last Business
Day of the preceding calendar month) plus 2.0%, multiplied by (z) the highest three-month average Days Sales Outstanding Ratio over the
prior twelve (12) months, divided by (b) 360.
“Yield and Servicer Fee Reserve” means, at any time, an amount equal to the product of (a) the Yield and Servicer Fee Percentage,
multiplied by (b) the Net Receivables Balance as of the close of business of the Servicer on such date.
“Yield Payment Date” means (A) the date each month which is two (2) Business Days after the Monthly Report due in such month is
due, and (B) the last day of the relevant Tranche Period in respect of each Purchaser Interest funded by the Financial Institutions.
All accounting terms not specifically defined herein shall be construed in accordance with GAAP. All terms used in Article 9 of the UCC in the
State of New York, and not specifically defined herein, are used herein as defined in such Article 9.
Exh I - 21
SCHEDULE C
FINANCIAL COVENANT DEFINITIONS
“Agent” means Bank One in its capacity as administrative agent for the Banks pursuant to the Credit Agreement, and not in its individual
capacity as a Bank, and any successor Agent appointed pursuant to the Credit Agreement.
“Bank One” means Bank One, NA (Main Office — Chicago), in its individual capacity, and its successors and assigns.
“Banks” — means the financial institutions from time to time party to the Credit Agreement as Banks thereunder.
“Bonds” means, collectively, the Interest Bearing Bonds and the Zero Rate Bonds.
“Capital Lease” means any lease which has been or would be capitalized on the books of the lessee in accordance with GAAP.
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Consolidated EBIT” means, for any period, Consolidated Net Income for such period plus (i) to the extent deducted from revenues in
determining such Consolidated Net Income (without duplication), (a) Consolidated Interest Expense, (b) expense for taxes paid or accrued, and
(c) any non-cash write-offs and write-downs contained in Consumers’ Consolidated Net Income, including, without limitation, write-offs or
write-downs related to the sale of assets, impairment of assets and loss on contracts minus (ii) to the extent included in such Consolidated Net
Income, extraordinary gains realized other than in the ordinary course of business, all calculated for Consumers and its Subsidiaries on a
consolidated basis in accordance with GAAP.
“Consolidated Interest Expense” means with respect to any period for which the amount thereof is to be determined, an amount equal to
interest expense on Debt, including payments in the nature of interest under Capital Leases but excluding dividends paid on Hybrid Preferred
Securities, all calculated for Consumers and its Subsidiaries on a consolidated basis in accordance with GAAP.
“Consolidated Net Income” means, with reference to any period, the net income (or loss) of Consumers and its Subsidiaries calculated on a
consolidated basis for such period.
“Consolidated Subsidiary” means any Subsidiary whose accounts are or are required to be consolidated with the accounts of Consumers in
accordance with GAAP.
Sch. C-1
“Credit Agreement” means that certain Credit Agreement, dated as of March 27, 2003 among Consumers, the financial institutions from time
to time party thereto as “Banks” and Bank One, as Agent.
“Credit Documents” means the Credit Agreement, the Facility LC Applications, the Supplemental Indenture and the Bonds.
“Debt” means, with respect to any Person, and without duplication, (a) all indebtedness of such Person for borrowed money, (b) all
indebtedness of such Person for the deferred purchase price of property or services (other than trade accounts payable arising in the ordinary
course of business which are not overdue), (c) all Unfunded Vested Liabilities of such Person (if such Person is not Consumers, determined in
a manner analogous to that of determining Unfunded Vested Liabilities of Consumers), (d) all obligations of such Person arising under
acceptance facilities, (e) all obligations of such Person as lessee under Capital Leases, (f) all obligations of such Person arising under any
interest rate swap, “cap”, “collar” or other hedging agreement; provided that for purposes of the calculation of Debt for this clause (f) only,
the actual amount of Debt of such Person shall be determined on a net basis to the extent such agreements permit such amounts to be
calculated on a net basis, and (g) all guaranties, endorsements (other than for collection in the ordinary course of business) and other
contingent obligations of such Person to assure a creditor against loss (whether by the purchase of goods or services, the provision of funds
for payment, the supply of funds to invest in any Person or otherwise) in respect of indebtedness or obligations of any other Person of the
kinds referred to in clauses (a) through (f) above.
“ERISA Affiliate” means any corporation or trade or business which is a member of the same controlled group of corporations (within the
meaning of Section 414(b) of the Code) as Consumers or is under common control (within the meaning of Section 414(c) of the Code) with
Consumers.
“Facility LC” — a standby or commercial letter of credit issued pursuant to Article III of the Credit Agreement.
“Facility LC Application” — each application agreement executed and delivered by Consumers in respect of a Facility LC.
“First Mortgage Bonds” means bonds issued by Consumers pursuant to the Indenture.
“GAAP” means generally accepted accounting principles in the United States of America as in effect on the date hereof, applied on a basis
consistent with those used in the preparation of the financial statements referred to in the Credit Agreement (except, for purposes of the
annual and quarterly financial statements required to be delivered pursuant to the Credit Agreement, for changes concurred in by Consumers’
Sch. C-2
“Hybrid Preferred Securities” means any preferred securities issued by a Hybrid Preferred Securities Subsidiary, where such preferred
securities have the following characteristics:
(i) such Hybrid Preferred Securities Subsidiary lends substantially all of the proceeds from the issuance of such preferred securities to
Consumers or a wholly-owned direct or indirect Subsidiary of Consumers in exchange for Junior Subordinated Debt issued by Consumers
or such wholly-owned direct or indirect Subsidiary, respectively;
(ii) such preferred securities contain terms providing for the deferral of interest payments corresponding to provisions providing for the
deferral of interest payments on the Junior Subordinated Debt; and
(iii) Consumers or a wholly-owned direct or indirect Subsidiary of Consumers (as the case may be) makes periodic interest payments on
the Junior Subordinated Debt, which interest payments are in turn used by the Hybrid Preferred Securities Subsidiary to make
corresponding payments to the holders of the preferred securities.
“Hybrid Preferred Securities Subsidiary” means any Delaware business trust (or similar entity) (i) all of the common equity interest of which
is owned (either directly or indirectly through one or more wholly-owned Subsidiaries of Consumers) at all times by Consumers or a wholly-
owned direct or indirect Subsidiary of Consumers, (ii) that has been formed for the purpose of issuing Hybrid Preferred Securities and
(iii) substantially all of the assets of which consist at all times solely of Junior Subordinated Debt issued by Consumers or a wholly-owned
direct or indirect Subsidiary of Consumers (as the case may be) and payments made from time to time on such Junior Subordinated Debt.
“Indenture” means the Indenture, dated as of September 1, 1945, as supplemented and amended from time to time, from Consumers to
JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank), as successor Trustee.
“Interest Bearing Bonds” means a series of interest-bearing First Mortgage Bonds created under the Supplemental Indenture issued in
favor of, and in form and substance satisfactory to, the Agent.
“Junior Subordinated Debt” means any unsecured Debt of Consumers or a Subsidiary of Consumers (i) issued in exchange for the proceeds
of Hybrid Preferred Securities and (ii) subordinated to the rights of the Banks hereunder and under the other Credit Documents pursuant to
terms of subordination substantially similar to those set forth in Exhibit E to the Credit Agreement, or pursuant to other terms and conditions
satisfactory to the Majority Banks.
“Majority Banks” means, as of any date of determination, Banks in the aggregate having more than 50% of the aggregate commitments
under the Credit Agreement as of such date or, if the aggregate commitments have been terminated, Banks in the aggregate holding more than
50% of the aggregate unpaid principal amount of outstanding credit exposure as of such date.
Sch. C-3
“Multiemployer Plan” means a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA.

“Net Proceeds” means, with respect to any sale or issuance of securities or incurrence of Debt by any Person, the excess of (i) the gross
cash proceeds received by or on behalf of such Person in respect of such sale, issuance or incurrence (as the case may be) over (ii) customary
underwriting commissions, auditing and legal fees, printing costs, rating agency fees and other customary and reasonable fees and expenses
incurred by such Person in connection therewith.
“Person” means an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever nature.
“Plan” means any employee benefit plan (other than a Multiemployer Plan) maintained for employees of Consumers or any ERISA Affiliate
and covered by Title IV of ERISA.
“Securitized Bonds” shall mean any nonrecourse bonds or similar asset-backed securities issued by a special-purpose Subsidiary of
Consumers which are payable solely from specialized charges authorized by the utility commission of the relevant state in connection with the
recovery of (x) stranded regulatory costs, (y) stranded clean air and pension costs and (z) other “Qualified Costs” (as defined in M.C.L.
§460.10h(g)) authorized to be securitized by the Michigan Public Service Commission.
“Single Employer Plan” means a Plan maintained by Consumers or any ERISA Affiliate for employees of Consumers or any ERISA Affiliate.
“Subsidiary” means, as to any Person, any corporation or other entity of which at least a majority of the securities or other ownership
interests having ordinary voting power (absolutely or contingently) for the election of directors or other Persons performing similar functions
are at the time owned directly or indirectly by such Person.
“Supplemental Indenture” means a supplemental indenture substantially in the form set forth in the Exhibits to the Credit Agreement.
“Total Consolidated Capitalization” means, at any date of determination, the sum of (a) Total Consolidated Debt, (b) equity of the common
stockholders of Consumers, (c) equity of the preference stockholders of Consumers and (d) equity of the preferred stockholders of
Consumers, in each case determined at such date.
“Total Consolidated Debt” means, at any date of determination, the aggregate Debt of Consumers and its Consolidated Subsidiaries;
provided that Total Consolidated Debt shall exclude (i) the principal amount of any Securitized Bonds, (ii) any Junior Subordinated Debt
owned by any Hybrid Preferred Securities Subsidiary, (iii) any guaranty by Consumers of payments with respect to any Hybrid Preferred
Securities, provided that such guaranty is subordinated to the rights of the Banks hereunder and under the other Credit Documents pursuant
to terms of subordination substantially similar to those set forth in Exhibit F to the Credit Agreement, or pursuant to other terms and
conditions satisfactory to the Majority Banks, (iv)
Sch. C-4
such percentage of the Net Proceeds from any issuance of hybrid debt/equity securities (other than Junior Subordinated Debt and Hybrid
Preferred Securities) by Consumers or any Consolidated Subsidiary as shall be agreed to be deemed equity by the Agent and Consumers prior
to the issuance thereof (which determination shall be based on, among other things, the treatment (if any) given to such securities by the
applicable rating agencies).
“Unfunded Vested Liabilities” means, (i) in the case of Single Employer Plans, the amount (if any) by which the present value of all vested
nonforfeitable benefits under such Plan exceeds the fair market value of all Plan assets allocable to such benefits, all determined as of the then
most recent valuation date for such Plan, and (ii) in the case of Multiemployer Plans, the withdrawal liability of Consumers and its ERISA
Affiliates.
“Zero Rate Bonds” means a series of zero coupon First Mortgage Bonds created under the Supplemental Indenture issued in favor of, and
in form and substance satisfactory to, the Agent.
Sch. C-5
TABLE OF CONTENTS
(continued)
P age
ARTICLE I
PURCHASE ARRANGEMENTS 1
Section 1.1 Purchase Facility 1

Section 1.2 Increases 2
Section 1.3 Decreases 2
Section 1.4 Payment Requirements 2
ARTICLE II
PAYMENTS AND COLLECTIONS 3
Section 2.1 Payments 3

Section 2.2 Collections Prior to Amortization 3
Section 2.3 Terminating Financial Institutions 5
Section 2.4 Collections Following Amortization 5
Section 2.5 Application of Collections 5
Section 2.6 Payment Rescission 6
Section 2.7 Maximum Purchaser Interests 6
Section 2.8 Clean Up Call 6
Section 2.9 Payment Allocations 6
ARTICLE III
COMPANY FUNDING 7
Section 3.1 Yield 7

Section 3.2 Payments 7
Section 3.3 Calculation of Yield 7
ARTICLE IV
FINANCIAL INSTITUTION FUNDING 7
Section 4.1 Financial Institution Funding 7

Section 4.2 Yield Payments 7
Section 4.3 Selection and Continuation of Tranche Periods 7
Section 4.4 Financial Institution Bank Rates 8
Section 4.5 Suspension of the LIBO Rate 8
Section 4.6 Liquidity Agreement Fundings 9
ARTICLE V
REPRESENTATIONS AND WARRANTIES 9
Section 5.1 Representations and Warranties of The Seller Parties 9
Page vi
P age
Section 5.2 Financial Institution Representations and Warranties 13
ARTICLE VI
CONDITIONS OF PURCHASES 13
Section 6.1 Conditions Precedent to Initial Incremental Purchase 13

Section 6.2 Conditions Precedent to All Purchases and Reinvestments 14
ARTICLE VII
COVENANTS 15
Section 7.1 Affirmative Covenants of The Seller Parties 15

Section 7.2 Negative Covenants of the Seller Parties 23
ARTICLE VIII
ADMINISTRATION AND COLLECTION 25
Section 8.1 Designation of Servicer 25

Section 8.2 Duties of Servicer 26
Section 8.3 Collection Notices 27
Section 8.4 Responsibilities of Seller 27
Section 8.5 Reports 28
Section 8.6 Servicing Fees 28
ARTICLE IX
AMORTIZATION EVENTS 28
Section 9.1 Amortization Events 28

Section 9.2 Remedies 30
ARTICLE X
INDEMNIFICATION 31
Section 10.1 Indemnities by the Seller 31

Section 10.2 Indemnities by the Servicer 33
Section 10.3 Increased Cost and Reduced Return 34
Section 10.4 Other Costs and Expenses 35
ARTICLE XI
THE AGENT 35
Section 11.1 Authorization and Action 35

Section 11.2 Delegation of Duties 36
Section 11.3 Exculpatory Provisions 36
Section 11.4 Reliance by Administrative Agent 36
Section 11.5 Non-Reliance on Administrative Agent and Other Purchasers 36
Section 11.6 Reimbursement and Indemnification 37
Section 11.7 Administrative Agent in its Individual Capacity 37
Section 11.8 Successor Administrative Agent 37
Sch. C-vii
P age
ARTICLE XII
ASSIGNMENTS; PARTICIPATIONS 38
Section 12.1 Assignments 38

Section 12.2 Participations 39
Section 12.3 Extension of Liquidity Termination Date 39
Section 12.4 Terminating Financial Institutions 40
ARTICLE XIII
MISCELLANEOUS 40
Section 13.1 Waivers and Amendments 40

Section 13.2 Notices 41
Section 13.3 Ratable Payments 42
Section 13.4 Protection of Ownership Interests of the Purchasers 42
Section 13.5 Confidentiality 42
Section 13.6 Bankruptcy Petition 43
Section 13.7 Limitation of Liability 43
Section 13.8 CHOICE OF LAW 44
Section 13.9 CONSENT TO JURISDICTION 44
Section 13.10 WAIVER OF JURY TRIAL 44
Section 13.11 Integration; Binding Effect; Survival of Terms 45
Section 13.12 Counterparts; Severability; Section References 45
Section 13.13 Bank One Roles 45
Section 13.14 Characterization 45
Section 13.15 Intercreditor Agreement 46
Exhibits and Schedules

Exhibit I Definitions
Exhibit II Form of Purchase Notice
Exhibit III Places of Business of the Seller Parties; Locations of Records; Federal Employer Identification Number(s)
Exhibit IV Names of Collection Banks; Collection Accounts; Lock-Boxes; Specified Accounts
Exhibit V Form of Compliance Certificate
Exhibit VI Form of Collection Account Agreement
Exhibit VII Form of Assignment Agreement
Exhibit VIII Credit and Collection Policy
Exhibit IX Form of Monthly Report
Exhibit X Form of Reduction Notice
Exhibit XI Form of P.O. Box Transfer Notice
Schedule A Commitments
Schedule B Closing Documents
Schedule C Financial Covenant Definitions
Sch. C-viii
EXECUTION COPY
AMENDMENT NO. 1
to
Dated as of August 18, 2003
THIS AMENDMENT NO. 1 (“Amendment”) is entered into as of August 18, 2003 by and among Consumers Receivables Funding II,
LLC, a Delaware limited liability company (“Seller”). Consumers Energy Company, a Michigan corporation (“Servicer”), as initial Servicer, the
entities parties hereto as “Financial Institutions”, Falcon Asset Securitization Corporation (“Conduit”) and Bank One, NA (Main Office
Chicago), as Administrative Agent (together with its successors and assigns, the “Administrative Agent”).
PRELIMINARY STATEMENT
A. Seller, Servicer, Conduit, the Financial Institutions and the Administrative Agent are parties to that certain Receivables Purchase
Agreement dated as of May 22, 2003 (as the same may be further amended, restated, supplemented or otherwise modified from time to time, the
(“Purchase Agreement”). Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Purchase
Agreement.
B. Seller, Servicer, Conduit, the Financial Institutions and the Administrative Agent have agreed to amend the Purchase Agreement on
the terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises set forth above, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
Section 1. Amendments. Effective as of the date hereof and subject to the satisfaction of the conditions precedent set forth in Section 2
below, the Purchase Agreement is hereby amended as follows:
(a) Article XIII of the Purchase Agreement is hereby amended to add the following Section 13.16 after Section 13.15:
Section 13.16 Accounting Terms. All accounting terms not specifically defined herein shall be construed in accordance with GAAP. If
any changes in generally accepted accounting principles are hereafter required or permitted and are adopted by Consumers or any of its
Subsidiaries, or Consumers or any of its Subsidiaries shall change its application of generally accepted accounting principles with respect
to any Off-Balance Sheet Liabilities, in each case with the agreement of its independent certified public accountants, and such changes
result in a change in the method of calculation of any of the financial covenants, tests, restrictions or standards herein or in the related
definitions or terms used therein (“Accounting Changes”), the parties hereto agree, at Consumers’ request, to enter into negotiations, in
good faith, in order to amend such provisions in a credit
neutral manner so as to reflect equitably such changes with the desired result that the criteria for evaluating Consumers and its
Subsidiaries’ financial condition shall be the same after such changes as if such changes had not been made; provided, however, until such
provisions are amended in a manner reasonably satisfactory to the Administrative Agent and the Purchasers, no Accounting Change shall
be given effect in such calculations. In the event such amendment is entered into, all references in this Agreement to GAAP shall mean
generally accepted accounting principles as of the date of such amendment.
(b) Exhibit I to the Purchase Agreement is amended to add the following definitions in the appropriate alphabetical order:
“Accounting Changes” has the meaning set forth in Section 13.16.
“ Off-Balance Sheet Liability” of a Person means (i) any repurchase obligation or liability of such Person with respect to accounts or
notes receivable sold by such Person, (ii) any liability under any sale and leaseback transaction which is not a Capital Lease, (iii) any
liability under any so-called “synthetic lease” transaction entered into by such Person, or (iv) any obligation arising with respect to any
other transaction which is the functional equivalent of or takes the place of borrowing but which does not constitute a liability on the
balance sheets of such Person, but excluding from this clause (iv) Operating Leases.
“Operating Lease” of a Person means any lease of Property (other than a Capital Lease) by such Person as lessee.
“Property” of a Person means any and all property, whether real, personal, tangible, intangible, or mixed, of such Person, or other assets
owned, leased or operated by such Person.
(c) Schedule C to the Purchase Agreement is amended to delete the definitions of “Consolidated EBIT”, “Consolidated Interest Expense”
and “Total Consolidated Capitalization” in their entirety and replace them with the following:
determining such Consolidated Net Income (without duplication), (a) Consolidated Interest Expense plus interest or dividends on Hybrid
Preferred Securities, (b) expense for taxes paid or accrued, and (c) any non-cash write-offs and write-downs contained in Consumers’
Consolidated Net Income, including, without limitation, write-offs or write-downs related to the sale of assets, impairment of assets and loss
on contracts minus (ii) to the extent included in such Consolidated Net Income, extraordinary gains realized other than in the ordinary
course of business, all
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calculated for Consumers and its Subsidiaries on a consolidated basis in accordance with GAAP.
“Consolidated Interest Expense” means with respect to any period for which the amount thereof is to be determined, an amount equal to
interest expense on Debt, including payments in the nature of interest under Capital Leases but excluding interest or dividends paid on
Hybrid Preferred Securities, all calculated for Consumers and its Subsidiaries on a consolidated basis in accordance with GAAP.
“Total Consolidated Capitalization” means, at any date of determination, the sum of (a) Total Consolidated Debt, (b) equity of the
common stockholders of Consumers, (c) equity of the preference stockholders of Consumers, (d) Hybrid Preferred Securities and (e) equity
of the preferred stockholders of Consumers, in each case determined at such date.
Section 2. Conditions Precedent. This Amendment shall become effective and be deemed effective, as of the date first above written,
upon receipt by the Administrative Agent of four (4) copies of this Amendment duly executed by each of the parties hereto.
Section 3. Covenants, Representations and Warranties of the Seller and the Servicer.
(a) Upon the effectiveness of this Amendment, each of the Seller and the Servicer hereby reaffirms all covenants, representations and
warranties made by it in the Purchase Agreement, as amended, and agrees that all such covenants, representations and warranties shall be
deemed to have been re-made as of the effective date of this Amendment.
(b) Each of the Seller and the Servicer hereby represents and warrants as to itself (i) that this Amendment constitutes the legal, valid and
binding obligation of such party enforceable against such party in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and general
principles of equity which may limit the availability of equitable remedies and (ii) upon the effectiveness of this Amendment, that no event
shall have occurred and be continuing which constitutes an Amortization Event or a Potential Amortization Event.
Section 4. Fees, Costs, Expenses and Taxes. Without limiting the rights of the Administrative Agent and the Purchasers set forth in the
Purchase Agreement and the Fee Letter, the Seller agrees to pay all reasonable fees and out-of-pocket expenses of counsel for the
Administrative Agent and the Purchasers incurred in connection with the preparation, execution and delivery of this Amendment and the
other instruments and documents to be delivered in connection herewith and with respect to advising the Administrative Agent and the
Purchasers as to their rights and responsibilities hereunder and thereunder.
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Section 5. Reference to and Effect on the Purchase Agreement.

(a) Upon the effectiveness of this Amendment, each reference in the Purchase Agreement to “this Agreement,” “hereunder,” “hereof,”
“herein,” “hereby” or words of like import shall mean and be a reference to the Purchase Agreement as amended hereby, and each reference to
the Purchase Agreement in any other document, instrument or agreement executed and/or delivered in connection with the Purchase
Agreement shall mean and be a reference to the Purchase Agreement as amended hereby.
(b) Except as specifically amended hereby, the Purchase Agreement and other documents, instruments and agreements executed and/or
delivered in connection therewith shall remain in full force and effect and are hereby ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of any
Purchaser or the Administrative Agent under the Purchase Agreement or any of the other Transaction Documents, nor constitute a waiver of
any provision contained therein.
Section 6. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE
Section 7. Execution in Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall
constitute but one and the same instrument.
Section 8. Headings. Section headings in this Amendment are included herein for convenience of reference only and shall not constitute
a part of this Amendment for any other purpose.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed on the date first set forth above by their
respective officers thereto duly authorized, to be effective as hereinabove provided.
CONSUMERS RECEIVABLES FUNDING II, LLC, as Seller

NAME: Laura L. Mountcastle
Title: President

Signature page to Amendment No. 1 to Receivables Purchase Agreement

By: /s/ Leo Loughead

Name: Leo Loughead
Title: Authorized Signatory
BANK ONE, NA (MAIN OFFICE CHICAGO),

as a Financial Institution and as
Administrative Agent

Name: Leo Loughead
Signature page to Amendment No. 1 to Receivables Purchase Agreement

Execution Version
AMENDMENT NO. 2 AND WAIVER

TO
THIS AMENDMENT NO. 2 AND WAIVER TO RECEIVABLES PURCHASE AGREEMENT (this “Amendment”) dated as of October 10,
2003, is entered into among CONSUMERS RECEIVABLES FUNDING II, LLC (“Seller”), CONSUMERS ENERGY COMPANY, individually, and
in its capacity as Servicer (in such capacity, the “Servicer”), FALCON ASSET SECURITIZATION CORPORATION (“Falcon”), and BANK
ONE, NA (MAIN OFFICE CHICAGO) (“Bank One”), as a Financial Institution and as Administrative Agent (in such capacity, the
“Administrative Agent”). Capitalized terms used herein without definition shall have the meanings ascribed thereto in the “Receivables
Purchase Agreement” or the “Receivables Sale Agreement,” as applicable, referred to below.
A. Reference is made to that certain Receivables Purchase Agreement dated as of May 22, 2003 among Seller, Servicer, Falcon, Bank One
and the Administrative Agent (as amended by that certain Amendment No. 1 to Receivables Purchase Agreement dated as of August 18, 2003
and as the same may be further amended, restated, supplemented or modified from time to time, the “Receivables Purchase Agreement”).
B. Reference is made to that certain Receivables Sale Agreement dated as of May 22, 2003 among Seller, as “Buyer” thereunder and
Consumers Energy Company, as an “Originator” thereunder (as amended, restated, supplemented or modified from time to time, the
“Receivables Sale Agreement”).
C. The parties hereto have agreed to amend and waive the requirements of certain provisions of the Receivables Purchase Agreement
upon the terms and conditions set forth herein.
SECTION 1. Amendment and Waiver. Subject to the satisfaction of the conditions precedent set forth in Section 3 hereof, the parties hereto
hereby agree:
(a) to amend the Receivables Purchase Agreement:
(i) to delete clause (f) of Section 9.1 and substitute the following therefor:
(f) As at the end of any Accrual Period, (i) the average of the Dilution Ratios as of the end of such Accrual Period and the two
preceding Accrual Periods shall exceed 2.75%, (ii) the average of the Loss-to-Liquidation Ratios as of the end of such Accrual Period
and the two preceding Accrual Periods shall exceed 0.75%, (iii) the average of the Past Due Ratios as of the end of such Accrual
Period and the
two preceding Accrual Periods shall exceed (A) 9.0% for any Accrual Period occurring in May through October of any calendar year
or (B) 5.5% for any Accrual Period occurring in November through April of any calendar year and (iv) the average of the Days Sales
Outstanding Ratios as of the end of such Accrual Period and the two preceding Accrual Periods shall exceed 55 days.
(ii) to delete the definition of “Default Ratio” set forth in Exhibit I thereto; and
(iii) to insert the following definition of “Loss-to-Liquidation Ratio” in appropriate alphabetical order therein:
“Loss-to-Liquidation Ratio” means, for any Accrual Period, the ratio (expressed as a percentage) equal to (i) all Charged-Off
Receivables written off during such Accrual Period divided by (ii) the aggregate amount of Collections received during such Accrual
Period.
and
(b) to waive as of July 31, 2003 and August 31, 2003 any Amortization Event arising under Section 9.1(f)(iii) of the Receivables Purchase
Agreement as of such date.
SECTION 2. Representations and Warranties. Each of the Seller and the Servicer hereby represents and warrants to each of the other parties
hereto, as to itself that:
(a) this Amendment constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms; and
(b) on the date hereof, before and after giving effect to this Amendment, (i) other than as waived pursuant to this Amendment, no
Amortization Event or Potential Amortization Event has occurred and is continuing and (ii) the aggregate Purchaser Interests do not exceed
the Applicable Maximum Purchaser Interest.
SECTION 3. Conditions Precedent. This Amendment shall become effective on the first Business Day (the “Effective Date”) on which the
Administrative Agent or its counsel has received counterpart signature pages of this Amendment, executed by each of the parties hereto.
SECTION 4. Reference to and Effect on the Transaction Documents.
(a) Upon the effectiveness of this Amendment, (i) each reference in the Receivables Purchase Agreement to “this Receivables Purchase
Agreement”, “this Agreement”, “hereunder”, “hereof, “herein” or words of like import shall mean and be a reference to the Receivables
Purchase Agreement as amended or otherwise modified hereby, and (ii) each reference to the Receivables Purchase Agreement in any other
Transaction Document or any other document, instrument or agreement executed and/or
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delivered in connection therewith, shall mean and be a reference to the Receivables Purchase Agreement as amended or otherwise modified
hereby.
(b) Except as specifically amended, terminated or otherwise modified above, the terms and conditions of the Receivables Purchase
Agreement, of all other Transaction Documents and any other documents, instruments and agreements executed and/or delivered in
connection therewith, shall remain in full force and effect and are hereby ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the
Administrative Agent or any Purchaser under the Receivables Purchase Agreement or any other Transaction Document or any other
document, instrument or agreement executed in connection therewith, nor constitute a waiver of any provision contained therein, in each
case except as specifically set forth herein.
SECTION 5. Execution in Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in
constitute but one and the same instrument. Delivery of an executed counterpart of a signature page to this Amendment by telecopier shall be
SECTION 6. Governing Law. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS (INCLUDING, WITHOUT LIMITATION, SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF NEW YORK, BUT
SECTION 7. Headings. Section headings in this Amendment are included herein for convenience of reference only and shall not constitute
SECTION 8. Fees and Expenses. Seller hereby confirms its agreement to pay on demand all reasonable costs and expenses of the
Administrative Agent or Purchasers in connection with the preparation, execution and delivery of this Amendment and any of the other
instruments, documents and agreements to be executed and/or delivered in connection herewith, including, without limitation, the reasonable
fees and out-of-pocket expenses of counsel to the Administrative Agent or Purchasers with respect thereto.
[Remainder of Page Deliberately Left Blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective officers as of the date
first above written.

Title: President

Signature Page to Amendment No. 2 and Waiver


BANK ONE, NA (MAIN OFFICE CHICAGO), as a

Financial Institution and Administrative Agent

Title: Managing Director Capital Markets

EXECUTION COPY

TO
THIS AMENDMENT NO. 3 AND WAIVER TO RECEIVABLES PURCHASE AGREEMENT (this “Amendment”) dated as of May 20,
2004, is entered into among CONSUMERS RECEIVABLES FUNDING II, LLC (“Seller”), CONSUMERS ENERGY COMPANY, in its capacity as
Servicer (in such capacity, the “Servicer”), FALCON ASSET SECURITIZATION CORPORATION (“Falcon”), and BANK ONE, NA (MAIN
OFFICE CHICAGO) (“Bank One”), as a Financial Institution and as Administrative Agent (in such capacity, the “Administrative Agent”),
Capitalized terms used herein without definition shall have the meanings ascribed thereto in the “Receivables Purchase Agreement” referred to
and the Administrative Agent (as amended by that certain Amendment No. 1 to Receivables Purchase Agreement dated as of August 18, 2003
and that certain Amendment No. 2 to Receivables Purchase Agreement dated as of October 10, 2003, and as the same may be further amended,
restated, supplemented or modified from time to time, the “Receivables Purchase Agreement”).
B. The parties hereto have agreed to amend and waive the requirements of certain provisions of the Receivables Purchase Agreement
SECTION 1. Amendments. Subject to the satisfaction of the conditions precedent set forth in Section 4 hereof, the parties hereto hereby
agree to amend the Receivables Purchase Agreement as follows:
(a) Section 7.1(b) of the Receivables Purchase Agreement is hereby amended to add the following clause (viii) after clause (vii):
(viii) Receivables Classification. The occurrence of any event or circumstance (including, without limitation, any change in law,
regulation or systems reporting), which would impact the identification of any accounts receivable on the books and records of the
Originator or the Seller not less than thirty (30) days prior to such occurrence (or in the event of a change in law or regulation, as soon
as reasonably possible).
(b) Section 7.1 of the Receivables Purchase Agreement is hereby amended to add the following paragraphs (t) and (u) after paragraph (s):
(t) Receivables Classification. In connection with any change in the identification of any accounts receivable on the books and
records of the Originator or the Seller, the Seller shall ensure that all actions required by Section 7.1 (h) will have been taken prior to
such change.
(u) Certification of Receivables Classification. In connection with the delivery of each Monthly Report, the Servicer shall certify to the
Administrative Agent that it has made diligent inquiry and that the accounts receivable included in the such report as Receivables are
identified on the books and records of the Originator and the Seller with the account code “Account 142.130 Accounts Receivable-
Electric & Gas-Central Billing”.
(c) Exhibit I to the Receivables Purchase Agreement is hereby amended to delete the definition of “Liquidity Termination Date” and
replace it with the following:
(d) Exhibit I to the Receivables Purchase Agreement is hereby amended to delete the definition of “Purchase Price” and replace it with
the following:
“Purchase Price” means, with respect to any Incremental Purchase of a Purchaser Interest, the amount paid to Seller for such
Purchaser Interest which shall not exceed the least of (i) the amount requested by Seller in the applicable Purchase Notice, (ii) the
unused portion of the Purchase Limit on the applicable purchase date and (iii) the amount (which may be an amount less than
requested by Seller in such Purchase Notice) which, when added to the Aggregate Capital, would not cause the Purchaser Interests to
exceed the Applicable Maximum Purchaser Interest.
(e) Exhibit I to the Receivables Purchase Agreement is hereby further amended to delete the definition of “Receivable” and replace it with
the following:
“Receivable” means all indebtedness and other obligations owed to Seller. CRF I or Originator (at the time it arises, and before giving
effect to any transfer or conveyance under the applicable Sale Agreement or hereunder) or in which Seller, CRF I or Originator has a
security interest or other interest, including, without limitation, any indebtedness, obligation or interest constituting an account,
chattel paper, instrument or general intangible, arising in connection with the sale of goods, electricity or gas or the rendering of
services by Originator, and which is identified
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on the books and records of the Originator or the Seller (including its accounting system) with the account code “Account 142.130
Accounts Receivable-Electric & Gas-Central Billing”, and further includes, without limitation, the obligation to pay any Finance
Charges with respect thereto. Indebtedness and other rights and obligations arising from any one transaction, including, without
limitation, indebtedness and other rights and obligations represented by an individual invoice, shall constitute a Receivable separate
from a Receivable consisting of the indebtedness and other rights and obligations arising from any other transaction; provided, that
any indebtedness, rights or obligations referred to in the immediately preceding sentence shall be a Receivable regardless of whether
the account debtor, Seller, CRF I or Originator treats such indebtedness, rights or obligations as a separate payment obligation.
Notwithstanding the foregoing, “Receivable” does not include (i) Transferred Securitization Property or (ii) the books and records
relating solely to the Transferred Securitization Property; provided that the determination of what constitutes collections of the
Securitization Charges in respect of Transferred Securitization Property shall be made in accordance with the allocation methodology
specified in Annex 2 to the Servicing Agreement.
SECTION 2. Waivers.
(a) Subject to the satisfaction of the conditions precedent set forth in Section 4 hereof, each of Falcon, each Financial Institution and the
Administrative Agent hereby agree to waive any Amortization Event arising under Section 9.1(a)(ii) of the Receivables Purchase Agreement
which may have occurred prior to the date hereof solely as a result of a breach of clauses (iii) and (iv) of Section 7.1 (i) of the Receivables
Purchase Agreement.
(b) Subject to the satisfaction of the conditions precedent set forth in Section 4 hereof, each of Falcon, each Financial Institution and the
Administrative Agent hereby agree to waive any Amortization Event arising under Section 9.1(b) of the Receivables Purchase Agreement
which may have occurred prior to the date hereof solely as a result of a breach of Section 5.1 (g) of the Receivables Purchase Agreement in
connection with the delivery of Monthly Reports which included information regarding only Receivables which have been identified on the
books and records of the Originator or the Seller (including its accounting system) with the account code “Account 142.130 Accounts
Receivable-Electric & Gas-Central Billing”.
(c) Falcon, the Financial Institutions and the Administrative Agent hereby expressly reserve all of their rights with respect to the
occurrence of other Amortization
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Events, if any, whether previously existing or hereinafter arising or which exist at any time on or after the date first written above. The
specific waivers set forth in this Section 2 apply only to the above-specified violations.
Administrative Agent or its counsel has received the following:
(a) four (4) counterpart signature pages to this Amendment, executed by each of the parties hereto;
(b) four (4) counterpart signature pages to the amended and restated Fee Letter dated the date hereof, executed by each of the parties
thereto; and
(c) four (4) counterpart signature pages to Amendment No. 1 to the Receivables Sale Agreement dated the date hereof, executed by each
of the parties thereto.
SECTION 5. Consent to Amendment. The Administrative Agent hereby consents to Amendment No. 1 to the Receivables Sale Agreement
dated the date hereof.
Agreement”, “this Agreement”, “hereunder”, “hereof”, “herein” or words of like import shall mean and be a reference to the Receivables
Transaction Document or any other document, instrument or agreement executed and/or delivered in connection therewith, shall mean and
be a reference to the Receivables Purchase Agreement as amended or otherwise modified hereby.
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5

Title: President






Execution Version
AMENDMENT NO. 4
TO
THIS AMENDMENT NO. 4 TO RECEIVABLES PURCHASE AGREEMENT (this “Amendment”) dated as of September 28, 2004, is
entered into among CONSUMERS RECEIVABLES FUNDING II, LLC (“Seller”), CONSUMERS ENERGY COMPANY, in its capacity as Servicer
(in such capacity, the “Servicer”), FALCON ASSET SECURITIZATION CORPORATION (“Falcon”), and BANK ONE, NA (MAIN OFFICE
CHICAGO) (“Bank One”), as a Financial Institution and as Administrative Agent (in such capacity, the “Administrative Agent”). Capitalized
terms used herein without definition shall have the meanings ascribed thereto in the “Receivables Purchase Agreement” referred to below.
and the Administrative Agent (as amended by that certain Amendment No. 1 to Receivables Purchase Agreement dated as of August 18, 2003,
that certain Amendment No. 2 to Receivables Purchase Agreement dated as of October 10, 2003 and that certain Amendment No. 3 and Waiver
to Receivables Purchase Agreement dated as of May 20, 2004, and as the same may be further amended, restated, supplemented or modified
from time to time, the “Receivables Purchase Agreement”).
B. The parties hereto have agreed to amend the requirements of certain provisions of the Receivables Purchase Agreement upon the
terms and conditions set forth herein.
(a) Section 9.1(k) of the Receivables Purchase Agreement is hereby amended to delete clause (i) in its entirety and to substitute the
following therefor:
(i) Consumers shall fail to maintain a ratio of Total Consolidated Debt to Total Consolidated Capitalization of not greater than 0.70 to
1.0
(b) Section 11.5 of the Receivables Purchase Agreement is hereby deleted and the following substituted therefor:
Section 11.5 Non-Reliance on Administrative Agent and Other Purchasers.
(a) Each Purchaser expressly acknowledges that neither the Administrative Agent, nor any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates has made any representations or warranties to it and that no act by the
Administrative Agent hereafter taken, including, without limitation, any review of the affairs of any Seller Party, shall be deemed to
constitute any representation or warranty by the Administrative Agent. Each Purchaser represents and warrants to the Administrative
Agent that it has and will, independently and without reliance upon the Administrative Agent or any other Purchaser and based on
such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business,
operations, property, prospects, financial and other conditions and creditworthiness of Seller and made its own decision to enter into
this Agreement, the other Transaction Documents and all other documents related hereto or thereto.
(b) Without limiting clause (a) above, each Purchaser acknowledges and agrees that neither such Purchaser nor any of its Affiliates,
participants or assignees may rely on the Administrative Agent to carry out such Purchaser’s or other Person’s customer
identification program, or other obligations required or imposed under or pursuant to the USA Patriot Act or the regulations
thereunder, including the regulations contained in 31 C.F.R. 103.121 (as amended or replaced, the “CIP Regulations”), or any other
applicable law, rule, regulation or order of any governmental authority, including any program involving any of the following items
relating to or in connection with any Seller Party or any of their Affiliates or agents, the Transaction Documents or the transactions
contemplated hereby: (i) any identity verification procedure; (ii) any recordkeeping; (iii) any comparison with a government list;
(iv) any customer notice or (v) any other procedure required under the CIP Regulations or such other law, rule, regulation or order.
(c) Article XII of the Receivables Purchase Agreement is hereby amended to add the following Section 12.5:
Section 12.5 USA Patriot Act Certification. Within 10 days after the date of this Agreement and at such other times as are required
under the USA Patriot Act, each Purchaser and each assignee and participant that is not incorporated under the laws of the United
States of America or a state thereof (and is not excepted from the certification requirement contained in Section 313 of the USA Patriot
Act and the applicable regulations) shall
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deliver to the Administrative Agent a certification, or, if applicable, recertification, certifying that such Purchaser is not a “shell” and
certifying as to other matters as required by Section 313 of the USA Patriot Act and the applicable regulations.
(d) Article XIII of the Receivables Purchase Agreement is hereby amended to add the following Section 13.16:
Section 13.16 USA Patriot Act. Each Purchaser hereby notifies the Seller that pursuant to requirements of the USA Patriot Act, such
Purchaser is required to obtain, verify and record information that identifies the Seller, which information includes the name and
address of the Seller and other information that will allow such Purchaser to identify the Seller in accordance with the USA Patriot Act
.
(e) Exhibit I to the Receivables Purchase Agreement is hereby amended to add the following definitions in appropriate alphabetical order
therein:
“CIP Regulations” has the meaning specified in Section 11.5(b).
“USA Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001, Pub. L. No. 107-56, 115 Stat. 272 (2001), as amended.
Administrative Agent or its counsel has received four (4) counterpart signature pages to this Amendment, executed by each of the parties
hereto.
Agreement”, “this
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Agreement”, “hereunder”, “hereof”, “herein” or words of like import shall mean and be a reference to the Receivables Purchase Agreement
as amended or otherwise modified hereby, and (ii) each reference to the Receivables Purchase Agreement in any other Transaction
Document or any other document, instrument or agreement executed and/or delivered in connection therewith, shall mean and be a
reference to the Receivables Purchase Agreement as amended or otherwise modified hereby.
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Title: President, Chief Executive Officer, Chief
Financial Officer and Treasurer, Manager

Signature Page to Amendment No.4




Title: Managing Director, Capital
Markets
Signature Page to Amendment No.4

Execution Version
AMENDMENT NO. 5
TO
THIS AMENDMENT NO. 5 TO RECEIVABLES PURCHASE AGREEMENT (this “Amendment”) dated as of May 19, 2005, is entered into
among CONSUMERS RECEIVABLES FUNDING II, LLC (“Seller”), CONSUMERS ENERGY COMPANY, in its capacity as Servicer (in such
capacity, the “Servicer”), FALCON ASSET SECURITIZATION CORPORATION (“Falcon”), and JPMORGAN CHASE BANK, N.A. (as
successor by merger to Bank One, NA (Main Office Chicago)) (“JPMorgan”), as a Financial Institution and as Administrative Agent (in such
capacity, the “Administrative Agent”). Capitalized terms used herein without definition shall have the meanings ascribed thereto in the
“Receivables Purchase Agreement” referred to below.
A. Reference is made to that certain Receivables Purchase Agreement dated as of May 22, 2003 among Seller, Servicer, Falcon, JPMorgan
that certain Amendment No. 2 to Receivables Purchase Agreement dated as of October 10, 2003, that certain Amendment No. 3 and Waiver to
Receivables Purchase Agreement dated as of May 20, 2004 and that certain Amendment No. 4 to Receivables Purchase Agreement dated as of
September 28, 2004, and as the same may be further amended, restated, supplemented or modified from time to time, the “Receivables Purchase
Agreement”).
(a) Section 1.2 of the Receivables Purchase Agreement is hereby amended to delete the first sentence thereof in its entirety and to
substitute the following therefor:
Seller shall, no later than 12:00 noon (New York time) on the Business Day immediately preceding a desired incremental Purchase, provide
the Administrative Agent with notice of its request for such Incremental Purchase in the form set forth as Exhibit II hereto (a “Purchase
Notice”).
(b) Exhibit I to the Receivables Purchase Agreement is hereby amended to delete the definitions of “Liquidity Termination Date” and
“Required Notice Period” and substitute the following therefor:
“Required Notice Period” means the number of days required notice set forth below applicable to the Aggregate Reduction indicated
below:
Aggregate Reduction Required Notice Period

≤ $100,000,000 one Business Days
>$100,000,000 two Business Days
hereto.
document, instrument or agreement executed in connection
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therewith, nor constitute a waiver of any provision contained therein, in each case except as specifically set forth herein.
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JPMORGAN CHASE BANK, N.A., as a Financial Institution and

Administrative Agent

Signature Page to Amendment No. 5


Title: Manager, President, Chief
Executive Officer, Chief Financial
Officer and Treasurer
CONSUMERS ENERGY COMPANY, as servicer


Execution Version

TO
THIS AMENDMENT NO. 6 AND WAIVER TO RECEIVABLES PURCHASE AGREEMENT (this “Amendment”) dated as of September 8,
2005, is entered into among CONSUMERS RECEIVABLES FUNDING II, LLC (“Seller”), CONSUMERS ENERGY COMPANY, in its capacity as
Servicer (in such capacity, the “Servicer”), FALCON ASSET SECURITIZATION CORPORATION (“Falcon”), and JPMORGAN CHASE
BANK, N.A. (as successor by merger to Bank One, NA (Main Office Chicago)) (“JPMorgan”), as a Financial Institution and as Administrative
Agent (in such capacity, the “Administrative Agent”). Capitalized terms used herein without definition shall have the meanings ascribed
thereto in the “Receivables Purchase Agreement” referred to below.
that certain Amendment No. 2 and Waiver to Receivables Purchase Agreement dated as of October 10, 2003, that certain Amendment No. 3
and Waiver to Receivables Purchase Agreement dated as of May 20, 2004, that certain Amendment No. 4 to Receivables Purchase Agreement
dated as of September 28, 2004 and that certain Amendment No. 5 to Receivables Purchase Agreement dated as of May 19, 2005, and as the
same may be further amended, restated, supplemented or modified from time to time, the “Receivables Purchase Agreement”).
hereby agree:
(i) to amend Section 9.1(f) to delete the phrase “(iii) the average of the Past Due Ratios as of the end of such Accrual Period and the
two preceding Accrual Periods shall exceed (A) 9.0% for any Accrual Period occurring in May through October of any calendar year or
(B) 5.5% for any Accrual Period occurring in November through April of any calendar year” and substitute the phrase “(iii) the average
of the Past Due Ratios as of the end of such Accrual Period and the two preceding Accrual Periods shall exceed (A) 11.0% for any
Accrual Period occurring in May through October of any calendar year thereafter or (B) 6% for any Accrual Period occurring in
November through April of any calendar year thereafter” therefor.
(ii) to delete the definition of “Debt” set forth on Schedule C in its entirety, and substitute the following therefor:
indebtedness of such Person for the deferred purchase price of property or services (other than trade accounts payable arising in the
ordinary course of business which are not overdue), (c) all liabilities arising from any accumulated funding deficiency (as defined in
Section 412(a) of the Code) for a Plan, (d) all liabilities arising in connection with any withdrawal liability under ERISA to any
Multiemployer Plan, (e) all obligations of such Person arising under acceptance facilities, (f) all obligations of such Person as lessee
under Capital Leases, (g) all obligations of such Person arising under any interest rate swap, “cap”, “collar” or other hedging
agreement; provided that for purposes of the calculation of Debt for this clause (g) only, the actual amount of Debt of such Person
shall be determined on a net basis to the extent such agreements permit such amounts to be calculated on a net basis, and (h) all
guaranties, endorsements (other than for collection in the ordinary course of business) and other contingent obligations of such
Person to assure a creditor against loss (whether by the purchase of goods or services, the provision of funds for payment, the
supply of funds to invest in any Person or otherwise) in respect of indebtedness or obligations of any other Person of the kinds
referred to in clauses (a) through (g) above.
(iii) to delete the definition of “Unfunded Vested Liabilities” set forth on Schedule C in its entirety.
(b) to waive as of July 31, 2005 any Amortization Event arising under Section 9.1(f)(iii) of the Receivables Purchase Agreement in respect
of the July 2005 Accrual Period.
2
hereto.
3
4
By: JPMorgan Chase Bank, N.A., as attorney in fact

JPMORGAN CHASE BANK, N.A., as a Financial

Institution and Administrative Agent



CONSUMERS ENERGY COMPANY, as servicer


Execution Copy

TO
THIS AMENDMENT NO. 7 AND WAIVER TO RECEIVABLES PURCHASE AGREEMENT (this “Amendment”) dated as of
December 22, 2005, is entered into among CONSUMERS RECEIVABLES FUNDING II, LLC (“Seller”), CONSUMERS ENERGY COMPANY, in
its capacity as Servicer (in such capacity, the “Servicer”), FALCON ASSET SECURITIZATION CORPORATION (“Falcon”), and JPMORGAN
CHASE BANK, N.A. (as successor by merger to Bank One, NA (Main Office Chicago)) (“JPMorgan”). as a Financial Institution and as
Administrative Agent (in such capacity, the “Administrative Agent”). Capitalized terms used herein without definition shall have the meanings
ascribed thereto in the “Receivables Purchase Agreement” referred to below.
and the Administrative Agent (as amended prior to the date hereof and as the same may be further amended, restated, supplemented or
modified from time to time, the “Receivables Purchase Agreement”).
hereby agree:
(i) to delete clause (ii) of Section 9.l (f) thereof and substitute the clause “(ii) the average of the Loss-to-Liquidation Ratios as of the
end of such Accrual Period and the two preceding Accrual Periods shall exceed 1.0%” therefor;
(ii) to delete clause (iii) of Section 9.1 (f) thereof and substitute the clause “(iii) the average of the Past Due Ratios as of the end of
such Accrual Period and the two preceding Accrual Periods shall exceed (A) 11.0% for any Accrual Period occurring in May through
October of any calendar year, (B) 9.0% for any Accrual Period occurring in November of any calendar year or (C) 7.0% for any Accrual
Period occurring in December through April of any calendar year” therefor;
;and
(iii) to delete the definition of “Loss Ratio” in its entirety and substitute the following therefor:
“Loss Ratio” means, at any time, a ratio (expressed as a percentage) equal to (i) the sum of (a) the amount equal to (x) the aggregate
Outstanding Balance of all Billed Receivables which are more than sixty (60) and less than ninety-one (91) days past due as of the last
day of the most recently ended Accrual Period times (y) 0.5 and (b) all Charged-Off Receivables written off during such Accrual Period
divided by (ii) the aggregate Original Balance of all Receivables originated during the Accrual Period which ended three Accrual Periods
prior to such Accrual Period.
(b) to waive as of November 30, 2005 any Amortization Event arising under clauses (ii) or (iii) of Section 9. l(f) of the Receivables
Purchase Agreement in respect of the November 2005 Accrual Period.
(a) it has all necessary corporate or company power and authority to execute and deliver this Amendment and to perform its obligations
under the Receivables Purchase Agreement as amended hereby, the execution and delivery of this Amendment and the performance of its
obligations under the Receivables Purchase Agreement as amended hereby has been duly authorized by all necessary corporate or
company action on its part and this Amendment constitutes its legal, valid and binding obligation, enforceable against it in accordance with
its terms; and
hereto.
2
case except as specifically set forth in Section l(b) above. Falcon, the Financial Institutions and the Administrative Agent hereby expressly
reserve all of their rights with respect to the occurrence of other Amortization Events, if any, whether previously existing or hereinafter
arising or which exist at any time on or after the date first written above.
SECTIONS 5. Execution in Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in
constitute but one and the same instrument. Delivery of an executed counterpart of a signature page to this Amendment by facsimile or other
electronic format shall be effective as delivery of a manually executed counterpart of this Amendment.
3

Title: President


By: JPMorgan Chase Bank, N.A., as attorney in fact
By: /s/ Mark J. Connor

Name: Mark J. Connor

By: /s/ Mark J. Connor

Name: Mark J. Connor

Execution Copy
AMENDMENT NO. 8
TO
THIS AMENDMENT NO. 8 TO RECEIVABLES PURCHASE AGREEMENT (this “Amendment”) dated as of March 13, 2006, is entered
into among CONSUMERS RECEIVABLES FUNDING II, LLC (“Seller”), CONSUMERS ENERGY COMPANY, in its capacity as Servicer (in such
that certain Amendment No. 2 to Receivables Purchase Agreement dated as of October 10, 2003, that certain Amendment No. 3 and Waiver to
Receivables Purchase Agreement dated as of May 20, 2004, that certain Amendment No. 4 to Receivables Purchase Agreement dated as of
September 28, 2004, that certain Amendment No. 5 to Receivables Purchase Agreement dated as of May 19, 2005, that certain Amendment
No. 6 and Waiver to Receivables Purchase Agreement dated as of September 8, 2005 and that certain Amendment No. 7 and Waiver dated as
of December 22, 2005, and as the same may be further amended, restated, supplemented or modified from time to time, the “Receivables
Purchase Agreement”).
SECTION 1. Amendment. Subject to the satisfaction of the conditions precedent set forth in Section 3 hereof, the parties hereto hereby
(a) The definition of the term “Liquidity Termination Date” set forth in Exhibit I to the Receivables Purchase Agreement is hereby
amended to delete the date “May 18, 2006” appearing therein and to replace such date with the date “August 16, 2006”.
hereto.
2
3

Title: President, CEO, CFO and Treasurer



By: JPMorgan Chase Bank, N.A., its attorney-in-fact

Name: Leo Loughead


Name: Leo Loughead

Execution Copy
AMENDMENT NO. 9
TO
THIS AMENDMENT NO. 9 TO RECEIVABLES PURCHASE AGREEMENT (this “Amendment”) dated as of May 18, 2006, is entered into
among CONSUMERS RECEIVABLES FUNDING II, LLC (“Seller”), CONSUMERS ENERGY COMPANY, in its capacity as Servicer (in such
and the Administrative Agent (as amended prior to the date hereof, and as the same may be further amended, restated, supplemented or
agree to delete the definition of the term “Consolidated EBIT” set forth in Schedule C to the Receivables Purchase Agreement and replace it
with the following:
determining such Consolidated Net Income (without duplication), (a) Consolidated Interest Expense plus interest and dividends on Hybrid
Preferred Securities and on securities of the type described in clause (iv) of the definition of Total Consolidated Debt (but only, in the case
of securities of the type described in such clause (iv), to the extent such securities have been deemed to be equity), (b) expense for taxes
paid or accrued, (c) non-cash write-offs and write-downs contained in Consumers’ Consolidated Net Income, including write-offs or write-
downs related to the sale of assets, impairment of assets and loss on contracts, and (d) non-cash losses on mark-to-market valuation of
contracts minus (ii) to the extent included in such Consolidated Net Income, extraordinary gains realized other than in the ordinary course of
business and non-cash gains on mark-to-market valuation of contracts, all calculated for Consumers and its Subsidiaries on a consolidated
basis in accordance with GAAP.
(b) on the date hereof, before and after giving effect to this Amendment, (i) no Amortization Event or Potential Amortization Event has
occurred and is continuing and (ii) the aggregate Purchaser Interests do not exceed the Applicable Maximum Purchaser Interest.
hereto; provided that any calculations made on or after February 9, 2006 based on Consolidated EBIT shall be deemed to have been made
using Consolidated EBIT as such term is amended hereby.
electronic means shall be effective as delivery of a manually executed counterpart of this Amendment.
2
Administrative Agent and Purchasers in connection with the preparation, execution and delivery of this Amendment and any of the other
fees and out-of-pocket expenses of counsel to the Administrative Agent and Purchasers with respect thereto.
3

Title: President, CEO, CFO & Treasurer



By: /s/ Mark Connor

Name: Mark Connor
Title. Vice President

By: /s/ Mark Connor

Name: Mark Connor

EXECUTION COPY
AMENDMENT NO. 10
TO
THIS AMENDMENT NO. 10 TO RECEIVABLES PURCHASE AGREEMENT (this “Amendment”) dated as of August 15, 2006, is entered
capacity, the “Servicer”), FALCON ASSET SECURITIZATION COMPANY LLC (formerly Falcon Asset Securitization Corporation) (“Falcon”),
and JPMORGAN CHASE BANK, N.A. (as successor by merger to Bank One, NA (Main Office Chicago)) (“JPMorgan”), as a Financial
Institution and as Administrative Agent (in such capacity, the “Administrative Agent”). Capitalized terms used herein without definition shall
have the meanings ascribed thereto in the “Receivables Purchase Agreement” referred to below.
(a) The first sentence of Section 1.2 of the Receivables Purchase Agreement is hereby deleted in its entirety and replaced with the
following:
Seller shall provide the Administrative Agent with at least one Business Day’s prior notice in the form set forth as Exhibit II hereto
of each Incremental Purchase (a “Purchase Notice”).
(b) The definition of the term “Liquidity Termination Date” set forth in Exhibit I to the Receivables Purchase Agreement is hereby
amended to delete the date “August 16, 2006” appearing therein and to replace such date with the date “August 15, 2007”.
(c) Exhibit IV to the Receivables Purchase Agreement is hereby replaced in its entirety with Exhibit IV attached hereto.
SECTION 2. Representations and Warranties. Each of the Seller and the Servicer hereby represents and warrants to each of the other
parties hereto, as to itself that:
SECTION 3. Waiver. Each of the Administrative Agent and each Purchaser hereby waives any Amortization Event which has occurred
prior to the date hereof as a result of the Seller and the Originator terminating and adding Collection Accounts which were not Specified
Accounts without giving prior written notice thereof to the Administrative Agent.
SECTION 4. Conditions Precedent. This Amendment shall become effective on the first Business Day (the “Effective Date”) on which
the Administrative Agent or its counsel has received four (4) counterpart signature pages to this Amendment, executed by each of the parties
hereto.
case except as specifically set forth in Section 3 above. Falcon, the Financial Institutions and the Administrative Agent hereby expressly
reserve all of their rights with respect to the occurrence of other Amortization Events, if any, whether previously existing or hereinafter
arising or which exist at any time on or after the date first written above.
SECTION 6. Execution in Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto
in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken
2
together shall constitute but one and the same instrument. Delivery of an executed counterpart of a signature page to this Amendment by
facsimile or other electronic means shall be effective as delivery of a manually executed counterpart of this Amendment.
SECTION 7. Governing Law. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE
SECTION 8. Headings. Section headings in this Amendment are included herein for convenience of reference only and shall not
constitute a part of this Amendment for any other purpose.
SECTION 10. Receivables Sale Agreement Amendment. Each of the Administrative Agent and each Purchaser hereby consents and
agrees to the amendment and waiver contained in Amendment No. 2 to Receivables Sale Agreement dated the date hereof between the Seller
and the Originator.
3


Signature Page to Amendment No. 10 to RPA

FALCON ASSET SECURITIZATION COMPANY LLC

(formerly Falcon Asset Securitization Corporation)

Leo Loughead
Managing Director


Leo Loughead
Managing Director

EXHIBIT IV
NAMES OF COLLECTION BANKS; COLLECTION ACCOUNTS; LOCK-BOXES

JPMorgan Chase Bank, N.A.
P O Box 2558
Houston, TX 77252-8391
Contact: Juanita Chretien
Phone: (713)216-8648
Fax: (713)216-4801
Email: juanita,l.chretien@chase.com
Specified Account: #000323010091
Collection Account: #1242263
LaSalle Bank
201 Townsend Street, Suite 600
M0936/00
Lansing, MI 48933
Contact: Douglas Henderson
Phone: (517)377-0559
Fax: (517)377-0502
Email: doug.henderson@abnamro.com
Collection Accounts: #1054516142, #1054518354 (Concentration Account)
Citibank
4500 New Linden Hill
Wilmington, DE 19801
Contact: Laura Jones
Phone: (302)683-4496
Fax: (302)683-4933
Email: laura.b.jones@citigroup.com
Collection Accounts: #30489425, #27318
Comerica Bank
MC 7618
P O Box 75000
Detroit, MI 48275
Contact: Lorraine Edwards
Phone: (734)632-4536
Fax: (734)632-4545
Email: lorraine_m_edwards@comerica.com
Collection Accounts: #1851978096, #1851978898, #1852147071, #1852048774, #1851120384, #1076119914,
and #1000123354 (Concentration Account)
Lock-Box Zip Code:
Lansing, MI 48937-0001
EXECUTION COPY
AMENDMENT NO. 11
TO
THIS AMENDMENT NO. 11 TO RECEIVABLES PURCHASE AGREEMENT (this “Amendment”) dated as of May 18,2007, is entered
capacity, the “Servicer”). FALCON ASSET SECURITIZATION COMPANY LLC (“Falcon”), and JPMORGAN CHASE BANK, N.A.
(“JPMorgan”). as a Financial Institution and as Administrative Agent (in such capacity, the “Administrative Agent”). Capitalized terms used
herein without definition shall have the meanings ascribed thereto in the “Receivables Purchase Agreement” referred to below.
(a) Section 9. l(k) of the Receivables Purchase Agreement is hereby deleted in its entirety and replaced with the following:
(k) Consumers shall fail to maintain a ratio of Total Consolidated Debt to Total Consolidated Capitalization of not greater than 0.70
to 1.0. Defined terms used in this Section 9.1 (k) shall have the meanings given to such terms in Schedule C.
(b) Schedule C to the Receivables Purchase Agreement is hereby replaced in its entirety with Schedule C attached hereto.
the Administrative Agent or its counsel has received four (4) counterpart signature pages to this Amendment, executed by each of the parties
hereto.
document, instrument or agreement executed in connection therewith, nor constitute a waiver of any provision contained therein. Falcon,
the Financial Institutions and the Administrative Agent hereby expressly reserve all of their rights with respect to the occurrence of other
Amortization Events, if any, whether previously existing or hereinafter arising or which exist at any time on or after the date first written
above.
in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall
INTERNAL LAWS (INCLUDING, WITHOUT LIMITATION, SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF
2
NEW YORK, BUT OTHERWISE WITHOUT REGARD TO THE LAW OF CONFLICTS) OF THE STATE OF NEW YORK, BUT GIVING
EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
3

Title: President, Chief Executive Officer,
Chief Financial Officer and Treasurer

Signature Past to Amendment No. 11 to RPA


By: /s/ Mark Connor

Name: Mark Connor

By: /s/ Mark Connor

Name: Mark Connor

SCHEDULE C
FINANCIAL COVENANT DEFINITIONS
“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling (including all directors and officers of such
Person), controlled by, or under direct or indirect common control with such Person. A Person shall be deemed to control another entity if
such Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such entity,
whether through the ownership of voting securities, by contract or otherwise.
“Agent” means JPMorgan in its capacity as administrative agent for the Banks pursuant to the Credit Agreement, and not in its individual
capacity as a Bank, and any successor Agent appointed pursuant to the Credit Agreement.
“Assignment Agreement” means an assignment made pursuant to an agreement substantially in the form of Exhibit D to the Credit
Agreement.
“Banks” means the financial institutions from time to time party to the Credit Agreement as Banks thereunder.
“Bonds” means a series of interest-bearing First Mortgage Bonds created under the Supplemental Indenture issued in favor of, and in form
and substance satisfactory to, the Agent.
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Commitment” means, for each Bank, the obligation of such Bank to make Loans to, and participate in Facility LCs issued upon the
application of, Consumers in an aggregate amount not exceeding the amount set forth in the Credit Agreement or in any Assignment
Agreement, as such amount may be modified from time to time.
“Consolidated Subsidiary” means any Subsidiary whose accounts are or are required to be consolidated with the accounts of Consumers in
accordance with GAAP.
“Credit Agreement” means that certain Fourth Amended and Restated Credit Agreement, dated as of March 30, 2007 (as the same may be
amended, supplemented or otherwise modified from time to time) among Consumers, the financial institutions from time to time party thereto as
“Banks” and JPMorgan, as Agent.
“Credit Documents” means the Credit Agreement, the Facility LC Applications, the Supplemental Indenture and the Bonds.
Sch.C-1
indebtedness of such Person for the deferred purchase price of property or services (other than trade accounts payable arising in the ordinary
course of business which are not overdue), (c) all liabilities arising from any accumulated funding deficiency (as defined in Section 412(a) of
the Code) for a Plan, (d) all liabilities arising in connection with any withdrawal liability under ERISA to any Multiemployer Plan, (e) all
obligations of such Person arising under acceptance facilities, (f) all obligations of such Person as lessee under Capital Leases, (g) all
obligations of such Person arising under any interest rate swap, “cap”, “collar” or other hedging agreement; provided that for purposes of the
calculation of Debt for this clause (g) only, the actual amount of Debt of such Person shall be determined on a net basis to the extent such
agreements permit such amounts to be calculated on a net basis, and (h) all guaranties, endorsements (other than for collection in the ordinary
course of business) and other contingent obligations of such Person to assure a creditor against loss (whether by the purchase of goods or
services, the provision of funds for payment, the supply of funds to invest in any Person or otherwise) in respect of indebtedness or
obligations of any other Person of the kinds referred to in clauses (a) through (g) above.
“ERISA Affiliate” means any corporation or trade or business which is a member of the same controlled group of corporations (within the
meaning of Section 414(b) of the Code) as Consumers or is under common control (within the meaning of Section 414(c) of the Code) with
Consumers.
“Existing Facility LC” means each letter of credit issued under the Prior Credit Agreement and identified in the Credit Agreement.
“Facility LC” means each standby or commercial letter of credit issued under the Credit Agreement and each Existing Facility LC.
“Facility LC Application” means each application agreement executed and delivered by Consumers in respect of a Facility LC.
“First Mortgage Bonds” means bonds issued by Consumers pursuant to the Indenture.
“Fitch” means Fitch Inc. or any successor thereto.
“GAAP” means generally accepted accounting principles in the United States of America as in effect on the date hereof, applied on a basis
consistent with those used in the preparation of the financial statements referred to in the Credit Agreement (except, for purposes of the
annual and quarterly financial statements required to be delivered pursuant to the Credit Agreement, for changes concurred in by Consumers’
“Hybrid Equity Securities” means securities issued by Consumers or a Hybrid Equity Securities Subsidiary that (i) are classified as
possessing a minimum of at least two of the following: (x) “intermediate equity content” by S&P; (y) “Basket C equity credit” by Moody’s;
and (z) “50% equity credit” by Fitch and (ii) require no repayment, prepayment,
Sch.C-2
mandatory redemption or mandatory repurchase prior to the date that is at least 91 days after the later of the termination of the Commitments
and the repayment in full of all Obligations.
“Hybrid Equity Securities Subsidiary” means any Delaware business trust (or similar entity) (i) all of the common equity interest of which is
owned (either directly or indirectly through one or more wholly-owned Subsidiaries of Consumers) at all times by Consumers or a wholly-
owned direct or indirect Subsidiary of Consumers, (ii) that has been formed for the purpose of issuing Hybrid Equity Securities and
“Hybrid Preferred Securities” means any preferred securities issued by a Hybrid Preferred Securities Subsidiary, where such preferred
securities have the following characteristics:
(i) such Hybrid Preferred Securities Subsidiary lends substantially all of the proceeds from the issuance of such preferred securities to
Consumers or a wholly-owned direct or indirect Subsidiary of Consumers in exchange for Junior Subordinated Debt issued by Consumers
or such wholly-owned direct or indirect Subsidiary, respectively;
(ii) such preferred securities contain terms providing for the deferral of interest payments corresponding to provisions providing for
the deferral of interest payments on the Junior Subordinated Debt; and
(iii) Consumers or a wholly-owned direct or indirect Subsidiary of Consumers (as the case may be) makes periodic interest payments
on the Junior Subordinated Debt, which interest payments are in turn used by the Hybrid Preferred Securities Subsidiary to make
corresponding payments to the holders of the preferred securities.
“Hybrid Preferred Securities Subsidiary” means any Delaware business trust (or similar entity) (i) all of the common equity interest of which
is owned (either directly or indirectly through one or more wholly-owned Subsidiaries of Consumers) at all times by Consumers or a wholly-
owned direct or indirect Subsidiary of Consumers, (ii) that has been formed for the purpose of issuing Hybrid Preferred Securities and
“Indenture” means the Indenture, dated as of September 1,1945, as supplemented and amended from time to time, from Consumers to The
Bank of New York, as successor Trustee.
“JPMorgan” means JPMorgan Chase Bank, N.A. (as successor by merger to Bank One, NA (Main Office — Chicago)), in its individual
capacity, and its successors and assigns.
“Junior Subordinated Debt” means any unsecured Debt of Consumers or a Subsidiary of Consumers (i) issued in exchange for the proceeds
of Hybrid Equity Securities or Hybrid
Sch.C-3
Preferred Securities and (ii) subordinated to the rights of the Banks under the Credit Agreement and under the other Credit Documents
pursuant to terms of subordination substantially similar to those set forth in Exhibit E to the Credit Agreement, or pursuant to other terms and
conditions satisfactory to the Majority Banks.
“LC Issuer” means JPMorgan (or any subsidiary or affiliate of JPMorgan designated by JPMorgan) in its capacity as an issuer of Facility
LCs under the Credit Agreement, and any other Bank designated by Consumers that (i) agrees to be an issuer of Facility LCs hereunder and
(ii) is approved by the Agent (such approval not to be unreasonably withheld or delayed).
“Loan” means the loans made time to time to Consumers by the Banks under the Credit Agreement.
“Majority Banks” means, as of any date of determination, Banks in the aggregate having more than 50% of the aggregate commitments
under the Credit Agreement as of such date or, if the aggregate commitments have been terminated, Banks in the aggregate holding more than
50% of the aggregate unpaid principal amount of outstanding credit exposure as of such date.
“Moody’s” means Moody’s Investors Service, Inc. or any successor thereto.
“Multiemployer Plan” means a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA.
“Net Proceeds” means, with respect to any sale or issuance of securities or incurrence of Debt by any Person, the excess of (i) the gross
cash proceeds received by or on behalf of such Person in respect of such sale, issuance or incurrence (as the case may be) over (ii) customary
underwriting commissions, auditing and legal fees, printing costs, rating agency fees and other customary and reasonable fees and expenses
incurred by such Person in connection therewith.
“Obligations” means all unpaid principal of and accrued and unpaid interest on the Loans, all Reimbursement Obligations, all accrued and
unpaid fees and all other obligations of Consumers to the Banks or to any Bank, the LC Issuer or the Agent arising under the Credit
Documents.
“Person” means an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever nature.
“Plan” means any employee benefit plan (other than a Multiemployer Plan) maintained for employees of Consumers or any ERISA Affiliate
and covered by Title IV of ERISA.
“Prior Agreement” means the Third Amended and Restated Credit Agreement dated as of May 18, 2005 among Consumers, various
financial institutions and JPMorgan (then known as Bank One, NA), as Agent, as amended.
“Reimbursement Obligations” means, at any time, the aggregate of all obligations of Consumers then outstanding under the Credit
Agreement to reimburse the LC Issuer for amounts paid by the LC Issuer in respect of any one or more drawings under Facility LCs.
Sch.C-4
“S&P” means Standard and Poor’s Rating Services, a division of The McGraw Hill Companies, Inc., or any successor thereto.
“Securitized Bonds” shall mean any nonrecourse bonds or similar asset-backed securities issued by a special-purpose Subsidiary of
Consumers which are payable solely from specialized charges authorized by the utility commission of the relevant state in connection with the
recovery of (x) stranded regulatory costs, (y) stranded clean air and pension costs and (z) other “Qualified Costs” (as defined in M.C.L.
§460.10h(g)) authorized to be securitized by the Michigan Public Service Commission.
“Single Employer Plan” means a Plan maintained by Consumers or any ERISA Affiliate for employees of Consumers or any ERISA Affiliate.
“Subsidiary” means, as to any Person, any corporation or other entity of which at least a majority of the securities or other ownership
interests having ordinary voting power (absolutely or contingently) for the election of directors or other Persons performing similar functions
are at the time owned directly or indirectly by such Person.
“Supplemental Indenture” means a supplemental indenture substantially in the form set forth in the Exhibits to the Credit Agreement.
“Total Consolidated Capitalization” means, at any date of determination, without duplication, the sum of (a) Total Consolidated Debt plus
all amounts excluded from Total Consolidated Debt pursuant to clauses (ii), (iii), (iv), (vi) and (vii) of the proviso to the definition of such term
(but only, in the case of securities of the type described in clause (iii) or (iv) of such proviso, to the extent such securities have been deemed
to be equity pursuant to Financial Accounting Standards Board Statement No. 150), (b) equity of the common stockholders of Consumers,
(c) equity of the preference stockholders of Consumers and (d) equity of the preferred stockholders of Consumers, in each case determined at
such date.
“Total Consolidated Debt” means, at any date of determination, the aggregate Debt of Consumers and its Consolidated Subsidiaries;
provided that Total Consolidated Debt shall exclude, without duplication, (i) the principal amount of any Securitized Bonds, (ii) any Junior
Subordinated Debt owned by any Hybrid Equity Securities Subsidiary or Hybrid Preferred Securities Subsidiary, (iii) Hybrid Equity Securities
or Hybrid Preferred Securities outstanding as of December 31, 2002 (including any guaranty by Consumers of payments with respect to any
such Hybrid Equity Securities or Hybrid Preferred Securities, provided that such guaranty is subordinated to the rights of the Banks under the
Credit Agreement and under the other Credit Documents pursuant to terms of subordination substantially similar to those set forth in Exhibit F
to the Credit Agreement, or pursuant to other terms and conditions satisfactory to the Majority Banks), (iv) such percentage of the Net
Proceeds from any issuance of hybrid debt/equity securities (other than Junior Subordinated Debt, Hybrid Equity Securities and Hybrid
Preferred Securities) by Consumers or any Consolidated Subsidiary as shall be agreed to be deemed equity by the Agent and Consumers prior
to the issuance thereof (which determination shall be based on, among other things, the treatment (if any) given to such securities by the
applicable rating agencies), (v) if all or any portion of the disposition of Consumers’ Palisades Nuclear Plant is required to be accounted for as
a financing under GAAP rather than as a sale, the amount of
Sch.C-5
liabilities reflected on Consumers’ consolidated balance sheet as the result of such disposition, (vi) obligations of Consumers and its
Consolidated Subsidiaries of the type described in Section 1.3 in the Credit Agreement, (vii) Debt of any Affiliate of Consumers that is (1)
consolidated on the financial statements of Consumers solely as a result of the effect and application of Financial Accounting Standards
Board No. 46 and of Accounting Research Bulletin No. 51, Consolidated Financial Statements, as modified by Statement of Financial
Accounting Standards No. 94, and (2) non-recourse to Consumers or any of its Affiliates (other than the primary obligor of such Debt and any
of its Subsidiaries), (viii) Debt of Consumers and its Affiliates that is re-categorized as such from certain lease obligations pursuant to
Emerging Issues Task Force (“EITF”) Issue 01-8, any subsequent EITF Issue or recommendation or other interpretation, bulletin or other
similar document by the Financial Accounting Standards Board on or related to such re-categorization and (ix) any non-cash obligations
resulting from the adoption of Financial Accounting Standards Board Statement No. 158 and any proposed amendment thereto, to the extent
such obligations are required to be treated as debt.
Sch.C-6
Execution Copy
AMENDMENT NO. 12
TO
capacity, the “Servicer’’), FALCON ASSET SECURITIZATION COMPANY LLC (“Falcon”), and JPMORGAN CHASE BANK, N.A.
(“JPMorgan”), as a Financial Institution and as Administrative Agent (in such capacity, the “Administrative Agent”). Capitalized terms used
herein without definition shall have the meanings ascribed thereto in the “Receivables Purchase Agreement” referred to below.
(a) Section 7. l(b)(vi) of the Receivables Purchase Agreement is hereby deleted and replaced with the following:
(vi) Downgrade of Originator. Any downgrade in the rating of any Indebtedness of Originator by S&P, by Moody’s or by Fitch,
setting forth the Indebtedness affected and the nature of such change.
(b) The definition of the term “Debt Rating” set forth in Exhibit I to the Receivables Purchase Agreement is hereby replaced with the
following:
“Debt Rating” means the rating then assigned by S&P, Moody’s or Fitch, as applicable, (a) at any time prior to the FMB Release Date,
with respect to the Senior Debt, and (b) at any time thereafter, with respect to the Originator’s senior unsecured long-term debt
(without credit enhancement).
(c) The following definitions are hereby added to Exhibit I to the Receivables Purchase Agreement in the appropriate alphabetical order:
“Credit Agreement” means that certain Fourth Amended and Restated Credit Agreement, dated as of March 30, 2007 (as in effect on
August 14, 2007) among Consumers, the financial institutions from time to time party thereto as “Banks” and JPMorgan, as Agent.
“Fitch” means Fitch Inc.
“FMB Release Date” has the meaning set forth in the Credit Agreement.
“Senior Debt” has the meaning set forth in the Credit Agreement.
(d) The definition of the term “Liquidity Termination Date” set forth in Exhibit I to the Receivables Purchase Agreement is hereby
amended to delete the date “August 15, 2007” appearing therein and to replace such date with the date “August 13, 2008”.
the Administrative Agent or its counsel has received four (4) counterpart signature pages to (i) this Amendment, executed by each of the
parties hereto and (ii) the amended and restated Fee Letter dated the date hereof, executed by each of the parties thereto.
Agreement, of all other Transaction Documents and any other documents, instruments and agreements executed and/or
2
delivered in connection therewith, shall remain in full force and effect and are hereby ratified and confirmed.
document, instrument or agreement executed in connection therewith, nor constitute a waiver of any provision contained therein. Falcon,
the Financial Institutions and the Administrative Agent hereby expressly reserve all of their rights with respect to the occurrence of other
Amortization Events, if any, whether previously existing or hereinafter arising or which exist at any time on or after the date first written
above.
3
By: /s/ Thomas J. Webb

Name: Thomas J. Webb
Title: Executive Vice President
By: /s/ Thomas J. Webb

Title: Executive Vice President and Chief Financial
Officer


By: /s/ Mark Connor

Name: Mark Connor

By: /s/ Mark Connor

Name: Mark Connor


By: /s/ Mark Connor

Name: Mark Connor

By: /s/ Mark Connor

Name: Mark Connor


By: /s/ Mark Connor

Name: Mark Connor

By: /s/ Mark Connor

Name: Mark Connor


By: /s/ Mark Connor

Name: Mark Connor

By: /s/ Mark Connor

Name: Mark Connor

Execution Copy
AMENDMENT NO. 13
TO
capacity, the “Servicer”), FALCON ASSET SECURITIZATION COMPANY LLC (“Falcon”), and JPMORGAN CHASE BANK, N.A.
(“JPMorgan”), as a Financial Institution and as Administrative Agent (in such capacity, the “Administrative Agent”). Capitalized terms used
herein without definition shall have the meanings ascribed thereto in the “Purchase Agreement” referred to below.
modified from time to time, the “Purchase Agreement”).
B. The parties hereto have agreed to amend the requirements of certain provisions of the Purchase Agreement upon the terms and
conditions set forth herein.
agree to amend the Purchase Agreement as follows:
(a) The following new Section 10.5 is hereby added to the Purchase Agreement immediately following Section 10.4 of the Purchase
Agreement:
Section 10.5 Accounting Based Consolidation Event. (a) If an Accounting Based Consolidation Event shall at any time occur then,
upon demand by the Administrative Agent, Seller shall pay to the Administrative Agent, for the benefit of the relevant Affected Entity,
such amounts as such Affected Entity reasonably determines will compensate or reimburse such Affected Entity for any resulting (i) fee,
expense or increased cost charged to, incurred or otherwise suffered by such Affected Entity, (ii) reduction in the rate of return on such
Affected Entity’s capital or reduction in the amount of any sum received or receivable by such Affected Entity or (iii) internal capital
charge or other imputed cost determined by such Affected Entity to be allocable to Seller or the transactions contemplated in this
Agreement in connection therewith. Amounts under this Section 10.5 may be demanded at any time without regard to the timing of
issuance of any financial statement by any Affected Entity.
(b) For purposes of this Section 10.5, the following terms shall have the following meanings:
“Accounting Based Consolidation Event” means the consolidation, for financial and/or regulatory accounting purposes, of all or
any portion of the assets and liabilities of Conduit that are subject to this Agreement or any other Transaction Document with all or
any portion of the assets and liabilities of an Affected Entity. An Accounting Based Consolidation Event shall be deemed to occur on
the date any Affected Entity shall acknowledge in writing that any such consolidation of the assets and liabilities of Conduit shall
occur.
“Affected Entity” means (i) any Financial Institution, (ii) any insurance company, bank or other funding entity providing liquidity,
credit enhancement or back-up purchase support or facilities to Conduit, (iii) any agent, administrator or manager of Conduit or
(iv) any bank holding company in respect of any of the foregoing.
(b) The following new Section 12.6 is hereby added to the Purchase Agreement immediately following Section 12.5 of the Purchase
Agreement:
Section 12.6 Federal Reserve. Notwithstanding any other provision of this Agreement to the contrary, any Financial Institution
may at any time pledge or grant a security interest in all or any portion of its rights (including, without limitation, any Purchaser
Interest and any rights to payment of Capital and Yield) under this Agreement to secure obligations of such Financial Institution to a
Federal Reserve Bank, without notice to or consent of the Seller or the Administrative Agent; provided that no such pledge or grant of
a security interest shall release a Financial Institution from any of its obligations hereunder, or substitute any such pledgee or
grantee for such Financial Institution as a party hereto.
(c) The following new Section 13.14(d) is hereby added to the Purchase Agreement immediately following Section 13.14(c) of the
Purchase Agreement:
(d) If, notwithstanding the intention of the parties expressed above, any sale or transfer by Seller hereunder shall be characterized
as a secured loan and not a sale or such sale shall for any reason be ineffective or unenforceable (any of the foregoing being a
“Recharacterization”), then this Agreement shall be deemed to constitute a security agreement under the UCC and other applicable
law. In the case of any Recharacterization, the Seller represents and warrants that each remittance of Collections to the
Administrative Agent or any Purchaser hereunder will have been (i) in payment of a debt incurred in the ordinary course of business
or financial affairs and (ii) made in the ordinary course of business or financial affairs.
(d) The numbering of “Section 13.16” which was added to the Purchase Agreement pursuant to Amendment No. 4 to Receivables
Purchase Agreement dated September 28, 2004 is hereby changed to “Section 13.17”.
(e) The definition of the term “Fee Letter” set forth in Exhibit I to the Purchase Agreement is hereby replaced with the following:
2
“Fee Letter” means that certain letter agreement dated as of August 12, 2008 among Seller, the Conduit and the Administrative
Agent, as it may be amended, restated, supplemented or otherwise modified from time to time.
(f) The definition of the term “Liquidity Termination Date” set forth in Exhibit I to the Purchase Agreement is hereby amended to delete
the date “August 13, 2008” appearing therein and to replace such date with the date “February 13, 2009”.
(a) the Administrative Agent or its counsel has received four (4) counterpart signature pages to (i) this Amendment, executed by each of the
parties hereto and (ii) the amended and restated Fee Letter dated the date hereof, executed by each of the parties thereto and (b) the
Administrative Agent has received the “Amendment Fee” as defined in the Fee Letter.
(a) Upon the effectiveness of this Amendment, (i) each reference in the Purchase Agreement to “this Receivables Purchase Agreement”,
“this Agreement”, “hereunder”, “hereof”, “herein” or words of like import shall mean and be a reference to the Purchase Agreement as
amended or otherwise modified hereby, and (ii) each reference to the Purchase Agreement in any other Transaction Document or any other
document, instrument or agreement executed and/or delivered in connection therewith, shall mean and be a reference to the Purchase
Agreement as amended or otherwise modified hereby.
(b) Except as specifically amended, terminated or otherwise modified above, the terms and conditions of the Purchase Agreement, of all
other Transaction Documents and any other documents, instruments and agreements executed and/or delivered in connection therewith, shall
remain in full force and effect and are hereby ratified and confirmed.
Administrative Agent or any Purchaser under the Purchase Agreement or any other Transaction Document or any other document, instrument
or agreement executed in connection therewith, nor constitute a waiver of any provision contained therein. Falcon, the Financial Institutions
and the Administrative Agent hereby expressly reserve all of their rights with respect to the occurrence of other Amortization
3
Events, if any, whether previously existing or hereinafter arising or which exist at any time on or after the date first written above.
SECTION 6. Governing Law. THIS AMENDMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE
4

Title: Treasurer, President, Chief Executive Officer
and Chief Financial Officer


FALCON ASSET SECURITIZATION COMPANY

LLC
By: /s/ Patrick Menichillo

Name: Patrick Menichillo



EXECUTION COPY

TO
THIS AMENDMENT NO. 14 AND WAIVER TO RECEIVABLES PURCHASE AGREEMENT (this “Amendment”) dated as of
November 5, 2008, is entered into among CONSUMERS RECEIVABLES FUNDING II, LLC (“Seller”), CONSUMERS ENERGY COMPANY, in its
capacity as Servicer (in such capacity, the “Servicer”), FALCON ASSET SECURITIZATION COMPANY LLC (“Falcon”), and JPMORGAN
CHASE BANK, N.A. (as successor by merger to Bank One, NA (Main Office Chicago)) (“JPMorgan”), as a Financial Institution and as
Administrative Agent (in such capacity, the “Administrative Agent”). Capitalized terms used herein without definition shall have the meanings
ascribed thereto in the “Receivables Purchase Agreement” referred to below.
SECTION 1. Amendment and Waiver. Subject to the satisfaction of the conditions precedent set forth in Section 3 hereof:
(a) The parties hereto hereby agree to amend the Receivables Purchase Agreement:
(i) to delete clause (ii) of Section 9.1(f) thereof and substitute the clause “(ii) the average of the Loss-to-Liquidation Ratios as of the
end of such Accrual Period and the two preceding Accrual Periods shall exceed 2.0%” therefor;
(ii) to amend the definition of “Loss Percentage” in Exhibit I thereto to delete the “8%” in clause (i) of such definition and replace it
with “20%”;
(iii) to amend the definition of “Purchase Limit” in Exhibit I thereto to delete the “$325,000,000” in such definition and replace it with
“$250,000,000”; and
(iv) to replace Schedule A thereto in its entirety with Exhibit A attached hereto.
(b) Falcon, the Financial Institution and the Administrative Agent each hereby agrees to waive as of September 30, 2008 any
Amortization Event arising under clause (ii) of Section 9.1(f) of the Receivables Purchase Agreement in respect of the September 2008
Accrual Period. Falcon, the Financial Institution and the Administrative Agent hereby expressly reserve all of their rights with respect to the
occurrence of other Amortization Events, if any, whether previously existing or hereinafter arising or which exist at any time on or after the
date first written above. This specific waiver applies only to the above-specified violations.
under the Receivables Purchase Agreement as amended hereby, the execution and delivery of this Amendment and the performance of its
obligations under the Receivables Purchase Agreement as amended hereby has been duly authorized by all necessary corporate or
company action on its part and this Amendment constitutes its legal, valid and binding obligation, enforceable against it in accordance with
its terms; and
hereto.
2
case except as specifically set forth in Section 1(b) above.
3

Title: President, Chief Executive Officer, Chief
Financial Officer and Treasurer






Exhibit A
SCHEDULE A
COMMITMENTS OF FINANCIAL INSTITUTIONS
Financial Institution Commitment

JPMorgan Chase Bank, N.A. (as successor by merger to Bank One, NA (Main Office Chicago)) $250,000,000
Execution Copy
AMENDMENT NO. 15
TO
THIS AMENDMENT NO. 15 TO RECEIVABLES PURCHASE AGREEMENT (this “Amendment”) dated as of February 12, 2009, is
entered into among CONSUMERS RECEIVABLES FUNDING II, LLC (“Seller”), CONSUMERS ENERGY COMPANY, in its capacity as Servicer
(in such capacity, the “Servicer”), FALCON ASSET SECURITIZATION COMPANY LLC (“Falcon”), and JPMORGAN CHASE BANK, N.A.
(as successor by merger to Bank One, NA (Main Office Chicago)) (“JPMorgan”), as a Financial Institution and as Administrative Agent (in
such capacity, the “Administrative Agent”). Capitalized terms used herein without definition shall have the meanings ascribed thereto in the
“Purchase Agreement” referred to below.
modified from time to time, the “Purchase Agreement”).
B. The parties hereto have agreed to amend certain provisions of the Purchase Agreement upon the terms and conditions set forth
herein.
agree to amend the Purchase Agreement as follows:
(a) Article I of the Purchase Agreement is hereby amended to delete Section 1.4 in its entirety and replace it with the following:
Section 1.4 Payment Requirements. All amounts to be paid or deposited by any Seller Party pursuant to any provision of this
Agreement shall be paid or deposited in accordance with the terms hereof no later than 12:00 noon (New York time) on the day when
due in immediately available funds, and if not received before 12:00 noon (New York time) shall be deemed to be received on the next
succeeding Business Day. If such amounts are payable to a Purchaser they shall be paid to the Administrative Agent, for the account
of such Purchaser, at 10 South Dearborn, Chicago, Illinois 60670 until otherwise notified by the Administrative Agent. All
computations of Yield (other than Yield calculated using the Alternate Base Rate described in clauses (a) or (b) of the definition
thereof), per annum fees hereunder and per annum fees under the Fee Letter shall be made on the basis of a year of 360 days for the
actual number of days elapsed. All computations of Yield calculated using the Alternate Base Rate described in clauses (a) or (b) of
the definition thereof shall be made on the basis of a year of 365 or 366 days, as
applicable, for the actual number of days elapsed. If any amount hereunder shall be payable on a day which is not a Business Day,
such amount shall be payable on the next succeeding Business Day.
(b) Article II of the Purchase Agreement is hereby amended to delete Section 2.7 in its entirety and replace it with the following:
Section 2.7 Maximum Purchaser Interests. Seller shall ensure that the Purchaser Interests of the Purchasers shall at no time exceed
in the aggregate the Applicable Maximum Purchaser Interest. If the aggregate of the Purchaser Interests of the Purchasers exceeds the
Applicable Maximum Purchaser Interest, Seller shall pay to the Administrative Agent, within one (I) Business Day, an amount such
that, after giving effect to such payment, the aggregate of the Purchaser Interests equals or is less than the Applicable Maximum
Purchaser Interest. Amounts paid by the Seller under this Section 2.7 shall be applied to the outstanding Capital of the Purchasers
ratably in accordance with such Purchasers’ respective Capital Pro Rata Shares.
(c) Article IV of the Purchase Agreement is hereby amended to delete Sections 4.1, 4.4 and 4.5(a) in their entirety and replace them with
the following:
Section 4.1 Financial Institution Funding. Each Purchaser Interest of the Financial Institutions shall accrue Yield for each day
during its Tranche Period at either the LIBO Rate or the Alternate Base Rate in accordance with the terms and conditions hereof.
Until Seller gives notice to the Administrative Agent of another Bank Rate in accordance with Section 4.4, the initial Bank Rate for
any Purchaser Interest transferred to the Financial Institutions pursuant to the terms and conditions hereof shall be the Alternate
Base Rate. If the Financial Institutions acquire by assignment from Conduit all or any portion of a Purchaser Interest (or an
undivided interest therein) pursuant to the Liquidity Agreement, each Purchaser Interest so assigned shall each be deemed to have a
new Tranche Period commencing on the date of any such assignment.
Section 4.4 Financial Institution Bank Rates. Seller may select the LIBO Rate or the Alternate Base Rate for each Purchaser
Interest of the Financial Institutions. Seller shall by 12:00 noon (New York time). (i) at least three (3) Business Days prior to the
expiration of any Terminating Tranche with respect to which the LIBO Rate is being requested as a new Bank Rate and (ii) at least
one (I) Business Day prior to the expiration of any Terminating Tranche with respect to which the Alternate Base Rate is being
requested as a new Bank Rate, give the Agent irrevocable notice of the new Bank Rate for the Purchaser Interest associated with such
Terminating Tranche. Until Seller gives notice to the Agent of another Bank Rate, the initial Bank Rate for any Purchaser Interest
transferred to the Financial Institutions pursuant to the terms and conditions hereof shall be the Alternate Base Rate.
2
Section 4.5 Suspension of the LIBO Rate. (a) If any Financial Institution notifies the Administrative Agent that it has determined
that funding its Pro Rata Share of the Purchaser Interests of the Financial Institutions at a LIBO Rate would violate any applicable
law, rule, regulation, or directive of any governmental or regulatory authority, whether or not having the force of law, or that (i)
deposits of a type and maturity appropriate to fund its Purchaser Interests at such LIBO Rate are not available or (ii) such LIBO Rate
does not accurately reflect the cost of acquiring or maintaining a Purchaser Interest at such LIBO Rate, then the Administrative Agent
shall suspend the availability of such LIBO Rate and select the Alternate Base Rate for any Purchaser Interest accruing Yield at such
LIBO Rate, and the then current Tranche Period for such Purchaser Interest shall thereupon be terminated and a new Tranche Period
based upon the Alternate Base Rate shall commence.
(d) Article VIII of the Purchase Agreement is hereby amended to delete Section 8.5 in its entirety and replace it with the following:
Section 8.5 Reports. The Servicer shall prepare and forward to the Administrative Agent (i) on the twelfth (12th) Business Day of
each month and at such times as the Administrative Agent shall request, a Monthly Report, (ii) on the second (2nd ) Business Day of
each week during a Level Two Enhancement Period, a weekly report in substantially the same form as the Monthly Report or such
other form approved by the Administrative Agent in writing and reflecting information as of the end of the prior week, (iii) on each
Business Day during a Level Three Enhancement Period, a Daily Report, and (iv) at such times as the Administrative Agent shall
reasonably request, an aging of Receivables.
(e) Section 9.1 of the Purchase Agreement is hereby amended to delete paragraph (a) in its entirety and replace it with the following:
(a) Any Seller Party shall fail (i) to make any payment or deposit required hereunder when due and such failure shall continue for
one (1) Business Day, or (ii) to perform or observe any term, covenant or agreement hereunder (other than as referred to in clause (i)
of this paragraph (a) and Section 9.1(b) through (k)) and such failure shall continue for five (5) consecutive Business Days or a
“Servicer Default” shall occur under (and as such term is defined in) the Servicing Agreement.
(f) Section 9.1(f) of the Purchase Agreement is amended to delete the percentage “7.0%” in clause (iii)(C) and replace it with “8.0%”
(g) Exhibit I to the Purchase Agreement is hereby amended to add the following definitions of “Alternate Base Rate” and “Daily Report”
in the appropriate alphabetical order:
3
“Alternate Base Rate” means, for any date, a rate per annum equal to the greatest of (a) the LIBO Rate for a one month Tranche
Period at approximately 11:00 a.m. London time on such day (or if such day is not a Business Day, the immediately preceding
Business Day) plus 1.0%, (b) the Federal Funds Effective Rate in effect on such day plus 1 /2 of 1% and (c) the corporate base rate,
prime rate or base rate of interest, as applicable, announced by the Administrative Agent from time to time, changing when and as
such rate changes (the “Base Rate”). Any change in the Alternate Base Rate due to a change in the Base Rate, the Federal Funds
Effective Rate or the LIBO Rate shall be effective from and including the effective date of such change in the Base Rate, the Federal
Funds Effective Rate or the LIBO Rate, respectively.
“Daily Report” means a report, in substantially the form of Exhibit XII hereto (appropriately completed), furnished by the Servicer
to the Administrative Agent pursuant to Section 8.5.
(h) Exhibit I to the Purchase Agreement is hereby amended to delete the definitions of “Applicable Stress Factor”, “Bank Rate”, “Default
Fee”, “Fee Letter” and “Liquidity Termination Date” and replace them with the following:
“Applicable Stress Factor” means 2.5.
“Bank Rate” means, the LIBO Rate or the Alternate Base Rate, as applicable, with respect to each Purchaser Interest of the
Financial Institutions and any Purchaser Interest of Conduit, an undivided interest in which has been assigned by Conduit to a
Financial Institution pursuant to the Liquidity Agreement.
“Default Fee” means with respect to any amount due and payable by Seller (or required to be deposited by Servicer) in respect of
any Aggregate Unpaids, an amount equal to the greater of (i) $1000 and (ii) interest on any such unpaid Aggregate Unpaids at a
rate per annum equal to 2.75% above the Alternate Base Rate.
“Fee Letter” means that certain letter agreement dated as of February 12, 2009 among Seller, the Conduit and the Administrative
Agent, as it may be amended, restated, supplemented or otherwise modified from time to time.
(i) Exhibit I to the Purchase Agreement is hereby amended to delete the definitions of “Excess WPP Receivables Amount”, “Prime Rate”
and “WPP Limit”.
(j) Exhibit I to the Purchase Agreement is hereby amended to delete clauses (i) and (vi) of the definition of “Eligible Receivable” in their
entirety and replace them with the following:
4
(i) which is not a Charged-Off Receivable, a Delinquent Receivable or a WPP Receivable,

(vi) the Obligor of which (a) is not an Affiliate of (1) any party hereto or (2) Originator and (b) to the knowledge of either Servicer
or Seller, has not taken any action, or suffered any event to occur, of the type described in Section 9.1(d) (as if references to Seller
Party therein refer to such Obligor),
(k) Exhibit I to the Purchase Agreement is hereby amended to delete the percentage “20%” in clause (i) of the definition of “Loss
Percentage” and replace it with “15%”
(l) Exhibit I to the Purchase Agreement is hereby amended to add the word “and” at the end of clause (vi) of the definition of “Net
Receivables Balance” and to delete the clause “and (viii) the Excess WPP Receivables Amount at such time” of such definition in its
entirety.
(m) Exhibit I to the Purchase Agreement is hereby amended to delete clause (b) of the definition of “Tranche Period” and replace it with
the following:
(b) if Yield for such Purchaser Interest is calculated on the basis of clause (a) or (b) of the definition of Alternate Base Rate, a
period commencing on a Business Day selected by Seller and agreed to by the Administrative Agent, provided no such period shall
exceed one month.
(n) Exhibit I to the Purchase Agreement is hereby amended to delete the definitions of “Unbilled Receivables Offset Amount”, “Yield”
and “Yield and Servicer Fee Percentage” and replace them with the following:
“Unbilled Receivables Offset Amount” means, at any time, an amount equal to the lesser of (a) the credit balance of all EMPP
Receivables as of the last day of the immediately preceding Accrual Period and (b) the product of (i) the greater of (A) 7% and (B) the
ratio of (1) the total number of Obligors whose accounts are subject to a balanced or levelized payment plan or a payment plan based
on a percentage of such Obligor’s income (giving rise to EMPP Receivables) as of the last day of the immediately preceding Accrual
Period divided by (2) the total number of Obligors as of the last day of the immediately preceding Accrual Period multiplied by
(ii) the aggregate amount of Unbilled Receivables for such Accrual Period.
“Yield” means (a) for each respective Tranche Period relating to Purchaser Interests funded by the Financial Institutions,
including any Purchaser Interests or undivided interest in a Purchaser Interest assigned to a Financial Institution pursuant to the
Liquidity Agreement, an amount equal to the product of the applicable Bank Rate for each Purchaser Interest multiplied by the
Capital of such Purchaser Interest for each day elapsed during such Tranche Period, annualized on a 360 day basis (or a 365 or
366 day basis, as applicable, in the case of a Bank Rate determined by clause (a)
5
or (b) of the definition of Alternate Base Rate), and (b) for each respective Settlement Period relating to Purchaser Interests funded by
Conduit, other than a Purchaser Interest which, or an undivided interest in which, has been assigned by Conduit to a Financial
Institution pursuant to the Liquidity Agreement, an amount equal to the product of the applicable CP Rate multiplied by the Capital
of such Purchaser Interest for each day elapsed during such Settlement Period, annualized on a 360 day basis.
“Yield and Servicer Fee Percentage” means, at any time, an amount equal to the greater of (i) 1.5% and (ii) the ratio (expressed as
a percentage) equal to (a) the product of (x) 1.5, multiplied by (y) the Alternate Base Rate (measured as of the close of business as of
the last Business Day of the preceding calendar month) plus 2.0%, multiplied by (z) the highest three-month average Days Sales
Outstanding Ratio over the prior twelve (12) months, divided by (b) 360.
(o) The Purchase Agreement is hereby amended to add Attachment A hereto as a new Exhibit XII to the Purchase Agreement.
under the Purchase Agreement as amended hereby, the execution and delivery of this Amendment and the performance of its obligations
under the Purchase Agreement as amended hereby has been duly authorized by all necessary corporate or company action on its part and
this Amendment constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms; and
SECTION 3. Conditions Precedent. This Amendment shall become effective on the first Business Day (the “Effective Date”) on which (i) the
Administrative Agent or its counsel has received four (4) counterpart signature pages to each of this Amendment and the Fee Letter of even
date herewith, in each case, executed by each of the parties hereto and (ii) the Administrative Agent has received the Amendment Fee (as such
term is defined in the Fee Letter).
(a) Upon the effectiveness of this Amendment, (i) each reference in the Purchase Agreement to “this Receivables Purchase Agreement”,
“this Agreement”, “hereunder”, “hereof”, “herein” or words of like import shall mean and be a reference to the Purchase Agreement as
amended or otherwise modified hereby, and (ii) each
6
reference to the Purchase Agreement in any other Transaction Document or any other document, instrument or agreement executed and/or
delivered in connection therewith, shall mean and be a reference to the Purchase Agreement as amended or otherwise modified hereby.
(b) Except as specifically amended, terminated or otherwise modified above, the terms and conditions of the Purchase Agreement, of all
other Transaction Documents and any other documents, instruments and agreements executed and/or delivered in connection therewith,
shall remain in full force and effect and are hereby ratified and confirmed.
Administrative Agent or any Purchaser under the Purchase Agreement or any other Transaction Document or any other document,
instrument or agreement executed in connection therewith, nor constitute a waiver of any provision contained therein.
7

Title: President, Chief Executive Officer,
Chief Financial Officer and Treasurer






Attachment A to Amendment No. 15 to Receivables Purchase Agreement

EXHIBIT XII
FORM OF DAILY REPORT
(Attached.)
Exhibit (10)(xx)
Execution Version
RECEIVABLES SALE AGREEMENT

dated as of May 22, 2003
Between
CONSUMERS ENERGY COMPANY,
as Originator
And
CONSUMERS RECEIVABLES FUNDING II, LLC,
as Buyer

THIS RECEIVABLES SALE AGREEMENT, dated as of May 22, 2003, is by and between CONSUMERS ENERGY COMPANY, a Michigan
corporation (“Originator”), and CONSUMERS RECEIVABLES FUNDING II, LLC, a Delaware limited liability company (“Buyer”). Unless
defined elsewhere herein, capitalized terms used in this Agreement shall have the meanings assigned to such terms in Exhibit I.
Originator now owns, and from time to time hereafter will own, Receivables. Originator wishes to sell and assign to Buyer, and Buyer
wishes to purchase from Originator, all of Originator’s right, title and interest in and to such Receivables, together with the Related Security
and Collections with respect thereto.
Originator and Buyer intend the transactions contemplated hereby to be true sales of the Receivables from Originator to Buyer,
providing Buyer with the full benefits of ownership of the Receivables, and Originator and Buyer do not intend these transactions to be, or for
any purpose to be characterized as, loans from Buyer to Originator.
Buyer will sell undivided interests in the Receivables and in the associated Related Security and Collections pursuant to that certain
Receivables Purchase Agreement dated as of May 22, 2003 (as the same may from time to time hereafter be amended, supplemented, restated
or otherwise modified, the “Purchase Agreement”) among Buyer, Originator, as Servicer, Falcon Asset Securitization Corporation (“Conduit”),
the financial institutions from time to time party thereto (the “Financial Institutions”) and Bank One, NA (Main Office Chicago) or any
successor agent appointed pursuant to the terms of the Purchase Agreement, as administrative agent for the Conduit and such Financial
Institutions (in such capacity, the “Administrative Agent”).
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
AMOUNTS AND TERMS
Section 1.1 Purchases of Receivables.
(a) Effective on the date hereof, in consideration for the Purchase Price and upon the terms and subject to the conditions set forth herein,
Originator does hereby sell, assign, transfer, set-over and otherwise convey to Buyer, without recourse (except to the extent
expressly provided herein), and Buyer does hereby purchase from Originator, all of Originator’s right, title and interest in and to all Receivables
existing as of the close of business on the Business Day immediately prior to the date hereof and all Receivables thereafter arising through and
including the Termination Date, together, in each case, with all Related Security relating thereto and all Collections thereof. In accordance with
the preceding sentence, on the date hereof Buyer shall acquire all of Originator’s right, title and interest in and to all Receivables existing as of
the close of business on the Business Day immediately prior to the date hereof and thereafter arising through and including the Termination
Date, together with all Related Security relating thereto and all Collections thereof. Buyer shall be obligated to pay the Purchase Price for each
Receivable, its Related Security and Collections in accordance with Section 1.2. In connection with the payment of the Purchase Price for any
Receivables purchased hereunder, Buyer may request that Originator deliver, and Originator shall deliver, such approvals, opinions,
information, reports or documents as Buyer may reasonably request.
(b) It is the intention of the parties hereto that each Purchase of Receivables made hereunder shall constitute a sale of “accounts” (as
such term is used in Article 9 of the UCC), which sale is absolute and irrevocable and provides Buyer with the full benefits of ownership of the
Receivables. Except for the Purchase Price Credits owed pursuant to Section 1.3, the sales of Receivables hereunder are made without recourse
to Originator; provided, however, that (i) Originator shall be liable to Buyer for all representations, warranties and covenants made by
Originator pursuant to the terms of the Transaction Documents to which Originator is a party, and (ii) such sale does not constitute and is not
intended to result in an assumption by Buyer or any assignee thereof of any obligation of Originator or any other Person arising in connection
with the Receivables, the related Contracts and/or other Related Security or any other obligations of Originator. In view of the intention of the
parties hereto that the Purchases of Receivables made hereunder shall constitute sales of such Receivables rather than loans secured thereby,
Originator agrees to note in its financial statements that its Receivables have been sold to Buyer. Upon the request of Buyer or the
Administrative Agent (as Buyer’s assignee), Originator will execute and file such financing or continuation statements, or amendments thereto
or assignments thereof, and such other instruments or notices, as may be necessary or appropriate to perfect and maintain the perfection of
Buyer’s ownership interest in the Receivables and the Related Security and Collections with respect thereto, or as Buyer or the Administrative
Agent (as Buyer’s assignee) may reasonably request.
Section 1.2 Payment for the Purchases.
(a) The Purchase Price for the Purchase of Receivables in existence on the close of business on the Business Day immediately preceding
the date hereof (the “Initial Cutoff Date”) shall be payable in full by Buyer to Originator on the date hereof, and shall be paid to Originator in
the following manner:
(i) by delivery of immediately available funds, to the extent of funds made available to Buyer in connection with its subsequent sale of
an interest in such Receivables to the Purchasers under the Purchase Agreement; provided that a portion of such funds shall be offset
by amounts owed by Originator to Buyer on account of the issuance of equity having a total value of not less than the Required Capital
Amount, and
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(ii) the balance, by delivery of the proceeds of a subordinated revolving loan from Originator to Buyer (a “Subordinated Loan”) in an
amount not to exceed the least of (A) the remaining unpaid portion of such Purchase Price, (B) the maximum Subordinated Loan that
could be borrowed without rendering Buyer’s Net Worth less than the Required Capital Amount and (C) the maximum Subordinated
Loan that could be borrowed without rendering the Net Value less than the aggregate outstanding principal balance of the Subordinated
Loans (including the Subordinated Loan proposed to be made on such date).
Each Receivable coming into existence after the Initial Cutoff Date shall be sold to the Buyer on the Business Day occurring immediately after
the day such Receivable is originated and the Purchase Price for such Receivable shall be due and owing in full by Buyer to Originator or its
designee on such Business Day (except that Buyer may, with respect to any such Purchase Price, offset against such Purchase Price any
amounts owed by Originator to Buyer hereunder and which have become due but remain unpaid) and shall be paid to Originator in the manner
provided in the following paragraphs (b), (c) and (d).
(b) With respect to any Receivables sold hereunder after the date hereof, on the first Business Day after such Receivable is originated,
such Receivable shall be sold to Buyer and on such date of Purchase, Buyer shall pay the Purchase Price therefor in accordance with Section
1.2(d) and in the following manner:
first, by delivery of immediately available funds, to the extent of funds available to Buyer from its subsequent sale of an interest in the
Receivables to the Administrative Agent for the benefit of the Purchasers under the Purchase Agreement or other cash on hand;
second, by delivery of the proceeds of a Subordinated Loan, provided that the making of any such Subordinated Loan shall be subject
to the provisions set forth in Section 1.2(a)(ii); and
third, unless Originator has declared the Termination Date to have occurred pursuant to Section 5.2, by accepting a contribution to its
capital in an amount equal to the remaining unpaid balance of such Purchase Price.
Subject to the limitations set forth in Section 1.2(a)(ii), Originator irrevocably agrees to advance each Subordinated Loan requested by Buyer
on or prior to the Termination Date. The Subordinated Loans shall be evidenced by, and shall be payable in accordance with the terms and
provisions of the Subordinated Note and shall be payable solely from funds which Buyer is not required under the Purchase Agreement to set
aside for the benefit of, or otherwise pay over to, the Administrative Agent or the Purchasers. Originator is hereby authorized by Buyer to
endorse on the schedule attached to the Subordinated Note an appropriate notation evidencing the date and amount of each advance
thereunder, as well as the date of each payment with respect thereto, provided that the failure to make such notation shall not affect any
obligation of the Buyer thereunder.
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(c) From and after the Termination Date, Originator shall not be obligated to (but may, at its option) sell Receivables to Buyer unless
Originator reasonably determines that the Purchase Price therefor will be satisfied with funds available to Buyer from sales of interests in the
Receivables pursuant to the Purchase Agreement, Collections, proceeds of Subordinated Loans, other cash on hand or otherwise.
(d) Although the Purchase Price for each Receivable coming into existence after the Initial Cutoff Date shall be paid in full by Buyer to
Originator on the date such Receivable is purchased, a precise reconciliation of the Purchase Price between Buyer and Originator shall be
effected on a monthly basis on Settlement Dates with respect to all Receivables sold during the same Calculation Period most recently ended
prior to such Settlement Date and based on the information contained in the Monthly Report delivered by the Servicer pursuant to Article VIII
of the Purchase Agreement for such Calculation Period. Although such reconciliation shall be effected on Settlement Dates, increases or
decreases in the amount owing under the Subordinated Note made pursuant to Section 1.2(b) and any contribution of capital by Originator to
Buyer made pursuant to Section 1.2(b) shall be deemed to have occurred and shall be effective as of the date that the Purchase Price is paid.
On each Settlement Date, Originator shall determine the net increase or the net reduction in the outstanding principal amount of its
Subordinated Note occuring during the immediately preceding Calculation Period and shall account for such net increase or net reduction in
its books and records. Originator hereby agrees that within three (3) Business Days after Buyer so requests, Originator will provide Buyer with
a current report of daily sales giving rise to Receivables purchased hereunder and a current daily report of Collections received.
(e) Each contribution of a Receivable by Originator to Buyer shall be deemed to be a Purchase of such Receivable by Buyer for all
purposes of this Agreement. Buyer hereby acknowledges that Originator shall have no obligations to make further capital contributions to
Buyer, in respect of Originator’s equity interest in Buyer or otherwise, in order to provide funds to pay the Purchase Price to Originator under
this Agreement or for any other reason.
Section 1.3 Purchase Price Credit Adjustments.
(a) If on any day the Outstanding Balance of a Receivable is:
(i) reduced as a result of any defective or rejected goods or services, any discount or any adjustment or otherwise by Originator (other
than cash Collections on account of the Receivables),
(ii) reduced or canceled as a result of a setoff in respect of any claim by any Person (whether such claim arises out of the same or a
related transaction or an unrelated transaction), or
(b) if any of the representations and warranties set forth in Article II were not true with respect to any Receivable on the date of its
Purchase hereunder,
then, in such event, Buyer shall be entitled to a credit (each, a “Purchase Price Credit”) against the Purchase Price otherwise payable
hereunder in an amount equal to the amount of such reduction or cancellation in the case of clause (a) or the Outstanding Balance of such
Receivable
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in the case of clause (b). If such Purchase Price Credit exceeds the Purchase Price for the Receivables sold on such day, then Originator shall
pay the remaining amount of such Purchase Price Credit in cash within five (5) Business Days thereafter, provided that if the Termination Date
has not occurred, Originator shall be allowed to deduct the remaining amount of such Purchase Price Credit from any indebtedness owed to it
under the Subordinated Note to the extent permitted thereunder.
Section 1.4 Payments and Computations, Etc. All amounts to be paid or deposited by Buyer hereunder shall be paid or deposited in
accordance with the terms hereof on the day when due in immediately available funds to the account of Originator designated from time to time
by Originator or as otherwise directed by Originator. In the event that any payment owed by any Person hereunder becomes due on a day that
is not a Business Day, then such payment shall be made on the next succeeding Business Day. If any Person fails to pay any amount
hereunder when due, such Person agrees to pay, on demand, the Default Fee in respect thereof until paid in full; provided, however, that such
Default Fee shall not at any time exceed the maximum rate permitted by applicable law. All computations of interest payable hereunder shall be
made on the basis of a year of 360 days for the actual number of days (including the first but excluding the last day) elapsed.
Section 1.5 Transfer of Records.
(a) In connection with the Purchases of Receivables hereunder, Originator hereby sells, transfers, assigns and otherwise conveys to
Buyer all of Originator’s right and title to and interest in the Records relating to all Receivables sold hereunder, without the need for any
further documentation in connection with the Purchases. In connection with such transfer, Originator hereby grants to each of Buyer, the
Administrative Agent and the Servicer an irrevocable, non-exclusive license to use, without royalty or payment of any kind, all software used
by Originator to account for the Receivables, to the extent necessary to administer the Receivables, whether such software is owned by
Originator or is owned by others and used by Originator under license agreements with respect thereto, provided that should the consent of
any licensor of such software be required for the grant of the license described herein to be effective, Originator hereby agrees that upon the
request of Buyer (or the Administrative Agent as Buyer’s assignee), Originator will use its reasonable efforts to obtain the consent of such
third-party licensor. The license granted hereby shall be irrevocable, and shall terminate on the date this Agreement terminates in accordance
with its terms.
(b) Originator (i) shall take such action reasonably requested by Buyer and/or the Administrative Agent (as Buyer’s assignee), from time
to time hereafter, that may be necessary or appropriate to ensure that Buyer and its assigns under the Purchase Agreement have an
enforceable ownership interest in the Records relating to the Receivables purchased from Originator hereunder, and (ii) shall use its reasonable
efforts to ensure that Buyer, the Administrative Agent and the Servicer each has an enforceable right (whether by license or sublicense or
otherwise) to use all of the computer software used to account for the Receivables and/or to recreate such Records.
Section 1.6 Characterization.
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(a) If, notwithstanding the intention of the parties expressed in Section 1.1(b), any sale or contribution by Originator to Buyer of
Receivables hereunder shall be characterized as a secured loan and not a sale or such sale shall for any reason be ineffective or unenforceable,
then this Agreement shall be deemed to constitute a security agreement under the UCC and other applicable law. For this purpose and without
being in derogation of the parties’ intention that the sale of Receivables hereunder shall constitute a true sale thereof, Originator hereby grants
to Buyer a valid and perfected security interest in all of Originator’s right, title and interest, now owned or hereafter acquired, in, to and under
all Receivables now existing and hereafter arising, and in all Collections, Related Security and Records with respect thereto, each Lock-Box and
Collection Account, all other rights and payments relating to the Receivables and all proceeds of the foregoing to secure the prompt and
complete payment of a loan deemed to have been made in an amount equal to the Purchase Price of the Receivables originated by Originator
together with all other obligations of Originator hereunder, which security interest shall be prior to all other Adverse Claims thereto. After the
occurrence of a Termination Event, Buyer and its assigns shall have, in addition to the rights and remedies which they may have under this
Agreement, all other rights and remedies provided to a secured creditor after default under the UCC and other applicable law, which rights and
remedies shall be cumulative. Originator hereby authorizes the Buyer (or its assigns), within the meaning of Section 9-509 of any applicable
enactment of the UCC, as secured party, to file without the signature of the debtor, the UCC financing statements contemplated hereby.
(b) Originator acknowledges that Buyer, pursuant to the Purchase Agreement, shall assign to the Administrative Agent, for the benefit
of the Administrative Agent and the Purchasers thereunder, all of its rights, remedies, powers and privileges under this Agreement and that
the Administrative Agent may further assign such rights, remedies, powers and privileges to the extent permitted by the Purchase Agreement.
The Originator agrees that the Administrative Agent, as the assignee of the Buyer, shall, subject to the terms of the Purchase Agreement, have
the right to enforce this Agreement and to exercise directly all of Buyer’s rights and remedies under this Agreement (including, without
limitation, the right to give or withhold any consents or approvals of Buyer to be given or withheld hereunder, and , in any case without regard
to whether specific reference is made to Buyer’s assigns in the provisions of this Agreement which set forth such rights and remedies) and
Originator agrees to cooperate fully with the Administrative Agent and the Purchasers in the exercise of such rights and remedies. Originator
further agrees to give to the Administrative Agent copies of all notices it is required to give to Buyer hereunder.
ARTICLE II
REPRESENTATIONS AND WARRANTIES

Section 2.1 Representations and Warranties of Originator. Originator hereby represents and warrants to Buyer on the date hereof and on
the date of each Purchase hereunder that:
(a) Corporate Existence and Power. Originator is a corporation duly organized, validly existing and in good standing under the laws of its
state of incorporation.
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(b) Power and Authority; Due Authorization Execution and Delivery. The execution and delivery by Originator of this Agreement and
each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder and, Originator’s use
of the proceeds of the Purchases made hereunder, are within its corporate powers and authority and have been duly authorized by all
necessary corporate action on its part.
(c) No Conflict. The execution and delivery by Originator of this Agreement and each other Transaction Document to which it is a party,
and the performance of its obligations hereunder and thereunder do not contravene or violate (i) its certificate or articles of incorporation or
by-laws (ii) any law, rule or regulation applicable to it, including, without limitation, the Public Utility Holding Company Act of 1935, as
amended, (iii) any restrictions under any material agreement, contract or instrument to which it is a party or by which it or any of its property is
bound, or (iv) any order, writ, judgment, award, injunction or decree binding on or affecting it or its property, and do not result in the creation
or imposition of any Adverse Claim on assets of Originator or its Subsidiaries (except as created hereunder); and no transaction contemplated
hereby requires compliance with any bulk sales act or similar law.
(d) Governmental Authorization. Other than (i) the filing of the financing statements required hereunder or (ii) such authorizations,
approvals, notices, filings or other actions as have been obtained, made or taken prior to the date hereof, no authorization or approval or other
action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution and delivery by
Originator of this Agreement and each other Transaction Document to which it is a party and the performance of its obligations hereunder and
thereunder.
(e) Actions, Suits. Except (i) to the extent described in Originator’s Annual Report on Form 10-K for the year ended December 31, 2002, as
filed with the SEC, and (ii) such other similar actions, suits and proceedings predicated on the occurrence of the same events giving rise to any
actions, suits and proceedings described in the Annual Reports referred to in the foregoing clause (i), there are no actions, suits or
proceedings pending, or to the best of Originator’s knowledge, threatened, against or affecting Originator, or any of its properties, in or before
any court, arbitrator or other body, that (i) relate to the transactions under this Agreement or (ii) could reasonably be expected to have a
Material Adverse Effect. Originator is not in default with respect to any order of any court, arbitrator or governmental body.
(f) Binding Effect. This Agreement and each other Transaction Document to which Originator is a party constitute the legal, valid and
binding obligations of Originator enforceable against Originator in accordance with their respective terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors’ rights generally and by
general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).
(g) Accuracy of Information. All information heretofore furnished by Originator or any of its Affiliates to Buyer (or its assigns) for
purposes of or in connection with this Agreement, any of the other Transaction Documents or any transaction contemplated hereby or
thereby is, and all such information hereafter furnished by Originator or any of its Affiliates to Buyer (or its assigns) will be, true and accurate
in every material respect on the date such
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information is stated or certified and does not and will not contain any material misstatement of fact or omit to state a material fact or any fact
necessary to make the statements contained therein not materially misleading.
(h) Use of Proceeds. No proceeds of the Purchases hereunder will be used (i) for a purpose that violates, or would be inconsistent with,
Regulation T, U or X promulgated by the Board of Governors of the Federal Reserve System from time to time or (ii) to acquire any security in
any transaction which is subject to Section 12, 13 or 14 of the Securities Exchange Act of 1934, as amended.
(i) Good Title. Immediately prior to the time each Receivable is purchased, Originator shall be the legal and beneficial owner of each such
Receivable and Related Security with respect thereto, free and clear of any Adverse Claim, except as created by the Transaction Documents.
(j) Perfection. This Agreement, together with the filing of the financing statements contemplated hereby, is effective to, and shall, upon
each Purchase hereunder, transfer to Buyer (and Buyer shall acquire from Originator) (i) legal and equitable title to, with the right to sell and
encumber each Receivable, whether now existing or hereafter arising, together with the Collections with respect thereto, and (ii) all of
Originator’s right, title and interest in the Related Security associated with each such Receivable, in each case, free and clear of any Adverse
Claim, except as created by the Transaction Documents. There have been duly filed all financing statements or other similar instruments or
documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect Buyer’s ownership interest in the
Receivables, the Related Security and the Collections.
(k) Places of Business and Locations of Records. The principal places of business and chief executive office of Originator and the offices
where it keeps all of its Records are located at the address(es) listed on Exhibit II or such other locations of which Buyer has been notified in
accordance with Section 4.2(a) in jurisdictions where all action required by Section 4.2(a) has been taken and completed. Originator is a
corporation incorporated solely in the State of Michigan. Originator’s Michigan organizational identification number and Federal Employer
Identification Number are correctly set forth on Exhibit II.
(l) Collections. The conditions and requirements set forth in Section 4.1(i) have at all times been satisfied and duly performed. The names
and addresses of all Collection Banks, together with the account numbers of the Collection Accounts of Originator at each Collection Bank
and the special zip code number of each Lock-Box, are listed on Exhibit III. Originator has not granted any Person, other than the Buyer (or its
assigns) as contemplated by this Agreement and the Intercreditor Agreement, dominion and control of any Lock-Box or Collection Account,
or the right to take dominion and control of any such Lock-Box or Collection Account at a future time or upon the occurrence of a future event.
(m) Material Adverse Effect. The Originator represents and warrants that since December 31, 2002, no event has occurred that would
have a material adverse effect on (A) the financial condition or operations of Originator and its Subsidiaries, taken as a whole, (B) the
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ability of Originator to perform its obligations under the Transaction Documents, or (C) the collectibility of the Receivables generally or any
material portion of the Receivable.
(n) Names. Originator has not used any corporate names, trade names or assumed names other than the name in which it has executed
this Agreement and as listed on Exhibit II.
(o) Ownership of Buyer. Originator owns, directly or indirectly, 100% of the issued and outstanding membership interests of Buyer, free
and clear of any Adverse Claim. There are no options, warrants or other rights to acquire securities of Buyer.
(p) Public Utility Holding Company Act; Investment Company Act. Originator is exempt from the registration requirements of the Public
Utility Holding Company Act of 1935, as amended, or any successor statute. Originator is not an “investment company” within the meaning of
the Investment Company Act of 1940, as amended, or any successor statute.
(q) Compliance with Law. Originator has complied in all respects with all applicable laws, rules, regulations, orders, writs, judgments,
injunctions, decrees or awards to which it may be subject, except where the failure to so comply could not reasonably be expected to have a
Material Adverse Effect. Each Receivable, together with the Contract related thereto, does not contravene any laws, rules or regulations
applicable thereto (including, without limitation, laws, rules and regulations relating to truth in lending, fair credit billing, fair credit reporting,
equal credit opportunity, fair debt collection practices and privacy), and no part of such Contract is in violation of any such law, rule or
regulation.
(r) Compliance with Credit and Collection Policy. Originator has complied in all material respects with the Credit and Collection Policy
with regard to each Receivable and the related Contract, and has not made any change to such Credit and Collection Policy, other than as
permitted under Section 4.2 and in compliance with the notification requirements of Section 4.1(a)(vii).
(s) Payments to Originator. With respect to each Receivable transferred to Buyer hereunder, the Purchase Price received by Originator
constitutes reasonably equivalent value in consideration therefor and such transfer was not made for or on account of an antecedent debt. No
transfer by Originator of any Receivable hereunder is or may be voidable under any section of the Bankruptcy Reform Act of 1978 (11 U.S.C.
§§ 101 et seq.), as amended.
(t) Enforceability of Contracts. Each Contract with respect to each Receivable is effective to create, and has created, a legal, valid and
binding obligation of the related Obligor to pay the Outstanding Balance of the Receivable created thereunder and any accrued interest
thereon, enforceable against the Obligor in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws relating to or limiting creditors’ rights generally and by general principles of equity (regardless
of whether enforcement is sought in a proceeding in equity or at law).
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(u) Eligible Receivables; Nature of Receivables. Each Receivable included in the Net Receivables Balance as an Eligible Receivable on the
date of Purchase hereunder was an Eligible Receivable on such date.
(v) Accounting. In the case of Originator, Originator is treating the conveyance of the ownership interest in the Receivables and the
Collections as a sale for the purposes of GAAP.
(w) Bonds . All debt evidenced or secured by the bonds issued pursuant to and secured by any of the Supplement Indentures First
through Sixty-Seventh, Seventy-Sixth, Seventy-Eighth, Eighty-First, Eighty-Second, and Eighty-Fourth through Eighty-Sixth, such
Supplement Indentures having been made and entered into by and between Originator (formerly Consumers Power Company) and JPMorgan
Chase Bank (as successor trustee to City Bank Farmers Trust Company, the “Trustee”), as Trustee under that certain Indenture (as the same
has been amended, restated, supplemented or otherwise modified from time to time, the “1945 Indenture”) dated as of September 1, 1945
between Consumers Power Company and City Bank Farmers Trust Company, has been satisfied in full and Originator has been released from
all liability therefor.
ARTICLE III
CONDITIONS OF PURCHASE
Section 3.1 Conditions Precedent to Initial Purchase. The initial Purchase under this Agreement is subject to the conditions precedent
that (a) Buyer shall have received on or before the date of such Purchase those documents listed on Schedule A and (b) all of the conditions
to the initial purchase under the Purchase Agreement shall have been satisfied or waived in accordance with the terms thereof.
Section 3.2 Conditions Precedent to Subsequent Payments. Buyer’s obligation to pay for Receivables coming into existence after the
Initial Cutoff Date shall be subject to the further conditions precedent that: (a) the Termination Date shall not have occurred; and (b) Buyer (or
its assigns) shall have received such other approvals, opinions or documents as it may reasonably request if such Person reasonably believes
there has been a change in law or circumstance that affects the status or characteristics of the Receivables, Related Security or Collections, or
the Buyer’ s (and its assignees’) first priority perfected security interest in the Receivables, Related Security and Collections. Originator
represents and warrants that the representations and warranties set forth in Article II are true and correct on and as of the date each
Receivable came into existence as though made on and as of such date.
ARTICLE IV
COVENANTS
Section 4.1 Affirmative Covenants of Originator. Until the date on which this Agreement terminates in accordance with its terms,
Originator hereby covenants as set forth below:
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(a) Financial Reporting. Originator will maintain, for itself and each of its Subsidiaries, a system of accounting established and
administered in accordance with GAAP, and furnish to Buyer (and its assigns):
(i) Annual Reporting. Within 120 days after the close of each of Originator’s fiscal years, a copy of the Annual Report on Form 10-K
(or any successor form) for Originator for such year, including therein the consolidated balance sheet of Originator and its consolidated
Subsidiaries as at the end of such year and the consolidated statements of income, cash flows and common stockholder’s equity of
Originator and its consolidated Subsidiaries as at the end of and for such year, or statements providing substantially similar information,
in each case certified by independent public accountants of recognized national standing selected by Originator (and not objected to by
the Administrative Agent), together with a certificate of such accounting firm addressed to the Administrative Agent stating that, in the
course of its examination of the consolidated financial statements of Originator and its consolidated Subsidiaries, which examination was
conducted by such accounting firm in accordance with GAAP, (1) such accounting firm has obtained no knowledge that a Termination
Event, insofar as such Termination Event related to accounting or financial matters, has occurred and is continuing, or if, in the opinion
of such accounting firm, such a Termination Event has occurred and is continuing, a statement as to the nature thereof, and (2) such
accounting firm has examined a certificate prepared by Originator setting forth the computations made by Originator in determining, as of
the end of such fiscal year, the ratios specified in Section 9.1(k) of the Purchase Agreement, which certificate shall be attached to the
certificate of such accounting firm, and such accounting firm confirms that such computations accurately reflect such ratios.
(ii) Quarterly Reporting. Within 60 days after the close of the first three (3) quarterly periods of each of its fiscal years, balance sheets
of Originator and its consolidated Subsidiaries as at the close of each such period and statements of income and retained earnings and a
statement of cash flows for Originator and its consolidated Subsidiaries for the period from the beginning of such fiscal year to the end
of such quarter, all certified by its chief financial officer.
(iii) Compliance Certificate. Together with the financial statements required hereunder, a compliance certificate in substantially the
form of Exhibit IV signed by Originator’s Responsible Officer and dated the date of such annual financial statement or such quarterly
financial statement, as the case may be.
(iv) Shareholders Statements and Reports. Promptly upon the furnishing thereof to the shareholders of Originator copies of all
financial statements, reports and proxy statements (other than those which relate solely to employee benefit plans) so furnished which
Originator files with the SEC.
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(v) Bond Servicing Reports; SEC Filings. Promptly upon the execution, delivery or filing thereof, (i) copies of all reports, statements,
notices and certificates delivered or received by the Originator (in its capacity as “Servicer” under the Servicing Agreement or otherwise)
pursuant to Sections 3.05, 3.06, 3.07, 6.02, Annex 1 and Annex 2 of the Servicing Agreement (excluding any “Daily Servicer’s Report”
delivered pursuant to Annex 2 of the Servicing Agreement), (ii) copies of all reports and notices delivered to the holders of the
Securitization Bonds, (iii) copies of all amendments, waivers or other modifications to any of the Basic Documents (as defined in the
Servicing Agreement), (iv) copies of all reports which the Servicer sends to the holders of any of its securities or its creditors generally
and (v) copies of all registration statements and annual, quarterly, monthly or other regular reports which Originator or any of its
Subsidiaries files with the SEC.
(vi) Copies of Notices. Promptly upon its receipt of any notice, request for consent, financial statements, certification, report or other
communication under or in connection with any Transaction Document from any Person other than Buyer, the Administrative Agent or
Conduit, copies of the same.
(vii) Change in Credit and Collection Policy. At least thirty (30) days prior to the effectiveness of any material change in or material
amendment to the Credit and Collection Policy, a copy of the Credit and Collection Policy then in effect and a notice (A) indicating such
change or amendment, and (B) if such proposed change or amendment be would reasonably likely to adversely affect the collectibility of
the Receivable or decrease the credit quality of any newly created Receivables, requesting the Buyer’s consent thereto, such consent
not to be unreasonably withheld.
(viii) Other Information. Promptly, from time to time, such other information, documents, records or reports relating to the Receivables
or the condition or operations, financial or otherwise, of Originator as Buyer (and its assigns) may from time to time reasonably request in
order to protect the interests of Buyer (and its assigns) under or as contemplated by this Agreement (including, without limitation, any
information relevant to the calculation and allocations described in the Servicing Agreement and the Intercreditor Agreement).
(b) Notices. Originator will notify the Buyer (and its assigns) in writing of any of the following promptly upon learning of the occurrence
thereof, describing the same and, if applicable, the steps being taken with respect thereto:
(i) Termination Events or Potential Termination Events. The occurrence of each Termination Event and each Potential Termination
Event, by a statement of a Responsible Officer of Originator.
(ii) Judgment and Proceedings. (A) The entry of any judgment or decree against Originator if the aggregate amount of all judgments
and decrees then outstanding against Originator exceeds $25,000,000, and (B) the institution
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of any litigation, arbitration proceeding or governmental proceeding against Originator which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
(iii) Material Adverse Effect. The occurrence of any event or condition that has, or could reasonably be expected to have, a Material
Adverse Effect.
(iv) Downgrade of the Originator. Any downgrade in the rating of any Indebtedness of the Originator by S&P or by Moody’s, setting
forth the Indebtedness affected and the nature of such change.
(v) Servicer Default. The occurrence of any event or circumstance which constitutes a Servicer Default (as defined in the Servicing
Agreement) or which, with the giving of notice or the passage of time, would become a Servicer Default.
(c) Compliance with Laws and Preservation of Corporate Existence. Originator will comply in all respects with all applicable laws, rules,
regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject, except where the failure to so comply could
not reasonably be expected to have a Material Adverse Effect. Originator will preserve and maintain its corporate existence, rights and
franchises in the jurisdiction of its incorporation, and qualify and remain qualified in good standing as a foreign corporation in each
jurisdiction in which such qualification is necessary in view of its businesses and operations or the ownership of its properties, provided that
Originator shall not be required to preserve any such right or franchise or to remain so qualified unless the failure to do so could reasonably be
expected to have a Material Adverse Effect.
(d) Audits. Originator will furnish to Buyer (and its assigns) from time to time such information with respect to it and the Receivables as
Buyer (or its assigns) may reasonably request. Originator will, from time to time during regular business hours as requested by Buyer (or its
assigns), upon reasonable notice, subject to any necessary approval of the Nuclear Regulatory Commission, and at the sole cost of the
Originator (within the limitations of Section 7.1(d) of the Purchase Agreement), permit Buyer (and its assigns) or their respective agents or
representatives, (i) to examine and make copies of and abstracts from all Records in the possession or under the control of Originator relating
to the Receivables, the Related Security, the Securitization Property and the Servicing Agreement, including, without limitation, the related
Contracts, and (ii) to visit the offices and properties of Originator for the purpose of examining such materials described in clause (i) above,
and to discuss matters relating to Originator’s financial condition or the Receivables and the Related Security or Originator’s performance
under any of the Transaction Documents or Originator’s performance under the Contracts and, in each case, with any of the officers or
employees of Originator having knowledge of such matters.
(e) Keeping and Marking of Records and Books.
(i) Originator will maintain and implement administrative and operating procedures (including, without limitation, an ability to recreate
records
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evidencing Receivables in the event of the destruction of the originals thereof), and keep and maintain all documents, books, records and
other information reasonably necessary or advisable for the collection of all Receivables and the performance of the Originator’s duties
under the Transaction Documents and the Servicing Agreement (including, without limitation, (A) records adequate to permit the
immediate identification of each new Receivable and all Collections of and adjustments to each existing Receivable and (B) the
performance of the calculations and allocations required by the Intercreditor Agreement and the Servicing Agreement). Originator will
give Buyer (and its assigns) notice of any material change in the administrative and operating procedures referred to in the previous
sentence.
(ii) Originator will (A) on or prior to the date hereof, mark its master data processing records and other books and records relating to
the Receivables with a legend, acceptable to Buyer (and its assigns), describing Buyer’s ownership interests in the Receivables and
further describing the Purchaser Interests of the Administrative Agent (on behalf of the Purchasers) under the Purchase Agreement and
(B) at any time after the occurrence of a Termination Event, upon the request of the Administrative Agent, deliver to Buyer (or its
assigns as directed by the Administrative Agent) all Contracts (including, without limitation, all multiple originals of any such Contract)
relating to the Receivables, provided, that the requirements of this clause (B) shall apply solely to any Contract consisting of or
evidenced by an instrument or chattel paper.
(f) Compliance with Contracts and Credit and Collection Policy. Originator will timely and fully (i) perform and comply with all provisions,
covenants and other promises required to be observed by it under the Contracts related to the Receivables, except where the failure to so
perform or comply could not reasonably be expected to have a Material Adverse Effect, and (ii) comply in all respects with the Credit and
Collection Policy in regard to each Receivable and the related Contract, except where the failure to so comply could not reasonably be
expected to have a Material Adverse Effect.
(g) Ownership. Originator will take all necessary action to establish and maintain, irrevocably in Buyer, (i) legal and equitable title to the
Receivables and the associated Collections and (ii) all of Originator’s right, title and interest in the Related Security associated with such
Receivable, in each case, free and clear of any Adverse Claims other than Adverse Claims in favor of Buyer (and its assigns) (including,
without limitation, the filing of all financing statements or other similar instruments or documents necessary under the UCC (or any comparable
law) of all appropriate jurisdictions to perfect Buyer’s interest in such Receivables, Related Security and Collections and such other action to
perfect, protect or more fully evidence the interest of Buyer as Buyer (or its assigns) may reasonably request).
(h) Purchasers’ Reliance. Originator acknowledges that the Administrative Agent and the Purchasers are entering into the transactions
contemplated by the Purchase Agreement in reliance upon Buyer’s identity as a legal entity that is separate from Originator or any Affiliates
thereof (each a “CMS Entity”). Therefore, from and after the date of execution and delivery of this Agreement, Originator will take all
reasonable steps including, without
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limitation, all steps that Buyer or any assignee of Buyer may from time to time reasonably request to maintain Buyer’s identity as a separate
legal entity and to make it manifest to third parties that Buyer is an entity with assets and liabilities distinct from those of any CMS Entity and
not just a division of a CMS Entity. Without limiting the generality of the foregoing and in addition to the other covenants set forth herein,
Originator (i) will not hold itself out to third parties as liable for the debts of Buyer nor purport to own the Receivables and other assets
acquired by Buyer and (ii) will take all other actions reasonably necessary on its part to ensure that Buyer is at all times in compliance with the
covenants set forth in Section 7.1(i) of the Purchase Agreement.
(i) Collections. Originator will cause (i) all checks representing Collections and Securitization Charge Collections to be remitted to a Lock-
Box , (ii) all other amounts in respect of Collections and Securitization Charge Collections to be deposited directly to a Collection Account,
(iii) all proceeds from all Lock-Boxes to be deposited by the Originator into a Collection Account, (iv) all funds in each Collection Account
which is not a Specified Account to be remitted to a Specified Account as soon as is reasonably practicable and (v) each Specified Account to
be subject at all times to a Collection Account Agreement that is in full force and effect. In the event any payments relating to Receivables are
remitted directly to Originator or any Affiliate of Originator, Originator will remit (or will cause all such payments to be remitted) directly to a
Collection Bank for deposit into a Collection Account within two (2) Business Days following receipt thereof, and, at all times prior to such
remittance, Originator will itself hold or, if applicable, will cause such payments to be held in trust for the exclusive benefit of Buyer and its
assigns. Originator will transfer exclusive ownership, dominion and control of each Lock-Box and Collection Account to Buyer and will not
grant the right to take dominion and control of any Lock-Box or Collection Account at a future time or upon the occurrence of a future event to
any Person, except to Buyer (and its assigns) as contemplated by this Agreement and the Purchase Agreement and the Intercreditor
Agreement. Upon not less than thirty (30) days prior written notice to the Buyer and the Originator, the Administrative Agent may, in its
reasonable discretion, designate additional Collection Accounts as Specified Accounts and such Specified Accounts shall be subject to the
requirement set forth in clause (v) above. On the date which is thirty (30) days after the first day of a Level Three Enhancement Period, all
Collection Accounts shall be Specified Accounts and such Specified Accounts shall be subject to the requirement set forth in clause (v)
above.
(j) Taxes. Originator will pay and discharge before the same shall become delinquent, all taxes and governmental charges imposed upon it
or its property, provided that Originator shall not be required to pay or discharge any such tax or governmental charge (i) which is being
contested by it in good faith and by proper procedures or (ii) the non-payment of which will not have a Material Adverse Effect.
(k) Insurance. Originator will maintain in effect, as Originator’s expense, such casualty and liability insurance as Originator deems
appropriate in its good faith business judgment.
(l) Performance under Servicing Agreement. Originator will perform and comply with all obligations of the Originator as the “Servicer”
under the Servicing Agreement,
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including, without limitation, its duties and responsibilities relating to the calculations and allocations required by the Intercreditor Agreement
and the Servicing Agreement.
(m) Financing Statements for Supplement Indentures. Originator shall cause the collateral description in each UCC-1 Financing Statement
filed pursuant to any Supplement Indenture to expressly exclude all Receivables, all Related Security, all Collections, each Lock-Box, each
Collection Account and the proceeds thereof in a manner acceptable to the Administrative Agent and the Buyer.
Section 4.2 Negative Covenants of Originator. Until the date on which this Agreement terminates in accordance with its terms, Originator
hereby covenants that:
(a) Name Change, Offices and Records. Originator will not (i) make any change to its name (within the meaning of Section 9-507(c) of any
applicable enactment of the UCC), identity, corporate structure or location of its books and records unless, at least thirty (30) days prior to the
effective date of any such name change, change in corporate structure, or change in location of its books and records, Originator notifies
Buyer (and its assigns) thereof and delivers to the Administrative Agent such financing statements (Forms UCC-1 and UCC-3) authorized or
executed by Originator (if required under applicable law) which Buyer (or its assigns) may reasonably request to reflect such name change,
location change, or change in corporate structure, together with such other documents and instruments that Buyer (or its assigns) may
reasonably request in connection therewith and has taken all other steps to ensure that Buyer (and its assigns) continues to have a first
priority, perfected ownership or security interest in the Receivables, the Related Security related thereto and any Collections thereon, or
(ii) change its jurisdiction of organization unless the Buyer (and its assigns) shall have received from the Originator, prior to such change, (A)
those items described in clause (i) hereof, and (B) if Buyer (or its assigns) shall so request, an opinion of counsel, in form and substance
reasonably satisfactory to such Person, as to such organization and the Originator’s valid existence and good standing and the perfection and
priority of Buyer’s ownership interest or security interest in the Receivables, the Related Security and Collections.
(b) Change in Payment Instructions to Obligors. Originator will not add or terminate any bank as a Collection Bank, or make any change
in the instructions to Obligors regarding payments to be made to any Lock-Box or Collection Account, unless Buyer (and its assigns) shall
have received, at least ten (10) days before the proposed effective date therefor, (i) written notice of such addition, termination or change and
(ii) (A) with respect to the addition of a Collection Bank or a Collection Account or Lock-Box, an executed Collection Account Agreement with
respect to the new Collection Account if a Specified Account, or Lock-Box if linked to a Specified Account and (B) with respect to the addition
of a Lock-Box, an executed P.O. Box Transfer Notice with respect to the new Lock-Box; provided, however, that Originator may make changes
in instructions to Obligors regarding payments if such new instructions require such Obligor to make payments to another existing Collection
Account or Lock-Box.
(c) Modifications to Contracts and Credit and Collection Policy. Without the consent of the Buyer (and its assigns), Originator will not
make any change to the Credit and Collection Policy that would be reasonably likely to adversely affect the collectibility of the Receivables.
Except as otherwise permitted in its capacity as Servicer pursuant to Article VIII of
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the Purchase Agreement, Originator will not extend, amend or otherwise modify the terms of any Receivable or any Contract related thereto
other than in accordance with the Credit and Collection Policy.
(d) Sales, Liens. Originator will not sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with
respect to, or create or suffer to exist any Adverse Claim upon (including, without limitation, the filing of any financing statement) or with
respect to, any Receivable, Related Security or Collections, or upon or with respect to any Contract under which any Receivable arises, or any
Lock-Box or Collection Account, or assign any right to receive income with respect thereto (other than, in each case, the creation of the
interests therein in favor of Buyer provided for herein), and Originator will defend the right, title and interest of Buyer in, to and under any of
the foregoing property, against all claims of third parties claiming through or under Originator. Originator shall not create or suffer to exist any
mortgage, pledge, security interest, encumbrance, lien, charge or other similar arrangement on any of its inventory, except as contemplated in
an Inventory Facility Intercreditor Agreement.
(e) Accounting for Purchases. Originator will not, and will not permit any Affiliate to, account for or treat (whether in financial statements
or otherwise) the transactions contemplated hereby in any manner other than as sales of the Receivables and the Related Security by
Originator to Buyer or in any other respect account for or treat the transactions contemplated hereby in any manner other than as sales of the
Receivables and the Related Security by Originator to Buyer except to the extent that such transactions are not recognized on account of
consolidated financial reporting in accordance with GAAP.
(f) Collection Accounts not Subject to Collection Account Agreement. At any time after the 30th day following the first day of a Level
Three Enhancement Period, Originator will not direct any Collections to be remitted to any Collection Account not subject at all times to a
Collection Account Agreement.
(g) Commingling. Originator shall not deposit or otherwise credit, or cause or permit to be so deposited or credited to, any Lock-Box or
Collection Account cash or cash proceeds other than Collections and Securitization Charge Collections.
(h) Servicing Agreement . Without the consent of the Buyer and its assigns, Originator will not amend, modify or waive any term or
condition of (i) Section 3.02 or Section 5.04 of the Servicing Agreement, (ii) Annex 2 to the Servicing Agreement, (iii) the definition of the term
“Securitization Charges”, “Securitization Charge Collections” or “Transferred Securitization Property” in the Servicing Agreement or (iv) to the
extent relating to any of the foregoing, any definition used directly or indirectly in any of the foregoing terms or conditions.
ARTICLE V
TERMINATION EVENTS
Section 5.1 Termination Events. The occurrence of any one or more of the following events shall constitute a Termination Event:
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(a) Originator shall fail (i) (A) during a Level One Enhancement Period, to make any payment or deposit required hereunder when due and
such failure shall continue for two (2) Business Days, and (B) during a Level Two Enhancement Period or a Level Three Enhancement Period,
to make any payment or deposit required hereunder when due and such failure shall continue for one (1) Business Day or (ii) to perform or
observe any term, covenant or agreement hereunder (other than as referred to in clause (i) of this paragraph (a) and Section 5.1(b) through
(f) or any other Transaction Document to which it is a party and such failure shall continue for five (5) consecutive Business Days or a
“Servicer Default” shall occur under (and as such term is defined in) the Servicing Agreement.
(b) Any representation, warranty, certification or statement made by Originator in this Agreement, any other Transaction Document or in
any other document delivered pursuant hereto or thereto shall prove to have been (i) with respect to any representations, warranties,
certifications or statements which contain a materiality qualifier, incorrect in any respect when made or deemed made and (ii) with respect to
any representations, warranties, certifications or statements which do not contain a materiality qualifier, incorrect in any material respect when
made or deemed made.
(c) (i) Failure of Originator to pay any Indebtedness when due in excess of $25,000,000 and such failure shall continue after any
applicable grace period; or (ii) the default by Originator in the performance of any term, provision or condition contained in any agreement
under which any such Indebtedness was created or is governed, the effect of which is to cause, or to permit the holder or holders of such
Indebtedness to cause, such Indebtedness to become due prior to its stated maturity, unless the obligor under or holder of such Indebtedness
shall have waived in writing such circumstance, or such circumstance has been cured so that such circumstance is no longer continuing; or
(iii) any such Indebtedness of Originator shall be declared to be due and payable or required to be prepaid (other than by a regularly
scheduled payment) prior to the date of maturity thereof; or (iv) any Indenture Event of Default shall occur.
(d) (i) Originator shall generally not pay its debts as such debts become due or shall admit in writing its inability to pay its debts
generally or shall make a general assignment for the benefit of creditors; or (ii) any proceeding shall be instituted by or against Originator
seeking to adjudicate it bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or
composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee or other similar official for it or any substantial part of its property and, in the case of
any such proceeding instituted against it (but not instituted by it), any such proceeding shall remain dismissed or unstayed for a period of
thirty (30) days, or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief against, or the
appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property) shall occur or (iii)
Originator shall take any corporate action to authorize any of the actions set forth in the foregoing clauses (i) or (ii) of this subsection (d).
(e) A Change of Control shall occur.
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(f) One or more final judgments for the payment of money in an amount in excess of $25,000,000 in the aggregate, shall be entered against
Originator on claims not covered by insurance or as to which the insurance carrier has denied its responsibility, and (i) enforcement
proceedings have been commenced by any creditor upon any such judgement or (ii) such judgment shall continue unsatisfied and in effect for
thirty (30) consecutive days without a stay of execution.
(g) Originator shall fail to provide Buyer and its assigns, within fifteen (15) days of the Initial Cutoff Date, acknowledgement copies
evidencing the filing of UCC-3 financing statements substantially in the form of Exhibit VII amending the UCC-1 Financing Statements filed
pursuant to the Supplement Indentures Sixty-Eighth through Seventy-Fifth, Seventy-Seventh, Seventy-Ninth, Eightieth, Eighty-Third, and
Eighty-Seventh through Ninety.
Section 5.2 Remedies. Upon the occurrence and during the continuation of a Termination Event, Buyer may take any of the following
actions: (i) declare the Termination Date to have occurred, whereupon the Termination Date shall forthwith occur, without demand, protest or
further notice of any kind, all of which are hereby expressly waived by Originator; provided, however, that upon the occurrence of Termination
Event described in Section 5.1(d), the Termination Date shall automatically occur, without demand, protest or any notice of any kind, all of
which are hereby expressly waived by Originator and (ii) to the fullest extent permitted by applicable law, declare that the Default Fee shall
accrue with respect to any amounts then due and owing by Buyer to Originator. The aforementioned rights and remedies shall be without
limitation and shall be in addition to all other rights and remedies of Buyer and its assigns otherwise available under any other provision of
this Agreement, by operation of law, at equity or otherwise, all of which are hereby expressly preserved, including, without limitation, all rights
and remedies provided under the UCC, all of which rights shall be cumulative.
ARTICLE VI
INDEMNIFICATION
Section 6.1 Indemnities by Originator. Without limiting any other rights that Buyer may have hereunder or under applicable law,
Originator hereby agrees to indemnify (and pay upon demand to) Buyer, its assigns and their respective assigns, officers, directors, agents
and employees (each an “Indemnified Party”) from and against any and all damages, losses, claims, taxes, liabilities, costs, expenses and for all
other amounts payable, including reasonable attorneys’ fees (which attorneys may be employees of Buyer or its assigns) and disbursements
(all of the foregoing being collectively referred to as “Indemnified Amounts”) awarded against or incurred by any of them arising out of or as a
result of this Agreement or the acquisition, either directly or indirectly, by Buyer of an interest in the Receivables, excluding, however, in all of
the foregoing instances:
(a) Indemnified Amounts to the extent a final judgment of a court of competent jurisdiction holds that such Indemnified Amounts
resulted from gross negligence or willful misconduct on the part of the Indemnified Party seeking indemnification;
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(b) Indemnified Amounts to the extent the same includes losses in respect of Receivables that are uncollectible on account of the
insolvency, bankruptcy or lack of creditworthiness of the related Obligor; or
(c) taxes imposed by the jurisdiction in which such Indemnified Party’s principal executive office is located, on or measured by the
overall net income of such Indemnified Party to the extent that the computation of such taxes is consistent with the Intended Characterization;
provided, however, that nothing contained in this sentence shall limit the liability of Originator or limit the recourse of Buyer to Originator for
amounts otherwise specifically provided to be paid by Originator under the terms of this Agreement. Without limiting the generality of the
foregoing indemnification, but subject to the exclusions in clauses (a), (b) and (c) above, Originator shall indemnify the Indemnified Parties for
Indemnified Amounts (including, without limitation, losses in respect of uncollectible Receivables, regardless of whether reimbursement
therefor would constitute recourse to Originator) relating to or resulting from:
(i) any representation or warranty made by Originator (or any officers of Originator) under or in connection with this Agreement, any
other Transaction Document to which Originator is a party or any other written information or report delivered by any such Person
pursuant hereto or thereto, which shall have been false or incorrect when made or deemed made;
(ii) the failure by Originator, to comply with any applicable law, rule or regulation with respect to any Receivable or Contract related
thereto, or the nonconformity of any Receivable or Contract included therein with any such applicable law, rule or regulation, the
violation of which shall cause the Receivables to be uncollectible or unenforceable by Originator, Buyer or its assignees in whole or in
part, or any failure of Originator to keep or perform any of its obligations, express or implied, with respect to any Contract;
(iii) any failure of Originator to perform its duties, covenants or other obligations in accordance with the provisions of this Agreement
or any other Transaction Document to which it is a party;
(iv) any products liability, personal injury or damage suit, or other similar claim arising out of or in connection with merchandise,
insurance or services that are the subject of any Contract or any Receivable;
(v) any dispute, claim, offset or defense (other than discharge in bankruptcy of the Obligor) of the Obligor to the payment of any
Receivable (including, without limitation, a defense based on such Receivable or the related Contract not being a legal, valid and binding
obligation of such Obligor enforceable against it in accordance with its terms), or any other claim resulting from the provision of goods,
electricity, gas or services related to such Receivable or the furnishing or failure to furnish such goods, electricity, gas or services;
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(vi) the commingling of Collections of Receivables at any time with other funds;
(vii) any investigation, litigation or proceeding initiated by a party other than the Buyer or the Administrative Agent related to or
arising from this Agreement or any other Transaction Document, the Servicing Agreement or any other Basic Document (as defined in
the Servicing Agreement) to which Originator is a party, the transactions contemplated hereby, the use of the proceeds of any Purchase,
the ownership of the Receivables or any other investigation, litigation or proceeding relating to Originator in which any Indemnified
Party becomes involved as a result of any of the transactions contemplated hereby; provided that Originator shall have no obligation to
indemnify any Indemnified Party under this paragraph (vii) for Indemnified Amounts to the extent a final judgement of a court of
competent jurisdiction holds that such Indemnified Amounts resulted from gross negligence or willful misconduct on the part of the
Indemnified Party seeking indemnification;
(viii) any inability to litigate any claim against any Obligor in respect of any Receivable as a result of such Obligor being immune from
civil and commercial law and suit on the grounds of sovereignty or otherwise from any legal action, suit or proceeding;
(ix) any Termination Event described in Section 5.1(d);
(x) any failure to vest and maintain vested in Buyer, or to transfer to Buyer, legal and equitable title to, and a first priority perfected
ownership interest in, the Receivables and the associated Related Security and Collections, free and clear of any Adverse Claim (except
as created by the Transaction Documents);
(xi) the failure to have filed, or any delay in filing, financing statements or other similar instruments or documents under the UCC of
any applicable jurisdiction or other applicable laws with respect to any Receivable, the Related Security and Collections with respect
thereto, and the proceeds of any thereof, whether at the time of any Purchase or at any subsequent time;
(xii) any action or omission by Originator (other than in accordance with or as contemplated by this Agreement or any other
Transaction Document) which reduces or impairs the rights of Buyer with respect to any Receivable and the Related Security and
Collections with respect thereto or the value of any such Receivable and the Related Security and Collections with respect thereto; and
(xiii) any attempt by any Person to void any Purchase hereunder under statutory provisions or common law or equitable action.
Section 6.2 Other Costs and Expenses. Originator shall pay to Buyer on demand all reasonable costs and out-of-pocket expenses in
connection with the preparation, execution, delivery and administration of this Agreement, the transactions contemplated hereby and the other
documents to be delivered hereunder. Originator shall pay to Buyer on demand
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any and all reasonable costs and expenses of Buyer, if any, including reasonable counsel fees and expenses in connection with the
enforcement of this Agreement and the other documents delivered hereunder and in connection with any restructuring or workout of this
Agreement or such documents (including any amendments hereto or thereto), or the administration of this Agreement following a Termination
Event.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Waivers and Amendments.
(a) No failure or delay on the part of Buyer (or its assigns) in exercising any power, right or remedy under this Agreement shall operate as
a waiver thereof, nor shall any single or partial exercise of any such power, right or remedy preclude any other further exercise thereof or the
exercise of any other power, right or remedy. The rights and remedies herein provided shall be cumulative and nonexclusive of any rights or
remedies provided by law. Any waiver of this Agreement shall be effective only in the specific instance and for the specific purpose for which
given.
(b) No provision of this Agreement may be amended, supplemented, modified or waived except in writing signed by Originator and Buyer
and, to the extent required under the Purchase Agreement, the Administrative Agent and the Financial Institutions or the Required Financial
Institutions.
Section 7.2 Notices. Except as provided below, all communications and notices provided for hereunder shall be in writing (including bank
wire, telecopy or electronic facsimile transmission or similar writing) and shall be given to the other parties hereto at their respective addresses
or telecopy numbers set forth on the signature pages hereof or at such other address or telecopy number as such Person may hereafter specify
for the purpose of notice to each of the other parties hereto. Each such notice or other communication shall be effective (i) if given by facsimile
transmission, upon confirmation of receipt thereof, (ii) if given by mail, three (3) Business Days after the time such communication is deposited
in the mail with first class postage prepaid or (iii) if given by any other means, when received at the address specified in this Section 7.2.
Section 7.3 Protection of Ownership Interests of Buyer.
(a) Originator agrees that from time to time, at its expense, it will promptly execute and deliver all instruments and documents, and take all
actions, that may be necessary or desirable, or that Buyer (or its assigns) may request, to perfect, protect or more fully evidence the interests
of the Buyer hereunder and the Purchaser Interests, or to enable Buyer (or its assigns) to exercise and enforce their rights and remedies
hereunder. At any time after the occurrence and during the continuation of an Amortization Event under the Purchase Agreement, Buyer (or
its assigns) may, at Originator’s sole cost and expense, direct Originator to notify the Obligors of Receivables of the ownership interests of
Buyer under this Agreement and may also direct that
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payments of all amounts due or that become due under any or all Receivables be made directly to Buyer or its designee.
(b) If Originator fails to perform any of its obligations hereunder, Buyer (or its assigns) may (but shall not be required to), after providing
notice to Originator, perform, or cause performance of, such obligation, and Buyer’s (or such assigns’) costs and expenses incurred in
connection therewith shall be payable by Originator as provided in Section 6.2. Originator irrevocably authorizes Buyer (or its assigns) at any
time and from time to time in the sole discretion of Buyer (or its assigns), and appoints Buyer (or its assigns) as its attorney(s)-in-fact, to act on
behalf of Originator (i) to execute on behalf of Originator as debtor and to file financing statements necessary or desirable in Buyer’s (or its
assigns’) sole discretion, after providing notice to Originator, to perfect and to maintain the perfection and priority of the interest of Buyer in
the Receivables and (ii) to file a carbon, photographic or other reproduction of this Agreement or any financing statement with respect to the
Receivables as a financing statement in such offices as Buyer (or its assigns) in their sole discretion deem necessary or desirable to perfect
and to maintain the perfection and priority of Buyer’s interests in the Receivables. This appointment is coupled with an interest and is
irrevocable.
Section 7.4 Confidentiality.
(a) Originator shall maintain and shall cause each of its employees and officers to maintain the confidentiality of this Agreement and the
other confidential proprietary information with respect to the Administrative Agent and Conduit and their respective businesses obtained by it
or them in connection with the structuring, negotiating and execution of the transactions contemplated herein, except that Originator and its
officers and employees may disclose such information to Originator’s external accountants and attorneys and as required by any applicable
law, regulation or order of any judicial or administrative proceeding (whether or not having the force of law).
(b) Anything herein to the contrary notwithstanding, each of the Buyer, Originator, each Indemnified Party and any successor or assign
of any of the foregoing (and each employee, representative or other agent of any of the foregoing) may disclose to any and all Persons,
without limitation of any kind, the “tax treatment” and “tax structure” (in each case, within the meaning of Treasury Regulation Section 1.6011-
4) of the transactions contemplated herein and all materials of any kind (including opinions or other tax analyses) that are or have been
provided to any of the foregoing relating to such tax treatment or tax structure, and it is hereby confirmed that each of the foregoing have been
so authorized since the commencement of discussions regarding the transactions.
(c) Anything herein to the contrary notwithstanding, Originator hereby consents to the disclosure of any nonpublic information with
respect to it (i) to Buyer, the Administrative Agent, the Financial Institutions or Conduit by each other, (ii) by Buyer, the Administrative Agent
or the Purchasers to any prospective or actual assignee or participant of any of them or (iii) by the Administrative Agent to any rating agency,
Commercial Paper dealer or provider of a surety, guaranty or credit or liquidity enhancement to Conduit or any entity organized for the purpose
of purchasing, or making loans secured by, financial assets for which the Administrative Agent acts as the administrative agent and to any
officers, directors,
23
employees, outside accountants and attorneys of any of the foregoing provided each such Person is informed of the confidential nature of
such information. In addition, the Purchasers and the Administrative Agent may disclose any such nonpublic information pursuant to any law,
rule, regulation, direction, request or order of any judicial, administrative or regulatory authority or proceedings (whether or not having the
force or effect of law).
Section 7.5 Bankruptcy Petition. Originator and Buyer each hereby covenants and agrees that, prior to the date that is one year and one
day after the payment in full of all outstanding senior indebtedness of Conduit, it will not institute against, or join any other Person in
instituting against, Conduit any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceeding
under the laws of the United States or any state of the United States.
Section 7.6 CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS (INCLUDING, WITHOUT LIMITATIONS, SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF NEW YORK,
BUT OTHERWISE WITHOUT REGARD TO THE LAW OF CONFLICTS) OF THE STATE OF NEW YORK, BUT GIVING EFFECT TO
FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
Section 7.7 CONSENT TO JURISDICTION. ORIGINATOR HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK, NEW YORK IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY ORIGINATOR
PURSUANT TO THIS AGREEMENT AND ORIGINATOR HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION
IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A
COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF BUYER (OR ITS
ASSIGNS) TO BRING PROCEEDINGS AGAINST ORIGINATOR IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL
PROCEEDING BY ORIGINATOR AGAINST BUYER (OR ITS ASSIGNS) OR ANY AFFILIATE THEREOF INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY
DOCUMENT EXECUTED BY ORIGINATOR PURSUANT TO THIS AGREEMENT SHALL BE BROUGHT ONLY IN A COURT IN NEW YORK,
NEW YORK.
Section 7.8 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY
ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT, ANY DOCUMENT EXECUTED BY ORIGINATOR
PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER.
24
Section 7.9 Integration; Binding Effect; Survival of Terms.

(a) This Agreement and each other Transaction Document contain the final and complete integration of all prior expressions by the
parties hereto with respect to the subject matter hereof and shall constitute the entire agreement among the parties hereto with respect to the
subject matter hereof superseding all prior oral or written understandings.
(b) This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted
assigns (including any trustee in bankruptcy). This Agreement shall create and constitute the continuing obligations of the parties hereto in
accordance with its terms and shall remain in full force and effect until terminated in accordance with its terms; provided, however, that the
rights and remedies with respect to (i) any breach of any representation and warranty made by Originator pursuant to Article II, (ii) the
indemnification and payment provisions of Article VI, and Sections 7.4 and 7.5 shall be continuing and shall survive any termination of this
Agreement.
Section 7.10 Counterparts; Severability; Section References. This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when
taken together shall constitute one and the same Agreement. Any provisions of this Agreement which are prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision
in any other jurisdiction. Unless otherwise expressly indicated, all references herein to “Article,” “Section,” “Schedule” or “Exhibit” shall mean
articles and sections of, and schedules and exhibits to, this Agreement.
25
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered by their duly authorized officers as
of the date hereof.

Address:
One Energy Plaza
Jackson, MI 49201

Title: President
Address:
Consumers Receivables Funding II, LLC
One Energy Plaza
Jackson, MI 49201
Signature Page to Receivables Sale Agreement

Exhibit I
Definitions
This is Exhibit I to the Agreement (as hereinafter defined). As used in the Agreement and the Exhibits, Schedules and Annexes thereto,
capitalized terms have the meanings set forth in this Exhibit I (such meanings to be equally applicable to the singular and plural forms thereof).
If a capitalized term is used in the Agreement, or any Exhibit, Schedule or Annex thereto, and not otherwise defined therein or in this Exhibit I,
such term shall have the meaning assigned thereto in Exhibit I to the Purchase Agreement.
“1945 Indenture” has the meaning set forth in Section 2.1(w).
“Administrative Agent” has the meaning set forth in the Preliminary Statements to the Agreement.
“Adverse Claim” means a lien, security interest, financing statement, charge or encumbrance, or other right or claim in, of or on any
Person’s assets or properties in favor of any other Person.
“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person or any Subsidiary of such Person. A Person shall be deemed to control another Person if the controlling
Person owns 10% or more of any class of voting securities of the controlled Person or possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies of the controlled Person, whether through ownership of stock, by contract or otherwise.
“Agreement” means this Receivables Sale Agreement as the same may be amended, restated or otherwise modified from time to time.
“Bank Rate” means a rate per annum equal to the corporate base rate, prime rate or base rate of interest, as applicable, announced by the
Bank One, N.A. from time to time, changing when and as such rate changes.
“Business Day” means any day on which banks are not authorized or required to close in New York, New York or Chicago, Illinois and
The Depository Trust Company of New York is open for business.
“Buyer” has the meaning set forth in the Preliminary Statements to the Agreement.
“Calculation Period” means each calendar month or portion thereof which elapses during the term of the Agreement. The first Calculation
Period shall commence on the date of the initial Purchase of Receivables hereunder and the final Calculation Period shall terminate on the
Termination Date.
“Change of Control” means the acquisition by any Person, or two or more Persons acting in concert, of beneficial ownership (within the
meaning of Rule 13d-3 of the SEC under the Securities Exchange Act of 1934) of 50% or more of the outstanding shares of voting stock of
Originator.
“CMS Entity” has the meaning set forth in Section 4.01(h) of the Agreement.
“Collection Account” means each concentration account, depositary account, lock-box account or similar account in which any
Collections are collected or deposited and which is listed on Exhibit IV of the Purchase Agreement.
“Collection Account Agreement” means an agreement substantially in the form of Exhibit VI of the Purchase Agreement among
Originator, Buyer, the Administrative Agent and a Collection Bank.
“Collection Bank” means, at any time, any of the banks holding one or more Collection Accounts.
“Collections” means, with respect to any Receivable, all cash collections and other cash proceeds in respect of such Receivable,
including, without limitation, all yield, Finance Charges or other related amounts accruing in respect thereof and all cash proceeds of Related
Security with respect to such Receivable.
“Conduit” has the meaning set forth in the Preliminary Statements to the Agreement.
“Contingent Obligation” of a Person means any agreement, undertaking or arrangement by which such Person assumes, guarantees,
endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise becomes or is contingently liable upon, the
obligation or liability of any other Person, or agrees to maintain the net worth or working capital or other financial condition of any other
Person, or otherwise assures any creditor of such other Person against loss, including, without limitation, any comfort letter, operating
agreement, take-or-pay contract or application for a letter of credit.
“Contract” means, with respect to any Receivable, the invoices and any instruments, agreements or other writings pursuant to which
such Receivable arises or which evidences such Receivable.
“Credit and Collection Policy” means Originator’s credit and collection policies and practices relating to Contracts and Receivables
existing on the date hereof and summarized in Exhibit V, as modified from time to time in accordance with the Agreement, or as required under
regulatory directive.
“Default Fee” means a per annum rate of interest equal to the sum of (i) the Bank Rate, plus (ii) 2% per annum.
“Dilutions” means, at any time, the aggregate amount of reductions or cancellations described in Section 1.3(a) of the Agreement.
2
“Discount Factor” means a percentage calculated to provide Buyer with a reasonable return on its investment in the Receivables after
taking account of (i) the time value of money based upon the anticipated dates of collection of the Receivables and the cost to Buyer of
financing its investment in the Receivables during such period and (ii) the risk of nonpayment by the Obligors. Originator and Buyer may
agree from time to time to change the Discount Factor based on changes in one or more of the items affecting the calculation thereof, provided
that any change to the Discount Factor shall take effect as of the commencement of a Calculation Period, shall apply only prospectively and
shall not affect the Purchase Price payment in respect of a Purchase which occurred during or prior to the Calculation Period during which
Originator and Buyer agree to make such change.
“Federal Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy”, as amended and any successor statute
thereto.
“Finance Charges” means, with respect to a Contract, any finance, interest, late payment charges or similar charges owing by an Obligor
pursuant to such Contract.
“Financial Institution” has the meaning set forth in the Preliminary Statement of the Agreement.
“Indebtedness” of a Person means such Person’s (i) obligations for borrowed money, (ii) obligations representing the deferred purchase
price of property or services (other than accounts payable arising in the ordinary course of such Person’s business payable on terms
customary in the trade), (iii) obligations, whether or not assumed, secured by liens or payable out of the proceeds or production from property
now or hereafter owned or acquired by such Person, (iv) obligations which are evidenced by notes, acceptances, or other instruments,
(vi) capitalized lease obligations, (vii) net liabilities under interest rate swap, exchange or cap agreements, (viii) Contingent Obligations and
(ix) liabilities in respect of unfunded vested benefits under plans covered by Title IV of ERISA.
“Indemnified Amount” has the meaning set forth in Section 6.1 of this Agreement.
“Indemnified Party” has the meaning set forth in Section 6.1 of this Agreement.
“Initial Cutoff Date” has the meaning set forth in Section 1.2 of the Agreement.
“Intended Characterization” means, for income tax purposes, the characterization of the acquisition by the Purchasers of Purchaser
Interests under the Purchase Agreement as a loan or loans by the Purchasers to Buyer secured by the Receivables, the Related Security and
the Collections.
“Lock-Box” means each postal box or code listed on Exhibit IV to the Purchase Agreement over which the Administrative Agent has
been granted control pursuant to a P.O. Box Transfer Notice.
“Material Adverse Effect” means a material adverse effect on (i) the financial condition or operations of Originator and its Subsidiaries,
taken as a whole (except that a
3
downgrade in any debt rating of the Originator or any of its Subsidiaries shall not by itself have any such material adverse effect), (ii) the
ability of Originator to perform its obligations under the Agreement or any other Transaction Document, (iii) the legality, validity or
enforceability of the Agreement or any other Transaction Document, (iv) Originator’s, Buyer’s, the Administrative Agent’s or any Purchaser’s
interest in the Receivables generally or in any significant portion of the Receivables, the Related Security or Collections with respect thereto,
or (v) the collectibility of the Receivables generally or of any material portion of the Receivables.
“Moody’s” means Moody’s Investors Service, Inc.
“Net Value” means, as of any date of determination, an amount equal to the sum of (i) the aggregate Outstanding Balance of the
Receivables at such time, minus (ii) the sum of (A) the aggregate Capital outstanding at such time, plus (B) the Aggregate Reserves.
“Net Worth” means as of the last Business Day of each Calculation Period preceding any date of determination, the excess, if any, of
(i) the aggregate Outstanding Balance of the Receivables at such time, over (ii) the sum of (A) the aggregate Capital outstanding at such time,
plus (B) the aggregate outstanding principal balance of the Subordinated Loans (including any Subordinated Loan proposed to be made on
the date of determination).
“Obligor” means a Person obligated to make payments pursuant to a Contract.
“Original Balance” means, with respect to any Receivable, the Outstanding Balance of such Receivable on the date it was purchased by
Buyer.
“Originator” has the meaning set forth in the Preliminary Statements to the Agreement.
“Outstanding Balance” of any Receivable at any time means the then outstanding principal balance thereof.
“Person” means an individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof.
“P.O. Box Transfer Notice” means an agreement substantially in the form of Exhibit XI of the Purchase Agreement, or such other
agreement in form and substance reasonably acceptable to the Administrative Agent.
“Potential Termination Event” means an event which, with the passage of time or the giving of notice, or both, would constitute a
Termination Event.
“Purchase” means each purchase or contribution pursuant to Section 1.1(a) of the Agreement by Buyer from Originator of the
Receivables, the Related Security and the Collections related thereto, together with all related rights in connection therewith.
“Purchase Agreement” has the meaning set forth in the Preliminary Statements to the Agreement.
4
“Purchase Price” means, with respect to any Purchase on any date, the aggregate price to be paid by Buyer to Originator for such
Purchase in accordance with Section 1.2 of the Agreement for the Receivables, Collections and Related Security being sold to Buyer on such
date, which price shall equal (i) the product of (A) the Original Balance of such Receivables, multiplied by (B) one minus the Discount Factor
then in effect, minus (ii) any Purchase Price Credits to be credited against the Purchase Price otherwise payable in accordance with Section 1.3
of the Agreement.
“Purchase Price Credit” has the meaning set forth in Section 1.3 of the Agreement.
“Purchasers” means Conduit and each Financial Institution.
“Receivable” means all indebtedness and other obligations owed to Originator (at the time it arises, and before giving effect to any
transfer or conveyance under the Agreement) or Buyer (after giving effect to the transfers under the Agreement) or in which Originator or
Buyer has a security interest or other interest including, without limitation, any indebtedness, obligation or interest constituting an account,
chattel paper, instrument or general intangible, arising in connection with the sale of goods, electricity or gas or the rendering of services by
Originator and further includes, without limitation, the obligation to pay any Finance Charges with respect thereto. Indebtedness and other
rights and obligations arising from any one transaction, including, without limitation, indebtedness and other rights and obligations
represented by an individual invoice, shall constitute a Receivable separate from a Receivable consisting of the indebtedness and other rights
and obligations arising from any other transaction; provided that any indebtedness, rights or obligations referred to in the immediately
preceding sentence shall be a Receivable regardless of whether the account debtor or Originator treats such indebtedness, rights or
obligations as a separate payment obligation. Notwithstanding the foregoing, “Receivable” does not include (i) Transferred Securitization
Property or (ii) the books and records relating solely to the Transferred Securitization Property; provided that the determination of what
constitutes collections of the Securitization Charges in respect of Transferred Securitization Property shall be made in accordance with the
allocation methodology specified in Annex 2 to the Servicing Agreement.
“Records” means, with respect to any Receivable, all Contracts and other documents, books, records and other information (including,
without limitation, computer programs, tapes, disks, punch cards, data processing software and related property and rights) relating to such
Receivable, any Related Security therefor and the related Obligor.
“Related Security” means, with respect to any Receivable:
(i) all of Originator’s interest in the inventory and goods (including returned or repossessed inventory and goods), if any, the sale of
which by Originator gave rise to such Receivable, and all insurance contracts with respect thereto,
(ii) all other security interests or liens and property subject thereto from time to time, if any, purporting to secure payment of such
Receivable,
5
whether pursuant to the Contract related to such Receivable or otherwise, together with all financing statements and security agreements
describing any collateral securing such Receivable,
(iii) all guaranties, letters of credit, letter of credit rights, supporting obligations, insurance and other agreements or arrangements of
whatever character from time to time supporting or securing payment of such Receivable whether pursuant to the Contract related to
such Receivable or otherwise,
(iv) all service contracts and other contracts and agreements associated with such Receivable,
(v) all Records related to such Receivable,
(vi) all of the Originator’s rights, title and interest in, to and under any contracts or agreements providing for the servicing of such
Receivable, and
(vii) all proceeds of any of the foregoing.
“Required Capital Amount” means, as of any date of determination, an amount equal to 15% of the Purchase Limit.
“Responsible Officer” means, with respect to Originator, its chief financial officer, chief accounting officer, senior vice president-finance,
treasurer, assistant treasurer, corporate controller or any other officer whose primary duties are similar to the duties of any of the previously
listed officers.
“S&P” means Standard & Poor’s Ratings Service, a division of The McGraw-Hill Companies, Inc.
“SEC” means the United States Securities and Exchange Commission or any successor regulatory body.
“Servicer” means at any time the Person (which may be the Administrative Agent) then authorized pursuant to Article VIII to the
Purchase Agreement to service, administer and collect Receivables.
“Subordinated Loan” has the meaning set forth in Section 1.2(a) of the Agreement.
“Subordinated Note” means a promissory note in substantially the form of Exhibit VI hereto as more fully described in Section 1.2 of the
Agreement, as the same may be amended, restated, supplemented or otherwise modified from time to time.
“Subsidiary” of a Person means (i) any corporation more than 50% of the outstanding securities having ordinary voting power of which
shall at the time be owned or controlled, directly or indirectly, by such Person or by one or more of its Subsidiaries or by such Person and one
or more of its Subsidiaries, or (ii) any partnership, association, limited liability
6
company, joint venture or similar business organization more than 50% of the ownership interests having ordinary voting power of which shall
at the time be so owned or controlled.
“Supplement Indenture” means each Supplement Indenture made and entered into by and between Originator (formerly known as
Consumers Power Company) and the Trustee, as Trustee under the 1945 Indenture.
“Termination Date” means the earliest to occur of (i) the Amortization Date (as that term is defined in the Purchase Agreement), (ii) the
Business Day immediately prior to the occurrence of a Termination Event set forth in Section 5.1(d), (iii) the Business Day specified in a written
notice from Buyer to Originator following the occurrence of any other Termination Event, and (iv) the date which is at least fifteen
(15) Business Days after Buyer’s receipt of written notice from Originator that it wishes to terminate the facility evidenced by this Agreement.
“Termination Event” has the meaning set forth in Section 5.1 of the Agreement.
“Transaction Documents” means, collectively, this Agreement, the Intercreditor Agreement, each Collection Account Agreement, the
Subordinated Note, and all other instruments, documents and agreements executed and delivered in connection herewith.
All accounting terms not specifically defined herein shall be construed in accordance with GAAP. All terms used in Article 9 of the UCC
in the State of New York, and not specifically defined herein, are used herein as defined in such Article 9.
7
Exhibit II
Places of Business; Locations of Records;
Organizational and Federal Employer Identification Number(s); Other Names
Place of Business,
Chief Executive Office, and
Location of Records:
212 West Michigan Ave.
Jackson, MI 49201 (Prior to May 2003 Board Meeting)
One Energy Plaza
Jackson, MI 49201-2276 (From and after May 2003 Board Meeting)
Federal Employer Identification Number: 38-0442310
Michigan Organizational Identification Number: MI 021-395
Corporate Name: Consumers Energy Company
Partnership Trade and Assumed Names: Consumers Energy, Consumers Power Company, Consumers Power
Exhibit III
Lock-boxes; Collection Accounts; Collection Banks; Specified Accounts
JPMorgan Chase Bank
270 Park Avenue
New York, NY 10017
Contact: Dorin Ladan
227 West Monroe Street
Chicago, IL 60606
Phone: 312-541-0583
Bank One
611 Woodward Ave.
Detroit, MI 48226
Contact: Shirley Ferretti
Phone: 313-225-1357
Standard Federal Bank
201 South Main Street, Ann Arbor, MI 48104
Contact: Judy Gross
Phone: 734-747-8050
Collection Accounts: #1054516142, #1054516150, #1054518354 (Concentration Account)
Fifth Third Bank
250 Monroe Avenue NW, Suite 400
Grand Rapids, MI 49503
Contact: Debra Olin
Phone: 616-653-8169
Collection Accounts: #7161331629, #7161331686, #9991602906 (Concentration Account)
Comerica Bank
599 Woodward Ave., 9th Floor, MC3268
Detroit, MI 48226
Contact: Stacy McVeigh
Phone: 313-222-4515
Collection Accounts: #1076119864, #1076124450, #1076124468, #1850844026, #1851120384, #1850923754, #1851041283, #1076124476,
#1850497742. #1076119914, #1851183945, #1000123354 (Concentration Account)
Citizens National Bank
1121 E. State Street
Cheboygan, MI 49721
Phone: 231-597-9687
Chemical Bank
1511 W. Houghton Lake Drive
Prudenville, MI 48651
Phone: 989-366-9636
Hastings City Bank
150 West Court Street
Hastings, MI 49058
Phone: 269-945-2401
Independent Bank
508 Bennett Street
Rose City, MI 48654
Phone: 989-685-2461
National City
1001 South Worth Street
Birmingham, MI 48009-6943
Contact: Janet Moore
Phone: 248-901-4856
Collection Account: #884264203, #884264238, #884264211, #884264246 (Concentration Account)
Lock-Box Zip Code:
2
Exhibit IV
Form of Compliance Certificate
This Compliance Certificate is furnished pursuant to that certain Receivables Sale Agreement dated as of May 22, 2003, between
Consumers Energy Company (“Originator”) and Consumers Receivables Funding II, LLC (as amended, restated or otherwise modified from
time to time, the “Agreement”). Capitalized terms used and not otherwise defined herein are used with the meanings attributed thereto in the
Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected of Originator.
2. I have reviewed the terms of the Agreement and I have made, or have caused to be made under my supervision, a detailed review of
the transactions and conditions of Originator and its Subsidiaries during the accounting period covered by the attached financial statements.
3. The examinations described in paragraph 2 did not disclose, and I have no knowledge of, the existence of any condition or event
which constitutes a Termination Event or a Potential Termination Event, as each such term is defined under the Agreement, during or at the
end of the accounting period covered by the attached financial statements or as of the date of this Certificate, except as set forth below.
4. Described below are the exceptions, if any, to paragraph 3 by listing, in detail, the nature of the condition or event, the period during
which it has existed and the action which Originator has taken, is taking, or proposes to take with respect to each such condition or event:
The foregoing certifications, together with the computations set forth in Schedule I hereto and the financial statements delivered with
this Certificate in support hereof, are made and delivered this day of , 20___.
[Name]
Exhibit V
Credit and Collection Policy
On file with Administrative Agreement.
Exhibit VI
Form of Subordinated Note
SUBORDINATED NOTE
May 22, 2003

1. Note. FOR VALUE RECEIVED, the undersigned, CONSUMERS RECEIVABLES FUNDING II, LLC, a Delaware limited liability company
(“SPV”), hereby unconditionally promises to pay to the order of CONSUMERS ENERGY COMPANY, a Michigan corporation (“Originator”), in
lawful money of the United States of America and in immediately available funds, on the date following the Termination Date which is one year
and one day after the date on which (i) the Outstanding Balance of all Receivables sold under the “Sale Agreement” referred to below has
been reduced to zero and (ii) Originator has paid to the Buyer all indemnities, adjustments and other amounts which may be owed thereunder
in connection with the Purchases (the “Collection Date”), the aggregate unpaid principal sum outstanding of all “Subordinated Loans” made
from time to time by Originator to SPV pursuant to and in accordance with the terms of that certain Receivables Sale Agreement dated as of
May 22, 2003 between Originator and SPV (as amended, restated, supplemented or otherwise modified from time to time, the “Sale
Agreement”). Reference to Section 1.2 of the Sale Agreement is hereby made for a statement of the terms and conditions under which the
loans evidenced hereby have been and will be made. All terms which are capitalized and used herein and which are not otherwise specifically
defined herein shall have the meanings ascribed to such terms in the Sale Agreement or the Purchase Agreement (as hereinafter defined).
2. Interest. SPV further promises to pay interest on the outstanding unpaid principal amount hereof from the date hereof until payment in
full hereof at a rate equal to the Bank Rate; provided, however, that if SPV shall default in the payment of any principal hereof, SPV promises to
pay, on demand, interest at the rate of the Bank Rate plus 2.00% per annum on any such unpaid amounts, from the date such payment is due
to the date of actual payment. Interest shall be payable on the first Business Day of each month in arrears; provided, however, that SPV may
elect on the date any interest payment is due hereunder to defer such payment and upon such election the amount of interest due but unpaid
on such date shall constitute principal under this Subordinated Note. The outstanding principal of any loan made under this Subordinated
Note shall be due and payable on the Collection Date and may be repaid or prepaid at any time without premium or penalty.
3. Principal Payments. Originator is authorized and directed by SPV to enter on the grid attached hereto, or, at its option, in its books and
records, the date and amount of each loan made by it which is evidenced by this Subordinated Note and the amount of each payment of
principal made by SPV, and absent manifest error, such entries shall constitute prima facie evidence of the accuracy of the information so
entered; provided that neither the failure of Originator to make any such entry or any error therein shall expand, limit or affect the obligations
of SPV hereunder.
4. Subordination. The indebtedness evidenced by this Subordinated Note is subordinated to the prior payment in full of all of SPV’s
recourse obligations under that certain Receivables Purchase Agreement dated as of May 22, 2003 by and among SPV, Originator, as Servicer,
various “Purchasers” from time to time party thereto, and Bank One, NA (Main Office Chicago), as the “Administrative Agent” (as amended,
restated, supplemented or otherwise modified from time to time, the “Purchase Agreement”). The subordination provisions contained herein
are for the direct benefit of, and may be enforced by, the Administrative Agent and the Purchasers and/or any of their respective assignees
(collectively, the “Senior Claimants”) under the Purchase Agreement. Until the date on which all “Capital” outstanding under the Purchase
Agreement has been repaid in full and all other obligations of SPV and/or the Servicer thereunder and under the “Fee Letter” referenced
therein (all such obligations, collectively, the “Senior Claim”) have been indefeasibly paid and satisfied in full, Originator shall not demand,
accelerate, sue for, take, receive or accept from SPV, directly or indirectly, in cash or other property or by set-off or any other manner
(including, without limitation, from or by way of collateral) any payment or security of all or any of the indebtedness under this Subordinated
Note or exercise any remedies or take any action or proceeding to enforce the same; provided, however, that (i) Originator hereby agrees that it
will not institute against SPV any proceeding of the type described in Section 5.1(d) of the Sale Agreement unless and until the Collection Date
has occurred and (ii) nothing in this paragraph shall restrict SPV from paying, or Originator from requesting, any payments under this
Subordinated Note so long as SPV is not required under the Purchase Agreement to set aside for the benefit of, or otherwise pay over to, the
funds used for such payments to any of the Senior Claimants and further provided that the making of such payment would not otherwise
violate the terms and provisions of the Purchase Agreement. Should any payment, distribution or security or proceeds thereof be received by
Originator in violation of the immediately preceding sentence, Originator agrees that such payment shall be segregated, received and held in
trust for the benefit of, and deemed to be the property of, and shall be immediately paid over and delivered to the Administrative Agent for the
benefit of the Senior Claimants.
5. Bankruptcy; Insolvency. Upon the occurrence of any proceeding of the type described in Section 5.1(d) of the Sale Agreement
involving SPV as debtor, then and in any such event the Senior Claimants shall receive payment in full of all amounts due or to become due on
or in respect of Capital and the Senior Claim (including “CP Costs” and “Yield” as defined and as accruing under the Purchase Agreement after
the commencement of any such proceeding, whether or not any or all of such CP Costs or Yield is an allowable claim in any such proceeding)
before Originator is entitled to receive payment on account of this Subordinated Note, and to that end, any payment or distribution of assets
of SPV of any kind or character, whether in cash, securities or other property, in any applicable insolvency proceeding, which would otherwise
be payable to or deliverable upon or with respect to any or all indebtedness under this Subordinated Note, is hereby assigned to and shall be
paid or delivered by the Person making such payment or delivery (whether a trustee in bankruptcy, a receiver, custodian or liquidating trustee
or otherwise) directly to the Administrative Agent for application to, or as collateral for the payment of, the Senior Claim until such Senior
Claim shall have been paid in full and satisfied.
6. Amendments. This Subordinated Note shall not be amended or modified except in accordance with Section 7.1 of the Sale Agreement.
The terms of this Subordinated
2
Note may not be amended or otherwise modified without the prior written consent of the Administrative Agent for the benefit of the
Purchasers.
7. GOVERNING LAW. THIS SUBORDINATED NOTE SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE
PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LAWS AND DECISIONS OF THE STATE OF NEW YORK.
WHEREVER POSSIBLE EACH PROVISION OF THIS SUBORDINATED NOTE SHALL BE INTERPRETED IN SUCH MANNER AS TO
BE EFFECTIVE AND VALID UNDER APPLICABLE LAW, BUT IF ANY PROVISION OF THIS SUBORDINATED NOTE SHALL BE
PROHIBITED BY OR INVALID UNDER APPLICABLE LAW, SUCH PROVISION SHALL BE INEFFECTIVE TO THE
EXTENT OF SUCH PROHIBITION OR INVALIDITY, WITHOUT INVALIDATING THE REMAINDER OF SUCH PROVISION OR THE
REMAINING PROVISIONS OF THIS SUBORDINATED NOTE.
8. Waivers. All parties hereto, whether as makers, endorsers, or otherwise, severally waive presentment for payment, demand, protest
and notice of dishonor. Originator additionally expressly waives all notice of the acceptance by any Senior Claimant of the subordination and
other provisions of this Subordinated Note and expressly waives reliance by any Senior Claimant upon the subordination and other provisions
herein provided.
9. Assignment. This Subordinated Note may not be assigned, pledged or otherwise transferred to any party other than Originator
without the prior written consent of the Administrative Agent, and any such attempted transfer shall be void.
By:
Title:
3
Schedule
to
SUBORDINATED NOTE
SUBORDINATED LOANS AND PAYMENTS OF PRINCIPAL
Amount of Amount of Unpaid

Subordinated P rincipal P rincipal Notation made
Date Loan P aid Balance by
Exhibit VII
Form of UCC-3
[See attached.]
Schedule A
DOCUMENTS TO BE DELIVERED TO BUYER
ON OR PRIOR TO THE INITIAL PURCHASE
[See attached.]
TABLE OF CONTENTS
P age
ARTICLE I
AMOUNTS AND TERMS 1
Section 1.1 Purchases of Receivables 1

Section 1.2 Payment for the Purchases 2
Section 1.3 Purchase Price Credit Adjustments 4
Section 1.4 Payments and Computations, Etc 5
Section 1.5 Transfer of Records 5
Section 1.6 Characterization 5
ARTICLE II
REPRESENTATIONS AND WARRANTIES 6
Section 2.1 Representations and Warranties of Originator 6
ARTICLE III
CONDITIONS OF PURCHASE 10
Section 3.1 Conditions Precedent to Initial Purchase 10

Section 3.2 Conditions Precedent to Subsequent Payments 10
ARTICLE IV
COVENANTS 10
Section 4.1 Affirmative Covenants of Originator 10

Section 4.2 Negative Covenants of Originator 16
ARTICLE V
TERMINATION EVENTS 17
Section 5.1 Termination Events 17

Section 5.2 Remedies 19
ARTICLE VI
INDEMNIFICATION 19
Section 6.1 Indemnities by Originator 19

Section 6.2 Other Costs and Expenses 21
ARTICLE VII
MISCELLANEOUS 22
Section 7.1 Waivers and Amendments 22

Section 7.2 Notices 22
i
TABLE OF CONTENTS
(continued)
P age
Section 7.3 Protection of Ownership Interests of Buyer 22
Section 7.4 Confidentiality 23
Section 7.5 Bankruptcy Petition 24
Section 7.6 CHOICE OF LAW 24
Section 7.7 CONSENT TO JURISDICTION 24
Section 7.8 WAIVER OF JURY TRIAL 24
Section 7.9 Integration; Binding Effect; Survival of Terms 25
Section 7.10 Counterparts; Severability; Section References 25
Exhibits and Schedules
EXHIBIT I — Definitions
EXHIBIT II — Principal Place of Business; Location(s) of Records; Organizational and Federal Employer Identification Number;
Other Names
EXHIBIT — Lock-Boxes; Collection Accounts; Collection Banks; Specified Accounts

III
EXHIBIT — Form of Compliance Certificate

IV
EXHIBIT V — Credit and Collection Policy
EXHIBIT — Form of Subordinated Note

VI
EXHIBIT — Form of UCC-3

VII
SCHEDULE — List of Documents to Be Delivered to Buyer Prior to the Initial Purchase

A
ii
EXECUTION COPY
AMENDMENT NO. 1
TO
THIS AMENDMENT NO. 1 TO RECEIVABLES SALE AGREEMENT (this “Amendment”) dated as of May 20, 2004, is entered into
among CONSUMERS RECEIVABLES FUNDING II, LLC (“Buyer”) and CONSUMERS ENERGY COMPANY (“Originator”). Capitalized terms
used herein without definition shall have the meanings ascribed thereto in the “Receivables Sale Agreement” referred to below.
A. Reference is made to that certain Receivables Sale Agreement dated as of May 22, 2003 between Buyer and Originator (as amended,
restated, supplemented or modified from time to time, the “Receivables Sale Agreement”).
B. The parties hereto have agreed to amend certain provisions of the Receivables Sale Agreement upon the terms and conditions set
forth herein.
SECTION 1. Amendments. Subject to the satisfaction of the condition precedent set forth in Section 3 hereof, the parties hereto hereby
agree to amend the Receivables Sale Agreement as follows:
(a) Section 4.1(b) of the Receivables Sale Agreement is hereby amended to add the following clause (vi) after clause (v):
(vi) Receivables Classification. The occurrence of any event or circumstance (including, without limitation, any change in law,
regulation or systems reporting), which would impact the identification of any accounts receivable on the books and records of the
Originator not less than thirty (30) days prior to such occurrence (or in the event of a change in law or regulation, as soon as
reasonably possible).
(b) Section 4.1 of the Receivables Sale Agreement is hereby amended to add the following paragraph (n) after paragraph (m):
(n) Receivables Classification. In connection with any change in the identification of any accounts receivable on the books and
records of the Originator, the Originator shall ensure that all actions required by Section 4.1(g) will have been taken prior to such
change.
(c) Exhibit I to the Receivables Sale Agreement is hereby further amended to delete the definition of “Receivable” and replace it with the
following:
“Receivable” means all indebtedness and other obligations owed to Originator (at the time it arises, and before giving effect to any
transfer or conveyance under the Agreement) or Buyer (after giving effect to the transfers under the Agreement) or in which
Originator or Buyer has a security interest or other interest including, without limitation, any indebtedness, obligation or interest
constituting an account, chattel paper, instrument or general intangible, arising in connection with the sale of goods, electricity or gas
or the rendering of services by Originator, and which is identified on the books and records of the Originator (including its accounting
system) with the account code “Account 142.130 Accounts Receivable-Electric & Gas-Central Billing”, and further includes, without
limitation, the obligation to pay any Finance Charges with respect thereto. Indebtedness and other rights and obligations arising from
any one transaction, including, without limitation, indebtedness and other rights and obligations represented by an individual invoice,
shall constitute a Receivable separate from a Receivable consisting of the indebtedness and other rights and obligations arising from
any other transaction; provided that any indebtedness, rights or obligations referred to in the immediately preceding sentence shall be
a Receivable regardless of whether the account debtor or Originator treats such indebtedness, rights or obligations as a separate
payment obligation. Notwithstanding the foregoing, “Receivable” does not include (i) Transferred Securitization Property or (ii) the
books and records relating solely to the Transferred Securitization Property; provided that the determination of what constitutes
collections of the Securitization Charges in respect of Transferred Securitization Property shall be made in accordance with the
allocation methodology specified in Annex 2 to the Servicing Agreement.
SECTION 2. Representations and Warranties. The Originator hereby represents and warrants to Buyer and its assigns that:
(b) on the date hereof, before and after giving effect to this Amendment, no Termination Event or Potential Termination Event has
occurred and is continuing.
Buyer and the Administrative Agent or its counsel
2
has received four (4) counterpart signature pages to this Amendment, executed by each of the parties hereto.
(a) Upon the effectiveness of this Amendment, (i) each reference in the Receivables Sale Agreement to “this Receivables Sale
Sale Agreement as amended or otherwise modified hereby, and (ii) each reference to the Receivables Sale Agreement in any other
be a reference to the Receivables Sale Agreement as amended or otherwise modified hereby.
(b) Except as specifically amended, terminated or otherwise modified above, the terms and conditions of the Receivables Sale Agreement,
of all other Transaction Documents and any other documents, instruments and agreements executed and/or delivered in connection
therewith, shall remain in full force and effect and are hereby ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the Buyer
or its assigns under the Receivables Sale Agreement or any other Transaction Document or any other document, instrument or agreement
executed in connection therewith, nor constitute a waiver of any provision contained therein, in each case except as specifically set forth
herein.
3

Title: President

Signature Page to Amendment No. 1 to RSA

EXECUTION COPY
AMENDMENT NO. 2
TO
THIS AMENDMENT NO. 2 TO RECEIVABLES SALE AGREEMENT (this “Amendment”) dated as of August 15, 2006, is entered into
among CONSUMERS RECEIVABLES FUNDING II, LLC (“Buyer”) and CONSUMERS ENERGY COMPANY (“Originator”). Capitalized terms
used herein without definition shall have the meanings ascribed thereto in the “Receivables Sale Agreement” referred to below.
A. Reference is made to that certain Receivables Sale Agreement dated as of May 22, 2003 between Buyer and Originator (as amended,
restated, supplemented or modified from time to time, the “Receivables Sale Agreement”).
B. The parties hereto have agreed to amend certain provisions of the Receivables Sale Agreement upon the terms and conditions set
forth herein.
SECTION 1. Amendments. Subject to the satisfaction of the condition precedent set forth in Section 4 hereof, the parties hereto hereby
agree to amend the Receivables Sale Agreement as follows:
(a) Exhibit III to the Receivables Sale Agreement is hereby replaced in its entirety with the Exhibit III attached hereto.
SECTION 2. Representations and Warranties. The Originator hereby represents and warrants to Buyer and its assigns that:
(b) on the date hereof, before and after giving effect to this Amendment, no Termination Event or Potential Termination Event has
occurred and is continuing.
SECTION 3. Wavier. Buyer hereby waives any Termination Event which has occurred prior to the date hereof as a result of the Originator
terminating and adding Collection Accounts which were not Specified Accounts without giving prior written notice thereof to Buyer and its
assigns.
Buyer and the Administrative Agent or its counsel has received four (4) counterpart signature pages to this Amendment, executed by each of
the parties hereto.

(a) Upon the effectiveness of this Amendment, (i) each reference in the Receivables Sale Agreement to “this Receivables Sale
Sale Agreement as amended or otherwise modified hereby, and (ii) each reference to the Receivables Sale Agreement in any other
be a reference to the Receivables Sale Agreement as amended or otherwise modified hereby.
(b) Except as specifically amended, terminated or otherwise modified above, the terms and conditions of the Receivables Sale Agreement,
of all other Transaction Documents and any other documents, instruments and agreements executed and/or delivered in connection
therewith, shall remain in full force and effect and are hereby ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of Buyer or
its assigns under the Receivables Sale Agreement or any other Transaction Document or any other document, instrument or agreement
executed in connection therewith, nor constitute a waiver of any provision contained therein, in each case except as specifically set forth in
Section 3 above. Buyer and its assigns hereby expressly reserve all of their rights with respect to the occurrence of other Termination
Events, if any, whether previously existing or hereinafter arising or which exist at any time on or after the date first written above.
2


Signature Page to Amendment No. 2 to RSA

EXHIBIT IV
NAMES OF COLLECTION BANKS; COLLECTION ACCOUNTS; LOCK-BOXES
JPMorgan Chase Bank, N.A.
P O Box 2558
Houston, TX 77252-8391
Contact: Juanita Chretien
Phone: (713)216-8648
Fax: (713)216-4801
Email: juanita.l.chretien@chase.com
LaSalle Bank
201 Townsend Street, Suite 600
M0936/00
Lansing, MI 48933
Contact: Douglas Henderson
Phone: (517)377-0559
Fax: (517)377-0502
Email: doug.henderson@abnamro.com
Collection Accounts: #1054516142, #1054518354 (Concentration Account)
Citibank
4500 New Linden Hill
Wilmington, DE 19801
Contact: Laura Jones
Phone: (302)683-4496
Fax: (302)683-4933
Email: laura.b.jones@citigroup.com
Collection Accounts: #30489425, #27318
Comerica Bank
MC 7618
P O Box 75000
Detroit, MI 48275
Contact: Lorraine Edwards
Phone: (734)632-4536
Fax: (734)632-4545
Email: lorraine_m_edwards@comerica.com
Collection Accounts: #1851978096, #1851978898, #1852147071, #1852048774, #1851120384, #1076119914, and #1000123354 (Concentration
Account)
Lock-Box Zip Code:
Exhibit (12)(a)

Ratio of Earnings to Fixed Charges and Combined Fixed Charges and Preferred Dividends
(Millions of Dollars)
Ye ar En de d De ce m be r 31
2008 2007 2006 2005 2004
(b) (c) (d) (e)
Earnings as defined (a)
Pretax income from continuing operations $ 449 $ (308) $ (425) $ (764) $ 98
Exclude equity basis subsidiaries (1) (22) (14) (17) (88)
Fixed charges as defined 421 480 526 531 637
Earnings as defined $ 869 $ 150 $ 87 $ (250) $ 647
Fixed charges as defined (a)

Interest on long-term debt $ 363 $ 406 $ 483 $ 506 $ 560
Estimated interest portion of lease rental 25 23 8 6 4
Other interest charges 33 51 35 19 73
Fixed charges as defined $ 421 $ 480 $ 526 $ 531 $ 637
Preferred dividends 17 12 11 10 11
Combined fixed charges and preferred dividends $ 438 $ 492 $ 537 $ 541 $ 648
Ratio of earnings to fixed charges 2.06 — — — 1.01
Ratio of earnings to combined fixed charges and

preferred dividends 1.98 — — — —
NOTES:
(a) Earnings and fixed charges as defined in instructions for Item 503 of Regulation S-K.
(b) For the year ended December 31, 2007, fixed charges exceeded earnings by $330 million and combined fixed charges and preferred
dividends exceeded earnings by $342 million. Earnings as defined include $204 million in asset impairment charges and a $279 million charge for
an electric sales contract termination.
(c) For the year ended December 31, 2006, fixed charges exceeded earnings by $439 million and combined fixed charges and preferred dividends
exceeded earnings by $450 million. Earnings as defined include $459 million of asset impairment charges.
(d) For the year ended December 31, 2005, fixed charges exceeded earnings by $781 million and combined fixed charges and preferred
dividends exceeded earnings by $791 million. Earnings as defined include $1.184 billion of asset impairment charges.
(e) For 2004, fixed charges and combined fixed charges and preferred dividends, adjusted as defined, include $25 million of interest cost that
was capitalized prior to 2004 and subsequently expensed in 2004. Combined fixed charges and preferred dividends exceeded earnings by
$1 million. Earnings as defined include $160 million of asset impairments.
Exhibit (12)(b)

Ratio of Earnings to Fixed Charges and Combined Fixed Charges and Preferred Dividends
(Millions of Dollars)
Year Ended December 31

2008 2007 2006 2005 2004
(b)
Earnings as defined (a)
Pretax income from continuing operations $ 562 $ 437 $ 167 $(590) $ 439
Exclude equity basis subsidiaries (c) — — (1) (1) (1)
Fixed charges as defined 276 293 307 316 345
Earnings as defined $ 838 $ 730 $ 473 $(275) $ 783
Fixed charges as defined (a)

Interest on long-term debt $ 229 $ 236 $ 286 $ 305 $ 328
Estimated interest portion of lease rental 25 23 8 6 4
Other interest charges 22 34 13 5 13
Fixed charges as defined $ 276 $ 293 $ 307 $ 316 $ 345
Preferred dividends 3 3 3 3 3
Combined fixed charges and preferred dividends $ 279 $ 296 $ 310 $ 319 $ 348
Ratio of earnings to fixed charges 3.04 2.49 1.54 — 2.27
Ratio of earnings to combined fixed charges and preferred dividends 3.00 2.47 1.53 — 2.25
NOTES:
(a) Earnings and fixed charges as defined in instructions for Item 503 of Regulation S-K.
(b) For the year ended December 31, 2005, fixed charges exceeded earnings by $591 million and combined fixed charges and preferred
dividends exceeded earnings by $594 million. Earnings as defined include $1.184 billion of asset impairment charges.
(c) In 2004, we consolidated the MCV Partnership and the FMLP in accordance with Revised FASB Interpretation No. 46.
Exhibit (21)
For the purpose of this filing, information is organized under the headings of CMS Energy Corporation (Tier 1), CMS Capital, L.L.C. (Tier 2),
CMS Enterprises Company (Tier 2), CMS Land Company (Tier 2), Consumers Energy Company (Tier 2) and Dearborn Industrial Energy, L.L.C.
(Tier 2). As set forth in detail below, CMS Energy Corporation is the parent company of CMS Capital, L.L.C., CMS Enterprises Company, CMS
Land Company, Consumers Energy Company and Dearborn Industrial Energy, L.L.C. All ownership interests are 100% unless indicated
parenthetically to the contrary and are accurate as of December 31, 2008.
01 CMS Energy Corporation

Address:
One Energy Plaza
CMS Energy Corporation is an integrated energy company, which has as its primary business operations an electric and natural gas utility,
natural gas pipeline systems, and independent power generation.
The name, state of organization and nature of business of CMS Energy’s direct subsidiaries are described below:
02 CMS Capital, L.L.C.
CMS Capital, L.L.C. is a Michigan limited liability company formed to assist in securing financing for CMS Energy Corporation and its
subsidiaries and affiliates.
02 CMS Enterprises Company
CMS Enterprises Company is a Michigan corporation that, through various subsidiaries and affiliates, is engaged in diversified businesses
in the United States and in select international markets.
02 CMS Land Company
CMS Land Company is a Michigan corporation formed to act as a repository for any unused real property formerly owned by Consumers
Energy Company, and hold the same for possible non-utility development.
02 Consumers Energy Company
Consumers Energy Company is a Michigan corporation engaged in the generation, purchase, distribution and sale of electricity, and in the
purchase, storage, distribution and sale of natural gas, in the lower peninsula of the State of Michigan.
02 Dearborn Industrial Energy, L.L.C.
Dearborn Industrial Energy, L.L.C. is a Michigan limited liability company that holds the ownership interest in Dearborn Industrial
Generation, L.L.C.
The name, state of organization and nature of business of each subsidiary and their subsidiaries are described below:
02 CMS Capital, L.L.C.

Address:
One Energy Plaza
CMS Capital, L.L.C. is a Michigan limited liability company formed to assist in securing financing for CMS Energy Corporation and its
subsidiaries and affiliates.
03 EnerBank USA
EnerBank USA is a Utah corporation engaged in the business of an “industrial loan corporation” to issue thrift certificates of deposit and
thrift savings accounts for the payment of money, to issue capital notes or debentures to receive payments with or without allowance for
interest.
02 CMS Enterprises Company

Address:
One Energy Plaza
CMS Enterprises Company is a Michigan corporation that, through various subsidiaries and affiliates, is engaged in diversified businesses
in the United States and in select international markets.
03 CMS Distributed Power, L.L.C.
CMS Distributed Power, L.L.C. is a Michigan limited liability company formed for the purpose of aggregating the output from multiple
generators to have power available on demand. (in process of dissolution)
03 CMS Energy Asia Private Limited
CMS Energy Asia Private Limited, a Singapore corporation, was involved in the development of electrical generation and distribution
opportunities, gas transmission, storage and distribution opportunities, electrical and gas marketing opportunities and development
opportunities in Asia and the Pacific Rim. (in process of liquidation)
03 CMS Energy Resource Management Company
CMS Energy Resource Management Company is a Michigan corporation concentrating on the purchase and sale of energy commodities in
support of CMS Energy’s generating facilities.
04 CMS ERM Michigan LLC
CMS ERM Michigan LLC is a Michigan limited liability company formed for the sole purpose of taking an assignment of the Ford/Rouge
Electricity Sales Agreements from Dearborn Industrial Generation, L.L.C. and to perform those contracts.
04 CMS Viron Corporation
CMS Viron Corporation is a Missouri corporation formed to provide services in the area of energy usage analysis and the engineering and
implementation of energy conservation measures.
03 CMS Energy South America Company
CMS Energy South America Company is a Cayman Islands corporation formed to provide for consolidation of the development expenses
and activity in Argentina and Brazil.
03 CMS Enterprises Development, L.L.C.
CMS Enterprises Development, L.L.C. is a Michigan limited liability company formed to invest in various projects.
03 CMS Gas Transmission Company

CMS Gas Transmission Company is a Michigan corporation organized to engage in the transmission, storage and processing of natural
gas.
04 CMS Energy Investment LLC
CMS Energy Investment LLC is a Delaware limited liability company that acts as a holding company of CMS Energy’s interests in the
Michigan gas transmission assets.
04 CMS Gas Argentina Company
CMS Gas Argentina Company is a Cayman Islands corporation formed to own an equity interest in Transportadora de Gas del Norte S.A.,
an Argentine corporation, which provides natural gas transmission services to the northern and central parts of Argentina.
04 CMS International Ventures, L.L.C. (37.01%) (See Exhibit A for list of subsidiaries)
CMS International Ventures, L.L.C. is a Michigan limited liability company, formed to own, manage and sell certain of CMS Energy’s
international investments.
04 Nitrotec Corporation (50%)
Nitrotec Corporation is a Delaware corporation formed to invest in plants that extract helium from natural gas.
03 CMS Generation Jegurupadu I Limited Duration Company (1%)
CMS Generation Jegurupadu I Limited Duration Company is a Cayman Islands company and formerly was one of the owners of the
company which operates the GVK project, a 235-MW gas- and naphtha-fired independent power generating plant in Jegurupadu, Andhra
Pradesh Province, India.
04 Jegurupadu O&M Company Mauritius (50%)
Jegurupadu O&M Company Mauritius, a Mauritius company, is inactive and in the process of liquidation.
03 CMS Generation Jegurupadu II Limited Duration Company (1%)
CMS Generation Jegurupadu II Limited Duration Company is a Cayman Islands company and formerly was one of the owners of the
03 CMS Generation San Nicolas Company (.1%)

CMS Generation San Nicolas Company is a Michigan corporation which holds interests in certain Argentine assets.
04 Inversora de San Nicolas, S.A. (.1%)
05 Centrales Termicas San Nicolas S.A. (88%)
03 CMS International Ventures, L.L.C. (61.49%) (See Exhibit A for list of subsidiaries)
03 CMS Resource Development Company
CMS Resource Development Company is a Michigan corporation formed to pursue and develop various power sources outside the United
States. (in process of dissolution)
03 HYDRA-CO Enterprises, Inc. (See Exhibit B for list of subsidiaries)
HYDRA-CO Enterprises, Inc. is a New York corporation involved in the management and operation of various power plants. The plants are
fueled by coal, natural gas, waste wood and water .
03 New Generation Co.
New Generation Co. is a Delaware limited liability company which was formed to conduct business activities for CMS Enterprises
Company. (in process of dissolution)
02 CMS Land Company

Address:
One Energy Plaza
CMS Land Company is a Michigan corporation formed to act as a repository for any unused real property formerly owned by Consumers
Energy Company, and hold the same for possible non-utility development.
03 Beeland Group LLC
Beeland Group LLC is a Michigan limited liability company formed to acquire land and other property in order to provide a disposal well for
the Bay Harbor properties.
02 Consumers Energy Company

Address:
One Energy Plaza
The consolidated operations of Consumers Energy Company (“Consumers”) account for the largest share of CMS Energy’s total assets
and income and account for a substantial portion of its revenues. The name, state of organization and nature of business of Consumers’
subsidiaries are described below:
03 CMS Engineering Co.
CMS Engineering Co. is a Michigan corporation engaged in offering design, engineering, project management and related construction
services to natural gas utilities, natural gas exploration and production companies, and other energy businesses.
03 Consumers Campus Holdings, LLC
Consumers Campus Holdings, LLC is a Michigan limited liability company formed for the purpose of being the lessee in the synthetic lease
financing of the new Consumers Energy Company office building located in downtown Jackson, Michigan.
03 Consumers Funding LLC
Consumers Funding LLC is a Delaware limited liability company formed for the purpose of acting as issuer of securitization bonds and
assignee of property transferred by Consumers.
03 Consumers Receivables Funding II, LLC
Consumers Receivables Funding II, LLC is a Delaware limited liability company that buys certain accounts receivable from Consumers
Energy Company and sells them to a third party.
03 ES Services Company
ES Services Company is a Michigan corporation formed for the purpose of offering design, engineering, project management and related
services primarily to electric utilities and generation facilities.
03 Maxey Flats Site IRP, L.L.C. (1.71%)
Maxey Flats Site IRP, L.L.C. is a Virginia limited liability company formed for the purpose of environmental remediation of a former low-level
radioactive waste disposal site.
02 Dearborn Industrial Energy, L.L.C.

Address:
One Energy Plaza
Dearborn Industrial Energy, L.L.C. is a Michigan limited liability company that holds the ownership interest in Dearborn Industrial
Generation, L.L.C.
03 Dearborn Industrial Generation, L.L.C.
Dearborn Industrial Generation, L.L.C. is a Michigan limited liability company engaged in the operation of the Ford/Rouge Cogeneration
Facility in Dearborn, Michigan.
EXHIBIT A
Subsidiaries of CMS International Ventures, L.L.C.

Address:
One Energy Plaza
04 CMS Electric & Gas, L.L.C.
CMS Electric & Gas, L.L.C. is a Michigan limited liability company. CMS International Distribution LLC and CMS Electric and Gas
Company merged in December 2002 to form CMS Electric & Gas, L.L.C.
05 CMS (Barbados), SRL
CMS (Barbados), SRL is a Barbados entity which was formed for the purpose of holding investments in Venezuela.
06 CMS Venezuela, S.A.
CMS Venezuela, S.A. is a Venezuelan corporation formed to operate Sistema Electrico Nueva Esparta C.A. (SENECA).
06 ENELMAR S.A.
ENELMAR S.A. is a Venezuelan corporation formed to hold CMS Electric & Gas, L.L.C.’s interests in the privatized electric system of the
State of Nueva Esparta.
05 CMS Electric and Gas Sucursal (branch) Argentina
CMS Electric and Gas Sucursal (branch) Argentina is an Argentine branch office of CMS Electric & Gas, L.L.C., which provided technical
assistance in generation and distribution companies. (in process of closure)
05 CMS Empreendimentos Ltda (99.99%)
CMS Empreendimentos Ltda, a Brazilian corporation was established as CMS Electric & Gas, L.L.C.’s Rio office in Brazil.
05 CMS Participações e Negócios S/A (99.99%)
CMS Participações e Negócios S/A, a Brazilian corporation formed to hold real estate in Brazil.
04 CMS Generation Jegurupadu I Limited Duration Company (99%)

CMS Generation Jegurupadu I Limited Duration Company is a Cayman Islands company and
formerly was one of the owners of the company which operates the GVK project, a 235-MW gas- and naphtha-fired independent power
generating plant in Jegurupadu, Andhra Pradesh Province, India.
Jegurupadu O&M Company Mauritius, a Mauritius company, is inactive and in the process of liquidation.
04 CMS Generation Jegurupadu II Limited Duration Company (99%)
CMS Generation Jegurupadu II Limited Duration Company is a Cayman Islands company and formerly was one of the owners of the
05 Jegurupadu O&M Company Mauritius (50%) (in process of liquidation)
04 CMS Luxembourg S.a.r.l.
CMS Luxembourg S.a.r.l. is a Luxembourg company which was formed in connection with the former Goldfields pipeline acquisition. (in
process of liquidation)
04 Jegurupadu CMS Generation Company Ltd.
Jegurupadu CMS Generation Company Ltd. is a Mauritius company that is inactive and is in the process of liquidation.
EXHIBIT B
Subsidiaries of HYDRA-CO Enterprises, Inc.

Address:
One Energy Plaza
04 CMS Exeter LLC
CMS Exeter LLC is a Michigan limited liability company formed to facilitate the restructuring of Oxford/CMS Development Limited
Partnership and Exeter Energy Limited Partnership for state tax planning purposes.
05 Exeter Energy Limited Partnership (2% GP)
05 Oxford/CMS Development Limited Partnership (1% GP)
04 CMS Generation Filer City, Inc.
CMS Generation Filer City, Inc. is a Michigan corporation involved as a General Partner in the T.E.S. Filer City Station Limited Partnership,
a Michigan limited partnership that is the owner of the 54 megawatt (net) woodchip- and coal-fired electric generating station in Filer City,
Michigan.
05 T.E.S. Filer City Station Limited Partnership (50%)
04 CMS Generation Filer City Operating LLC
CMS Generation Filer City Operating LLC is a Michigan limited liability company formed to operate a coal and waste wood-fueled power
plant near Filer City, Michigan owned by the T.E.S. Filer City Station Limited Partnership.
04 CMS Generation Genesee Company
CMS Generation Genesee Company is a Michigan corporation involved as a General Partner in the Genesee Power Station Limited
Partnership, a Delaware limited partnership, which owns and operates a 35-megawatt (net) waste wood-fired electric generating facility
located in Genesee County, Michigan.
05 Genesee Power Station Limited Partnership (1%)
06 GPS Newco, L.L.C. (50%)
GPS Newco, L.L.C. is a Kansas limited liability company formed for the purpose of facilitation financing and/or restricting liabilities of
CMS’ equity invested in Genesee Power Station Limited Partnership.
04 CMS Generation Grayling Company

CMS Generation Grayling Company is a Michigan corporation involved as a General Partner in Grayling Generating Station Limited
Partnership, a Michigan limited partnership, that owns a waste wood-fueled power plant in Grayling, Michigan. Grayling Generating Station
Limited Partnership owns GGS Holdings Company, a Michigan corporation, which is a General Partner in AJD Forest Products Limited
Partnership, a Michigan limited partnership, that operates a sawmill adjacent to the Grayling Generating Station and also supplies waste
wood fuel to Grayling Generating Station. Grayling Generating Station Limited Partnership is a Limited Partner in AJD Forest Products
Limited Partnership.
05 Grayling Generating Station Limited Partnership (1%)
06 AJD Forest Products Limited Partnership (49.5% LP)
06 GGS Holdings Company
A Michigan corporation that owns a General Partner interest in AJD Forest Products
Limited Partnership, a Michigan limited partnership.
07 AJD Forest Products Limited Partnership (.5% GP)
05 Grayling Partners Land Development, L.L.C. (1%)
A Michigan limited liability company formed to acquire land near the Grayling facility for potential development of an ash disposal site.
04 CMS Generation Grayling Holdings Company
CMS Generation Grayling Holdings Company is a Michigan corporation involved as a Limited Partner in Grayling Generating Station
Limited Partnership, a Michigan limited partnership. Grayling Generating Station Limited Partnership owns GGS Holdings Company, a
Michigan corporation that owns a General Partner interest in AJD Forest Products Limited Partnership, a Michigan limited partnership.
05 Grayling Generating Station Limited Partnership (49%)
06 AJD Forest Products Limited Partnership (49.5% LP)
06 GGS Holdings Company
07 AJD Forest Products Limited Partnership (.5% GP)
05 Grayling Partners Land Development, L.L.C. (49%)
04 CMS Generation Holdings Company
CMS Generation Holdings Company is a Michigan corporation involved as a limited partner in various partnerships.
05 Genesee Power Station Limited Partnership (48.75%)

06 Genesee Power Station Limited Partnership (.25%)
04 CMS Generation Honey Lake Company
CMS Generation Honey Lake Company is a Michigan corporation with General Partnership and Limited Partnership interests in H L Power
Company, a California limited partnership that uses waste wood and geothermal fluid to generate a 30-megawatt (net) electric generating
station in Lassen County, California. It is also involved as General Partner in Honey Lake Energy I LP, and Honey Lake Energy II LP, both
Michigan limited partnerships formed to own limited partnership interests in H L Power Company.
05 Honey Lake Energy I L.P. (99%)
06 H L Power Company (18.65%)
05 Honey Lake Energy II L.P. (99%)
05 H L Power Company (.5%)
04 CMS Generation Michigan Power L.L.C.
CMS Generation Michigan Power L.L.C. is a Michigan limited liability company formed to own generating units which are to be sited in
Michigan for the purpose of generating power during peak demand periods.
04 CMS Generation Operating Company II, Inc.
CMS Generation Operating Company II, Inc. is a New York corporation formed to operate power plants, primarily in the United States.
05 HCO-Jamaica, Inc.
HCO-Jamaica, Inc. is a New York corporation formed to operate a 60 MW Diesel project in Jamaica.
04 CMS Generation Operating LLC
CMS Generation Operating LLC is a Michigan limited liability company involved in the operation of various power plants throughout the
United States.
04 CMS Generation Recycling Company

CMS Generation Recycling Company is a Michigan corporation that has ownership interest in Mid-Michigan Recycling, L.C. Mid-
Michigan Recycling, L.C. was created to be involved in supplying waste wood fuel for the Genesee Power Station Limited Partnership.
05 Mid-Michigan Recycling, L.C. (50%)
Mid-Michigan Recycling, L.C. is a Michigan limited liability company involved in supplying waste-wood fuel for the Genesee Power
Station Limited Partnership.
04 CMS Prairie State LLC
CMS Prairie State LLC is a Michigan limited liability company formed to hold a membership interest in an entity which would hold an
interest in the Prairie State mine-mouth coal generation project.
04 Craven County Wood Energy Limited Partnership (44.99%)
04 Dearborn Generation Operating, L.L.C.
Dearborn Generation Operating, L.L.C. is a Michigan limited liability company formed to operate the Ford/Rouge Project.
04 Exeter Energy Limited Partnership (50%)
04 HCE-Biopower, Inc.
HCE-Biopower, Inc. is a New York corporation formed to hold partnership interests in various power projects.
05 IPP Investment Partnership (51%)
06 Craven County Wood Energy Limited Partnership (.01%)
04 Honey Lake I L.P. (1%)
04 Honey Lake Energy II L.P. (1%)
04 IPP Investment Partnership (49%)
05 Craven County Wood Energy Limited Partnership (.01%)
04 New Bern Energy Recovery, Inc.
New Bern Energy Recovery, Inc. is a Delaware corporation formed to participate as a General Partner in the Craven County Wood Energy
limited partnership formed to construct,
05 Craven County Wood Energy Limited Partnership (5%)

04 Oxford/CMS Development Limited Partnership (99% LP)
05 Exeter Energy Limited Partnership (48% LP)
04 South India Natural Gas Marketing Company Private Limited (36.94%)
South India Natural Gas Marketing Company Private Limited is a company formed in India and now in the process of liquidation
04 Sterling Wind LLC
Sterling Wind LLC is a Delaware limited liability company formed to own wind power projects in Connecticut.
04 TN LNG & Power Company Private Limited (36.04%)
TN LNG & Power Company Private Limited is a company formed in India and now in the process of liquidation
Exhibit (23)(a)
Consent of Independent Registered Public Accounting Firm
We hereby consent to the incorporation by reference in the Registration Statement on Forms S-8 (No. 333-152800), and S-3 (Nos. 333-52560,
333-153353, 333-155293, 333-119255 and 333-119256) of CMS Energy Corporation of our report dated February 25, 2009 relating to the financial
statements, financial statement schedules and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

Detroit, Michigan
February 25, 2009
Exhibit (23)(b)
We consent to the incorporation by reference in the following Registration Statements and in the related Prospectuses of CMS Energy
Corporation:
(1) Registration Statements (Form S-3 No. 333-153353, No. 333-155293, No. 333-52560, No. 333-119255 and No. 333-119256) of CMS Energy
Corporation;
(2) Registration Statement (Form S-8 No. 333-152800) pertaining to the CMS Energy Corporation Performance Incentive Stock Plan and
Executive Stock Option Plan;
of our report dated February 21, 2007 (except for “Discontinued Operations” in Note 3, as to which the date is February 20, 2008) with respect
to the consolidated financial statements and schedules of CMS Energy Corporation for the year ended December 31, 2006 included in this
Annual Report (Form 10-K) for the year ended December 31, 2008.

Detroit, Michigan
February 23, 2009
Exhibit (23)(c)
We hereby consent to the incorporation by reference in the Registration Statement on Forms S-8 (No. 333-152800) and S-3 (Nos. 333-52560,
333-153353, 333-155293, 333-119255 and 333-119256) of CMS Energy Corporation of our report dated February 19, 2007 relating to the financial
statements of Midland Cogeneration Venture L.P., which appears in this Form 10-K.
Detroit, Michigan
February 25, 2009
Exhibit (23)(d)
We hereby consent to the incorporation by reference in the Registration Statement on Form S-3 (No. 333-153353-03) of Consumers Energy
Company of our report dated February 25, 2009 relating to the financial statements, financial statement schedules and the effectiveness of
internal control over financial reporting, which appears in this Form 10-K.

Detroit, Michigan
February 25, 2009
Exhibit (23)(e)
We consent to the incorporation by reference in the Registration Statement (Form S-3 No. 333-153353-03) of Consumers Energy Company and
in the related Prospectus of our report dated February 21, 2007, with respect to the consolidated financial statements and schedule of
Consumers Energy Company for the year ended December 31, 2006 included in this Annual Report (Form 10-K) for the year ended
December 31, 2008.

Detroit, Michigan
February 23, 2009
Exhibit (23)(f)
We hereby consent to the incorporation by reference in the Registration Statement on Form S-3 (No. 333-153353-03) of Consumers Energy
Company of our report dated February 19, 2007 relating to the financial statements of Midland Cogeneration Venture L.P., which appears in
this Form 10-K.

Detroit, Michigan
February 25, 2009
Exhibit (24)(a)
February 23, 2009

Mr. Thomas J. Webb
Mr. James E. Brunner
Ms. Catherine M. Reynolds
One Energy Plaza
Jackson, MI 49201-2276
CMS Energy Corporation is required to file an Annual Report on Form 10-K for the year ended December 31, 2008 with the Securities and
Exchange Commission within 60 days after the end of the year.
We hereby make, constitute and appoint each of you our true and lawful attorney for each of us and in each of our names, places and steads
to sign and cause to be filed with the Securities and Exchange Commission said Annual Report with any necessary exhibits, and any
amendments thereto that may be required.
Very truly yours,
/s/ K. Whipple /s/ Philip R. Lochner, Jr.

Kenneth Whipple Philip R. Lochner, Jr.
/s/ Merribel S. Ayres /s/ M. T. Monahan

Merribel S. Ayres Michael T. Monahan
/s/ Jon E. Barfield /s/ Joseph F. Paquette, Jr.

Jon E. Barfield Joseph F. Paquette, Jr.
/s/ Richard M. Gabrys /s/ Percy A. Pierre

Richard M. Gabrys Percy A. Pierre
/s/ D. W. Joos /s/ K. L. Way

David W. Joos Kenneth L. Way
/s/ John B. Yasinsky

John B. Yasinsky
Exhibit (24)(b)
February 23, 2009

Mr. Thomas J. Webb
Mr. James E. Brunner
Ms. Catherine M. Reynolds
One Energy Plaza
Jackson, MI 49201-2276
Consumers Energy Company is required to file an Annual Report on Form 10-K for the year ended December 31, 2008 with the Securities and
Exchange Commission within 60 days after the end of the year.
We hereby make, constitute and appoint each of you our true and lawful attorney for each of us and in each of our names, places and steads
to sign and cause to be filed with the Securities and Exchange Commission said Annual Report with any necessary exhibits, and any
amendments thereto that may be required.
Very truly yours,
/s/ K. Whipple /s/ Philip R. Lochner, Jr.

Kenneth Whipple Philip R. Lochner, Jr.
/s/ Merribel S. Ayres /s/ M. T. Monahan

Merribel S. Ayres Michael T. Monahan
/s/ Jon E. Barfield /s/ Joseph F. Paquette, Jr.

Jon E. Barfield Joseph F. Paquette, Jr.
/s/ Richard M. Gabrys /s/ Percy A. Pierre

Richard M. Gabrys Percy A. Pierre
/s/ D. W. Joos /s/ K. L. Way

David W. Joos Kenneth L. Way
/s/ John B. Yasinsky

John B. Yasinsky
Exhibit (31)(a)
CERTIFICATION OF DAVID W. JOOS
I, David W. Joos, certify that:

1. I have reviewed this annual report on Form 10-K 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 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: February 25, 2009 By: /s/ David W. Joos

David W. Joos
President and
Exhibit (31)(b)
CERTIFICATION OF THOMAS J. WEBB
I, Thomas J. Webb, certify that:

1. I have reviewed this annual report on Form 10-K of CMS Energy Corporation;
report;
functions):
and
Dated: February 25, 2009 By /s/ Thomas J. Webb

Thomas J. Webb
Executive Vice President and
Exhibit (31)(c)
CERTIFICATION OF DAVID W. JOOS
I, David W. Joos, certify that:

1. I have reviewed this annual report on Form 10-K of Consumers Energy Company;
report;
functions):
and
Dated: February 25, 2009 By: /s/ David W. Joos

David W. Joos
Exhibit (31)(d)
CERTIFICATION OF THOMAS J. WEBB
I, Thomas J. Webb, certify that:

1. I have reviewed this annual report on Form 10-K of Consumers Energy Company;
report;
functions):
and
Dated: February 25, 2009 By /s/ Thomas J. Webb

Thomas J. Webb
Executive Vice President and
Exhibit (32)(a)
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 Annual Report on Form 10-K of CMS Energy Corporation (the “Company”) for the annual period ended December 31,
2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), David W. Joos, 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 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/ David W. Joos

Name: David W. Joos
Title: President and
Date: February 25, 2009
/s/ Thomas J. Webb

Title: Executive Vice President and
Exhibit (32)(b)
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 Annual Report on Form 10-K of Consumers Energy Company (the “Company”) for the annual period ended
December 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), David W. Joos, as 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 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/ David W. Joos

Name: David W. Joos
Title: Chief Executive Officer
/s/ Thomas J. Webb

Title: Executive Vice President and

CMS ENERGY CORP 10-K (Annual Reports) 2009-02-25

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

1-5611 Consumers Energy Company 38-0442310

CMS Energy Corporation

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ABATE Association of Businesses Advocating Tariff Equity

FIN 47 FASB Interpretation No. 47, “Accounting for Conditional Asset

LS Power Group LS Power Group, a non-affiliated company

Pension Plan The trusteed, non-contributory, defined benefit pension plan of

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Consumers Financial Information

Consumers Electric Utility

Electric Utility Properties

(a) Weighted average fuel costs.

Consumers Gas Utility

Independent Power Production

Energy Resource Management

Natural Gas Transmission

International Energy Distribution

CMS ENERGY AND CONSUMERS REGULATION

Michigan Public Service Commission

Federal Energy Regulatory Commission

CMS ENERGY AND CONSUMERS ENVIRONMENTAL COMPLIANCE

CMS ENERGY AND CONSUMERS COMPETITION

CMS ENERGY EXECUTIVE OFFICERS (as of February 1, 2009)

Nam e Age Position Pe riod

CONSUMERS EXECUTIVE OFFICERS (as of February 1, 2009)

Nam e Age Position Pe riod

ITEM 1A. RISK FACTORS

Unplanned power plant outages may be costly for Consumers.

CMS Energy and Consumers are subject to rate regulation.

ITEM 1B. UNRESOLVED STAFF COMMENTS

ITEM 3. LEGAL PROCEEDINGS

GAS INDEX PRICE REPORTING LITIGATION

QUICKSILVER RESOURCES, INC.

STATE STREET BANK/TEXAS SOUTHERN UNIVERSITY LITIGATION

MARATHON INDEMNITY CLAIM REGARDING F.T. BARR CLAIM

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Issuer Repurchases of Equity Securities

ITEM 6. SELECTED FINANCIAL DATA

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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(CMS ENERGY LOGO)

2008 Consolidated Financial Statements

CMS Energy Corporation

2008 2007 2006 2005 2004

CMS Energy Corporation

FORWARD-LOOKING STATEMENTS AND INFORMATION

Ye ars En de d De ce m be r 31 2008 2007 2006

Ye ars En de d De ce m be r 31 2008 2007 C h an ge 2007 2006 C h an ge

ELECTRIC UTILITY RESULTS OF OPERATIONS

Ye ars En de d De ce m be r 31 2008 2007 C h an ge 2007 2006 C h an ge

GAS UTILITY RESULTS OF OPERATIONS

Ye ars En de d De ce m be r 31 2008 2007 C h an ge 2007 2006 C h an ge

ENTERPRISES RESULTS OF OPERATIONS

CORPORATE INTEREST AND OTHER NET EXPENSES

CRITICAL ACCOUNTING POLICIES

USE OF ESTIMATES AND ASSUMPTIONS

ACCOUNTING FOR THE EFFECTS OF INDUSTRY REGULATION

FINANCIAL AND DERIVATIVE INSTRUMENTS AND MARKET RISK INFORMATION

ACCOUNTING FOR ASSET RETIREMENT OBLIGATIONS

CAPITAL RESOURCES AND LIQUIDITY