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<div> <div style="font-family: 'Times New Roman',Times,serif;"> <div style="margin-top: 12pt; font-size: 10pt;" align="left"><b>3: CONTINGENCIES AND COMMITMENTS</b></div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><font style="font-variant: small-caps;" class="_mt"><b>CMS ENERGY CONTINGENCIES</b></font></div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><b>Gas Index Price Reporting Investigation: </b>In 2002, 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 cooperated with an investigation by the DOJ regarding this matter. Although CMS Energy has not received any formal notification that the DOJ has completed its investigation, the DOJ's last request for information occurred in 2003, and CMS Energy completed its response to this request in 2004. CMS Energy is unable to predict the outcome of the DOJ investigation and what effect, if any, the investigation will have on CMS Energy. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><b>Gas Index Price Reporting Litigation: </b>CMS Energy, along with CMS MST, CMS Field Services, Cantera Natural Gas, Inc., and Cantera Gas Company, are named as defendants in various class action and individual lawsuits arising as a result of alleged inaccurate natural gas price reporting to publications that report trade information. Allegations include manipulation of NYMEX natural gas futures and options prices, price-fixing conspiracies, restraint of trade, and artificial inflation of natural gas retail prices in California, Colorado, Kansas, Missouri, Tennessee, and Wisconsin. The following provides more detail on these proceedings: </div> <div style="margin-top: 6pt;"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="2%"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>In 2005, CMS MST was served with a summons and complaint that 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. The complaint alleges that during the putative class period, January 1, 2000 through October 31, 2002, the defendants engaged in a scheme to violate the Kansas Restraint of Trade Act. The plaintiffs, who allege they purchased natural gas from the defendants and others for their facilities, are seeking statutory full consideration damages consisting of the full consideration paid by plaintiffs for natural gas.</td></tr> <tr><td style="font-size: 6pt;"> </td></tr> <tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="2%"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>In 2007, a class action complaint, Heartland Regional Medical Center, et al. v. Oneok, Inc. et al., was filed in Missouri state court 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.</td></tr> <tr><td style="font-size: 6pt;"> </td></tr> <tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="2%"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>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 the Colorado Antitrust Act of 1992 in connection with their natural gas price reporting activities. Plaintiffs are seeking full refund damages.</td></tr></table></div></div> <div style="font-family: 'Times New Roman',Times,serif;"> <div style="margin-top: 6pt;"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="2%"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>A class action complaint, Arandell Corp., et al. v. XCEL Energy Inc., et al., was filed in 2006 in Wisconsin state court on behalf of Wisconsin commercial entities that purchased natural gas between January 1, 2000 and October 31, 2002. The defendants, including CMS Energy, CMS ERM, and Cantera Gas Company, are alleged to have violated Wisconsin's antitrust statute. The plaintiffs are seeking full consideration damages, plus exemplary damages, and attorneys' fees. After dismissal on jurisdictional grounds in 2009, plaintiffs filed a new Arandell case in Michigan. The CMS Energy defendants filed a motion to dismiss the new Michigan case on statute-of-limitations grounds and that motion remains pending.</td></tr> <tr><td style="font-size: 6pt;"> </td></tr> <tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="2%"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>Another class action complaint, Newpage Wisconsin System v. CMS ERM, CMS Energy, and Cantera Gas Company, was filed in 2009 in circuit court in Wood County, Wisconsin, against CMS Energy defendants and 19 other non-CMS Energy companies. The plaintiff is seeking full consideration damages, treble damages, costs, interest, and attorneys' fees.</td></tr> <tr><td style="font-size: 6pt;"> </td></tr> <tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="2%"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>In 2005, J.P. Morgan Trust Company, in its capacity as Trustee of the FLI Liquidating Trust, filed an action in Kansas state court 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. The plaintiff is seeking statutory full consideration damages for its purchases of natural gas between January 1, 2000 and December 31, 2001. This case is part of the MDL proceeding, but is not a class action.</td></tr></table></div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">After removal to federal court, the Learjet, Heartland, Breckenridge, both Arandell cases, Newpage, and J.P. Morgan cases were transferred to the MDL case. CMS Energy was dismissed from the Learjet, Heartland, and J.P. Morgan cases in 2009, but other CMS Energy defendants remain parties. All CMS Energy defendants were dismissed from the Breckenridge case in 2009. It is expected that the plaintiffs in this case will appeal this decision after all claims against defendants have been dismissed. At this time, there is no pending appeal. In June 2010, CMS Energy and Cantera Gas Company were dismissed from the Newpage case; the Arandell (Wisconsin) case was reinstated against CMS ERM; and the Arandell (Wisconsin) case was consolidated with the Newpage case. These two consolidated cases remain pending only against CMS ERM. Pending before the court in all of the MDL cases are the defendants' renewed motions for summary judgment based on FERC preemption and the plaintiffs' motion for leave to amend their complaint to add a federal Sherman Act antitrust claim. In all but the J.P. Morgan case, there are also pending plaintiffs' motions for class certification. These motions are not yet decided. </div> <div style="margin-top: 6pt;"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="2%"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>In 2005, 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. The defendants included CMS Energy, CMS MST, and CMS Field Services. In April 2010, the Tennessee Supreme Court dismissed all claims against all defendants.</td></tr> <tr><td style="font-size: 6pt;"> </td></tr> <tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="2%"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>In 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., alleging violation of the Missouri antitrust law, fraud, and unjust enrichment. In 2009, all defendants were dismissed for lack of standing. The Missouri Court of Appeals affirmed the dismissals in late 2009. In February 2010, the plaintiff filed an application for leave to appeal with the Missouri Supreme Court, seeking to overturn the Missouri Court of Appeals decision. In April 2010, the Missouri Supreme Court granted review to hear the case. Oral argument on the appeal is scheduled for September 2010 in the Missouri Supreme Court.</td></tr></table></div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">These cases involve complex facts, a large number of similarly situated defendants with different factual positions, and multiple jurisdictions. Presently, any estimate of liability would be highly speculative; the amount of CMS Energy's possible loss would be based on widely varying models previously untested in this context. Defenses are being pursued vigorously, which could result in the dismissal of the cases completely, but CMS Energy is unable to predict the outcome of these matters. If the outcome is unfavorable, these cases could have a material adverse impact on CMS Energy's financial condition and results of operations. </div></div> <div style="font-family: 'Times New Roman',Times,serif;"> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><b>Bay Harbor: </b>As part of the development of Bay Harbor by certain subsidiaries of CMS Energy, and under an agreement with the MDNRE, 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 constructing a leachate collection system at an identified seep. Leachate is produced when water enters into the CKD piles. In 2002, CMS Energy sold its interest in Bay Harbor, but retained its obligations under environmental indemnities entered into at the start of the project. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">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 contamination issues at Bay Harbor. Collection systems required under the plan have been installed and effectiveness monitoring of the systems at the shoreline is ongoing. CMS Land, CMS Capital, and the EPA agreed upon augmentation measures to address areas where pH measurements were not satisfactory. The augmentation measures were implemented and completed in 2009. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">In 2008, the MDNRE and the EPA granted permits for CMS Land or its affiliate, Beeland, to construct and operate a deep injection well in Antrim County, Michigan, to dispose of leachate from Bay Harbor. Certain environmental groups, a local township, and a local county filed lawsuits appealing the permits. The legal proceeding was stayed in 2009 and can be renewed by either party at any time. CMS Land and CMS Capital continue to seek a lower cost long-term water disposal option including using deep injection wells, permitted discharge to surface water, and disposal with a local municipal water treatment facility. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">Various claims have been brought against CMS Land or its affiliates, including CMS Energy, alleging environmental damage to property, loss of property value, insufficient disclosure of environmental matters, breach of agreement relating to access, or other matters. There is presently one lawsuit (Jankowski v. CMS Energy, CMS Capital, and CMS Land) pending that was filed in June 2010 in Emmet County Circuit Court in Michigan relating to such subjects. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">CMS Land and CMS Capital, the MDNRE, the EPA, and other parties are negotiating the long-term remedy for the Bay Harbor sites, including: </div> <div style="margin-top: 6pt;"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="2%"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>the disposal of leachate;</td></tr> <tr><td style="font-size: 6pt;"> </td></tr> <tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="2%"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>the capping and excavation of CKD;</td></tr> <tr><td style="font-size: 6pt;"> </td></tr> <tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="2%"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>the location and design of collection lines and upstream diversion of water;</td></tr> <tr><td style="font-size: 6pt;"> </td></tr> <tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="2%"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>potential flow of leachate below the collection system;</td></tr> <tr><td style="font-size: 6pt;"> </td></tr> <tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="2%"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>applicable criteria for various substances such as mercury; and</td></tr> <tr><td style="font-size: 6pt;"> </td></tr> <tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="2%"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>other matters that are likely to affect the scope of remedial work that CMS Land and CMS Capital may be obligated to undertake.</td></tr></table></div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">CMS Energy has recorded a cumulative charge related to Bay Harbor of $180 million. At June 30, 2010, CMS Energy had a recorded liability of $70 million for its remaining obligations. CMS Energy calculated this liability based on discounted projected costs, using a discount rate of 4.32 percent and an inflation rate of one percent on annual operating and maintenance costs. CMS Energy based the discount rate on the interest rate for 30-year U.S. Treasury securities on June 30, 2009. The undiscounted amount of the remaining obligation is $91 million. CMS Energy expects to pay $12 million during the remainder of 2010, $9 million in 2011, $7 million in 2012, $5 million in 2013, and the remaining amount thereafter on long-term liquid disposal and operating and maintenance costs. </div></div> <div style="font-family: 'Times New Roman',Times,serif;"> <div style="margin-top: 6pt; font-size: 10pt;" align="left">CMS Energy's estimate of remedial action costs and the timing of expenditures could change if there are additional major changes in circumstances or assumptions, including but not limited to: </div> <div style="margin-top: 6pt;"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="2%"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>inability to secure a suitable long-term water disposal option at a reasonable cost;</td></tr> <tr><td style="font-size: 6pt;"> </td></tr> <tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="2%"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>further increases in water disposal costs under existing options;</td></tr> <tr><td style="font-size: 6pt;"> </td></tr> <tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="2%"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>delays in developing a long-term water disposal option;</td></tr> <tr><td style="font-size: 6pt;"> </td></tr> <tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="2%"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>an increase in the number of contamination areas;</td></tr> <tr><td style="font-size: 6pt;"> </td></tr> <tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="2%"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>different remediation techniques;</td></tr> <tr><td style="font-size: 6pt;"> </td></tr> <tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="2%"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>the nature and extent of contamination;</td></tr> <tr><td style="font-size: 6pt;"> </td></tr> <tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="2%"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>continued inability to reach agreement with the MDNRE or the EPA over required remedial actions;</td></tr> <tr><td style="font-size: 6pt;"> </td></tr> <tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="2%"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>delays in the receipt of requested permits;</td></tr> <tr><td style="font-size: 6pt;"> </td></tr> <tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="2%"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>delays following the receipt of any requested permits due to legal appeals of third parties;</td></tr> <tr><td style="font-size: 6pt;"> </td></tr> <tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="2%"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>additional or new legal or regulatory requirements; or</td></tr> <tr><td style="font-size: 6pt;"> </td></tr> <tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="2%"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>new or different landowner claims.</td></tr></table></div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">Depending on the size of any indemnity 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 affect CMS Energy's financial results. CMS Energy cannot predict the financial impact or outcome of this matter. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><b>State Street Bank and TSU Litigation: </b>In 2002, State Street Bank sued CMS Viron in the District Court of Harris County, Texas, claiming primarily a breach of representations and warranties and seeking $9 million plus interest from CMS Viron. During the same year, CMS Viron filed a counterclaim, as well as third-party actions against TSU, Academic Capital Group, Inc., and Academic Services, Inc. for breach of contract and fiduciary duties and conversion. In December 2009, the jury rendered a verdict in favor of CMS Viron and a final judgment was rendered on January 15, 2010 awarding CMS Viron $8 million plus prejudgment interest from TSU and another $3 million plus prejudgment interest and attorneys' fees against Academic Capital Group, Inc. and Academic Services, Inc., collectively. This verdict is affected by an agreement under which CMS Viron agreed to pay $3 million to State Street Bank regardless of the verdict. In addition, State Street Bank agreed to assign certain rights of indemnification under a lease agreement to CMS Viron in return for a two-thirds stake in any ultimate recovery from TSU. At June 30, 2010, CMS Energy had a recorded liability of $3 million for its potential obligation related to this matter. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><b>Equatorial Guinea Tax Claim: </b>In 2004, CMS Energy received a request for indemnification from the purchaser of CMS Oil and Gas. The indemnity claim relates to the sale of CMS Energy's oil, gas, and methanol projects in Equatorial Guinea and the claim of the government of Equatorial Guinea that CMS Energy owes $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. CMS Energy cannot predict the financial impact or outcome of this matter. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><b>Marathon Indemnity Claim regarding F.T. Barr Claim: </b>In 2001, F.T. Barr 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. In 2004, all parties signed a confidential settlement agreement that resolved claims between Barr and the defendants. The CMS Energy defendants reserved all defenses to any indemnity claim relating to the settlement. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">In April 2009, certain Marathon entities filed a case in the U.S. District Court for the Southern District of Texas against CMS Enterprises for indemnification in connection with this matter. CMS Energy entities dispute Marathon's claim, and are opposing it vigorously. CMS Energy entities also 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. </div></div> <div style="font-family: 'Times New Roman',Times,serif;"> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><b>Former NOMECO Employees' Litigation: </b>In June 2010, eight former employees of NOMECO filed a lawsuit in Ingham County Circuit Court in Michigan against CMS Energy and three Marathon entities (Richard Rulewicz, Trustee of the Richard Rulewicz Revocable Living Trust, et al. v. CMS Energy) alleging underpayment of the former employees' overriding royalty payments related to the Alba field production in Equatorial Guinea, to which the plaintiffs claim to be entitled. CMS Oil and Gas sold its interests in the Alba field to Marathon in 2002. CMS Energy cannot predict the financial impact or outcome of this matter. CMS Energy believes that it may be entitled to full or partial indemnification from Marathon for monetary damages that may arise from this lawsuit. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><font style="font-variant: small-caps;" class="_mt"><b>CONSUMERS' ELECTRIC UTILITY CONTINGENCIES</b></font> </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><b>Electric Environmental Matters: </b>Consumers' operations are subject to environmental laws and regulations. Generally, Consumers has been able to recover, in customer rates, the costs to operate its facilities in compliance with these laws and regulations. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><i>Cleanup and Solid Waste: </i>Consumers expects to incur remediation and other response activity costs at a number of sites under NREPA. Consumers believes that these costs should be recoverable in rates, but cannot guarantee that outcome. At June 30, 2010, Consumers had a recorded liability of $1 million, its estimated probable NREPA liability. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">Consumers is a potentially responsible party at a number of contaminated sites administered under the Superfund. Superfund liability is joint and several. In addition to Consumers, many other creditworthy parties with substantial assets are potentially responsible with respect to the individual sites. Based on its experience, Consumers estimates that its share of the total liability for known Superfund sites will be between $2 million and $8 million. Various factors, including the number of potentially responsible parties involved with each site, affect Consumers' share of the total liability. At June 30, 2010, Consumers had a recorded liability of $2 million, the minimum amount in the range of its estimated probable Superfund liability. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">The timing of payments related to Consumers' remediation and other response activities at its Superfund and NREPA sites is uncertain. Consumers periodically reviews these cost 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 its estimates of NREPA and Superfund liability. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><i>Ludington PCB: </i>In 1998, 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 take action with respect to the remaining materials, Consumers has had several communications with the EPA. Consumers is not able to predict when the EPA will issue a final ruling and cannot predict the financial impact or outcome of this matter. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><i>Electric Utility Plant Air Permit Issues and Notices of Violation: </i>In 2007, Consumers received an NOV/FOV from the EPA alleging that fourteen utility boilers exceeded the visible emission limits in their associated air permits. Consumers has responded formally to the NOV/FOV denying the allegations. In addition, in 2008, Consumers received an NOV for three of its coal-fueled facilities alleging, among other things, violations of NSR PSD regulations relating to ten projects from 1986 to 1998 allegedly subject to NSR review. The EPA has alleged that some utilities have classified incorrectly major plant modifications as RMRR rather than seeking permits from the EPA or state regulatory agencies to modify their plants. Consumers responded to the information requests from the EPA on this subject in the past. Consumers believes that it has properly interpreted the requirements of RMRR. </div></div> <div style="font-family: 'Times New Roman',Times,serif;"> <div style="margin-top: 6pt; font-size: 10pt;" align="left">Consumers is engaged in discussions with the EPA on all of these matters. Depending upon the outcome of these discussions, the EPA could bring legal action against Consumers and/or Consumers could be required to install additional pollution control equipment at some or all of its coal-fueled electric generating plants, surrender emission allowances, engage in Supplemental Environmental Programs, and/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 these matters. Although the potential costs relating to these matters could be material and cost recovery cannot be reasonably estimated, Consumers expects that it would be able to recover some or all of the costs in rates, consistent with the recovery of other reasonable costs of complying with environmental laws and regulations. </div> <div style="margin-top: 12pt; font-size: 10pt;" align="left"><b>Nuclear Matters:</b> </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><i>DOE Litigation: </i>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 Consumers and other utilities participated, has not been successful in producing more specific relief for the DOE's failure to accept the spent nuclear fuel. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">A number of court decisions support the right of utilities to pursue damage claims in the U.S. Court of Claims against the DOE for failure to take delivery of spent nuclear fuel. Consumers filed a complaint in 2002. If Consumers' litigation against the DOE is successful, Consumers plans to use any recoveries as reimbursement for the incurred costs of spent nuclear fuel storage during Consumers' ownership of Palisades and Big Rock. Consumers 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 Consumers' ownership of Palisades and Big Rock. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><i>Nuclear Fuel Disposal Cost: </i>Consumers has a recorded liability of $163 million for amounts it collected from customers before 1983 to fund the disposal of spent nuclear fuel. This amount, which includes interest of $119 million, is payable to the DOE when it begins to accept delivery of spent nuclear fuel. In conjunction with the sale of Palisades and the Big Rock ISFSI in 2007, Consumers retained this obligation and provided a letter of credit to Entergy as security for this obligation. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><font style="font-variant: small-caps;" class="_mt"><b>CONSUMERS' GAS UTILITY CONTINGENCIES</b></font> </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><b>Gas Environmental Matters: </b>Consumers expects to incur remediation and other response activity costs at a number of sites under the NREPA. These sites include 23 former MGP facilities. Consumers operated the facilities on these sites for some part of their operating lives. For some of these sites, Consumers has no present ownership interest or may own only a portion of the original site. At June 30, 2010, Consumers estimated its undiscounted remaining remediation and other response activity costs to be between $33 million and $48 million. Generally, Consumers has been able to recover most of its costs to date through proceeds from insurance settlements and customer rates. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">At June 30, 2010, Consumers had a recorded liability of $33 million and a regulatory asset of $61 million that included $28 million of deferred MGP expenditures. The timing of payments related to the remediation and other response activity at Consumers' former MGP sites is uncertain. Consumers expects its remediation and other response activity costs to average $6 million annually over the next five years. Consumers periodically reviews these cost estimates. Any significant change in the underlying assumptions, such as an increase in the number of sites, changes in remediation techniques, or legal and regulatory requirements, could affect Consumers' estimates of annual response activity costs and the MGP liability. </div></div> <div style="font-family: 'Times New Roman',Times,serif;"> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><font style="font-variant: small-caps;" class="_mt"><b> </b></font> </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><font style="font-variant: small-caps;" class="_mt"><b>CONSUMERS' OTHER CONTINGENCIES</b></font> </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><b>Michigan Sales/Use Tax</b>: Consumers was audited recently by the State of Michigan and assessed $35 million in additional sales and use tax for the tax years 1997 through 2004. This assessment, which comprises tax and interest, relates to the denial of an industrial processing exemption from sales and use tax on certain of Consumers' equipment and supply purchases. Consumers will contest the assessment in the Michigan Court of Claims. To do so, it must first pay the assessment so that a filing can be made in the Michigan Court of Claims. At June 30, 2010, Consumers had a recorded liability of $35 million related to this matter. </div> <div style="margin-top: 12pt; font-size: 10pt;" align="left"><b>GUARANTEES</b> </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">The following table describes CMS Energy's guarantees at June 30, 2010: </div> <div align="center"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr valign="bottom"><td width="52%"> </td> <td width="5%"> </td> <td width="7%"> </td> <td width="5%"> </td> <td width="7%"> </td> <td width="5%"> </td> <td width="7%"> </td> <td width="5%"> </td> <td width="7%"> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td style="border-bottom: #000000 1px solid;" colspan="9" nowrap="nowrap" align="right">In Millions</td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td nowrap="nowrap" align="center">Issue</td> <td> </td> <td nowrap="nowrap" align="left">Expiration</td> <td> </td> <td nowrap="nowrap" align="center">Maximum</td> <td> </td> <td nowrap="nowrap" align="center">Carrying</td></tr> <tr style="font-size: 8pt;" valign="bottom"><td nowrap="nowrap" align="left">Guarantee Description</td> <td> </td> <td nowrap="nowrap" align="center">Date</td> <td> </td> <td nowrap="nowrap" align="left">Date</td> <td> </td> <td nowrap="nowrap" align="center">Obligation</td> <td> </td> <td nowrap="nowrap" align="center">Amount</td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 1px solid;" colspan="9" align="left"> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Indemnity obligations from asset sales and other agreements</div></td> <td> </td> <td valign="top" align="left">Various</td> <td> </td> <td valign="top" nowrap="nowrap" align="left">Various through</td> <td> </td> <td valign="bottom" align="center">$845 (a)</td> <td> </td> <td valign="bottom" align="center">$12</td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"> </div></td> <td> </td> <td valign="top" align="left"> </td> <td> </td> <td valign="top" align="left">June 2022</td> <td> </td> <td valign="bottom" align="center"> </td> <td> </td> <td valign="bottom" align="center"> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"> </div></td> <td> </td> <td valign="top" align="left"> </td> <td> </td> <td valign="top" align="left"> </td> <td> </td> <td valign="bottom" align="center"> </td> <td> </td> <td valign="bottom" align="center"> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Guarantees and put options (b)</div></td> <td> </td> <td valign="top" align="left">Various</td> <td> </td> <td valign="top" align="left">Various through</td> <td> </td> <td valign="bottom" align="center">36</td> <td> </td> <td valign="bottom" align="center">     1</td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"> </div></td> <td> </td> <td valign="top" align="left"> </td> <td> </td> <td valign="top" align="left">December 2011</td> <td> </td> <td valign="bottom" align="center"> </td> <td> </td> <td valign="bottom" align="center"> </td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 3px double;" colspan="9" align="left"> </td></tr></table></div> <div style="margin-top: 3pt;"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td width="3%"> </td> <td width="1%"> </td> <td width="96"> </td></tr> <tr valign="top"><td nowrap="nowrap" align="left">(a)</td> <td> </td> <td>The majority of this amount arises from stock and asset sales agreements under which CMS Energy or a subsidiary of CMS Energy, other than Consumers, indemnified the purchaser for losses resulting from various matters, including claims related to tax disputes, claims related to PPAs, and defects in title to the assets or stock sold to the purchaser by CMS Energy subsidiaries. Except for items described elsewhere in this Note, CMS Energy believes the likelihood of material loss to be remote for the indemnity obligations not recorded as liabilities.</td></tr> <tr style="font-size: 3pt;"><td> </td></tr> <tr valign="top"><td nowrap="nowrap" align="left">(b)</td> <td> </td> <td>At June 30, 2010, the carrying amount of CMS Land's put option agreements with certain Bay Harbor property owners was $1 million. If CMS Land is required to purchase a Bay Harbor property under a put option agreement, it may sell the property to recover the amount paid under the put option agreement.</td></tr></table></div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">At June 30, 2010, the maximum obligation and carrying amounts for Consumers' guarantees were less than $1 million. </div></div> <div style="font-family: 'Times New Roman',Times,serif;"> <div style="margin-top: 6pt; font-size: 10pt;" align="left"> </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">The following table provides additional information regarding CMS Energy's guarantees: </div> <div align="center"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr valign="bottom"><td width="35%"> </td> <td width="2%"> </td> <td width="35%"> </td> <td width="2%"> </td> <td width="35%"> </td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 1px solid;" valign="top" colspan="5" align="left"> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="left">Events That Would Require</td></tr> <tr style="font-size: 8pt;" valign="bottom"><td nowrap="nowrap" align="left">Guarantee Description</td> <td> </td> <td nowrap="nowrap" align="left">How Guarantee Arose</td> <td> </td> <td nowrap="nowrap" align="left">Performance</td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 1px solid;" valign="top" colspan="5" align="left"> </td></tr> <tr valign="bottom"><td valign="top"> <div style="text-indent: 0px; margin-left: 0px;">Indemnity obligations from asset sales and other agreements </div></td> <td> </td> <td valign="top" align="left">Stock and asset sales agreements </td> <td> </td> <td valign="top" align="left">Findings of misrepresentation, breach of warranties, tax claims, and other specific events or circumstances</td></tr> <tr valign="bottom"><td valign="top"> <div style="text-indent: 0px; margin-left: 0px;"> </div></td> <td> </td> <td valign="top" align="left"> </td> <td> </td> <td valign="top" align="left"> </td></tr> <tr valign="bottom"><td valign="top"> <div style="text-indent: 0px; margin-left: 0px;">Surety bonds and other indemnity obligations </div></td> <td> </td> <td valign="top" align="left">Normal operating activity, permits and licenses </td> <td> </td> <td valign="top" align="left">Nonperformance</td></tr> <tr valign="bottom"><td valign="top"> <div style="text-indent: 0px; margin-left: 0px;"> </div></td> <td> </td> <td valign="top" align="left"> </td> <td> </td> <td valign="top" align="left"> </td></tr> <tr valign="bottom"><td valign="top"> <div style="text-indent: 0px; margin-left: 0px;">Guarantees and put options </div></td> <td> </td> <td valign="top" align="left">Normal operating activity </td> <td> </td> <td valign="top" align="left">Nonperformance or non-payment by a subsidiary under a related contract </td></tr> <tr valign="bottom"><td valign="top"> <div style="text-indent: 0px; margin-left: 0px;"> </div></td> <td> </td> <td valign="top" align="left"> </td> <td> </td> <td valign="top" align="left"> </td></tr> <tr valign="bottom"><td valign="top"> <div style="text-indent: 0px; margin-left: 0px;"> </div></td> <td> </td> <td valign="top" align="left">Bay Harbor remediation efforts</td> <td> </td> <td valign="top" align="left">Owners exercising put options requiring CMS Land to purchase property</td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 3px double;" valign="top" colspan="5" align="left"> </td></tr></table></div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">CMS Energy, Consumers, and certain other subsidiaries of CMS Energy also enter into various agreements containing tax and other indemnity provisions for which they are unable to estimate the maximum potential obligation. These factors include unspecified exposure under certain agreements. CMS Energy and Consumers consider the likelihood that they would be required to perform or incur substantial losses related to these indemnities to be remote. </div> <div style="margin-top: 12pt; font-size: 10pt;" align="left"><b>OTHER CONTINGENCIES</b> </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">In addition to the matters disclosed in this Note and Note 4, Utility Rate Matters, there are certain other lawsuits and administrative proceedings before various courts and governmental agencies arising in the ordinary course of business to which CMS Energy, Consumers, and certain other subsidiaries of CMS Energy are parties. These other lawsuits and proceedings may involve personal injury, property damage, contracts, environmental issues, federal and state taxes, rates, licensing, and other matters. Further, CMS Energy and Consumers occasionally self-report certain regulatory non-compliance matters that may or may not eventually result in administrative proceedings. CMS Energy and Consumers believe that the outcome of any one of these proceedings will not have a material adverse effect on their consolidated results of operations, financial position, or cash flows. </div></div> </div>

0.25

0.125

0.3

0.15

350000000

125000000

350000000

125000000

227900000

84100000

228300000

84100000

2000000

841000000

2000000

841000000

152000000

175000000

83000000

75000000

172000000

193000000

83000000

87000000

506000000

505000000

643000000

571000000

564000000

282000000

280000000

592000000

587000000

314000000

310000000

694000000

365000000

653000000

61000000

<div> <div style="font-family: 'Times New Roman',Times,serif;"> <div style="margin-top: 12pt; font-size: 10pt;" align="left"><b>5: FINANCINGS</b> </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">The following is a summary of significant long-term debt transactions during the six months ended June 30, 2010: </div> <div align="center"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr valign="bottom"><td width="52%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 1px solid;" valign="top" colspan="17" align="left"> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Principal</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Interest</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center"> </td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center"> </td> <td> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">(in millions)</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Rate</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Issue/Retirement Date</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Maturity Date</td> <td> </td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 1px solid;" colspan="17" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"><font style="font-variant: small-caps;" class="_mt"><b>Debt Issuances:</b></font></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"><font style="font-variant: small-caps;" class="_mt"><b>CMS Energy</b></font></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Senior notes</div></td> <td> </td> <td align="left">$</td> <td align="right">300</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">6.25</td> <td nowrap="nowrap">%</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">January 2010</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">February 2020</td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 3px double;" colspan="17" align="left"> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"><font style="font-variant: small-caps;" class="_mt"><b>Debt Retirements:</b></font></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"><font style="font-variant: small-caps;" class="_mt"><b>Consumers</b></font></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">FMBs</div></td> <td> </td> <td align="left">$</td> <td align="right">250</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">4.00</td> <td nowrap="nowrap">%</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">May 2010</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">May 2010</td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Tax-exempt pollution control revenue bonds</div></td> <td> </td> <td> </td> <td align="right">58</td> <td> </td> <td> </td> <td colspan="3" align="center">Various</td> <td> </td> <td colspan="3" align="center">June 2010</td> <td> </td> <td colspan="3" align="center">June 2010</td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 3px double;" colspan="17" align="left"> </td></tr></table></div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">In April 2010, Consumers executed a bond purchase agreement whereby Consumers will issue, in a September 2010 private placement, $250 million of 5.30 percent FMBs due September 2022 and $50 million of 6.17 percent FMBs due September 2040. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><b>Revolving Credit Facilities: </b>The following secured revolving credit facilities with banks were available at June 30, 2010: </div> <div align="center"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr valign="bottom"><td width="40%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td style="border-bottom: #000000 1px solid;" colspan="20" nowrap="nowrap" align="right">In Millions</td> <td> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Letters of</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center"> </td> <td> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Amount of</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Amount</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Credit</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Amount</td> <td> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td nowrap="nowrap" align="left">Company</td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Expiration Date</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Facility</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Borrowed</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Outstanding</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Available</td> <td> </td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 1px solid;" colspan="21" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">CMS Energy (a)</div></td> <td> </td> <td colspan="3" align="center">April 2, 2012</td> <td> </td> <td align="left">$</td> <td align="right">550</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">3</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">547</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Consumers</div></td> <td> </td> <td colspan="3" align="center">March 30, 2012</td> <td> </td> <td> </td> <td align="right">500</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">335</td> <td> </td> <td> </td> <td> </td> <td align="right">165</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Consumers (b)</div></td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">November 30, 2010</td> <td> </td> <td> </td> <td align="right">30</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">30</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Consumers</div></td> <td> </td> <td colspan="3" align="center">August 17, 2010</td> <td> </td> <td> </td> <td align="right">150</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">150</td> <td> </td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 3px double;" colspan="21" align="left"> </td></tr></table></div> <div style="margin-top: 3pt;"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td width="3%"> </td> <td width="1%"> </td> <td width="96"> </td></tr> <tr valign="top"><td nowrap="nowrap" align="left">(a)</td> <td> </td> <td>CMS Energy's average borrowings during the six months ended June 30, 2010, totaled $2 million, with a weighted-average annual interest rate of 1.0 percent, at LIBOR plus 0.75 percent.</td></tr> <tr style="font-size: 3pt;"><td> </td></tr> <tr valign="top"><td nowrap="nowrap" align="left">(b)</td> <td> </td> <td>Secured revolving letter of credit facility.</td></tr></table></div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><b>Short-term Borrowings: </b>Under Consumers' revolving accounts receivable sales program, Consumers may transfer up to $250 million of accounts receivable, subject to certain eligibility requirements. </div></div> <div style="font-family: 'Times New Roman',Times,serif;"> <div style="margin-top: 6pt; font-size: 10pt;" align="left">Effective January 1, 2010, transactions entered into under this program are accounted for as secured borrowings rather than as sales. For additional details, see Note 1, New Accounting Standards. At June 30, 2010, $250 million of accounts receivable were eligible for transfer, and no accounts receivable had been transferred under the program. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">Consumers' average short-term borrowings during the six months ended June 30, 2010, totaled $1 million, with a weighted average annual interest rate of 0.2 percent. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><b>Contingently Convertible Securities: </b>At June 30, 2010, the significant terms of CMS Energy's contingently convertible securities were as follows: </div> <div align="center"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr valign="bottom"><td width="52%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 1px solid;" valign="top" colspan="17" align="left"> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Outstanding</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Adjusted</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Adjusted</td> <td> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td nowrap="nowrap" align="left">Security</td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Maturity</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">(In Millions)</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Conversion Price</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Trigger Price</td> <td> </td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 1px solid;" colspan="17" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">4.50% preferred stock (a)</div></td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">239</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">8.96</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">10.75</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">3.375% senior notes (a)</div></td> <td> </td> <td> </td> <td align="right">2023</td> <td> </td> <td> </td> <td> </td> <td align="right">139</td> <td> </td> <td> </td> <td> </td> <td align="right">9.67</td> <td> </td> <td> </td> <td> </td> <td align="right">11.60</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">2.875% senior notes</div></td> <td> </td> <td> </td> <td align="right">2024</td> <td> </td> <td> </td> <td> </td> <td align="right">288</td> <td> </td> <td> </td> <td> </td> <td align="right">13.36</td> <td> </td> <td> </td> <td> </td> <td align="right">16.03</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">5.50% senior notes</div></td> <td> </td> <td> </td> <td align="right">2029</td> <td> </td> <td> </td> <td> </td> <td align="right">173</td> <td> </td> <td> </td> <td> </td> <td align="right">14.46</td> <td> </td> <td> </td> <td> </td> <td align="right">18.80</td> <td> </td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 3px double;" colspan="17" align="left"> </td></tr></table></div> <div style="margin-top: 3pt;"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td width="3%"> </td> <td width="1%"> </td> <td width="96"> </td></tr> <tr valign="top"><td nowrap="nowrap" align="left">(a)</td> <td> </td> <td>During 20 of the last 30 trading days ended June 30, 2010, the adjusted trigger prices were met for these securities and, as a result, the securities are convertible at the option of the security holders for the three months ending September 30, 2010.</td></tr></table></div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">During the three months ended June 30, 2010, no other trigger price contingencies were met that would have allowed the holders of the convertible securities to convert the securities to cash and equity. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">In July 2010, 250,000 shares of 4.50 percent preferred stock and $8 million principal amount of 3.375 percent senior notes were tendered for conversion. The average conversion price per share, number of common shares to be issued, and cash to be paid on settlement are not yet determinable. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><b>Dividend Restrictions: </b>Under provisions of CMS Energy's senior notes indenture, at June 30, 2010, payment of common stock dividends by CMS Energy was limited to $879 million. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">Under the provisions of its articles of incorporation, at June 30, 2010, Consumers had $356 million of unrestricted retained earnings available to pay common stock dividends to CMS Energy. Provisions of the Federal Power Act and the Natural Gas Act appear to restrict dividends payable by Consumers to the amount of Consumers' retained earnings. Several decisions from FERC suggest that under a variety of circumstances common stock dividends from Consumers would not be limited to amounts in Consumers' retained earnings. Any decision by Consumers to pay common stock dividends in excess of retained earnings would be based on specific facts and circumstances and would result only after a formal regulatory filing process. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">For the six months ended June 30, 2010, CMS Energy received $168 million of common stock dividends from Consumers. </div></div> </div>

172000000

127000000

94000000

46000000

107000000

-22000000

43000000

206000000

51000000

165000000

231000000

926000000

444000000

1058000000

294000000

288000000

303000000

301000000

<div> <div style="font-family: 'Times New Roman',Times,serif;"> <div style="margin-top: 12pt; font-size: 10pt;" align="left"><b>8: DERIVATIVE INSTRUMENTS</b> </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">In order to limit exposure to certain market risks, primarily changes in commodity prices, interest rates, and foreign exchange rates, CMS Energy and Consumers may enter into various risk management contracts, such as forward contracts, futures, options, and swaps. In entering into these contracts, they follow 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. Neither CMS Energy nor Consumers enters into any derivatives for trading purposes. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">The contracts used to manage market risks may qualify as derivative instruments. If a contract is a derivative and does not qualify for the normal purchases and sales exception, the contract is recorded on the balance sheet at its fair value. Each reporting period, the resulting asset or liability is adjusted to reflect any change in the fair value of the contract. Since none of CMS Energy's or Consumers' derivatives have been designated as accounting hedges, all changes in fair value are reported in earnings. For a discussion of how CMS Energy and Consumers determine the fair value of their derivatives, see Note 2, Fair Value Measurements. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><i>Commodity Price Risk</i>: In order to support ongoing operations, CMS Energy and Consumers enter into contracts for the future purchase and sale of various commodities, such as electricity, natural gas, and coal. These forward contracts are generally long-term in nature and result in physical delivery of the commodity at a contracted price. Most of these contracts are not subject to derivative accounting because: </div> <div style="margin-top: 6pt;"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="2%"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>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);</td></tr> <tr><td style="font-size: 6pt;"> </td></tr> <tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="2%"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>they qualify for the normal purchases and sales exception; or</td></tr> <tr><td style="font-size: 6pt;"> </td></tr> <tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="2%"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>there is not an active market for the commodity.</td></tr></table></div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">CMS Energy's and Consumers' coal purchase contracts are not derivatives because there is not an active market for the coal they 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 fair value gains and losses would be offset by changes in regulatory assets and liabilities and would not affect net income. No other subsidiaries of CMS Energy enter into coal purchase contracts. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">CMS ERM has not designated its contracts to purchase and sell electricity and natural gas as normal purchases and sales and, therefore, CMS Energy accounts for those contracts as derivatives. To manage commodity price risks associated with these forward purchase and sale contracts, CMS ERM uses various financial instruments, such as futures, options, and swaps. At June 30, 2010, CMS ERM held a forward contract for the physical sale of 743 GWh of electricity through 2015 on behalf of one of CMS Energy's non-utility generating plants. CMS ERM also held futures contracts through 2011 as an economic hedge of 36 percent of the generating plant's natural gas requirements needed to serve a steam sales contract, for a total of 0.5 bcf of natural gas. In its role as a marketer of natural gas for third-party producers, CMS ERM held forward contracts to purchase 2.4 bcf and sell 2.0 bcf of natural gas through 2010 and a financial contract to sell 1.0 bcf of natural gas as an economic hedge of gas storage sales in 2011. At June 30, 2010, CMS ERM held financial contracts through 2010 as an economic hedge against tolling arrangements with a purchase of 260 GWh of electricity and a sale of 1.7 bcf of gas. </div></div> <div style="font-family: 'Times New Roman',Times,serif;"> <div style="margin-top: 6pt; font-size: 10pt;" align="left">At June 30, 2010 and December 31, 2009, the fair value of Consumers' derivative instruments was less than $1 million. The following table summarizes the fair values of CMS Energy's derivative instruments: </div> <div align="center"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr valign="bottom"><td width="28%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td style="border-bottom: #000000 1px solid;" colspan="25" nowrap="nowrap" align="right">In Millions</td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td style="border-bottom: #000000 1px solid;" colspan="11" nowrap="nowrap" align="center">Derivative Assets</td> <td> </td> <td style="border-bottom: #000000 1px solid;" colspan="11" nowrap="nowrap" align="center">Derivative Liabilities</td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td style="border-bottom: #000000 1px solid;" colspan="7" nowrap="nowrap" align="center">Fair Value</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td style="border-bottom: #000000 1px solid;" colspan="7" nowrap="nowrap" align="center">Fair Value</td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">Balance</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">Balance</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center"> </td> <td> </td> <td colspan="3" nowrap="nowrap" align="center"> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">Sheet</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">June 30,</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">December 31,</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">Sheet</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">June 30,</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">December 31,</td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">Location</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">2010</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">2009</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">Location</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">2010</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">2009</td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 1px solid;" colspan="25" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td nowrap="nowrap"> <div style="text-indent: -15px; margin-left: 15px;"><font style="font-variant: small-caps;" class="_mt"><b>CMS Energy, including Consumers</b></font></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"><i>Derivatives not designated as hedging instruments:</i></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td valign="top"> <div style="text-indent: -15px; margin-left: 30px;">Commodity contracts (a)</div></td> <td> </td> <td colspan="3" align="center">Other<br />assets<br />(b)</td> <td> </td> <td align="right">$</td> <td align="right">5</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">1</td> <td> </td> <td> </td> <td colspan="3" align="center">Other<br />liabilities<br />(c)</td> <td> </td> <td align="right">$</td> <td align="right">8</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">9</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td valign="top"> <div style="text-indent: -15px; margin-left: 30px;">Interest rate contracts (d)</div></td> <td> </td> <td colspan="3" align="center">Other<br />assets</td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td colspan="3" align="center">Other<br />liabilities</td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">1</td> <td> </td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="7" align="left"> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="7" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Total CMS Energy Derivatives</div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">5</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">1</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">8</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">10</td> <td> </td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 3px double;" colspan="25" align="left"> </td></tr></table></div> <div style="margin-top: 3pt;"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td width="3%"> </td> <td width="1%"> </td> <td width="96"> </td></tr> <tr valign="top"><td nowrap="nowrap" align="left">(a)</td> <td> </td> <td>Assets and liabilities are presented gross and exclude the impact of offsetting derivative assets and liabilities under master netting agreements, which was $1 million at June 30, 2010 and December 31, 2009.</td></tr> <tr style="font-size: 3pt;"><td> </td></tr> <tr valign="top"><td nowrap="nowrap" align="left">(b)</td> <td> </td> <td>Assets exclude the impact of offsetting cash margin deposits paid by other parties to CMS ERM, which was $2 million at June 30, 2010. CMS Energy presents these assets net of these impacts on its Consolidated Balance Sheets.</td></tr> <tr style="font-size: 3pt;"><td> </td></tr> <tr valign="top"><td nowrap="nowrap" align="left">(c)</td> <td> </td> <td>Liabilities exclude the impact of offsetting cash margin deposits paid by CMS ERM to other parties, which was less than $1 million at June 30, 2010 and $1 million at December 31, 2009. CMS Energy presents these liabilities net of these impacts on its Consolidated Balance Sheets.</td></tr> <tr style="font-size: 3pt;"><td> </td></tr> <tr valign="top"><td nowrap="nowrap" align="left">(d)</td> <td> </td> <td>At December 31, 2009, CMS Energy's derivatives included an interest rate collar held by Grayling as an economic hedge of the variable interest rate charged on its outstanding revenue bonds. Effective January 1, 2010, CMS Energy deconsolidated Grayling. CMS Energy reflected its share of the loss on the interest rate collar, which was less than $1 million at June 30, 2010, in Income (loss) from equity method investees in its Consolidated Statements of Income. For additional details about the deconsolidation of Grayling, see Note 11, Variable Interest Entities.</td></tr></table></div> <p style="font-size: 10pt;" align="center"> </p></div> <div style="font-family: 'Times New Roman',Times,serif;"> <div style="margin-top: 6pt; font-size: 10pt;" align="left">The following tables summarize the effect of CMS Energy's and Consumers' derivative instruments on their Consolidated Statements of Income: </div> <div align="center"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr valign="bottom"><td width="64%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td style="border-bottom: #000000 1px solid;" colspan="13" nowrap="nowrap" align="right">In Millions</td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">Location of Gain (Loss)</td> <td> </td> <td colspan="7" nowrap="nowrap" align="center">Amount of Gain (Loss)</td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">on Derivatives</td> <td> </td> <td colspan="7" nowrap="nowrap" align="center">on Derivatives</td></tr> <tr style="font-size: 8pt;" valign="bottom"><td style="border-bottom: #000000 1px solid;"> </td> <td style="border-bottom: #000000 1px solid;"> </td> <td style="border-bottom: #000000 1px solid;" colspan="3" nowrap="nowrap" align="center">Recognized in Income</td> <td style="border-bottom: #000000 1px solid;"> </td> <td style="border-bottom: #000000 1px solid;" colspan="7" nowrap="nowrap" align="center">Recognized in Income</td></tr> <tr style="font-size: 8pt;" valign="bottom"><td nowrap="nowrap" align="left">Three months ended June 30</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">2010</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">2009</td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 1px solid;" colspan="13" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"><font style="font-variant: small-caps;" class="_mt"><b>CMS Energy, including Consumers</b></font></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"><i>Derivatives not designated as hedging instruments:</i></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Commodity contracts</div></td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">Operating Revenue</td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(2</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(2</td> <td nowrap="nowrap">)</td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"> </div></td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">Other income</td> <td> </td> <td> </td> <td align="right">1</td> <td> </td> <td> </td> <td> </td> <td align="right">1</td> <td> </td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="7" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Total CMS Energy</div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(1</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(1</td> <td nowrap="nowrap">)</td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 3px double;" colspan="13" align="left"> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"><font style="font-variant: small-caps;" class="_mt"><b>Consumers</b></font></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"><i>Derivatives not designated as hedging instruments:</i></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Commodity contracts</div></td> <td> </td> <td colspan="3" align="center">Other income</td> <td> </td> <td align="right">$</td> <td align="right">1</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">1</td> <td> </td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 3px double;" colspan="13" align="left"> </td></tr></table></div> <div align="center"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr valign="bottom"><td width="64%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td style="border-bottom: #000000 1px solid;" colspan="13" nowrap="nowrap" align="right">In Millions</td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">Location of Gain (Loss)</td> <td> </td> <td colspan="7" nowrap="nowrap" align="center">Amount of Gain (Loss)</td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">on Derivatives</td> <td> </td> <td colspan="7" nowrap="nowrap" align="center">on Derivatives</td></tr> <tr style="font-size: 8pt;" valign="bottom"><td style="border-bottom: #000000 1px solid;"> </td> <td style="border-bottom: #000000 1px solid;"> </td> <td style="border-bottom: #000000 1px solid;" colspan="3" nowrap="nowrap" align="center">Recognized in Income</td> <td style="border-bottom: #000000 1px solid;"> </td> <td style="border-bottom: #000000 1px solid;" colspan="7" nowrap="nowrap" align="center">Recognized in Income</td></tr> <tr style="font-size: 8pt;" valign="bottom"><td colspan="5" nowrap="nowrap" align="left">Six months ended June 30</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">2010</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">2009</td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 1px solid;" colspan="13" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"><font style="font-variant: small-caps;" class="_mt"><b>CMS Energy, including Consumers</b></font></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"><i>Derivatives not designated as hedging instruments:</i></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Commodity contracts</div></td> <td> </td> <td colspan="3" align="center">Operating Revenue</td> <td> </td> <td align="right">$</td> <td align="right">3</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">5</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"> </div></td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">Fuel for electric generation</td> <td> </td> <td> </td> <td align="right">2</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(2</td> <td nowrap="nowrap">)</td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"> </div></td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">Cost of gas sold</td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(3</td> <td nowrap="nowrap">)</td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"> </div></td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">Cost of power purchased</td> <td> </td> <td> </td> <td align="right">1</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"> </div></td> <td> </td> <td colspan="3" align="center">Other income</td> <td> </td> <td> </td> <td align="right">1</td> <td> </td> <td> </td> <td> </td> <td align="right">1</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Foreign exchange contracts (a)</div></td> <td> </td> <td colspan="3" align="center">Other expense</td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(1</td> <td nowrap="nowrap">)</td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="7" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Total CMS Energy</div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">7</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">—</td> <td> </td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 3px double;" colspan="13" align="left"> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"><font style="font-variant: small-caps;" class="_mt"><b>Consumers</b></font></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"><i>Derivatives not designated as hedging instruments:</i></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Commodity contracts</div></td> <td> </td> <td colspan="3" align="center">Other income</td> <td> </td> <td align="right">$</td> <td align="right">1</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">1</td> <td> </td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 3px double;" colspan="13" align="left"> </td></tr></table></div> <div style="margin-top: 3pt;"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td width="3%"> </td> <td width="1%"> </td> <td width="96"> </td></tr> <tr valign="top"><td nowrap="nowrap" align="left">(a)</td> <td> </td> <td>This derivative loss relates to a foreign-exchange forward contract that CMS Energy settled in January 2009.</td></tr></table></div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">At June 30, 2010, none of CMS Energy's derivative liabilities was subject to credit-risk-related contingency features. At December 31, 2009, CMS Energy's derivative liabilities subject to credit-risk-related contingent features were less than $1 million. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><i>Credit Risk: </i>CMS Energy's swaps, options, and forward contracts contain credit risk, which is the risk that a counterparty will fail to meet its contractual obligations. CMS Energy reduces this risk through established policies and procedures. CMS Energy assesses credit quality by considering credit ratings, financial condition, and other available information for counterparties. A credit limit is established for each counterparty based on the evaluation of their credit quality. Exposure to potential loss under each contract is monitored and action is taken when appropriate. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">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 CMS Energy's exposure to credit risk based on how similar changes in economic conditions, the weather, or other conditions affect these counterparties. </div></div> <div style="font-family: 'Times New Roman',Times,serif;"> <div style="margin-top: 6pt; font-size: 10pt;" align="left">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. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">The following table illustrates CMS Energy's exposure to potential losses at June 30, 2010, if each counterparty within this industry concentration failed to meet its contractual obligations. This table includes contracts accounted for as derivatives. It does not include trade accounts receivable, derivative contracts that qualify for the normal purchases and sales exception, or other contracts that CMS Energy does not account for as derivatives. </div> <div align="center"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr valign="bottom"><td width="40%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td style="border-bottom: #000000 1px solid;" colspan="21" nowrap="nowrap" align="right">In Millions</td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">Net Exposure</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">Net Exposure</td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">Exposure</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">from</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">from</td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">Before</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">Investment</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">Investment</td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">Collateral</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">Grade</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">Grade</td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">(a)</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">Collateral Held</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">Net Exposure</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">Companies</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">Companies (%)</td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 1px solid;" colspan="21" align="left"> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">CMS Energy</div></td> <td> </td> <td align="right">$</td> <td align="right">3</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">2</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">1</td> <td> </td> <td> </td> <td align="right">$ </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 3px double;" colspan="21" align="left"> </td></tr></table></div> <div style="margin-top: 3pt;"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td width="3%"> </td> <td width="1%"> </td> <td width="96"> </td></tr> <tr valign="top"><td nowrap="nowrap" align="left">(a)</td> <td> </td> <td>Exposure is reflected net of payables or derivative liabilities if netting arrangements exist.</td></tr></table></div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">CMS Energy does not expect a material adverse effect on its Consolidated Balance Sheets and Consolidated Statements of Income as a result of counterparty nonperformance, given CMS Energy's credit policies, current exposures, and credit reserves. </div></div> </div>

16000000

17000000

5000000

6000000

-57000000

-130000000

-28000000

-58000000

-69000000

-168000000

-35000000

-54000000

-6000000

-1000000

-3000000

-5000000

-1000000

-2000000

-1000000

2000000

8000000

1000000

11000000

9000000

12000000

0.64

0.33

0.72

0.35

0.62

0.32

0.67

0.32

<div> <div style="font-family: 'Times New Roman',Times,serif;"> <div style="margin-top: 12pt; font-size: 10pt;" align="left"><b>6: EARNINGS PER SHARE — CMS ENERGY</b> </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">The following table presents CMS Energy's basic and diluted EPS computations based on Income from Continuing Operations: </div> <div align="center"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr valign="bottom"><td width="76%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td style="border-bottom: #000000 1px solid;" colspan="8" nowrap="nowrap" align="right">In Millions, Except Per Share Amounts</td> <td> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td nowrap="nowrap" align="left">Three months ended June 30</td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">2010</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">2009</td> <td> </td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 1px solid;" colspan="9" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"><b>Income Available to Common Stockholders</b></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Income from Continuing Operations</div></td> <td> </td> <td align="left">$</td> <td align="right">100</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">55</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Less Income Attributable to Noncontrolling Interests</div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(2</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(2</td> <td nowrap="nowrap">)</td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Less Preferred Dividends</div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(2</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(3</td> <td nowrap="nowrap">)</td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="7" nowrap="nowrap" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Income from Continuing Operations Available to Common Stockholders — Basic and Diluted</div></td> <td> </td> <td align="left">$</td> <td align="right">96</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">50</td> <td> </td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td style="border-top: #000000 3px double;" colspan="7" align="left"> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"><b>Average Common Shares Outstanding</b></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Weighted Average Shares — Basic</div></td> <td> </td> <td> </td> <td align="right">228.2</td> <td> </td> <td> </td> <td> </td> <td align="right">226.9</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Add dilutive impact of Contingently Convertible Securities</div></td> <td> </td> <td> </td> <td align="right">19.3</td> <td> </td> <td> </td> <td> </td> <td align="right">7.6</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Add dilutive Options and Warrants</div></td> <td> </td> <td> </td> <td align="right">0.1</td> <td> </td> <td> </td> <td> </td> <td align="right">0.1</td> <td> </td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="7" align="left"> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Weighted Average Shares — Diluted</div></td> <td> </td> <td> </td> <td align="right">247.6</td> <td> </td> <td> </td> <td> </td> <td align="right">234.6</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"><b>Income from Continuing Operations Per Average Common Share Available to Common Stockholders</b></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Basic</div></td> <td> </td> <td align="left">$</td> <td align="right">0.42</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">0.22</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Diluted</div></td> <td> </td> <td align="left">$</td> <td align="right">0.39</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">0.21</td> <td> </td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 3px double;" colspan="9" align="left"> </td></tr></table></div> <div align="center"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr valign="bottom"><td width="76%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td style="border-bottom: #000000 1px solid;" colspan="8" nowrap="nowrap" align="right">In Millions, Except Per Share Amounts</td> <td> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td nowrap="nowrap" align="left">Six months ended June 30</td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">2010</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">2009</td> <td> </td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 1px solid;" colspan="9" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"><b>Income Available to Common Stockholders</b></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Income from Continuing Operations</div></td> <td> </td> <td align="left">$</td> <td align="right">189</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">130</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Less Income Attributable to Noncontrolling Interests</div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(2</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(3</td> <td nowrap="nowrap">)</td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Less Preferred Dividends</div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(5</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(6</td> <td nowrap="nowrap">)</td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="7" nowrap="nowrap" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Income from Continuing Operations Available to Common Stockholders — Basic and Diluted</div></td> <td> </td> <td align="left">$</td> <td align="right">182</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">121</td> <td> </td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td style="border-top: #000000 3px double;" colspan="7" align="left"> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"><b>Average Common Shares Outstanding</b></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Weighted Average Shares — Basic</div></td> <td> </td> <td> </td> <td align="right">228.1</td> <td> </td> <td> </td> <td> </td> <td align="right">226.8</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Add dilutive impact of Contingently Convertible Securities</div></td> <td> </td> <td> </td> <td align="right">19.5</td> <td> </td> <td> </td> <td> </td> <td align="right">7.2</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Add dilutive Options and Warrants</div></td> <td> </td> <td> </td> <td align="right">0.1</td> <td> </td> <td> </td> <td> </td> <td align="right">0.1</td> <td> </td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="7" align="left"> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Weighted Average Shares — Diluted</div></td> <td> </td> <td> </td> <td align="right">247.7</td> <td> </td> <td> </td> <td> </td> <td align="right">234.1</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"><b>Income from Continuing Operations Per Average Common Share Available to Common Stockholders</b></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Basic</div></td> <td> </td> <td align="left">$</td> <td align="right">0.80</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">0.53</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Diluted</div></td> <td> </td> <td align="left">$</td> <td align="right">0.74</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">0.52</td> <td> </td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 3px double;" colspan="9" align="left"> </td></tr></table></div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><b>Contingently Convertible Securities: </b>When CMS Energy has earnings from continuing operations, its contingently convertible securities dilute EPS to the extent that the conversion value of a security, which is based on the average market price of CMS Energy's common stock, exceeds the principal value of that security. For additional details on contingently convertible securities, see Note 5, Financings. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><b>Stock Options and Warrants: </b>For each of the three and six months ended June 30, 2010, outstanding options to purchase 0.4 million shares of CMS Energy common stock had no impact on diluted EPS, since the exercise price was greater than the average market price of CMS Energy common stock. These stock options have the potential to dilute EPS in the future. </div></div> <div style="font-family: 'Times New Roman',Times,serif;"> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><b>Unvested Restricted Stock Awards: </b>CMS Energy's unvested restricted stock awards accrue cash dividends when common stockholders receive dividends. Since the recipient is not required to return the dividends to CMS Energy if the recipient forfeits the award, the unvested restricted stock awards are considered participating securities. As such, unvested restricted stock awards were included in the computation of basic EPS. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><b>Convertible Debentures: </b>For each of the three and six months ended June 30, 2010 and 2009, there was no impact on diluted EPS from CMS Energy's 7.75 percent convertible subordinated debentures. Using the if-converted method, the debentures would have: </div> <div style="margin-top: 6pt;"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="2%"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>increased the numerator of diluted EPS by less than $1 million for the three months ended June 30, 2010, and by $2 million for the three months ended June 30, 2009, from an assumed reduction of interest expense, net of tax;</td></tr> <tr><td style="font-size: 6pt;"> </td></tr> <tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="2%"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>increased the denominator of diluted EPS by 0.7 million shares for the three months ended June 30, 2010, and by 3.6 million shares for the three months ended June 30, 2009;</td></tr> <tr><td style="font-size: 6pt;"> </td></tr> <tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="2%"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>increased the numerator of diluted EPS by $1 million for the six months ended June 30, 2010, and by $4 million for the six months ended June 30, 2009, from an assumed reduction of interest expense, net of tax; and</td></tr> <tr><td style="font-size: 6pt;"> </td></tr> <tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="2%"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>increased the denominator of diluted EPS by 0.7 million shares for the six months ended June 30, 2010, and by 3.9 million shares for the six months ended June 30, 2009.</td></tr></table></div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">CMS Energy can revoke the conversion rights if certain conditions are met. </div></div> </div>

1043000000

1038000000

842000000

838000000

158000000

148000000

131000000

130000000

<div> <div style="font-family: 'Times New Roman',Times,serif;"> <div style="margin-top: 12pt; font-size: 10pt;" align="left"><b>7: FINANCIAL INSTRUMENTS</b> </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">The carrying amounts of CMS Energy's and Consumers' cash, cash equivalents, current accounts and notes receivable, short-term investments, and current liabilities approximate their fair values because of their short-term nature. The cost or carrying amounts and fair values of CMS Energy's and Consumers' long-term financial instruments were as follows: </div> <div align="center"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr valign="bottom"><td width="52%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td style="border-bottom: #000000 1px solid;" colspan="16" nowrap="nowrap" align="right">In Millions</td> <td style="border-bottom: #000000 1px solid;"> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td style="border-bottom: #000000 1px solid;"> </td> <td style="border-bottom: #000000 1px solid;"> </td> <td style="border-bottom: #000000 1px solid;" colspan="6" nowrap="nowrap" align="center">June 30, 2010</td> <td style="border-bottom: #000000 1px solid;"> </td> <td style="border-bottom: #000000 1px solid;"> </td> <td style="border-bottom: #000000 1px solid;" colspan="6" nowrap="nowrap" align="center">December 31, 2009</td> <td style="border-bottom: #000000 1px solid;"> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Cost or</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Cost or</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center"> </td> <td> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Carrying</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Carrying</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center"> </td> <td> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Amount</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Fair Value</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Amount</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Fair Value</td> <td> </td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 1px solid;" colspan="17" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"><font style="font-variant: small-caps;" class="_mt"><b>CMS Energy, including Consumers</b></font></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Securities held to maturity</div></td> <td> </td> <td align="left">$</td> <td align="right">4</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">5</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">4</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">4</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Securities available for sale</div></td> <td> </td> <td> </td> <td align="right">89</td> <td> </td> <td> </td> <td> </td> <td align="right">90</td> <td> </td> <td> </td> <td> </td> <td align="right">26</td> <td> </td> <td> </td> <td> </td> <td align="right">27</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Notes receivable, net</div></td> <td> </td> <td> </td> <td align="right">296</td> <td> </td> <td> </td> <td> </td> <td align="right">320</td> <td> </td> <td> </td> <td> </td> <td align="right">269</td> <td> </td> <td> </td> <td> </td> <td align="right">279</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Long-term debt (a)</div></td> <td> </td> <td> </td> <td align="right">6,511</td> <td> </td> <td> </td> <td> </td> <td align="right">7,178</td> <td> </td> <td> </td> <td> </td> <td align="right">6,567</td> <td> </td> <td> </td> <td> </td> <td align="right">7,013</td> <td> </td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 3px double;" colspan="17" align="left"> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"><font style="font-variant: small-caps;" class="_mt"><b>Consumers</b></font></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Securities available for sale</div></td> <td> </td> <td align="left">$</td> <td align="right">64</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">83</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">24</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">45</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Long-term debt (b)</div></td> <td> </td> <td> </td> <td align="right">4,079</td> <td> </td> <td> </td> <td> </td> <td align="right">4,487</td> <td> </td> <td> </td> <td> </td> <td align="right">4,406</td> <td> </td> <td> </td> <td> </td> <td align="right">4,635</td> <td> </td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 3px double;" colspan="17" align="left"> </td></tr></table></div> <div style="margin-top: 3pt;"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td width="3%"> </td> <td width="1%"> </td> <td width="96"> </td></tr> <tr valign="top"><td nowrap="nowrap" align="left">(a)</td> <td> </td> <td>Includes current portion of long-term debt of $628 million at June 30, 2010 and $672 million at December 31, 2009.</td></tr> <tr style="font-size: 3pt;"><td> </td></tr> <tr valign="top"><td nowrap="nowrap" align="left">(b)</td> <td> </td> <td>Includes current portion of long-term debt of $36 million at June 30, 2010 and $343 million at December 31, 2009.</td></tr></table></div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">Notes receivable, net consist of EnerBank's fixed-rate installment loans. EnerBank estimates the fair value of these loans using a discounted cash flows technique that incorporates current market interest rates as well as assumptions about the remaining life of the loans and credit risk. Fair values for impaired loans are estimated using discounted cash flows or underlying collateral values. </div></div> <div style="font-family: 'Times New Roman',Times,serif;"> <div style="margin-top: 6pt; font-size: 10pt;" align="left">CMS Energy and Consumers estimate the fair value of their long-term debt using quoted prices from market trades of the debt, if available. In the absence of quoted prices, CMS Energy and Consumers calculate market yields and prices for the debt using a matrix method that incorporates market data for similarly rated debt. Depending on the information available, other valuation techniques may be used that rely on internal assumptions and models. For its convertible securities, CMS Energy incorporates, as appropriate, information on the market prices of CMS Energy's common stock. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">The effects of third-party credit enhancements are excluded from the fair value measurements of long-term debt. At June 30, 2010, CMS Energy's long-term debt included $240 million principal amount that was supported by third-party insurance or other credit enhancements. This entire principal amount was at Consumers. At December 31, 2009, CMS Energy's long-term debt included $286 million principal amount that was supported by third-party insurance or other credit enhancements. Of this amount, $271 million principal amount was at Consumers. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">The following table summarizes CMS Energy's and Consumers' investment securities: </div> <div align="center"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr valign="bottom"><td width="20%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td style="border-bottom: #000000 1px solid;" colspan="32" nowrap="nowrap" align="right">In Millions</td> <td style="border-bottom: #000000 1px solid;"> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td style="border-bottom: #000000 1px solid;"> </td> <td style="border-bottom: #000000 1px solid;"> </td> <td style="border-bottom: #000000 1px solid;" colspan="14" nowrap="nowrap" align="center">June 30, 2010</td> <td style="border-bottom: #000000 1px solid;"> </td> <td style="border-bottom: #000000 1px solid;"> </td> <td style="border-bottom: #000000 1px solid;" colspan="14" nowrap="nowrap" align="center">December 31, 2009</td> <td style="border-bottom: #000000 1px solid;"> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Unrealized</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Unrealized</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Fair</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Unrealized</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Unrealized</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Fair</td> <td> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Cost</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Gains</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Losses</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Value</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Cost</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Gains</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Losses</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Value</td> <td> </td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 1px solid;" colspan="33" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"><font style="font-variant: small-caps;" class="_mt"><b>CMS Energy, including Consumers</b></font></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Available for sale:</div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 45px;">SERP:</div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 60px;">Mutual fund</div></td> <td> </td> <td align="left">$</td> <td align="right">62</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">62</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 60px;">State and municipal bonds</div></td> <td> </td> <td> </td> <td align="right">27</td> <td> </td> <td> </td> <td> </td> <td align="right">1</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">28</td> <td> </td> <td> </td> <td> </td> <td align="right">26</td> <td> </td> <td> </td> <td> </td> <td align="right">1</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">27</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Held to maturity:</div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 60px;">Debt securities</div></td> <td> </td> <td> </td> <td align="right">4</td> <td> </td> <td> </td> <td> </td> <td align="right">1</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">5</td> <td> </td> <td> </td> <td> </td> <td align="right">4</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">4</td> <td> </td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 3px double;" colspan="33" align="left"> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"><font style="font-variant: small-caps;" class="_mt"><b>Consumers</b></font></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Available for sale:</div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 45px;">SERP:</div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 60px;">Mutual fund</div></td> <td> </td> <td align="left">$</td> <td align="right">39</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">39</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 60px;">State and municipal bonds</div></td> <td> </td> <td> </td> <td align="right">17</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">17</td> <td> </td> <td> </td> <td> </td> <td align="right">16</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">16</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 45px;">CMS Energy Common Stock</div></td> <td> </td> <td> </td> <td align="right">8</td> <td> </td> <td> </td> <td> </td> <td align="right">19</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">27</td> <td> </td> <td> </td> <td> </td> <td align="right">8</td> <td> </td> <td> </td> <td> </td> <td align="right">21</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">29</td> <td> </td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 3px double;" colspan="33" align="left"> </td></tr></table></div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">The mutual fund classified as available for sale is a short-term, fixed-income fund. Shares in this fund were acquired during the six months ended June 30, 2010. State and municipal bonds classified as available for sale consist of investment grade state and municipal bonds. Debt securities classified as held to maturity consist of state and municipal bonds and mortgage-backed securities held by EnerBank. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">The following table summarizes the sales activity for CMS Energy's and Consumers' investment securities: </div> <div align="center"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr valign="bottom"><td width="52%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td style="border-bottom: #000000 1px solid;" colspan="16" nowrap="nowrap" align="right">In Millions</td> <td> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td style="border-bottom: #000000 0px solid;" colspan="6" nowrap="nowrap" align="center">Three months ended</td> <td> </td> <td> </td> <td style="border-bottom: #000000 0px solid;" colspan="6" nowrap="nowrap" align="center">Six months ended</td> <td> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td nowrap="nowrap" align="left">June 30</td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">2010</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">2009</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">2010</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">2009</td> <td> </td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 1px solid;" colspan="17" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"><b>Proceeds from sales of investment securities:</b></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">CMS Energy, including Consumers</div></td> <td> </td> <td align="left">$</td> <td align="right">1</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">1</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">2</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">3</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Consumers</div></td> <td> </td> <td> </td> <td align="right">1</td> <td> </td> <td> </td> <td> </td> <td align="right">1</td> <td> </td> <td> </td> <td> </td> <td align="right">1</td> <td> </td> <td> </td> <td> </td> <td align="right">2</td> <td> </td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 3px double;" colspan="17" align="left"> </td></tr></table></div> <p style="font-size: 10pt;" align="center"> </p></div> <div style="font-family: 'Times New Roman',Times,serif;"> <div style="margin-top: 6pt; font-size: 10pt;" align="left">All of the proceeds related to sales of state and municipal bonds that were held within the SERP and classified as available for sale. Realized losses on these sales were insignificant for both CMS Energy and Consumers during each period. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">The fair values of the SERP state and municipal bonds by contractual maturity at June 30, 2010 were as follows: </div> <div align="center"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr valign="bottom"><td width="76%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td style="border-bottom: #000000 1px solid;" colspan="8" nowrap="nowrap" align="right">In Millions</td> <td> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">CMS Energy,</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center"> </td> <td> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">including</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center"> </td> <td> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Consumers</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Consumers</td> <td> </td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 1px solid;" colspan="9" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Due one year or less</div></td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Due after one year through five years</div></td> <td> </td> <td> </td> <td align="right">10</td> <td> </td> <td> </td> <td> </td> <td align="right">6</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Due after five years through ten years</div></td> <td> </td> <td> </td> <td align="right">11</td> <td> </td> <td> </td> <td> </td> <td align="right">7</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Due after ten years</div></td> <td> </td> <td> </td> <td align="right">7</td> <td> </td> <td> </td> <td> </td> <td align="right">4</td> <td> </td></tr> <tr style="font-size: 1px;"><td> <div style="text-indent: -15px; margin-left: 15px;"> </div></td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="2" nowrap="nowrap" align="right"> </td> <td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="2" nowrap="nowrap" align="right"> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Total</div></td> <td> </td> <td align="left">$</td> <td align="right">28</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">17</td> <td> </td></tr></table></div></div> </div>

<div> <div style="font-family: 'Times New Roman',Times,serif;"> <div style="margin-top: 12pt; font-size: 10pt;" align="left"><b>2: FAIR VALUE MEASUREMENTS</b> </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. When measuring fair value, CMS Energy and Consumers are required to incorporate all assumptions that market participants would use in pricing an asset or liability, including assumptions about risk. A fair value hierarchy prioritizes inputs used to measure fair value according to their observability in the market. The three levels of the fair value hierarchy are as follows: </div> <div style="margin-top: 6pt;"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="2%"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities.</td></tr> <tr><td style="font-size: 6pt;"> </td></tr> <tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="2%"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>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.</td></tr> <tr><td style="font-size: 6pt;"> </td></tr> <tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="2%"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>Level 3 inputs are unobservable inputs that reflect CMS Energy's or Consumers' own assumptions about how market participants would value their assets and liabilities.</td></tr></table></div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">To the extent possible, CMS Energy and Consumers use quoted market prices or other observable market pricing data in valuing assets and liabilities measured at fair value. If this information is unavailable, they use market-corroborated data or reasonable estimates about market participant assumptions. CMS Energy and Consumers classify fair value measurements within the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement in its entirety. </div></div> <div style="font-family: 'Times New Roman',Times,serif;"> <div style="margin-top: 12pt; font-size: 10pt;" align="left"><b>Assets and Liabilities Measured at Fair Value on a Recurring Basis</b> </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">The following table summarizes, by level within the fair value hierarchy, CMS Energy's and Consumers' assets and liabilities reported at fair value on a recurring basis at June 30, 2010: </div> <div align="center"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr valign="bottom"><td width="52%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td style="border-bottom: #000000 1px solid;" colspan="17" nowrap="nowrap" align="right">In Millions</td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Total</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Level 1</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Level 2</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Level 3</td> <td> </td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 1px solid;" colspan="17" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"><font style="font-variant: small-caps;" class="_mt"><b>CMS Energy, including Consumers</b></font></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Assets:</div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Cash equivalents</div></td> <td> </td> <td align="left">$</td> <td align="right">465</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">465</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Restricted cash equivalents</div></td> <td> </td> <td> </td> <td align="right">5</td> <td> </td> <td> </td> <td> </td> <td align="right">5</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Nonqualified deferred compensation plan assets</div></td> <td> </td> <td> </td> <td align="right">5</td> <td> </td> <td> </td> <td> </td> <td align="right">5</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">SERP:</div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 45px;">Cash equivalents</div></td> <td> </td> <td> </td> <td align="right">2</td> <td> </td> <td> </td> <td> </td> <td align="right">2</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 45px;">Mutual fund</div></td> <td> </td> <td> </td> <td align="right">62</td> <td> </td> <td> </td> <td> </td> <td align="right">62</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 45px;">State and municipal bonds</div></td> <td> </td> <td> </td> <td align="right">28</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">28</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Derivative instruments:</div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 45px;">Commodity contracts (a)</div></td> <td> </td> <td> </td> <td align="right">5</td> <td> </td> <td> </td> <td> </td> <td align="right">2</td> <td> </td> <td> </td> <td> </td> <td align="right">3</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="15" align="left"> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Total</div></td> <td> </td> <td align="left">$</td> <td align="right">572</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">541</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">31</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td style="border-top: #000000 3px double;" colspan="15" align="left"> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Liabilities:</div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Nonqualified deferred compensation plan liabilities</div></td> <td> </td> <td align="left">$</td> <td align="right">5</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">5</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Derivative instruments:</div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 45px;">Commodity contracts (b)</div></td> <td> </td> <td> </td> <td align="right">8</td> <td> </td> <td> </td> <td> </td> <td align="right">2</td> <td> </td> <td> </td> <td> </td> <td align="right">1</td> <td> </td> <td> </td> <td> </td> <td align="right">5</td> <td> </td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="15" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Total (c)</div></td> <td> </td> <td align="left">$</td> <td align="right">13</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">7</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">1</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">5</td> <td> </td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 3px double;" colspan="17" align="left"> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"><font style="font-variant: small-caps;" class="_mt"><b>Consumers</b></font></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Assets:</div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Cash equivalents</div></td> <td> </td> <td align="left">$</td> <td align="right">260</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">260</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Restricted cash equivalents</div></td> <td> </td> <td> </td> <td align="right">5</td> <td> </td> <td> </td> <td> </td> <td align="right">5</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">CMS Energy Common Stock</div></td> <td> </td> <td> </td> <td align="right">27</td> <td> </td> <td> </td> <td> </td> <td align="right">27</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Nonqualified deferred compensation plan assets</div></td> <td> </td> <td> </td> <td align="right">4</td> <td> </td> <td> </td> <td> </td> <td align="right">4</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">SERP:</div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 45px;">Cash equivalents</div></td> <td> </td> <td> </td> <td align="right">1</td> <td> </td> <td> </td> <td> </td> <td align="right">1</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 45px;">Mutual fund</div></td> <td> </td> <td> </td> <td align="right">39</td> <td> </td> <td> </td> <td> </td> <td align="right">39</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 45px;">State and municipal bonds</div></td> <td> </td> <td> </td> <td align="right">17</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">17</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="15" align="left"> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Total</div></td> <td> </td> <td align="left">$</td> <td align="right">353</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">336</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">17</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td style="border-top: #000000 3px double;" colspan="15" align="left"> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Liabilities:</div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Nonqualified deferred compensation plan liabilities</div></td> <td> </td> <td align="left">$</td> <td align="right">4</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">4</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="15" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Total</div></td> <td> </td> <td align="left">$</td> <td align="right">4</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">4</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 3px double;" colspan="17" align="left"> </td></tr></table></div> <div style="margin-top: 3pt;"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td width="3%"> </td> <td width="1%"> </td> <td width="96"> </td></tr> <tr valign="top"><td nowrap="nowrap" align="left">(a)</td> <td> </td> <td>This amount is gross and excludes the $1 million impact of offsetting derivative assets and liabilities under master netting arrangements and the $2 million impact of offsetting cash margin deposits paid to CMS ERM by other parties.</td></tr> <tr style="font-size: 3pt;"><td> </td></tr> <tr valign="top"><td nowrap="nowrap" align="left">(b)</td> <td> </td> <td>This amount is gross and excludes the $1 million impact of offsetting derivative assets and liabilities under master netting arrangements.</td></tr> <tr style="font-size: 3pt;"><td> </td></tr> <tr valign="top"><td nowrap="nowrap" align="left">(c)</td> <td> </td> <td>At June 30, 2010, CMS Energy's liabilities classified as Level 3 represented 38 percent of CMS Energy's total liabilities measured at fair value. The Level 3 liabilities are comprised primarily of an electricity sales agreement held by CMS ERM.</td></tr></table></div></div> <div style="font-family: 'Times New Roman',Times,serif;"> <div style="margin-top: 6pt; font-size: 10pt;" align="left"> </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">The following table summarizes, by level within the fair value hierarchy, CMS Energy's and Consumers' assets and liabilities reported at fair value on a recurring basis at December 31, 2009: </div> <div align="center"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr valign="bottom"><td width="52%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td style="border-bottom: #000000 1px solid;" colspan="17" nowrap="nowrap" align="right">In Millions</td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Total</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Level 1</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Level 2</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Level 3</td> <td> </td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 1px solid;" colspan="17" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"><font style="font-variant: small-caps;" class="_mt"><b>CMS Energy, including Consumers</b></font></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Assets:</div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Cash equivalents</div></td> <td> </td> <td align="left">$</td> <td align="right">57</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">57</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Restricted cash equivalents</div></td> <td> </td> <td> </td> <td align="right">12</td> <td> </td> <td> </td> <td> </td> <td align="right">12</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Nonqualified deferred compensation plan assets</div></td> <td> </td> <td> </td> <td align="right">5</td> <td> </td> <td> </td> <td> </td> <td align="right">5</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">SERP:</div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 45px;">Cash equivalents</div></td> <td> </td> <td> </td> <td align="right">49</td> <td> </td> <td> </td> <td> </td> <td align="right">49</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 45px;">State and municipal bonds</div></td> <td> </td> <td> </td> <td align="right">27</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">27</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Derivative instruments:</div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 45px;">Commodity contracts (a)</div></td> <td> </td> <td> </td> <td align="right">1</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">1</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="15" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Total</div></td> <td> </td> <td align="left">$</td> <td align="right">151</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">123</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">28</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td style="border-top: #000000 3px double;" colspan="15" align="left"> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Liabilities:</div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Nonqualified deferred compensation plan liabilities</div></td> <td> </td> <td align="left">$</td> <td align="right">5</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">5</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Derivative instruments:</div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 45px;">Commodity contracts (b)</div></td> <td> </td> <td> </td> <td align="right">9</td> <td> </td> <td> </td> <td> </td> <td align="right">1</td> <td> </td> <td> </td> <td> </td> <td align="right">1</td> <td> </td> <td> </td> <td> </td> <td align="right">7</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 45px;">Interest rate contracts</div></td> <td> </td> <td> </td> <td align="right">1</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">1</td> <td> </td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="15" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Total (c)</div></td> <td> </td> <td align="left">$</td> <td align="right">15</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">6</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">1</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">8</td> <td> </td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 3px double;" colspan="17" align="left"> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"><font style="font-variant: small-caps;" class="_mt"><b>Consumers</b></font></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Assets:</div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Cash equivalents</div></td> <td> </td> <td align="left">$</td> <td align="right">31</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">31</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Restricted cash equivalents</div></td> <td> </td> <td> </td> <td align="right">5</td> <td> </td> <td> </td> <td> </td> <td align="right">5</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">CMS Energy Common Stock</div></td> <td> </td> <td> </td> <td align="right">29</td> <td> </td> <td> </td> <td> </td> <td align="right">29</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Nonqualified deferred compensation plan assets</div></td> <td> </td> <td> </td> <td align="right">4</td> <td> </td> <td> </td> <td> </td> <td align="right">4</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">SERP:</div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 45px;">Cash equivalents</div></td> <td> </td> <td> </td> <td align="right">30</td> <td> </td> <td> </td> <td> </td> <td align="right">30</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 45px;">State and municipal bonds</div></td> <td> </td> <td> </td> <td align="right">16</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">16</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="15" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Total</div></td> <td> </td> <td align="left">$</td> <td align="right">115</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">99</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">16</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td style="border-top: #000000 3px double;" colspan="15" align="left"> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Liabilities:</div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Nonqualified deferred compensation plan liabilities</div></td> <td> </td> <td align="left">$</td> <td align="right">4</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">4</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="15" align="left"> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Total</div></td> <td> </td> <td align="left">$</td> <td align="right">4</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">4</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 3px double;" colspan="17" align="left"> </td></tr></table></div> <div style="margin-top: 3pt;"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td width="3%"> </td> <td width="1%"> </td> <td width="96"> </td></tr> <tr valign="top"><td nowrap="nowrap" align="left">(a)</td> <td> </td> <td>This amount is gross and excludes the $1 million impact of offsetting derivative assets and liabilities under master netting arrangements.</td></tr> <tr style="font-size: 3pt;"><td> </td></tr> <tr valign="top"><td nowrap="nowrap" align="left">(b)</td> <td> </td> <td>This amount is gross and excludes the $1 million impact of offsetting derivative assets and liabilities under master netting arrangements and the $1 million impact of offsetting cash margin deposits paid by CMS ERM to other parties.</td></tr> <tr style="font-size: 3pt;"><td> </td></tr> <tr valign="top"><td nowrap="nowrap" align="left">(c)</td> <td> </td> <td>At December 31, 2009, CMS Energy's liabilities classified as Level 3 represented 53 percent of CMS Energy's total liabilities measured at fair value. The Level 3 liabilities are comprised primarily of an electricity sales agreement held by CMS ERM.</td></tr></table></div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><i>Cash Equivalents: </i>Cash equivalents and restricted 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. </div></div> <div style="font-family: 'Times New Roman',Times,serif;"> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><i>Nonqualified Deferred Compensation Plan Assets: </i>CMS Energy's and Consumers' nonqualified deferred compensation plan assets are invested in various mutual funds. CMS Energy and Consumers value these assets using a market approach, using the daily quoted NAVs provided by the fund managers that are the basis for transactions to buy or sell shares in each fund. CMS Energy and Consumers report these assets in Other non-current assets on their Consolidated Balance Sheets. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><i>SERP Assets: </i>CMS Energy and Consumers value their SERP assets using a market approach, incorporating prices and other relevant information from market transactions. The SERP cash equivalents consist of a money market fund with daily liquidity, which invests in state and municipal securities. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">The SERP invests in a short-term, fixed-income mutual fund that holds a variety of debt securities with average maturities of one to three years. The fund invests primarily in investment-grade debt securities but, in order to achieve its investment objective, it may invest a portion of its assets in high-yield securities, foreign debt, and derivative instruments. The fair value of the fund is determined using the daily published NAV, which is the basis for transactions to buy or sell shares in the fund. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">The SERP state and municipal bonds are investment grade securities that are valued using a matrix pricing model that incorporates Level 2 market-based information. The fair value of the bonds is derived from various observable inputs, including benchmark yields, reported trades, broker/dealer quotes, bond ratings, and general information on market movements normally considered by market participants when pricing such debt securities. CMS Energy and Consumers report their SERP assets in Other non-current assets on their Consolidated Balance Sheets. For additional details about SERP securities, see Note 7, Financial Instruments. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><i>Nonqualified Deferred Compensation Plan Liabilities: </i>CMS Energy and Consumers value their non-qualified deferred compensation plan liabilities based on the fair values of the plan assets, as they reflect what is owed to the plan participants in accordance with their investment elections. CMS Energy and Consumers report these liabilities in Other non-current liabilities on their Consolidated Balance Sheets. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><i>Derivative Instruments: </i>CMS Energy and Consumers value their derivative instruments using either a market approach that incorporates information from market transactions, or an income approach that discounts future expected cash flows to a present value amount. They use various inputs to value the derivatives depending on the type of contract and the availability of market data. CMS Energy has exchange-traded derivative contracts that are valued based on Level 1 quoted prices in actively traded markets, as well as derivatives that are valued using Level 2 inputs, including commodity market prices, interest rates, credit ratings, default rates, and market-based seasonality factors. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">CMS Energy's derivatives include an electricity sales agreement held by CMS ERM that extends beyond the term for which quoted electricity prices are available. To value this agreement, CMS Energy uses an internally developed model to project future prices. This method incorporates a proprietary forward power pricing curve that is based on forward gas prices and an implied heat rate. CMS Energy also increases the fair value of the liability for this agreement by an amount that reflects the uncertainty of its model. Since the modeling technique is significant to the overall fair value measurement, this agreement is classified as Level 3. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">For all fair values other than Level 1 prices, CMS Energy and Consumers incorporate adjustments for the risk of nonperformance. For derivative assets, a credit adjustment is applied against the asset based on the published default rate for the credit rating that CMS Energy and Consumers assign to the counterparty based on an internal credit-scoring model. This model considers various inputs, including the counterparty's financial statements, credit reports, trade press, and other information that would be available to market participants. To the extent that the internal ratings are comparable to credit ratings published by independent rating agencies, the resulting credit adjustment is classified within Level 2. If the internal model results in a rating that is outside of the range of ratings given by the independent agencies and the credit adjustment is significant to the overall valuation, the derivative fair value is classified as Level 3. CMS Energy and Consumers adjust their derivative liabilities downward to reflect the risk of their own nonperformance, based on their published credit ratings. Adjustments for credit risk using the approach outlined within this paragraph are not materially different from the adjustments that would result from using credit default swap rates for the contracts presently held. For additional details about derivative contracts, see Note 8, Derivative Instruments. </div></div> <div style="font-family: 'Times New Roman',Times,serif;"> <div style="margin-top: 12pt; font-size: 10pt;" align="left"><b>Assets and Liabilities Measured at Fair Value on a Recurring Basis using Significant Level 3 Inputs</b> </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">The following table is a reconciliation of changes in the fair values of Level 3 assets and liabilities at CMS Energy: </div> <div align="center"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr valign="bottom"><td width="76%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td style="border-bottom: #000000 1px solid;" colspan="9" nowrap="nowrap" align="right">In Millions</td></tr> <tr style="font-size: 8pt;" valign="bottom"><td nowrap="nowrap" align="left">Three months ended June 30</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">2010</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">2009</td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 1px solid;" colspan="9" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Balance at April 1</div></td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(3</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(10</td> <td nowrap="nowrap">)</td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Total losses included in earnings (a)</div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(1</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">—</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Purchases, sales, issuances, and settlements (net)</div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(1</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(1</td> <td nowrap="nowrap">)</td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="7" nowrap="nowrap" align="left"> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Balance at June 30</div></td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(5</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(11</td> <td nowrap="nowrap">)</td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 1px solid;" colspan="9" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: 0px; margin-left: 0px;">Unrealized losses included in earnings for the three months ended June 30 relating to assets and liabilities still held at June 30 (a)</div></td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(2</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(1</td> <td nowrap="nowrap">)</td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 3px double;" colspan="9" align="left"> </td></tr></table></div> <div align="center"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr valign="bottom"><td width="76%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td style="border-bottom: #000000 1px solid;" colspan="9" nowrap="nowrap" align="right">In Millions</td></tr> <tr style="font-size: 8pt;" valign="bottom"><td nowrap="nowrap" align="left">Six months ended June 30</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">2010</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">2009</td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 1px solid;" colspan="9" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Balance at January 1</div></td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(8</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(16</td> <td nowrap="nowrap">)</td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Total gains included in earnings (a)</div></td> <td> </td> <td> </td> <td align="right">3</td> <td> </td> <td> </td> <td> </td> <td align="right">6</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Purchases, sales, issuances, and settlements (net)</div></td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(1</td> <td nowrap="nowrap">)</td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="7" nowrap="nowrap" align="left"> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Balance at June 30</div></td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(5</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(11</td> <td nowrap="nowrap">)</td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 1px solid;" colspan="9" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: 0px; margin-left: 0px;">Unrealized gains included in earnings for the six months ended June 30 relating to assets and liabilities still held at June 30 (a)</div></td> <td> </td> <td align="right">$</td> <td align="right">2</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">4</td> <td> </td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 3px double;" colspan="9" align="left"> </td></tr></table></div> <div style="margin-top: 3pt;"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td width="3%"> </td> <td width="1%"> </td> <td width="96"> </td></tr> <tr valign="top"><td nowrap="nowrap" align="left">(a)</td> <td> </td> <td>CMS Energy records realized and unrealized gains and losses for Level 3 recurring fair values in earnings as a component of Operating Revenue or Maintenance and other operating expenses on its Consolidated Statements of Income.</td></tr></table></div> <div style="margin-top: 12pt; font-size: 10pt;" align="left"><b>Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis</b> </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">The following table summarizes, by level within the fair value hierarchy, CMS Energy's assets reported at fair value on a nonrecurring basis during the three months ended June 30, 2010: </div> <div align="center"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr valign="bottom"><td width="52%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td style="border-bottom: #000000 1px solid;" colspan="17" nowrap="nowrap" align="right">In Millions</td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">Gains</td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">Level 1</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">Level 2</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">Level 3</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">(Losses)</td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 1px solid;" colspan="17" align="left"> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"><font style="font-variant: small-caps;" class="_mt"><b>CMS Energy, including Consumers</b></font></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Assets held for sale</div></td> <td> </td> <td align="right">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">—</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">7</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(4</td> <td nowrap="nowrap">)</td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 3px double;" colspan="17" align="left"> </td></tr></table></div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">CMS Energy wrote down assets held for sale from their carrying amount of $11 million to their fair value at June 30, 2010 of $7 million, resulting in a loss of $4 million, which was recorded in earnings as part of discontinued operations. The fair value was determined based on a discounted cash flow technique. The reduction in fair value during the three months ended</div></div> <div style="font-family: 'Times New Roman',Times,serif;"> <div style="margin-top: 6pt; font-size: 10pt;" align="left">June 30, 2010 was due primarily to declines in forward electricity prices. Consumers did not have any nonrecurring fair value measurements during the three months ended June 30, 2010.</div></div> </div>

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<div> <div style="font-family: 'Times New Roman',Times,serif;"> <div style="margin-top: 12pt; font-size: 10pt;" align="left"><b>10: INCOME TAXES</b> </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">The actual income tax expense on income from continuing operations, excluding income attributable to noncontrolling interests, differs from the amount computed by applying the statutory U.S. federal income tax rate as follows: </div> <div align="center"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr valign="bottom"><td width="76%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td style="border-bottom: #000000 1px solid;" colspan="9" nowrap="nowrap" align="right">In Millions</td></tr> <tr style="font-size: 8pt;" valign="bottom"><td nowrap="nowrap" align="left">Six months ended June 30</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">2010</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">2009</td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 1px solid;" colspan="9" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"><font style="font-variant: small-caps;" class="_mt"><b>CMS Energy, including Consumers</b></font></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Income from continuing operations before income taxes</div></td> <td> </td> <td align="right">$</td> <td align="right">307</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">209</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Income tax expense at statutory 35% federal rate</div></td> <td> </td> <td> </td> <td align="right">108</td> <td> </td> <td> </td> <td> </td> <td align="right">73</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Increase (decrease) in income taxes from:</div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Change in tax law, Medicare Part D subsidy</div></td> <td> </td> <td> </td> <td align="right">3</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">ITC amortization</div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(2</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(2</td> <td nowrap="nowrap">)</td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Medicare Part D exempt income</div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(3</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(3</td> <td nowrap="nowrap">)</td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">State and local income taxes, net of federal benefit</div></td> <td> </td> <td> </td> <td align="right">12</td> <td> </td> <td> </td> <td> </td> <td align="right">13</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Other, net</div></td> <td> </td> <td> </td> <td align="right">2</td> <td> </td> <td> </td> <td> </td> <td align="right">1</td> <td> </td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="7" align="left"> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Income tax expense</div></td> <td> </td> <td align="right">$</td> <td align="right">120</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">82</td> <td> </td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="7" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Effective tax rate</div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">39.1</td> <td nowrap="nowrap">%</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">39.2</td> <td nowrap="nowrap">%</td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 3px double;" colspan="9" align="left"> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"><font style="font-variant: small-caps;" class="_mt"><b>Consumers</b></font></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Income from continuing operations before income taxes</div></td> <td> </td> <td align="right">$</td> <td align="right">310</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">272</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Income tax expense at statutory 35% federal rate</div></td> <td> </td> <td> </td> <td align="right">108</td> <td> </td> <td> </td> <td> </td> <td align="right">95</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Increase (decrease) in taxes from:</div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">ITC amortization</div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(2</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(2</td> <td nowrap="nowrap">)</td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Medicare Part D exempt income</div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(3</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(3</td> <td nowrap="nowrap">)</td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">State and local income taxes, net of federal benefit</div></td> <td> </td> <td> </td> <td align="right">11</td> <td> </td> <td> </td> <td> </td> <td align="right">8</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Other, net</div></td> <td> </td> <td> </td> <td align="right">1</td> <td> </td> <td> </td> <td> </td> <td align="right">3</td> <td> </td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="7" align="left"> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Income tax expense</div></td> <td> </td> <td align="right">$</td> <td align="right">115</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">101</td> <td> </td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="7" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Effective tax rate</div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">37.1</td> <td nowrap="nowrap">%</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">37.1</td> <td nowrap="nowrap">%</td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 3px double;" colspan="9" align="left"> </td></tr></table></div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">The Patient Protection and Affordable Care Act and the related Health Care and Education Reconciliation Act (the Health Care Acts) were enacted in March 2010. For taxable years beginning after December 31, 2012, the Health Care Acts repeal the tax deduction for the portion of health care costs that are reimbursed by the Medicare Part D subsidy. To reflect the law change, CMS Energy and Consumers decreased their deferred tax asset balances by $68 million, with CMS Energy recognizing deferred tax expense of $3 million and Consumers recognizing an increase to net regulatory tax assets of $65 million (not including the effects of ratemaking tax gross-ups). Therefore, this legislation had no effect on Consumers' net income for the six months ended June 30, 2010. </div></div> </div>

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<div> <div style="font-family: 'Times New Roman',Times,serif;"> <div style="margin-top: 6pt; font-size: 10pt;" align="left">These interim Consolidated Financial Statements have been prepared by CMS Energy and Consumers in accordance with accounting principles generally accepted in the U.S. for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. As a result, CMS Energy and Consumers have condensed or omitted certain information and Note disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the U.S. CMS Energy and Consumers have reclassified certain prior period amounts to conform to the presentation in the current period. In management's opinion, the unaudited information contained in this report reflects all adjustments of a normal recurring nature necessary to ensure the fair presentation of financial position, results of operations, and cash flows for the periods presented. The Notes to Consolidated Financial Statements and the related Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and related Notes contained in the 2009 Form 10-K. Due to the seasonal nature of CMS Energy's and Consumers' operations, the results presented for this interim period are not necessarily indicative of results to be achieved for the fiscal year.</div></div> </div>

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87000000

<div> <div style="font-family: 'Times New Roman',Times,serif;"> <div style="margin-top: 12pt; font-size: 10pt;" align="left"><b>9: RETIREMENT BENEFITS</b> </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">CMS Energy and Consumers provide Pension Plan, OPEB, and other retirement benefit plans to employees. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">The following tables show the costs and other changes in plan assets and benefit obligations incurred in CMS Energy's and Consumers' retirement benefits plans: </div> <div align="center"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr valign="bottom"><td width="52%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td style="border-bottom: #000000 1px solid;" colspan="17" nowrap="nowrap" align="right">In Millions</td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td style="border-bottom: #000000 0px solid;" colspan="15" nowrap="nowrap" align="center">Pension</td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td style="border-bottom: #000000 0px solid;" colspan="7" nowrap="nowrap" align="center">Three Months Ended</td> <td> </td> <td style="border-bottom: #000000 0px solid;" colspan="7" nowrap="nowrap" align="center">Six Months Ended</td></tr> <tr style="font-size: 8pt;" valign="bottom"><td nowrap="nowrap" align="left">June 30</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">2010</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">2009</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">2010</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">2009</td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 1px solid;" colspan="17" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"><font style="font-variant: small-caps;" class="_mt"><b>CMS Energy, including Consumers</b></font></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Service cost</div></td> <td> </td> <td align="right">$</td> <td align="right">11</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">10</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">22</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">20</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Interest expense</div></td> <td> </td> <td> </td> <td align="right">25</td> <td> </td> <td> </td> <td> </td> <td align="right">24</td> <td> </td> <td> </td> <td> </td> <td align="right">49</td> <td> </td> <td> </td> <td> </td> <td align="right">48</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Expected return on plan assets</div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(23</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(22</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(46</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(43</td> <td nowrap="nowrap">)</td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;"><i>Amortization of:</i></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 45px;">Net loss</div></td> <td> </td> <td> </td> <td align="right">13</td> <td> </td> <td> </td> <td> </td> <td align="right">11</td> <td> </td> <td> </td> <td> </td> <td align="right">26</td> <td> </td> <td> </td> <td> </td> <td align="right">21</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 45px;">Prior service cost</div></td> <td> </td> <td> </td> <td align="right">1</td> <td> </td> <td> </td> <td> </td> <td align="right">1</td> <td> </td> <td> </td> <td> </td> <td align="right">3</td> <td> </td> <td> </td> <td> </td> <td align="right">3</td> <td> </td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="15" align="left"> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Net periodic cost</div></td> <td> </td> <td align="right">$</td> <td align="right">27</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">24</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">54</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">49</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Regulatory adjustment</div></td> <td> </td> <td> </td> <td align="right">21</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">23</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="15" align="left"> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Net periodic cost after regulatory adjustment</div></td> <td> </td> <td align="right">$</td> <td align="right">48</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">24</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">77</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">49</td> <td> </td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 3px double;" colspan="17" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"><font style="font-variant: small-caps;" class="_mt"><b>Consumers</b></font></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Service cost</div></td> <td> </td> <td align="right">$</td> <td align="right">10</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">10</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">21</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">20</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Interest expense</div></td> <td> </td> <td> </td> <td align="right">24</td> <td> </td> <td> </td> <td> </td> <td align="right">23</td> <td> </td> <td> </td> <td> </td> <td align="right">48</td> <td> </td> <td> </td> <td> </td> <td align="right">46</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Expected return on plan assets</div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(22</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(22</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(45</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(42</td> <td nowrap="nowrap">)</td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;"><i>Amortization of:</i></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 45px;">Net loss</div></td> <td> </td> <td> </td> <td align="right">13</td> <td> </td> <td> </td> <td> </td> <td align="right">10</td> <td> </td> <td> </td> <td> </td> <td align="right">25</td> <td> </td> <td> </td> <td> </td> <td align="right">20</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 45px;">Prior service cost</div></td> <td> </td> <td> </td> <td align="right">1</td> <td> </td> <td> </td> <td> </td> <td align="right">2</td> <td> </td> <td> </td> <td> </td> <td align="right">3</td> <td> </td> <td> </td> <td> </td> <td align="right">3</td> <td> </td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="15" align="left"> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Net periodic cost</div></td> <td> </td> <td align="right">$</td> <td align="right">26</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">23</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">52</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">47</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Regulatory adjustments (a)</div></td> <td> </td> <td> </td> <td align="right">21</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">23</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="15" align="left"> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Net periodic cost after regulatory adjustment</div></td> <td> </td> <td align="right">$</td> <td align="right">47</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">23</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">75</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">47</td> <td> </td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 3px double;" colspan="17" align="left"> </td></tr></table></div> <div style="margin-top: 3pt;"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td width="3%"> </td> <td width="1%"> </td> <td width="96"> </td></tr> <tr valign="top"><td nowrap="nowrap" align="left">(a)</td> <td> </td> <td>Regulatory adjustments are the differences between amounts included in rates and the periodic benefit cost calculated.</td></tr></table></div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">CMS Energy's and Consumers' expected long-term rate of return on plan assets is eight percent. For the six months ended June 30, 2010, the actual return on Pension Plan assets was a negative 0.5 percent, and for 2009 the actual return was 21 percent. The expected rate of return is an assumption about long-term asset performance that CMS Energy and Consumers review annually for reasonableness and appropriateness. </div></div> <div style="font-family: 'Times New Roman',Times,serif;"> <div align="center"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr valign="bottom"><td width="52%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td style="border-bottom: #000000 1px solid;" colspan="17" nowrap="nowrap" align="right">In Millions</td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td style="border-bottom: #000000 0px solid;" colspan="15" nowrap="nowrap" align="center">OPEB</td></tr> <tr style="font-size: 8pt;" valign="bottom"><td style="border-bottom: #000000 1px solid;"> </td> <td style="border-bottom: #000000 1px solid;"> </td> <td style="border-bottom: #000000 1px solid;" colspan="7" nowrap="nowrap" align="center">Three Months Ended</td> <td style="border-bottom: #000000 1px solid;"> </td> <td style="border-bottom: #000000 1px solid;" colspan="7" nowrap="nowrap" align="center">Six Months Ended</td></tr> <tr style="font-size: 8pt;" valign="bottom"><td nowrap="nowrap" align="left">June 30</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">2010</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">2009</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">2010</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">2009</td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 1px solid;" colspan="17" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"><font style="font-variant: small-caps;" class="_mt"><b>CMS Energy, including Consumers</b></font></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Service cost</div></td> <td> </td> <td align="right">$</td> <td align="right">6</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">7</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">13</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">13</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Interest expense</div></td> <td> </td> <td> </td> <td align="right">20</td> <td> </td> <td> </td> <td> </td> <td align="right">20</td> <td> </td> <td> </td> <td> </td> <td align="right">41</td> <td> </td> <td> </td> <td> </td> <td align="right">40</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Expected return on plan assets</div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(14</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(13</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(29</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(26</td> <td nowrap="nowrap">)</td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;"><i>Amortization of:</i></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 45px;">Net loss</div></td> <td> </td> <td> </td> <td align="right">8</td> <td> </td> <td> </td> <td> </td> <td align="right">9</td> <td> </td> <td> </td> <td> </td> <td align="right">16</td> <td> </td> <td> </td> <td> </td> <td align="right">17</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 45px;">Prior service credit</div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(5</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(3</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(7</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(5</td> <td nowrap="nowrap">)</td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="15" nowrap="nowrap" align="left"> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Net periodic cost</div></td> <td> </td> <td align="right">$</td> <td align="right">15</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">20</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">34</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">39</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Regulatory adjustment</div></td> <td> </td> <td> </td> <td align="right">6</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">7</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="15" align="left"> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Net periodic cost after regulatory adjustment</div></td> <td> </td> <td align="right">$</td> <td align="right">21</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">20</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">41</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">39</td> <td> </td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 3px double;" colspan="17" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"><font style="font-variant: small-caps;" class="_mt"><b>Consumers</b></font></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Service cost</div></td> <td> </td> <td align="right">$</td> <td align="right">6</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">6</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">13</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">12</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Interest expense</div></td> <td> </td> <td> </td> <td align="right">20</td> <td> </td> <td> </td> <td> </td> <td align="right">19</td> <td> </td> <td> </td> <td> </td> <td align="right">40</td> <td> </td> <td> </td> <td> </td> <td align="right">39</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Expected return on plan assets</div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(14</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(12</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(28</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(24</td> <td nowrap="nowrap">)</td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;"><i>Amortization of:</i></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 45px;">Net loss</div></td> <td> </td> <td> </td> <td align="right">8</td> <td> </td> <td> </td> <td> </td> <td align="right">9</td> <td> </td> <td> </td> <td> </td> <td align="right">16</td> <td> </td> <td> </td> <td> </td> <td align="right">17</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 45px;">Prior service credit</div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(4</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(3</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(6</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(5</td> <td nowrap="nowrap">)</td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="15" nowrap="nowrap" align="left"> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Net periodic cost</div></td> <td> </td> <td align="right">$</td> <td align="right">16</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">19</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">35</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">39</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Regulatory adjustments (a)</div></td> <td> </td> <td> </td> <td align="right">6</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">7</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="15" align="left"> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Net periodic cost after regulatory adjustment</div></td> <td> </td> <td align="right">$</td> <td align="right">22</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">19</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">42</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">39</td> <td> </td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 3px double;" colspan="17" align="left"> </td></tr></table></div> <div style="margin-top: 3pt;"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td width="3%"> </td> <td width="1%"> </td> <td width="96"> </td></tr> <tr valign="top"><td nowrap="nowrap" align="left">(a)</td> <td> </td> <td>Regulatory adjustments are the differences between amounts included in rates and the periodic benefit cost calculated.</td></tr></table></div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">In February 2010, the MPSC issued an order in Consumers' GCR case that allowed Consumers to collect a one-time surcharge under a Pension Plan and OPEB equalization mechanism. For the six months ended June 30, 2010, Consumers collected $2 million of Pension Plan and $1 million of OPEB surcharge revenue in gas rates. Consumers recorded a reduction of $3 million of equalization regulatory assets on its Consolidated Balance Sheets and an increase of $3 million of expense on its Consolidated Statements of Income. Thus, Consumers' collection of the equalization mechanism surcharge had no impact on net income for the six months ended June 30, 2010. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">In April 2010, the MPSC issued an order in Consumers' PSCR case that allowed Consumers to collect a one-time surcharge under a Pension Plan and OPEB equalization mechanism. For the six months ended June 30, 2010, Consumers collected $21 million of Pension Plan and $6 million of OPEB surcharge revenue in gas rates. Consumers recorded a reduction of $27 million of equalization regulatory assets on its Consolidated Balance Sheets and an increase of $27 million of expense on its Consolidated Statements of Income. Thus, Consumers' collection of the equalization mechanism surcharge had no impact on net income for the six months ended June 30, 2010. </div></div> <div style="font-family: 'Times New Roman',Times,serif;"> <div style="margin-top: 6pt; font-size: 10pt;" align="left">CMS Energy and Consumers remeasured their OPEB obligations at April 30, 2010 to incorporate the effects of a new collective bargaining agreement reached between the Union and Consumers. The OPEB plan remeasurement decreased CMS Energy's OPEB liability by $95 million, OPEB regulatory asset by $93 million, and AOCL by $2 million, and will result in a decrease in benefit costs of $14 million for 2010. The OPEB plan remeasurement decreased Consumers' OPEB liability and OPEB regulatory asset by $93 million each, and will result in a decrease in benefit costs of $13 million for 2010. With the plan remeasurement, the discount rate was reduced from 6.0 percent at December 31, 2009 to 5.85 percent at April 30, 2010. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">In March 2010, CMS Energy contributed $100 million to its pension fund, which included a contribution of $97 million by Consumers. In February 2010, CMS Energy contributed $17 million to its SERP fund, which included a contribution of $11 million by Consumers. </div></div> </div>

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<div> <div style="font-family: 'Times New Roman',Times,serif;"> <div style="margin-top: 12pt; font-size: 10pt;" align="left"><b>4: UTILITY RATE MATTERS</b> </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">Rate matters are critical to Consumers. Depending upon the specific issues, the outcomes of specific rate cases and proceedings could have a material adverse effect on Consumers' cash flows and results of operations. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><font style="font-variant: small-caps;" class="_mt"><b>CONSUMERS' ELECTRIC UTILITY RATE MATTERS</b></font> </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><b>Power Supply Cost Recovery: </b>The PSCR process is designed to allow Consumers to recover all of its power supply costs if incurred under reasonable and prudent policies and practices. The MPSC reviews these costs, policies, and practices in annual plan and reconciliation proceedings. Consumers adjusts its PSCR billing factor monthly in order to minimize the overrecovery or underrecovery amount in the annual PSCR reconciliation. </div></div> <div style="font-family: 'Times New Roman',Times,serif;"> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><i>PSCR Reconciliations</i>: The following table summarizes the PSCR reconciliation filing pending with the MPSC: </div> <div align="center"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr valign="bottom"><td width="20%"> </td> <td width="2%"> </td> <td width="20%"> </td> <td width="2%"> </td> <td width="25%"> </td> <td width="2%"> </td> <td width="25%"> </td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 1px solid;" valign="top" colspan="7" align="left"> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center">PSCR Cost of</td></tr> <tr style="font-size: 8pt;" valign="bottom"><td nowrap="nowrap" align="left">PSCR Year</td> <td> </td> <td nowrap="nowrap" align="left">Date Filed</td> <td> </td> <td nowrap="nowrap" align="center">Net Underrecovery</td> <td> </td> <td nowrap="nowrap" align="center">Power Sold</td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 1px solid;" valign="top" colspan="7" align="left"> </td></tr> <tr valign="bottom"><td valign="top"> <div style="text-indent: 0px; margin-left: 0px;">2009 </div></td> <td> </td> <td valign="top" align="left">March 2010 </td> <td> </td> <td valign="top" align="center">$39 million (a) </td> <td> </td> <td valign="top" align="center">$1.6 billion</td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 3px double;" valign="top" colspan="7" align="left"> </td></tr></table></div> <div style="margin-top: 3pt;"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td width="3%"> </td> <td width="1%"> </td> <td width="96"> </td></tr> <tr valign="top"><td nowrap="nowrap" align="left">(a)</td> <td> </td> <td>In 2005, the MPSC approved an economic development discount for a large industrial customer to promote long-term investments in the industrial infrastructure of Michigan. It was determined in the November 2009 electric rate case order that recovery of this discount should be provided through the electric general rates that Consumers self-implemented in May 2009. That order, however, did not address the recovery of the power-supply component of the discount provided from January 2009 through self-implementation, which totaled $4 million. Consumers has requested recovery of this amount through its 2009 PSCR reconciliation.</td></tr></table></div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">In March 2010, the MPSC issued an order in Consumers' 2007 PSCR reconciliation, disallowing PSCR recovery of $3 million of economic development discounts and $4 million of net replacement power costs associated with a crane incident at Consumers' Campbell plant. The MPSC approved the 2007 PSCR reconciliation, as modified by the order, and authorized Consumers to include an underrecovery of $21 million in its 2008 PSCR plan. In April 2010, Consumers filed for a rehearing in its 2007 PSCR reconciliation, asking the MPSC to reconsider its decision to disallow recovery of a $2 million economic development discount provided in 2007 to a large industrial customer. In June 2010, the MPSC denied Consumers' petition for rehearing. In July 2010, Consumers filed a claim for appeal with the Michigan Court of Appeals regarding the MPSC's decision to disallow recovery of the economic development discount. Consumers cannot predict the outcome of this proceeding. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">In June 2010, the MPSC issued an order in Consumers' 2008 PSCR reconciliation, disallowing the PSCR recovery of a $3 million economic development discount. The MPSC approved the 2008 PSCR reconciliation, as modified by the order, and authorized Consumers to include an overrecovery of $14 million in its 2009 PSCR reconciliation. In July 2010, Consumers filed for a rehearing in its 2008 PSCR reconciliation, asking the MPSC to reconsider its decision to disallow recovery of the $3 million economic development discount. Consumers cannot predict the outcome of this proceeding. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><i>PSCR Plan</i>: In September 2009, Consumers submitted its 2010 PSCR Plan to the MPSC. Using the maximum PSCR factor proposed in its plan, Consumers self-implemented the 2010 PSCR charge beginning in January 2010. While Consumers expects to recover all of its PSCR costs, it cannot predict the financial impact or outcome of this proceeding. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><b>Electric Rate Cases: </b>The MPSC, through a final order and rehearing in Consumers' 2009 electric rate case, directed Consumers to refund to customers the difference between the rates it self-implemented in May 2009 and the rates authorized in the order, plus interest, subject to a reconciliation proceeding. In February 2010, Consumers filed an application for the refund of $12 million to its customers beginning in September 2010. In May 2010, the MPSC Staff recommended a refund of $32 million. In June 2010, Consumers revised its proposed refund to $15 million. The MPSC issued an order in June 2010 that dispenses with the need for the ALJ's PFD in this case, which will expedite the refund Consumers must make to its customers. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">The MPSC's order in Consumers' 2009 electric rate case also adopted a "pilot" decoupling mechanism and an uncollectible expense tracking mechanism. Various parties have filed appeals concerning aspects of the MPSC order, including both of these ratemaking mechanisms. Two parties also seek to have the Michigan Supreme Court hear these appeals directly. Consumers cannot predict the outcome of these proceedings. </div></div> <div style="font-family: 'Times New Roman',Times,serif;"> <div style="margin-top: 6pt; font-size: 10pt;" align="left">In January 2010, Consumers filed an application with the MPSC seeking an annual increase in revenue of $178 million based on an 11 percent authorized return on equity. The filing requested authority to recover new investments in system reliability, environmental compliance, and technology advancements. In June 2010, the MPSC Staff recommended a revenue increase of $90 million, based on a 10.35 percent return on equity. The MPSC Staff also recommended an additional revenue increase of $25 million (not included in the table below) if the MPSC denies Consumers' request for a tracking mechanism for an economic development discount provided to a large industrial customer. In July 2010, Consumers self-implemented an annual electric rate increase of $150 million, subject to refund with interest. The $28 million reduction from Consumers' requested rate increase reflects Consumers' attempt to be responsive to concerns raised by the MPSC Staff and other intervenors, and to balance the need for investment in improved infrastructure to support economic recovery in Michigan and the resulting rate impacts on customers. The following table details the components of Consumers' self-implemented electric rate increase and the increase recommended by the MPSC Staff: </div> <div align="center"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr valign="bottom"><td width="64%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td style="border-bottom: #000000 1px solid;"> </td> <td style="border-bottom: #000000 1px solid;"> </td> <td style="border-bottom: #000000 1px solid;"> </td> <td style="border-bottom: #000000 1px solid;"> </td> <td style="border-bottom: #000000 1px solid;"> </td> <td style="border-bottom: #000000 1px solid;"> </td> <td style="border-bottom: #000000 1px solid;" colspan="3" nowrap="nowrap" align="center"> </td> <td style="border-bottom: #000000 1px solid;"> </td> <td style="border-bottom: #000000 1px solid;" colspan="3" nowrap="nowrap" align="center">In Millions</td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">Increase</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center"> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">Consumers'</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">Recommended</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center"> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">Self-Implemented</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">by the</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center"> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td nowrap="nowrap" align="left">Components of the increase in revenue</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">Increase</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">MPSC Staff</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">Difference</td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 1px solid;" colspan="13" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Investment in rate base</div></td> <td> </td> <td align="left">$</td> <td align="right">106</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">80</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right"> (26</td> <td nowrap="nowrap">)</td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Recovery of operating and maintenance costs</div></td> <td> </td> <td> </td> <td align="right">21</td> <td> </td> <td> </td> <td> </td> <td align="right">25</td> <td> </td> <td> </td> <td> </td> <td align="right">4</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Return on equity</div></td> <td> </td> <td> </td> <td align="right">18</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(19</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(37</td> <td nowrap="nowrap">)</td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Impact of sales declines</div></td> <td> </td> <td> </td> <td align="right">5</td> <td> </td> <td> </td> <td> </td> <td align="right">4</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(1</td> <td nowrap="nowrap">)</td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="11" nowrap="nowrap" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Total</div></td> <td> </td> <td align="left">$</td> <td align="right">150</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">90</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">(60</td> <td nowrap="nowrap">)</td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 3px double;" colspan="13" align="left"> </td></tr></table></div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">In its July 2010 order allowing Consumers to self-implement this increase, the MPSC expressed concern about utilities repeatedly self-implementing rate increases over short time periods, and before the return of previous overcollections of self-implemented rate increases. Consumers cannot predict the financial impact or outcome of this electric rate case. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><b>Electric Operation and Maintenance Expenditures Show-Cause Order: </b>In December 2005, the MPSC authorized Consumers to increase its electric rates. In the same order, the MPSC ordered Consumers to spend certain amounts on future tree-trimming and line-clearing activities, as well as on the operation and maintenance of Consumers' fossil-fueled power plants. At that time, the MPSC also ordered Consumers to establish mechanisms to track these expenditures and stated that the rate increase was subject to refund with interest if the specified amounts were not spent on these activities. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">In October 2009, the MPSC issued a show-cause order alleging that, in 2007, Consumers spent $14 million less on forestry and fossil-fueled plant operation and maintenance activity than the amount ordered by the MPSC and that Consumers has not refunded this amount to customers. The order directed Consumers to explain why it should not be found in violation of the MPSC's December 2005 order and subjected to applicable sanctions, and why the refunds required by that order have not yet occurred. Consumers' response indicated that the total amount it spent on forestry and fossil-fueled plant operation and maintenance activity for the years 2006 through 2009 exceeded the total amounts included in rates for these activities. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">In March 2010, the MPSC Staff requested that the MPSC find Consumers in violation of the December 2005 order and that the MPSC order Consumers to refund $27 million for failure to meet annual spending requirements during 2007 and 2008. Consumers filed a response, stating that it would be unreasonable and unlawful to order a refund of this amount and that Consumers' expenditures were consistent with the MPSC's orders. In March 2010, the ALJ's PFD found Consumers' expenditures to be prudent and that Consumers did not violate the December 2005 order. The ALJ recommended that the MPSC find that no violation of the December 2005 order occurred and that no refunds be made to customers. Consumers cannot predict the outcome of this proceeding. </div></div> <div style="font-family: 'Times New Roman',Times,serif;"> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><b>Big Rock Decommissioning: </b>The MPSC and FERC regulate the recovery of Consumers' costs to decommission Big Rock. Subsequent to 2000, Consumers stopped funding a Big Rock trust fund because the collection period for an MPSC-authorized decommissioning surcharge expired on that date. The level of funds provided by the trust fell short of the amount needed to complete decommissioning and Consumers provided $44 million of corporate contributions for decommissioning costs. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">In an order issued in February 2010, the MPSC concluded that decommissioning surcharges collected during a statutory rate freeze from 2001 through 2003 should have been deposited in the decommissioning trust fund. The MPSC agreed that Consumers was entitled to a recovery of the $44 million decommissioning shortfall, but concluded that Consumers had collected this amount previously through the decommissioning surcharge in effect during the rate freeze. In April 2010, the MPSC ordered Consumers to refund $85 million of revenue collected in excess of decommissioning costs plus interest, over seven months beginning in July 2010. Consumers filed an appeal with the Michigan Court of Appeals in March 2010 to dispute the MPSC's conclusion that the collections received during the rate freeze should be subject to refund. At June 30, 2010, Consumers had an $86 million regulatory liability recorded on its Consolidated Balance Sheets for this refund. Consumers cannot predict the outcome of this proceeding. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">Consumers has paid $30 million to Entergy to assume ownership and responsibility for the Big Rock ISFSI, and has incurred $55 million for nuclear fuel storage costs as a result of the DOE's failure to accept spent nuclear fuel. Consumers is seeking recovery of these costs from the DOE. At June 30, 2010, Consumers had an $85 million regulatory asset recorded on its Consolidated Balance Sheets for these costs. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><b>Electric Depreciation: </b>In February 2010, Consumers filed an electric depreciation case related to its wholly owned electric utility property. As ordered by the MPSC, Consumers prepared a traditional cost-of-removal study, which supported a $46 million increase in annual depreciation expense. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">Also in February 2010, Consumers filed an electric depreciation case for Ludington, the pumped storage plant jointly owned by Consumers and Detroit Edison. This case, filed jointly with Detroit Edison, requests an increase in annual depreciation expense. Consumers' share of this increase is $9 million annually. Consumers cannot predict the financial impact or outcome of these proceedings. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><b>Renewable Energy Plan: </b>In June 2010, Consumers filed its first annual report and reconciliation for its renewable energy plan with the MPSC, requesting approval of Consumers' reconciliation of renewable energy plan costs for 2009. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><b>Energy Optimization Plan: </b>In April 2010, Consumers filed its first annual report and reconciliation for its energy optimization plan with the MPSC, requesting approval of Consumers' reconciliation of energy optimization plan costs for 2009. Consumers also requested approval of the collection of a $6 million incentive payment for both its gas and electric energy optimization plans. During 2009, Consumers achieved 134 percent of its electric savings target and 132 percent of its gas savings target. These achievements qualify Consumers to earn the maximum incentive allowed by the MPSC, which is calculated as 15 percent of Consumers' investment in energy savings. </div></div> <div style="font-family: 'Times New Roman',Times,serif;"> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><font style="font-variant: small-caps;" class="_mt"><b> </b></font> </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><font style="font-variant: small-caps;" class="_mt"><b>CONSUMERS' GAS UTILITY RATE MATTERS</b></font> </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><b>Gas Cost Recovery: </b>The GCR process is designed to allow Consumers to recover all of its purchased natural gas costs if incurred under reasonable and prudent policies and practices. The MPSC reviews these costs, policies, and practices in annual plan and reconciliation proceedings. Consumers adjusts its GCR billing factor monthly in order to minimize the overrecovery or underrecovery amount in the annual GCR reconciliation. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><i>GCR Reconciliations</i>: The following table summarizes the GCR reconciliation filings pending with the MPSC: </div> <div align="center"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr valign="bottom"><td width="20%"> </td> <td width="2%"> </td> <td width="20%"> </td> <td width="2%"> </td> <td width="25%"> </td> <td width="2%"> </td> <td width="25%"> </td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 1px solid;" valign="top" colspan="7" align="left"> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center">GCR Cost of</td></tr> <tr style="font-size: 8pt;" valign="bottom"><td nowrap="nowrap" align="left">GCR Year</td> <td> </td> <td nowrap="nowrap" align="left">Date Filed</td> <td> </td> <td nowrap="nowrap" align="center">Net (Under)/Overrecovery</td> <td> </td> <td nowrap="nowrap" align="center">Gas Sold</td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 1px solid;" valign="top" colspan="7" align="left"> </td></tr> <tr valign="bottom"><td valign="top"> <div style="text-indent: 0px; margin-left: 0px;">2008-2009 </div></td> <td> </td> <td valign="top" align="left">June 2009 </td> <td> </td> <td valign="top" align="center">$(15) million </td> <td> </td> <td valign="top" align="center">$1.8 billion</td></tr> <tr valign="bottom"><td valign="top"> <div style="text-indent: 0px; margin-left: 0px;">2009-2010 </div></td> <td> </td> <td valign="top" align="left">June 2010 </td> <td> </td> <td valign="top" align="center">  $1 million </td> <td> </td> <td valign="top" align="center">$1.3 billion</td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 3px double;" valign="top" colspan="7" align="left"> </td></tr></table></div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><i>GCR Plans: </i>In March 2010, the MPSC authorized Consumers to implement its 2009-2010 base GCR factor and generally approved Consumers' plan with minor adjustments to Consumers' current purchasing guidelines. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">In December 2009, Consumers filed an application with the MPSC seeking approval of a GCR plan for its 2010-2011 GCR plan year. In April 2010, Consumers self-implemented its filed GCR plan. While Consumers expects to recover all of its GCR costs, it cannot predict the financial impact or outcome of these proceedings. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><b>Gas Rate Case: </b>In May 2009, Consumers filed an application with the MPSC seeking an annual increase in revenue of $114 million based on an 11 percent authorized return on equity. The filing requested authorization to implement an uncollectible expense tracking mechanism, Pension Plan and OPEB equalization mechanisms, as well as a revenue decoupling mechanism. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">In November 2009, Consumers self-implemented a gas rate increase in the annual amount of $89 million. In May 2010, the MPSC issued its order in this case, authorizing Consumers to increase its rates by $66 million based on an authorized return on equity of 10.55 percent. The following table details the components of Consumers' self-implemented gas rate increase and the increase authorized by the MPSC: </div> <div align="center"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr valign="bottom"><td width="64%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td style="border-bottom: #000000 1px solid;" colspan="12" nowrap="nowrap" align="right">In Millions</td> <td> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Consumers'</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Increase</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center"> </td> <td> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Self-Implemented</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Authorized by</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center"> </td> <td> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td nowrap="nowrap" align="left">Components of the increase in revenue</td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Increase</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">the MPSC</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="center">Difference</td> <td> </td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 1px solid;" colspan="13" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Impact of sales declines</div></td> <td> </td> <td align="left">$</td> <td align="right">41</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">28</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(13</td> <td nowrap="nowrap">)</td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Investment in rate base</div></td> <td> </td> <td> </td> <td align="right">23</td> <td> </td> <td> </td> <td> </td> <td align="right">27</td> <td> </td> <td> </td> <td> </td> <td align="right">4</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Recovery of operating and maintenance costs</div></td> <td> </td> <td> </td> <td align="right">17</td> <td> </td> <td> </td> <td> </td> <td align="right">13</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(4</td> <td nowrap="nowrap">)</td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;">Return on equity</div></td> <td> </td> <td> </td> <td align="right">8</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(2</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(10</td> <td nowrap="nowrap">)</td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="11" nowrap="nowrap" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Total</div></td> <td> </td> <td align="left">$</td> <td align="right">89</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">66</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left">$</td> <td align="right">(23</td> <td nowrap="nowrap">)</td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 3px double;" colspan="13" align="left"> </td></tr></table></div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">The MPSC directed Consumers to refund to customers the difference between the rates it self-implemented in November 2009 and the rates authorized in this order, plus interest, subject to a reconciliation proceeding. At June 30, 2010, CMS Energy and Consumers had a recorded regulatory liability of $15 million related to this refund. CMS Energy and Consumers determined that the portion of the refund that was specifically identifiable with the first quarter of 2010 was not material and, accordingly, did not revise those financial statements. </div></div> <div style="font-family: 'Times New Roman',Times,serif;"> <div style="margin-top: 6pt; font-size: 10pt;" align="left">The May 2010 order also adopts a revenue decoupling mechanism, effective June 1, 2010, which, subject to certain conditions, allows Consumers to adjust future rates to collect or refund the change in marginal revenue by class arising from the difference between base sales per customer established in the order and weather-adjusted sales per customer. The order denied Consumers' request to implement a gas uncollectible expense tracking mechanism and Pension Plan and OPEB equalization mechanisms. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><b>Gas Depreciation: </b>In September 2009, the MPSC ordered Consumers to adopt certain standard retirement units by January 1, 2010. Consumers estimates that the use of these standard retirement units will increase maintenance expense, and recovery of that expense, by $10 million annually. In May 2010, as ordered by the MPSC, Consumers implemented the new standard retirement units concurrently with the final rates approved in its gas rate case. </div></div> </div>

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<div> <div style="font-family: 'Times New Roman',Times,serif;"> <div style="margin-top: 12pt; font-size: 10pt;" align="left"><b>1: NEW ACCOUNTING STANDARDS</b> </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><b>IMPLEMENTATION OF NEW ACCOUNTING STANDARDS</b> </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><i>SFAS No. 166, Accounting for Transfers of Financial Assets, an amendment of FASB Statement No. 140,</i> codified through <i>ASU No. 2009-16, Transfers and Servicing (Topic 860): Accounting for Transfers of Financial Assets: </i>This standard, which was effective for CMS Energy and Consumers January 1, 2010, removes the concept of a QSPE from guidance relating to transfers of financial assets and extinguishments of liabilities. It also removes the exceptions from applying guidance relating to VIEs to QSPEs. This standard revises and clarifies when an entity is required to derecognize a financial asset that it has transferred to another entity. It further clarifies how to measure beneficial interests received as proceeds in connection with a transfer of a financial asset, and introduces the concept of a "participating interest," the conditions of which must be met for a partial asset transfer to qualify for sale accounting treatment. The standard also requires enhanced disclosures related to continuing involvement with financial assets. Under this standard, transactions entered into under Consumers' revolving accounts receivable sales program, discussed in Note 5, Financings, are accounted for as secured borrowings rather than as sales. CMS Energy and Consumers present outstanding amounts under the program as short-term debt collateralized by accounts receivable. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><i>SFAS No. 167, Amendments to FASB Interpretation No. 46(R), </i>codified through <i>ASU No. 2009-17, Consolidations (Topic 810): Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities: </i>This standard, which was effective for CMS Energy and Consumers January 1, 2010, amends the criteria used to determine which entity, if any, has a controlling financial interest in a VIE. It replaces the quantitative calculation of risks and rewards with a qualitative approach focused on identifying which entity (1) has the power to direct the activities of a VIE that most significantly impact the VIE's economic performance and (2) has the obligation to absorb losses of the VIE or the right to receive benefits from the VIE. This standard also requires ongoing assessments of whether an entity is the primary beneficiary of a VIE. Upon implementation of this guidance, CMS Energy concluded that it is the primary beneficiary of CMS Energy Trust I and consolidated the trust in its consolidated financial statements on January 1, 2010. CMS Energy also concluded that it is not the primary beneficiary of T.E.S. Filer City, Grayling, or Genesee and deconsolidated these partnerships in its consolidated financial statements on January 1, 2010. CMS Energy consolidated CMS Energy Trust I at the carrying value that would be recorded had this guidance been effective when CMS Energy initially became involved with CMS Energy Trust I. CMS Energy recorded its retained interest in the deconsolidated partnerships at the carrying value that would be recorded had this guidance been effective when CMS Energy initially became involved with the partnerships. CMS Energy and Consumers have chosen not to adjust previously reported balances. No cumulative effect adjustments were required. For additional details, see Note 11, Variable Interest Entities. </div></div> <div style="font-family: 'Times New Roman',Times,serif;"> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><i>ASU No. 2010-06, Improving Disclosures about Fair Value Measurements: </i>This standard expands the required quarterly disclosures about fair value measurements that are included in Note 2, Fair Value Measurements. The standard requires information on transfers in and out of Levels 1 and 2 of the fair value hierarchy. In addition, it requires gross reporting of purchases, sales, issuances, and settlements in the reconciliation of Level 3 fair values, rather than reporting this activity as one net amount. The standard also clarifies certain existing disclosure requirements. This standard was effective for CMS Energy and Consumers January 1, 2010, except for the gross reporting of Level 3 fair value activity, which will be effective for CMS Energy and Consumers January 1, 2011. This standard does not impact CMS Energy's or Consumers' consolidated income, cash flows, or financial position, and did not result in any significant changes to the fair value disclosures. </div></div> </div>

<div> <div style="font-family: 'Times New Roman',Times,serif;"> <div style="margin-top: 12pt; font-size: 10pt;" align="left"><b>11: VARIABLE INTEREST ENTITIES</b> </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">Entities that are VIEs must be consolidated if the reporting entity determines that it has a controlling financial interest. The entity 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 VIE's net assets, excluding variable interests, changes. 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. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">Effective January 1, 2010, the accounting standards for consolidation of VIEs were amended. The most significant amendment changed the criteria for identifying the primary beneficiary. Under the amended standard, the primary beneficiary is the entity that has both (1) the power to direct the activities of a VIE that most significantly impact the VIE's economic performance and (2) the obligation to absorb losses of the VIE that could potentially be significant to the VIE. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">As a result of adopting this amendment, effective January 1, 2010, CMS Energy has consolidated CMS Energy Trust I and deconsolidated three partnerships that it had previously consolidated. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">CMS Energy has consolidated CMS Energy Trust I because CMS Energy is the variable interest holder that designed the entity and, through the design, has the power to direct the activities of CMS Energy Trust I that most significantly impact the trust's economic performance. Through its guarantee, CMS Energy also has the obligation to absorb losses of CMS Energy Trust I. The sole assets of the trust consist of notes payable by CMS Energy, and the sole liabilities of the trust consist of Trust Preferred Securities. Upon consolidation, CMS Energy reduced its equity method investment by $5 million and its Long-term debt by $34 million. CMS Energy also recorded a $29 million liability for the mandatorily redeemable preferred securities issued by the trust. No gain or loss was recognized on the consolidation of CMS Energy Trust I. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">CMS Energy has deconsolidated T.E.S. Filer City, Grayling, and Genesee because CMS Energy determined that power is shared among unrelated parties, and that no one party has the power to direct the activities that most significantly impact the entities' economic performance. The partners must agree on all major decisions for each of the partnerships. As a result, CMS Energy is not the primary beneficiary of these partnerships. </div></div> <div style="font-family: 'Times New Roman',Times,serif;"> <div style="margin-top: 6pt; font-size: 10pt;" align="left"> </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">The following table provides information about these partnerships: </div> <div align="center"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr valign="bottom"><td width="20%"> </td> <td width="1%"> </td> <td width="15%"> </td> <td width="1%"> </td> <td width="63%"> </td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 1px solid;" valign="top" colspan="5" align="left"> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td nowrap="nowrap" align="center">Nature of</td> <td> </td> <td nowrap="nowrap" align="center"> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td nowrap="nowrap" align="left">Name (Ownership Interest)</td> <td> </td> <td nowrap="nowrap" align="center">the Entity</td> <td> </td> <td nowrap="nowrap" align="left">Financing of Partnership</td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 1px solid;" valign="top" colspan="5" align="left"> </td></tr> <tr valign="bottom"><td valign="top"> <div style="text-indent: 0px; margin-left: 0px;">T.E.S. Filer City (50%) </div></td> <td> </td> <td valign="top" align="left">Coal-fueled power<br />generator </td> <td> </td> <td valign="top" align="left">Non-recourse long-term debt that matured in December 2007.</td></tr> <tr valign="bottom"><td valign="top"> <div style="text-indent: 0px; margin-left: 0px;"> </div></td> <td> </td> <td valign="top" align="left"> </td> <td> </td> <td valign="top" align="left"> </td></tr> <tr valign="bottom"><td valign="top"> <div style="text-indent: 0px; margin-left: 0px;">Grayling (50%) </div></td> <td> </td> <td valign="top" align="left">Wood waste- fueled<br />power generator </td> <td> </td> <td valign="top" align="left">Sale of revenue bonds that mature in November 2012 and bear interest at variable rates. The debt is recourse to the partnership, but not the individual partners, and secured by a letter of credit equal to the outstanding balance.</td></tr> <tr valign="bottom"><td valign="top"> <div style="text-indent: 0px; margin-left: 0px;"> </div></td> <td> </td> <td valign="top" align="left"> </td> <td> </td> <td valign="top" align="left"> </td></tr> <tr valign="bottom"><td valign="top"> <div style="text-indent: 0px; margin-left: 0px;">Genesee (50%) </div></td> <td> </td> <td valign="top" align="left">Wood waste- fueled<br />power generator </td> <td> </td> <td valign="top" align="left">Sale of revenue bonds that mature in 2021 and bear interest at fixed rates. The debt is non-recourse to the partnership and secured by a CMS Energy guarantee capped at $3 million annually.</td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 3px double;" valign="top" colspan="5" align="left"> </td></tr></table></div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">CMS Energy has operating and management contracts with Grayling and Genesee, and Consumers is the primary purchaser of power from each partnership through long-term PPAs. Consumers also has reduced dispatch agreements with Grayling and Genesee, which allow these facilities to be dispatched based on the market price of wood waste. This results in fuel cost savings that each partnership shares with Consumers' customers. </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">CMS Energy's investment in these partnerships is included in Investments on the Consolidated Balance Sheets in the amount of $49 million as of June 30, 2010. The partnerships were consolidated at December 31, 2009. Total assets of the partnerships were $189 million and total liabilities were $92 million at December 31, 2009. The partnerships had third-party debt obligations totaling $70 million at December 31, 2009. Plant, property, and equipment serving as collateral for these obligations had a carrying value of $137 million at December 31, 2009. The creditors of these partnerships do not have recourse to the general credit of CMS Energy or Consumers, except through outstanding letters of credit of $2 million and a guarantee of $3 million annually. CMS Energy has deferred collections on certain receivables owed by Genesee. CMS Energy's maximum exposure to loss from these receivables is $6 million. Consumers has not provided any financial or other support during the periods presented that was not previously contractually required. </div></div> </div>

<div> <div style="font-family: 'Times New Roman',Times,serif;"> <div style="margin-top: 6pt; font-size: 10pt;" align="left"><b>12: REPORTABLE SEGMENTS</b> </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">Reportable segments consist of business units defined by the products and services they offer. CMS Energy and Consumers evaluate performance based on the net income available to common stockholders of each segment. The reportable segments for CMS Energy and Consumers are: </div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">CMS Energy: </div> <div style="margin-top: 6pt;"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="2%"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>electric utility, consisting of regulated activities associated with the generation and distribution of electricity in Michigan;</td></tr> <tr><td style="font-size: 6pt;"> </td></tr> <tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="2%"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>gas utility, consisting of regulated activities associated with the transportation, storage, and distribution of natural gas in Michigan;</td></tr> <tr><td style="font-size: 6pt;"> </td></tr> <tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="2%"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>enterprises, consisting of various subsidiaries engaging primarily in domestic independent power production; and</td></tr> <tr><td style="font-size: 6pt;"> </td></tr> <tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="2%"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>other, including corporate interest and other expenses and discontinued operations.</td></tr></table></div></div> <div style="font-family: 'Times New Roman',Times,serif;"> <div style="margin-top: 6pt; font-size: 10pt;" align="left">Consumers: </div> <div style="margin-top: 6pt;"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="2%"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>electric utility, consisting of regulated activities associated with the generation and distribution of electricity in Michigan;</td></tr> <tr><td style="font-size: 6pt;"> </td></tr> <tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="2%"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>gas utility, consisting of regulated activities associated with the transportation, storage, and distribution of natural gas in Michigan; and</td></tr> <tr><td style="font-size: 6pt;"> </td></tr> <tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="2%"> </td> <td width="3%" nowrap="nowrap" align="left"><b>•</b></td> <td width="1%"> </td> <td>other, including a consolidated special-purpose entity for the sale of accounts receivable.</td></tr></table></div> <div style="margin-top: 6pt; font-size: 10pt;" align="left">The following tables provide financial information by reportable segment: </div> <div align="center"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr valign="bottom"><td width="52%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td style="border-bottom: #000000 1px solid;"> </td> <td style="border-bottom: #000000 1px solid;"> </td> <td style="border-bottom: #000000 1px solid;" colspan="15" nowrap="nowrap" align="right">In Millions</td></tr> <tr style="font-size: 8pt;" valign="bottom"><td style="border-bottom: #000000 1px solid;"> </td> <td style="border-bottom: #000000 1px solid;"> </td> <td style="border-bottom: #000000 1px solid;" colspan="7" nowrap="nowrap" align="right">Three months ended</td> <td style="border-bottom: #000000 1px solid;"> </td> <td style="border-bottom: #000000 1px solid;" colspan="7" nowrap="nowrap" align="right">Six months ended</td></tr> <tr style="font-size: 8pt;" valign="bottom"><td nowrap="nowrap" align="left">June 30</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">2010</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">2009</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">2010</td> <td> </td> <td colspan="3" nowrap="nowrap" align="center">2009</td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 1px solid;" colspan="17" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"><b>Operating Revenue</b></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;"><font style="font-variant: small-caps;" class="_mt"><b>CMS Energy, including Consumers</b></font></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 60px;">Electric utility</div></td> <td> </td> <td align="right">$</td> <td align="right">975</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">848</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">1,813</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">1,660</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 60px;">Gas utility</div></td> <td> </td> <td> </td> <td align="right">301</td> <td> </td> <td> </td> <td> </td> <td align="right">334</td> <td> </td> <td> </td> <td> </td> <td align="right">1,353</td> <td> </td> <td> </td> <td> </td> <td align="right">1,556</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 60px;">Enterprises</div></td> <td> </td> <td> </td> <td align="right">55</td> <td> </td> <td> </td> <td> </td> <td align="right">37</td> <td> </td> <td> </td> <td> </td> <td align="right">123</td> <td> </td> <td> </td> <td> </td> <td align="right">101</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 60px;">Other</div></td> <td> </td> <td> </td> <td align="right">9</td> <td> </td> <td> </td> <td> </td> <td align="right">6</td> <td> </td> <td> </td> <td> </td> <td align="right">18</td> <td> </td> <td> </td> <td> </td> <td align="right">12</td> <td> </td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="15" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 45px;">Total Operating Revenue — CMS Energy</div></td> <td> </td> <td align="right">$</td> <td align="right">1,340</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">1,225</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">3,307</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">3,329</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;"><font style="font-variant: small-caps;" class="_mt"><b>Consumers</b></font></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 60px;">Electric utility</div></td> <td> </td> <td align="right">$</td> <td align="right">975</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">848</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">1,813</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">1,660</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 60px;">Gas utility</div></td> <td> </td> <td> </td> <td align="right">301</td> <td> </td> <td> </td> <td> </td> <td align="right">334</td> <td> </td> <td> </td> <td> </td> <td align="right">1,353</td> <td> </td> <td> </td> <td> </td> <td align="right">1,556</td> <td> </td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="15" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 45px;">Total Operating Revenue — Consumers</div></td> <td> </td> <td align="right">$</td> <td align="right">1,276</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">1,182</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">3,166</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">3,216</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"><b>Net Income Available to Common Stockholders</b></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;"><font style="font-variant: small-caps;" class="_mt"><b>CMS Energy, including Consumers</b></font></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 60px;">Electric utility</div></td> <td> </td> <td align="right">$</td> <td align="right">86</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">67</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">127</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">106</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 60px;">Gas utility</div></td> <td> </td> <td> </td> <td align="right">1</td> <td> </td> <td> </td> <td> </td> <td align="right">5</td> <td> </td> <td> </td> <td> </td> <td align="right">67</td> <td> </td> <td> </td> <td> </td> <td align="right">64</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 60px;">Enterprises</div></td> <td> </td> <td> </td> <td align="right">33</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(13</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">42</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(12</td> <td nowrap="nowrap">)</td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 60px;">Discontinued Operations</div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(16</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">25</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(17</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">24</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 60px;">Other</div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(24</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(9</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(54</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(37</td> <td nowrap="nowrap">)</td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="15" nowrap="nowrap" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 45px;">Total Net Income Available to Common Stockholders — CMS Energy</div></td> <td> </td> <td align="right">$</td> <td align="right">80</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">75</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">165</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">145</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;"><font style="font-variant: small-caps;" class="_mt"><b>Consumers</b></font></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 60px;">Electric utility</div></td> <td> </td> <td align="right">$</td> <td align="right">86</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">67</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">127</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">106</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 60px;">Gas utility</div></td> <td> </td> <td> </td> <td align="right">1</td> <td> </td> <td> </td> <td> </td> <td align="right">5</td> <td> </td> <td> </td> <td> </td> <td align="right">67</td> <td> </td> <td> </td> <td> </td> <td align="right">64</td> <td> </td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="15" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td nowrap="nowrap"> <div style="text-indent: -15px; margin-left: 45px;">Total Net Income Available to Common Stockholder — Consumers</div></td> <td> </td> <td align="right">$</td> <td align="right">87</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">72</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">194</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">170</td> <td> </td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 3px double;" colspan="17" align="left"> </td></tr></table></div></div> <div style="font-family: 'Times New Roman',Times,serif;"> <div align="center"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr valign="bottom"><td width="76%"> <p> </p> <p> </p></td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td></tr> <tr style="font-size: 8pt;" valign="bottom"><td style="border-bottom: #000000 1px solid;" colspan="9" nowrap="nowrap" align="right">In Millions</td></tr> <tr style="font-size: 8pt;" valign="bottom"><td> </td> <td> </td> <td colspan="3" nowrap="nowrap" align="right">June 30, 2010</td> <td> </td> <td colspan="3" nowrap="nowrap" align="right">December 31, 2009</td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 1px solid;" colspan="9" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"><b>Plant, Property, and Equipment, Gross</b></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"><font style="font-variant: small-caps;" class="_mt"><b>CMS Energy, including Consumers</b></font></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 45px;">Electric utility</div></td> <td> </td> <td align="right">$</td> <td align="right">9,717</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">9,525</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 45px;">Gas utility</div></td> <td> </td> <td> </td> <td align="right">3,875</td> <td> </td> <td> </td> <td> </td> <td align="right">3,812</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 45px;">Enterprises</div></td> <td> </td> <td> </td> <td align="right">101</td> <td> </td> <td> </td> <td> </td> <td align="right">345</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 45px;">Other</div></td> <td> </td> <td> </td> <td align="right">34</td> <td> </td> <td> </td> <td> </td> <td align="right">34</td> <td> </td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="7" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Total Plant, Property, and Equipment — CMS Energy</div></td> <td> </td> <td align="right">$</td> <td align="right">13,727</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">13,716</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;"><font style="font-variant: small-caps;" class="_mt"><b>Consumers</b></font></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 45px;">Electric utility</div></td> <td> </td> <td align="right">$</td> <td align="right">9,717</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">9,525</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 45px;">Gas utility</div></td> <td> </td> <td> </td> <td align="right">3,875</td> <td> </td> <td> </td> <td> </td> <td align="right">3,812</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 45px;">Other</div></td> <td> </td> <td> </td> <td align="right">15</td> <td> </td> <td> </td> <td> </td> <td align="right">15</td> <td> </td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="7" align="left"> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Total Plant, Property, and Equipment — Consumers</div></td> <td> </td> <td align="right">$</td> <td align="right">13,607</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">13,352</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 15px;"><b>Assets</b></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;"><font style="font-variant: small-caps;" class="_mt"><b>CMS Energy, including Consumers</b></font></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 45px;">Electric utility (a)</div></td> <td> </td> <td align="right">$</td> <td align="right">9,268</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">9,157</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 45px;">Gas utility (a)</div></td> <td> </td> <td> </td> <td align="right">4,407</td> <td> </td> <td> </td> <td> </td> <td align="right">4,594</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 45px;">Enterprises</div></td> <td> </td> <td> </td> <td align="right">192</td> <td> </td> <td> </td> <td> </td> <td align="right">303</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 45px;">Other</div></td> <td> </td> <td> </td> <td align="right">1,184</td> <td> </td> <td> </td> <td> </td> <td align="right">1,202</td> <td> </td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="7" align="left"> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Total Assets — CMS Energy</div></td> <td> </td> <td align="right">$</td> <td align="right">15,051</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">15,256</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;"><font style="font-variant: small-caps;" class="_mt"><b>Consumers</b></font></div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 45px;">Electric utility (a)</div></td> <td> </td> <td align="right">$</td> <td align="right">9,268</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">9,157</td> <td> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 45px;">Gas utility (a)</div></td> <td> </td> <td> </td> <td align="right">4,407</td> <td> </td> <td> </td> <td> </td> <td align="right">4,594</td> <td> </td></tr> <tr style="background: #cceeff;" valign="bottom"><td> <div style="text-indent: -15px; margin-left: 45px;">Other</div></td> <td> </td> <td> </td> <td align="right">651</td> <td> </td> <td> </td> <td> </td> <td align="right">871</td> <td> </td></tr> <tr style="font-size: 1px;"><td> </td> <td> </td> <td style="border-top: #000000 1px solid;" colspan="7" align="left"> </td></tr> <tr valign="bottom"><td> <div style="text-indent: -15px; margin-left: 30px;">Total Assets — Consumers</div></td> <td> </td> <td align="right">$</td> <td align="right">14,326</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">14,622</td> <td> </td></tr> <tr style="font-size: 1px;"><td style="border-top: #000000 3px double;" colspan="9" align="left"> </td></tr></table></div> <div style="margin-top: 3pt;"> <table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td width="3%"> </td> <td width="1%"> </td> <td width="96"> </td></tr> <tr valign="top"><td nowrap="nowrap" align="left">(a)</td> <td> </td> <td>Amounts include a portion of Consumers' other common assets attributable to both the electric and the gas utility businesses.</td></tr></table></div></div> </div>

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