10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2011

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission	Registrant; State of Incorporation;	IRS Employer
File Number	Address; and Telephone Number	Identification No.
1-9513	CMS ENERGY CORPORATION	38-2726431
	(A Michigan Corporation)
	One Energy Plaza, Jackson, Michigan 49201
	(517) 788-0550
1-5611	CONSUMERS ENERGY COMPANY	38-0442310
	(A Michigan Corporation)
	One Energy Plaza, Jackson, Michigan 49201
	(517) 788-0550

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

CMS Energy Corporation: Yes þ No o Consumers Energy Company: Yes þ No o

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).

CMS Energy Corporation: Yes þ No o Consumers Energy Company: Yes þ No o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

CMS Energy Corporation:

Large accelerated filer þ	Accelerated filer o	Non-Accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

Consumers Energy Company:

Large accelerated filer o	Accelerated filer o	Non-Accelerated filer þ	Smaller reporting company o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

CMS Energy Corporation: Yes o No þ Consumers Energy Company: Yes o No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock at July 14, 2011:

CMS Energy Corporation:
CMS Energy Common Stock, $0.01 par value
(including 1,568,145 shares owned by Consumers Energy Company)	253,356,241
Consumers Energy Company:
Consumers Energy Common Stock, $10 par value, privately held by CMS Energy Corporation	84,108,789

CMS Energy Corporation
Consumers Energy Company

Quarterly Reports on Form 10-Q to the Securities and Exchange Commission for the Period Ended June 30, 2011

TABLE OF CONTENTS

	Page
Glossary		3
Filing Format		8
Forward-Looking Statements and Information		8
PART I — FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (unaudited)
CMS Energy		32
Consumers		40
Notes to the Consolidated Financial Statements		47
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		12
Item 3. Quantitative and Qualitative Disclosures about Market Risk		78
Item 4. Controls and Procedures		78
PART II — OTHER INFORMATION
Item 1. Legal Proceedings		79
Item 1A. Risk Factors		79
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		79
Item 3. Defaults Upon Senior Securities		80
Item 4. Removed and Reserved		80
Item 5. Other Information		80
Item 6. Exhibits		81
Signatures		82
EX-10.1
EX-12.1
EX-12.2
EX-31.1
EX-31.2
EX-31.3
EX-31.4
EX-32.1
EX-32.2
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

1

(This page intentionally left blank)

2

GLOSSARY

Certain terms used in the text and financial statements are defined below.

2008 Energy Law	Comprehensive energy reform package enacted in October 2008 with the approval of Michigan Senate Bill 213 and Michigan House Bill 5524
2010 Form 10-K	Each of CMS Energy’s and Consumers’ Annual Report on Form 10-K for the year ended December 31, 2010
ABATE	Association of Businesses Advocating Tariff Equity
Bay Harbor	A residential/commercial real estate area located near Petoskey, Michigan. In 2002, CMS Energy sold its interest in Bay Harbor.
bcf	Billion cubic feet of gas
Big Rock	Big Rock Point nuclear power plant, formerly owned by Consumers
CAIR	The Clean Air Interstate Rule
Cantera Gas Company	Cantera Gas Company LLC, a non-affiliated company (formerly known as CMS Field Services)
Cantera Natural Gas, Inc.	Cantera Natural Gas, Inc., a non-affiliated company that purchased CMS Field Services
CCB	Coal combustion by-product
CEO	Chief Executive Officer
CFO	Chief Financial Officer
CKD	Cement kiln dust
Clean Air Act	Federal Clean Air Act, as amended
Clean Water Act	Federal Water Pollution Control Act, as amended
CMS Capital	CMS Capital, L.L.C., a wholly owned subsidiary of CMS Energy
CMS Energy	CMS Energy Corporation, the parent of Consumers and CMS Enterprises
CMS Enterprises	CMS Enterprises Company, a wholly owned subsidiary of CMS Energy
CMS ERM	CMS Energy Resource Management Company, formerly CMS MST, a wholly owned subsidiary of CMS Enterprises

3

CMS Field Services	CMS Field Services, Inc., a former wholly owned subsidiary of CMS Gas Transmission
CMS Gas Transmission	CMS Gas Transmission Company, a wholly owned subsidiary of CMS Enterprises
CMS Land	CMS Land Company, a wholly owned subsidiary of CMS Capital
CMS MST	CMS Marketing, Services and Trading Company, a wholly owned subsidiary of CMS Enterprises, whose name was changed to CMS ERM effective January 2004
CMS Oil and Gas	CMS Oil and Gas Company, a former wholly owned subsidiary of CMS Enterprises
Consumers	Consumers Energy Company, a wholly owned subsidiary of CMS Energy
CSAPR	Cross-State Air Pollution Rule, finalized in July 2011, which supersedes the EPA’s proposed Clean Air Transport Rule and replaces CAIR
Customer Choice Act	Customer Choice and Electricity Reliability Act, a Michigan statute
D.C.	District of Columbia
Detroit Edison	The Detroit Edison Company, a non-affiliated company
Dodd-Frank Act	Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted in July 2010
DOE	U.S. Department of Energy
DOJ	U.S. Department of Justice
EBITDA	Earnings Before Interest, Taxes, Depreciation, and Amortization
EnerBank	EnerBank USA, a wholly owned subsidiary of CMS Capital
Entergy	Entergy Corporation, a non-affiliated company
EPA	U.S. Environmental Protection Agency
EPS	Earnings per share

4

Exchange Act	Securities Exchange Act of 1934, as amended
FDIC	Federal Deposit Insurance Corporation
FERC	The Federal Energy Regulatory Commission
FLI Liquidating Trust	Trust formed in Missouri bankruptcy court to accomplish the liquidation of Farmland Industries, Inc., a non-affiliated entity
FMB	First mortgage bond
FOV	Finding of Violation
FTR	Financial transmission right
GAAP	U.S. Generally Accepted Accounting Principles
GCR	Gas cost recovery
GWh	Gigawatt-hour (a unit of energy equal to one million kWh)
Health Care Acts	Comprehensive health care reform enacted in March 2010, comprising the Patient Protection and Affordable Care Act and the related Health Care and Education Reconciliation Act
IRS	Internal Revenue Service
ISFSI	Independent spent fuel storage installation
kWh	Kilowatt-hour (a unit of energy equal to one thousand watt-hours)
Ludington	Ludington pumped-storage plant, jointly owned by Consumers and Detroit Edison
MACT	Maximum Achievable Control Technology, which is the emission control that is achieved in practice by the best-controlled similar source; for existing sources, MACT is the average emission limitation achieved by the best performing 12 percent of existing sources or the average limitation achieved by the best performing five sources, depending on the number of sources in the category
MBT	Michigan Business Tax
MCIT	Michigan Corporate Income Tax
MD&A	Management’s Discussion and Analysis
MDEQ	Michigan Department of Environmental Quality

5

MDL	A pending multi-district litigation case in Nevada
MGP	Manufactured gas plant
Midwest Energy Market	An energy market developed by MISO to provide day-ahead and real-time market information and centralized dispatch for market participants
MISO	The Midwest Independent Transmission System Operator, Inc.
MPSC	Michigan Public Service Commission
MW	Megawatt (a unit of power equal to one million watts)
MWh	Megawatt-hour (a unit of energy equal to one million watt-hours)
NOV	Notice of Violation
NPDES	National Pollutant Discharge Elimination System
NREPA	Part 201 of Michigan Natural Resources and Environmental Protection Act, a statute that covers environmental activities including remediation
NSR	New Source Review, a construction-permitting program under the Clean Air Act
NYMEX	New York Mercantile Exchange
OPEB	Postretirement benefit plans other than pensions
Palisades	Palisades nuclear power plant, sold by Consumers to Entergy in 2007
Panhandle	Panhandle Eastern Pipe Line Company, including its wholly owned subsidiaries Trunkline Gas Company, LLC, Pan Gas Storage Company, Panhandle Storage Company, and Panhandle Holding Company, a former wholly owned subsidiary of CMS Gas Transmission
PCB	Polychlorinated biphenyl
Pension Plan	Trusteed, non-contributory, defined benefit pension plan of CMS Energy, Consumers, and Panhandle
PPA	Power purchase agreement
PSCR	Power supply cost recovery
PSD	Prevention of Significant Deterioration

6

REC	Renewable energy credit established under the 2008 Energy Law
RMRR	Routine maintenance, repair, and replacement
ROA	Retail Open Access, which allows electric generation customers to choose alternative electric suppliers pursuant to the Customer Choice Act
SEC	U.S. Securities and Exchange Commission
SERP	Supplemental Executive Retirement Plan
Smart Grid	Consumers’ grid modernization project, which includes the installation of smart meters that are capable of transmitting and receiving data, a two-way communications network, and modifications to Consumers’ existing information technology system to manage the data and enable changes to key business processes
Superfund	Comprehensive Environmental Response, Compensation and Liability Act
Supplemental Environmental Projects	Environmentally beneficial projects that a party agrees to undertake as part of the settlement of an enforcement action, but which the party is not otherwise legally required to perform
Title V	A federal program under the Clean Air Act designed to standardize air quality permits and the permitting process for major sources of emissions across the U.S.
U.S.	United States
XBRL	eXtensible Business Reporting Language

7

FILING FORMAT

This combined Form 10-Q is separately filed by CMS Energy and Consumers. Information in this combined Form 10-Q relating to each individual registrant is filed by such registrant on its own behalf. Consumers makes no representation regarding information relating to any other companies affiliated with CMS Energy other than its own subsidiaries. None of CMS Energy, CMS Enterprises, nor any of CMS Energy’s other subsidiaries (other than Consumers) has any obligation in respect of Consumers’ debt securities and holders of such debt securities should not consider the financial resources or results of operations of CMS Energy, CMS Enterprises, nor any of CMS Energy’s other subsidiaries (other than Consumers and its own subsidiaries (in relevant circumstances)) in making a decision with respect to Consumers’ debt securities. Similarly, none of Consumers nor any other subsidiary of CMS Energy has any obligation in respect of debt securities of CMS Energy.

This report should be read in its entirety. No one section of this report deals with all aspects of the subject matter of this report. This report should be read in conjunction with the consolidated financial statements and related notes and with MD&A included in the 2010 Form 10-K.

FORWARD-LOOKING STATEMENTS AND INFORMATION

This Form 10-Q and other written and oral statements that CMS Energy and Consumers make may contain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. The use of “might,” “may,” “could,” “should,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “projects,” “forecasts,” “predicts,” “assumes,” and other similar words is intended to identify forward-looking statements that involve risk and uncertainty. This discussion of potential risks and uncertainties is designed to highlight important factors that may impact CMS Energy’s and Consumers’ businesses and financial outlook. CMS Energy and Consumers have no obligation to update or revise forward-looking statements regardless of whether new information, future events, or any other factors affect the information contained in the statements. These forward-looking statements are subject to various factors that could cause CMS Energy’s and Consumers’ actual results to differ materially from the results anticipated in these statements. These factors include CMS Energy’s and Consumers’ inability to predict or control the following, all of which are potentially significant:

• the price of CMS Energy common stock, capital and financial market conditions, and the effect of these market conditions on CMS Energy’s and Consumers’ postretirement benefit plans, interest costs, and access to the capital markets, including availability of financing (including Consumers’ accounts receivable sales program and CMS Energy’s and Consumers’ revolving credit facilities) to CMS Energy, Consumers, or any of their affiliates, and the energy industry;

• the impact of the economy, particularly in Michigan, and potential future volatility in the financial and credit markets on CMS Energy’s, Consumers’, or any of their affiliates’:

■ revenues;

■ capital expenditure programs and related earnings growth;

■ ability to collect accounts receivable from customers;

■ cost of capital and availability of capital; and

■ Pension Plan and postretirement benefit plans assets and required contributions;

• changes in the economic and financial viability of CMS Energy’s and Consumers’ suppliers, customers, and other counterparties and the continued ability of these third parties, including third parties in bankruptcy, to meet their obligations to CMS Energy and Consumers;

• population changes in the geographic areas where CMS Energy and Consumers conduct business;

8

• national, regional, and local economic, competitive, and regulatory policies, conditions, and developments;

• changes in applicable laws, rules, regulations, principles, or practices, or in their interpretation, including those related to taxes, the environment, and accounting matters, that could have an impact on CMS Energy’s and Consumers’ businesses or financial results, including the impact of any future regulations or lawsuits regarding:

■ carbon dioxide and other greenhouse gas emissions, including potential future legislation to establish a cap and trade system;

■ criteria pollutants, such as nitrogen oxide, sulfur dioxide, and particulate, and hazardous air pollutants, including impacts of CSAPR and MACT;

■ CCBs;

■ PCBs;

■ cooling water intake or discharge from power plants or other industrial equipment;

■ limitations on the use or construction of coal-fueled electric power plants;

■ nuclear-related regulation;

■ renewable portfolio standards and energy efficiency mandates;

■ energy-related derivatives and hedges under the Dodd-Frank Act; and

■ any other potential legislative changes, including changes to the ten-percent ROA limit;

• potentially adverse regulatory or legal interpretations or decisions, including those related to environmental laws and regulations, and potential environmental remediation costs associated with these interpretations or decisions, including those that may affect Bay Harbor or Consumers’ RMRR classification under NSR regulations;

• potentially adverse or delayed regulatory treatment or permitting decisions concerning significant matters affecting CMS Energy or Consumers that are or could come before the MDEQ and/or EPA, including Bay Harbor;

• potentially adverse regulatory treatment or failure to receive timely regulatory orders concerning a number of significant matters affecting Consumers that are or could come before the MPSC, including:

■ sufficient and timely recovery of:

▪ environmental and safety-related expenditures for coal-fueled plants and other utility properties;

▪ power supply and natural gas supply costs;

▪ operating and maintenance expenses;

▪ additional utility rate-based investments;

▪ costs associated with the proposed retirement and decommissioning of facilities;

▪ MISO energy and transmission costs;

▪ costs associated with energy efficiency investments and state or federally mandated renewable resource standards; and

▪ Smart Grid program costs;

■ actions of regulators with respect to expenditures subject to tracking mechanisms;

■ actions of regulators to prevent or curtail shutoffs for non-paying customers;

■ actions of regulators with respect to Consumers’ pilot electric and gas decoupling mechanisms;

■ regulatory orders preventing or curtailing rights to self-implement rate requests;

■ regulatory orders potentially requiring a refund of previously self-implemented rates;

■ implementation of new energy legislation or revisions of existing regulations; and

■ regulatory treatment of the DOE settlement;

9

• potentially adverse regulatory treatment resulting from pressure on regulators to oppose annual rate increases or to lessen rate impacts upon customers, particularly in difficult economic times;

• loss of customer demand for electric generation supply to alternative energy suppliers;

• the ability of Consumers to recover its regulatory assets in full and in a timely manner;

• the effectiveness of Consumers’ electric and gas decoupling mechanisms in moderating the impact of sales variability on net revenues;

• the impact of enforcement powers and investigation activities at FERC;

• federal regulation of electric sales and transmission of electricity, including periodic re-examination by federal regulators of CMS Energy’s and Consumers’ market-based sales authorizations in wholesale power markets without price restrictions;

• effects of weather conditions, such as unseasonably warm weather during the winter, on sales;

• the market perception of the energy industry or of CMS Energy, Consumers, or any of their affiliates;

• the credit ratings of CMS Energy or Consumers;

• the impact of credit markets, economic conditions, and any new banking regulations on EnerBank;

• potential effects of the Dodd-Frank Act and related regulations on CMS Energy and Consumers, including regulation of financial institutions such as EnerBank, whistleblower rules, and shareholder activity that is permitted or may be permitted under the Act;

• disruptions in the normal commercial insurance and surety bond markets that may increase costs or reduce traditional insurance coverage, particularly terrorism and sabotage insurance, performance bonds, and tax-exempt debt insurance, and stability of insurance providers, and the ability of Consumers to recover the costs of any such insurance from customers;

• changes in energy markets, including availability of capacity and the timing and extent of changes in commodity prices for oil, coal, natural gas, natural gas liquids, electricity, and certain related products due to lower or higher demand, shortages, transportation problems, or other developments, and their impact on CMS Energy’s and Consumers’ cash flows and working capital;

• the effectiveness of CMS Energy’s and Consumers’ risk management policies, procedures, and strategies, including their strategies to hedge risk related to future prices of electricity, natural gas, and other energy-related commodities;

• changes in construction material prices and the availability of qualified construction personnel to implement Consumers’ construction program;

• factors affecting development of generation projects and distribution infrastructure replacement and expansion projects, including those related to project site identification, construction, permitting, and government approvals;

10

• costs and availability of personnel, equipment, and materials for operating and maintaining existing facilities;

• factors affecting operations, such as unusual weather conditions, catastrophic weather-related damage, unscheduled generation outages, maintenance or repairs, environmental incidents, or electric transmission and distribution or gas pipeline system constraints;

• potential disruption or interruption of facilities or operations due to accidents, war, cyber-attacks, or terrorism, and the ability to obtain or maintain insurance coverage for these events;

• the impact of an accident, explosion, or other physical disaster involving Consumers’ gas pipelines, gas storage fields, overhead or underground electrical lines, or other utility infrastructure;

• CMS Energy’s and Consumers’ ability to achieve generation planning goals and the occurrence and duration of scheduled or unscheduled generation or gas compression outages;

• technological developments in energy production, delivery, usage, and storage;

• achievement of capital expenditure and operating expense goals, including the 2011 capital expenditures forecast;

• the impact of CMS Energy’s and Consumers’ integrated business software system on their operations, including utility customer billing and collections;

• potential effects of the Health Care Acts on existing or future health care costs;

• adverse outcomes regarding tax positions;

• adverse consequences resulting from any past or future assertion of indemnity or warranty claims associated with assets and businesses previously owned by CMS Energy or Consumers, including claims resulting from attempts by foreign or domestic governments to assess taxes on past operations or transactions;

• the outcome, cost, and other effects of legal or administrative proceedings, settlements, investigations, or claims;

• earnings volatility resulting from the application of fair value accounting to certain energy commodity contracts, such as electricity sales agreements and interest rate and foreign currency contracts;

• changes in financial or regulatory accounting principles or policies;

• a possible future requirement to comply with International Financial Reporting Standards, which differ from GAAP in various ways, including the present lack of special accounting treatment for regulated activities; and

• other business or investment matters that may be disclosed from time to time in CMS Energy’s and Consumers’ SEC filings, or in other publicly issued documents.

For additional details regarding these and other uncertainties, see the “Outlook” section included in MD&A; Note 3, Contingencies and Commitments; Note 4, Regulatory Matters; and Part II, Item 1A. Risk Factors.

11

CMS Energy Corporation
Consumers Energy Company

MANAGEMENT’S DISCUSSION AND ANALYSIS

This MD&A is a combined report of CMS Energy and Consumers.

EXECUTIVE OVERVIEW

CMS Energy is an energy company operating primarily in Michigan. It is the parent holding company of several subsidiaries, including Consumers, an electric and gas utility, and CMS Enterprises, primarily a domestic independent power producer. Consumers’ electric utility operations include the generation, purchase, distribution, and sale of electricity, and Consumers’ gas utility operations include the purchase, transmission, storage, distribution, and sale of natural gas. Consumers’ customer base consists of a mix of residential, commercial, and diversified industrial customers. CMS Enterprises, through its subsidiaries and equity investments, owns and operates power generation facilities.

CMS Energy and Consumers manage their businesses by the nature of services each provides. CMS Energy operates principally in three business segments: electric utility; gas utility; and enterprises, its non-utility investments and operations. Consumers operates principally in two business segments: electric utility and gas utility.

CMS Energy and Consumers earn revenue and generate cash from operations by providing electric and natural gas utility services; electric distribution and generation; gas transmission, storage, and distribution; and other energy-related services. Their businesses are affected primarily by:

• regulation and regulatory matters;

• economic conditions;

• weather;

• energy commodity prices;

• interest rates; and

• CMS Energy’s and Consumers’ securities’ credit ratings.

During the past several years, CMS Energy’s “Growing Forward” business strategy has emphasized the key elements depicted below:

12

Safe, excellent operations

The safety and security of employees, customers, and the general public remain a priority of CMS Energy and Consumers. Accordingly, CMS Energy and Consumers have worked to integrate a set of safety principles into their business operations and culture. These principles include complying with applicable safety, health, and security regulations and implementing programs and processes aimed at continually improving safety and security conditions. From 2007 to 2010, Consumers achieved a 63 percent reduction in the annual number of recordable safety incidents.

Customer Value

Consumers is undertaking a number of initiatives that reflect its intensified customer focus. Consumers’ planned investments in reliability are aimed at improving safety, reducing customer outage frequency, reducing repetitive outages, and increasing customer satisfaction. Consumers’ productivity improvements are expected to help keep annual base rate increases (excluding PSCR and GCR charges) at or below the average rate of inflation. Consumers considers these and other aspects of its customer value initiative to be important to its success.

Utility Investment

Consumers expects to make capital investments of $6.5 billion over the next five years, with a key aspect of its strategy being the balanced energy initiative. The balanced energy initiative is a comprehensive energy resource plan to meet Consumers’ projected short-term and long-term electric power requirements with energy efficiency, demand management, expanded use of renewable energy, development of new power plants, pursuit of additional PPAs to complement existing generating sources, potential retirement or mothballing of older generating units, and continued operation of other existing units.

Renewable energy projects are a major component of Consumers’ planned capital investments. Consumers expects to spend $600 million on renewable energy investments from 2011 through 2015. The 2008 Energy Law requires that at least ten percent of Consumers’ electric sales volume come from renewable energy sources by 2015, and it includes requirements for specific capacity additions. Consumers has historically included renewable resources as part of its portfolio, with about five percent of its present power supply coming from such renewable sources as hydroelectric, landfill gas, biomass, and wind. In May 2011, the MPSC issued an order approving Consumers’ amended renewable energy plan, with slight modifications. The amended plan reduces the renewable energy surcharge billed to customers in the future by an annual amount of $54 million. The reduction is a result of lower-than-anticipated costs to comply with the renewable energy requirements prescribed by the 2008 Energy Law.

In February 2011, Consumers and Detroit Edison together announced an $800 million maintenance and upgrade project at their jointly owned Ludington pumped-storage plant. The project, scheduled to begin in 2013 and extend through 2019, is expected to increase the capacity of Ludington by 16 percent, from its present level of 1,872 MW to about 2,172 MW, and increase the plant’s efficiency by five percent. Consumers expects its share of the project cost to total $400 million.

Consumers’ Smart Grid program, with a total project capital cost of $750 million, also represents a major capital investment. The deployment, planned for mid-2012, will include advanced metering infrastructure. Consumers has spent $97 million through 2010 on its Smart Grid program, and expects to spend an additional $267 million, following a phased approach, from 2011 through 2015.

Two additional major investment areas for Consumers are environmental spending and reliability improvements. Consumers expects its environmental investments to total $1.4 billion and its investments in system reliability to total $1.2 billion through 2015.

13

Regulation

Regulatory matters are a key aspect of CMS Energy’s and Consumers’ businesses, particularly Consumers’ rate cases and regulatory proceedings before the MPSC. Recent important regulatory events and developments are summarized below.

• 2010 Gas Rate Case: In August 2010, Consumers filed an application with the MPSC seeking an annual gas rate increase of $55 million, based on an 11 percent authorized return on equity. In January 2011, Consumers filed support for a self-implemented annual gas rate increase of $48 million. In February, Consumers reduced the proposed self-implemented increase to $29 million. The MPSC then issued an order delaying Consumers’ self-implementation. The MPSC approved a partial settlement agreement in May, authorizing a $31 million annual gas rate increase, based on a 10.5 percent authorized return on equity. Matters not yet addressed in this case include the decoupling mechanism, the Smart Grid program, and contributions to the low-income and energy efficiency fund.

• Electric Revenue Decoupling Mechanism: Consumers’ 2009 electric rate case order authorized an electric revenue decoupling mechanism, subject to certain conditions. This decoupling mechanism, which was extended in the 2010 electric rate case order, allows Consumers to adjust future electric rates to compensate for changes in sales volumes resulting from weather fluctuations, energy efficiency, and conservation. In March 2011, Consumers filed its first reconciliation of the electric decoupling mechanism, requesting recovery of $27 million from customers for the period December 2009 through November 2010.

• 2011 Electric Rate Case: In June 2011, Consumers filed a new general electric rate case seeking a $195 million revenue increase, based on a 10.7 percent authorized return on equity.

Environmental regulation is another area of importance for CMS Energy and Consumers, and they are monitoring numerous legislative and regulatory initiatives to regulate greenhouse gases, as well as related litigation. The EPA has taken steps to regulate greenhouse gases under the Clean Air Act and is expected to issue final new source performance standards in May 2012 addressing greenhouse gas emissions from fossil-fueled electric generating units. The EPA is also expected to propose guidelines for states to regulate greenhouse gas emissions from existing sources.

During 2010, the EPA issued various proposals for regulating PCBs, CCBs, sulfur dioxide, and nitrogen oxides. Additionally, in March 2011, the EPA proposed a hazardous air pollutant rule that would establish MACT emission standards for mercury and other hazardous air pollutants. Under the proposed rule, some coal-fueled electric generating units would require additional controls for hazardous air pollutants. Also in March 2011, the EPA issued a proposed rule to regulate existing electric generating plant cooling water intake systems. In July 2011, the EPA finalized the CSAPR, which requires Michigan and 26 other states to improve air quality by reducing power plant emissions that allegedly contribute to ground-level ozone and fine particle pollution in other downwind states. This rule, which replaces CAIR, mandates emission reductions beginning in 2012. CMS Energy and Consumers are monitoring the MACT emission standards developments for potential effects on their operations and assessing the impact and cost of complying with the CSAPR.

Financial Performance in 2011 and Beyond

For the three months ended June 30, 2011, CMS Energy’s net income available to common stockholders was $100 million, and diluted earnings per share were $0.38. This compares with net income available to common stockholders of $80 million and diluted earnings per share of $0.32 for the three months ended June 30, 2010. For the six months ended June 30, 2011, CMS Energy’s net income available to common stockholders was $235 million, and diluted earnings per share were $0.90. This compares with net income available to common stockholders of $165 million and diluted earnings per share of $0.67 for the six months ended June 30, 2010. Among the factors contributing to CMS Energy’s improved

14

performance for both the three months and the six months ended June 30, 2011 were benefits from electric and gas rate orders and increased gas deliveries, offset partially by decreased electric delivery revenues and higher depreciation, property taxes, and distribution and service restoration costs. A tax benefit resulting from the enactment of the MCIT in May 2011 was offset by the absence, in 2011, of an insurance settlement recovery recorded in 2010.

A more detailed discussion of the factors affecting CMS Energy’s and Consumers’ performance can be found in the “Results of Operations” section that follows this Executive Overview.

CMS Energy believes that economic conditions in Michigan have improved. Although Michigan’s economy continues to be affected by the recession and its impact on the state’s automotive industry, by high unemployment rates, and by a modestly shrinking population, there are indications that the recession has eased in Michigan. Consumers expects its electric sales to increase by about 1.7 percent annually through 2016, driven largely by the continued rise in industrial production. Consumers is projecting that its gas sales will decline by about one percent annually through 2016, due largely to energy efficiency and conservation.

As Consumers continues to seek fair and timely regulatory treatment, delivering customer value will remain a key strategic priority. To keep costs down for its utility customers, Consumers has set goals to achieve further annual productivity improvements. Additionally, Consumers will strive to give priority to capital investments that increase customer value or lower costs.

Consumers expects to continue to have sufficient capacity to fund its investment-based growth plans. CMS Energy also expects its sources of liquidity to remain sufficient to meet its cash requirements. CMS Energy and Consumers will continue to monitor developments in the financial and credit markets, as well as government policy responses to those developments, for potential implications for their businesses and their future financial needs.

15

RESULTS OF OPERATIONS

CMS Energy’s Consolidated Results of Operations

In Millions, Except Per Share Amounts
	Three Months Ended						Six Months Ended
June 30	2011		2010		Change		2011		2010		Change
Net Income Available to Common Stockholders	$	100	$	80	$	20	$	235	$	165	$	70
Basic Earnings Per Share	$	0.40	$	0.35	$	0.05	$	0.94	$	0.72	$	0.22
Diluted Earnings Per Share	$	0.38	$	0.32	$	0.06	$	0.90	$	0.67	$	0.23

In Millions
	Three Months Ended									Six Months Ended
June 30	2011			2010			Change			2011			2010			Change
Electric Utility	$	85		$	86		$	(1	)	$	150		$	127		$	23
Gas Utility		5			1			4			93			67			26
Enterprises		29			33			(4	)		32			42			(10	)
Corporate Interest and Other		(19	)		(24	)		5			(42	)		(54	)		12
Discontinued Operations		—			(16	)		16			2			(17	)		19
Net Income Available to Common Stockholders	$	100		$	80		$	20		$	235		$	165		$	70

Presented in the following table are specific after-tax changes to net income available to common stockholders for the three and six months ended June 30, 2011 versus 2010:

In Millions
	2011 better/(worse) than 2010
	Three Months Ended								Six Months Ended
	June 30								June 30
Electric and gas rate orders			$	29							$	52
Gas sales
Weather	$	7							$	23
Deliveries and decoupling benefit		4		11						12		35
Electric sales and decoupling				(13	)							(4	)
Distribution and service restoration costs				(13	)							(21	)
Other, mainly depreciation and property tax				(11	)	$	3					(19	)	$	43
Subsidiary earnings of enterprises segment							(1	)							(7	)
Other, mainly lower corporate interest expense							1								7
2010 insurance settlement recovery				(31	)							(31	)
MCIT enactment				32								32
Voluntary separation plan cost in 2010				—								7
Other, mainly tax adjustments related to previously sold businesses				16			17					19			27
Total change						$	20							$	70

16

Consumers’ Electric Utility Results of Operations

In Millions
June 30	2011		2010		Change
Net Income Available to Common Stockholders
Three months ended	$	85	$	86	$	(1	)
Six months ended		150		127		23

In Millions
	Three Months Ended			Six Months Ended
Reasons for the change:	June 30, 2011 vs. 2010			June 30, 2011 vs. 2010
Electric deliveries and rate increases	$	(26	)	$	2
Power supply costs and related revenue		—			10
Other income, net of expenses		(5	)		(7	)
Maintenance and other operating expenses		15			1
Depreciation and amortization		10			24
General taxes		(5	)		(5	)
Interest charges		8			9
Income taxes		2			(11	)
Total change	$	(1	)	$	23

Electric deliveries and rate increases: For the three months ended June 30, 2011, electric delivery revenues decreased $26 million compared with 2010. This variance was due to the absence, in 2011, of $43 million of surcharges in 2010 to recover retirement benefit expenses and certain regulatory assets, and a $23 million decrease in sales revenue resulting from cooler weather and lower decoupling revenue, offset partially by a $40 million increase in revenues from a November 2010 rate increase. Overall, deliveries to end-use customers were 8.9 billion kWh in 2011, a decrease of 0.1 billion kWh, or 1.1 percent, compared with 2010.

For the six months ended June 30, 2011, electric delivery revenues increased $2 million compared with 2010. This variance was due to a $66 million increase in revenues from a November 2010 rate increase, offset largely by the absence, in 2011, of $61 million of surcharges in 2010 to recover retirement benefit expenses and certain regulatory assets, and a $3 million decrease in other revenues. Overall, deliveries to end-use customers were 18.3 billion kWh in 2011, an increase of 0.2 billion kWh, or 1.1 percent, compared with 2010.

Power supply costs and related revenue: For the six months ended June 30, 2011, PSCR revenue increased $10 million compared with 2010. This increase was due to the absence, in 2011, of a disallowance in 2010 of certain power supply costs in Consumers’ 2007 PSCR reconciliation case.

Other income, net of expenses: For the three months ended June 30, 2011, other income decreased $5 million compared with 2010, and for the six months ended June 30, 2011, other income decreased $7 million compared with 2010. These decreases were due primarily to a reduction in interest income recorded as a result of the declining balance of certain regulatory assets.

Maintenance and other operating expenses: For the three months ended June 30, 2011, maintenance and other operating expenses decreased $15 million compared with 2010. This variance was due primarily to the absence, in 2011, of $26 million of retirement benefit expenses that were recovered in revenue in 2010, offset partially by a $9 million increase in service restoration costs.

For the six months ended June 30, 2011, maintenance and other operating expenses decreased $1 million compared with 2010. The absence, in 2011, of $26 million of retirement benefit expenses that were recovered in revenue in 2010 and $6 million of voluntary separation plan expenses incurred in 2010 was offset largely by $22 million of higher service restoration costs, caused by a series of unusually severe

17

storms, and $9 million of higher forestry and tree-trimming costs, plant maintenance, and other operating expenses.

Depreciation and amortization: For the three months ended June 30, 2011, depreciation and amortization expense decreased $10 million compared with 2010, and for the six months ended June 30, 2011, depreciation and amortization expense decreased $24 million compared with 2010. These decreases were due to lower amortization expense on certain regulatory assets, offset partially by higher depreciation expense from increased plant in service.

Interest charges: For the three months ended June 30, 2011, interest charges decreased $8 million compared with 2010, and for the six months ended June 30, 2011, interest charges decreased $9 million compared with 2010. These decreases resulted primarily from the absence, in 2011, of interest expense on a Michigan use tax assessment.

Income taxes: For the three months ended June 30, 2011, income taxes decreased $2 million compared with 2010, reflecting lower electric utility earnings. For the six months ended June 30, 2011, income taxes increased $11 million compared with 2010, reflecting higher electric utility earnings.

Consumers’ Gas Utility Results of Operations

In Millions
June 30	2011		2010		Change
Net Income Available to Common Stockholders
Three months ended	$	5	$	1	$	4
Six months ended		93		67		26

In Millions
	Three Months Ended			Six Months Ended
Reasons for the change:	June 30, 2011 vs. 2010			June 30, 2011 vs. 2010
Gas deliveries and rate increases	$	19		$	52
Other income, net of expense		(2	)		(4	)
Maintenance and other operating expenses		(7	)		5
Depreciation and amortization		(2	)		(5	)
General taxes		(4	)		(6	)
Interest charges		3			3
Income taxes		(3	)		(19	)
Total change	$	4		$	26

Gas deliveries and rate increases: For the three months ended June 30, 2011, gas delivery revenues increased $19 million compared with 2010. This increase reflected higher customer usage, of which $11 million was due to colder weather in 2011. Gas deliveries, including miscellaneous transportation to end-use customers, were 45.6 bcf in 2011, an increase of 8.8 bcf, or 23.9 percent, compared with 2010.

For the six months ended June 30, 2011, gas delivery revenues increased $52 million compared with 2010. This increase reflected higher customer usage, of which $37 million was due to colder weather in 2011. Gas deliveries, including miscellaneous transportation to end-use customers, were 179.5 bcf in 2011, an increase of 23.6 bcf, or 15.1 percent, compared with 2010.

Maintenance and other operating expenses: For the three months ended June 30, 2011, maintenance and other operating expenses increased $7 million compared with 2010, due primarily to higher transmission and distribution operating expenses.

For the six months ended June 30, 2011, maintenance and other operating expenses decreased $5 million compared with 2010, due primarily to the absence, in 2011, of voluntary separation plan expenses incurred in 2010.

18

Income taxes: For the three months ended June 30, 2011, income taxes increased $3 million compared with 2010, and for the six months ended June 30, 2011, income taxes increased $19 million, reflecting higher gas utility earnings in 2011.

Enterprises Results of Operations

In Millions
June 30	2011		2010		Change
Net Income Available to Common Stockholders
Three months ended	$	29	$	33	$	(4	)
Six months ended		32		42		(10	)

For the three months ended June 30, 2011, net income of the enterprises segment decreased $4 million compared with 2010, due to the absence, in 2011, of a $31 million insurance settlement recovery in 2010, offset largely by a $28 million income tax benefit resulting from the enactment of the MCIT in May 2011.

For the six months ended June 30, 2011, net income of the enterprises segment decreased $10 million compared with 2010, due to the absence, in 2011, of a $31 million insurance settlement recovery in 2010 and lower electric revenues of $7 million in 2011. These decreases were offset partially by a $28 million income tax benefit resulting from the enactment of the MCIT in May 2011.

For further details about the enactment of the MCIT, see Note 11, Income Taxes.

Corporate Interest and Other Results of Operations

In Millions
June 30	2011			2010			Change
Net Loss Available to Common Stockholders
Three months ended	$	(19	)	$	(24	)	$	5
Six months ended		(42	)		(54	)		12

For the three months ended June 30, 2011, corporate interest and other net expenses decreased $5 million compared with 2010, due primarily to lower income tax expense resulting from the enactment of the MCIT in May 2011.

For the six months ended June 30, 2011, corporate interest and other net expenses decreased $12 million compared with 2010, due primarily to lower income tax expense resulting partially from the enactment of the MCIT in May 2011.

Discontinued Operations

For the three months ended June 30, 2011, the net loss recorded from discontinued operations was less than $1 million, compared with a loss from discontinued operations of $16 million in 2010 related to prior asset sales.

For the six months ended June 30, 2011, income of $2 million was recorded from discontinued operations due to a legal settlement, compared with a loss from discontinued operations of $17 million in 2010 related to prior asset sales.

19

CASH POSITION, INVESTING, AND FINANCING

At June 30, 2011, CMS Energy had $994 million of consolidated cash and cash equivalents and $29 million of restricted cash and cash equivalents. At June 30, 2011, Consumers had $766 million of consolidated cash and cash equivalents and $28 million of restricted cash and cash equivalents.

Operating Activities

Presented in the following table are specific components of net cash provided by operating activities for the six months ended June 30, 2011 and 2010:

In Millions
Six Months Ended June 30	2011			2010			Change
CMS Energy, including Consumers
Net income	$	236		$	172		$	64
Non-cash transactions1		480			539			(59	)
	$	716		$	711		$	5
Sale of gas purchased in the prior year		514			474			40
Purchase of gas in the current year		(293	)		(274	)		(19	)
Accounts receivable sales, net		—			(50	)		50
Change in other core working capital2		232			299			(67	)
Postretirement benefits contributions		(39	)		(153	)		114
Other changes in assets and liabilities, net		86			41			45
Net cash provided by operating activities	$	1,216		$	1,048		$	168
Consumers
Net income	$	245		$	195		$	50
Non-cash transactions1		473			398			75
	$	718		$	593		$	125
Sale of gas purchased in the prior year		514			474			40
Purchase of gas in the current year		(293	)		(274	)		(19	)
Accounts receivable sales, net		—			(50	)		50
Change in other core working capital2		230			300			(70	)
Postretirement benefits contributions		(37	)		(143	)		106
Other changes in assets and liabilities, net		113			83			30
Net cash provided by operating activities	$	1,245		$	983		$	262

1	Non-cash transactions comprise depreciation and amortization, changes in deferred income taxes, postretirement benefits expense, and other non-cash items.
2	Other core working capital comprises other changes in accounts receivable and accrued revenues, inventories, and accounts payable.

For the six months ended June 30, 2011, net cash provided by operating activities at CMS Energy increased $168 million compared with 2010. The increase was due primarily to the absence of Pension Plan contributions in 2011 and increased collections of accounts receivable.

For the six months ended June 30, 2011, net cash provided by operating activities at Consumers increased $262 million compared with 2010. The increase was due primarily to higher net income, the absence of Pension Plan contributions in 2011, and increased collections of accounts receivable.

20

Investing Activities

Presented in the following table are specific components of net cash used in investing activities for the six months ended June 30, 2011 and 2010:

In Millions
Six Months Ended June 30	2011			2010			Change
CMS Energy, including Consumers
Capital expenditures	$	(399	)	$	(424	)	$	25
Cash effect of deconsolidation of partnerships		—			(10	)		10
Costs to retire property and other		(72	)		(56	)		(16	)
Net cash used in investing activities	$	(471	)	$	(490	)	$	19
Consumers
Capital expenditures	$	(394	)	$	(423	)	$	29
Costs to retire property and other		(51	)		(21	)		(30	)
Net cash used in investing activities	$	(445	)	$	(444	)	$	(1	)

For the six months ended June 30, 2011, net cash used in investing activities decreased $19 million at CMS Energy compared with 2010. This variance was due primarily to a decrease in capital expenditures and the absence, in 2011, of the cash effect of deconsolidating certain partnerships in 2010, offset partially by other investing activities, including CMS Energy’s contribution of $27 million to its SERP fund.

For the six months ended June 30, 2011, net cash used in investing activities increased $1 million at Consumers compared with 2010. A decrease in capital expenditures was offset largely by other investing activities, including Consumers’ contribution of $20 million to its SERP fund.

Financing Activities

Presented in the following table are specific components of net cash used in financing activities for the six months ended June 30, 2011 and 2010:

In Millions
Six Months Ended June 30	2011			2010			Change
CMS Energy, including Consumers
Issuance of FMBs, convertible senior notes, senior notes, and other debt	$	396		$	366		$	30
Retirement of long-term debt		(292	)		(352	)		60
Common stock issued		22			5			17
Payment of common stock dividends		(106	)		(69	)		(37	)
Other financing activities		(20	)		(61	)		41
Net cash used in financing activities	$	—		$	(111	)	$	111
Consumers
Retirement of debt and other debt maturity payments	$	(18	)	$	(327	)	$	309
Payments of common stock dividends		(196	)		(168	)		(28	)
Stockholder’s contribution from CMS Energy		125			250			(125	)
Other financing activities		(16	)		(13	)		(3	)
Net cash used in financing activities	$	(105	)	$	(258	)	$	153

For the six months ended June 30, 2011, net cash used in financing activities at CMS Energy decreased $111 million compared to 2010. The change was due primarily to an increase in net proceeds from borrowings and common stock issued by CMS Energy in 2011.

For the six months ended June 30, 2011, net cash used in financing activities at Consumers decreased $153 million compared with 2010. The change was due primarily to a decrease in debt retirements, offset partially by a decrease in stockholder’s contribution from CMS Energy.

21

CAPITAL RESOURCES AND LIQUIDITY

CMS Energy uses dividends from its subsidiaries and external financing and capital transactions to invest in its utility and non-utility businesses, retire debt, pay dividends, and fund its other obligations. The ability of CMS Energy’s subsidiaries, including Consumers, to pay dividends to CMS Energy depends upon each subsidiary’s revenues, earnings, cash needs, and other factors. In addition, Consumers’ ability to pay dividends may be restricted by certain terms included in its articles of incorporation, by provisions under the Federal Power Act and the Natural Gas Act, and by FERC requirements. For additional details on Consumers’ dividend restrictions, see Note 5, Financings, “Dividend Restrictions.” For the six months ended June 30, 2011, Consumers paid $196 million in common stock dividends to CMS Energy.

Consumers uses cash flows generated from operations and external financing transactions, as well as stockholder’s contributions from CMS Energy, to fund capital expenditures, retire debt, pay dividends, contribute to its employee benefit plans, and fund its other obligations.

CMS Energy’s and Consumers’ access to the financial and capital markets depends on their credit ratings and on market conditions. As evidenced by past financing transactions, CMS Energy and Consumers have had ready access to these markets and, barring major market dislocations or disruptions, they expect to continue to have such access. If access to these markets were to become diminished or otherwise restricted, however, CMS Energy and Consumers would implement contingency plans to address debt maturities, which could include reduced capital spending. CMS Energy and Consumers also had the following secured revolving credit facilities available at June 30, 2011:

In Millions
	Amount of		Amount		Letters of Credit		Amount		Expiration
	Facility		Borrowed		Outstanding		Available		Date
CMS Energy
Revolving credit facility1	$	550	$	—	$	3	$	547	March 2016
Consumers
Revolving credit facility2,3	$	500	$	—	$	189	$	311	March 2016
Revolving credit facility3		150		—		—		150	August 2013

1	On March 31, 2011, CMS Energy entered into a $550 million secured revolving credit facility with a consortium of banks. This facility has a five-year term and replaces CMS Energy’s revolving credit facility that was set to expire in 2012. Obligations under this facility are secured by Consumers common stock.
2	On March 31, 2011, Consumers entered into a $500 million secured revolving credit facility with a consortium of banks. This facility has a five-year term and replaces Consumers’ revolving credit facility that was set to expire in 2012.
3	Obligations under this facility are secured by FMBs of Consumers.

CMS Energy and Consumers use these credit facilities for general working capital purposes and to issue letters of credit. An additional source of liquidity is Consumers’ revolving accounts receivable sales program, which allows it to transfer up to $250 million of accounts receivable as a secured borrowing. At June 30, 2011, $250 million of accounts receivable were eligible for transfer under this program.

22

CMS Energy’s $550 million revolving credit agreement specifies a maximum debt-to-EBITDA ratio, as defined therein. Consumers’ $500 million revolving credit agreement specifies a maximum debt-to-capital ratio, as defined therein. CMS Energy and Consumers were each in compliance with these limits as of June 30, 2011, as presented in the following table:

				Ratio at
Revolving Credit Agreement	Description	Maximum Limit		June 30, 2011
CMS Energy
$550 million revolving credit agreement	Debt to EBITDA		6.0 to 1.0		4.80 to 1.0
Consumers
$500 million revolving credit agreement	Debt to Capital		0.65 to 1.0		0.50 to 1.0

Components of CMS Energy’s and Consumers’ cash management plan include controlling operating expenses and capital expenditures and evaluating market conditions for financing and refinancing opportunities. CMS Energy and Consumers believe that their present level of cash and their expected cash flows from operating activities, together with their access to sources of liquidity, will be sufficient to fund their contractual obligations for 2011 and beyond.

Off-Balance-Sheet Arrangements

CMS Energy, Consumers, and certain of their subsidiaries also enter into various arrangements in the normal course of business to facilitate commercial transactions with third parties. These arrangements include indemnities, surety bonds, letters of credit, and financial and performance guarantees. Indemnities are usually agreements to reimburse a counterparty that may incur losses due to outside claims or breach of contract terms. The maximum payment that could be required under a number of these indemnity obligations is not estimable. While CMS Energy and Consumers believe it is unlikely that they will incur any material losses related to indemnities they have not recorded as liabilities, they cannot predict the impact of these contingent obligations on their liquidity and financial condition. For additional details on these and other guarantee arrangements, see Note 3, Contingencies and Commitments, “Guarantees.”

23

OUTLOOK

Several business trends and uncertainties may affect CMS Energy’s and Consumers’ financial condition and results of operations. These trends and uncertainties could have a material impact on CMS Energy’s and Consumers’ consolidated income, cash flows, or financial position. For additional details regarding these and other uncertainties, see “Forward-Looking Statements and Information;” Note 3, Contingencies and Commitments; and Part II, Item 1A. Risk Factors.

Consumers’ Electric Utility Business Outlook and Uncertainties

Balanced Energy Initiative: Consumers’ balanced energy initiative is a comprehensive energy resource plan designed to meet the short-term and long-term energy needs of its customers through:

• energy efficiency;

• demand management;

• expanded use of renewable energy;

• development of new power plants;

• pursuit of additional PPAs to complement existing generating sources;

• continued operation of existing units; and

• potential retirement or mothballing of older generating units.

In 2010, Consumers announced plans to defer the development of its proposed 830-MW coal-fueled plant at its Karn/Weadock generating complex. This decision reflects reduced customer demand for electricity due to the recession, forecasted lower natural gas prices due to recent developments in shale gas recovery technology, and projected surplus generating capacity in the MISO market. Consumers has been monitoring customer demand, fuel and power prices, and other market conditions, and has not set a timetable for a future decision about the project. Although the likelihood that the plant will be constructed has diminished significantly, in July 2011 the MDEQ granted Consumers an extension of the project’s air permit. Consumers’ alternatives to constructing the proposed coal-fueled plant include constructing new gas-fueled generation, relying on additional market purchases, and continued operation of several existing generating units.

Renewable Energy Plan: Consumers’ renewable energy plan details how Consumers will meet REC and capacity standards prescribed by the 2008 Energy Law. This law requires Consumers to obtain RECs in an amount equal to at least ten percent of its electric sales volume (estimated to be 3.5 million RECs annually) by 2015. RECs represent proof that the associated electricity was generated from a renewable energy resource. The law also requires Consumers to obtain 500 MW of capacity from renewable energy resources by 2015, either through generation resources owned by Consumers or through agreements to purchase capacity from other parties. Under its renewable energy plan, Consumers expects to secure its renewable energy requirement each year with a combination of newly generated RECs and previously generated RECs carried over from prior years. At June 30, 2011, the combination of these sources represented 84 percent of Consumers’ 2015 REC requirement.

To meet its renewable capacity requirements, Consumers expects to add more than 500 MW of owned or contracted renewable capacity by 2015. Through June 2011, Consumers has contracted for the purchase of 296 MW of nameplate capacity from renewable energy suppliers, which represents 59 percent of the 2015 renewable capacity requirement.

Consumers has secured more than 81,000 acres of land easements in Michigan’s Huron, Mason, and Tuscola Counties for the potential development of wind generation, and is now collecting wind speed and other meteorological data at those sites. Consumers has entered into construction and supply contracts as well as a contract to purchase wind turbine generators for the construction of a 100-MW wind park in Mason County, the Lake Winds Energy Park, which Consumers expects to be operational in late 2012. In July 2011, the Mason County Planning Commission voted in favor of granting a special

24

land use permit for the construction of the Lake Winds Energy Park. The action by the Mason County Planning Commission has been appealed to the Mason County Zoning Board of Appeals. Consumers will also continue development of its 150-MW wind park in Tuscola County, Cross Winds Energy Park, scheduled for operation by late 2014, as well as seek other opportunities for wind generation development in support of the renewable capacity standards.

Electric Customer Deliveries and Revenue: Consumers’ electric customer deliveries are largely dependent on Michigan’s economy, which has suffered from economic and financial instability in the automotive and real estate sectors. Consumers believes economic conditions have improved, and expects weather-adjusted electric deliveries to increase in 2011 by two percent compared with 2010.

Consumers expects average electric delivery growth of about 1.7 percent annually over the next five years. This increase reflects growth in electric demand, offset partially by the predicted effects of energy efficiency programs and appliance efficiency standards. Actual deliveries will depend on:

• energy conservation measures and results of energy efficiency programs;

• fluctuations in weather; and

• changes in economic conditions, including utilization and expansion or contraction of manufacturing facilities, population trends, and housing activity.

A decoupling mechanism was authorized by the MPSC in Consumers’ 2009 electric rate case order, subject to certain conditions, and extended in the 2010 electric rate case order. It allows Consumers to adjust future electric rates to compensate for changes in sales volumes resulting from weather fluctuations, energy efficiency, and conservation. This mechanism reduces the volatility of Consumers’ electric utility revenue.

Electric ROA: The Customer Choice Act allows all of Consumers’ electric customers to buy electric generation service from Consumers or from an alternative electric supplier. The 2008 Energy Law revised the Customer Choice Act by limiting alternative electric supply to ten percent of Consumers’ weather-adjusted retail sales of the preceding calendar year. At June 30, 2011, electric deliveries under the ROA program were at the ten percent limit and alternative electric suppliers were providing 796 MW of generation service to ROA customers. Based on 2010 weather-adjusted retail sales, Consumers expects 2011 electric deliveries under the ROA program to be at a similar level to 2010.

Electric Transmission: In July 2011, FERC issued an order in a rulemaking proceeding concerning regional electric transmission planning and cost allocations. In a related matter, in July 2010, MISO filed a tariff revision with FERC proposing a cost allocation methodology for a new category of transmission projects. In December 2010, FERC approved MISO’s cost allocation proposal. Under this tariff revision, the cost of these new transmission projects will be spread proportionally across the Midwest Energy Market. Consumers believes that Michigan customers will bear additional costs under MISO’s tariff without receiving comparable benefits from these projects. In January 2011, Consumers, along with the Michigan Attorney General, ABATE, Detroit Edison, the Michigan Municipal Electric Association, and the Michigan Public Power Agency, filed a protest and request for rehearing with FERC, opposing the allocation methodology in the MISO tariff revision. Consumers expects to continue to recover transmission expenses, including those associated with the MISO tariff revision, through the PSCR process.

Electric Rate Matters: Rate matters are critical to Consumers’ electric utility business. For details on Consumers’ electric rate cases, PSCR, electric revenue decoupling mechanism, uncollectible expense tracking mechanism, electric operation and maintenance expenditures show-cause order, Big Rock decommissioning, renewable energy plan, energy optimization plan, and electric depreciation, see Note 4, Regulatory Matters, “Consumers’ Electric Utility.”

25

Electric Environmental Estimates: Consumers’ operations are subject to various state and federal environmental laws and regulations. Consumers continues to focus on complying with the Clean Air Act, Clean Water Act, and numerous state and federal environmental regulations, and estimates that it will incur expenditures of $1.6 billion from 2011 through 2018 to comply with these regulations. Consumers expects to recover these costs in customer rates, but cannot guarantee this result. Consumers’ primary environmental compliance focus includes, but is not limited to, the following matters:

Clean Air Interstate Rule/Cross-State Air Pollution Rule: In December 2008, a court decision remanded CAIR back to the EPA. Until the EPA finalized a new rule, CAIR remained in effect. In July 2011, the EPA released CSAPR, a final replacement rule for CAIR, which requires Michigan and 26 other states to improve air quality by reducing power plant emissions that allegedly contribute to ground-level ozone and fine particle pollution in other downwind states. This rule mandates emission reductions beginning in 2012. Consumers is analyzing this final rule to assess its impact on Consumers’ operations.

Electric Generating Unit MACT: In March 2011, the EPA proposed MACT emission standards for electric generating units, based on Section 112 of the Clean Air Act. Under the proposed rule, some coal-fueled electric generating units would require additional controls for hazardous air pollutants. Existing sources must meet the standards generally within three years of issuance of the final rule. The final rule is expected to be issued in November 2011.

Presently, Consumers’ strategy to comply with CSAPR, and with MACT in its present form, involves the installation of state-of-the-art emission control equipment; however, Consumers continues to evaluate CSAPR and MACT standards in conjunction with other EPA rulemakings. These rules could result in additional or accelerated environmental compliance costs related to Consumers’ fossil-fueled power plants and the retirement or mothballing of some or all of Consumers’ older, smaller generating units.

Greenhouse Gases: There are numerous legislative and regulatory initiatives at the state, regional, and national levels that involve the regulation of greenhouse gases. Consumers monitors and comments on these initiatives and also follows litigation involving greenhouse gases. Consumers believes Congress may eventually pass greenhouse gas legislation, but is unable to predict the form and timing of any final legislation.

In 2009, the U.S. Court of Appeals for the Second Circuit issued a decision that allowed states and private plaintiffs to bring lawsuits in the federal courts against utilities and others based on common law nuisance theories that challenged the defendants’ greenhouse gas emissions. This decision potentially allowed federal judges to impose caps on such emissions on a case-by-case basis without reference to any legislatively created standards. A group of utilities filed a petition with the U.S. Supreme Court, seeking review of the U.S. Court of Appeals decision. In June 2011, the U.S. Supreme Court reversed the decision of the U.S. Court of Appeals for the Second Circuit, agreeing with the position taken by the utility industry that the Clean Air Act displaces any common law actions to force greenhouse gas emissions reductions from fossil-based power plants.

In 2010, the EPA released its Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule. The final rule, which numerous parties have challenged in the U.S. Court of Appeals for the D.C. Circuit, sets limits for greenhouse gas emissions that define when permits are required for new and existing industrial facilities under NSR PSD and Title V Operating Permit programs. The EPA issued revised guidance on this rule in March 2011. Consumers does not expect that the rule will require it to incur significant expenditures for efficiency upgrades for modified or new facilities.

In December 2010, the EPA entered into a settlement agreement with certain states and environmental groups that puts it on a path to issue proposed new source performance standards in September 2011. This proposal will address greenhouse gas emissions for new fossil-fueled electric generating units and major modifications under Section 111(b) of the Clean Air Act. The EPA is expected to promulgate final standards by May 2012. On the same schedule, the EPA is expected to propose emissions guidelines for

26

the states to regulate greenhouse gas emissions from existing sources under Section 111(d) of the Clean Air Act. Under the expected schedule, states will need to submit plans to the EPA within nine months of issuance of the final rule and guidelines. Consumers will continue to monitor this settlement and any proposed new source performance standards regulations.

In March 2011, the EPA issued a final rule that extends to September 30, 2011 the deadline for reporting 2010 greenhouse gas emissions data under the Greenhouse Gas Reporting Program. The original deadline was March 31, 2011. Consumers is prepared to comply with the final rule.

Litigation, as well as federal laws, EPA regulations regarding greenhouse gases, or similar treaties, state laws, or rules, if enacted, could require Consumers to replace equipment, install additional equipment for emission controls, purchase emission allowances, curtail operations, arrange for alternative sources of supply, or take other steps to manage or lower the emission of greenhouse gases. Although associated capital or operating costs relating to greenhouse gas regulation or legislation could be material and cost recovery cannot be assured, Consumers expects to recover these costs and capital expenditures in rates consistent with the recovery of other reasonable costs of complying with environmental laws and regulations.

Coal Combustion By-Products: In June 2010, the EPA proposed rules regulating CCBs, such as coal ash, under the Resource Conservation and Recovery Act. Michigan already regulates CCBs as low-hazard industrial waste. The EPA proposed a range of alternatives for regulating CCBs, including regulation as either a non-hazardous waste or a hazardous waste. If coal ash were regulated as a hazardous waste, Consumers would likely cease the beneficial re-use of this product, resulting in significantly more coal ash requiring costly disposal. Additionally, it is possible that existing coal ash disposal areas could be closed and costly alternative arrangements for coal ash disposal could be required if the upgrades to hazardous waste landfill standards are economically prohibitive. Consumers is unable to predict accurately the impacts from this wide range of possible outcomes, but significant expenditures are likely.

Water: In March 2011, the EPA issued a proposed rule to regulate existing electric generating plant cooling water intake systems. Consumers is evaluating this proposed rule and its potential impacts on Consumers’ plants. A final rule is expected in July 2012.

Advance Notice of Proposed Rulemaking on PCBs: In April 2010, the EPA issued an Advance Notice of Proposed Rulemaking, indicating that it is considering a variety of regulatory actions with respect to PCBs. One proposal aims to phase out equipment containing PCBs by 2025. Another proposal eliminates an exemption for small equipment containing PCBs. Consumers could incur substantial costs associated with the regulation of PCBs due to prior installation of electrical equipment potentially containing PCBs.

Other electric environmental matters could have a major impact on Consumers’ outlook. For additional details on other electric environmental matters, see Note 3, Contingencies and Commitments, “Consumers’ Electric Utility Contingencies — Electric Environmental Matters.”

27

Consumers’ Gas Utility Business Outlook and Uncertainties

Gas Deliveries: Consumers believes economic conditions in Michigan have improved, and expects weather-adjusted gas deliveries to increase in 2011 by two percent compared with 2010. Over the next five years, Consumers expects average gas deliveries to decline about one percent annually, reflecting the predicted effects of energy efficiency programs and continued conservation. Actual delivery levels from year to year may vary from this trend due to:

• fluctuations in weather;

• use by independent power producers;

• availability and development of renewable energy sources;

• changes in gas prices;

• Michigan economic conditions, including population trends and housing activity;

• the price of competing energy sources or fuels; and

• energy efficiency and conservation.

A decoupling mechanism was authorized by the MPSC in Consumers’ 2009 gas rate case order, subject to certain conditions. It allows Consumers to adjust future gas rates to compensate for changes in sales volumes by class arising from the difference between the level of average sales per customer adopted in the order and actual average weather-adjusted sales per customer. The mechanism does not provide rate adjustments for changes in sales volumes arising from weather fluctuations. This mechanism mitigates the impacts of energy efficiency programs, conservation, and changes in economic conditions on its gas revenue.

Gas Rate Matters: Rate matters are critical to Consumers’ gas utility business. For details on Consumers’ gas rate case and GCR, see Note 4, Regulatory Matters, “Consumers’ Gas Utility.”

Gas Pipeline Safety: In response to the natural gas pipeline explosion that occurred in San Bruno, California in September 2010 and other recent events, the U.S. House of Representatives and the U.S. Senate have proposed bills stipulating stricter regulation of natural gas pipelines nationwide. These proposed bills affect both transmission and distribution pipelines. The proposed bills contain provisions mandating:

• the installation of automatic shutoff equipment in high consequence areas;

• redefinition of “high consequence areas”;

• increased civil penalties;

• prescribed notification and on-site incident response times;

• plans for safe management and replacement of cast iron pipelines;

• consideration of seismic activity;

• verification of maximum allowable operating pressure of all pipelines; and

• certain disclosures to homeowners and regulatory agencies.

Consumers continues to comply with laws and regulations governing natural gas pipeline safety. If these proposed laws are put into effect, Consumers could incur significant additional costs related to its natural gas pipeline safety programs. Consumers expects that it would be able to recover the costs in rates, consistent with the recovery of other reasonable costs of complying with laws and regulations.

Gas Environmental Estimates: Consumers expects to incur response activity costs at a number of sites, including 23 former MGP sites. For additional details, see Note 3, Contingencies and Commitments, “Consumers’ Gas Utility Contingencies — Gas Environmental Matters.”

28

Consumers’ Other Outlook and Uncertainties

Smart Grid: Consumers’ grid modernization effort continues to move forward. The foundation of this effort is the installation of advanced metering and the infrastructure to support it. The installation will include smart meters that are capable of transmitting and receiving data, a two-way communications network, and modifications to Consumers’ existing information technology systems to manage the data and enable changes to key business processes. Consumers expects to experience operational benefits upon the installation of smart meters. Smart meters are also intended to allow customers to monitor and manage their energy usage and help reduce demand during critical peak times, resulting in lower peak capacity requirements. Due to this system’s complexity and the relative immaturity of the technology, Consumers intends to continue its phased implementation approach. In mid-2012, Consumers plans to begin a larger-scale deployment to expand testing of the operations and systems of the selected advanced metering infrastructure network communications vendor.

Enterprises Outlook and Uncertainties

The primary focus with respect to CMS Energy’s remaining non-utility businesses is to optimize cash flow and maximize the value of their assets.

Trends, uncertainties, and other matters that could have a material impact on CMS Energy’s consolidated income, cash flows, or financial position include:

• indemnity and environmental remediation obligations at Bay Harbor;

• the outcome of certain legal proceedings;

• impacts of declines in electricity prices on the profitability of the enterprises segment’s generating units;

• representations, warranties, and indemnities provided by CMS Energy or its subsidiaries in connection with previous sales of assets;

• changes in commodity prices and interest rates on certain derivative contracts that do not qualify for hedge accounting and must be marked to market through earnings;

• changes in various environmental laws, regulations, principles, or practices, or in their interpretation; and

• economic conditions in Michigan, including population trends and housing activity.

For additional details regarding the enterprises segment’s uncertainties, see Note 3, Contingencies and Commitments.

Other Outlook and Uncertainties

EnerBank: EnerBank, a wholly owned subsidiary of CMS Capital, is a Utah state-chartered, FDIC-insured industrial bank providing unsecured home improvement loans. EnerBank represented one percent of CMS Energy’s net assets at June 30, 2011, and two percent of CMS Energy’s net income available to common stockholders for the six months ended June 30, 2011. The carrying value of EnerBank’s loan portfolio was $398 million at June 30, 2011. Its loan portfolio was funded primarily by deposit liabilities of $385 million. Twelve-month rolling average default rates on loans held by EnerBank have declined from 1.4 percent at December 31, 2010 to 1.1 percent at June 30, 2011. EnerBank expects the rate of loan defaults to level out at about 1.0 percent. CMS Energy is required to ensure that EnerBank remains well capitalized.

Litigation: CMS Energy, Consumers, and certain of their subsidiaries are named as parties in various litigation matters, as well as in administrative proceedings before various courts and governmental agencies, arising in the ordinary course of business. For additional details regarding these and other legal matters, see Note 3, Contingencies and Commitments and Note 4, Regulatory Matters.

29

NEW ACCOUNTING STANDARDS

For details regarding the implementation of new accounting standards and new accounting standards issued that are not yet effective, see Note 1, New Accounting Standards.

30

(This page intentionally left blank)

31

CMS Energy Corporation
Consolidated Statements of Income
(Unaudited)

In Millions
	Three Months Ended						Six Months Ended
June 30	2011			2010			2011			2010
Operating Revenue	$	1,364		$	1,340		$	3,419		$	3,307
Operating Expenses
Fuel for electric generation		153			151			305			289
Purchased and interchange power		303			314			603			592
Purchased power — related parties		20			21			41			42
Cost of gas sold		220			178			988			956
Maintenance and other operating expenses		288			296			567			571
Depreciation and amortization		122			131			284			303
General taxes		51			41			118			107
Insurance settlement		—			(50	)		—			(50	)
Gain on asset sales, net		—			(4	)		—			(4	)
Total operating expenses		1,157			1,078			2,906			2,806
Operating Income		207			262			513			501
Other Income (Expense)
Interest income		2			4			4			9
Allowance for equity funds used during construction		2			2			3			3
Income from equity method investees		2			2			6			5
Other income		5			9			9			18
Other expense		(3	)		(3	)		(5	)		(5	)
Total other income		8			14			17			30
Interest Charges
Interest on long-term debt		99			98			199			196
Other interest expense		6			20			12			28
Allowance for borrowed funds used during construction		(1	)		(1	)		(2	)		(2	)
Total interest charges		104			117			209			222
Income Before Income Taxes		111			159			321			309
Income Tax Expense		10			59			87			120
Income From Continuing Operations		101			100			234			189
Income (Loss) From Discontinued Operations, Net of Tax Expense of $ —, $6, $1, and $5		—			(16	)		2			(17	)
Net Income		101			84			236			172
Income Attributable to Noncontrolling Interests		1			2			1			2
Net Income Attributable to CMS Energy		100			82			235			170
Preferred Stock Dividends		—			2			—			5
Net Income Available to Common Stockholders	$	100		$	80		$	235		$	165

The accompanying notes are an integral part of these statements.

32

In Millions, Except Per Share Amounts
	Three Months Ended					Six Months Ended
June 30	2011		2010			2011		2010
Net Income Attributable to Common Stockholders
Amounts Attributable to Continuing Operations	$	100	$	96		$	233	$	182
Amounts Attributable to Discontinued Operations		—		(16	)		2		(17	)
Net Income Available to Common Stockholders	$	100	$	80		$	235	$	165
Income Attributable to Noncontrolling Interests
Amounts Attributable to Continuing Operations	$	1	$	2		$	1	$	2
Amounts Attributable to Discontinued Operations		—		—			—		—
Income Attributable to Noncontrolling Interests	$	1	$	2		$	1	$	2
Basic Earnings Per Average Common Share
Basic Earnings from Continuing Operations	$	0.40	$	0.42		$	0.93	$	0.80
Basic Earnings (Loss) from Discontinued Operations		—		(0.07	)		0.01		(0.08	)
Basic Earnings Attributable to Common Stock	$	0.40	$	0.35		$	0.94	$	0.72
Diluted Earnings Per Average Common Share
Diluted Earnings from Continuing Operations	$	0.38	$	0.39		$	0.89	$	0.74
Diluted Earnings (Loss) from Discontinued Operations		—		(0.07	)		0.01		(0.07	)
Diluted Earnings Attributable to Common Stock	$	0.38	$	0.32		$	0.90	$	0.67
Dividends Declared Per Common Share	$	0.21	$	0.15		$	0.42	$	0.30

33

(This page intentionally left blank)

34

CMS Energy Corporation
Consolidated Statements of Cash Flows
(Unaudited)

In Millions
Six Months ended June 30	2011			2010
Cash Flows from Operating Activities
Net Income	$	236		$	172
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		284			303
Deferred income taxes and investment tax credit		74			107
Postretirement benefits expense		83			88
Other non-cash operating activities		39			41
Postretirement benefits contributions		(39	)		(153	)
Changes in other assets and liabilities:
Decrease in accounts receivable, notes receivable, and accrued revenue		215			178
Decrease in accrued power supply revenue		15			22
Decrease in inventories		204			230
Increase in accounts payable		34			41
Decrease in accrued expenses		(36	)		(51	)
Decrease in other current and non-current assets		71			88
Increase (decrease) in other current and non-current liabilities		36			(18	)
Net cash provided by operating activities		1,216			1,048
Cash Flows from Investing Activities
Capital expenditures (excludes assets placed under capital lease)		(399	)		(424	)
Cost to retire property		(28	)		(20	)
Cash effect of deconsolidation of partnerships		—			(10	)
Other investing activities		(44	)		(36	)
Net cash used in investing activities		(471	)		(490	)
Cash Flows from Financing Activities
Proceeds from issuance of long-term debt		375			300
Proceeds from EnerBank notes, net		21			66
Issuance of common stock		22			5
Retirement of long-term debt		(292	)		(352	)
Payment of common stock dividends		(106	)		(69	)
Payment of preferred stock dividends		—			(5	)
Payment of capital and finance lease obligations		(12	)		(12	)
Other financing costs		(8	)		(44	)
Net cash used in financing activities		—			(111	)
Net Increase in Cash and Cash Equivalents, Including Assets Held for Sale		745			447
Decrease (Increase) in Cash and Cash Equivalents Included in Assets Held for Sale		2			(1	)
Net Increase in Cash and Cash Equivalents		747			446
Cash and Cash Equivalents, Beginning of Period		247			90
Cash and Cash Equivalents, End of Period	$	994		$	536

The accompanying notes are an integral part of these statements.

35

CMS Energy Corporation
Consolidated Balance Sheets
(Unaudited)

In Millions
	June 30		December 31
ASSETS	2011		2010
Current Assets
Cash and cash equivalents	$	994	$	247
Restricted cash and cash equivalents		29		23
Accounts receivable and accrued revenue, less allowances of $25 in 2011 and 2010		719		981
Notes receivable		57		70
Accounts receivable — related parties		10		10
Accrued power supply revenue		—		15
Inventories at average cost
Gas in underground storage		720		946
Materials and supplies		106		104
Generating plant fuel stock		143		125
Deferred property taxes		133		180
Regulatory assets		8		19
Assets held for sale		—		2
Prepayments and other current assets		37		37
Total current assets		2,956		2,759
Plant, Property & Equipment (at cost)
Plant, property & equipment, gross		14,413		14,145
Less accumulated depreciation, depletion, and amortization		4,802		4,646
Plant, property & equipment, net		9,611		9,499
Construction work in progress		644		570
Total plant, property & equipment		10,255		10,069
Non-current Assets
Regulatory assets		2,050		2,093
Accounts and notes receivable, less allowances of $5 in 2011 and 2010		398		397
Investments		52		49
Assets held for sale		—		4
Other non-current assets		234		245
Total non-current assets		2,734		2,788
Total Assets	$	15,945	$	15,616

The accompanying notes are an integral part of these statements.

36

In Millions
	June 30			December 31
LIABILITIES AND EQUITY	2011			2010
Current Liabilities
Current portion of long-term debt, capital and finance lease obligations	$	1,123		$	750
Accounts payable		444			492
Accounts payable — related parties		8			9
Accrued rate refunds		43			19
Accrued interest		107			102
Accrued taxes		239			302
Deferred income taxes		154			180
Regulatory liabilities		1			22
Liabilities held for sale		—			1
Other current liabilities		122			144
Total current liabilities		2,241			2,021
Non-current Liabilities
Long-term debt		6,184			6,448
Non-current portion of capital and finance lease obligations		177			188
Regulatory liabilities		1,860			1,988
Postretirement benefits		1,136			1,135
Asset retirement obligations		252			245
Deferred investment tax credit		47			49
Deferred income taxes		768			438
Other non-current liabilities		278			267
Total non-current liabilities		10,702			10,758
Commitments and Contingencies (Notes 3, 4, 5, 7, and 8)
Equity
Common stockholders’ equity
Common stock, authorized 350.0 shares; outstanding 251.8 shares in 2011 and 249.6 shares in 2010		3			2
Other paid-in capital		4,621			4,588
Accumulated other comprehensive loss		(38	)		(40	)
Accumulated deficit		(1,628	)		(1,757	)
Total common stockholders’ equity		2,958			2,793
Noncontrolling interests		44			44
Total equity		3,002			2,837
Total Liabilities and Equity	$	15,945		$	15,616

37

CMS Energy Corporation
Consolidated Statements of Changes in Equity
(Unaudited)

In Millions
	Three Months Ended						Six Months Ended
June 30	2011			2010			2011			2010
Common Stock
At beginning of period	$	3		$	2		$	2		$	2
Common stock issued		—			—			1			—
At end of period		3			2			3			2
Other Paid-in Capital
At beginning of period		4,599			4,564			4,588			4,560
Common stock issued		22			6			28			10
Common stock reissued		—			—			5			—
Common stock repurchased		—			(1	)		—			(1	)
At end of period		4,621			4,569			4,621			4,569
Accumulated Other Comprehensive Loss
Retirement benefits liability
At beginning of period		(39	)		(31	)		(39	)		(32	)
Retirement benefits liability adjustments1		1			1			1			2
At end of period		(38	)		(30	)		(38	)		(30	)
Investments
At beginning of period		—			—			—			—
Unrealized gain on investments1		1			—			1			—
At end of period		1			—			1			—
Derivative instruments
At beginning and end of period		(1	)		(1	)		(1	)		(1	)
At end of period		(38	)		(31	)		(38	)		(31	)
Accumulated Deficit
At beginning of period		(1,675	)		(1,876	)		(1,757	)		(1,927	)
Net income attributable to CMS Energy1		100			82			235			170
Common stock dividends declared		(53	)		(35	)		(106	)		(69	)
Preferred stock dividends declared		—			(2	)		—			(5	)
At end of period		(1,628	)		(1,831	)		(1,628	)		(1,831	)
Preferred Stock
At beginning and end of period		—			239			—			239
Noncontrolling Interests
At beginning of period		44			44			44			97
Income attributable to noncontrolling interests1		1			2			1			2
Distributions and other changes in noncontrolling interests		(1	)		(1	)		(1	)		(54	)
At end of period		44			45			44			45
Total Equity	$	3,002		$	2,993		$	3,002		$	2,993

38

In Millions
	Three Months Ended				Six Months Ended
June 30	2011		2010		2011		2010
1 Disclosure of Comprehensive Income:
Net income	$	101	$	84	$	236	$	172
Income attributable to noncontrolling interests		1		2		1		2
Net income attributable to CMS Energy	$	100	$	82	$	235	$	170
Retirement benefits liability:
Retirement benefits liability adjustments, net of tax of $ —, $ 2, $ — , and $1, respectively		1		1		1		2
Investments:
Unrealized gain on investments, net of tax of $ — , $ — , $ — , and $ —, respectively		1		—		1		—
Total Comprehensive Income	$	102	$	83	$	237	$	172

The accompanying notes are an integral part of these statements.

39

Consumers Energy Company
Consolidated Statements of Income
(Unaudited)

In Millions
	Three Months Ended						Six Months Ended
June 30	2011			2010			2011			2010
Operating Revenue	$	1,303		$	1,276		$	3,291		$	3,166
Operating Expenses
Fuel for electric generation		138			125			267			250
Purchased and interchange power		299			310			592			587
Purchased power — related parties		19			20			40			41
Cost of gas sold		197			163			950			909
Maintenance and other operating expenses		273			281			538			543
Depreciation and amortization		121			130			282			301
General taxes		49			40			115			104
Total operating expenses		1,096			1,069			2,784			2,735
Operating Income		207			207			507			431
Other Income (Expense)
Interest income		2			4			4			9
Allowance for equity funds used during construction		2			2			3			3
Other income		5			9			13			18
Other expense		(3	)		(3	)		(5	)		(5	)
Total other income		6			12			15			25
Interest Charges
Interest on long-term debt		63			60			126			123
Other interest expense		5			19			9			25
Allowance for borrowed funds used during construction		(1	)		(1	)		(2	)		(2	)
Total interest charges		67			78			133			146
Income Before Income Taxes		146			141			389			310
Income Tax Expense		54			53			144			115
Net Income		92			88			245			195
Preferred Stock Dividends		1			1			1			1
Net Income Available to Common Stockholder	$	91		$	87		$	244		$	194

The accompanying notes are an integral part of these statements.

40

Consumers Energy Company
Consolidated Statements of Cash Flows
(Unaudited)

In Millions
Six Months ended June 30	2011			2010
Cash Flows from Operating Activities
Net Income	$	245		$	195
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		282			301
Deferred income taxes and investment tax credit		82			(22	)
Postretirement benefits expense		78			87
Other non-cash operating activities		31			32
Postretirement benefits contributions		(37	)		(143	)
Changes in other assets and liabilities:
Decrease in accounts receivable, notes receivable, and accrued revenue		207			186
Decrease in accrued power supply and gas revenue		15			22
Decrease in inventories		202			229
Increase in accounts payable		42			35
Decrease in accrued expenses		(12	)		(13	)
Decrease in other current and non-current assets		68			92
Increase (decrease) in other current and non-current liabilities		42			(18	)
Net cash provided by operating activities		1,245			983
Cash Flows from Investing Activities
Capital expenditures (excludes assets placed under capital lease)		(394	)		(423	)
Cost to retire property		(28	)		(21	)
Other investing activities		(23	)		—
Net cash used in investing activities		(445	)		(444	)
Cash Flows from Financing Activities
Retirement of long-term debt		(18	)		(327	)
Payment of common stock dividends		(196	)		(168	)
Payment of preferred stock dividends		(1	)		(1	)
Stockholder’s contribution		125			250
Payment of capital and finance lease obligations		(12	)		(12	)
Other financing costs		(3	)		—
Net cash used in financing activities		(105	)		(258	)
Net Increase in Cash and Cash Equivalents		695			281
Cash and Cash Equivalents, Beginning of Period		71			39
Cash and Cash Equivalents, End of Period	$	766		$	320

The accompanying notes are an integral part of these statements.

41

Consumers Energy Company
Consolidated Balance Sheets
(Unaudited)

In Millions
	June 30		December 31
ASSETS	2011		2010
Current Assets
Cash and cash equivalents	$	766	$	71
Restricted cash and cash equivalents		28		23
Accounts receivable and accrued revenue, less allowances of $23 in 2011 and 2010		706		963
Notes receivable		43		55
Accrued power supply revenue		—		15
Accounts receivable — related parties		1		1
Inventories at average cost
Gas in underground storage		720		941
Materials and supplies		103		100
Generating plant fuel stock		141		124
Deferred property taxes		133		180
Regulatory assets		8		19
Prepayments and other current assets		30		27
Total current assets		2,679		2,519
Plant, Property & Equipment (at cost)
Plant, property & equipment, gross		14,285		14,022
Less accumulated depreciation, depletion, and amortization		4,747		4,593
Plant, property & equipment, net		9,538		9,429
Construction work in progress		640		566
Total plant, property & equipment		10,178		9,995
Non-current Assets
Regulatory assets		2,050		2,093
Accounts and notes receivable		13		22
Investments		31		34
Other non-current assets		150		176
Total non-current assets		2,244		2,325
Total Assets	$	15,101	$	14,839

The accompanying notes are an integral part of these statements.

42

In Millions
	June 30		December 31
LIABILITIES AND EQUITY	2011		2010
Current Liabilities
Current portion of long-term debt, capital and finance lease obligations	$	362	$	61
Accounts payable		429		471
Accounts payable — related parties		11		11
Accrued rate refunds		43		19
Accrued interest		75		74
Accrued taxes		163		199
Deferred income taxes		194		209
Regulatory liabilities		1		22
Other current liabilities		85		95
Total current liabilities		1,363		1,161
Non-current Liabilities
Long-term debt		4,169		4,488
Non-current portion of capital and finance lease obligations		177		188
Regulatory liabilities		1,860		1,988
Postretirement benefits		1,078		1,076
Asset retirement obligations		251		244
Deferred investment tax credit		47		49
Deferred income taxes		1,617		1,289
Other non-current liabilities		186		176
Total non-current liabilities		9,385		9,498
Commitments and Contingencies (Notes 3, 4, 5, 7, and 8)
Equity
Common stockholder’s equity
Common stock, authorized 125.0 shares; outstanding 84.1 shares for both periods		841		841
Other paid-in capital		2,957		2,832
Retained earnings		511		463
Total common stockholder’s equity		4,309		4,136
Preferred stock		44		44
Total equity		4,353		4,180
Total Liabilities and Equity	$	15,101	$	14,839

43

Consumers Energy Company
Consolidated Statements of Changes in Equity
(Unaudited)

In Millions
	Three Months Ended						Six Months Ended
June 30	2011			2010			2011			2010
Common Stock
At beginning and end of period	$	841		$	841		$	841		$	841
Other Paid-in Capital
At beginning of period		2,957			2,782			2,832			2,582
Stockholder’s contribution		—			50			125			250
At end of period		2,957			2,832			2,957			2,832
Accumulated Other Comprehensive Income
Retirement benefits liability
At beginning of period		(15	)		(11	)		(16	)		(11	)
Retirement benefits liability adjustments1		—			—			1			—
At end of period		(15	)		(11	)		(15	)		(11	)
Investments
At beginning of period		15			12			16			13
Unrealized loss on investments1		—			(1	)		(1	)		(2	)
At end of period		15			11			15			11
At end of period		—			—			—			—
Retained Earnings
At beginning of period		512			382			463			389
Net income1		92			88			245			195
Common stock dividends declared		(92	)		(54	)		(196	)		(168	)
Preferred stock dividends declared		(1	)		(1	)		(1	)		(1	)
At end of period		511			415			511			415
Preferred Stock
At beginning and end of period		44			44			44			44
Total Equity	$	4,353		$	4,132		$	4,353		$	4,132

The accompanying notes are an integral part of these statements.

44

In Millions
	Three Months Ended					Six Months Ended
June 30	2011		2010			2011			2010
1 Disclosure of Comprehensive Income:
Net income	$	92	$	88		$	245		$	195
Retirement benefits liability:
Retirement benefits liability adjustments, net of tax of $—, $— , $—, and $—, respectively		—		—			1			—
Investments:
Unrealized loss on investments, net of tax of $—, $— , $(1), and $—, respectively		—		(1	)		(1	)		(2	)
Total Comprehensive Income	$	92	$	87		$	245		$	193

45

(This page intentionally left blank)

46

CMS Energy Corporation
Consumers Energy Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

These interim consolidated financial statements have been prepared by CMS Energy and Consumers in accordance with GAAP 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 GAAP. 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 the 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 2010 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.

1: NEW ACCOUNTING STANDARDS

New Accounting Standards Not Yet Effective

ASU 2011-05, Presentation of Comprehensive Income: This standard, effective January 1, 2012 for CMS Energy and Consumers, eliminates the option to report other comprehensive income and its components on the statement of changes in equity. Presently, both CMS Energy and Consumers use this option for their consolidated financial statements. Under the standard, entities will be required to present either a single continuous statement of comprehensive income, containing both net income and components of other comprehensive income, or two separate consecutive statements. This standard will affect only the presentation of comprehensive income in CMS Energy’s and Consumers’ consolidated financial statements.

ASU 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs: This standard, effective January 1, 2012 for CMS Energy and Consumers, is the result of a joint project of the Financial Accounting Standards Board and the International Accounting Standards Board. The primary objective of the standard is to ensure that fair value has the same meaning under GAAP and International Financial Reporting Standards and to establish common fair value measurement guidance in the two sets of standards. The standard does not change the overall fair value model in GAAP, but it amends various fair value principles and establishes additional disclosure requirements. CMS Energy and Consumers are evaluating this standard, but they do not expect it to have a significant impact on their consolidated financial statements.

2: FAIR VALUE MEASUREMENTS

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:

• Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

47

• Level 2 inputs are observable, market-based inputs, other than Level 1 prices. Level 2 inputs may include quoted prices for similar assets or liabilities in active markets, quoted prices in inactive markets, interest rates and yield curves observable at commonly quoted intervals, credit risks, default rates, and inputs derived from or corroborated by observable market data.

• Level 3 inputs are unobservable inputs that reflect CMS Energy’s or Consumers’ own assumptions about how market participants would value their assets and liabilities.

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.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Presented in the following table are CMS Energy’s and Consumers’ assets and liabilities, by level within the fair value hierarchy, reported at fair value on a recurring basis at June 30, 2011:

In Millions
	Total		Level 1		Level 2		Level 3
CMS Energy, including Consumers
Assets
Cash equivalents	$	875	$	875	$	—	$	—
Restricted cash equivalents		15		15		—		—
Nonqualified deferred compensation plan assets		4		4		—		—
SERP
Mutual fund		90		90		—		—
State and municipal bonds		26		—		26		—
Derivative instruments
Commodity contracts1		3		—		—		3
Total2	$	1,013	$	984	$	26	$	3
Liabilities
Nonqualified deferred compensation plan liabilities	$	4	$	4	$	—	$	—
Derivative instruments
Commodity contracts3		3		—		—		3
Total4	$	7	$	4	$	—	$	3
Consumers
Assets
Cash equivalents	$	667	$	667	$	—	$	—
Restricted cash equivalents		14		14		—		—
CMS Energy common stock		31		31		—		—
Nonqualified deferred compensation plan assets		3		3		—		—
SERP
Mutual fund		59		59		—		—
State and municipal bonds		17		—		17		—
Derivative instruments
Commodity contracts		3		—		—		3
Total5	$	794	$	774	$	17	$	3
Liabilities
Nonqualified deferred compensation plan liabilities	$	3	$	3	$	—	$	—
Total	$	3	$	3	$	—	$	—

¹ This amount is gross and excludes the impact of offsetting derivative assets and liabilities under master netting arrangements, which was less than $1 million at June 30, 2011.

48

2	At June 30, 2011, CMS Energy’s assets classified as Level 3 represented less than one percent of CMS Energy’s total assets measured at fair value.
3	This amount is gross and excludes the impact of offsetting derivative assets and liabilities under master netting arrangements and offsetting cash margin deposits paid by CMS ERM to other parties, which was less than $1 million at June 30, 2011.
4	At June 30, 2011, CMS Energy’s liabilities classified as Level 3 represented 43 percent of CMS Energy’s total liabilities measured at fair value. The Level 3 liabilities consisted primarily of an electricity sales agreement held by CMS ERM.
5	At June 30, 2011, Consumers’ assets classified as Level 3 represented less than one percent of Consumers’ total assets measured at fair value.

Presented in the following table are CMS Energy’s and Consumers’ assets and liabilities, by level within the fair value hierarchy, reported at fair value on a recurring basis at December 31, 2010:

In Millions
	Total		Level 1		Level 2		Level 3
CMS Energy, including Consumers
Assets
Cash equivalents	$	183	$	183	$	—	$	—
Restricted cash equivalents		6		6		—		—
Nonqualified deferred compensation plan assets		6		6		—		—
SERP
Cash equivalents		1		1		—		—
Mutual fund		62		62		—		—
State and municipal bonds		28		—		28		—
Derivative instruments
Commodity contracts1		1		—		—		1
Total2	$	287	$	258	$	28	$	1
Liabilities
Nonqualified deferred compensation plan liabilities	$	6	$	6	$	—	$	—
Derivative instruments
Commodity contracts3		4		—		—		4
Total4	$	10	$	6	$	—	$	4
Consumers
Assets
Cash equivalents	$	19	$	19	$	—	$	—
Restricted cash equivalents		6		6		—		—
CMS Energy common stock		34		34		—		—
Nonqualified deferred compensation plan assets		4		4		—		—
SERP
Cash equivalents		1		1		—		—
Mutual fund		39		39		—		—
State and municipal bonds		17		—		17		—
Derivative instruments
Commodity contracts		1		—		—		1
Total5	$	121	$	103	$	17	$	1
Liabilities
Nonqualified deferred compensation plan liabilities	$	4	$	4	$	—	$	—
Total	$	4	$	4	$	—	$	—

¹ This amount is gross and excludes the impact of offsetting derivative assets and liabilities under master netting arrangements, which was less than $1 million at December 31, 2010.

49

2	At December 31, 2010, CMS Energy’s assets classified as Level 3 represented less than one percent of CMS Energy’s total assets measured at fair value.
3	This amount is gross and excludes the impact of offsetting derivative assets and liabilities under master netting arrangements and offsetting cash margin deposits paid by CMS ERM to other parties, which was less than $1 million at December 31, 2010.
4	At December 31, 2010, CMS Energy’s liabilities classified as Level 3 represented 40 percent of CMS Energy’s total liabilities measured at fair value. The Level 3 liabilities consisted primarily of an electricity sales agreement held by CMS ERM.
5	At December 31, 2010, Consumers’ assets classified as Level 3 represented one percent of Consumers’ total assets measured at fair value.

Cash Equivalents: 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, repurchase agreements collateralized by U.S. Treasury notes, and highly rated, short-term corporate debt securities.

Nonqualified Deferred Compensation Plan Assets: 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 net asset values 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.

SERP Assets: 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.

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 net asset value, which is the basis for transactions to buy or sell shares in the fund.

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.

Nonqualified Deferred Compensation Plan Liabilities: 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.

Derivative Instruments: 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. CMS Energy and

50

Consumers have classified certain derivatives as Level 3 since the fair value measurements incorporate pricing assumptions that cannot be observed or confirmed through market transactions.

The most significant derivatives classified as Level 3 are an electricity sales agreement held by CMS ERM and FTRs held by Consumers. At December 31, 2010 and in prior periods, for the electricity sales agreement held by CMS ERM, quoted electricity prices were not available for the entire term of the agreement, and a proprietary forward pricing model was used to determine fair value. At June 30, 2011, quoted prices at the nearest active market were available for the entire term of the agreement. The agreement, however, remains classified as Level 3 since the pricing differential between the nearest active market in Ohio and the delivery point in Michigan cannot be confirmed with observable market transactions. There is no quoted pricing information for FTRs held by Consumers. Consumers determines the fair value of FTRs based on Consumers’ average historical settlements.

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. CMS Energy and Consumers monitor market conditions and may incorporate other data, such as credit default swap rates, in determining adjustments for credit risk as warranted. For additional details about derivative contracts, see Note 8, Derivative Instruments.

Assets and Liabilities Measured at Fair Value on a Recurring Basis using Significant Level 3 Inputs

Presented in the following tables are reconciliations of changes in the fair values of Level 3 assets and liabilities at CMS Energy, which include Level 3 assets and liabilities at Consumers:

In Millions
Three Months Ended June 30	2011			2010
Balance at April 1	$	(2	)	$	(3	)
Total losses included in earnings1		(1	)		(2	)
Total gains offset through regulatory accounting		3			1
Settlements		—			(1	)
Balance at June 30	$	—		$	(5	)
Unrealized losses included in earnings for the three months ended June 30 relating to assets and liabilities still held at June 301	$	—		$	(2	)

In Millions
Six Months Ended June 30	2011			2010
Balance at January 1	$	(3	)	$	(8	)
Total gains included in earnings1		—			2
Total gains offset through regulatory accounting		3			1
Settlements		—			—
Balance at June 30	$	—		$	(5	)
Unrealized gains included in earnings for the six months ended June 30 relating to assets and liabilities still held at June 301	$	1		$	2

51

¹ 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.

Presented in the following tables are reconciliations of changes in the fair values of Level 3 assets and liabilities at Consumers:

	In Millions
Three Months Ended June 30	2011		2010
Balance at April 1	$	—	$	—
Total gains offset through regulatory accounting		3		1
Settlements		—		(1	)
Balance at June 30	$	3	$	—

	In Millions
Six Months Ended June 30	2011			2010
Balance at January 1	$	1		$	—
Total gains offset through regulatory accounting		3			1
Settlements		(1	)		(1	)
Balance at June 30	$	3		$	—

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

CMS Energy and Consumers had no nonrecurring fair value measurements during the six months ended June 30, 2011.

Presented in the following table are CMS Energy’s assets, by level within the fair value hierarchy, reported at fair value on a nonrecurring basis during the three months ended June 30, 2010:

In Millions
	Level 1		Level 2		Level 3		Losses
CMS Energy, including Consumers
Assets held for sale	$	—	$	—	$	7	$	(4	)

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. CMS Energy had no other nonrecurring fair value measurements and Consumers had no nonrecurring fair value measurements during the six months ended June 30, 2010.

3: CONTINGENCIES AND COMMITMENTS

CMS Energy and Consumers are involved in various matters that give rise to contingent liabilities. Depending on the specific issues, the resolution of these contingencies could have a material effect on CMS Energy’s and Consumers’ liquidity, financial condition, and results of operations. In their disclosures of these matters, CMS Energy and Consumers provide an estimate of the possible loss or range of loss when such an estimate can be made. Disclosures that state that CMS Energy or Consumers cannot predict the outcome of a matter indicate that they are unable to estimate a possible loss or range of loss for the matter.

52

CMS Energy Contingencies

Gas Index Price Reporting Investigation: 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.

Gas Index Price Reporting Litigation: CMS Energy, along with CMS MST, CMS Field Services, Cantera Natural Gas, Inc., and Cantera Gas Company, are named as defendants in various 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 Colorado, Kansas, Missouri, and Wisconsin. The following provides more detail on these proceedings:

• In 2005, CMS Energy, CMS MST, and CMS Field Services were named 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 the defendants engaged in a scheme to violate the Kansas Restraint of Trade Act. The plaintiffs are seeking statutory full consideration damages consisting of the full consideration paid by plaintiffs for natural gas allegedly purchased from defendants.

• 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 laws.

• 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 2006. Defendants, including CMS Energy, CMS Field Services, and CMS MST, are alleged to have violated the Colorado Antitrust Act of 1992. Plaintiffs are seeking full refund damages.

• 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. 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 complaint in the U.S. District Court for the Eastern District of Michigan. In 2010, the MDL judge issued an opinion and order granting the CMS Energy defendants’ motion to dismiss the Michigan complaint on statute-of-limitations grounds and all CMS Energy defendants have been dismissed from the Arandell (Michigan) action.

• Another class action complaint, Newpage Wisconsin System v. CMS ERM, et al., was filed in 2009 in circuit court in Wood County, Wisconsin, against CMS Energy, CMS ERM, Cantera Gas Company, and others. The plaintiff is seeking full consideration damages, treble damages, costs, interest, and attorneys’ fees.

• 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 CMS Energy, CMS MST, CMS Field Services, and others. The complaint alleges various claims under the Kansas Restraint of Trade Act. The plaintiff is

53

seeking statutory full consideration damages for its purchases of natural gas in 2000 and 2001.

After removal to federal court, all of the cases described above were transferred to the MDL. CMS Energy was dismissed from the Learjet, Heartland, and J.P. Morgan cases in 2009, but other CMS Energy defendants remained parties. All CMS Energy defendants were dismissed from the Breckenridge case in 2009. In 2010, CMS Energy and Cantera Gas Company were dismissed from the Newpage case and the Arandell (Wisconsin) case was reinstated against CMS ERM. In July 2011, all claims against remaining CMS Energy defendants in the MDL cases were dismissed based on FERC preemption. Appeals are possible.

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. If the outcome after appeals is unfavorable, these cases could have a material adverse impact on CMS Energy’s liquidity, financial condition, and results of operations.

Bay Harbor: As part of the development of Bay Harbor by certain subsidiaries of CMS Energy, and under an agreement with the MDEQ, third parties constructed a golf course and park over several abandoned CKD piles left over from the former cement plant operations on the Bay Harbor site. The third parties also undertook a series of response activities, including constructing a leachate collection system in one area where CKD-impacted groundwater was entering Little Traverse Bay. 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.

In 2005, the EPA, along with CMS Land and CMS Capital, voluntarily executed an Administrative Order on Consent under Superfund, and the EPA approved a Removal Action Work Plan to address contamination issues. 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. Several augmentation measures were implemented and completed in 2009, with the remaining measure completed in 2010.

In May 2011, CMS Energy received approval from the EPA on a revised scope of remedies that CMS Energy had submitted in December 2010. CMS Energy is presently in negotiations with the MDEQ to finalize an agreement that will identify the remaining final remedies at the site. In December 2010, the MDEQ issued an NPDES permit that authorizes CMS Land to discharge treated leachate into Little Traverse Bay. This permit requires renewal every five years. Additionally, CMS Land has committed to investigate the potential for a deep injection well on the Bay Harbor site as an alternative long-term solution to the leachate disposal issue. In 2008, the MDEQ and the EPA granted permits for CMS Land or its wholly owned subsidiary, Beeland Group LLC, to construct and operate an off-site 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.

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. In October 2010, CMS Land and other parties received a demand for payment from the EPA in the amount of $7 million, plus interest, whereby the EPA is seeking recovery, as allowed under Superfund, of the EPA’s response costs incurred at the Bay Harbor site. CMS Land believes that this is not a valid claim and intends to dispute it.

54

CMS Land and CMS Capital, the MDEQ, the EPA, and other parties continue to negotiate the long-term remedy for the Bay Harbor site, including:

• the disposal of leachate;

• the capping and excavation of CKD;

• the location and design of collection lines and upstream water diversion systems;

• application of criteria for various substances such as mercury; and

• other matters that are likely to affect the scope of response activities that CMS Land and CMS Capital may be obligated to undertake.

CMS Energy has recorded a cumulative charge related to Bay Harbor of $223 million, which includes accretion expense. At June 30, 2011, CMS Energy had a recorded liability of $88 million for its remaining obligations. CMS Energy calculated this liability based on discounted projected costs, using a discount rate of 4.34 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 at December 31, 2010. The undiscounted amount of the remaining obligation is $109 million. CMS Energy expects to pay $16 million during the remainder of 2011, $16 million in 2012, $7 million in 2013, $5 million in 2014, $4 million in 2015, and the remaining amount thereafter on long-term liquid disposal and operating and maintenance costs.

CMS Energy’s estimate of response activity costs and the timing of expenditures could change if there are additional major changes in circumstances or assumptions, including but not limited to:

• inability to complete the present long-term water disposal strategy at a reasonable cost;

• delays in implementing the present long-term water disposal strategy;

• requirements to alter the present long-term water disposal strategy upon expiration of the NPDES permit if the MDEQ or EPA identify a more suitable alternative;

• an increase in the number of contamination areas;

• different remediation techniques;

• the nature and extent of contamination;

• inability to reach agreement with the MDEQ or the EPA over additional response activities;

• delays in the receipt of requested permits;

• delays following the receipt of any requested permits due to legal appeals of third parties;

• additional or new legal or regulatory requirements; or

• new or different landowner claims.

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. Although a liability for its present estimate of remaining response activity costs has been recorded, CMS Energy cannot predict the ultimate financial impact or outcome of this matter.

Equatorial Guinea Tax Claim: 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 indicated in 2008 that it still intends to pursue its claim. CMS Energy cannot predict the financial impact or outcome of this matter.

55

Consumers’ Electric Utility Contingencies

Electric Environmental Matters: Consumers’ operations are subject to environmental laws and regulations. Historically, Consumers has generally been able to recover, in customer rates, the costs to operate its facilities in compliance with these laws and regulations.

Cleanup and Solid Waste: 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, 2011, Consumers had a recorded liability of $2 million, its estimated probable NREPA liability.

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. In November 2010, Consumers received official notification from the EPA that identified Consumers as a potentially responsible party at the Kalamazoo River Superfund site. The notification claimed that the EPA has reason to believe Consumers disposed of PCBs and arranged for the disposal and treatment of PCB-containing materials at portions of the site. Consumers responded to the EPA in December 2010, stating that it has no information showing that it disposed of PCBs or arranged for disposal or treatment of PCB-containing material at portions of the site and requesting further information from the EPA before Consumers would commit to perform or finance cleanup activities at the site. In April 2011, Consumers received a follow-up letter from the EPA requesting that Consumers, as a potentially responsible party at the Kalamazoo River Superfund site, agree to participate in a removal action plan along with several other companies. The letter also indicated that under Sections 106 and 107 of Superfund, Consumers may be liable for reimbursement of the EPA’s costs and potential penalties for noncompliance with any unilateral order that the EPA may issue requiring performance under the removal action plan. The EPA has provided limited information regarding Consumers’ potential responsibility for contamination at the site and has not yet given an indication of the share of any cleanup costs for which Consumers could be held responsible. Consumers continues to investigate the EPA’s claim that it disposed of PCBs or arranged for disposal or treatment of PCB-containing material at portions of the site. Until further information is received from the EPA, Consumers is unable to estimate a range of potential liability for cleanup of the river.

Based on its experience, Consumers estimates that its share of the total liability for other 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, 2011, Consumers had a recorded liability of $2 million for its share of the total liability at these sites, the minimum amount in the range of its estimated probable Superfund liability.

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, the nature and extent of contamination, and legal and regulatory requirements, could affect its estimates of NREPA and Superfund liability.

Ludington PCB: 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.

Electric Utility Plant Air Permit Issues and Notices of Violation: In 2007, Consumers received an NOV/FOV from the EPA alleging that fourteen utility boilers exceeded the visible emission limits in their

56

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 review under the NSR. 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.

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 Projects, and/or pay fines. Additionally, Consumers would need to assess the viability of continuing operations at certain plants. The potential costs relating to these matters could be material and the extent of cost recovery cannot be reasonably estimated. Although Consumers cannot predict the financial impact or outcome of these matters, 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.

Nuclear Matters: The matters discussed in this section relate to Consumers’ previously owned nuclear generating plants.

At June 30, 2011, Consumers had a recorded liability of $163 million to the DOE to fund the disposal of spent nuclear fuel used before 1983. This balance comprised the principal amount of $44 million collected from customers for spent nuclear fuel disposal fees and $119 million of interest accrued on those collections. The liability, which was classified in long-term debt on CMS Energy’s and Consumers’ consolidated balance sheets, was to be paid to the DOE when it began 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.

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. 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.

In July 2011, Consumers entered into an agreement with the DOE to settle its claims for $120 million. As part of this agreement, Consumers settled its $163 million liability to the DOE. Consumers will request that the MPSC determine the regulatory treatment of the $120 million settlement. In this filing, Consumers will propose that $85 million of the settlement should represent the recovery of its regulatory asset related to nuclear fuel storage costs at Big Rock. Certain other costs related to spent nuclear fuel were recovered from customers through rates, and the MPSC may determine that those amounts should be refunded to customers. If the MPSC concludes that Consumers may retain a portion of the settlement, Consumers will recognize that amount in earnings.

In its November 2010 electric rate order, the MPSC directed Consumers to establish, within six months of the date of the order, an independent trust fund for the amount payable to the DOE. Subsequent rate orders extended this six-month deadline. Following its settlement with the DOE, Consumers petitioned the MPSC to relieve it of the obligation to fund the trust.

As a result of the DOE settlement, Consumers may, under the terms of the purchase and sale agreement with Entergy, request termination of the letter of credit.

57

Consumers’ Gas Utility Contingencies

Gas Environmental Matters: 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, 2011, Consumers estimated its undiscounted remaining remediation and other response activity costs to be between $28 million and $43 million. Generally, Consumers has been able to recover most of its costs to date through proceeds from insurance settlements and customer rates.

At June 30, 2011, Consumers had a recorded liability of $28 million and a regulatory asset of $55 million that included $27 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.

Guarantees

Presented in the following table are CMS Energy’s guarantees at June 30, 2011:

In Millions
	Issue	Expiration	Maximum			Carrying
Guarantee Description	Date	Date	Obligation			Amount
Indemnity obligations from asset sales and other agreements	Various	Various through June 2022	$	512	1	$	21
Guarantees and put options2	Various	Various through March 2021		33			1

1

The majority of this amount arises from stock and asset sale 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.

2

At June 30, 2011, 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.

At June 30, 2011, the maximum obligation and carrying amounts for Consumers’ guarantees were less than $1 million.

58

Presented in the following table is additional information regarding CMS Energy’s guarantees:

Guarantee Description	How Guarantee Arose	Events That Would Require Performance
Indemnity obligations from asset sales and other agreements	Stock and asset sale agreements	Findings of misrepresentation, breach of warranties, tax claims, and other specific events or circumstances
Guarantees and put options	Normal operating activity	Nonperformance or non-payment by a subsidiary under a related contract
Guarantees and put options	Bay Harbor remediation efforts	Owners exercising put options requiring CMS Land to purchase property

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.

Other Contingencies

Michigan Single Business Tax: The State of Michigan is finalizing its audit of CMS Energy’s and Consumers’ combined Michigan single business tax returns for 2004 through 2007. The outcome of this audit could impact CMS Energy’s and Consumers’ net income. CMS Energy and Consumers are unable to estimate any potential earnings impact.

Other: In addition to the matters disclosed in this note and Note 4, Regulatory 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 matters, federal and state taxes, rates, licensing, employment, 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 condition, or liquidity.

4: REGULATORY MATTERS

Rate matters are critical to Consumers. Depending upon the specific issues, the outcomes of rate cases and proceedings could have a material adverse effect on CMS Energy’s and Consumers’ liquidity, financial condition, and results of operations. Consumers cannot predict the outcome of these proceedings.

Consumers’ Electric Utility

Electric Rate Cases: The MPSC, in its 2010 electric rate case order, authorized Consumers to increase its rates by $146 million annually, $4 million less than the rate increase self-implemented by Consumers in July 2010. In June 2011, the MPSC approved a settlement agreement, finding that no refund of self-implemented rates to customers is required.

59

In June 2011, Consumers filed an application with the MPSC seeking an annual increase in revenue of $195 million, based on a 10.7 percent authorized return on equity. The filing requested authority to recover new investment in system reliability, environmental compliance, and technology enhancements. Presented in the following table are the components of the requested increase in revenue:

In Millions
Components of the increase in revenue
Investment in rate base	$	81
Recovery of depreciation and property taxes		70
Impact of sales declines		50
Reduced operating and maintenance costs		(4	)
Cost of capital		(2	)
Total	$	195

Power Supply Cost Recovery: 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.

PSCR Plan: In September 2010, Consumers submitted its 2011 PSCR plan to the MPSC. In accordance with its proposed plan, Consumers self-implemented the 2011 PSCR charge beginning in January 2011.

PSCR Reconciliation: Presented in the following table is the PSCR reconciliation filing pending with the MPSC:

PSCR Year	Date Filed	Net Underrecovery	PSCR Cost of Power Sold
2010	March 2011	$   15 million	$   1.7 billion

In June 2011, the MPSC issued an order approving Consumers’ 2009 PSCR reconciliation, as modified by the order, and authorized Consumers to include an underrecovery of $31 million in its 2010 PSCR reconciliation.

Electric Revenue Decoupling Mechanism: Consumers’ 2009 electric rate case order authorized an electric revenue decoupling mechanism, subject to certain conditions. This decoupling mechanism, which was extended in the 2010 electric rate case order, allows Consumers to adjust future electric rates to compensate for changes in sales volumes resulting from weather fluctuations, energy efficiency, and conservation. Various parties have filed appeals concerning the electric decoupling mechanism.

In March 2011, Consumers filed its first reconciliation of the electric revenue decoupling mechanism with the MPSC, requesting recovery of $27 million from customers for the period December 2009 through November 2010. Other parties are opposing this recovery.

At June 30, 2011, Consumers had a $58 million non-current regulatory asset recorded for electric decoupling, which included the $27 million balance referred to above.

Uncollectible Expense Tracking Mechanism: In March 2011, Consumers filed its reconciliation of the uncollectible expense tracking mechanism with the MPSC, requesting recovery of $3 million from customers for November 2009 through November 2010, the entire period of the tracker. The uncollectible expense tracking mechanism, authorized by the MPSC in its November 2009 electric rate order, allowed future rates to be adjusted to collect or refund 80 percent of the difference between the level of electric uncollectible expense included in rates and actual uncollectible expense. During 2009, various parties filed appeals concerning the uncollectible expense tracking mechanism. In its 2010 electric rate order, the MPSC terminated the uncollectible expense tracking mechanism as of November 2010.

60

Electric Operation and Maintenance Expenditures Show-Cause Order: In 2005, 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. In 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 had not refunded this amount to customers. 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. In June 2011, the MPSC found that Consumers violated the 2005 order, but that customers were not affected significantly by the violation. The MPSC levied a $65,200 penalty on Consumers, but concluded that no refund was required.

Big Rock Decommissioning: 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. 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.

In an order issued in February 2010, the MPSC concluded that certain revenues collected during a statutory rate freeze from 2001 through 2003 should have been deposited in a decommissioning trust fund. The MPSC agreed that Consumers was entitled to recover $44 million of decommissioning costs, but concluded that Consumers had collected this amount previously through the rates 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. Consumers completed this refund in January 2011. 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.

Consumers paid $30 million to Entergy to assume ownership and responsibility for the Big Rock ISFSI, and incurred $55 million for nuclear fuel storage costs as a result of the DOE’s failure to accept spent nuclear fuel. At June 30, 2011, Consumers had an $85 million regulatory asset recorded on its consolidated balance sheets for these costs. In July 2011, Consumers entered into a settlement agreement with the DOE related to the DOE’s failure to accept spent nuclear fuel. For further information, see Note 3, Contingencies and Commitments, “Nuclear Matters.”

Renewable Energy Plan: In 2010, Consumers filed with the MPSC its first annual report and reconciliation for its renewable energy plan, requesting approval of Consumers’ reconciliation of renewable energy plan costs for 2009. In June 2011, the Administrative Law Judge issued a proposal for decision, recommending that the MPSC issue an order finding that Consumers met its 2009 renewable portfolio standards and that actual 2009 renewable energy expenses and revenues fell within MPSC-authorized levels. The Administrative Law Judge also recommended, however, that the MPSC exclude from recovery through the renewable surcharge $3 million of capital expenditures, along with related carrying costs, that Consumers incurred prior to enactment of the 2008 Energy Law.

In May 2011, the MPSC issued an order approving Consumers’ amended renewable energy plan, with slight modifications. The amended plan reduces the renewable energy surcharge billed to customers by an annual amount of $54 million. The reduction is a result of lower-than-anticipated costs to comply with the renewable energy requirements prescribed by the 2008 Energy Law.

Consumers filed its second annual report and reconciliation with the MPSC in June 2011, requesting approval of its reconciliation of renewable energy plan costs for 2010.

Energy Optimization Plan: In May 2011, the MPSC issued an order approving Consumers’ reconciliation of energy optimization plan costs for 2009. The MPSC also authorized Consumers to collect $6 million from customers as an incentive payment for exceeding savings targets under both its

61

gas and electric energy optimization plans during 2009. Consumers will collect the incentive over 12 months beginning June 2011.

In April 2011, Consumers filed with the MPSC its second annual report and reconciliation for its energy optimization plan, requesting approval of Consumers’ reconciliation of energy optimization plan costs for 2010. Consumers also requested approval to collect $8 million from customers as an incentive payment for exceeding savings targets under both its gas and electric energy optimization plans during 2010.

Electric Depreciation: 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. In June 2011, the MPSC approved a settlement agreement in this electric depreciation case, authorizing a $19 million increase in annual depreciation expense. The new depreciation rates will go into effect with a final order in Consumers’ next electric rate case.

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’ Gas Utility

Gas Rate Case: In August 2010, Consumers filed an application with the MPSC seeking an annual increase in revenue of $55 million based on an 11 percent authorized return on equity. The filing requested recovery for investments made to enhance safety, system reliability, and operational efficiencies that improve service to customers.

Consumers filed testimony and exhibits with the MPSC in January 2011, supporting a self-implemented annual gas rate increase of $48 million, subject to refund with interest. In February, Consumers filed a letter with the MPSC reducing the proposed self-implemented increase to $29 million. The MPSC then issued an order delaying Consumers’ self-implementation in order to give other parties to the proceeding an opportunity to respond to Consumers’ revised self-implementation filing.

In May 2011, the MPSC approved a partial settlement agreement authorizing Consumers to increase its rates by $31 million annually, based on a 10.5 percent authorized return on equity. Matters not yet addressed in this case include the decoupling mechanism, the Smart Grid program, and contributions to the low-income and energy efficiency fund. Presented in the following table are the components of the rate increase authorized by the MPSC and the rate increase originally requested by Consumers:

In Millions
				Increase Originally
	Increase Authorized			Requested by
Components of the increase in revenue	by the MPSC			Consumers		Difference
Investment in rate base	$	29		$	30	$	(1	)
Impact of sales declines		15			4		11
Recovery of operating and maintenance costs		2			16		(14	)
Cost of capital		(15	)		5		(20	)
Total	$	31		$	55	$	(24	)

62

Gas Cost Recovery: 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.

GCR Plan: In December 2010, Consumers submitted its 2011-2012 GCR plan to the MPSC. In accordance with its proposed plan, Consumers self-implemented the 2011-2012 GCR charge beginning in April 2011.

GCR Reconciliations: Presented in the following table are the GCR reconciliation filings pending with the MPSC:

GCR Year	Date Filed	Net Overrecovery	GCR Cost of Gas Sold
2009-2010	June 2010	$   1 million	$   1.3 billion
2010-2011	June 2011	6 million	1.2 billion

5: FINANCINGS

Presented in the following table is a summary of major long-term debt transactions during the six months ended June 30, 2011:

	Principal					Issue/Retirement
	(In Millions)		Interest Rate			Date	Maturity Date
Debt Issuances
CMS Energy
Senior Notes	$	250		2.75	%	May 2011	May 2014
Consumers
Tax-exempt bonds1		68	Variable			May 2011	April 2018
Tax-exempt bonds1		35	Variable			May 2011	April 2035
Total	$	353
Debt Retirements
Consumers
Tax-exempt bonds1	$	68	Variable			May 2011	April 2018
Tax-exempt bonds1		35	Variable			May 2011	April 2035
Total	$	103

¹ In May 2011, Consumers utilized the Michigan Strategic Fund for the issuance of $68 million and $35 million of tax-exempt Michigan Strategic Fund Variable Rate Limited Obligation Revenue Bonds. The initial interest rate, which resets weekly, was 0.26 percent for the $68 million bond issuance and 0.28 percent for the $35 million bond issuance. The bonds, which are backed by letters of credit and collateralized by FMBs, are subject to optional tender by the holders that would result in remarketing. Consumers used the proceeds to redeem $103 million of tax-exempt bonds in May 2011.

Revolving Credit Facilities: The following secured revolving credit facilities with banks were available at June 30, 2011:

In Millions
	Amount of		Amount		Letters of Credit		Amount
Expiration Date	Facility		Borrowed		Outstanding		Available
CMS Energy
March 31, 20161	$	550	$	—	$	3	$	547
Consumers
March 31, 20162, 3	$	500	$	—	$	189	$	311
August 9, 20133		150		—		—		150
September 21, 20114		30		—		30		—

63

1	On March 31, 2011, CMS Energy entered into a $550 million secured revolving credit facility with a consortium of banks. This facility has a five-year term and replaces CMS Energy’s revolving credit facility that was set to expire in 2012. Obligations under this facility are secured by Consumers common stock.
	CMS Energy’s average borrowings during the six months ended June 30, 2011 totaled $11 million, with a weighted-average annual interest rate of 2.22 percent, representing LIBOR plus 2.00 percent
2	On March 31, 2011, Consumers entered into a $500 million secured revolving credit facility with a consortium of banks. This facility has a five-year term and replaces Consumers’ revolving credit facility that was set to expire in 2012.
3	Obligations under this facility are secured by FMBs of Consumers.
4	Secured revolving letter of credit facility.

Short-term Borrowings: Under Consumers’ revolving accounts receivable sales program, Consumers may transfer up to $250 million of accounts receivable, subject to certain eligibility requirements. These transactions are accounted for as short-term secured borrowings. At June 30, 2011, $250 million of accounts receivable were eligible for transfer, and no accounts receivable had been transferred under the program. During the six months ended June 30, 2011, Consumers had no borrowings under this program.

Contingently Convertible Securities: Presented in the following table are the significant terms of CMS Energy’s contingently convertible securities at June 30, 2011:

			Outstanding		Adjusted		Adjusted
Security	Maturity		(In Millions)		Conversion Price		Trigger Price
2.875% senior notes		2024	$	288	$	12.81	$	15.37
5.50% senior notes		2029		172		14.26		18.54

During 20 of the last 30 trading days ended June 30, 2011, the adjusted trigger-price contingencies were met for both series of the contingently convertible senior notes, and as a result, the senior notes are convertible at the option of the security holders for the three months ending September 30, 2011.

Presented in the following table are details about conversions of contingently convertible securities during the six months ended June 30, 2011:

3.375% contingently		Principal		Conversion Value		Common		Cash Paid on
convertible senior notes	Conversion	Converted		per $1,000 of		Stock Issued		Settlement
due 2023	Date	(In Millions)		principal		on Settlement		(In Millions)
Voluntary conversion	January 2011	$	4	$	1,994.21		197,472	$	4

Dividend Restrictions: Under provisions of CMS Energy’s senior notes indenture, at June 30, 2011, payment of common stock dividends by CMS Energy was limited to $1.1 billion.

Under the provisions of its articles of incorporation, at June 30, 2011, Consumers had $452 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.

For the six months ended June 30 2011, CMS Energy received $196 million of common stock dividends from Consumers.

64

Issuance of Common Stock: On June 15, 2011, CMS Energy entered into a continuous equity offering program under which CMS Energy may sell, from time to time in “at the market” offerings, common stock having an aggregate sales price of up to $50 million. In June 2011, under this program, CMS Energy issued 762,925 shares of common stock at an average price of $19.66 per share, resulting in net proceeds of $15 million.

6: EARNINGS PER SHARE — CMS ENERGY

Presented in the following table are CMS Energy’s basic and diluted EPS computations based on income from continuing operations:

In Millions, Except Per Share Amounts
	Three Months Ended				Six Months Ended
June 30	2011		2010		2011		2010
Income Available to Common Stockholders
Income from continuing operations	$	101	$	100	$	234	$	189
Less income attributable to noncontrolling interest		1		2		1		2
Less preferred stock dividends		—		2		—		5
Income from Continuing Operations Available to Common Stockholders — Basic and Diluted	$	100	$	96	$	233	$	182
Average Common Shares Outstanding
Weighted average shares — basic		250.3		228.2		250.2		228.1
Add dilutive contingently convertible securities		11.3		19.3		11.0		19.5
Add dilutive non-vested stock awards and options		0.3		0.1		0.3		0.1
Weighted average shares — diluted		261.9		247.6		261.5		247.7
Income from Continuing Operations per Average Common Share Available to Common Stockholders
Basic	$	0.40	$	0.42	$	0.93	$	0.80
Diluted		0.38		0.39		0.89		0.74

Contingently Convertible Securities

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 common stock, exceeds the principal value of that security.

Stock Options and Warrants

For the three months and six months ended June 30, 2011, outstanding options to purchase 0.1 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.

Non-vested Stock Awards

CMS Energy’s non-vested stock awards are composed of participating and non-participating securities. The participating securities 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 non-vested stock awards are considered participating securities. As such, the participating non-vested stock awards were included in the computation of basic EPS. The non-participating securities accrue stock dividends that vest concurrently with the stock award. If the recipient forfeits the award, the stock dividends accrued on the non-participating securities are also forfeited. Accordingly, the non-participating awards and stock dividends were included in the computation of diluted EPS, but not basic EPS.

65

Convertible Debentures

For each of the three and six months ended June 30, 2011 and 2010, CMS Energy’s 7.75 percent convertible subordinated debentures would have increased diluted earnings per share had they been included in the calculation. Using the if-converted method, the debentures would have had the following impacts on the calculation of diluted EPS:

In Millions
	Three Months Ended				Six Months Ended
June 30	2011		2010		2011		2010
Increase to numerator from assumed reduction in interest expense	$	—	$	—	$	1	$	1
Increase to denominator from assumed conversion of debentures into common shares		0.7		0.7		0.7		0.7

CMS Energy can revoke the conversion rights if certain conditions are met.

7: FINANCIAL INSTRUMENTS

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. Presented in the following table are the cost or carrying amounts and fair values of CMS Energy’s and Consumers’ long-term financial instruments:

In Millions
	June 30, 2011				December 31, 2010
	Cost or				Cost or
	Carrying				Carrying
	Amount		Fair Value		Amount		Fair Value
CMS Energy, including Consumers
Securities held to maturity	$	7	$	7	$	5	$	6
Securities available for sale		115		116		90		90
Notes receivable1		398		417		386		407
Long-term debt2		7,283		8,074		7,174		7,861
Consumers
Securities available for sale	$	82	$	107	$	64	$	90
Long-term debt3		4,507		4,892		4,525		4,891

1	Includes current portion of notes receivable of $13 million at June 30, 2011 and $11 million at December 31, 2010.
2	Includes current portion of long-term debt of $1,099 million at June 30, 2011 and $726 million at December 31, 2010.
3	Includes current portion of long-term debt of $338 million at June 30, 2011 and $37 million at December 31, 2010.

Notes receivable consist of EnerBank’s fixed-rate installment loans. EnerBank estimates the fair value of these loans using a discounted cash flows technique that incorporates 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.

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

66

similarly rated debt. Depending on the information available, other valuation techniques may be used that rely on internal assumptions and models. CMS Energy includes the value of the conversion features in estimating the fair value of its convertible debt, and incorporates, as appropriate, information on the market prices of CMS Energy common stock.

The effects of third-party credit enhancements are excluded from the fair value measurements of long-term debt. At June 30, 2011 and December 31, 2010, CMS Energy’s long-term debt included $103 million principal amount that was supported by third-party credit enhancements. This entire principal amount was at Consumers.

Presented in the following table are CMS Energy’s and Consumers’ investment securities:

													In Millions
	June 30, 2011								December 31, 2010
			Unrealized		Unrealized		Fair				Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value		Cost		Gains		Losses		Value
CMS Energy, including consumers
Available for sale
SERP
Mutual fund	$	89	$	1	$	—	$	90	$	62	$	—	$	—	$	62
State and municipal bonds		26		—		—		26		28		—		—		28
Held to maturity
Debt securities		7		—		—		7		5		1		—		6
Consumers
Available for sale
SERP
Mutual fund	$	58	$	1	$	—	$	59	$	39	$	—	$	—	$	39
State and municipal bonds		17		—		—		17		17		—		—		17
CMS Energy common stock		7		24		—		31		8		26		—		34

The mutual fund classified as available for sale is a short-term, fixed-income fund. During the six months ended June 30, 2011, CMS Energy contributed $27 million to the SERP, which included a contribution of $20 million by Consumers. The contributions were used to acquire additional shares in the mutual fund. 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 primarily of mortgage-backed securities held by EnerBank, as well as state and municipal bonds held by EnerBank.

Presented in the following table is a summary of the sales activity for CMS Energy’s and Consumers’ investment securities:

In Millions
	Three months ended				Six months ended
June 30	2011		2010		2011		2010
CMS Energy, including Consumers
Proceeds from sales of investment securities1	$	1	$	—	$	1	$	1
Consumers
Proceeds from sales of investment securities1	$	—	$	—	$	1	$	—

¹ 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.

67

Presented in the following table are the fair values of the SERP state and municipal bonds by contractual maturity at June 30, 2011:

In Millions
	CMS Energy,
	including Consumers		Consumers
Due one year or less	$	1	$	1
Due after one year through five years		10		7
Due after five years through ten years		12		7
Due after ten years		3		2
Total	$	26	$	17

8: DERIVATIVE INSTRUMENTS

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.

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 has been designated as an accounting hedge, 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.

Commodity Price Risk: 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:

• they do not have a notional amount (that is, a number of units specified in a derivative instrument, such as MWh of electricity or bcf of natural gas);

• they qualify for the normal purchases and sales exception; or

• there is not an active market for the commodity.

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 deferred as regulatory assets or liabilities and would not affect net income. No other subsidiaries of CMS Energy enter into coal purchase contracts.

Consumers also uses FTRs to manage price risk related to electricity transmission congestion. An FTR is a financial instrument that entitles its holder to receive compensation or requires its holder to remit payment for congestion-related transmission charges. FTRs are accounted for as derivatives. Under regulatory accounting, all changes in fair value associated with these instruments are deferred as regulatory assets or liabilities until the instruments are settled.

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

68

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, 2011, CMS ERM held the following derivative contracts:

• a forward contract for the physical sale of 608 GWh of electricity through 2015 on behalf of one of CMS Energy’s non-utility generating plants;

• futures contracts through 2011 as an economic hedge of 22 percent of the generating plant’s natural gas requirements needed to serve a steam sales contract, for a total of 0.1 bcf of natural gas;

• forward contracts to purchase 2.5 bcf and sell 4.2 bcf of natural gas through 2012 in CMS ERM’s role as a marketer of natural gas for third-party producers; and

• an option to sell 305 GWh of electricity, and as an economic hedge, contracts to purchase 0.4 bcf of natural gas through 2011.

Presented in the following table are the fair values of CMS Energy’s and Consumers’ derivative instruments:

In Millions
	Derivative Assets					Derivative Liabilities
	Balance	Fair Value at				Balance	Fair Value at
	Sheet	June 30,		December 31,		Sheet	June 30,		December 31,
	Location	2011		2010		Location	2011		2010
CMS Energy, including Consumers
Derivatives not designated as hedging instruments
Commodity contracts1	Other assets	$	3	$	1	Other liabilities2	$	3	$	4
Consumers
Derivatives not designated as hedging instruments
Commodity contracts	Other assets	$	3	$	1	Other liabilities	$	—	$	—

1	Assets and liabilities are presented gross and exclude the impact of offsetting derivative assets and liabilities under master netting agreements, which was less than $1 million at June 30, 2011 and December 31, 2010.
2	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, 2011 and December 31, 2010. CMS Energy presents these liabilities net of these impacts on its consolidated balance sheets.

Presented in the following table is the effect on CMS Energy’s and Consumers’ consolidated statements of income of their derivatives not designated as hedging instruments:

In Millions
	Amount of Gain (Loss) on Derivatives Recognized in Income
Location of Gain (Loss) on	Three Months Ended June 30						Six Months Ended June 30
Derivatives Recognized in Income	2011			2010			2011		2010
CMS Energy, including Consumers
Commodity contracts
Operating revenue	$	(1	)	$	(2	)	$	—	$	3
Fuel for electric generation		—			—			—		2
Purchased and interchange power		—			—			—		1
Total CMS Energy	$	(1	)	$	(2	)	$	—	$	6

Consumers’ gains on FTRs deferred as regulatory liabilities were $3 million for the three months ended June 30, 2011 and $1 million for the three months ended June 30, 2010. These amounts were $3 million for the six months ended June 30, 2011 and $1 million for the six months ended June 30, 2010.

69

CMS Energy’s derivative liabilities subject to credit-risk-related contingent features were less than $1 million at June 30, 2011 and were $1 million at December 31, 2010.

Credit Risk: 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 its credit quality. Exposure to potential loss under each contract is monitored and action is taken when appropriate.

CMS ERM enters into contracts primarily with companies in the electric and gas industry. This industry concentration may have a positive or negative impact on CMS Energy’s exposure to credit risk based on how similar changes in economic conditions, the weather, or other conditions affect these counterparties. CMS ERM reduces its credit risk exposure by using industry-standard agreements that allow for netting positive and negative exposures associated with the same counterparty. Typically, these agreements also allow each party to demand adequate assurance of future performance from the other party, when there is reason to do so.

At June 30, 2011, if counterparties within this industry concentration all failed to meet their contractual obligations, the loss to CMS Energy on contracts accounted for as derivatives would be less than $1 million.

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.

9: NOTES RECEIVABLE

EnerBank provides unsecured consumer installment loans for financing home improvements. These loans totaled $398 million, net of an allowance for loan losses of $5 million, at June 30, 2011, and $386 million, net of an allowance for loan losses of $5 million, at December 31, 2010. At June 30, 2011, $13 million of EnerBank’s loans were classified as current notes receivable and $385 million were classified as non-current notes receivable on CMS Energy’s consolidated balance sheets. At December 31, 2010, $11 million of EnerBank’s loans were classified as current notes receivable and $375 million were classified as non-current notes receivable on CMS Energy’s consolidated balance sheets.

The allowance for loan losses is a valuation allowance to reflect estimated credit losses. The allowance is increased by the provision for loan losses and decreased by loan charge-offs net of recoveries. Management estimates the allowance balance required by taking into consideration historical loan loss experience, the nature and volume of the portfolio, economic conditions, and other factors. Loans losses are charged against the allowance when the loss is confirmed, but no later than the point at which a loan becomes 120 days past due.

70

Presented in the following table are the changes in the allowance for loan losses:

In Millions
	Three months			Six months
	ended			ended
June 30	2011			2011
Allowance for loan losses, at beginning of period	$	5		$	5
Charge-offs		(1	)		(2	)
Recoveries		—			—
Provision for loan losses		1			2
Allowance for loan losses, at end of period	$	5		$	5

Loans that are 30 days or more past due are considered delinquent. Presented in the following table is the delinquency status of EnerBank’s consumer loans at June 30, 2011:

In Millions
Past Due	Past Due		Past Due		Total				Total
30-59 Days	60-89 Days		Over 90 Days		Delinquent		Current		Outstanding
$                1	$	1	$	—	$	2	$	396	$	398

71

10: RETIREMENT BENEFITS

CMS Energy and Consumers provide pension, OPEB, and other retirement benefits to employees.

Presented in the following tables are the costs and other changes in plan assets and benefit obligations incurred in CMS Energy’s and Consumers’ retirement benefits plans:

In Millions
	Pension
	Three Months Ended						Six Months Ended
June 30	2011			2010			2011			2010
CMS Energy, including Consumers
Net periodic pension cost
Service cost	$	12		$	11		$	24		$	22
Interest expense		25			25			50			49
Expected return on plan assets		(28	)		(23	)		(56	)		(46	)
Amortization of:
Net loss		15			13			31			26
Prior service cost		2			1			3			3
Net periodic pension cost	$	26		$	27		$	52		$	54
Regulatory adjustment1		—			21			—			23
Net periodic pension cost after regulatory adjustment	$	26		$	48		$	52		$	77
Consumers
Net periodic pension cost
Service cost	$	11		$	10		$	23		$	21
Interest expense		25			24			49			48
Expected return on plan assets		(28	)		(22	)		(55	)		(45	)
Amortization of:
Net loss		16			13			31			25
Prior service cost		2			1			3			3
Net periodic pension cost	$	26		$	26		$	51		$	52
Regulatory adjustment1		—			21			—			23
Net periodic pension cost after regulatory adjustment	$	26		$	47		$	51		$	75

¹ Regulatory adjustments are the differences between amounts included in rates and the periodic benefit cost calculated. These regulatory adjustments were offset by surcharge revenues, resulting in no impact to net income for the periods presented.

CMS Energy’s and Consumers’ expected long-term rate of return on Pension Plan assets is eight percent. For the twelve months ended June 30, 2011, the actual return on Pension Plan assets was 19.5 percent, and for the twelve months ended June 30, 2010 the actual return was 14.2 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.

72

In Millions
	OPEB
	Three Months Ended						Six Months Ended
June 30	2011			2010			2011			2010
CMS Energy, including Consumers
Net periodic OPEB cost
Service cost	$	6		$	6		$	13		$	13
Interest expense		19			20			38			41
Expected return on plan assets		(16	)		(14	)		(33	)		(29	)
Amortization of:
Net loss		8			8			16			16
Prior service cost		(5	)		(5	)		(10	)		(7	)
Net periodic OBEB cost	$	12		$	15		$	24		$	34
Regulatory adjustment1		—			6			—			7
Net periodic OPEB cost after regulatory adjustment	$	12		$	21		$	24		$	41
Consumers
Net periodic OPEB cost
Service cost	$	7		$	6		$	13		$	13
Interest expense		19			20			37			40
Expected return on plan assets		(16	)		(14	)		(31	)		(28	)
Amortization of:
Net loss		8			8			16			16
Prior service cost		(5	)		(4	)		(10	)		(6	)
Net periodic OPEB cost	$	13		$	16		$	25		$	35
Regulatory adjustment1		—			6			—			7
Net periodic OPEB cost after regulatory adjustment	$	13		$	22		$	25		$	42

¹ Regulatory adjustments are the differences between amounts included in rates and the periodic benefit cost calculated. These regulatory adjustments were offset by surcharge revenues, resulting in no impact to net income for the periods presented.

73

11: INCOME TAXES

Presented in the following table is the difference between the effective income tax rate from continuing operations, excluding noncontrolling interests, and the statutory U.S. federal income tax rate:

Six Months Ended June 30	2011			2010
CMS Energy, Including Consumers
U.S. federal income tax rate		35.0	%		35.0	%
Increase (decrease) in income taxes from:
MCIT law change, net of federal expense		(9.9	)		—
State and local income taxes, net of federal benefit		3.5			4.0
Medicare Part D exempt income, net of law change		(1.1	)		—
Income tax credit amortization		(0.6	)		(0.6	)
Other, net		0.3			0.7
Effective income tax rate		27.2	%		39.1	%
Consumers
U.S. federal income tax rate		35.0	%		35.0	%
Increase (decrease) in income taxes from:
State and local income taxes, net of federal benefit		3.4			3.5
Medicare Part D exempt income, net of law change		(0.8	)		(1.0	)
Plant basis differences		0.2			—
Income tax credit amortization		(0.5	)		(0.5	)
Other, net		(0.3	)		0.1
Effective income tax rate		37.0	%		37.1	%

CMS Energy’s effective tax rate for the three months and the six months ended June 30, 2011, was materially reduced due to a one-time non-cash reduction in tax expense resulting from a change in Michigan tax law. In May 2011, Michigan enacted the MCIT, effective January 1, 2012. The MCIT, a simplified six percent corporate income tax, will replace the MBT, which is a complex multi-part business tax. Both the MBT and the MCIT are income taxes for financial reporting purposes, for which deferred income tax assets and liabilities are recorded. CMS Energy and Consumers remeasured their Michigan deferred income tax assets and liabilities at June 30, 2011 to reflect this change in law. Unlike the MBT, the MCIT does not allow future tax deductions to offset the book-tax differences that existed upon enactment of the tax. Due primarily to the elimination of these future tax deductions, Consumers eliminated $134 million of net deferred tax assets associated with its utility book-tax temporary differences, recognizing a $134 million regulatory asset (not including the effects of income tax gross-ups), and in addition to the amounts related to Consumers, CMS Energy eliminated $32 million of net deferred tax liabilities associated with its non-utility book-tax temporary differences, recognizing a $32 million deferred income tax benefit.

For the six months ended June 30, 2010, CMS Energy recognized deferred tax expense of $3 million to reflect the enactment of the Health Care Acts. The law change prospectively repealed the tax deduction for the portion of the health care costs reimbursed by the Medicare Part D subsidy for taxable years beginning after December 31, 2012.

74

12: REPORTABLE SEGMENTS

Reportable segments consist of business units defined by the products and services they offer. CMS Energy and Consumers evaluate the performance of each segment based on its contribution to net income available to CMS Energy’s common stockholders. The reportable segments for CMS Energy and Consumers are:

CMS Energy:

• electric utility, consisting of regulated activities associated with the generation and distribution of electricity in Michigan;

• gas utility, consisting of regulated activities associated with the transportation, storage, and distribution of natural gas in Michigan;

• enterprises, consisting of various subsidiaries engaging primarily in domestic independent power production; and

• other, including EnerBank, corporate interest and other expenses, and discontinued operations.

Consumers:

• electric utility, consisting of regulated activities associated with the generation and distribution of electricity in Michigan;

• gas utility, consisting of regulated activities associated with the transportation, storage, and distribution of natural gas in Michigan; and

• other, including a consolidated special-purpose entity for the sale of accounts receivable.

Presented in the following tables is financial information by reportable segment:

In Millions
	Three Months Ended						Six Months Ended
June 30	2011			2010			2011			2010
Operating Revenue
CMS Energy, including Consumers
Electric utility	$	949		$	975		$	1,846		$	1,813
Gas utility		354			301			1,445			1,353
Enterprises		50			55			105			123
Other		11			9			23			18
Total Operating Revenue — CMS Energy	$	1,364		$	1,340		$	3,419		$	3,307
Consumers
Electric utility	$	949		$	975		$	1,846		$	1,813
Gas utility		354			301			1,445			1,353
Total Operating Revenue — Consumers	$	1,303		$	1,276		$	3,291		$	3,166
Net Income Available to Common Stockholders
CMS Energy, including Consumers
Electric utility	$	85		$	86		$	150		$	127
Gas utility		5			1			93			67
Enterprises		29			33			32			42
Discontinued operations		—			(16	)		2			(17	)
Other		(19	)		(24	)		(42	)		(54	)
Total Net Income Available to Common Stockholders — CMS Energy	$	100		$	80		$	235		$	165
Consumers
Electric utility	$	85		$	86		$	150		$	127
Gas utility		5			1			93			67
Other		1			—			1			—
Total Net Income Available to Common Stockholder — Consumers	$	91		$	87		$	244		$	194

75

In Millions
	June 30, 2011		December 31, 2010
Plant, Property, and Equipment, Gross
CMS Energy, including Consumers
Electric utility1	$	10,184	$	9,944
Gas utility1		4,086		4,063
Enterprises		106		102
Other		37		36
Total Plant, Property, and Equipment, Gross — CMS Energy	$	14,413	$	14,145
Consumers
Electric utility1	$	10,184	$	9,944
Gas utility1		4,086		4,063
Other		15		15
Total Plant, Property, and Equipment, Gross — Consumers	$	14,285	$	14,022
Assets
CMS Energy, including Consumers
Electric utility1	$	9,831	$	9,321
Gas utility1		4,581		4,614
Enterprises		175		191
Other		1,358		1,490
Total Assets — CMS Energy	$	15,945	$	15,616
Consumers
Electric utility1	$	9,831	$	9,321
Gas utility1		4,581		4,614
Other		689		904
Total Assets — Consumers	$	15,101	$	14,839

¹ Amounts include a portion of Consumers’ other common assets attributable to both the electric and the gas utility businesses.

76

(This page intentionally left blank)

77

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

CMS ENERGY

There have been no material changes to market risk as previously disclosed in Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk, in the 2010 Form 10-K.

CONSUMERS

There have been no material changes to market risk as previously disclosed in Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk, in the 2010 Form 10-K.

ITEM 4. CONTROLS AND PROCEDURES

CMS ENERGY

Disclosure Controls and Procedures: CMS Energy’s management, with the participation of its CEO and CFO, has evaluated the effectiveness of its disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on such evaluation, CMS Energy’s CEO and CFO have concluded that, as of the end of such period, its disclosure controls and procedures are effective.

Internal Control Over Financial Reporting: There have not been any changes in CMS Energy’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

CONSUMERS

Disclosure Controls and Procedures: Consumers’ management, with the participation of its CEO and CFO, has evaluated the effectiveness of its disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on such evaluation, Consumers’ CEO and CFO have concluded that, as of the end of such period, its disclosure controls and procedures are effective.

Internal Control Over Financial Reporting: There have not been any changes in Consumers’ internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

78

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

CMS Energy and Consumers are parties to various lawsuits and regulatory matters in the ordinary course of business. For information regarding material legal proceedings, including updates to information reported under Item 3 of Part I of the 2010 Form 10-K, see Part I, Item 1, Note 3, Contingencies and Commitments, and Note 4, Regulatory Matters.

ITEM 1A. RISK FACTORS

There have been no material changes to the Risk Factors as previously disclosed in Part I, Item 1A. Risk Factors, in the 2010 Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a) Unregistered Sales of Equity Securities

None.

(c) Issuer Repurchases of Equity Securities

Presented in the following table are CMS Energy’s repurchases of equity securities for the three months ended June 30, 2011:

							Maximum Number of
					Total Number of Shares		Shares that May Yet Be
	Total Number				Purchased as Part of		Purchased Under
	of Shares		Average Price		Publicly Announced		Publicly Announced
Period	Purchased1		Paid per Share		Plans or Programs		Plans or Programs
April 1 – 30, 2011		2,292	$	19.70		—		—
May 1 – 31, 2011		—		—		—		—
June 1 – 30, 2011		3,402		19.71		—		—
Total		5,694	$	19.71		—		—

¹ Common shares were purchased to satisfy CMS Energy’s minimum statutory income tax withholding obligation for common shares that have vested under the performance incentive stock plan. Shares repurchased have a value based on the market price on the vesting date.

79

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. REMOVED AND RESERVED

ITEM 5. OTHER INFORMATION

None.

80

ITEM 6. EXHIBITS

The agreements included as exhibits to this Form 10-Q filing are included solely to provide information regarding the terms of the agreements and are not intended to provide any other factual or disclosure information about CMS Energy, Consumers, or other parties to the agreements. The agreements may contain representations and warranties made by each of the parties to each of the agreements that were made exclusively for the benefit of the parties involved in each of the agreements and should not be treated as statements of fact. The representations and warranties were made as a way to allocate risk if one or more of those statements prove to be incorrect. The statements were qualified by disclosures to the parties to each of the agreements and may not be reflected in each of the agreements. The agreements may apply standards of materiality that are different than standards applied to other investors. Additionally, the statements were made as of the date of the agreements or as specified in the agreements and have not been updated.

The representations and warranties may not describe the actual state of affairs of the parties to each agreement. Additional information about CMS Energy and Consumers may be found in this filing, at www.cmsenergy.com, at www.consumersenergy.com, and through the SEC’s website at www.sec.gov.

Exhibits		Description
4.1	—	One Hundred Fifteenth Supplemental Indenture dated as of May 4, 2011 between Consumers and The Bank of New York Mellon, Trustee. (Exhibit 4.16.18 to Form S-3 filed June 15, 2011 and incorporated herein by reference)
4.2	—	Twenty-Seventh Supplemental Indenture dated as of May 12, 2011 between CMS Energy and The Bank of New York Mellon, as Trustee. (Exhibit 4.1 to Form 8-K filed May 12, 2011 and incorporated herein by reference)
10.1	—	Settlement Agreement between Consumers and United States to Resolve Claims Arising from Contract DE-CR01-83NE44374, entered into on July 11, 2011
12.1	—	Statement regarding computation of CMS Energy’s Ratios of Earnings to Fixed Charges and Combined Fixed Charges and Preferred Dividends
12.2	—	Statement regarding computation of Consumers’ Ratios of Earnings to Fixed Charges and Combined Fixed Charges and Preferred Dividends
31.1	—	CMS Energy’s certification of the CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	—	CMS Energy’s certification of the CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.3	—	Consumers’ certification of the CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.4	—	Consumers’ certification of the CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	—	CMS Energy’s certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	—	Consumers’ certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS1	—	XBRL Instance Document
101.SCH1	—	XBRL Taxonomy Extension Schema
101.CAL1	—	XBRL Taxonomy Extension Calculation Linkbase
101.DEF1	—	XBRL Taxonomy Extension Definition Linkbase
101.LAB1	—	XBRL Taxonomy Extension Labels Linkbase
101.PRE1	—	XBRL Taxonomy Extension Presentation Linkbase

¹ In accordance with Regulation S-T, the XBRL-related information in Exhibit 101 shall be deemed to be “furnished” and not “filed.” The financial information contained in the XBRL-related information is “unaudited” and “unreviewed.”

81

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature for each undersigned company shall be deemed to relate only to matters having reference to such company or its subsidiary.

		CMS ENERGY CORPORATION (Registrant)
Dated: July 28, 2011	By:	/s/ Thomas J. Webb Thomas J. Webb
		Executive Vice President and
		Chief Financial Officer
		CONSUMERS ENERGY COMPANY (Registrant)
Dated: July 28, 2011	By:	/s/ Thomas J. Webb Thomas J. Webb
		Executive Vice President and
		Chief Financial Officer

82

CMS ENERGY’S AND CONSUMERS’ EXHIBIT INDEX

Exhibits		Description
10.1	—	Settlement Agreement between Consumers and United States to Resolve Claims Arising from Contract DE-CR01-83NE44374, entered into on July 11, 2011
12.1	—	Statement regarding computation of CMS Energy’s Ratios of Earnings to Fixed Charges and Combined Fixed Charges and Preferred Dividends
12.2	—	Statement regarding computation of Consumers’ Ratios of Earnings to Fixed Charges and Combined Fixed Charges and Preferred Dividends
31.1	—	CMS Energy’s certification of the CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	—	CMS Energy’s certification of the CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.3	—	Consumers’ certification of the CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.4	—	Consumers’ certification of the CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	—	CMS Energy’s certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	—	Consumers’ certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS1	—	XBRL Instance Document
101.SCH1	—	XBRL Taxonomy Extension Schema
101.CAL1	—	XBRL Taxonomy Extension Calculation Linkbase
101.DEF1	—	XBRL Taxonomy Extension Definition Linkbase
101.LAB1	—	XBRL Taxonomy Extension Labels Linkbase
101.PRE1	—	XBRL Taxonomy Extension Presentation Linkbase

¹ In accordance with Regulation S-T, the XBRL-related information in Exhibit 101 shall be deemed to be “furnished” and not “filed.” The financial information contained in the XBRL-related information is “unaudited” and “unreviewed.”

EX-10.1

Exhibit 10.1

SETTLEMENT AGREEMENT BETWEEN
CONSUMERS ENERGY COMPANY AND UNITED STATES
TO RESOLVE CLAIMS ARISING FROM
CONTRACT DE-CR01-83NE44374

I. General Terms and Provisions

     For the purpose of disposing of certain claims by Consumers Energy Company (“Consumers Energy”) as set forth below without any judicial proceedings and without there being any trial or adjudication of any issue of law or fact and without constituting an admission of liability on the part of the United States (also referred to alternatively herein as “DOE” and the “Government”), and for no other purpose, Consumers Energy and the United States (the “Parties”) enter into this Settlement Agreement and stipulate and agree as follows:

     A. Consumers Energy, formerly doing business as Consumers Power Company, is an energy utility company based in Michigan. Consumers Energy is a wholly-owned subsidiary of CMS Energy Corporation, a publicly-traded energy company based in Michigan.

     B. Consumers Energy was the purchaser under a standard contract with the United States Department of Energy (DOE), No. DE-CR01-83NE44374 (Contract), for the acceptance of spent nuclear fuel and high-level radioactive waste (SNF/HLW) under the Nuclear Waste Policy Act, the material terms of which are reproduced at 10 C.F.R. § 961.11. The Contract covers the acceptance of SNF/HLW from the nuclear plants formerly owned by Consumers Energy and specified in Appendix A of the Contract.

     C. Consumers Energy was, until April 11, 2007, the owner of the Big Rock plant in Charlevoix, Michigan. Big Rock ceased operations in 1997 and all of Big Rock’s

1

SNF was transferred to dry cask storage at an Independent Spent Fuel Storage Installation (ISFSI) at the Big Rock site (Big Rock ISFSI). Until April 11, 2007, Consumers Energy also owned the Palisades Nuclear Plant (Palisades) located near Covert, Michigan. As of April 11, 2007, the Palisades plant was still operating. The SNF at the Palisades plant was stored in a spent fuel pool and at two ISFSIs located on-site at the plant. On April 11, 2007, Consumers Energy sold the Palisades plant and the Big Rock ISFSI and approximately 107 acres of real property upon which the Big Rock plant was located, to Entergy Nuclear Palisades, LLC, a subsidiary of Entergy Corporation (Entergy), pursuant to an Asset Sale Agreement dated July 11, 2006 (Asset Sale Agreement). Pursuant to the Asset Sale Agreement (Asset Sale Agreement, Sections 6.14 and 6.25), Consumers Energy paid Entergy $30,000,000 to take ownership and all responsibility for the Big Rock ISFSI, including all SNF/HLW stored at the Big Rock ISFSI (Big Rock Amount). Entergy also assumed ownership and responsibility for all SNF/HLW stored at the Palisades plant.

     D. The Contract required DOE to commence acceptance of SNF/HLW from Contract holders not later than January 31, 1998, but DOE did not so commence acceptance of SNF/HLW by that date. On December 16, 2002, Consumers Energy filed a complaint against the United States in the Court of Federal Claims, docketed as case No. 02-1894 (the “Litigation”). Consumers Energy’s claim includes all costs for storing SNF/HLW incurred through the asset sale on April 11, 2007, as the result of DOE’s delay in performance of the Contract at the Big Rock and Palisades plants and the $30 million Big Rock Amount paid to Entergy. Consumers Energy represents and agrees that it has not incurred and will not be claiming costs associated with any other nuclear reactor not identified in Appendix A of Contract No. DE-CR01-83NE44374.

2

     E. Consumers Energy warrants and represents that Consumers Energy was the holder of the Contract up to and including the asset sale on April 11, 2007, and that no other actions or suits by Consumers Energy are pending with respect to any other claims for DOE’s delay in performance against the Government related to the Contract; nor will such actions or suits be filed by Consumers Energy with respect to any claims in any other court, administrative agency, or legislative body, except as contemplated by this Settlement Agreement. Consumers Energy also warrants and represents that it has the right to bring and prosecute all claims against the Government arising under the Contract for claims through the asset sale on April 11, 2007 attributable to DOE’s delay in performance of the Contract.

     F. By letter dated December 4, 2006, Consumers Energy notified the Contracting Officer, Department of Energy (DOE), for the Contract that Consumers Energy intended to assign its Contract to Entergy at the close of the sale of the plants. By letter dated February 6, 2007, the DOE Contracting Officer notified Consumers Energy that DOE objected to the proposed assignment because Consumers Energy intended to retain the obligation to pay the one-time fee. Consumers Energy warrants that it has assigned all of its rights and obligations pursuant to the Contract except for the obligation to pay the one-time fee, provided for in Section III of this Agreement, and its claims described in the Asset Sale Agreement (which are the subject of this Settlement Agreement). As part of and to effectuate this settlement, the Government exercises its sole discretion to accept the assignment of the Standard Contract from Consumers Energy to Entergy because Consumers Energy will pay its one-time fee with this settlement. The assignment shall be deemed effective as of April 11, 2007.

3

     G. The Parties entered into negotiations designed to resolve amicably Consumers Energy’s claim, and Consumers Energy provided extensive documentation of its claims for review by the United States. Following that review and negotiations, Consumers Energy has offered to settle all its claims for the agreed-upon amount of $120,000,000 (Settlement Amount), with the Parties each to bear its own legal costs, expenses, and attorney fees incurred in connection with this claim/settlement.

     H. Consumers Energy’s offer has been accepted by the authorized representative of the Attorney General.

     I. This Settlement Agreement shall be deemed a compromise settlement, made by the Attorney General, or persons authorized by him, of claims referred to the Attorney General for defense of imminent litigation or suits against the United States, or against its agencies or officials upon obligations or liabilities of the United States, for purposes of 28 U.S.C. § 2414. The Parties intend that the total Settlement Amount, and the Parties’ obligations concerning the one-time fee and indemnification provisions set forth in Sections III and IV below, shall constitute a “compromise settlement” under 31 U.S.C. § 1304.

     J. Upon execution of this Agreement and receipt of notice and verification of payment of the Settlement Amount referenced in Section III.B and the payment of the one-time fee balance by Consumers Energy referenced in Section III.C below, Plaintiff agrees to join with the United States in stipulating to dismiss the Litigation with prejudice.

II. Releases

     Upon satisfaction of the terms set forth in this Settlement Agreement, including but not limited to payment of the Settlement Amount of $120,000,000, Consumers Energy

4

releases, waives, and abandons any and all of Consumers Energy’s claims against the United States, its political subdivisions, its officers, agents, and employees that arise out of DOE’s delay in performance of its acceptance obligations under the Contract, regardless of whether such claims were included in Consumers Energy’s submission to the Government and including, but not limited to, any claim for legal costs, expenses, attorney fees, compensatory damages, and exemplary damages. Consumers Energy releases, waives and abandons any and all claims related to or arising out of DOE’s delay in performance of its acceptance obligations under the Contract, whether in the Court of Federal Claims or any other court. Consumers Energy further releases any and all claims related to impaired or diminished value of the property upon which the Big Rock plant was located.

III. One Time Fee Payment Provision

     A. Pursuant to Article VIII of the Contract, Consumers Energy was charged a one-time fee for fuel used to generate electricity in its civilian nuclear power reactors (Big Rock and Palisades) prior to April 7, 1983. As permitted by the payment provision set forth in Article VIII.B.2(b) of the Contract, Consumers Energy elected to defer payment of its one-time fee. The Parties agree that, as of the date of this Settlement Agreement, the total one-time fee obligation for Consumers Energy under Contract No. DE-CR01-83NE44374, inclusive of principal and interest calculated pursuant to Article VIII of the Contract, is $163,102,172.50.

     B. Pursuant to this Settlement Agreement, the Settlement Amount of $120,000,000 shall be paid by the Judgment Fund, administered by the Financial Management Service, Department of the Treasury, to the Nuclear Waste Fund, 42 U.S.C. § 10222(c), to satisfy a portion of Consumers Energy’s one-time fee obligation as set forth in

5

Section III.A above. Consumers Energy and the United States consent to this setoff, pursuant to 31 U.S.C. § 3728 and 31 C.F.R. § 256.22. The Parties agree that Consumers Energy shall pay to the Nuclear Waste Fund the remaining balance of its one-time fee obligation ($163,102,172.50 net of the payment of $120,000,000) for a total remaining principal payment of $43,102,172.50, subject to the payment terms set forth in Section III.C below.

     C. Consumers Energy shall pay the one-time fee balance of $43,102,172.50 to the Nuclear Waste Fund in full within 45 days after the effective date of this Settlement Agreement. The effective date of this Settlement Agreement shall be the day after the date on which this Settlement Agreement is executed on behalf of the United States and delivered to Consumers Energy c/o Jeffrey S. Theuer, Loomis, Ewert, Parsley, Davis & Gotting, P.C. 124 W. Allegan, Suite 700, Lansing, MI 48933.

     D. Consumers Energy’s one-time fee payment shall be made by Automated Clearing House [ACH] or by wire transfer, in accordance with instructions specified by DOE and provided to Consumers Energy, consistent with Appendix G of the Contract.

     E. Consumers Energy shall complete a Standard Remittance Advice, as set forth in Appendix G of the Contract, for the payment, and mail it postmarked no later than the payment date to “Department of Energy, Office of Controller, Cash Management Division, Bo. 500, Room D-208, Germantown, Maryland 20874.”

     F. Upon payment in full of the one-time fee balance referenced in subparagraph C above, Consumers Energy shall have no further financial obligation to DOE for the disposal of SNF/HLW, with the exception of any obligations related to or arising from the indemnification provision of this Settlement Agreement.

6

IV. Indemnification Provision

     A. This Settlement Agreement reflects the recovery by Consumers Energy of the Big Rock Amount referenced in Sections 6.14 and 6.25 of the Asset Sale Agreement identified herein. Accordingly, Consumers Energy shall indemnify and hold harmless the Government from and against any and all claims, demands, liabilities, losses, and damages asserted by Entergy Nuclear Palisades, LLC, its successors and assigns (“Entergy”), against the Government arising after the closing date of April 11, 2007 (“Future Claim”) of the Asset Sale Agreement between Consumers Energy and Entergy Nuclear Palisades, LLC, dated July 11, 2006, and only to the extent that such Future Claim meets the following criteria: (i) the Future Claim is one for recoverable damages arising after April 11, 2007 and resulting from DOE’s delay in commencing acceptance of SNF /HLW from Big Rock (currently located at the Big Rock ISFSI) for disposal pursuant to the Contract, and (ii) only to the extent that the Future Claim includes a claim for recovery by Entergy of all or any portion of the first $30 million of recoverable damages arising after April 11, 2007 with respect to the Big Rock ISFSI (the “Big Rock Amount”), as referenced in Sections 6.14 and 6.25 of the Asset Sale Agreement.

     B. Consumers Energy’s liability under this section of the Settlement Agreement shall be limited to all or any portion of the Big Rock Amount, awarded to Entergy at the time a final, binding judgment that meets the requirements of subparagraph A above has been entered and all possible appeals and requests for leave to appeal that judgment have been exhausted and/or denied.

     C. If the Government receives notice of the assertion of any claim or of the commencement of any claim, action, or proceeding which constitutes the Future Claim as

7

defined in this section, the Government shall provide Consumers Energy written notice thereof (“Initial Notice”) as soon as the nature of the claims is known, but no later than 90 days before the close of discovery in such an action. Such Initial Notice shall describe the nature of the Future Claim in reasonable detail and shall indicate the estimated amount, if practicable, of the asserted indemnifiable loss that has been or may be sustained by the Government. Failure to provide the Initial Notice as provided in this subsection shall terminate Consumers Energy’s indemnity obligation hereunder.

     D. The Government shall not oppose any reasonable attempt by Consumers Energy to participate, including without limitation by intervention, in the adjudication or other resolution of any claim for which the Government may seek indemnification. Consumers Energy shall cooperate in good faith in the defense of any claim for which the Government may seek indemnification, including without limitation providing the Government reasonable access to all non-privileged documents and witnesses within Consumers Energy’s control, including assisting with and making available witnesses for deposition and trial, as necessary.

     E. The Government may compromise or settle any such Future Claim only with the prior written consent of Consumers Energy, which consent shall not be unreasonably withheld. A firm offer of settlement of a Future Claim which is received by Consumers Energy or the Government shall be promptly communicated to the other Party, and in no event less than five (5) business days prior to the time required for a response to the offer.

     F. If Consumers Energy fails to meet its obligations as required by the Indemnification Provision of this Agreement, the Government may commence suit upon a

8

breach of this Agreement within six years of such failure directly in the United States District Court for the District of Columbia.

V. Other Provisions

     A. This Settlement Agreement is for the purpose of settling all of Consumers Energy’s claims against the Government as provided herein, and for no other reason. Accordingly, this Settlement Agreement shall not bind the Parties in any other proceeding, whether judicial or administrative in nature, in which the Parties have an interest except as is necessary to effect the terms of this Agreement. The Parties acknowledge that this Settlement Agreement may be relevant to proceedings filed or to be filed in the Michigan Public Service Commission, or Michigan Courts, concerning the regulatory effect of this settlement. The Parties agree that Consumers Energy may seek to introduce this Settlement Agreement into evidence in such proceedings in its discretion.

     B. Counsel for the Parties represent that they have been, and are, authorized to enter into this Settlement Agreement.

     C. Any provision herein which is held, after the date of the execution of this Settlement Agreement, to be illegal, invalid, or unenforceable by a court or agency of competent jurisdiction under present or future laws which apply to this Settlement Agreement, shall be fully severable. In place of any severed provision, the Parties agree to substitute a legal, valid, and enforceable provision which is as similar as possible to the severed provision.

     D. This document constitutes a complete integration of the Settlement Agreement between the Parties and supersedes any and all prior oral or written representations, understandings, or agreements among or between them.

9

     E. This Settlement Agreement is intended to benefit only the Parties, their successors, and assigns. It is not intended to benefit directly, or indirectly, any other individual, group of individuals, organization, or entity.

     G. This Agreement is in no way related to or concerned with income or other taxes for which Consumers Energy is now liable or may become liable in the future as a result of this Agreement.

AGREED TO:
FOR CONSUMERS ENERGY COMPANY:

/s/ James E. Brunner
JAMES E. BRUNNER	DATE: July 11, 2011
Senior Vice President
One Energy Plaza
Jackson, MI 49201
Tel: (517) 788-2153
Fax: (517) 788-2543
Attorney for Consumers Energy Company:
Jeffrey S. Theuer (P44161)
Loomis, Ewert, Parsley, Davis & Gotting, P.C.
124 West Allegan, Suite 700
Lansing, MI 48933
Tel: (517) 482-2400
Fax: (517) 853-8671

10

FOR THE UNITED STATES:

/s/ Jeanne E. Davidson / by /s/ Bryant G. Snee
JEANNE E. DAVIDSON	DATE:
Director
Commercial Litigation Branch
Civil Division
Department of Justice
P.O. Box 480
Ben Franklin Station
Washington D.C. 20044
Tel: (202) 514-7300
Fax: (202) 307-2503

AUTHORIZED REPRESENTATIVE
OF THE ATTORNEY GENERAL

GUARANTY

     For value received, Guarantor CMS Energy Corporation, of One Energy Plaza, Jackson, Michigan 49201 (hereinafter “Guarantor”) unconditionally and absolutely guarantees to the United States, its successors or assigns under the foregoing Settlement Agreement, the due and punctual payment of any indebtedness of Consumers Energy arising from the Indemnification Provisions contained in Section IV of this Settlement Agreement, payment to be made at such time or times as the indebtedness becomes due according to the terms of this Settlement Agreement.

CMS ENERGY CORPORATION

By:	/s/ John Russell	Dated: July 11, 2011
	JOHN G. RUSSELL
	CMS Energy Corporation
	One Energy Plaza
	Jackson, MI 49201
Its:	President & CEO

11

EX-12.1

Exhibit 12.1

CMS ENERGY CORPORATION
Ratio of Earnings to Fixed Charges and Combined Fixed Charges and Preferred Dividends
(Millions of Dollars)

	Six Months Ended			Year Ended December 31
	June 30, 2011			2010			2009		2008			2007		2	2006		3
Earnings as defined1
Pretax income from continuing operations	$	321		$	590		$	335	$	440		$	(317	)	$	(434	)
Exclude equity basis subsidiaries		(3	)		(2	)		2		(1	)		(22	)		(14	)
Fixed charges as defined4		221			449			456		429			489			535
Earnings as defined4	$	539		$	1,037		$	793	$	868		$	150		$	87
Fixed charges as defined1
Interest on long-term debt	$	199		$	394		$	383	$	371		$	415		$	492
Estimated interest portion of lease rental		10			16			17		25			23			8
Other interest charges		13			42			58		35			53			37
Fixed charges as defined4	$	222		$	452		$	458	$	431		$	491		$	537
Preferred dividends		—			13			17		17			12			11
Combined fixed charges and preferred dividends	$	222		$	465		$	475	$	448		$	503		$	548
Ratio of earnings to fixed charges		2.43			2.29			1.73		2.01			—			—
Ratio of earnings to combined fixed charges and preferred dividends		2.43			2.23			1.67		1.94			—			—

NOTES:

1	Earnings and fixed charges as defined in instructions for Item 503 of Regulation S-K.
2	For the year ended December 31, 2007, fixed charges exceeded earnings by $341 million and combined fixed charges and preferred dividends exceeded earnings by $353 million. Earnings as defined include $204 million in asset impairment charges and a $279 million charge for an electric sales contract termination.
3	For the year ended December 31, 2006, fixed charges exceeded earnings by $450 million and combined fixed charges and preferred dividends exceeded earnings by $461 million. Earnings as defined include $459 million of asset impairment charges.
4	Preferred dividends of a consolidated subsidiary are included in fixed charges, but excluded from earnings as defined because the amount was not deducted in arriving at pretax income from continuing operations.

EX-12.2

Exhibit 12.2

CONSUMERS ENERGY COMPANY
Ratio of Earnings to Fixed Charges and Combined Fixed Charges and Preferred Dividends
(Millions of Dollars)

	Six Months Ended		Year Ended December 31
	June 30, 2011		2010		2009		2008		2007		2006
Earnings as defined1
Pretax income from continuing operations	$	389	$	688	$	456	$	562	$	437	$	167
Exclude equity basis subsidiaries		—		—		—		—		—		(1	)
Fixed charges as defined		145		296		313		276		293		307
Earnings as defined	$	534	$	984	$	769	$	838	$	730	$	473
Fixed charges as defined1
Interest on long-term debt	$	126	$	246	$	250	$	229	$	236	$	286
Estimated interest portion of lease rental		10		16		17		25		23		8
Other interest charges		9		34		46		22		34		13
Fixed charges as defined	$	145	$	296	$	313	$	276	$	293	$	307
Preferred dividends		2		3		3		3		3		3
Combined fixed charges and preferred dividends	$	147	$	299	$	316	$	279	$	296	$	310
Ratio of earnings to fixed charges		3.68		3.32		2.46		3.04		2.49		1.54
Ratio of earnings to combined fixed charges and preferred dividends		3.63		3.29		2.43		3.00		2.47		1.53

NOTES:

¹ Earnings and fixed charges as defined in instructions for Item 503 of Regulation S-K.

EX-31.1

Exhibit 31.1

CERTIFICATION OF JOHN G. RUSSELL

I, John G. Russell, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of CMS Energy Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

     a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

     b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

     c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

     d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

     a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

     b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: July 28, 2011	By:	/s/ John G. Russell John G. Russell
		President and
		Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF THOMAS J. WEBB

I, Thomas J. Webb, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of CMS Energy Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

     a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

     b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

     c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

     d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

     a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

     b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: July 28, 2011	By:	/s/ Thomas J. Webb Thomas J. Webb
		Executive Vice President and
		Chief Financial Officer

EX-31.3

Exhibit 31.3

CERTIFICATION OF JOHN G. RUSSELL

I, John G. Russell, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Consumers Energy Company;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

     a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

     b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

     c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

     d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

     a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

     b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: July 28, 2011	By:	/s/ John G. Russell John G. Russell
		President and
		Chief Executive Officer

EX-31.4

Exhibit 31.4

CERTIFICATION OF THOMAS J. WEBB

I, Thomas J. Webb, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Consumers Energy Company;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

     a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

     b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

     c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

     d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

     a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

     b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: July 28, 2011	By:	/s/ Thomas J. Webb Thomas J. Webb
		Executive Vice President and
		Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification of CEO and CFO Pursuant to
18 U.S.C. Section 1350,
as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of CMS Energy Corporation (the “Company”) for the quarterly period ended June 30, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), John G. Russell, as President and Chief Executive Officer of the Company, and Thomas J. Webb, as Executive Vice President and Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

     (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

     (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ John G. Russell
Name:	John G. Russell
Title:	President and Chief Executive Officer

Date: July 28, 2011

/s/ Thomas J. Webb
Name:	Thomas J. Webb
Title:	Executive Vice President and Chief Financial Officer

Date: July 28, 2011

EX-32.2

Exhibit 32.2

Certification of CEO and CFO Pursuant to
18 U.S.C. Section 1350,
as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of Consumers Energy Company (the “Company”) for the quarterly period ended June 30, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), John G. Russell, as President and Chief Executive Officer of the Company, and Thomas J. Webb, as Executive Vice President and Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

     (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

     (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ John G. Russell
Name:	John G. Russell
Title:	President and Chief Executive Officer

Date: July 28, 2011

/s/ Thomas J. Webb
Name:	Thomas J. Webb
Title:	Executive Vice President and Chief Financial Officer

Date: July 28, 2011

XML



Document & Entity Information	6 Months Ended
	Jun. 30, 2011	Jul. 14, 2011
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2011
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2011
Trading Symbol	cms
Entity Registrant Name	CMS Energy Corporation
Entity Central Index Key	0000811156
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
CMS Energy Corporation [Member]
Entity Common Stock, Shares Outstanding		253,356,241
Consumers Energy Company [Member]
Entity Registrant Name	Consumers Energy Company
Entity Central Index Key	0000201533
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		84,108,789

XML



New Accounting Standards

6 Months Ended

Jun. 30, 2011

New Accounting Standards

1: NEW ACCOUNTING STANDARDS

New Accounting Standards Not Yet Effective

ASU 2011-05, Presentation of Comprehensive Income: This standard, effective January 1, 2012 for CMS Energy and Consumers, eliminates the option to report other comprehensive income and its components on the statement of changes in equity. Presently, both CMS Energy and Consumers use this option for their consolidated financial statements. Under the standard, entities will be required to present either a single continuous statement of comprehensive income, containing both net income and components of other comprehensive income, or two separate consecutive statements. This standard will affect only the presentation of comprehensive income in CMS Energy's and Consumers' consolidated financial statements.

ASU 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs: This standard, effective January 1, 2012 for CMS Energy and Consumers, is the result of a joint project of the Financial Accounting Standards Board and the International Accounting Standards Board. The primary objective of the standard is to ensure that fair value has the same meaning under GAAP and International Financial Reporting Standards and to establish common fair value measurement guidance in the two sets of standards. The standard does not change the overall fair value model in GAAP, but it amends various fair value principles and establishes additional disclosure requirements. CMS Energy and Consumers are evaluating this standard, but they do not expect it to have a significant impact on their consolidated financial statements.

Consumers Energy Company [Member]

New Accounting Standards

1: NEW ACCOUNTING STANDARDS

New Accounting Standards Not Yet Effective

ASU 2011-05, Presentation of Comprehensive Income: This standard, effective January 1, 2012 for CMS Energy and Consumers, eliminates the option to report other comprehensive income and its components on the statement of changes in equity. Presently, both CMS Energy and Consumers use this option for their consolidated financial statements. Under the standard, entities will be required to present either a single continuous statement of comprehensive income, containing both net income and components of other comprehensive income, or two separate consecutive statements. This standard will affect only the presentation of comprehensive income in CMS Energy's and Consumers' consolidated financial statements.

ASU 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs: This standard, effective January 1, 2012 for CMS Energy and Consumers, is the result of a joint project of the Financial Accounting Standards Board and the International Accounting Standards Board. The primary objective of the standard is to ensure that fair value has the same meaning under GAAP and International Financial Reporting Standards and to establish common fair value measurement guidance in the two sets of standards. The standard does not change the overall fair value model in GAAP, but it amends various fair value principles and establishes additional disclosure requirements. CMS Energy and Consumers are evaluating this standard, but they do not expect it to have a significant impact on their consolidated financial statements.

XML



Fair Value Measurements

6 Months Ended

Jun. 30, 2011

Fair Value Measurements

2: FAIR VALUE MEASUREMENTS

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:

• Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

• Level 2 inputs are observable, market-based inputs, other than Level 1 prices. Level 2 inputs may include quoted prices for similar assets or liabilities in active markets, quoted prices in inactive markets, interest rates and yield curves observable at commonly quoted intervals, credit risks, default rates, and inputs derived from or corroborated by observable market data.

• Level 3 inputs are unobservable inputs that reflect CMS Energy's or Consumers' own assumptions about how market participants would value their assets and liabilities.

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.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Presented in the following table are CMS Energy's and Consumers' assets and liabilities, by level within the fair value hierarchy, reported at fair value on a recurring basis at June 30, 2011:

In Millions
	Total		Level 1		Level 2		Level 3
CMS Energy, including Consumers
Assets
Cash equivalents	$	875	$	875	$	—	$	—
Restricted cash equivalents		15		15		—		—
Nonqualified deferred compensation plan assets		4		4		—		—
SERP
Mutual fund		90		90		—		—
State and municipal bonds		26		—		26		—
Derivative instruments
Commodity contracts1		3		—		—		3
Total2	$	1,013	$	984	$	26	$	3
Liabilities
Nonqualified deferred compensation plan liabilities	$	4	$	4	$	—	$	—
Derivative instruments
Commodity contracts3		3		—		—		3
Total4	$	7	$	4	$	—	$	3
Consumers
Assets
Cash equivalents	$	667	$	667	$	—	$	—
Restricted cash equivalents		14		14		—		—
CMS Energy common stock		31		31		—		—
Nonqualified deferred compensation plan assets		3		3		—		—
SERP
Mutual fund		59		59		—		—
State and municipal bonds		17		—		17		—
Derivative instruments
Commodity contracts		3		—		—		3
Total5	$	794	$	774	$	17	$	3
Liabilities
Nonqualified deferred compensation plan liabilities	$	3	$	3	$	—	$	—
Total	$	3	$	3	$	—	$	—

¹ This amount is gross and excludes the impact of offsetting derivative assets and liabilities under master netting arrangements, which was less than $1 million at June 30, 2011.

2	At June 30, 2011, CMS Energy's assets classified as Level 3 represented less than one percent of CMS Energy's total assets measured at fair value.
3	This amount is gross and excludes the impact of offsetting derivative assets and liabilities under master netting arrangements and offsetting cash margin deposits paid by CMS ERM to other parties, which was less than $1 million at June 30, 2011.
4	At June 30, 2011, CMS Energy's liabilities classified as Level 3 represented 43 percent of CMS Energy's total liabilities measured at fair value. The Level 3 liabilities consisted primarily of an electricity sales agreement held by CMS ERM.
5	At June 30, 2011, Consumers' assets classified as Level 3 represented less than one percent of Consumers' total assets measured at fair value.

Presented in the following table are CMS Energy's and Consumers' assets and liabilities, by level within the fair value hierarchy, reported at fair value on a recurring basis at December 31, 2010:

In Millions
	Total		Level 1		Level 2		Level 3
CMS Energy, including Consumers
Assets
Cash equivalents	$	183	$	183	$	—	$	—
Restricted cash equivalents		6		6		—		—
Nonqualified deferred compensation plan assets		6		6		—		—
SERP
Cash equivalents		1		1		—		—
Mutual fund		62		62		—		—
State and municipal bonds		28		—		28		—
Derivative instruments
Commodity contracts1		1		—		—		1
Total2	$	287	$	258	$	28	$	1
Liabilities
Nonqualified deferred compensation plan liabilities	$	6	$	6	$	—	$	—
Derivative instruments
Commodity contracts3		4		—		—		4
Total4	$	10	$	6	$	—	$	4
Consumers
Assets
Cash equivalents	$	19	$	19	$	—	$	—
Restricted cash equivalents		6		6		—		—
CMS Energy common stock		34		34		—		—
Nonqualified deferred compensation plan assets		4		4		—		—
SERP
Cash equivalents		1		1		—		—
Mutual fund		39		39		—		—
State and municipal bonds		17		—		17		—
Derivative instruments
Commodity contracts		1		—		—		1
Total5	$	121	$	103	$	17	$	1
Liabilities
Nonqualified deferred compensation plan liabilities	$	4	$	4	$	—	$	—
Total	$	4	$	4	$	—	$	—

¹ This amount is gross and excludes the impact of offsetting derivative assets and liabilities under master netting arrangements, which was less than $1 million at December 31, 2010.

2	At December 31, 2010, CMS Energy's assets classified as Level 3 represented less than one percent of CMS Energy's total assets measured at fair value.
3	This amount is gross and excludes the impact of offsetting derivative assets and liabilities under master netting arrangements and offsetting cash margin deposits paid by CMS ERM to other parties, which was less than $1 million at December 31, 2010.
4	At December 31, 2010, CMS Energy's liabilities classified as Level 3 represented 40 percent of CMS Energy's total liabilities measured at fair value. The Level 3 liabilities consisted primarily of an electricity sales agreement held by CMS ERM.
5	At December 31, 2010, Consumers' assets classified as Level 3 represented one percent of Consumers' total assets measured at fair value.

Cash Equivalents: 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, repurchase agreements collateralized by U.S. Treasury notes, and highly rated, short-term corporate debt securities.

Nonqualified Deferred Compensation Plan Assets: 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 net asset values 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.

SERP Assets: 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.

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 net asset value, which is the basis for transactions to buy or sell shares in the fund.

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.

Nonqualified Deferred Compensation Plan Liabilities: 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.

Derivative Instruments: 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. CMS Energy and Consumers have classified certain derivatives as Level 3 since the fair value measurements incorporate pricing assumptions that cannot be observed or confirmed through market transactions.

The most significant derivatives classified as Level 3 are an electricity sales agreement held by CMS ERM and FTRs held by Consumers. At December 31, 2010 and in prior periods, for the electricity sales agreement held by CMS ERM, quoted electricity prices were not available for the entire term of the agreement, and a proprietary forward pricing model was used to determine fair value. At June 30, 2011, quoted prices at the nearest active market were available for the entire term of the agreement. The agreement, however, remains classified as Level 3 since the pricing differential between the nearest active market in Ohio and the delivery point in Michigan cannot be confirmed with observable market transactions. There is no quoted pricing information for FTRs held by Consumers. Consumers determines the fair value of FTRs based on Consumers' average historical settlements.

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. CMS Energy and Consumers monitor market conditions and may incorporate other data, such as credit default swap rates, in determining adjustments for credit risk as warranted. For additional details about derivative contracts, see Note 8, Derivative Instruments.

Assets and Liabilities Measured at Fair Value on a Recurring Basis using Significant Level 3 Inputs

Presented in the following tables are reconciliations of changes in the fair values of Level 3 assets and liabilities at CMS Energy, which include Level 3 assets and liabilities at Consumers:

In Millions
Three Months Ended June 30	2011			2010
Balance at April 1	$	(2	)	$	(3	)
Total losses included in earnings1		(1	)		(2	)
Total gains offset through regulatory accounting		3			1
Settlements		—			(1	)
Balance at June 30	$	—		$	(5	)
Unrealized losses included in earnings for the three months ended June 30 relating to assets and liabilities still held at June 301	$	—		$	(2	)

In Millions
Six Months Ended June 30	2011			2010
Balance at January 1	$	(3	)	$	(8	)
Total gains included in earnings1		—			2
Total gains offset through regulatory accounting		3			1
Settlements		—			—
Balance at June 30	$	—		$	(5	)
Unrealized gains included in earnings for the six months ended June 30 relating to assets and liabilities still held at June 301	$	1		$	2

¹ 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.

Presented in the following tables are reconciliations of changes in the fair values of Level 3 assets and liabilities at Consumers:

In Millions
Three Months Ended June 30	2011		2010
Balance at April 1	$	—	$	—
Total gains offset through regulatory accounting		3		1
Settlements		—		(1	)
Balance at June 30	$	3	$	—

In Millions
Six Months Ended June 30	2011			2010
Balance at January 1	$	1		$	—
Total gains offset through regulatory accounting		3			1
Settlements		(1	)		(1	)
Balance at June 30	$	3		$	—

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

CMS Energy and Consumers had no nonrecurring fair value measurements during the six months ended June 30, 2011.

Presented in the following table are CMS Energy's assets, by level within the fair value hierarchy, reported at fair value on a nonrecurring basis during the three months ended June 30, 2010:

In Millions
	Level 1		Level 2		Level 3		Losses
CMS Energy, including Consumers
Assets held for sale	$	—	$	—	$	7	$	(4	)

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. CMS Energy had no other nonrecurring fair value measurements and Consumers had no nonrecurring fair value measurements during the six months ended June 30, 2010.

Consumers Energy Company [Member]

Fair Value Measurements

2: FAIR VALUE MEASUREMENTS

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:

• Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

• Level 2 inputs are observable, market-based inputs, other than Level 1 prices. Level 2 inputs may include quoted prices for similar assets or liabilities in active markets, quoted prices in inactive markets, interest rates and yield curves observable at commonly quoted intervals, credit risks, default rates, and inputs derived from or corroborated by observable market data.

• Level 3 inputs are unobservable inputs that reflect CMS Energy's or Consumers' own assumptions about how market participants would value their assets and liabilities.

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.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Presented in the following table are CMS Energy's and Consumers' assets and liabilities, by level within the fair value hierarchy, reported at fair value on a recurring basis at June 30, 2011:

In Millions
	Total		Level 1		Level 2		Level 3
CMS Energy, including Consumers
Assets
Cash equivalents	$	875	$	875	$	—	$	—
Restricted cash equivalents		15		15		—		—
Nonqualified deferred compensation plan assets		4		4		—		—
SERP
Mutual fund		90		90		—		—
State and municipal bonds		26		—		26		—
Derivative instruments
Commodity contracts1		3		—		—		3
Total2	$	1,013	$	984	$	26	$	3
Liabilities
Nonqualified deferred compensation plan liabilities	$	4	$	4	$	—	$	—
Derivative instruments
Commodity contracts3		3		—		—		3
Total4	$	7	$	4	$	—	$	3
Consumers
Assets
Cash equivalents	$	667	$	667	$	—	$	—
Restricted cash equivalents		14		14		—		—
CMS Energy common stock		31		31		—		—
Nonqualified deferred compensation plan assets		3		3		—		—
SERP
Mutual fund		59		59		—		—
State and municipal bonds		17		—		17		—
Derivative instruments
Commodity contracts		3		—		—		3
Total5	$	794	$	774	$	17	$	3
Liabilities
Nonqualified deferred compensation plan liabilities	$	3	$	3	$	—	$	—
Total	$	3	$	3	$	—	$	—

¹ This amount is gross and excludes the impact of offsetting derivative assets and liabilities under master netting arrangements, which was less than $1 million at June 30, 2011.

2	At June 30, 2011, CMS Energy's assets classified as Level 3 represented less than one percent of CMS Energy's total assets measured at fair value.
3	This amount is gross and excludes the impact of offsetting derivative assets and liabilities under master netting arrangements and offsetting cash margin deposits paid by CMS ERM to other parties, which was less than $1 million at June 30, 2011.
4	At June 30, 2011, CMS Energy's liabilities classified as Level 3 represented 43 percent of CMS Energy's total liabilities measured at fair value. The Level 3 liabilities consisted primarily of an electricity sales agreement held by CMS ERM.
5	At June 30, 2011, Consumers' assets classified as Level 3 represented less than one percent of Consumers' total assets measured at fair value.

Presented in the following table are CMS Energy's and Consumers' assets and liabilities, by level within the fair value hierarchy, reported at fair value on a recurring basis at December 31, 2010:

In Millions
	Total		Level 1		Level 2		Level 3
CMS Energy, including Consumers
Assets
Cash equivalents	$	183	$	183	$	—	$	—
Restricted cash equivalents		6		6		—		—
Nonqualified deferred compensation plan assets		6		6		—		—
SERP
Cash equivalents		1		1		—		—
Mutual fund		62		62		—		—
State and municipal bonds		28		—		28		—
Derivative instruments
Commodity contracts1		1		—		—		1
Total2	$	287	$	258	$	28	$	1
Liabilities
Nonqualified deferred compensation plan liabilities	$	6	$	6	$	—	$	—
Derivative instruments
Commodity contracts3		4		—		—		4
Total4	$	10	$	6	$	—	$	4
Consumers
Assets
Cash equivalents	$	19	$	19	$	—	$	—
Restricted cash equivalents		6		6		—		—
CMS Energy common stock		34		34		—		—
Nonqualified deferred compensation plan assets		4		4		—		—
SERP
Cash equivalents		1		1		—		—
Mutual fund		39		39		—		—
State and municipal bonds		17		—		17		—
Derivative instruments
Commodity contracts		1		—		—		1
Total5	$	121	$	103	$	17	$	1
Liabilities
Nonqualified deferred compensation plan liabilities	$	4	$	4	$	—	$	—
Total	$	4	$	4	$	—	$	—

¹ This amount is gross and excludes the impact of offsetting derivative assets and liabilities under master netting arrangements, which was less than $1 million at December 31, 2010.

2	At December 31, 2010, CMS Energy's assets classified as Level 3 represented less than one percent of CMS Energy's total assets measured at fair value.
3	This amount is gross and excludes the impact of offsetting derivative assets and liabilities under master netting arrangements and offsetting cash margin deposits paid by CMS ERM to other parties, which was less than $1 million at December 31, 2010.
4	At December 31, 2010, CMS Energy's liabilities classified as Level 3 represented 40 percent of CMS Energy's total liabilities measured at fair value. The Level 3 liabilities consisted primarily of an electricity sales agreement held by CMS ERM.
5	At December 31, 2010, Consumers' assets classified as Level 3 represented one percent of Consumers' total assets measured at fair value.

Cash Equivalents: 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, repurchase agreements collateralized by U.S. Treasury notes, and highly rated, short-term corporate debt securities.

Nonqualified Deferred Compensation Plan Assets: 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 net asset values 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.

SERP Assets: 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.

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 net asset value, which is the basis for transactions to buy or sell shares in the fund.

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.

Nonqualified Deferred Compensation Plan Liabilities: 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.

Derivative Instruments: 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. CMS Energy and Consumers have classified certain derivatives as Level 3 since the fair value measurements incorporate pricing assumptions that cannot be observed or confirmed through market transactions.

The most significant derivatives classified as Level 3 are an electricity sales agreement held by CMS ERM and FTRs held by Consumers. At December 31, 2010 and in prior periods, for the electricity sales agreement held by CMS ERM, quoted electricity prices were not available for the entire term of the agreement, and a proprietary forward pricing model was used to determine fair value. At June 30, 2011, quoted prices at the nearest active market were available for the entire term of the agreement. The agreement, however, remains classified as Level 3 since the pricing differential between the nearest active market in Ohio and the delivery point in Michigan cannot be confirmed with observable market transactions. There is no quoted pricing information for FTRs held by Consumers. Consumers determines the fair value of FTRs based on Consumers' average historical settlements.

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. CMS Energy and Consumers monitor market conditions and may incorporate other data, such as credit default swap rates, in determining adjustments for credit risk as warranted. For additional details about derivative contracts, see Note 8, Derivative Instruments.

Assets and Liabilities Measured at Fair Value on a Recurring Basis using Significant Level 3 Inputs

Presented in the following tables are reconciliations of changes in the fair values of Level 3 assets and liabilities at CMS Energy, which include Level 3 assets and liabilities at Consumers:

In Millions
Three Months Ended June 30	2011			2010
Balance at April 1	$	(2	)	$	(3	)
Total losses included in earnings1		(1	)		(2	)
Total gains offset through regulatory accounting		3			1
Settlements		—			(1	)
Balance at June 30	$	—		$	(5	)
Unrealized losses included in earnings for the three months ended June 30 relating to assets and liabilities still held at June 301	$	—		$	(2	)

In Millions
Six Months Ended June 30	2011			2010
Balance at January 1	$	(3	)	$	(8	)
Total gains included in earnings1		—			2
Total gains offset through regulatory accounting		3			1
Settlements		—			—
Balance at June 30	$	—		$	(5	)
Unrealized gains included in earnings for the six months ended June 30 relating to assets and liabilities still held at June 301	$	1		$	2

¹ 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.

Presented in the following tables are reconciliations of changes in the fair values of Level 3 assets and liabilities at Consumers:

In Millions
Three Months Ended June 30	2011		2010
Balance at April 1	$	—	$	—
Total gains offset through regulatory accounting		3		1
Settlements		—		(1	)
Balance at June 30	$	3	$	—

In Millions
Six Months Ended June 30	2011			2010
Balance at January 1	$	1		$	—
Total gains offset through regulatory accounting		3			1
Settlements		(1	)		(1	)
Balance at June 30	$	3		$	—

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

CMS Energy and Consumers had no nonrecurring fair value measurements during the six months ended June 30, 2011.

Presented in the following table are CMS Energy's assets, by level within the fair value hierarchy, reported at fair value on a nonrecurring basis during the three months ended June 30, 2010:

In Millions
	Level 1		Level 2		Level 3		Losses
CMS Energy, including Consumers
Assets held for sale	$	—	$	—	$	7	$	(4	)

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. CMS Energy had no other nonrecurring fair value measurements and Consumers had no nonrecurring fair value measurements during the six months ended June 30, 2010.

XML



Contingencies and Commitments

6 Months Ended

Jun. 30, 2011

Contingencies and Commitments

3: CONTINGENCIES AND COMMITMENTS

CMS Energy and Consumers are involved in various matters that give rise to contingent liabilities. Depending on the specific issues, the resolution of these contingencies could have a material effect on CMS Energy's and Consumers' liquidity, financial condition, and results of operations. In their disclosures of these matters, CMS Energy and Consumers provide an estimate of the possible loss or range of loss when such an estimate can be made. Disclosures that state that CMS Energy or Consumers cannot predict the outcome of a matter indicate that they are unable to estimate a possible loss or range of loss for the matter.

CMS Energy Contingencies

Gas Index Price Reporting Investigation: 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.

Gas Index Price Reporting Litigation: CMS Energy, along with CMS MST, CMS Field Services, Cantera Natural Gas, Inc., and Cantera Gas Company, are named as defendants in various 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 Colorado, Kansas, Missouri, and Wisconsin. The following provides more detail on these proceedings:

• In 2005, CMS Energy, CMS MST, and CMS Field Services were named 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 the defendants engaged in a scheme to violate the Kansas Restraint of Trade Act. The plaintiffs are seeking statutory full consideration damages consisting of the full consideration paid by plaintiffs for natural gas allegedly purchased from defendants.

• 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 laws.

• 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 2006. Defendants, including CMS Energy, CMS Field Services, and CMS MST, are alleged to have violated the Colorado Antitrust Act of 1992. Plaintiffs are seeking full refund damages.

• 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. 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 complaint in the U.S. District Court for the Eastern District of Michigan. In 2010, the MDL judge issued an opinion and order granting the CMS Energy defendants' motion to dismiss the Michigan complaint on statute-of-limitations grounds and all CMS Energy defendants have been dismissed from the Arandell (Michigan) action.

• Another class action complaint, Newpage Wisconsin System v. CMS ERM, et al., was filed in 2009 in circuit court in Wood County, Wisconsin, against CMS Energy, CMS ERM, Cantera Gas Company, and others. The plaintiff is seeking full consideration damages, treble damages, costs, interest, and attorneys' fees.

• 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 CMS Energy, CMS MST, CMS Field Services, and others. 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 in 2000 and 2001.

After removal to federal court, all of the cases described above were transferred to the MDL. CMS Energy was dismissed from the Learjet, Heartland, and J.P. Morgan cases in 2009, but other CMS Energy defendants remained parties. All CMS Energy defendants were dismissed from the Breckenridge case in 2009. In 2010, CMS Energy and Cantera Gas Company were dismissed from the Newpage case and the Arandell (Wisconsin) case was reinstated against CMS ERM. In July 2011, all claims against remaining CMS Energy defendants in the MDL cases were dismissed based on FERC preemption. Appeals are possible.

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. If the outcome after appeals is unfavorable, these cases could have a material adverse impact on CMS Energy's liquidity, financial condition, and results of operations.

Bay Harbor: As part of the development of Bay Harbor by certain subsidiaries of CMS Energy, and under an agreement with the MDEQ, third parties constructed a golf course and park over several abandoned CKD piles left over from the former cement plant operations on the Bay Harbor site. The third parties also undertook a series of response activities, including constructing a leachate collection system in one area where CKD-impacted groundwater was entering Little Traverse Bay. 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.

In 2005, the EPA, along with CMS Land and CMS Capital, voluntarily executed an Administrative Order on Consent under Superfund, and the EPA approved a Removal Action Work Plan to address contamination issues. 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. Several augmentation measures were implemented and completed in 2009, with the remaining measure completed in 2010.

In May 2011, CMS Energy received approval from the EPA on a revised scope of remedies that CMS Energy had submitted in December 2010. CMS Energy is presently in negotiations with the MDEQ to finalize an agreement that will identify the remaining final remedies at the site. In December 2010, the MDEQ issued an NPDES permit that authorizes CMS Land to discharge treated leachate into Little Traverse Bay. This permit requires renewal every five years. Additionally, CMS Land has committed to investigate the potential for a deep injection well on the Bay Harbor site as an alternative long-term solution to the leachate disposal issue. In 2008, the MDEQ and the EPA granted permits for CMS Land or its wholly owned subsidiary, Beeland Group LLC, to construct and operate an off-site 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.

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. In October 2010, CMS Land and other parties received a demand for payment from the EPA in the amount of $7 million, plus interest, whereby the EPA is seeking recovery, as allowed under Superfund, of the EPA's response costs incurred at the Bay Harbor site. CMS Land believes that this is not a valid claim and intends to dispute it.

CMS Land and CMS Capital, the MDEQ, the EPA, and other parties continue to negotiate the long-term remedy for the Bay Harbor site, including:

• the disposal of leachate;

• the capping and excavation of CKD;

• the location and design of collection lines and upstream water diversion systems;

• application of criteria for various substances such as mercury; and

• other matters that are likely to affect the scope of response activities that CMS Land and CMS Capital may be obligated to undertake.

CMS Energy has recorded a cumulative charge related to Bay Harbor of $223 million, which includes accretion expense. At June 30, 2011, CMS Energy had a recorded liability of $88 million for its remaining obligations. CMS Energy calculated this liability based on discounted projected costs, using a discount rate of 4.34 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 at December 31, 2010. The undiscounted amount of the remaining obligation is $109 million. CMS Energy expects to pay $16 million during the remainder of 2011, $16 million in 2012, $7 million in 2013, $5 million in 2014, $4 million in 2015, and the remaining amount thereafter on long-term liquid disposal and operating and maintenance costs.

CMS Energy's estimate of response activity costs and the timing of expenditures could change if there are additional major changes in circumstances or assumptions, including but not limited to:

• inability to complete the present long-term water disposal strategy at a reasonable cost;

• delays in implementing the present long-term water disposal strategy;

• requirements to alter the present long-term water disposal strategy upon expiration of the NPDES permit if the MDEQ or EPA identify a more suitable alternative;

• an increase in the number of contamination areas;

• different remediation techniques;

• the nature and extent of contamination;

• inability to reach agreement with the MDEQ or the EPA over additional response activities;

• delays in the receipt of requested permits;

• delays following the receipt of any requested permits due to legal appeals of third parties;

• additional or new legal or regulatory requirements; or

• new or different landowner claims.

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. Although a liability for its present estimate of remaining response activity costs has been recorded, CMS Energy cannot predict the ultimate financial impact or outcome of this matter.

Equatorial Guinea Tax Claim: 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 indicated in 2008 that it still intends to pursue its claim. CMS Energy cannot predict the financial impact or outcome of this matter.

Consumers' Electric Utility Contingencies

Electric Environmental Matters: Consumers' operations are subject to environmental laws and regulations. Historically, Consumers has generally been able to recover, in customer rates, the costs to operate its facilities in compliance with these laws and regulations.

Cleanup and Solid Waste: 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, 2011, Consumers had a recorded liability of $2 million, its estimated probable NREPA liability.

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. In November 2010, Consumers received official notification from the EPA that identified Consumers as a potentially responsible party at the Kalamazoo River Superfund site. The notification claimed that the EPA has reason to believe Consumers disposed of PCBs and arranged for the disposal and treatment of PCB-containing materials at portions of the site. Consumers responded to the EPA in December 2010, stating that it has no information showing that it disposed of PCBs or arranged for disposal or treatment of PCB-containing material at portions of the site and requesting further information from the EPA before Consumers would commit to perform or finance cleanup activities at the site. In April 2011, Consumers received a follow-up letter from the EPA requesting that Consumers, as a potentially responsible party at the Kalamazoo River Superfund site, agree to participate in a removal action plan along with several other companies. The letter also indicated that under Sections 106 and 107 of Superfund, Consumers may be liable for reimbursement of the EPA's costs and potential penalties for noncompliance with any unilateral order that the EPA may issue requiring performance under the removal action plan. The EPA has provided limited information regarding Consumers' potential responsibility for contamination at the site and has not yet given an indication of the share of any cleanup costs for which Consumers could be held responsible. Consumers continues to investigate the EPA's claim that it disposed of PCBs or arranged for disposal or treatment of PCB-containing material at portions of the site. Until further information is received from the EPA, Consumers is unable to estimate a range of potential liability for cleanup of the river.

Based on its experience, Consumers estimates that its share of the total liability for other 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, 2011, Consumers had a recorded liability of $2 million for its share of the total liability at these sites, the minimum amount in the range of its estimated probable Superfund liability.

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, the nature and extent of contamination, and legal and regulatory requirements, could affect its estimates of NREPA and Superfund liability.

Ludington PCB: 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.

Electric Utility Plant Air Permit Issues and Notices of Violation: 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 review under the NSR. 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.

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 Projects, and/or pay fines. Additionally, Consumers would need to assess the viability of continuing operations at certain plants. The potential costs relating to these matters could be material and the extent of cost recovery cannot be reasonably estimated. Although Consumers cannot predict the financial impact or outcome of these matters, 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.

Nuclear Matters: The matters discussed in this section relate to Consumers' previously owned nuclear generating plants.

At June 30, 2011, Consumers had a recorded liability of $163 million to the DOE to fund the disposal of spent nuclear fuel used before 1983. This balance comprised the principal amount of $44 million collected from customers for spent nuclear fuel disposal fees and $119 million of interest accrued on those collections. The liability, which was classified in long-term debt on CMS Energy's and Consumers' consolidated balance sheets, was to be paid to the DOE when it began 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.

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. 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.

In July 2011, Consumers entered into an agreement with the DOE to settle its claims for $120 million. As part of this agreement, Consumers settled its $163 million liability to the DOE. Consumers will request that the MPSC determine the regulatory treatment of the $120 million settlement. In this filing, Consumers will propose that $85 million of the settlement should represent the recovery of its regulatory asset related to nuclear fuel storage costs at Big Rock. Certain other costs related to spent nuclear fuel were recovered from customers through rates, and the MPSC may determine that those amounts should be refunded to customers. If the MPSC concludes that Consumers may retain a portion of the settlement, Consumers will recognize that amount in earnings.

In its November 2010 electric rate order, the MPSC directed Consumers to establish, within six months of the date of the order, an independent trust fund for the amount payable to the DOE. Subsequent rate orders extended this six-month deadline. Following its settlement with the DOE, Consumers petitioned the MPSC to relieve it of the obligation to fund the trust.

As a result of the DOE settlement, Consumers may, under the terms of the purchase and sale agreement with Entergy, request termination of the letter of credit.

Consumers' Gas Utility Contingencies

Gas Environmental Matters: 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, 2011, Consumers estimated its undiscounted remaining remediation and other response activity costs to be between $28 million and $43 million. Generally, Consumers has been able to recover most of its costs to date through proceeds from insurance settlements and customer rates.

At June 30, 2011, Consumers had a recorded liability of $28 million and a regulatory asset of $55 million that included $27 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.

Guarantees

Presented in the following table are CMS Energy's guarantees at June 30, 2011:

In Millions
	Issue	Expiration	Maximum			Carrying
Guarantee Description	Date	Date	Obligation			Amount
Indemnity obligations from asset sales and other agreements	Various	Various through June 2022	$	512	1	$	21
Guarantees and put options2	Various	Various through March 2021		33			1

1

The majority of this amount arises from stock and asset sale 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.

2

At June 30, 2011, 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.

At June 30, 2011, the maximum obligation and carrying amounts for Consumers' guarantees were less than $1 million.

Presented in the following table is additional information regarding CMS Energy's guarantees:

Guarantee Description	How Guarantee Arose	Events That Would Require Performance
Indemnity obligations from asset sales and other agreements	Stock and asset sale agreements	Findings of misrepresentation, breach of warranties, tax claims, and other specific events or circumstances
Guarantees and put options	Normal operating activity	Nonperformance or non-payment by a subsidiary under a related contract
Guarantees and put options	Bay Harbor remediation efforts	Owners exercising put options requiring CMS Land to purchase property

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.

Other Contingencies

Michigan Single Business Tax: The State of Michigan is finalizing its audit of CMS Energy's and Consumers' combined Michigan single business tax returns for 2004 through 2007. The outcome of this audit could impact CMS Energy's and Consumers' net income. CMS Energy and Consumers are unable to estimate any potential earnings impact.

Other: In addition to the matters disclosed in this note and Note 4, Regulatory 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 matters, federal and state taxes, rates, licensing, employment, 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 condition, or liquidity.

Consumers Energy Company [Member]

Contingencies and Commitments

3: CONTINGENCIES AND COMMITMENTS

CMS Energy and Consumers are involved in various matters that give rise to contingent liabilities. Depending on the specific issues, the resolution of these contingencies could have a material effect on CMS Energy's and Consumers' liquidity, financial condition, and results of operations. In their disclosures of these matters, CMS Energy and Consumers provide an estimate of the possible loss or range of loss when such an estimate can be made. Disclosures that state that CMS Energy or Consumers cannot predict the outcome of a matter indicate that they are unable to estimate a possible loss or range of loss for the matter.

CMS Energy Contingencies

Gas Index Price Reporting Investigation: 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.

Gas Index Price Reporting Litigation: CMS Energy, along with CMS MST, CMS Field Services, Cantera Natural Gas, Inc., and Cantera Gas Company, are named as defendants in various 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 Colorado, Kansas, Missouri, and Wisconsin. The following provides more detail on these proceedings:

• In 2005, CMS Energy, CMS MST, and CMS Field Services were named 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 the defendants engaged in a scheme to violate the Kansas Restraint of Trade Act. The plaintiffs are seeking statutory full consideration damages consisting of the full consideration paid by plaintiffs for natural gas allegedly purchased from defendants.

• 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 laws.

• 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 2006. Defendants, including CMS Energy, CMS Field Services, and CMS MST, are alleged to have violated the Colorado Antitrust Act of 1992. Plaintiffs are seeking full refund damages.

• 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. 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 complaint in the U.S. District Court for the Eastern District of Michigan. In 2010, the MDL judge issued an opinion and order granting the CMS Energy defendants' motion to dismiss the Michigan complaint on statute-of-limitations grounds and all CMS Energy defendants have been dismissed from the Arandell (Michigan) action.

• Another class action complaint, Newpage Wisconsin System v. CMS ERM, et al., was filed in 2009 in circuit court in Wood County, Wisconsin, against CMS Energy, CMS ERM, Cantera Gas Company, and others. The plaintiff is seeking full consideration damages, treble damages, costs, interest, and attorneys' fees.

• 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 CMS Energy, CMS MST, CMS Field Services, and others. 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 in 2000 and 2001.

After removal to federal court, all of the cases described above were transferred to the MDL. CMS Energy was dismissed from the Learjet, Heartland, and J.P. Morgan cases in 2009, but other CMS Energy defendants remained parties. All CMS Energy defendants were dismissed from the Breckenridge case in 2009. In 2010, CMS Energy and Cantera Gas Company were dismissed from the Newpage case and the Arandell (Wisconsin) case was reinstated against CMS ERM. In July 2011, all claims against remaining CMS Energy defendants in the MDL cases were dismissed based on FERC preemption. Appeals are possible.

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. If the outcome after appeals is unfavorable, these cases could have a material adverse impact on CMS Energy's liquidity, financial condition, and results of operations.

Bay Harbor: As part of the development of Bay Harbor by certain subsidiaries of CMS Energy, and under an agreement with the MDEQ, third parties constructed a golf course and park over several abandoned CKD piles left over from the former cement plant operations on the Bay Harbor site. The third parties also undertook a series of response activities, including constructing a leachate collection system in one area where CKD-impacted groundwater was entering Little Traverse Bay. 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.

In 2005, the EPA, along with CMS Land and CMS Capital, voluntarily executed an Administrative Order on Consent under Superfund, and the EPA approved a Removal Action Work Plan to address contamination issues. 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. Several augmentation measures were implemented and completed in 2009, with the remaining measure completed in 2010.

In May 2011, CMS Energy received approval from the EPA on a revised scope of remedies that CMS Energy had submitted in December 2010. CMS Energy is presently in negotiations with the MDEQ to finalize an agreement that will identify the remaining final remedies at the site. In December 2010, the MDEQ issued an NPDES permit that authorizes CMS Land to discharge treated leachate into Little Traverse Bay. This permit requires renewal every five years. Additionally, CMS Land has committed to investigate the potential for a deep injection well on the Bay Harbor site as an alternative long-term solution to the leachate disposal issue. In 2008, the MDEQ and the EPA granted permits for CMS Land or its wholly owned subsidiary, Beeland Group LLC, to construct and operate an off-site 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.

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. In October 2010, CMS Land and other parties received a demand for payment from the EPA in the amount of $7 million, plus interest, whereby the EPA is seeking recovery, as allowed under Superfund, of the EPA's response costs incurred at the Bay Harbor site. CMS Land believes that this is not a valid claim and intends to dispute it.

CMS Land and CMS Capital, the MDEQ, the EPA, and other parties continue to negotiate the long-term remedy for the Bay Harbor site, including:

• the disposal of leachate;

• the capping and excavation of CKD;

• the location and design of collection lines and upstream water diversion systems;

• application of criteria for various substances such as mercury; and

• other matters that are likely to affect the scope of response activities that CMS Land and CMS Capital may be obligated to undertake.

CMS Energy has recorded a cumulative charge related to Bay Harbor of $223 million, which includes accretion expense. At June 30, 2011, CMS Energy had a recorded liability of $88 million for its remaining obligations. CMS Energy calculated this liability based on discounted projected costs, using a discount rate of 4.34 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 at December 31, 2010. The undiscounted amount of the remaining obligation is $109 million. CMS Energy expects to pay $16 million during the remainder of 2011, $16 million in 2012, $7 million in 2013, $5 million in 2014, $4 million in 2015, and the remaining amount thereafter on long-term liquid disposal and operating and maintenance costs.

CMS Energy's estimate of response activity costs and the timing of expenditures could change if there are additional major changes in circumstances or assumptions, including but not limited to:

• inability to complete the present long-term water disposal strategy at a reasonable cost;

• delays in implementing the present long-term water disposal strategy;

• requirements to alter the present long-term water disposal strategy upon expiration of the NPDES permit if the MDEQ or EPA identify a more suitable alternative;

• an increase in the number of contamination areas;

• different remediation techniques;

• the nature and extent of contamination;

• inability to reach agreement with the MDEQ or the EPA over additional response activities;

• delays in the receipt of requested permits;

• delays following the receipt of any requested permits due to legal appeals of third parties;

• additional or new legal or regulatory requirements; or

• new or different landowner claims.

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. Although a liability for its present estimate of remaining response activity costs has been recorded, CMS Energy cannot predict the ultimate financial impact or outcome of this matter.

Equatorial Guinea Tax Claim: 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 indicated in 2008 that it still intends to pursue its claim. CMS Energy cannot predict the financial impact or outcome of this matter.

Consumers' Electric Utility Contingencies

Electric Environmental Matters: Consumers' operations are subject to environmental laws and regulations. Historically, Consumers has generally been able to recover, in customer rates, the costs to operate its facilities in compliance with these laws and regulations.

Cleanup and Solid Waste: 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, 2011, Consumers had a recorded liability of $2 million, its estimated probable NREPA liability.

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. In November 2010, Consumers received official notification from the EPA that identified Consumers as a potentially responsible party at the Kalamazoo River Superfund site. The notification claimed that the EPA has reason to believe Consumers disposed of PCBs and arranged for the disposal and treatment of PCB-containing materials at portions of the site. Consumers responded to the EPA in December 2010, stating that it has no information showing that it disposed of PCBs or arranged for disposal or treatment of PCB-containing material at portions of the site and requesting further information from the EPA before Consumers would commit to perform or finance cleanup activities at the site. In April 2011, Consumers received a follow-up letter from the EPA requesting that Consumers, as a potentially responsible party at the Kalamazoo River Superfund site, agree to participate in a removal action plan along with several other companies. The letter also indicated that under Sections 106 and 107 of Superfund, Consumers may be liable for reimbursement of the EPA's costs and potential penalties for noncompliance with any unilateral order that the EPA may issue requiring performance under the removal action plan. The EPA has provided limited information regarding Consumers' potential responsibility for contamination at the site and has not yet given an indication of the share of any cleanup costs for which Consumers could be held responsible. Consumers continues to investigate the EPA's claim that it disposed of PCBs or arranged for disposal or treatment of PCB-containing material at portions of the site. Until further information is received from the EPA, Consumers is unable to estimate a range of potential liability for cleanup of the river.

Based on its experience, Consumers estimates that its share of the total liability for other 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, 2011, Consumers had a recorded liability of $2 million for its share of the total liability at these sites, the minimum amount in the range of its estimated probable Superfund liability.

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, the nature and extent of contamination, and legal and regulatory requirements, could affect its estimates of NREPA and Superfund liability.

Ludington PCB: 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.

Electric Utility Plant Air Permit Issues and Notices of Violation: 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 review under the NSR. 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.

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 Projects, and/or pay fines. Additionally, Consumers would need to assess the viability of continuing operations at certain plants. The potential costs relating to these matters could be material and the extent of cost recovery cannot be reasonably estimated. Although Consumers cannot predict the financial impact or outcome of these matters, 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.

Nuclear Matters: The matters discussed in this section relate to Consumers' previously owned nuclear generating plants.

At June 30, 2011, Consumers had a recorded liability of $163 million to the DOE to fund the disposal of spent nuclear fuel used before 1983. This balance comprised the principal amount of $44 million collected from customers for spent nuclear fuel disposal fees and $119 million of interest accrued on those collections. The liability, which was classified in long-term debt on CMS Energy's and Consumers' consolidated balance sheets, was to be paid to the DOE when it began 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.

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. 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.

In July 2011, Consumers entered into an agreement with the DOE to settle its claims for $120 million. As part of this agreement, Consumers settled its $163 million liability to the DOE. Consumers will request that the MPSC determine the regulatory treatment of the $120 million settlement. In this filing, Consumers will propose that $85 million of the settlement should represent the recovery of its regulatory asset related to nuclear fuel storage costs at Big Rock. Certain other costs related to spent nuclear fuel were recovered from customers through rates, and the MPSC may determine that those amounts should be refunded to customers. If the MPSC concludes that Consumers may retain a portion of the settlement, Consumers will recognize that amount in earnings.

In its November 2010 electric rate order, the MPSC directed Consumers to establish, within six months of the date of the order, an independent trust fund for the amount payable to the DOE. Subsequent rate orders extended this six-month deadline. Following its settlement with the DOE, Consumers petitioned the MPSC to relieve it of the obligation to fund the trust.

As a result of the DOE settlement, Consumers may, under the terms of the purchase and sale agreement with Entergy, request termination of the letter of credit.

Consumers' Gas Utility Contingencies

Gas Environmental Matters: 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, 2011, Consumers estimated its undiscounted remaining remediation and other response activity costs to be between $28 million and $43 million. Generally, Consumers has been able to recover most of its costs to date through proceeds from insurance settlements and customer rates.

At June 30, 2011, Consumers had a recorded liability of $28 million and a regulatory asset of $55 million that included $27 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.

Guarantees

Presented in the following table are CMS Energy's guarantees at June 30, 2011:

In Millions
	Issue	Expiration	Maximum			Carrying
Guarantee Description	Date	Date	Obligation			Amount
Indemnity obligations from asset sales and other agreements	Various	Various through June 2022	$	512	1	$	21
Guarantees and put options2	Various	Various through March 2021		33			1

1

The majority of this amount arises from stock and asset sale 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.

2

At June 30, 2011, 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.

At June 30, 2011, the maximum obligation and carrying amounts for Consumers' guarantees were less than $1 million.

Presented in the following table is additional information regarding CMS Energy's guarantees:

Guarantee Description	How Guarantee Arose	Events That Would Require Performance
Indemnity obligations from asset sales and other agreements	Stock and asset sale agreements	Findings of misrepresentation, breach of warranties, tax claims, and other specific events or circumstances
Guarantees and put options	Normal operating activity	Nonperformance or non-payment by a subsidiary under a related contract
Guarantees and put options	Bay Harbor remediation efforts	Owners exercising put options requiring CMS Land to purchase property

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.

Other Contingencies

Michigan Single Business Tax: The State of Michigan is finalizing its audit of CMS Energy's and Consumers' combined Michigan single business tax returns for 2004 through 2007. The outcome of this audit could impact CMS Energy's and Consumers' net income. CMS Energy and Consumers are unable to estimate any potential earnings impact.

Other: In addition to the matters disclosed in this note and Note 4, Regulatory 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 matters, federal and state taxes, rates, licensing, employment, 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 condition, or liquidity.

XML



Regulatory Matters (Consumers Energy Company [Member])

6 Months Ended

Jun. 30, 2011

Consumers Energy Company [Member]

Regulatory Matters

4: REGULATORY MATTERS

Rate matters are critical to Consumers. Depending upon the specific issues, the outcomes of rate cases and proceedings could have a material adverse effect on CMS Energy's and Consumers' liquidity, financial condition, and results of operations. Consumers cannot predict the outcome of these proceedings.

Consumers' Electric Utility

Electric Rate Cases: The MPSC, in its 2010 electric rate case order, authorized Consumers to increase its rates by $146 million annually, $4 million less than the rate increase self-implemented by Consumers in July 2010. In June 2011, the MPSC approved a settlement agreement, finding that no refund of self-implemented rates to customers is required.

In June 2011, Consumers filed an application with the MPSC seeking an annual increase in revenue of $195 million, based on a 10.7 percent authorized return on equity. The filing requested authority to recover new investment in system reliability, environmental compliance, and technology enhancements. Presented in the following table are the components of the requested increase in revenue:

In Millions
Components of the increase in revenue
Investment in rate base	$	81
Recovery of depreciation and property taxes		70
Impact of sales declines		50
Reduced operating and maintenance costs		(4	)
Cost of capital		(2	)
Total	$	195

Power Supply Cost Recovery: 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.

PSCR Plan: In September 2010, Consumers submitted its 2011 PSCR plan to the MPSC. In accordance with its proposed plan, Consumers self-implemented the 2011 PSCR charge beginning in January 2011.

PSCR Reconciliation: Presented in the following table is the PSCR reconciliation filing pending with the MPSC:

PSCR Year	Date Filed	Net Underrecovery	PSCR Cost of Power Sold
2010	March 2011	$   15 million	$   1.7 billion

In June 2011, the MPSC issued an order approving Consumers' 2009 PSCR reconciliation, as modified by the order, and authorized Consumers to include an underrecovery of $31 million in its 2010 PSCR reconciliation.

Electric Revenue Decoupling Mechanism: Consumers' 2009 electric rate case order authorized an electric revenue decoupling mechanism, subject to certain conditions. This decoupling mechanism, which was extended in the 2010 electric rate case order, allows Consumers to adjust future electric rates to compensate for changes in sales volumes resulting from weather fluctuations, energy efficiency, and conservation. Various parties have filed appeals concerning the electric decoupling mechanism.

In March 2011, Consumers filed its first reconciliation of the electric revenue decoupling mechanism with the MPSC, requesting recovery of $27 million from customers for the period December 2009 through November 2010. Other parties are opposing this recovery.

At June 30, 2011, Consumers had a $58 million non-current regulatory asset recorded for electric decoupling, which included the $27 million balance referred to above.

Uncollectible Expense Tracking Mechanism: In March 2011, Consumers filed its reconciliation of the uncollectible expense tracking mechanism with the MPSC, requesting recovery of $3 million from customers for November 2009 through November 2010, the entire period of the tracker. The uncollectible expense tracking mechanism, authorized by the MPSC in its November 2009 electric rate order, allowed future rates to be adjusted to collect or refund 80 percent of the difference between the level of electric uncollectible expense included in rates and actual uncollectible expense. During 2009, various parties filed appeals concerning the uncollectible expense tracking mechanism. In its 2010 electric rate order, the MPSC terminated the uncollectible expense tracking mechanism as of November 2010.

Electric Operation and Maintenance Expenditures Show-Cause Order: In 2005, 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. In 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 had not refunded this amount to customers. 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. In June 2011, the MPSC found that Consumers violated the 2005 order, but that customers were not affected significantly by the violation. The MPSC levied a $65,200 penalty on Consumers, but concluded that no refund was required.

Big Rock Decommissioning: 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. 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.

In an order issued in February 2010, the MPSC concluded that certain revenues collected during a statutory rate freeze from 2001 through 2003 should have been deposited in a decommissioning trust fund. The MPSC agreed that Consumers was entitled to recover $44 million of decommissioning costs, but concluded that Consumers had collected this amount previously through the rates 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. Consumers completed this refund in January 2011. 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.

Consumers paid $30 million to Entergy to assume ownership and responsibility for the Big Rock ISFSI, and incurred $55 million for nuclear fuel storage costs as a result of the DOE's failure to accept spent nuclear fuel. At June 30, 2011, Consumers had an $85 million regulatory asset recorded on its consolidated balance sheets for these costs. In July 2011, Consumers entered into a settlement agreement with the DOE related to the DOE's failure to accept spent nuclear fuel. For further information, see Note 3, Contingencies and Commitments, "Nuclear Matters."

Renewable Energy Plan: In 2010, Consumers filed with the MPSC its first annual report and reconciliation for its renewable energy plan, requesting approval of Consumers' reconciliation of renewable energy plan costs for 2009. In June 2011, the Administrative Law Judge issued a proposal for decision, recommending that the MPSC issue an order finding that Consumers met its 2009 renewable portfolio standards and that actual 2009 renewable energy expenses and revenues fell within MPSC-authorized levels. The Administrative Law Judge also recommended, however, that the MPSC exclude from recovery through the renewable surcharge $3 million of capital expenditures, along with related carrying costs, that Consumers incurred prior to enactment of the 2008 Energy Law.

In May 2011, the MPSC issued an order approving Consumers' amended renewable energy plan, with slight modifications. The amended plan reduces the renewable energy surcharge billed to customers by an annual amount of $54 million. The reduction is a result of lower-than-anticipated costs to comply with the renewable energy requirements prescribed by the 2008 Energy Law.

Consumers filed its second annual report and reconciliation with the MPSC in June 2011, requesting approval of its reconciliation of renewable energy plan costs for 2010.

Energy Optimization Plan: In May 2011, the MPSC issued an order approving Consumers' reconciliation of energy optimization plan costs for 2009. The MPSC also authorized Consumers to collect $6 million from customers as an incentive payment for exceeding savings targets under both its gas and electric energy optimization plans during 2009. Consumers will collect the incentive over 12 months beginning June 2011.

In April 2011, Consumers filed with the MPSC its second annual report and reconciliation for its energy optimization plan, requesting approval of Consumers' reconciliation of energy optimization plan costs for 2010. Consumers also requested approval to collect $8 million from customers as an incentive payment for exceeding savings targets under both its gas and electric energy optimization plans during 2010.

Electric Depreciation: 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. In June 2011, the MPSC approved a settlement agreement in this electric depreciation case, authorizing a $19 million increase in annual depreciation expense. The new depreciation rates will go into effect with a final order in Consumers' next electric rate case.

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' Gas Utility

Gas Rate Case: In August 2010, Consumers filed an application with the MPSC seeking an annual increase in revenue of $55 million based on an 11 percent authorized return on equity. The filing requested recovery for investments made to enhance safety, system reliability, and operational efficiencies that improve service to customers.

Consumers filed testimony and exhibits with the MPSC in January 2011, supporting a self-implemented annual gas rate increase of $48 million, subject to refund with interest. In February, Consumers filed a letter with the MPSC reducing the proposed self-implemented increase to $29 million. The MPSC then issued an order delaying Consumers' self-implementation in order to give other parties to the proceeding an opportunity to respond to Consumers' revised self-implementation filing.

In May 2011, the MPSC approved a partial settlement agreement authorizing Consumers to increase its rates by $31 million annually, based on a 10.5 percent authorized return on equity. Matters not yet addressed in this case include the decoupling mechanism, the Smart Grid program, and contributions to the low-income and energy efficiency fund. Presented in the following table are the components of the rate increase authorized by the MPSC and the rate increase originally requested by Consumers:

In Millions
				Increase Originally
	Increase Authorized			Requested by
Components of the increase in revenue	by the MPSC			Consumers		Difference
Investment in rate base	$	29		$	30	$	(1	)
Impact of sales declines		15			4		11
Recovery of operating and maintenance costs		2			16		(14	)
Cost of capital		(15	)		5		(20	)
Total	$	31		$	55	$	(24	)

Gas Cost Recovery: 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.

GCR Plan: In December 2010, Consumers submitted its 2011-2012 GCR plan to the MPSC. In accordance with its proposed plan, Consumers self-implemented the 2011-2012 GCR charge beginning in April 2011.

GCR Reconciliations: Presented in the following table are the GCR reconciliation filings pending with the MPSC:

GCR Year	Date Filed	Net Overrecovery	GCR Cost of Gas Sold
2009-2010	June 2010	$   1 million	$   1.3 billion
2010-2011	June 2011	6 million	1.2 billion

XML



Financings

6 Months Ended

Jun. 30, 2011

Financings

5: FINANCINGS

Presented in the following table is a summary of major long-term debt transactions during the six months ended June 30, 2011:

	Principal					Issue/Retirement
	(In Millions)		Interest Rate			Date	Maturity Date
Debt Issuances
CMS Energy
Senior Notes	$	250		2.75	%	May 2011	May 2014
Consumers
Tax-exempt bonds1		68	Variable			May 2011	April 2018
Tax-exempt bonds1		35	Variable			May 2011	April 2035
Total	$	353
Debt Retirements
Consumers
Tax-exempt bonds1	$	68	Variable			May 2011	April 2018
Tax-exempt bonds1		35	Variable			May 2011	April 2035
Total	$	103

¹ In May 2011, Consumers utilized the Michigan Strategic Fund for the issuance of $68 million and $35 million of tax-exempt Michigan Strategic Fund Variable Rate Limited Obligation Revenue Bonds. The initial interest rate, which resets weekly, was 0.26 percent for the $68 million bond issuance and 0.28 percent for the $35 million bond issuance. The bonds, which are backed by letters of credit and collateralized by FMBs, are subject to optional tender by the holders that would result in remarketing. Consumers used the proceeds to redeem $103 million of tax-exempt bonds in May 2011.

Revolving Credit Facilities: The following secured revolving credit facilities with banks were available at June 30, 2011:

In Millions
	Amount of		Amount		Letters of Credit		Amount
Expiration Date	Facility		Borrowed		Outstanding		Available
CMS Energy
March 31, 20161	$	550	$	—	$	3	$	547
Consumers
March 31, 20162, 3	$	500	$	—	$	189	$	311
August 9, 20133		150		—		—		150
September 21, 20114		30		—		30		—

1	On March 31, 2011, CMS Energy entered into a $550 million secured revolving credit facility with a consortium of banks. This facility has a five-year term and replaces CMS Energy's revolving credit facility that was set to expire in 2012. Obligations under this facility are secured by Consumers common stock. CMS Energy's average borrowings during the six months ended June 30, 2011 totaled $11 million, with a weighted-average annual interest rate of 2.22 percent, representing LIBOR plus 2.00 percent.
2	On March 31, 2011, Consumers entered into a $500 million secured revolving credit facility with a consortium of banks. This facility has a five-year term and replaces Consumers' revolving credit facility that was set to expire in 2012.
3	Obligations under this facility are secured by FMBs of Consumers.
4	Secured revolving letter of credit facility.

Short-term Borrowings: Under Consumers' revolving accounts receivable sales program, Consumers may transfer up to $250 million of accounts receivable, subject to certain eligibility requirements. These transactions are accounted for as short-term secured borrowings. At June 30, 2011, $250 million of accounts receivable were eligible for transfer, and no accounts receivable had been transferred under the program. During the six months ended June 30, 2011, Consumers had no borrowings under this program.

Contingently Convertible Securities: Presented in the following table are the significant terms of CMS Energy's contingently convertible securities at June 30, 2011:

			Outstanding		Adjusted		Adjusted
Security	Maturity		(In Millions)		Conversion Price		Trigger Price
2.875% senior notes		2024	$	288	$	12.81	$	15.37
5.50% senior notes		2029		172		14.26		18.54

During 20 of the last 30 trading days ended June 30, 2011, the adjusted trigger-price contingencies were met for both series of the contingently convertible senior notes, and as a result, the senior notes are convertible at the option of the security holders for the three months ending September 30, 2011.

Presented in the following table are details about conversions of contingently convertible securities during the six months ended June 30, 2011:

3.375% contingently		Principal		Conversion Value		Common		Cash Paid on
convertible senior notes	Conversion	Converted		per $1,000 of		Stock Issued		Settlement
due 2023	Date	(In Millions)		principal		on Settlement		(In Millions)
Voluntary conversion	January 2011	$	4	$	1,994.21		197,472	$	4

Dividend Restrictions: Under provisions of CMS Energy's senior notes indenture, at June 30, 2011, payment of common stock dividends by CMS Energy was limited to $1.1 billion.

Under the provisions of its articles of incorporation, at June 30, 2011, Consumers had $452 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.

For the six months ended June 30 2011, CMS Energy received $196 million of common stock dividends from Consumers.

Issuance of Common Stock: On June 15, 2011, CMS Energy entered into a continuous equity offering program under which CMS Energy may sell, from time to time in "at the market" offerings, common stock having an aggregate sales price of up to $50 million. In June 2011, under this program, CMS Energy issued 762,925 shares of common stock at an average price of $19.66 per share, resulting in net proceeds of $15 million.

Consumers Energy Company [Member]

Financings

5: FINANCINGS

Presented in the following table is a summary of major long-term debt transactions during the six months ended June 30, 2011:

	Principal					Issue/Retirement
	(In Millions)		Interest Rate			Date	Maturity Date
Debt Issuances
CMS Energy
Senior Notes	$	250		2.75	%	May 2011	May 2014
Consumers
Tax-exempt bonds1		68	Variable			May 2011	April 2018
Tax-exempt bonds1		35	Variable			May 2011	April 2035
Total	$	353
Debt Retirements
Consumers
Tax-exempt bonds1	$	68	Variable			May 2011	April 2018
Tax-exempt bonds1		35	Variable			May 2011	April 2035
Total	$	103

¹ In May 2011, Consumers utilized the Michigan Strategic Fund for the issuance of $68 million and $35 million of tax-exempt Michigan Strategic Fund Variable Rate Limited Obligation Revenue Bonds. The initial interest rate, which resets weekly, was 0.26 percent for the $68 million bond issuance and 0.28 percent for the $35 million bond issuance. The bonds, which are backed by letters of credit and collateralized by FMBs, are subject to optional tender by the holders that would result in remarketing. Consumers used the proceeds to redeem $103 million of tax-exempt bonds in May 2011.

Revolving Credit Facilities: The following secured revolving credit facilities with banks were available at June 30, 2011:

In Millions
	Amount of		Amount		Letters of Credit		Amount
Expiration Date	Facility		Borrowed		Outstanding		Available
CMS Energy
March 31, 20161	$	550	$	—	$	3	$	547
Consumers
March 31, 20162, 3	$	500	$	—	$	189	$	311
August 9, 20133		150		—		—		150
September 21, 20114		30		—		30		—

1	On March 31, 2011, CMS Energy entered into a $550 million secured revolving credit facility with a consortium of banks. This facility has a five-year term and replaces CMS Energy's revolving credit facility that was set to expire in 2012. Obligations under this facility are secured by Consumers common stock.
	CMS Energy's average borrowings during the six months ended June 30, 2011 totaled $11 million, with a weighted-average annual interest rate of 2.22 percent, representing LIBOR plus 2.00 percent
2	On March 31, 2011, Consumers entered into a $500 million secured revolving credit facility with a consortium of banks. This facility has a five-year term and replaces Consumers' revolving credit facility that was set to expire in 2012.
3	Obligations under this facility are secured by FMBs of Consumers.
4	Secured revolving letter of credit facility.

Short-term Borrowings: Under Consumers' revolving accounts receivable sales program, Consumers may transfer up to $250 million of accounts receivable, subject to certain eligibility requirements. These transactions are accounted for as short-term secured borrowings. At June 30, 2011, $250 million of accounts receivable were eligible for transfer, and no accounts receivable had been transferred under the program. During the six months ended June 30, 2011, Consumers had no borrowings under this program.

Contingently Convertible Securities: Presented in the following table are the significant terms of CMS Energy's contingently convertible securities at June 30, 2011:

			Outstanding		Adjusted		Adjusted
Security	Maturity		(In Millions)		Conversion Price		Trigger Price
2.875% senior notes		2024	$	288	$	12.81	$	15.37
5.50% senior notes		2029		172		14.26		18.54

During 20 of the last 30 trading days ended June 30, 2011, the adjusted trigger-price contingencies were met for both series of the contingently convertible senior notes, and as a result, the senior notes are convertible at the option of the security holders for the three months ending September 30, 2011.

Presented in the following table are details about conversions of contingently convertible securities during the six months ended June 30, 2011:

3.375% contingently		Principal		Conversion Value		Common		Cash Paid on
convertible senior notes	Conversion	Converted		per $1,000 of		Stock Issued		Settlement
due 2023	Date	(In Millions)		principal		on Settlement		(In Millions)
Voluntary conversion	January 2011	$	4	$	1,994.21		197,472	$	4

Dividend Restrictions: Under provisions of CMS Energy's senior notes indenture, at June 30, 2011, payment of common stock dividends by CMS Energy was limited to $1.1 billion.

Under the provisions of its articles of incorporation, at June 30, 2011, Consumers had $452 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.

For the six months ended June 30 2011, CMS Energy received $196 million of common stock dividends from Consumers.

Issuance of Common Stock: On June 15, 2011, CMS Energy entered into a continuous equity offering program under which CMS Energy may sell, from time to time in "at the market" offerings, common stock having an aggregate sales price of up to $50 million. In June 2011, under this program, CMS Energy issued 762,925 shares of common stock at an average price of $19.66 per share, resulting in net proceeds of $15 million.

XML



Earnings Per Share - CMS Energy

6 Months Ended

Jun. 30, 2011

Earnings Per Share - CMS Energy

Earnings Per Share - CMS Energy

6: EARNINGS PER SHARE — CMS ENERGY

Presented in the following table are CMS Energy's basic and diluted EPS computations based on income from continuing operations:

In Millions, Except Per Share Amounts
	Three Months Ended				Six Months Ended
June 30	2011		2010		2011		2010
Income Available to Common Stockholders
Income from continuing operations	$	101	$	100	$	234	$	189
Less income attributable to noncontrolling interest		1		2		1		2
Less preferred stock dividends		—		2		—		5
Income from Continuing Operations Available to Common Stockholders — Basic and Diluted	$	100	$	96	$	233	$	182
Average Common Shares Outstanding
Weighted average shares — basic		250.3		228.2		250.2		228.1
Add dilutive contingently convertible securities		11.3		19.3		11.0		19.5
Add dilutive non-vested stock awards and options		0.3		0.1		0.3		0.1
Weighted average shares — diluted		261.9		247.6		261.5		247.7
Income from Continuing Operations per Average Common Share Available to Common Stockholders
Basic	$	0.40	$	0.42	$	0.93	$	0.80
Diluted		0.38		0.39		0.89		0.74

Contingently Convertible Securities

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 common stock, exceeds the principal value of that security.

Stock Options and Warrants

For the three months and six months ended June 30, 2011, outstanding options to purchase 0.1 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.

Non-vested Stock Awards

CMS Energy's non-vested stock awards are composed of participating and non-participating securities. The participating securities 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 non-vested stock awards are considered participating securities. As such, the participating non-vested stock awards were included in the computation of basic EPS. The non-participating securities accrue stock dividends that vest concurrently with the stock award. If the recipient forfeits the award, the stock dividends accrued on the non-participating securities are also forfeited. Accordingly, the non-participating awards and stock dividends were included in the computation of diluted EPS, but not basic EPS.

Convertible Debentures

For each of the three and six months ended June 30, 2011 and 2010, CMS Energy's 7.75 percent convertible subordinated debentures would have increased diluted earnings per share had they been included in the calculation. Using the if-converted method, the debentures would have had the following impacts on the calculation of diluted EPS:

In Millions
	Three Months Ended				Six Months Ended
June 30	2011		2010		2011		2010
Increase to numerator from assumed reduction in interest expense	$	—	$	—	$	1	$	1
Increase to denominator from assumed conversion of debentures into common shares		0.7		0.7		0.7		0.7

CMS Energy can revoke the conversion rights if certain conditions are met.

XML



Financial Instruments

6 Months Ended

Jun. 30, 2011

Financial Instruments

7: FINANCIAL INSTRUMENTS

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. Presented in the following table are the cost or carrying amounts and fair values of CMS Energy's and Consumers' long-term financial instruments:

In Millions
	June 30, 2011				December 31, 2010
	Cost or				Cost or
	Carrying				Carrying
	Amount		Fair Value		Amount		Fair Value
CMS Energy, including Consumers
Securities held to maturity	$	7	$	7	$	5	$	6
Securities available for sale		115		116		90		90
Notes receivable1		398		417		386		407
Long-term debt2		7,283		8,074		7,174		7,861
Consumers
Securities available for sale	$	82	$	107	$	64	$	90
Long-term debt3		4,507		4,892		4,525		4,891

1	Includes current portion of notes receivable of $13 million at June 30, 2011 and $11 million at December 31, 2010.
2	Includes current portion of long-term debt of $1,099 million at June 30, 2011 and $726 million at December 31, 2010.
3	Includes current portion of long-term debt of $338 million at June 30, 2011 and $37 million at December 31, 2010.

Notes receivable consist of EnerBank's fixed-rate installment loans. EnerBank estimates the fair value of these loans using a discounted cash flows technique that incorporates 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.

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. CMS Energy includes the value of the conversion features in estimating the fair value of its convertible debt, and incorporates, as appropriate, information on the market prices of CMS Energy common stock.

The effects of third-party credit enhancements are excluded from the fair value measurements of long-term debt. At June 30, 2011 and December 31, 2010, CMS Energy's long-term debt included $103 million principal amount that was supported by third-party credit enhancements. This entire principal amount was at Consumers.

Presented in the following table are CMS Energy's and Consumers' investment securities:

In Millions
	June 30, 2011								December 31, 2010
			Unrealized		Unrealized		Fair				Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value		Cost		Gains		Losses		Value
CMS Energy, including consumers
Available for sale
SERP
Mutual fund	$	89	$	1	$	—	$	90	$	62	$	—	$	—	$	62
State and municipal bonds		26		—		—		26		28		—		—		28
Held to maturity
Debt securities		7		—		—		7		5		1		—		6
Consumers
Available for sale
SERP
Mutual fund	$	58	$	1	$	—	$	59	$	39	$	—	$	—	$	39
State and municipal bonds		17		—		—		17		17		—		—		17
CMS Energy common stock		7		24		—		31		8		26		—		34

The mutual fund classified as available for sale is a short-term, fixed-income fund. During the six months ended June 30, 2011, CMS Energy contributed $27 million to the SERP, which included a contribution of $20 million by Consumers. The contributions were used to acquire additional shares in the mutual fund. 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 primarily of mortgage-backed securities held by EnerBank, as well as state and municipal bonds held by EnerBank.

Presented in the following table is a summary of the sales activity for CMS Energy's and Consumers' investment securities:

In Millions
	Three months ended				Six months ended
June 30	2011		2010		2011		2010
CMS Energy, including Consumers
Proceeds from sales of investment securities1	$	1	$	—	$	1	$	1
Consumers
Proceeds from sales of investment securities1	$	—	$	—	$	1	$	—

¹ 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.

Presented in the following table are the fair values of the SERP state and municipal bonds by contractual maturity at June 30, 2011:

In Millions
	CMS Energy,
	including Consumers		Consumers
Due one year or less	$	1	$	1
Due after one year through five years		10		7
Due after five years through ten years		12		7
Due after ten years		3		2
Total	$	26	$	17

Consumers Energy Company [Member]

Financial Instruments

7: FINANCIAL INSTRUMENTS

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. Presented in the following table are the cost or carrying amounts and fair values of CMS Energy's and Consumers' long-term financial instruments:

In Millions
	June 30, 2011				December 31, 2010
	Cost or				Cost or
	Carrying				Carrying
	Amount		Fair Value		Amount		Fair Value
CMS Energy, including Consumers
Securities held to maturity	$	7	$	7	$	5	$	6
Securities available for sale		115		116		90		90
Notes receivable1		398		417		386		407
Long-term debt2		7,283		8,074		7,174		7,861
Consumers
Securities available for sale	$	82	$	107	$	64	$	90
Long-term debt3		4,507		4,892		4,525		4,891

1	Includes current portion of notes receivable of $13 million at June 30, 2011 and $11 million at December 31, 2010.
2	Includes current portion of long-term debt of $1,099 million at June 30, 2011 and $726 million at December 31, 2010.
3	Includes current portion of long-term debt of $338 million at June 30, 2011 and $37 million at December 31, 2010.

Notes receivable consist of EnerBank's fixed-rate installment loans. EnerBank estimates the fair value of these loans using a discounted cash flows technique that incorporates 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.

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. CMS Energy includes the value of the conversion features in estimating the fair value of its convertible debt, and incorporates, as appropriate, information on the market prices of CMS Energy common stock.

The effects of third-party credit enhancements are excluded from the fair value measurements of long-term debt. At June 30, 2011 and December 31, 2010, CMS Energy's long-term debt included $103 million principal amount that was supported by third-party credit enhancements. This entire principal amount was at Consumers.

Presented in the following table are CMS Energy's and Consumers' investment securities:

In Millions
	June 30, 2011								December 31, 2010
			Unrealized		Unrealized		Fair				Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value		Cost		Gains		Losses		Value
CMS Energy, including consumers
Available for sale
SERP
Mutual fund	$	89	$	1	$	—	$	90	$	62	$	—	$	—	$	62
State and municipal bonds		26		—		—		26		28		—		—		28
Held to maturity
Debt securities		7		—		—		7		5		1		—		6
Consumers
Available for sale
SERP
Mutual fund	$	58	$	1	$	—	$	59	$	39	$	—	$	—	$	39
State and municipal bonds		17		—		—		17		17		—		—		17
CMS Energy common stock		7		24		—		31		8		26		—		34

The mutual fund classified as available for sale is a short-term, fixed-income fund. During the six months ended June 30, 2011, CMS Energy contributed $27 million to the SERP, which included a contribution of $20 million by Consumers. The contributions were used to acquire additional shares in the mutual fund. 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 primarily of mortgage-backed securities held by EnerBank, as well as state and municipal bonds held by EnerBank.

Presented in the following table is a summary of the sales activity for CMS Energy's and Consumers' investment securities:

In Millions
	Three months ended				Six months ended
June 30	2011		2010		2011		2010
CMS Energy, including Consumers
Proceeds from sales of investment securities1	$	1	$	—	$	1	$	1
Consumers
Proceeds from sales of investment securities1	$	—	$	—	$	1	$	—

¹ 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.

Presented in the following table are the fair values of the SERP state and municipal bonds by contractual maturity at June 30, 2011:

In Millions
	CMS Energy,
	including Consumers		Consumers
Due one year or less	$	1	$	1
Due after one year through five years		10		7
Due after five years through ten years		12		7
Due after ten years		3		2
Total	$	26	$	17

XML



Derivative Instruments

6 Months Ended

Jun. 30, 2011

Derivative Instruments

8: DERIVATIVE INSTRUMENTS

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.

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 has been designated as an accounting hedge, 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.

Commodity Price Risk: 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:

• they do not have a notional amount (that is, a number of units specified in a derivative instrument, such as MWh of electricity or bcf of natural gas);

• they qualify for the normal purchases and sales exception; or

• there is not an active market for the commodity.

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 deferred as regulatory assets or liabilities and would not affect net income. No other subsidiaries of CMS Energy enter into coal purchase contracts.

Consumers also uses FTRs to manage price risk related to electricity transmission congestion. An FTR is a financial instrument that entitles its holder to receive compensation or requires its holder to remit payment for congestion-related transmission charges. FTRs are accounted for as derivatives. Under regulatory accounting, all changes in fair value associated with these instruments are deferred as regulatory assets or liabilities until the instruments are settled.

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, 2011, CMS ERM held the following derivative contracts:

• a forward contract for the physical sale of 608 GWh of electricity through 2015 on behalf of one of CMS Energy's non-utility generating plants;

• futures contracts through 2011 as an economic hedge of 22 percent of the generating plant's natural gas requirements needed to serve a steam sales contract, for a total of 0.1 bcf of natural gas;

• forward contracts to purchase 2.5 bcf and sell 4.2 bcf of natural gas through 2012 in CMS ERM's role as a marketer of natural gas for third-party producers; and

• an option to sell 305 GWh of electricity, and as an economic hedge, contracts to purchase 0.4 bcf of natural gas through 2011.

Presented in the following table are the fair values of CMS Energy's and Consumers' derivative instruments:

In Millions
	Derivative Assets					Derivative Liabilities
	Balance	Fair Value at				Balance	Fair Value at
	Sheet	June 30,		December 31,		Sheet	June 30,		December 31,
	Location	2011		2010		Location	2011		2010
CMS Energy, including Consumers
Derivatives not designated as hedging instruments
Commodity contracts1	Other assets	$	3	$	1	Other liabilities2	$	3	$	4
Consumers
Derivatives not designated as hedging instruments
Commodity contracts	Other assets	$	3	$	1	Other liabilities	$	—	$	—

1	Assets and liabilities are presented gross and exclude the impact of offsetting derivative assets and liabilities under master netting agreements, which was less than $1 million at June 30, 2011 and December 31, 2010.
2	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, 2011 and December 31, 2010. CMS Energy presents these liabilities net of these impacts on its consolidated balance sheets.

Presented in the following table is the effect on CMS Energy's and Consumers' consolidated statements of income of their derivatives not designated as hedging instruments:

In Millions
	Amount of Gain (Loss) on Derivatives Recognized in Income
Location of Gain (Loss) on	Three Months Ended June 30						Six Months Ended June 30
Derivatives Recognized in Income	2011			2010			2011		2010
CMS Energy, including Consumers
Commodity contracts
Operating revenue	$	(1	)	$	(2	)	$	—	$	3
Fuel for electric generation		—			—			—		2
Purchased and interchange power		—			—			—		1
Total CMS Energy	$	(1	)	$	(2	)	$	—	$	6

Consumers' gains on FTRs deferred as regulatory liabilities were $3 million for the three months ended June 30, 2011 and $1 million for the three months ended June 30, 2010. These amounts were $3 million for the six months ended June 30, 2011 and $1 million for the six months ended June 30, 2010.

CMS Energy's derivative liabilities subject to credit-risk-related contingent features were less than $1 million at June 30, 2011 and were $1 million at December 31, 2010.

Credit Risk: 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 its credit quality. Exposure to potential loss under each contract is monitored and action is taken when appropriate.

CMS ERM enters into contracts primarily with companies in the electric and gas industry. This industry concentration may have a positive or negative impact on CMS Energy's exposure to credit risk based on how similar changes in economic conditions, the weather, or other conditions affect these counterparties. CMS ERM reduces its credit risk exposure by using industry-standard agreements that allow for netting positive and negative exposures associated with the same counterparty. Typically, these agreements also allow each party to demand adequate assurance of future performance from the other party, when there is reason to do so.

At June 30, 2011, if counterparties within this industry concentration all failed to meet their contractual obligations, the loss to CMS Energy on contracts accounted for as derivatives would be less than $1 million.

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.

Consumers Energy Company [Member]

Derivative Instruments

8: DERIVATIVE INSTRUMENTS

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.

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 has been designated as an accounting hedge, 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.

Commodity Price Risk: 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:

• they do not have a notional amount (that is, a number of units specified in a derivative instrument, such as MWh of electricity or bcf of natural gas);

• they qualify for the normal purchases and sales exception; or

• there is not an active market for the commodity.

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 deferred as regulatory assets or liabilities and would not affect net income. No other subsidiaries of CMS Energy enter into coal purchase contracts.

Consumers also uses FTRs to manage price risk related to electricity transmission congestion. An FTR is a financial instrument that entitles its holder to receive compensation or requires its holder to remit payment for congestion-related transmission charges. FTRs are accounted for as derivatives. Under regulatory accounting, all changes in fair value associated with these instruments are deferred as regulatory assets or liabilities until the instruments are settled.

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, 2011, CMS ERM held the following derivative contracts:

• a forward contract for the physical sale of 608 GWh of electricity through 2015 on behalf of one of CMS Energy's non-utility generating plants;

• futures contracts through 2011 as an economic hedge of 22 percent of the generating plant's natural gas requirements needed to serve a steam sales contract, for a total of 0.1 bcf of natural gas;

• forward contracts to purchase 2.5 bcf and sell 4.2 bcf of natural gas through 2012 in CMS ERM's role as a marketer of natural gas for third-party producers; and

• an option to sell 305 GWh of electricity, and as an economic hedge, contracts to purchase 0.4 bcf of natural gas through 2011.

Presented in the following table are the fair values of CMS Energy's and Consumers' derivative instruments:

In Millions
	Derivative Assets					Derivative Liabilities
	Balance	Fair Value at				Balance	Fair Value at
	Sheet	June 30,		December 31,		Sheet	June 30,		December 31,
	Location	2011		2010		Location	2011		2010
CMS Energy, including Consumers
Derivatives not designated as hedging instruments
Commodity contracts1	Other assets	$	3	$	1	Other liabilities2	$	3	$	4
Consumers
Derivatives not designated as hedging instruments
Commodity contracts	Other assets	$	3	$	1	Other liabilities	$	—	$	—

1	Assets and liabilities are presented gross and exclude the impact of offsetting derivative assets and liabilities under master netting agreements, which was less than $1 million at June 30, 2011 and December 31, 2010.
2	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, 2011 and December 31, 2010. CMS Energy presents these liabilities net of these impacts on its consolidated balance sheets.

Presented in the following table is the effect on CMS Energy's and Consumers' consolidated statements of income of their derivatives not designated as hedging instruments:

In Millions
	Amount of Gain (Loss) on Derivatives Recognized in Income
Location of Gain (Loss) on	Three Months Ended June 30						Six Months Ended June 30
Derivatives Recognized in Income	2011			2010			2011		2010
CMS Energy, including Consumers
Commodity contracts
Operating revenue	$	(1	)	$	(2	)	$	—	$	3
Fuel for electric generation		—			—			—		2
Purchased and interchange power		—			—			—		1
Total CMS Energy	$	(1	)	$	(2	)	$	—	$	6

Consumers' gains on FTRs deferred as regulatory liabilities were $3 million for the three months ended June 30, 2011 and $1 million for the three months ended June 30, 2010. These amounts were $3 million for the six months ended June 30, 2011 and $1 million for the six months ended June 30, 2010.

CMS Energy's derivative liabilities subject to credit-risk-related contingent features were less than $1 million at June 30, 2011 and were $1 million at December 31, 2010.

Credit Risk: 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 its credit quality. Exposure to potential loss under each contract is monitored and action is taken when appropriate.

CMS ERM enters into contracts primarily with companies in the electric and gas industry. This industry concentration may have a positive or negative impact on CMS Energy's exposure to credit risk based on how similar changes in economic conditions, the weather, or other conditions affect these counterparties. CMS ERM reduces its credit risk exposure by using industry-standard agreements that allow for netting positive and negative exposures associated with the same counterparty. Typically, these agreements also allow each party to demand adequate assurance of future performance from the other party, when there is reason to do so.

At June 30, 2011, if counterparties within this industry concentration all failed to meet their contractual obligations, the loss to CMS Energy on contracts accounted for as derivatives would be less than $1 million.

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.

XML



Notes Receivable

6 Months Ended

Jun. 30, 2011

Notes Receivable

Notes Receivable

9: NOTES RECEIVABLE

EnerBank provides unsecured consumer installment loans for financing home improvements. These loans totaled $398 million, net of an allowance for loan losses of $5 million, at June 30, 2011, and $386 million, net of an allowance for loan losses of $5 million, at December 31, 2010. At June 30, 2011, $13 million of EnerBank's loans were classified as current notes receivable and $385 million were classified as non-current notes receivable on CMS Energy's consolidated balance sheets. At December 31, 2010, $11 million of EnerBank's loans were classified as current notes receivable and $375 million were classified as non-current notes receivable on CMS Energy's consolidated balance sheets.

The allowance for loan losses is a valuation allowance to reflect estimated credit losses. The allowance is increased by the provision for loan losses and decreased by loan charge-offs net of recoveries. Management estimates the allowance balance required by taking into consideration historical loan loss experience, the nature and volume of the portfolio, economic conditions, and other factors. Loans losses are charged against the allowance when the loss is confirmed, but no later than the point at which a loan becomes 120 days past due.

Presented in the following table are the changes in the allowance for loan losses:

In Millions
	Three months			Six months
	ended			ended
June 30	2011			2011
Allowance for loan losses, at beginning of period	$	5		$	5
Charge-offs		(1	)		(2	)
Recoveries		—			—
Provision for loan losses		1			2
Allowance for loan losses, at end of period	$	5		$	5

Loans that are 30 days or more past due are considered delinquent. Presented in the following table is the delinquency status of EnerBank's consumer loans at June 30, 2011:

In Millions
Past Due		Past Due		Past Due		Total				Total
30-59 Days		60-89 Days		Over 90 Days		Delinquent		Current		Outstanding
$	1	$	1	$	—	$	2	$	396	$	398

XML



Retirement Benefits

6 Months Ended

Jun. 30, 2011

Retirement Benefits

10: RETIREMENT BENEFITS

CMS Energy and Consumers provide pension, OPEB, and other retirement benefits to employees.

Presented in the following tables are the costs and other changes in plan assets and benefit obligations incurred in CMS Energy's and Consumers' retirement benefits plans:

In Millions
	Pension
	Three Months Ended						Six Months Ended
June 30	2011			2010			2011			2010
CMS Energy, including Consumers
Net periodic pension cost
Service cost	$	12		$	11		$	24		$	22
Interest expense		25			25			50			49
Expected return on plan assets		(28	)		(23	)		(56	)		(46	)
Amortization of:
Net loss		15			13			31			26
Prior service cost		2			1			3			3
Net periodic pension cost	$	26		$	27		$	52		$	54
Regulatory adjustment1		—			21			—			23
Net periodic pension cost after regulatory adjustment	$	26		$	48		$	52		$	77

In Millions
	Pension
	Three Months Ended						Six Months Ended
June 30	2011			2010			2011			2010
Consumers
Net periodic pension cost
Service cost	$	11		$	10		$	23		$	21
Interest expense		25			24			49			48
Expected return on plan assets		(28	)		(22	)		(55	)		(45	)
Amortization of:
Net loss		16			13			31			25
Prior service cost		2			1			3			3
Net periodic pension cost	$	26		$	26		$	51		$	52
Regulatory adjustment1		—			21			—			23
Net periodic pension cost after regulatory adjustment	$	26		$	47		$	51		$	75

¹ Regulatory adjustments are the differences between amounts included in rates and the periodic benefit cost calculated. These regulatory adjustments were offset by surcharge revenues, resulting in no impact to net income for the periods presented.

CMS Energy's and Consumers' expected long-term rate of return on Pension Plan assets is eight percent. For the twelve months ended June 30, 2011, the actual return on Pension Plan assets was 19.5 percent, and for the twelve months ended June 30, 2010 the actual return was 14.2 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.

In Millions
	OPEB
	Three Months Ended						Six Months Ended
June 30	2011			2010			2011			2010
CMS Energy, including Consumers
Net periodic OPEB cost
Service cost	$	6		$	6		$	13		$	13
Interest expense		19			20			38			41
Expected return on plan assets		(16	)		(14	)		(33	)		(29	)
Amortization of:
Net loss		8			8			16			16
Prior service cost		(5	)		(5	)		(10	)		(7	)
Net periodic OBEB cost	$	12		$	15		$	24		$	34
Regulatory adjustment1		—			6			—			7
Net periodic OPEB cost after regulatory adjustment	$	12		$	21		$	24		$	41
Consumers
Net periodic OPEB cost
Service cost	$	7		$	6		$	13		$	13
Interest expense		19			20			37			40
Expected return on plan assets		(16	)		(14	)		(31	)		(28	)
Amortization of:
Net loss		8			8			16			16
Prior service cost		(5	)		(4	)		(10	)		(6	)
Net periodic OPEB cost	$	13		$	16		$	25		$	35
Regulatory adjustment1		—			6			—			7
Net periodic OPEB cost after regulatory adjustment	$	13		$	22		$	25		$	42

¹ Regulatory adjustments are the differences between amounts included in rates and the periodic benefit cost calculated. These regulatory adjustments were offset by surcharge revenues, resulting in no impact to net income for the periods presented.

Consumers Energy Company [Member]

Retirement Benefits

10: RETIREMENT BENEFITS

CMS Energy and Consumers provide pension, OPEB, and other retirement benefits to employees.

Presented in the following tables are the costs and other changes in plan assets and benefit obligations incurred in CMS Energy's and Consumers' retirement benefits plans:

In Millions
	Pension
	Three Months Ended						Six Months Ended
June 30	2011			2010			2011			2010
CMS Energy, including Consumers
Net periodic pension cost
Service cost	$	12		$	11		$	24		$	22
Interest expense		25			25			50			49
Expected return on plan assets		(28	)		(23	)		(56	)		(46	)
Amortization of:
Net loss		15			13			31			26
Prior service cost		2			1			3			3
Net periodic pension cost	$	26		$	27		$	52		$	54
Regulatory adjustment1		—			21			—			23
Net periodic pension cost after regulatory adjustment	$	26		$	48		$	52		$	77

In Millions
	Pension
	Three Months Ended						Six Months Ended
June 30	2011			2010			2011			2010
Consumers
Net periodic pension cost
Service cost	$	11		$	10		$	23		$	21
Interest expense		25			24			49			48
Expected return on plan assets		(28	)		(22	)		(55	)		(45	)
Amortization of:
Net loss		16			13			31			25
Prior service cost		2			1			3			3
Net periodic pension cost	$	26		$	26		$	51		$	52
Regulatory adjustment1		—			21			—			23
Net periodic pension cost after regulatory adjustment	$	26		$	47		$	51		$	75

¹ Regulatory adjustments are the differences between amounts included in rates and the periodic benefit cost calculated. These regulatory adjustments were offset by surcharge revenues, resulting in no impact to net income for the periods presented.

CMS Energy's and Consumers' expected long-term rate of return on Pension Plan assets is eight percent. For the twelve months ended June 30, 2011, the actual return on Pension Plan assets was 19.5 percent, and for the twelve months ended June 30, 2010 the actual return was 14.2 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.

In Millions
	OPEB
	Three Months Ended						Six Months Ended
June 30	2011			2010			2011			2010
CMS Energy, including Consumers
Net periodic OPEB cost
Service cost	$	6		$	6		$	13		$	13
Interest expense		19			20			38			41
Expected return on plan assets		(16	)		(14	)		(33	)		(29	)
Amortization of:
Net loss		8			8			16			16
Prior service cost		(5	)		(5	)		(10	)		(7	)
Net periodic OBEB cost	$	12		$	15		$	24		$	34
Regulatory adjustment1		—			6			—			7
Net periodic OPEB cost after regulatory adjustment	$	12		$	21		$	24		$	41
Consumers
Net periodic OPEB cost
Service cost	$	7		$	6		$	13		$	13
Interest expense		19			20			37			40
Expected return on plan assets		(16	)		(14	)		(31	)		(28	)
Amortization of:
Net loss		8			8			16			16
Prior service cost		(5	)		(4	)		(10	)		(6	)
Net periodic OPEB cost	$	13		$	16		$	25		$	35
Regulatory adjustment1		—			6			—			7
Net periodic OPEB cost after regulatory adjustment	$	13		$	22		$	25		$	42

¹ Regulatory adjustments are the differences between amounts included in rates and the periodic benefit cost calculated. These regulatory adjustments were offset by surcharge revenues, resulting in no impact to net income for the periods presented.

XML



Consolidated Statements of Income (USD $) In Millions, except Per Share data	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Operating Revenue	$ 1,364	$ 1,340	$ 3,419	$ 3,307
Operating Expenses
Fuel for electric generation	153	151	305	289
Purchased and interchange power	303	314	603	592
Purchased power - related parties	20	21	41	42
Cost of gas sold	220	178	988	956
Maintenance and other operating expenses	288	296	567	571
Depreciation and amortization	122	131	284	303
General taxes	51	41	118	107
Insurance settlement	0	(50)	0	(50)
Gain on asset sales, net	0	(4)	0	(4)
Total operating expenses	1,157	1,078	2,906	2,806
Operating Income	207	262	513	501
Other Income (Expense)
Interest income	2	4	4	9
Allowance for equity funds used during construction	2	2	3	3
Income from equity method investees	2	2	6	5
Other income	5	9	9	18
Other expense	(3)	(3)	(5)	(5)
Total other income	8	14	17	30
Interest Charges
Interest on long-term debt	99	98	199	196
Other interest expense	6	20	12	28
Allowance for borrowed funds used during construction	(1)	(1)	(2)	(2)
Total interest charges	104	117	209	222
Income Before Income Taxes	111	159	321	309
Income Tax Expense	10	59	87	120
Income from Continuing Operations	101	100	234	189
Income (Loss) From Discontinued Operations, Net of Tax	0	(16)	2	(17)
Net Income	101	84	236	172
Income Attributable to Noncontrolling Interests	1	2	1	2
Net Income Attributable to CMS Energy	100	82	235	170
Preferred Stock Dividends	0	2	0	5
Net Income Available to Common Stockholders	100	80	235	165
Net Income Attributable to Common Stockholders
Amounts Attributable to Continuing Operations	100	96	233	182
Amounts Attributable to Discontinued Operations	0	(16)	2	(17)
Net Income Available to Common Stockholders	100	80	235	165
Income Attributable to Noncontrolling Interests
Amounts Attributable to Continuing Operations	1	2	1	2
Loss from Discontinued Operations	0	0	0	0
Income Attributable to Noncontrolling Interests	1	2	1	2
Basic Earnings Per Average Common Share
Basic Earnings from Continuing Operations	$ 0.40	$ 0.42	$ 0.93	$ 0.80
Basic Earnings (Loss) from Discontinued Operations	$ 0.00	$ (0.07)	$ 0.01	$ (0.08)
Basic Earnings Attributable to Common Stock	$ 0.40	$ 0.35	$ 0.94	$ 0.72
Diluted Earnings Per Average Common Share
Diluted Earnings from Continuing Operations	$ 0.38	$ 0.39	$ 0.89	$ 0.74
Diluted Earnings (Loss) from Discontinued Operations	$ 0.00	$ (0.07)	$ 0.01	$ (0.07)
Diluted Earnings Attributable to Common Stock	$ 0.38	$ 0.32	$ 0.90	$ 0.67
Dividends Declared Per Common Share	$ 0.21	$ 0.15	$ 0.42	$ 0.3
Consumers Energy Company [Member]
Operating Revenue	1,303	1,276	3,291	3,166
Operating Expenses
Fuel for electric generation	138	125	267	250
Purchased and interchange power	299	310	592	587
Purchased power - related parties	19	20	40	41
Cost of gas sold	197	163	950	909
Maintenance and other operating expenses	273	281	538	543
Depreciation and amortization	121	130	282	301
General taxes	49	40	115	104
Total operating expenses	1,096	1,069	2,784	2,735
Operating Income	207	207	507	431
Other Income (Expense)
Interest income	2	4	4	9
Allowance for equity funds used during construction	2	2	3	3
Other income	5	9	13	18
Other expense	(3)	(3)	(5)	(5)
Total other income	6	12	15	25
Interest Charges
Interest on long-term debt	63	60	126	123
Other interest expense	5	19	9	25
Allowance for borrowed funds used during construction	(1)	(1)	(2)	(2)
Total interest charges	67	78	133	146
Income Before Income Taxes	146	141	389	310
Income Tax Expense	54	53	144	115
Net Income	92	88	245	195
Preferred Stock Dividends	1	1	1	1
Net Income Available to Common Stockholders	91	87	244	194
Net Income Attributable to Common Stockholders
Net Income Available to Common Stockholders	$ 91	$ 87	$ 244	$ 194

XML



Income Taxes

6 Months Ended

Jun. 30, 2011

Income Taxes

11: INCOME TAXES

Presented in the following table is the difference between the effective income tax rate from continuing operations, excluding noncontrolling interests, and the statutory U.S. federal income tax rate:

Six Months Ended June 30	2011			2010
CMS Energy, Including Consumers
U.S. federal income tax rate		35.0	%		35.0	%
Increase (decrease) in income taxes from:
MCIT law change, net of federal expense		(9.9	)		—
State and local income taxes, net of federal benefit		3.5			4.0
Medicare Part D exempt income, net of law change		(1.1	)		—
Income tax credit amortization		(0.6	)		(0.6	)
Other, net		0.3			0.7
Effective income tax rate		27.2	%		39.1	%
Consumers
U.S. federal income tax rate		35.0	%		35.0	%
Increase (decrease) in income taxes from:
State and local income taxes, net of federal benefit		3.4			3.5
Medicare Part D exempt income, net of law change		(0.8	)		(1.0	)
Plant basis differences		0.2			—
Income tax credit amortization		(0.5	)		(0.5	)
Other, net		(0.3	)		0.1
Effective income tax rate		37.0	%		37.1	%

CMS Energy's effective tax rate for the three months and the six months ended June 30, 2011, was materially reduced due to a one-time  non-cash reduction in tax expense resulting from a change in Michigan tax law.  In May 2011, Michigan enacted the MCIT, effective January 1, 2012. The MCIT, a simplified six percent corporate income tax, will replace the MBT, which is a complex multi-part business tax. Both the MBT and the MCIT are income taxes for financial reporting purposes, for which deferred income tax assets and liabilities are recorded. CMS Energy and Consumers remeasured their Michigan deferred income tax assets and liabilities at June 30, 2011 to reflect this change in law. Unlike the MBT, the MCIT does not allow future tax deductions to offset the book-tax differences that existed upon enactment of the tax. Due primarily to the elimination of these future tax deductions, Consumers eliminated $134 million of net deferred tax assets associated with its utility book-tax temporary differences, recognizing a $134 million regulatory asset (not including the effects of income tax gross-ups), and in addition to the amounts related to Consumers, CMS Energy eliminated $32 million of net deferred tax liabilities associated with its non-utility book-tax temporary differences, recognizing a $32 million deferred income tax benefit.

For the six months ended June 30, 2010, CMS Energy recognized deferred tax expense of $3 million to reflect the enactment of the Health Care Acts. The law change prospectively repealed the tax deduction for the portion of the health care costs reimbursed by the Medicare Part D subsidy for taxable years beginning after December 31, 2012.

Consumers Energy Company [Member]

Income Taxes

11: INCOME TAXES

Presented in the following table is the difference between the effective income tax rate from continuing operations, excluding noncontrolling interests, and the statutory U.S. federal income tax rate:

Six Months Ended June 30	2011			2010
CMS Energy, Including Consumers
U.S. federal income tax rate		35.0	%		35.0	%
Increase (decrease) in income taxes from:
MCIT law change, net of federal expense		(9.9	)		—
State and local income taxes, net of federal benefit		3.5			4.0
Medicare Part D exempt income, net of law change		(1.1	)		—
Income tax credit amortization		(0.6	)		(0.6	)
Other, net		0.3			0.7
Effective income tax rate		27.2	%		39.1	%
Consumers
U.S. federal income tax rate		35.0	%		35.0	%
Increase (decrease) in income taxes from:
State and local income taxes, net of federal benefit		3.4			3.5
Medicare Part D exempt income, net of law change		(0.8	)		(1.0	)
Plant basis differences		0.2			—
Income tax credit amortization		(0.5	)		(0.5	)
Other, net		(0.3	)		0.1
Effective income tax rate		37.0	%		37.1	%

CMS Energy's effective tax rate for the three months and the six months ended June 30, 2011, was materially reduced due to a one-time  non-cash reduction in tax expense resulting from a change in Michigan tax law.  In May 2011, Michigan enacted the MCIT, effective January 1, 2012. The MCIT, a simplified six percent corporate income tax, will replace the MBT, which is a complex multi-part business tax. Both the MBT and the MCIT are income taxes for financial reporting purposes, for which deferred income tax assets and liabilities are recorded. CMS Energy and Consumers remeasured their Michigan deferred income tax assets and liabilities at June 30, 2011 to reflect this change in law. Unlike the MBT, the MCIT does not allow future tax deductions to offset the book-tax differences that existed upon enactment of the tax. Due primarily to the elimination of these future tax deductions, Consumers eliminated $134 million of net deferred tax assets associated with its utility book-tax temporary differences, recognizing a $134 million regulatory asset (not including the effects of income tax gross-ups), and in addition to the amounts related to Consumers, CMS Energy eliminated $32 million of net deferred tax liabilities associated with its non-utility book-tax temporary differences, recognizing a $32 million deferred income tax benefit.

For the six months ended June 30, 2010, CMS Energy recognized deferred tax expense of $3 million to reflect the enactment of the Health Care Acts. The law change prospectively repealed the tax deduction for the portion of the health care costs reimbursed by the Medicare Part D subsidy for taxable years beginning after December 31, 2012.

XML



Reportable Segments

6 Months Ended

Jun. 30, 2011

Reportable Segments

12: REPORTABLE SEGMENTS

Reportable segments consist of business units defined by the products and services they offer. CMS Energy and Consumers evaluate the performance of each segment based on its contribution to net income available to CMS Energy's common stockholders. The reportable segments for CMS Energy and Consumers are:

CMS Energy:

• electric utility, consisting of regulated activities associated with the generation and distribution of electricity in Michigan;

• gas utility, consisting of regulated activities associated with the transportation, storage, and distribution of natural gas in Michigan;

• enterprises, consisting of various subsidiaries engaging primarily in domestic independent power production; and

• other, including EnerBank, corporate interest and other expenses, and discontinued operations.

Consumers:

• electric utility, consisting of regulated activities associated with the generation and distribution of electricity in Michigan;

• gas utility, consisting of regulated activities associated with the transportation, storage, and distribution of natural gas in Michigan; and

• other, including a consolidated special-purpose entity for the sale of accounts receivable.

Presented in the following tables is financial information by reportable segment:

In Millions
	Three Months Ended						Six Months Ended
June 30	2011			2010			2011			2010
Operating Revenue
CMS Energy, including Consumers
Electric utility	$	949		$	975		$	1,846		$	1,813
Gas utility		354			301			1,445			1,353
Enterprises		50			55			105			123
Other		11			9			23			18
Total Operating Revenue — CMS Energy	$	1,364		$	1,340		$	3,419		$	3,307
Consumers
Electric utility	$	949		$	975		$	1,846		$	1,813
Gas utility		354			301			1,445			1,353
Total Operating Revenue — Consumers	$	1,303		$	1,276		$	3,291		$	3,166
Net Income Available to Common Stockholders
CMS Energy, including Consumers
Electric utility	$	85		$	86		$	150		$	127
Gas utility		5			1			93			67
Enterprises		29			33			32			42
Discontinued operations		—			(16	)		2			(17	)
Other		(19	)		(24	)		(42	)		(54	)
Total Net Income Available to Common Stockholders — CMS Energy	$	100		$	80		$	235		$	165
Consumers
Electric utility	$	85		$	86		$	150		$	127
Gas utility		5			1			93			67
Other		1			—			1			—
Total Net Income Available to Common Stockholder — Consumers	$	91		$	87		$	244		$	194

In Millions
	June 30, 2011		December 31, 2010
Plant, Property, and Equipment, Gross
CMS Energy, including Consumers
Electric utility1	$	10,184	$	9,944
Gas utility1		4,086		4,063
Enterprises		106		102
Other		37		36
Total Plant, Property, and Equipment, Gross — CMS Energy	$	14,413	$	14,145
Consumers
Electric utility1	$	10,184	$	9,944
Gas utility1		4,086		4,063
Other		15		15
Total Plant, Property, and Equipment, Gross — Consumers	$	14,285	$	14,022
Assets
CMS Energy, including Consumers
Electric utility1	$	9,831	$	9,321
Gas utility1		4,581		4,614
Enterprises		175		191
Other		1,358		1,490
Total Assets — CMS Energy	$	15,945	$	15,616
Consumers
Electric utility1	$	9,831	$	9,321
Gas utility1		4,581		4,614
Other		689		904
Total Assets — Consumers	$	15,101	$	14,839

¹ Amounts include a portion of Consumers' other common assets attributable to both the electric and the gas utility businesses.

76

Consumers Energy Company [Member]

Reportable Segments

12: REPORTABLE SEGMENTS

Reportable segments consist of business units defined by the products and services they offer. CMS Energy and Consumers evaluate the performance of each segment based on its contribution to net income available to CMS Energy's common stockholders. The reportable segments for CMS Energy and Consumers are:

CMS Energy:

• electric utility, consisting of regulated activities associated with the generation and distribution of electricity in Michigan;

• gas utility, consisting of regulated activities associated with the transportation, storage, and distribution of natural gas in Michigan;

• enterprises, consisting of various subsidiaries engaging primarily in domestic independent power production; and

• other, including EnerBank, corporate interest and other expenses, and discontinued operations.

Consumers:

• electric utility, consisting of regulated activities associated with the generation and distribution of electricity in Michigan;

• gas utility, consisting of regulated activities associated with the transportation, storage, and distribution of natural gas in Michigan; and

• other, including a consolidated special-purpose entity for the sale of accounts receivable.

Presented in the following tables is financial information by reportable segment:

In Millions
	Three Months Ended						Six Months Ended
June 30	2011			2010			2011			2010
Operating Revenue
CMS Energy, including Consumers
Electric utility	$	949		$	975		$	1,846		$	1,813
Gas utility		354			301			1,445			1,353
Enterprises		50			55			105			123
Other		11			9			23			18
Total Operating Revenue — CMS Energy	$	1,364		$	1,340		$	3,419		$	3,307
Consumers
Electric utility	$	949		$	975		$	1,846		$	1,813
Gas utility		354			301			1,445			1,353
Total Operating Revenue — Consumers	$	1,303		$	1,276		$	3,291		$	3,166
Net Income Available to Common Stockholders
CMS Energy, including Consumers
Electric utility	$	85		$	86		$	150		$	127
Gas utility		5			1			93			67
Enterprises		29			33			32			42
Discontinued operations		—			(16	)		2			(17	)
Other		(19	)		(24	)		(42	)		(54	)
Total Net Income Available to Common Stockholders — CMS Energy	$	100		$	80		$	235		$	165
Consumers
Electric utility	$	85		$	86		$	150		$	127
Gas utility		5			1			93			67
Other		1			—			1			—
Total Net Income Available to Common Stockholder — Consumers	$	91		$	87		$	244		$	194

In Millions
	June 30, 2011		December 31, 2010
Plant, Property, and Equipment, Gross
CMS Energy, including Consumers
Electric utility1	$	10,184	$	9,944
Gas utility1		4,086		4,063
Enterprises		106		102
Other		37		36
Total Plant, Property, and Equipment, Gross — CMS Energy	$	14,413	$	14,145
Consumers
Electric utility1	$	10,184	$	9,944
Gas utility1		4,086		4,063
Other		15		15
Total Plant, Property, and Equipment, Gross — Consumers	$	14,285	$	14,022
Assets
CMS Energy, including Consumers
Electric utility1	$	9,831	$	9,321
Gas utility1		4,581		4,614
Enterprises		175		191
Other		1,358		1,490
Total Assets — CMS Energy	$	15,945	$	15,616
Consumers
Electric utility1	$	9,831	$	9,321
Gas utility1		4,581		4,614
Other		689		904
Total Assets — Consumers	$	15,101	$	14,839

¹ Amounts include a portion of Consumers' other common assets attributable to both the electric and the gas utility businesses.

XML



Notes Receivable (Policy)

6 Months Ended

Jun. 30, 2011

Notes Receivable

Allowance for Loan Losses Policy

The allowance for loan losses is a valuation allowance to reflect estimated credit losses. The allowance is increased by the provision for loan losses and decreased by loan charge-offs net of recoveries. Management estimates the allowance balance required by taking into consideration historical loan loss experience, the nature and volume of the portfolio, economic conditions, and other factors. Loans losses are charged against the allowance when the loss is confirmed, but no later than the point at which a loan becomes 120 days past due.

XML



Fair Value Measurements (Tables)

3 Months Ended

6 Months Ended

12 Months Ended

Jun. 30, 2011

Jun. 30, 2011

Dec. 31, 2010

Assets and Liabilities Measured at Fair Value on a Recurring Basis

In Millions
	Total		Level 1		Level 2		Level 3
CMS Energy, including Consumers
Assets
Cash equivalents	$	875	$	875	$	—	$	—
Restricted cash equivalents		15		15		—		—
Nonqualified deferred compensation plan assets		4		4		—		—
SERP
Mutual fund		90		90		—		—
State and municipal bonds		26		—		26		—
Derivative instruments
Commodity contracts1		3		—		—		3
Total2	$	1,013	$	984	$	26	$	3
Liabilities
Nonqualified deferred compensation plan liabilities	$	4	$	4	$	—	$	—
Derivative instruments
Commodity contracts3		3		—		—		3
Total4	$	7	$	4	$	—	$	3
Consumers
Assets
Cash equivalents	$	667	$	667	$	—	$	—
Restricted cash equivalents		14		14		—		—
CMS Energy common stock		31		31		—		—
Nonqualified deferred compensation plan assets		3		3		—		—
SERP
Mutual fund		59		59		—		—
State and municipal bonds		17		—		17		—
Derivative instruments
Commodity contracts		3		—		—		3
Total5	$	794	$	774	$	17	$	3
Liabilities
Nonqualified deferred compensation plan liabilities	$	3	$	3	$	—	$	—
Total	$	3	$	3	$	—	$	—

¹ This amount is gross and excludes the impact of offsetting derivative assets and liabilities under master netting arrangements, which was less than $1 million at June 30, 2011.

2	At June 30, 2011, CMS Energy's assets classified as Level 3 represented less than one percent of CMS Energy's total assets measured at fair value.
3	This amount is gross and excludes the impact of offsetting derivative assets and liabilities under master netting arrangements and offsetting cash margin deposits paid by CMS ERM to other parties, which was less than $1 million at June 30, 2011.
4	At June 30, 2011, CMS Energy's liabilities classified as Level 3 represented 43 percent of CMS Energy's total liabilities measured at fair value. The Level 3 liabilities consisted primarily of an electricity sales agreement held by CMS ERM.
5	At June 30, 2011, Consumers' assets classified as Level 3 represented less than one percent of Consumers' total assets measured at fair value.

In Millions
	Total		Level 1		Level 2		Level 3
CMS Energy, including Consumers
Assets
Cash equivalents	$	183	$	183	$	—	$	—
Restricted cash equivalents		6		6		—		—
Nonqualified deferred compensation plan assets		6		6		—		—
SERP
Cash equivalents		1		1		—		—
Mutual fund		62		62		—		—
State and municipal bonds		28		—		28		—
Derivative instruments
Commodity contracts1		1		—		—		1
Total2	$	287	$	258	$	28	$	1
Liabilities
Nonqualified deferred compensation plan liabilities	$	6	$	6	$	—	$	—
Derivative instruments
Commodity contracts3		4		—		—		4
Total4	$	10	$	6	$	—	$	4
Consumers
Assets
Cash equivalents	$	19	$	19	$	—	$	—
Restricted cash equivalents		6		6		—		—
CMS Energy common stock		34		34		—		—
Nonqualified deferred compensation plan assets		4		4		—		—
SERP
Cash equivalents		1		1		—		—
Mutual fund		39		39		—		—
State and municipal bonds		17		—		17		—
Derivative instruments
Commodity contracts		1		—		—		1
Total5	$	121	$	103	$	17	$	1
Liabilities
Nonqualified deferred compensation plan liabilities	$	4	$	4	$	—	$	—
Total	$	4	$	4	$	—	$	—

¹ This amount is gross and excludes the impact of offsetting derivative assets and liabilities under master netting arrangements, which was less than $1 million at December 31, 2010.

2	At December 31, 2010, CMS Energy's assets classified as Level 3 represented less than one percent of CMS Energy's total assets measured at fair value.
3	This amount is gross and excludes the impact of offsetting derivative assets and liabilities under master netting arrangements and offsetting cash margin deposits paid by CMS ERM to other parties, which was less than $1 million at December 31, 2010.
4	At December 31, 2010, CMS Energy's liabilities classified as Level 3 represented 40 percent of CMS Energy's total liabilities measured at fair value. The Level 3 liabilities consisted primarily of an electricity sales agreement held by CMS ERM.
5	At December 31, 2010, Consumers' assets classified as Level 3 represented one percent of Consumers' total assets measured at fair value.

Assets and Liabilities Measured at Fair Value on a Recurring Basis using Significant Level 3 Inputs

In Millions
Three Months Ended June 30	2011			2010
Balance at April 1	$	(2	)	$	(3	)
Total losses included in earnings1		(1	)		(2	)
Total gains offset through regulatory accounting		3			1
Settlements		—			(1	)
Balance at June 30	$	—		$	(5	)
Unrealized losses included in earnings for the three months ended June 30 relating to assets and liabilities still held at June 301	$	—		$	(2	)

In Millions
Six Months Ended June 30	2011			2010
Balance at January 1	$	(3	)	$	(8	)
Total gains included in earnings1		—			2
Total gains offset through regulatory accounting		3			1
Settlements		—			—
Balance at June 30	$	—		$	(5	)
Unrealized gains included in earnings for the six months ended June 30 relating to assets and liabilities still held at June 301	$	1		$	2

¹ 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.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

In Millions
	Level 1		Level 2		Level 3		Losses
CMS Energy, including Consumers
Assets held for sale	$	—	$	—	$	7	$	(4	)

Consumers Energy Company [Member]

Assets and Liabilities Measured at Fair Value on a Recurring Basis

In Millions
	Total		Level 1		Level 2		Level 3
CMS Energy, including Consumers
Assets
Cash equivalents	$	875	$	875	$	—	$	—
Restricted cash equivalents		15		15		—		—
Nonqualified deferred compensation plan assets		4		4		—		—
SERP
Mutual fund		90		90		—		—
State and municipal bonds		26		—		26		—
Derivative instruments
Commodity contracts1		3		—		—		3
Total2	$	1,013	$	984	$	26	$	3
Liabilities
Nonqualified deferred compensation plan liabilities	$	4	$	4	$	—	$	—
Derivative instruments
Commodity contracts3		3		—		—		3
Total4	$	7	$	4	$	—	$	3
Consumers
Assets
Cash equivalents	$	667	$	667	$	—	$	—
Restricted cash equivalents		14		14		—		—
CMS Energy common stock		31		31		—		—
Nonqualified deferred compensation plan assets		3		3		—		—
SERP
Mutual fund		59		59		—		—
State and municipal bonds		17		—		17		—
Derivative instruments
Commodity contracts		3		—		—		3
Total5	$	794	$	774	$	17	$	3
Liabilities
Nonqualified deferred compensation plan liabilities	$	3	$	3	$	—	$	—
Total	$	3	$	3	$	—	$	—

¹ This amount is gross and excludes the impact of offsetting derivative assets and liabilities under master netting arrangements, which was less than $1 million at June 30, 2011.

2	At June 30, 2011, CMS Energy's assets classified as Level 3 represented less than one percent of CMS Energy's total assets measured at fair value.
3	This amount is gross and excludes the impact of offsetting derivative assets and liabilities under master netting arrangements and offsetting cash margin deposits paid by CMS ERM to other parties, which was less than $1 million at June 30, 2011.
4	At June 30, 2011, CMS Energy's liabilities classified as Level 3 represented 43 percent of CMS Energy's total liabilities measured at fair value. The Level 3 liabilities consisted primarily of an electricity sales agreement held by CMS ERM.
5	At June 30, 2011, Consumers' assets classified as Level 3 represented less than one percent of Consumers' total assets measured at fair value.

In Millions
	Total		Level 1		Level 2		Level 3
CMS Energy, including Consumers
Assets
Cash equivalents	$	183	$	183	$	—	$	—
Restricted cash equivalents		6		6		—		—
Nonqualified deferred compensation plan assets		6		6		—		—
SERP
Cash equivalents		1		1		—		—
Mutual fund		62		62		—		—
State and municipal bonds		28		—		28		—
Derivative instruments
Commodity contracts1		1		—		—		1
Total2	$	287	$	258	$	28	$	1
Liabilities
Nonqualified deferred compensation plan liabilities	$	6	$	6	$	—	$	—
Derivative instruments
Commodity contracts3		4		—		—		4
Total4	$	10	$	6	$	—	$	4
Consumers
Assets
Cash equivalents	$	19	$	19	$	—	$	—
Restricted cash equivalents		6		6		—		—
CMS Energy common stock		34		34		—		—
Nonqualified deferred compensation plan assets		4		4		—		—
SERP
Cash equivalents		1		1		—		—
Mutual fund		39		39		—		—
State and municipal bonds		17		—		17		—
Derivative instruments
Commodity contracts		1		—		—		1
Total5	$	121	$	103	$	17	$	1
Liabilities
Nonqualified deferred compensation plan liabilities	$	4	$	4	$	—	$	—
Total	$	4	$	4	$	—	$	—

¹ This amount is gross and excludes the impact of offsetting derivative assets and liabilities under master netting arrangements, which was less than $1 million at December 31, 2010.

2	At December 31, 2010, CMS Energy's assets classified as Level 3 represented less than one percent of CMS Energy's total assets measured at fair value.
3	This amount is gross and excludes the impact of offsetting derivative assets and liabilities under master netting arrangements and offsetting cash margin deposits paid by CMS ERM to other parties, which was less than $1 million at December 31, 2010.
4	At December 31, 2010, CMS Energy's liabilities classified as Level 3 represented 40 percent of CMS Energy's total liabilities measured at fair value. The Level 3 liabilities consisted primarily of an electricity sales agreement held by CMS ERM.
5	At December 31, 2010, Consumers' assets classified as Level 3 represented one percent of Consumers' total assets measured at fair value.

Assets and Liabilities Measured at Fair Value on a Recurring Basis using Significant Level 3 Inputs

In Millions
Three Months Ended June 30	2011		2010
Balance at April 1	$	—	$	—
Total gains offset through regulatory accounting		3		1
Settlements		—		(1	)
Balance at June 30	$	3	$	—

In Millions
Six Months Ended June 30	2011			2010
Balance at January 1	$	1		$	—
Total gains offset through regulatory accounting		3			1
Settlements		(1	)		(1	)
Balance at June 30	$	3		$	—

XML



Contingencies and Commitments (Tables)

6 Months Ended

Jun. 30, 2011

Contingencies and Commitments

Guarantees

In Millions
	Issue	Expiration	Maximum			Carrying
Guarantee Description	Date	Date	Obligation			Amount
Indemnity obligations from asset sales and other agreements	Various	Various through June 2022	$	512	1	$	21
Guarantees and put options2	Various	Various through March 2021		33			1

1

The majority of this amount arises from stock and asset sale 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.

2

At June 30, 2011, 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.

XML



Regulatory Matters (Tables) (Consumers Energy Company [Member])

6 Months Ended

Jun. 30, 2011

Electric Rate Case [Member]

Components of Requested Annual Rate Increase

In Millions
Components of the increase in revenue
Investment in rate base	$	81
Recovery of depreciation and property taxes		70
Impact of sales declines		50
Reduced operating and maintenance costs		(4	)
Cost of capital		(2	)
Total	$	195

Power Supply Cost Recover (PSCR) [Member]

Reconciliation Filings Pending with MPSC

PSCR Year	Date Filed	Net Underrecovery	PSCR Cost of Power Sold
2010	March 2011	$   15 million	$   1.7 billion

Gas Cost Recover (GCR) [Member]

Reconciliation Filings Pending with MPSC

GCR Year	Date Filed	Net Overrecovery	GCR Cost of Gas Sold
2009-2010	June 2010	$   1 million	$   1.3 billion
2010-2011	June 2011	6 million	1.2 billion

Gas Rate Case [Member]

Schedule Of Rate Increase Authorized And Requested

In Millions
				Increase Originally
	Increase Authorized			Requested by
Components of the increase in revenue	by the MPSC			Consumers		Difference
Investment in rate base	$	29		$	30	$	(1	)
Impact of sales declines		15			4		11
Recovery of operating and maintenance costs		2			16		(14	)
Cost of capital		(15	)		5		(20	)
Total	$	31		$	55	$	(24	)

XML



Financings (Tables)

6 Months Ended

Jun. 30, 2011

Summary of Major Long-term Debt transactions

	Principal					Issue/Retirement
	(In Millions)		Interest Rate			Date	Maturity Date
Debt Issuances
CMS Energy
Senior Notes	$	250		2.75	%	May 2011	May 2014
Consumers
Tax-exempt bonds1		68	Variable			May 2011	April 2018
Tax-exempt bonds1		35	Variable			May 2011	April 2035
Total	$	353
Debt Retirements
Consumers
Tax-exempt bonds1	$	68	Variable			May 2011	April 2018
Tax-exempt bonds1		35	Variable			May 2011	April 2035
Total	$	103

¹ In May 2011, Consumers utilized the Michigan Strategic Fund for the issuance of $68 million and $35 million of tax-exempt Michigan Strategic Fund Variable Rate Limited Obligation Revenue Bonds. The initial interest rate, which resets weekly, was 0.26 percent for the $68 million bond issuance and 0.28 percent for the $35 million bond issuance. The bonds, which are backed by letters of credit and collateralized by FMBs, are subject to optional tender by the holders that would result in remarketing. Consumers used the proceeds to redeem $103 million of tax-exempt bonds in May 2011.

Revolving Credit Facilities

In Millions
	Amount of		Amount		Letters of Credit		Amount
Expiration Date	Facility		Borrowed		Outstanding		Available
CMS Energy
March 31, 20161	$	550	$	—	$	3	$	547
Consumers
March 31, 20162, 3	$	500	$	—	$	189	$	311
August 9, 20133		150		—		—		150
September 21, 20114		30		—		30		—

1	On March 31, 2011, CMS Energy entered into a $550 million secured revolving credit facility with a consortium of banks. This facility has a five-year term and replaces CMS Energy's revolving credit facility that was set to expire in 2012. Obligations under this facility are secured by Consumers common stock.
	CMS Energy's average borrowings during the six months ended June 30, 2011 totaled $11 million, with a weighted-average annual interest rate of 2.22 percent, representing LIBOR plus 2.00 percent
2	On March 31, 2011, Consumers entered into a $500 million secured revolving credit facility with a consortium of banks. This facility has a five-year term and replaces Consumers' revolving credit facility that was set to expire in 2012.
3	Obligations under this facility are secured by FMBs of Consumers.
4	Secured revolving letter of credit facility.

Contingently Convertible Securities

			Outstanding		Adjusted		Adjusted
Security	Maturity		(In Millions)		Conversion Price		Trigger Price
2.875% senior notes		2024	$	288	$	12.81	$	15.37
5.50% senior notes		2029		172		14.26		18.54

Conversions of Contingently Convertible Securities Details

3.375% contingently		Principal		Conversion Value		Common		Cash Paid on
convertible senior notes	Conversion	Converted		per $1,000 of		Stock Issued		Settlement
due 2023	Date	(In Millions)		principal		on Settlement		(In Millions)
Voluntary conversion	January 2011	$	4	$	1,994.21		197,472	$	4

Consumers Energy Company [Member]

Summary of Major Long-term Debt transactions

	Principal					Issue/Retirement
	(In Millions)		Interest Rate			Date	Maturity Date
Debt Issuances
CMS Energy
Senior Notes	$	250		2.75	%	May 2011	May 2014
Consumers
Tax-exempt bonds1		68	Variable			May 2011	April 2018
Tax-exempt bonds1		35	Variable			May 2011	April 2035
Total	$	353
Debt Retirements
Consumers
Tax-exempt bonds1	$	68	Variable			May 2011	April 2018
Tax-exempt bonds1		35	Variable			May 2011	April 2035
Total	$	103

¹ In May 2011, Consumers utilized the Michigan Strategic Fund for the issuance of $68 million and $35 million of tax-exempt Michigan Strategic Fund Variable Rate Limited Obligation Revenue Bonds. The initial interest rate, which resets weekly, was 0.26 percent for the $68 million bond issuance and 0.28 percent for the $35 million bond issuance. The bonds, which are backed by letters of credit and collateralized by FMBs, are subject to optional tender by the holders that would result in remarketing. Consumers used the proceeds to redeem $103 million of tax-exempt bonds in May 2011.

Revolving Credit Facilities

In Millions
	Amount of		Amount		Letters of Credit		Amount
Expiration Date	Facility		Borrowed		Outstanding		Available
CMS Energy
March 31, 20161	$	550	$	—	$	3	$	547
Consumers
March 31, 20162, 3	$	500	$	—	$	189	$	311
August 9, 20133		150		—		—		150
September 21, 20114		30		—		30		—

1	On March 31, 2011, CMS Energy entered into a $550 million secured revolving credit facility with a consortium of banks. This facility has a five-year term and replaces CMS Energy's revolving credit facility that was set to expire in 2012. Obligations under this facility are secured by Consumers common stock.
	CMS Energy's average borrowings during the six months ended June 30, 2011 totaled $11 million, with a weighted-average annual interest rate of 2.22 percent, representing LIBOR plus 2.00 percent
2	On March 31, 2011, Consumers entered into a $500 million secured revolving credit facility with a consortium of banks. This facility has a five-year term and replaces Consumers' revolving credit facility that was set to expire in 2012.
3	Obligations under this facility are secured by FMBs of Consumers.
4	Secured revolving letter of credit facility.

XML



Earnings Per Share - CMS Energy (Tables)

6 Months Ended

Jun. 30, 2011

Earnings Per Share - CMS Energy

Basic and Diluted EPS Computation

In Millions, Except Per Share Amounts
	Three Months Ended				Six Months Ended
June 30	2011		2010		2011		2010
Income Available to Common Stockholders
Income from continuing operations	$	101	$	100	$	234	$	189
Less income attributable to noncontrolling interest		1		2		1		2
Less preferred stock dividends		—		2		—		5
Income from Continuing Operations Available to Common Stockholders — Basic and Diluted	$	100	$	96	$	233	$	182
Average Common Shares Outstanding
Weighted average shares — basic		250.3		228.2		250.2		228.1
Add dilutive contingently convertible securities		11.3		19.3		11.0		19.5
Add dilutive non-vested stock awards and options		0.3		0.1		0.3		0.1
Weighted average shares — diluted		261.9		247.6		261.5		247.7
Income from Continuing Operations per Average Common Share Available to Common Stockholders
Basic	$	0.40	$	0.42	$	0.93	$	0.80
Diluted		0.38		0.39		0.89		0.74

Schedule of Potential Impacts on the Calculation of Diluted EPS using the If-Converted Method

In Millions
	Three Months Ended				Six Months Ended
June 30	2011		2010		2011		2010
Increase to numerator from assumed reduction in interest expense	$	—	$	—	$	1	$	1
Increase to denominator from assumed conversion of debentures into common shares		0.7		0.7		0.7		0.7

XML



Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2011

Schedule of Cost/Carrying Amounts and Fair Values of Long-Term Financial Instruments

In Millions
	June 30, 2011				December 31, 2010
	Cost or				Cost or
	Carrying				Carrying
	Amount		Fair Value		Amount		Fair Value
CMS Energy, including Consumers
Securities held to maturity	$	7	$	7	$	5	$	6
Securities available for sale		115		116		90		90
Notes receivable1		398		417		386		407
Long-term debt2		7,283		8,074		7,174		7,861
Consumers
Securities available for sale	$	82	$	107	$	64	$	90
Long-term debt3		4,507		4,892		4,525		4,891

1	Includes current portion of notes receivable of $13 million at June 30, 2011 and $11 million at December 31, 2010.
2	Includes current portion of long-term debt of $1,099 million at June 30, 2011 and $726 million at December 31, 2010.
3	Includes current portion of long-term debt of $338 million at June 30, 2011 and $37 million at December 31, 2010.

Schedule of Investment Securities

In Millions
	June 30, 2011								December 31, 2010
			Unrealized		Unrealized		Fair				Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value		Cost		Gains		Losses		Value
CMS Energy, including consumers
Available for sale
SERP
Mutual fund	$	89	$	1	$	—	$	90	$	62	$	—	$	—	$	62
State and municipal bonds		26		—		—		26		28		—		—		28
Held to maturity
Debt securities		7		—		—		7		5		1		—		6
Consumers
Available for sale
SERP
Mutual fund	$	58	$	1	$	—	$	59	$	39	$	—	$	—	$	39
State and municipal bonds		17		—		—		17		17		—		—		17
CMS Energy common stock		7		24		—		31		8		26		—		34

Schedule of Proceeds and Gross Realized Gains/Losses from Sales of Available-for-Sale Securities

In Millions
	Three months ended				Six months ended
June 30	2011		2010		2011		2010
CMS Energy, including Consumers
Proceeds from sales of investment securities1	$	1	$	—	$	1	$	1
Consumers
Proceeds from sales of investment securities1	$	—	$	—	$	1	$	—

¹ 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.

Schedule of Contractual Maturities of Investments

In Millions
	CMS Energy,
	including Consumers		Consumers
Due one year or less	$	1	$	1
Due after one year through five years		10		7
Due after five years through ten years		12		7
Due after ten years		3		2
Total	$	26	$	17

Consumers Energy Company [Member]

Schedule of Cost/Carrying Amounts and Fair Values of Long-Term Financial Instruments

In Millions
	June 30, 2011				December 31, 2010
	Cost or				Cost or
	Carrying				Carrying
	Amount		Fair Value		Amount		Fair Value
CMS Energy, including Consumers
Securities held to maturity	$	7	$	7	$	5	$	6
Securities available for sale		115		116		90		90
Notes receivable1		398		417		386		407
Long-term debt2		7,283		8,074		7,174		7,861
Consumers
Securities available for sale	$	82	$	107	$	64	$	90
Long-term debt3		4,507		4,892		4,525		4,891

1	Includes current portion of notes receivable of $13 million at June 30, 2011 and $11 million at December 31, 2010.
2	Includes current portion of long-term debt of $1,099 million at June 30, 2011 and $726 million at December 31, 2010.
3	Includes current portion of long-term debt of $338 million at June 30, 2011 and $37 million at December 31, 2010.

Schedule of Investment Securities

In Millions
	June 30, 2011								December 31, 2010
			Unrealized		Unrealized		Fair				Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value		Cost		Gains		Losses		Value
CMS Energy, including consumers
Available for sale
SERP
Mutual fund	$	89	$	1	$	—	$	90	$	62	$	—	$	—	$	62
State and municipal bonds		26		—		—		26		28		—		—		28
Held to maturity
Debt securities		7		—		—		7		5		1		—		6
Consumers
Available for sale
SERP
Mutual fund	$	58	$	1	$	—	$	59	$	39	$	—	$	—	$	39
State and municipal bonds		17		—		—		17		17		—		—		17
CMS Energy common stock		7		24		—		31		8		26		—		34

Schedule of Proceeds and Gross Realized Gains/Losses from Sales of Available-for-Sale Securities

In Millions
	Three months ended				Six months ended
June 30	2011		2010		2011		2010
CMS Energy, including Consumers
Proceeds from sales of investment securities1	$	1	$	—	$	1	$	1
Consumers
Proceeds from sales of investment securities1	$	—	$	—	$	1	$	—

¹ 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.

Schedule of Contractual Maturities of Investments

In Millions
	CMS Energy,
	including Consumers		Consumers
Due one year or less	$	1	$	1
Due after one year through five years		10		7
Due after five years through ten years		12		7
Due after ten years		3		2
Total	$	26	$	17

XML



Derivative Instruments (Tables)

6 Months Ended

Jun. 30, 2011

Schedule of Fair Value of Derivative Instruments

In Millions
	Derivative Assets					Derivative Liabilities
	Balance	Fair Value at				Balance	Fair Value at
	Sheet	June 30,		December 31,		Sheet	June 30,		December 31,
	Location	2011		2010		Location	2011		2010
CMS Energy, including Consumers
Derivatives not designated as hedging instruments
Commodity contracts1	Other assets	$	3	$	1	Other liabilities2	$	3	$	4
Consumers
Derivatives not designated as hedging instruments
Commodity contracts	Other assets	$	3	$	1	Other liabilities	$	—	$	—

1	Assets and liabilities are presented gross and exclude the impact of offsetting derivative assets and liabilities under master netting agreements, which was less than $1 million at June 30, 2011 and December 31, 2010.
2	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, 2011 and December 31, 2010. CMS Energy presents these liabilities net of these impacts on its consolidated balance sheets.

Gain/(Loss) Recognized in Income for Derivative Instruments

In Millions
	Amount of Gain (Loss) on Derivatives Recognized in Income
Location of Gain (Loss) on	Three Months Ended June 30						Six Months Ended June 30
Derivatives Recognized in Income	2011			2010			2011		2010
CMS Energy, including Consumers
Commodity contracts
Operating revenue	$	(1	)	$	(2	)	$	—	$	3
Fuel for electric generation		—			—			—		2
Purchased and interchange power		—			—			—		1
Total CMS Energy	$	(1	)	$	(2	)	$	—	$	6

Consumers Energy Company [Member]

Schedule of Fair Value of Derivative Instruments

In Millions
	Derivative Assets					Derivative Liabilities
	Balance	Fair Value at				Balance	Fair Value at
	Sheet	June 30,		December 31,		Sheet	June 30,		December 31,
	Location	2011		2010		Location	2011		2010
CMS Energy, including Consumers
Derivatives not designated as hedging instruments
Commodity contracts1	Other assets	$	3	$	1	Other liabilities2	$	3	$	4
Consumers
Derivatives not designated as hedging instruments
Commodity contracts	Other assets	$	3	$	1	Other liabilities	$	—	$	—

1	Assets and liabilities are presented gross and exclude the impact of offsetting derivative assets and liabilities under master netting agreements, which was less than $1 million at June 30, 2011 and December 31, 2010.
2	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, 2011 and December 31, 2010. CMS Energy presents these liabilities net of these impacts on its consolidated balance sheets.

XML



Consolidated Statements of Income (Parenthetical) (USD $) In Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Consolidated Statements of Income
Tax Expense included in Income (Loss) from Discontinued Operations		$ 6	$ 1	$ 5

XML



Notes Receivable (Tables) (EnerBank USA [Member])

6 Months Ended

Jun. 30, 2011

EnerBank USA [Member]

Schedule of Allowance for Loan Losses

In Millions
	Three months			Six months
	ended			ended
June 30	2011			2011
Allowance for loan losses, at beginning of period	$	5		$	5
Charge-offs		(1	)		(2	)
Recoveries		—			—
Provision for loan losses		1			2
Allowance for loan losses, at end of period	$	5		$	5

Schedule of Delinquency Status of EnerBank's Consumer Loans

In Millions
Past Due		Past Due		Past Due		Total				Total
30-59 Days		60-89 Days		Over 90 Days		Delinquent		Current		Outstanding
$	1	$	1	$	—	$	2	$	396	$	398

XML



Retirement Benefits (Tables)

6 Months Ended

Jun. 30, 2011

Consumers Energy Company [Member] | Pension Plans, Defined Benefit [Member]

Schedule of Net Benefit Costs

In Millions
	Pension
	Three Months Ended						Six Months Ended
June 30	2011			2010			2011			2010
CMS Energy, including Consumers
Net periodic pension cost
Service cost	$	12		$	11		$	24		$	22
Interest expense		25			25			50			49
Expected return on plan assets		(28	)		(23	)		(56	)		(46	)
Amortization of:
Net loss		15			13			31			26
Prior service cost		2			1			3			3
Net periodic pension cost	$	26		$	27		$	52		$	54
Regulatory adjustment1		—			21			—			23
Net periodic pension cost after regulatory adjustment	$	26		$	48		$	52		$	77

In Millions
	Pension
	Three Months Ended						Six Months Ended
June 30	2011			2010			2011			2010
Consumers
Net periodic pension cost
Service cost	$	11		$	10		$	23		$	21
Interest expense		25			24			49			48
Expected return on plan assets		(28	)		(22	)		(55	)		(45	)
Amortization of:
Net loss		16			13			31			25
Prior service cost		2			1			3			3
Net periodic pension cost	$	26		$	26		$	51		$	52
Regulatory adjustment1		—			21			—			23
Net periodic pension cost after regulatory adjustment	$	26		$	47		$	51		$	75

¹ Regulatory adjustments are the differences between amounts included in rates and the periodic benefit cost calculated. These regulatory adjustments were offset by surcharge revenues, resulting in no impact to net income for the periods presented.

Pension Plans, Defined Benefit [Member]

Schedule of Net Benefit Costs

In Millions
	Pension
	Three Months Ended						Six Months Ended
June 30	2011			2010			2011			2010
CMS Energy, including Consumers
Net periodic pension cost
Service cost	$	12		$	11		$	24		$	22
Interest expense		25			25			50			49
Expected return on plan assets		(28	)		(23	)		(56	)		(46	)
Amortization of:
Net loss		15			13			31			26
Prior service cost		2			1			3			3
Net periodic pension cost	$	26		$	27		$	52		$	54
Regulatory adjustment1		—			21			—			23
Net periodic pension cost after regulatory adjustment	$	26		$	48		$	52		$	77

In Millions
	Pension
	Three Months Ended						Six Months Ended
June 30	2011			2010			2011			2010
Consumers
Net periodic pension cost
Service cost	$	11		$	10		$	23		$	21
Interest expense		25			24			49			48
Expected return on plan assets		(28	)		(22	)		(55	)		(45	)
Amortization of:
Net loss		16			13			31			25
Prior service cost		2			1			3			3
Net periodic pension cost	$	26		$	26		$	51		$	52
Regulatory adjustment1		—			21			—			23
Net periodic pension cost after regulatory adjustment	$	26		$	47		$	51		$	75

¹ Regulatory adjustments are the differences between amounts included in rates and the periodic benefit cost calculated. These regulatory adjustments were offset by surcharge revenues, resulting in no impact to net income for the periods presented.

Consumers Energy Company [Member] | Other Postretirement Benefit Plans, Defined Benefit [Member]

Schedule of Net Benefit Costs

In Millions
	OPEB
	Three Months Ended						Six Months Ended
June 30	2011			2010			2011			2010
CMS Energy, including Consumers
Net periodic OPEB cost
Service cost	$	6		$	6		$	13		$	13
Interest expense		19			20			38			41
Expected return on plan assets		(16	)		(14	)		(33	)		(29	)
Amortization of:
Net loss		8			8			16			16
Prior service cost		(5	)		(5	)		(10	)		(7	)
Net periodic OBEB cost	$	12		$	15		$	24		$	34
Regulatory adjustment1		—			6			—			7
Net periodic OPEB cost after regulatory adjustment	$	12		$	21		$	24		$	41
Consumers
Net periodic OPEB cost
Service cost	$	7		$	6		$	13		$	13
Interest expense		19			20			37			40
Expected return on plan assets		(16	)		(14	)		(31	)		(28	)
Amortization of:
Net loss		8			8			16			16
Prior service cost		(5	)		(4	)		(10	)		(6	)
Net periodic OPEB cost	$	13		$	16		$	25		$	35
Regulatory adjustment1		—			6			—			7
Net periodic OPEB cost after regulatory adjustment	$	13		$	22		$	25		$	42

¹ Regulatory adjustments are the differences between amounts included in rates and the periodic benefit cost calculated. These regulatory adjustments were offset by surcharge revenues, resulting in no impact to net income for the periods presented.

Other Postretirement Benefit Plans, Defined Benefit [Member]

Schedule of Net Benefit Costs

In Millions
	OPEB
	Three Months Ended						Six Months Ended
June 30	2011			2010			2011			2010
CMS Energy, including Consumers
Net periodic OPEB cost
Service cost	$	6		$	6		$	13		$	13
Interest expense		19			20			38			41
Expected return on plan assets		(16	)		(14	)		(33	)		(29	)
Amortization of:
Net loss		8			8			16			16
Prior service cost		(5	)		(5	)		(10	)		(7	)
Net periodic OBEB cost	$	12		$	15		$	24		$	34
Regulatory adjustment1		—			6			—			7
Net periodic OPEB cost after regulatory adjustment	$	12		$	21		$	24		$	41
Consumers
Net periodic OPEB cost
Service cost	$	7		$	6		$	13		$	13
Interest expense		19			20			37			40
Expected return on plan assets		(16	)		(14	)		(31	)		(28	)
Amortization of:
Net loss		8			8			16			16
Prior service cost		(5	)		(4	)		(10	)		(6	)
Net periodic OPEB cost	$	13		$	16		$	25		$	35
Regulatory adjustment1		—			6			—			7
Net periodic OPEB cost after regulatory adjustment	$	13		$	22		$	25		$	42

¹ Regulatory adjustments are the differences between amounts included in rates and the periodic benefit cost calculated. These regulatory adjustments were offset by surcharge revenues, resulting in no impact to net income for the periods presented.

XML



Income Taxes (Tables)

6 Months Ended

Jun. 30, 2011

Schedule of Effective Income Tax Rate Reconciliation

Six Months Ended June 30	2011			2010
CMS Energy, Including Consumers
U.S. federal income tax rate		35.0	%		35.0	%
Increase (decrease) in income taxes from:
MCIT law change, net of federal expense		(9.9	)		—
State and local income taxes, net of federal benefit		3.5			4.0
Medicare Part D exempt income, net of law change		(1.1	)		—
Income tax credit amortization		(0.6	)		(0.6	)
Other, net		0.3			0.7
Effective income tax rate		27.2	%		39.1	%
Consumers
U.S. federal income tax rate		35.0	%		35.0	%
Increase (decrease) in income taxes from:
State and local income taxes, net of federal benefit		3.4			3.5
Medicare Part D exempt income, net of law change		(0.8	)		(1.0	)
Plant basis differences		0.2			—
Income tax credit amortization		(0.5	)		(0.5	)
Other, net		(0.3	)		0.1
Effective income tax rate		37.0	%		37.1	%

Consumers Energy Company [Member]

Schedule of Effective Income Tax Rate Reconciliation

Six Months Ended June 30	2011			2010
CMS Energy, Including Consumers
U.S. federal income tax rate		35.0	%		35.0	%
Increase (decrease) in income taxes from:
MCIT law change, net of federal expense		(9.9	)		—
State and local income taxes, net of federal benefit		3.5			4.0
Medicare Part D exempt income, net of law change		(1.1	)		—
Income tax credit amortization		(0.6	)		(0.6	)
Other, net		0.3			0.7
Effective income tax rate		27.2	%		39.1	%
Consumers
U.S. federal income tax rate		35.0	%		35.0	%
Increase (decrease) in income taxes from:
State and local income taxes, net of federal benefit		3.4			3.5
Medicare Part D exempt income, net of law change		(0.8	)		(1.0	)
Plant basis differences		0.2			—
Income tax credit amortization		(0.5	)		(0.5	)
Other, net		(0.3	)		0.1
Effective income tax rate		37.0	%		37.1	%

XML



Reportable Segments (Tables)

6 Months Ended

Jun. 30, 2011

Consumers Energy Company [Member] | Income Statement [Member]

Reconciliation of Segments to Consolidated

In Millions
	Three Months Ended						Six Months Ended
June 30	2011			2010			2011			2010
Operating Revenue
CMS Energy, including Consumers
Electric utility	$	949		$	975		$	1,846		$	1,813
Gas utility		354			301			1,445			1,353
Enterprises		50			55			105			123
Other		11			9			23			18
Total Operating Revenue — CMS Energy	$	1,364		$	1,340		$	3,419		$	3,307
Consumers
Electric utility	$	949		$	975		$	1,846		$	1,813
Gas utility		354			301			1,445			1,353
Total Operating Revenue — Consumers	$	1,303		$	1,276		$	3,291		$	3,166
Net Income Available to Common Stockholders
CMS Energy, including Consumers
Electric utility	$	85		$	86		$	150		$	127
Gas utility		5			1			93			67
Enterprises		29			33			32			42
Discontinued operations		—			(16	)		2			(17	)
Other		(19	)		(24	)		(42	)		(54	)
Total Net Income Available to Common Stockholders — CMS Energy	$	100		$	80		$	235		$	165
Consumers
Electric utility	$	85		$	86		$	150		$	127
Gas utility		5			1			93			67
Other		1			—			1			—
Total Net Income Available to Common Stockholder — Consumers	$	91		$	87		$	244		$	194

Income Statement [Member]

Reconciliation of Segments to Consolidated

In Millions
	Three Months Ended						Six Months Ended
June 30	2011			2010			2011			2010
Operating Revenue
CMS Energy, including Consumers
Electric utility	$	949		$	975		$	1,846		$	1,813
Gas utility		354			301			1,445			1,353
Enterprises		50			55			105			123
Other		11			9			23			18
Total Operating Revenue — CMS Energy	$	1,364		$	1,340		$	3,419		$	3,307
Consumers
Electric utility	$	949		$	975		$	1,846		$	1,813
Gas utility		354			301			1,445			1,353
Total Operating Revenue — Consumers	$	1,303		$	1,276		$	3,291		$	3,166
Net Income Available to Common Stockholders
CMS Energy, including Consumers
Electric utility	$	85		$	86		$	150		$	127
Gas utility		5			1			93			67
Enterprises		29			33			32			42
Discontinued operations		—			(16	)		2			(17	)
Other		(19	)		(24	)		(42	)		(54	)
Total Net Income Available to Common Stockholders — CMS Energy	$	100		$	80		$	235		$	165
Consumers
Electric utility	$	85		$	86		$	150		$	127
Gas utility		5			1			93			67
Other		1			—			1			—
Total Net Income Available to Common Stockholder — Consumers	$	91		$	87		$	244		$	194

Consumers Energy Company [Member] | Balance Sheet [Member]

Reconciliation of Segments to Consolidated

In Millions
	June 30, 2011		December 31, 2010
Plant, Property, and Equipment, Gross
CMS Energy, including Consumers
Electric utility1	$	10,184	$	9,944
Gas utility1		4,086		4,063
Enterprises		106		102
Other		37		36
Total Plant, Property, and Equipment, Gross — CMS Energy	$	14,413	$	14,145
Consumers
Electric utility1	$	10,184	$	9,944
Gas utility1		4,086		4,063
Other		15		15
Total Plant, Property, and Equipment, Gross — Consumers	$	14,285	$	14,022
Assets
CMS Energy, including Consumers
Electric utility1	$	9,831	$	9,321
Gas utility1		4,581		4,614
Enterprises		175		191
Other		1,358		1,490
Total Assets — CMS Energy	$	15,945	$	15,616
Consumers
Electric utility1	$	9,831	$	9,321
Gas utility1		4,581		4,614
Other		689		904
Total Assets — Consumers	$	15,101	$	14,839

¹ Amounts include a portion of Consumers' other common assets attributable to both the electric and the gas utility businesses.

Balance Sheet [Member]

Reconciliation of Segments to Consolidated

In Millions
	June 30, 2011		December 31, 2010
Plant, Property, and Equipment, Gross
CMS Energy, including Consumers
Electric utility1	$	10,184	$	9,944
Gas utility1		4,086		4,063
Enterprises		106		102
Other		37		36
Total Plant, Property, and Equipment, Gross — CMS Energy	$	14,413	$	14,145
Consumers
Electric utility1	$	10,184	$	9,944
Gas utility1		4,086		4,063
Other		15		15
Total Plant, Property, and Equipment, Gross — Consumers	$	14,285	$	14,022
Assets
CMS Energy, including Consumers
Electric utility1	$	9,822	$	9,321
Gas utility1		4,581		4,614
Enterprises		175		191
Other		1,358		1,490
Total Assets — CMS Energy	$	15,936	$	15,616
Consumers
Electric utility1	$	9,822	$	9,321
Gas utility1		4,581		4,614
Other		689		904
Total Assets — Consumers	$	15,092	$	14,839

¹ Amounts include a portion of Consumers' other common assets attributable to both the electric and the gas utility businesses.

XML



Fair Value Measurements (Assets and Liabilties Measured at Fair Value on a Recurring Basis) (Details) (USD $) In Millions, unless otherwise specified	Jun. 30, 2011		Dec. 31, 2010
Cash equivalents	$ 875		$ 183
Restricted cash equivalents	15		6
Nonqualified deferred compensation plan assets	4		6
Available for sale - fair value	116		90
Commodity contracts	3		1
Asset Total	1,013		287
Nonqualified deferred compensation plan liabilities	4		6
Commodity contracts	3		4
Liabilities Total	7		10
Assets classified as level three as a percentage of total assets measured at fair value	1.00%		1.00%
Impact of master netting arrangements	1		1
Impact of offsetting derivative assets and liabilites under master netting arrangments and offesetting cash margin deposits paid by CMS ERM	1		1
Liabilities classified as level three as a percentage of total liabilities measured at fair value	43.00%		40.00%
Consumers Energy Company [Member] | CMS Energy Common Stock [Member]
Available for sale - fair value	31		34
Consumers Energy Company [Member] | CMS Energy Common Stock [Member] | Fair Value, Inputs, Level 1 [Member]
Available for sale - fair value	31		34
Consumers Energy Company [Member] | CMS Energy Common Stock [Member] | Fair Value, Inputs, Level 2 [Member]
Available for sale - fair value
Consumers Energy Company [Member] | CMS Energy Common Stock [Member] | Fair Value, Inputs, Level 3 [Member]
Available for sale - fair value
Consumers Energy Company [Member] | Fair Value, Inputs, Level 1 [Member] | Supplemental Executive Retirement Plan [Member] | Cash Equivalents [Member]
Cash equivalents			1
Consumers Energy Company [Member] | Fair Value, Inputs, Level 1 [Member] | Supplemental Executive Retirement Plan [Member] | Mutual Fund [Member]
Available for sale - fair value	59		39
Consumers Energy Company [Member] | Fair Value, Inputs, Level 1 [Member] | Supplemental Executive Retirement Plan [Member] | State and Municipal Bonds [Member]
Available for sale - fair value
Consumers Energy Company [Member] | Fair Value, Inputs, Level 2 [Member] | Supplemental Executive Retirement Plan [Member] | Cash Equivalents [Member]
Cash equivalents
Consumers Energy Company [Member] | Fair Value, Inputs, Level 2 [Member] | Supplemental Executive Retirement Plan [Member] | Mutual Fund [Member]
Available for sale - fair value
Consumers Energy Company [Member] | Fair Value, Inputs, Level 2 [Member] | Supplemental Executive Retirement Plan [Member] | State and Municipal Bonds [Member]
Available for sale - fair value	17		17
Consumers Energy Company [Member] | Fair Value, Inputs, Level 3 [Member] | Supplemental Executive Retirement Plan [Member] | Cash Equivalents [Member]
Cash equivalents
Consumers Energy Company [Member] | Fair Value, Inputs, Level 3 [Member] | Supplemental Executive Retirement Plan [Member] | Mutual Fund [Member]
Available for sale - fair value
Consumers Energy Company [Member] | Fair Value, Inputs, Level 3 [Member] | Supplemental Executive Retirement Plan [Member] | State and Municipal Bonds [Member]
Available for sale - fair value
Consumers Energy Company [Member] | Supplemental Executive Retirement Plan [Member]
Available for sale - fair value	17
Consumers Energy Company [Member] | Supplemental Executive Retirement Plan [Member] | Cash Equivalents [Member]
Cash equivalents			1
Consumers Energy Company [Member] | Supplemental Executive Retirement Plan [Member] | Mutual Fund [Member]
Available for sale - fair value	59		39
Consumers Energy Company [Member] | Supplemental Executive Retirement Plan [Member] | State and Municipal Bonds [Member]
Available for sale - fair value	17		17
Fair Value, Inputs, Level 1 [Member] | Supplemental Executive Retirement Plan [Member]
Cash equivalents			1
Fair Value, Inputs, Level 1 [Member] | Supplemental Executive Retirement Plan [Member] | Mutual Fund [Member]
Available for sale - fair value	90		62
Fair Value, Inputs, Level 1 [Member] | Supplemental Executive Retirement Plan [Member] | State and Municipal Bonds [Member]
Available for sale - fair value
Fair Value, Inputs, Level 2 [Member] | Supplemental Executive Retirement Plan [Member]
Cash equivalents
Fair Value, Inputs, Level 2 [Member] | Supplemental Executive Retirement Plan [Member] | Mutual Fund [Member]
Available for sale - fair value
Fair Value, Inputs, Level 2 [Member] | Supplemental Executive Retirement Plan [Member] | State and Municipal Bonds [Member]
Available for sale - fair value	26		28
Fair Value, Inputs, Level 3 [Member] | Supplemental Executive Retirement Plan [Member]
Cash equivalents
Fair Value, Inputs, Level 3 [Member] | Supplemental Executive Retirement Plan [Member] | Mutual Fund [Member]
Available for sale - fair value
Fair Value, Inputs, Level 3 [Member] | Supplemental Executive Retirement Plan [Member] | State and Municipal Bonds [Member]
Available for sale - fair value
Supplemental Executive Retirement Plan [Member]
Cash equivalents			1
Available for sale - fair value	26
Supplemental Executive Retirement Plan [Member] | Mutual Fund [Member]
Available for sale - fair value	90		62
Supplemental Executive Retirement Plan [Member] | State and Municipal Bonds [Member]
Available for sale - fair value	26		28
Consumers Energy Company [Member] | Fair Value, Inputs, Level 1 [Member]
Cash equivalents	667		19
Restricted cash equivalents	14		6
Nonqualified deferred compensation plan assets	3		4
Commodity contracts
Asset Total	774	[1]	103	[2]
Nonqualified deferred compensation plan liabilities	3		4
Liabilities Total	3		4
Fair Value, Inputs, Level 1 [Member]
Cash equivalents	875		183
Restricted cash equivalents	15		6
Nonqualified deferred compensation plan assets	4		6
Commodity contracts
Asset Total	984		258
Nonqualified deferred compensation plan liabilities	4		6
Commodity contracts
Liabilities Total	4		6
Consumers Energy Company [Member] | Fair Value, Inputs, Level 2 [Member]
Cash equivalents
Restricted cash equivalents
Nonqualified deferred compensation plan assets
Commodity contracts
Asset Total	17	[1]	17	[2]
Nonqualified deferred compensation plan liabilities
Liabilities Total
Fair Value, Inputs, Level 2 [Member]
Cash equivalents
Restricted cash equivalents
Nonqualified deferred compensation plan assets
Commodity contracts
Asset Total	26		28
Nonqualified deferred compensation plan liabilities
Commodity contracts
Liabilities Total
Consumers Energy Company [Member] | Fair Value, Inputs, Level 3 [Member]
Cash equivalents
Restricted cash equivalents
Nonqualified deferred compensation plan assets
Commodity contracts	3		1
Asset Total	3	[1]	1	[2]
Nonqualified deferred compensation plan liabilities
Liabilities Total
Fair Value, Inputs, Level 3 [Member]
Cash equivalents
Restricted cash equivalents
Nonqualified deferred compensation plan assets
Commodity contracts	3		1
Asset Total	3		1
Nonqualified deferred compensation plan liabilities
Commodity contracts	3		4
Liabilities Total	3		4
Consumers Energy Company [Member]
Cash equivalents	667		19
Restricted cash equivalents	14		6
Nonqualified deferred compensation plan assets	3		4
Available for sale - fair value	107		90
Commodity contracts	3		1
Asset Total	794	[1]	121	[2]
Nonqualified deferred compensation plan liabilities	3		4
Liabilities Total	$ 3		$ 4
Assets classified as level three as a percentage of total assets measured at fair value	1.00%		1.00%

[1] At June 30, 2011, Consumers' assets classified as Level 3 represented less than one percent of Consumers' total assets measured at fair value.

[2] At December 31, 2010, Consumers' assets classified as Level 3 represented one percent of Consumers' total assets measured at fair value.

XML



Fair Value Measurements (Assets and Liabilities Measured At Fair Value on a Recurring Basis using Significant Level 3 Inputs) (Details) (USD $) In Millions	3 Months Ended				6 Months Ended
	Jun. 30, 2011		Jun. 30, 2010		Jun. 30, 2011	Jun. 30, 2010
Fair Value, Inputs, Level 3 [Member]
Beginning balance, April 1	$ (2)	[1]	$ (3)	[1]	$ (3)	$ (8)
Total gains (losses) included in earnings	(1)		(2)			2	[1]
Total gains offset through regulatory accounting	3		1		3	1
Settlements			(1)
Ending balance, June 30			(5)			(5)
Unrealized gains (losses) included in earnings relating to assets and liabilities still held at balance sheet date			(2)		1	2
Consumers Energy Company [Member]
Beginning balance, April 1					1
Total gains offset through regulatory accounting	3		1		3	1
Settlements			(1)		(1)	(1)
Ending balance, June 30	$ 3				$ 3

[1] 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.

XML



Fair Value Measurements (Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis) (Details) (USD $) In Millions	Jun. 30, 2010
Assets held for sale, carrying value	$ 11
Gains (Losses)	(4)
Fair Value, Inputs, Level 1 [Member]
Assets held for sale
Fair Value, Inputs, Level 2 [Member]
Assets held for sale
Fair Value, Inputs, Level 3 [Member]
Assets held for sale	$ 7

XML



Contingencies and Commitments (Narrative) (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended										1 Months Ended
	Jun. 30, 2011	Dec. 31, 2010	Oct. 31, 2010	Dec. 31, 2004	Jun. 30, 2011 Consumers Energy Company [Member] Manufactured Gas Plant [Member]	Jun. 30, 2011 Consumers Energy Company [Member] Manufactured Gas Plant [Member]	Jun. 30, 2011 Consumers Energy Company [Member] Deferred MGP Expenditures [Member]	Jun. 30, 2011 Consumers Energy Company [Member] Big Rock [Member]	Jun. 30, 2011 Consumers Energy Company [Member] NREPA [Member]	Jun. 30, 2011 Consumers Energy Company [Member] Superfund Liability [Member]	Jul. 31, 2011 Consumers Energy Company [Member] Nuclear Fuel Disposal Cost [Member]	Jun. 30, 2011 Consumers Energy Company [Member] Nuclear Fuel Disposal Cost [Member]	Jun. 30, 2011 Consumers Energy Company [Member] Spent Nuclear Fuel Principal [Member]	Jun. 30, 2011 Consumers Energy Company [Member] Spent Nuclear Fuel Interest [Member]	Jun. 30, 2011 Consumers Energy Company [Member]	Dec. 31, 2010 Consumers Energy Company [Member]
Demand For Payment By USEPA			$ 7
Cumulative Environmental Charge	223
Recorded liability	88
Accrual for Environmental Loss Contingencies						28			2	2
Spent Nuclear Fuel Obligation, Noncurrent												163	44	119
Discounted projected costs rate	4.34%
Site Contingency Accrual Inflation Rate	1.00%
Remaining undiscounted obligation amount	109
Undiscounted amount due within one year	16
Undiscounted amount due within two year	16
Undiscounted amount due within third year	7
Undiscounted amount due within fourth year	5
Undiscounted amount due within five year	4
Foreign Government Tax Claim On Sale				142
Remediation and other response activity costs, minimum						28				2
Remediation and other response activity costs. maximum						43				8
Litigation Settlement, Gross											120
Regulatory assets	2,050	2,093					27	85							2,050	2,093
Regulatory Liability, Noncurrent	1,860	1,988													1,860	1,988
Number of former MGPs															23
Regulatory asset					55
MGP Average Five Year Expenditures						$ 6

XML



Contingencies and Commitments (Guarantees) (Details) (USD $) In Millions	6 Months Ended
	Jun. 30, 2011
Indemnity obligations from asset sales and other agreements [Member]
Expiration Date	Various through June 2022
Guarantor Obligations, Maximum Exposure, Undiscounted	$ 512	[1]
Carrying Amount	21
CMS Land [Member]
Carrying Amount	1
Consumers Energy Company [Member] | Guarantees and put options [Member]
Guarantor Obligations, Maximum Exposure, Undiscounted	1
Guarantees and put options [Member]
Expiration Date	Various through March 2021
Guarantor Obligations, Maximum Exposure, Undiscounted	33	[2]
Carrying Amount	$ 1	[2]

[1] The majority of this amount arises from stock and asset sale 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.

[2] At June 30, 2011, 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.

XML



Regulatory Matters (Narrative) (Details) (USD $)			6 Months Ended			12 Months Ended
	Jun. 30, 2011	Dec. 31, 2010	Jun. 30, 2011 Power Supply Cost Recover (PSCR) [Member] Consumers Energy Company [Member] Authorized by MPSC [Member]	Jun. 30, 2011 Electric Rate Case [Member] Consumers Energy Company [Member]	Dec. 31, 2010 Electric Rate Case [Member] Consumers Energy Company [Member]	Dec. 31, 2010 Power Supply Cost Recover (PSCR) [Member] Consumers Energy Company [Member]	Mar. 31, 2011 Gas Cost Recover (GCR) [Member] Consumers Energy Company [Member]	Mar. 31, 2010 Gas Cost Recover (GCR) [Member] Consumers Energy Company [Member]	Jun. 30, 2011 Consumers Energy Company [Member] Electric Decoupling [Member]	Mar. 31, 2011 Consumers Energy Company [Member] Electric Decoupling [Member]	Mar. 31, 2011 Consumers Energy Company [Member] Uncollectible Expense Tracking Mechanism [Member]	Jun. 30, 2011 Consumers Energy Company [Member] Electric Operation and Maintenance Show-Cause Order [Member]	Dec. 31, 2009 Consumers Energy Company [Member] Electric Operation and Maintenance Show-Cause Order [Member]	May 31, 2011 Gas Rate Case [Member] Consumers Energy Company [Member]	Feb. 28, 2011 Gas Rate Case [Member] Consumers Energy Company [Member]	Jan. 31, 2011 Gas Rate Case [Member] Consumers Energy Company [Member]	Aug. 31, 2010 Gas Rate Case [Member] Consumers Energy Company [Member]	Jun. 30, 2011 Consumers Energy Company [Member] Big Rock [Member]	Apr. 30, 2010 Consumers Energy Company [Member] Big Rock [Member]	Feb. 28, 2010 Consumers Energy Company [Member] Big Rock [Member]	Jun. 30, 2011 Consumers Energy Company [Member] Electric Plant [Member]	Feb. 28, 2010 Consumers Energy Company [Member] Electric Plant [Member]	Feb. 28, 2010 Consumers Energy Company [Member] Consumers Share of Ludington [Member]	Jun. 30, 2011 Consumers Energy Company [Member]	May 31, 2011 Consumers Energy Company [Member]	Apr. 30, 2011 Consumers Energy Company [Member]	Dec. 31, 2010 Consumers Energy Company [Member]
Annual Rate Increase Authorized by MPSC					$ 146,000,000									$ 31,000,000
Annual Rate Increase Requested by Consumers				195,000,000													55,000,000
Difference Between the Annual Rate Increase Authorized by MPSC and the Annual Rate Increase Self-implemented by Consumers					4,000,000
Amount of rates to be refunded to customers				0
Requested Recovery										27,000,000	3,000,000
Regulatory assets	2,050,000,000	2,093,000,000							58,000,000									85,000,000						2,050,000,000			2,093,000,000
Percentage of Difference Between Rate Base Expense and Actual Expense To Collect/Refund											80.00%
Difference Between the Operation and Maintenance Expenditures Ordered by MPSC and the Operation and Maintenance Expenditures Incurred by Consumers During 2007													14,000,000
Imposed fine by MPSC												65,200
Contribution To Fund Decommissioning Costs Previously Collected																				44,000,000
Revenue Collected in Excess of Costs to Decommission Big Rock, Plus Interest, and Ordered for Refund																			85,000,000
Amount Paid to Transfer Ownership and Responsibility																		30,000,000
Nuclear Fuel Storage Costs Incurred as a Result of the DOE's Failure to Accept Spent Nuclear Fuel																		55,000,000
Recommended Renewable Recovery Disallowance																								3,000,000
Annual Amount Of Reduction Of Renewable Energy Plan Surcharge Billed To Customers																									54,000,000
Authorized Energy Optimization Incentive for Exceeding 2009 Savings Targets																									6,000,000
Requested Energy Optimization Incentive for Exceeding 2010 Savings Targets																										8,000,000
Requested Increase In Annual Depreciation Expense																						46,000,000	9,000,000
Authorized increase in depreciation expense																					19,000,000
Rate of Return on Equity Requested				10.70%													11.00%
Rate of Return On Equity Authorized by Public Service Commission														10.50%
Net Over/(Under) Recovery, Including Interest			(31,000,000)			(15,000,000)	6,000,000	1,000,000
Amount Of Proposed Self-implemented Rate Increase																48,000,000
Revised Amount Of Proposed Self-implemented Rate Increase															$ 29,000,000

XML



Consolidated Statements of Cash Flows (USD $) In Millions	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010
Cash Flows from Operating Activities
Net Income	$ 236	$ 172
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	284	303
Deferred income taxes and investment tax credit	74	107
Postretirement benefits expense	83	88
Other non-cash operating activities	39	41
Postretirement benefits contributions	(39)	(153)
Changes in other assets and liabilities:
Decrease in accounts receivable, notes receivable, and accrued revenue	215	178
Decrease in accrued power supply revenue	15	22
Decrease in inventories	204	230
Increase (decrease) in accounts payable	34	41
Decrease in accrued expenses	(36)	(51)
Decrease in other current and non-current assets	71	88
Increase (decrease) in other current and non-current liabilities	36	(18)
Net cash provided by operating activities	1,216	1,048
Cash Flows from Investing Activities
Capital expenditures (excludes assets placed under capital lease)	(399)	(424)
Cost to retire property	(28)	(20)
Cash effect of deconsolidation of partnerships	0	(10)
Other investing activities	(44)	(36)
Net cash used in investing activities	(471)	(490)
Cash Flows from Financing Activities
Proceeds from issuance of long-term debt	375	300
Proceeds from EnerBank notes, net	21	66
Issuance of common stock	22	5
Retirement of long-term debt	(292)	(352)
Payment of common stock dividends	(106)	(69)
Payment of preferred stock dividends	0	(5)
Payment of capital and finance lease obligations	(12)	(12)
Other financing costs	(8)	(44)
Net cash used in financing activities	0	(111)
Net Increase (Decrease) in Cash and Cash Equivalents, Including Assets Held for Sale	745	447
Decrease (Increase) in Cash and Cash Equivalents Included in Assets Held for Sale	2	(1)
Net Increase in Cash and Cash Equivalents	747	446
Cash and Cash Equivalents, Beginning of Period	247	90
Cash and Cash Equivalents, End of Period	994	536
Consumers Energy Company [Member]
Cash Flows from Operating Activities
Net Income	245	195
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	282	301
Deferred income taxes and investment tax credit	82	(22)
Postretirement benefits expense	78	87
Other non-cash operating activities	31	32
Postretirement benefits contributions	(37)	(143)
Changes in other assets and liabilities:
Decrease in accounts receivable, notes receivable, and accrued revenue	207	186
Decrease in accrued power supply revenue	15	22
Decrease in inventories	202	229
Increase (decrease) in accounts payable	42	35
Decrease in accrued expenses	(12)	(13)
Decrease in other current and non-current assets	68	92
Increase (decrease) in other current and non-current liabilities	42	(18)
Net cash provided by operating activities	1,245	983
Cash Flows from Investing Activities
Capital expenditures (excludes assets placed under capital lease)	(394)	(423)
Cost to retire property	(28)	(21)
Other investing activities	(23)
Net cash used in investing activities	(445)	(444)
Cash Flows from Financing Activities
Retirement of long-term debt	(18)	(327)
Payment of common stock dividends	(196)	(168)
Payment of preferred stock dividends	(1)	(1)
Stockholder's contribution	125	250
Payment of capital and finance lease obligations	(12)	(12)
Other financing costs	(3)
Net cash used in financing activities	(105)	(258)
Net Increase in Cash and Cash Equivalents	695	281
Cash and Cash Equivalents, Beginning of Period	71	39
Cash and Cash Equivalents, End of Period	$ 766	$ 320

XML



Regulatory Matters (Schedule of Components of the Increase in Revenue) (Details) (Electric Rate Case [Member], Consumers Energy Company [Member], USD $) In Millions	Jun. 30, 2011
Annual Rate Increase Requested by Consumers	$ 195
Investment in Rate Base [Member]
Annual Rate Increase Requested by Consumers	81
Recovery Of Depreciation And Property Taxes [Member]
Annual Rate Increase Requested by Consumers	70
Impact Of Sales Declines [Member]
Annual Rate Increase Requested by Consumers	50
Reduced Operating And Maintenance Costs [Member]
Annual Rate Increase Requested by Consumers	(4)
Cost Of Capital [Member]
Annual Rate Increase Requested by Consumers	$ (2)

XML



Regulatory Matters (Schedule of Power Supply Cost Recovery Reconciliations) (Details) (Power Supply Cost Recover (PSCR) [Member], Consumers Energy Company [Member], USD $) In Millions	12 Months Ended
	Dec. 31, 2010
Power Supply Cost Recover (PSCR) [Member] | Consumers Energy Company [Member]
Date Filed	March 2011
Net Over (Under) Recovery Of Expense Including Interest	$ (15)
PSCR Cost of Power Sold	$ 1,700.0

XML



Regulatory Matters (Schedule of Components of the Rate Increase Authorized by the MPSC and the Rate Increase Originally Requested by Consumers) (Details) (Gas Rate Case [Member], Consumers Energy Company [Member], USD $) In Millions	1 Months Ended
	May 31, 2011	Aug. 31, 2010
Annual Rate Increase Authorized by MPSC	$ 31
Annual Rate Increase Requested by Consumers		55
Difference Between Rate Increase Authorized And Requested	(24)
Investment in Rate Base [Member]
Annual Rate Increase Authorized by MPSC	29
Annual Rate Increase Requested by Consumers		30
Difference Between Rate Increase Authorized And Requested	(1)
Impact Of Sales Declines [Member]
Annual Rate Increase Authorized by MPSC	15
Annual Rate Increase Requested by Consumers		4
Difference Between Rate Increase Authorized And Requested	11
Recovery Of Operating And Maintenance Costs [Member]
Annual Rate Increase Authorized by MPSC	2
Annual Rate Increase Requested by Consumers		16
Difference Between Rate Increase Authorized And Requested	(14)
Cost Of Capital [Member]
Annual Rate Increase Authorized by MPSC	(15)
Annual Rate Increase Requested by Consumers		5
Difference Between Rate Increase Authorized And Requested	$ (20)

XML



Regulatory Matters (Schedule of GCR Reconciliation Filing Pending with the MPSC) (Details) (USD $) In Millions	3 Months Ended		6 Months Ended		12 Months Ended		3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010	Mar. 31, 2011 Gas Cost Recover (GCR) [Member] Consumers Energy Company [Member]	Mar. 31, 2010 Gas Cost Recover (GCR) [Member] Consumers Energy Company [Member]	Jun. 30, 2011 Consumers Energy Company [Member]	Jun. 30, 2010 Consumers Energy Company [Member]	Jun. 30, 2011 Consumers Energy Company [Member]	Jun. 30, 2010 Consumers Energy Company [Member]
Date Of Filing					June 2011	June 2010
Net Over-/(Under) Recovery of GCR Expense, Including Interest					$ 6	$ 1
Cost of gas sold	$ 220	$ 178	$ 988	$ 956	$ 1,200	$ 1,300	$ 197	$ 163	$ 950	$ 909

XML



Financings (Major Long-Term Debt Transactions) (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2011
Consumers Energy Company [Member] | Debt Issuances [Member] | April 2018 Tax-Exempt Bonds [Member]
Debt Issuance, Principal	$ 68	[1]
Debt Issuance Date	May 2011	[1]
Maturity Date	Apr. 15, 2018
Consumers Energy Company [Member] | Debt Issuances [Member] | April 2035 Tax Exempt Bonds [Member]
Debt Issuance, Principal	35	[1]
Debt Issuance Date	May 2011	[1]
Maturity Date	Apr. 01, 2035	[1]
Debt Issuances [Member]
Debt Issuance, Principal	353
Debt Issuances [Member] | Senior Notes [Member]
Debt Issuance, Principal	250
Interest Rate	2.75%
Debt Issuance Date	May 2011
Maturity Date	May 15, 2014
Consumers Energy Company [Member] | Debt Retirements [Member]
Debt Retirement, Principal	103
Consumers Energy Company [Member] | Debt Retirements [Member] | April 2018 Tax-Exempt Bonds [Member]
Maturity Date	Apr. 01, 2018	[1]
Debt Retirement, Principal	68	[1]
Debt Retirement Date	May 2011	[1]
Consumers Energy Company [Member] | Debt Retirements [Member] | April 2035 Tax Exempt Bonds [Member]
Maturity Date	Apr. 01, 2035	[1]
Debt Retirement, Principal	$ 35	[1]
Debt Retirement Date	May 2011	[1]
Consumers Energy Company [Member] | April 2018 Tax-Exempt Bonds [Member]
Interest Rate	0.26%
Consumers Energy Company [Member] | April 2035 Tax Exempt Bonds [Member]
Interest Rate	0.28%

[1] In May 2011, Consumers utilized the Michigan Strategic Fund for the issuance of $68 million and $35 million of tax-exempt Michigan Strategic Fund Variable Rate Limited Obligation Revenue Bonds. The initial interest rate, which resets weekly, was 0.26 percent for the $68 million bond issuance and 0.28 percent for the $35 million bond issuance. The bonds, which are backed by letters of credit and collateralized by FMBs, are subject to optional tender by the holders that would result in remarketing. Consumers used the proceeds to redeem $103 million of tax-exempt bonds in May 2011.

XML



Financings (Revolving Credit Facilities) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended	6 Months Ended
	Mar. 31, 2011	Jun. 30, 2011
Line of Credit Facility, Initiation Date	March 31, 2011
Average borrowings		$ 11
Weighted average interest rate		2.22%
Consumers Energy Company [Member] | Revolving Credit Facilities March 31, 2016 [Member]
Amount of Facility		500	[1],[2]
Amount Borrowed			[1],[2]
Letters of Credit Outstanding		189	[1],[2]
Amount Available		311	[1],[2]
Revolving Credit Facilities March 31, 2016 [Member]
Amount of Facility		550	[3]
Amount Borrowed			[3]
Letters of Credit Outstanding		3	[3]
Amount Available		547	[3]
Consumers Energy Company [Member] | Revolving Credit Facilities August 9, 2013 [Member]
Amount of Facility		150	[1]
Amount Borrowed			[1]
Amount Available		150	[1]
Consumers Energy Company [Member] | Revolving Credit Facilities September 21, 2011 [Member]
Amount of Facility		30	[4]
Amount Borrowed			[4]
Letters of Credit Outstanding		$ 30	[4]
Consumers Energy Company [Member]
Line of Credit Facility, Initiation Date	March 31, 2011

[1] Obligations under this facility are secured by FMBs of Consumers.

[2] On March 31, 2011, Consumers entered into a $500 million secured revolving credit facility with a consortium of banks. This facility has a five-year term and replaces Consumers' revolving credit facility that was set to expire in 2012.

[3] On March 31, 2011, CMS Energy entered into a $550 million secured revolving credit facility with a consortium of banks. This facility has a five-year term and replaces CMS Energy's revolving credit facility that was set to expire in 2012. Obligations under this facility are secured by Consumers common stock.CMS Energy's average borrowings during the six months ended June 30, 2011 totaled $11 million, with a weighted-average annual interest rate of 2.22 percent, representing LIBOR plus 2.00 percent.

[4] Secured revolving letter of credit facility.

XML



Financings (Short-term Borrowings) (Details) (Consumers Energy Company [Member], Short-term Borrowings [Member], USD $) In Millions	6 Months Ended
	Jun. 30, 2011
Consumers Energy Company [Member] | Short-term Borrowings [Member]
Accounts receivable sales facility, maximum borrowing capacity	$ 250
Accounts receivable sales facility, current borrowing capacity	250
Maximum outstanding during the period	$ 0

XML



Financings (Contingently Convertible Securities) (Details) (USD $) In Millions, except Share data, unless otherwise specified	6 Months Ended
	Jun. 30, 2011
Number of trading days, adjusted trigger price contingencies were met	20
Number of trading days	30
2.875% Senior Notes [Member]
Maturity Date	2024
Outstanding	$ 288
Adjusted Conversion Price	$ 12.81
Adjusted Trigger Price	$ 15.37
Senior Notes Interest Rate	2.875%
5.50% Senior Notes [Member]
Maturity Date	2029
Outstanding	172
Adjusted Conversion Price	$ 14.26
Adjusted Trigger Price	$ 18.54
Senior Notes Interest Rate	5.50%
3.375% Contingently Convertible Senior Notes due 2023 [Member]
Senior Notes Interest Rate	3.375%
Conversion Date	January 2011
Principal Converted	4
Conversion Value per share of principal	$ 1,994.21
Common Stock Issued on Settlement	197,472
Cash Paid on Settlement	$ 4

XML



Financings (Dividend Restrictions) (Details) (USD $)	6 Months Ended
	Jun. 30, 2011
Limitation on payment of stock dividends	$ 1,100,000,000
Consumers Energy Company [Member]
Common stock dividends from Consumers	196,000,000
Unrestricted retained earnings	$ 452,000,000

XML



Financings (Issuance of Common Stock) (Details) (USD $) In Millions, except Share data			3 Months Ended
	Jun. 30, 2011	Dec. 31, 2010	Jun. 30, 2011 Continuous Equity Program [Member]
Aggregate sales price of an equity offering program			$ 50
Shares of common stock issued			762,925
Per share value of common stock issued			$ 19.66
Value of common stock issued			15
Issuance of Common Stock Net Proceeds	$ 3	$ 2

XML



Consolidated Balance Sheets (USD $) In Millions	Jun. 30, 2011	Dec. 31, 2010
Assets
Cash and cash equivalents	$ 994	$ 247
Restricted cash and cash equivalents	29	23
Accounts receivable and accrued revenue, less allowances	719	981
Notes receivables	57	70
Accounts receivable - related parties	10	10
Accrued power supply revenue	0	15
Inventories at average cost
Gas in underground storage	720	946
Materials and supplies	106	104
Generating plant fuel stock	143	125
Deferred property taxes	133	180
Regulatory assets	8	19
Assets held for sale	0	2
Prepayments and other current assets	37	37
Total current assets	2,956	2,759
Plant, Property & Equipment (at cost)
Plant, property, and equipment, gross	14,413	14,145
Less accumulated depreciation, depletion, and amortization	4,802	4,646
Plant, property & equipment, net	9,611	9,499
Construction work in progress	644	570
Total plant, property & equipment	10,255	10,069
Non-current Assets
Regulatory assets	2,050	2,093
Accounts and notes receivable, less allowances	398	397
Investments	52	49
Assets held for sale		4
Other non-current assets	234	245
Total non-current assets	2,734	2,788
Total Assets	15,945	15,616
Liabilities and Equity
Current portion of long-term debt, capital and finance lease obligations	1,123	750
Accounts payable	444	492
Accounts payable - related parties	8	9
Accrued rate refunds	43	19
Accrued interest	107	102
Accrued taxes	239	302
Deferred income taxes	154	180
Regulatory liabilities	1	22
Liabilities held for sale		1
Other current liabilities	122	144
Total current liabilities	2,241	2,021
Non-current Liabilities
Long-term debt	6,184	6,448
Non-current portion of capital and finance lease obligations	177	188
Regulatory liabilities	1,860	1,988
Postretirement benefits	1,136	1,135
Asset retirement obligations	252	245
Deferred investment tax credit	47	49
Deferred income taxes	768	438
Other non-current liabilities	278	267
Total non-current liabilities	10,702	10,758
Commitments and Contingencies (Notes 3, 4, 5, 7, and 8)
Equity
Common stock	3	2
Other paid-in capital	4,621	4,588
Accumulated other comprehensive loss	(38)	(40)
Retained earnings (Accumulated deficit)	(1,628)	(1,757)
Total common stockholders' equity	2,958	2,793
Noncontrolling interests	44	44
Total equity	3,002	2,837
Total Liabilities and Equity	15,945	15,616
Consumers Energy Company [Member]
Assets
Cash and cash equivalents	766	71
Restricted cash and cash equivalents	28	23
Accounts receivable and accrued revenue, less allowances	706	963
Notes receivables	43	55
Accounts receivable - related parties	1	1
Accrued power supply revenue	0	15
Inventories at average cost
Gas in underground storage	720	941
Materials and supplies	103	100
Generating plant fuel stock	141	124
Deferred property taxes	133	180
Regulatory assets	8	19
Prepayments and other current assets	30	27
Total current assets	2,679	2,519
Plant, Property & Equipment (at cost)
Plant, property, and equipment, gross	14,285	14,022
Less accumulated depreciation, depletion, and amortization	4,747	4,593
Plant, property & equipment, net	9,538	9,429
Construction work in progress	640	566
Total plant, property & equipment	10,178	9,995
Non-current Assets
Regulatory assets	2,050	2,093
Accounts and notes receivable, less allowances	13	22
Investments	31	34
Other non-current assets	150	176
Total non-current assets	2,244	2,325
Total Assets	15,101	14,839
Liabilities and Equity
Current portion of long-term debt, capital and finance lease obligations	362	61
Accounts payable	429	471
Accounts payable - related parties	11	11
Accrued rate refunds	43	19
Accrued interest	75	74
Accrued taxes	163	199
Deferred income taxes	194	209
Regulatory liabilities	1	22
Other current liabilities	85	95
Total current liabilities	1,363	1,161
Non-current Liabilities
Long-term debt	4,169	4,488
Non-current portion of capital and finance lease obligations	177	188
Regulatory liabilities	1,860	1,988
Postretirement benefits	1,078	1,076
Asset retirement obligations	251	244
Deferred investment tax credit	47	49
Deferred income taxes	1,617	1,289
Other non-current liabilities	186	176
Total non-current liabilities	9,385	9,498
Equity
Common stock	841	841
Other paid-in capital	2,957	2,832
Retained earnings (Accumulated deficit)	511	463
Total common stockholders' equity	4,309	4,136
Preferred stock	44	44
Total equity	4,353	4,180
Total Liabilities and Equity	$ 15,101	$ 14,839

XML



Earnings Per Share - CMS Energy (Basic and Diluted EPS Computation) (Details) (USD $) In Millions, except Per Share data	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Earnings Per Share - CMS Energy
Income from Continuing Operations	$ 101	$ 100	$ 234	$ 189
Less Income Attributable to Noncontrolling Interest	1	2	1	2
Less Preferred Stock Dividends		2		5
Income from Continuing operations available to common stockholders basic and diluted	$ 100	$ 96	$ 233	$ 182
Weighted average shares basic	250.3	228.2	250.2	228.1
Add dilutive contingently convertible securities	11.3	19.3	11.0	19.5
Add dilutive Non vested awards and options	0.3	0.1	0.3	0.1
Weighted average shares - diluted	261.9	247.6	261.5	247.7
Basic	$ 0.40	$ 0.42	$ 0.93	$ 0.80
Diluted	$ 0.38	$ 0.39	$ 0.89	$ 0.74

XML



Earnings Per Share - CMS Energy (Narrative) (Details) (Stock Options [Member]) In Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2011
Stock Options [Member]
Potentially dilutive securities	0.1	0.1

XML



Earnings Per Share - CMS Energy (Impact on the Calulation of EPS if Using the If-Converted Method) (Details) (Convertible Debt Securities [Member], USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Convertible Debt Securities [Member]
Debt Instrument, Interest Rate, Stated Percentage	7.75%	7.75%	7.75%	7.75%
Potential impact of antidilutive debentures - income			$ 1.0	$ 1.0
Potential impact of antidilutive debentures - shares	0.7	0.7	0.7	0.7

XML



Financial Instruments (Schedule of Cost of Carrying Amounts and Fair Value of Long-Term Financial Instruments) (Details) (USD $) In Millions	Jun. 30, 2011		Dec. 31, 2010
Securities held to maturity, Cost or Carrying Amount	$ 7		$ 5
Securities held to maturity - fair value	7		6
Securities available for sale, Cost or Carrying Amount	115		90
Securities available for sale, fair value	116		90
Total unsecured consumer installment loans, net of an allowance for loan losses	398	[1]	386	[1]
Notes receivable, Fair Value	417	[1]	407	[1]
Long-term debt, Cost or Carrying Amount	7,283	[2]	7,174	[2]
Long-term Debt, Fair Value	8,074	[2]	7,861	[2]
EnerBank's Loans classified as current Notes receivable	57		70
Current portion of long-term debt	1,099		726
Portion of long-term debt supported by third-party credit enhancements	103		103
Consumers Energy Company [Member]
Securities available for sale, Cost or Carrying Amount	82		64
Securities available for sale, fair value	107		90
Long-term debt, Cost or Carrying Amount	4,507	[3]	4,525	[3]
Long-term Debt, Fair Value	4,892	[3]	4,891	[3]
EnerBank's Loans classified as current Notes receivable	43		55
Current portion of long-term debt	338		37
Portion of long-term debt supported by third-party credit enhancements	103		103
EnerBank USA [Member]
Total unsecured consumer installment loans, net of an allowance for loan losses	398		386
EnerBank's Loans classified as current Notes receivable	13		11
Notes receivable	$ 13		$ 11

[1] Includes current portion of notes receivable of $13 million at June 30, 2011 and $11 million at December 31, 2010.

[2] Includes current portion of long-term debt of $1,099 million at June 30, 2011 and $726 million at December 31, 2010.

[3] Includes current portion of long-term debt of $338 million at June 30, 2011 and $37 million at December 31, 2010.

XML



Financial Instruments (Schedule of Investment Securities) (Details) (USD $) In Millions			6 Months Ended
	Jun. 30, 2011	Dec. 31, 2010	Jun. 30, 2011 Consumers Energy Company [Member] Supplemental Executive Retirement Plan [Member]	Jun. 30, 2011 Supplemental Executive Retirement Plan [Member]	Jun. 30, 2011 Consumers Energy Company [Member] Mutual Fund [Member]	Dec. 31, 2010 Consumers Energy Company [Member] Mutual Fund [Member]	Jun. 30, 2011 Mutual Fund [Member]	Dec. 31, 2010 Mutual Fund [Member]	Jun. 30, 2011 Consumers Energy Company [Member] State and Municipal Bonds [Member]	Dec. 31, 2010 Consumers Energy Company [Member] State and Municipal Bonds [Member]	Jun. 30, 2011 State and Municipal Bonds [Member]	Dec. 31, 2010 State and Municipal Bonds [Member]	Jun. 30, 2011 Consumers Energy Company [Member] CMS Energy Common Stock [Member]	Dec. 31, 2010 Consumers Energy Company [Member] CMS Energy Common Stock [Member]	Jun. 30, 2011 Consumers Energy Company [Member]	Dec. 31, 2010 Consumers Energy Company [Member]
Available for sale - cost					$ 58	$ 39	$ 89	$ 62					$ 7	$ 8
Available for sale - unrealized gains					1		1						24	26
Available for sale - unrealized losses
Available for sale - fair value	116	90	17	26	59	39	90	62	17	17	26	28	31	34	107	90
Available for sale State and municipal bonds - cost									17	17	26	28
Held to maturity Debt securities - cost	7	5
Held to maturity Debt securities - unrealized gains		1
Held to maturity Debt securities - unrealized losses
Held to maturity Debt securities - fair value	7	6
SERP Contributions			$ 20	$ 27

XML



Financial Instruments (Summary of the Sales Activity for Investment Securities) (Details) (USD $) In Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2011		Jun. 30, 2011		Jun. 30, 2010
Proceeds from Sales of Available-for-Sale Securities	$ 1	[1]	$ 1	[1]	$ 1	[1]
Consumers Energy Company [Member]
Proceeds from Sales of Available-for-Sale Securities			$ 1	[1]

[1] 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.

XML



Financial Instruments (Schedule of Contractual Maturity Securities) (Details) (USD $) In Millions	Jun. 30, 2011	Dec. 31, 2010
Available for sale - fair value	$ 116	$ 90
Consumers Energy Company [Member] | Supplemental Executive Retirement Plan [Member]
Available for sale state and municipal bonds - Due within one year	1
Available for sale state and municipal bonds - Due after one year through five years	7
Available for sale state and municipal bonds - Due after five year through ten years	7
Available for sale state and municipal bonds - Due after ten years	2
Available for sale - fair value	17
Supplemental Executive Retirement Plan [Member]
Available for sale state and municipal bonds - Due within one year	1
Available for sale state and municipal bonds - Due after one year through five years	10
Available for sale state and municipal bonds - Due after five year through ten years	12
Available for sale state and municipal bonds - Due after ten years	3
Available for sale - fair value	26
Consumers Energy Company [Member]
Available for sale - fair value	$ 107	$ 90

XML



Derivative Instruments (Narrative) (Details) (USD $) In Millions, unless otherwise specified									3 Months Ended		6 Months Ended
	Jun. 30, 2011	Dec. 31, 2010	Jun. 30, 2011 Forward Contracts [Member]	Jun. 30, 2011 Future Contracts [Member]	Jun. 30, 2011 Forward Contracts to Purchase [Member]	Jun. 30, 2011 Forward Contracts to Sell [Member]	Jun. 30, 2011 Option Contract to Sell [Member]	Jun. 30, 2011 Futures Contract to Purchase (Member)	Jun. 30, 2011 Consumers Energy Company [Member] Financial Transmission Right [Member]	Jun. 30, 2010 Consumers Energy Company [Member] Financial Transmission Right [Member]	Jun. 30, 2011 Consumers Energy Company [Member] Financial Transmission Right [Member]	Jun. 30, 2010 Consumers Energy Company [Member] Financial Transmission Right [Member]
Derivative contracts (GWh/bcf)			608.0	0.1	2.5	4.2	305.0	0.4
% of Generating Plant's Natural Gas Requirements				22.00%
Gain Or Loss Deferred In Regulatory Accounts									$ 3	$ 1	$ 3	$ 1
Derivative Liabilities Subject to Credit-Related-Contingent Features	1	1
Loss Exposure to Counterparties for Derivative Instruments	$ 1

XML



Derivative Instruments (Assets and Liabilities Fair Value of Derivative Instruments) (Details) (USD $) In Millions	Jun. 30, 2011		Dec. 31, 2010
Impact of master netting arrangements	$ 1		$ 1
Impact of cash margin deposits on derivative liabilities	1		1
Consumers Energy Company [Member] | Other Assets [Member] | Commodity Contracts [Member]
Derivative Assets	3		1
Other Assets [Member] | Commodity Contracts [Member]
Derivative Assets	3	[1]	1	[1]
Consumers Energy Company [Member] | Other Liabilities [Member] | Commodity Contracts [Member]
Derivative Liabilities
Other Liabilities [Member] | Commodity Contracts [Member]
Derivative Liabilities	$ 3	[2]	$ 4	[2]

[1] Assets and liabilities are presented gross and exclude the impact of offsetting derivative assets and liabilities under master netting agreements, which was less than $1 million at June 30, 2011 and December 31, 2010.

[2] 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, 2011 and December 31, 2010. CMS Energy presents these liabilities net of these impacts on its consolidated balance sheets.

XML



Derivative Instruments (Effect of Derivative Instruments on Consolidated Statements of Income) (Details) (USD $) In Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2010
Gain/(Loss) Recognized in Income on Derivative Instruments	$ (1)	$ (2)	$ 6
Commodity Contracts [Member] | Operating Revenue [Member]
Gain/(Loss) Recognized in Income on Derivative Instruments	(1)	(2)	3
Commodity Contracts [Member] | Fuel for Electric Generation [Member]
Gain/(Loss) Recognized in Income on Derivative Instruments			2
Commodity Contracts [Member] | Purchased And Interchange Power [Member]
Gain/(Loss) Recognized in Income on Derivative Instruments			$ 1

XML



Consolidated Balance Sheets (Parenthetical) (USD $) In Millions	Jun. 30, 2011	Dec. 31, 2010
Allowances for doubtful accounts receivable	$ 25	$ 25
Allowances for doubtful notes receivable	5	5
Common stock, shares authorized	350.0	350.0
Common stock, shares outstanding	251.8	249.6
Consumers Energy Company [Member]
Allowances for doubtful accounts receivable	$ 23	$ 23
Common stock, shares authorized	125.0	125.0
Common stock, shares outstanding	84.1	84.1

XML



Notes Receivable (Narrative) (Details) (USD $) In Millions	Jun. 30, 2011		Dec. 31, 2010
Total unsecured consumer installment loans, net of an allowance for loan losses	$ 398	[1]	$ 386	[1]
EnerBank's Loans classified as current Notes receivable	57		70
EnerBank's Loans classified as noncurrent Notes receivable	398		397
EnerBank USA [Member]
Total unsecured consumer installment loans, net of an allowance for loan losses	398		386
Allowance for loan losses	5		5
EnerBank's Loans classified as current Notes receivable	13		11
EnerBank's Loans classified as noncurrent Notes receivable	$ 385		$ 375

[1] Includes current portion of notes receivable of $13 million at June 30, 2011 and $11 million at December 31, 2010.

XML



Notes Receivable (Changes of Allowance for Loan Losses) (Details) (EnerBank USA [Member], USD $) In Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2011
EnerBank USA [Member]
Allowance for loan losses, at beginning of period	$ 5	$ 5
Charge-offs	(1)	(2)
Recoveries
Provision for loan losses	1	2
Allowance for loan losses, at end of period	$ 5	$ 5

XML



Notes Receivable (Disclosure of Delinquency Status of EnerBank's Consumer Loans) (Details) (USD $) In Millions	Jun. 30, 2011		Dec. 31, 2010
Total Outstanding	$ 398	[1]	$ 386	[1]
EnerBank USA [Member]
Past Due 30-59 Days	1
Past Due 60-89 Days	1
Past Due Over 90 Days
Total Delinquent	2
Current	396
Total Outstanding	$ 398		$ 386

[1] Includes current portion of notes receivable of $13 million at June 30, 2011 and $11 million at December 31, 2010.

XML



Retirement Benefits (Narrative) (Details)	6 Months Ended	12 Months Ended
	Jun. 30, 2011	Jun. 30, 2011	Jun. 30, 2010
Expected long-term rate of return on pension plan assets	8.00%
Actual return on pension plan assets		19.50%	14.20%
Consumers Energy Company [Member]
Expected long-term rate of return on pension plan assets	8.00%
Actual return on pension plan assets		19.50%	14.20%

XML



Retirement Benefits (Schedule of Net Benefit Costs) (Details) (USD $) In Millions	3 Months Ended			6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010		Jun. 30, 2011	Jun. 30, 2010
Consumers Energy Company [Member] | Pension Plans, Defined Benefit [Member]
Service cost	$ 11	$ 10		$ 23	$ 21
Interest expense	25	24		49	48
Expected return on plan assets	(28)	(22)		(55)	(45)
Amortization of Net loss	16	13		31	25
Amortization of Prior service cost	2	1		3	3
Net periodic cost	26	26		51	52
Regulatory adjustment		21	[1]		23	[1]
Net periodic cost after regulatory adjustment	26	47		51	75
Pension Plans, Defined Benefit [Member]
Service cost	12	11		24	22
Interest expense	25	25		50	49
Expected return on plan assets	(28)	(23)		(56)	(46)
Amortization of Net loss	15	13		31	26
Amortization of Prior service cost	2	1		3	3
Net periodic cost	26	27		52	54
Regulatory adjustment		21	[1]		23	[1]
Net periodic cost after regulatory adjustment	26	48		52	77
Consumers Energy Company [Member] | Other Postretirement Benefit Plans, Defined Benefit [Member]
Service cost	7	6		13	13
Interest expense	19	20		37	40
Expected return on plan assets	(16)	(14)		(31)	(28)
Amortization of Net loss	8	8		16	16
Amortization of Prior service cost	(5)	(4)		(10)	(6)
Net periodic cost	13	16		25	35
Regulatory adjustment		6	[1]		7	[1]
Net periodic cost after regulatory adjustment	13	22		25	42
Other Postretirement Benefit Plans, Defined Benefit [Member]
Service cost	6	6		13	13
Interest expense	19	20		38	41
Expected return on plan assets	(16)	(14)		(33)	(29)
Amortization of Net loss	8	8		16	16
Amortization of Prior service cost	(5)	(5)		(10)	(7)
Net periodic cost	12	15		24	34
Regulatory adjustment		6	[1]		7	[1]
Net periodic cost after regulatory adjustment	$ 12	$ 21		$ 24	$ 41

[1] Regulatory adjustments are the differences between amounts included in rates and the periodic benefit cost calculated. These regulatory adjustments were offset by surcharge revenues, resulting in no impact to net income for the periods presented.

XML



Income Taxes (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2011	Jun. 30, 2010
U.S. federal income tax rate		35.00%	35.00%
MCIT law change, net of federal expense		(9.90%)
State and local income taxes, net of federal benefit		3.50%	4.00%
Medicare Part D exempt income, net of law change		(1.10%)
Income tax credit amortization		(0.60%)	(0.60%)
Other, net		0.30%	0.70%
Effective income tax rate		27.20%	39.10%
MCIT rate	6.00%
Expense Reversal on Previous Benefit from the Medicare Subsidy		$ 3
Consumers Energy Company [Member] | Michigan Corporate Income Tax [Member]
Reversal of net deferred tax assets related to MCIT law change	134	134
Recognition of regulatory asset related to MCIT law change	134	134
Michigan Corporate Income Tax [Member]
Elimination of deferred tax liabilities related to MCIT law change	32	32
Recognition of tax benefit related to MCIT law change	$ 32
Consumers Energy Company [Member]
U.S. federal income tax rate		35.00%	35.00%
State and local income taxes, net of federal benefit		3.40%	3.50%
Medicare Part D exempt income, net of law change		(0.80%)	(1.00%)
Plant basis differences		0.20%
Income tax credit amortization		(0.50%)	(0.50%)
Other, net		(0.30%)	0.10%
Effective income tax rate		37.00%	37.10%
MCIT rate	6.00%

XML



Reportable Segments (Reconciliation of Revenue from Segments to Consolidated) (Details) (USD $) In Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Operating Revenue	$ 1,364	$ 1,340	$ 3,419	$ 3,307
Total Net Income Available to Common Stockholders	100	80	235	165
Consumers Energy Company [Member] | Electric Utility [Member]
Operating Revenue	949	975	1,846	1,813
Total Net Income Available to Common Stockholders	85	86	150	127
Electric Utility [Member]
Operating Revenue	949	975	1,846	1,813
Total Net Income Available to Common Stockholders	85	86	150	127
Consumers Energy Company [Member] | Gas Utility [Member]
Operating Revenue	354	301	1,445	1,353
Total Net Income Available to Common Stockholders	5	1	93	67
Gas Utility [Member]
Operating Revenue	354	301	1,445	1,353
Total Net Income Available to Common Stockholders	5	1	93	67
Enterprises [Member]
Operating Revenue	50	55	105	123
Total Net Income Available to Common Stockholders	29	33	32	42
Consumers Energy Company [Member] | Other [Member]
Total Net Income Available to Common Stockholders	1		1
Other [Member]
Operating Revenue	11	9	23	18
Total Net Income Available to Common Stockholders	(19)	(24)	(42)	(54)
Discontinued Operations [Member]
Total Net Income Available to Common Stockholders		(16)	2	(17)
Consumers Energy Company [Member]
Operating Revenue	1,303	1,276	3,291	3,166
Total Net Income Available to Common Stockholders	$ 91	$ 87	$ 244	$ 194

XML



Reportable Segments (Reconciliation of Assets from Segment to Consolidated) (Details) (USD $) In Millions	Jun. 30, 2011		Dec. 31, 2010
Plant, property, and equipment, gross	$ 14,413		$ 14,145
Total Assets	15,945		15,616
Consumers Energy Company [Member] | Electric Utility [Member]
Plant, property, and equipment, gross	10,184	[1]	9,944	[1]
Total Assets	9,831	[1]	9,321	[1]
Electric Utility [Member]
Plant, property, and equipment, gross	10,184	[1]	9,944	[1]
Total Assets	9,831	[1]	9,321	[1]
Consumers Energy Company [Member] | Gas Utility [Member]
Plant, property, and equipment, gross	4,086	[1]	4,063	[1]
Total Assets	4,581	[1]	4,614	[1]
Gas Utility [Member]
Plant, property, and equipment, gross	4,086	[1]	4,063	[1]
Total Assets	4,581	[1]	4,614	[1]
Enterprises [Member]
Plant, property, and equipment, gross	106		102
Total Assets	175		191
Consumers Energy Company [Member] | Other [Member]
Plant, property, and equipment, gross	15		15
Total Assets	689		904
Other [Member]
Plant, property, and equipment, gross	37		36
Total Assets	1,358		1,490
Consumers Energy Company [Member]
Plant, property, and equipment, gross	14,285		14,022
Total Assets	$ 15,101		$ 14,839

[1] Amounts include a portion of Consumers' other common assets attributable to both the electric and the gas utility businesses.

XML



Consolidated Statements of Changes in Equity (USD $) In Millions	Consumers Energy Company [Member] CMS Energy Common Stock [Member]	Consumers Energy Company [Member] Other Paid-in Capital [Member]	Consumers Energy Company [Member] Accumulated Other Comprehensive Income (Loss) [Member]	Consumers Energy Company [Member] Retirement benefits liability [Member]	Consumers Energy Company [Member] Investments [Member]	Consumers Energy Company [Member] Retained Earnings (Accumulated Deficit) [Member]	Consumers Energy Company [Member] Preferred Stock [Member]	Consumers Energy Company [Member] Comprehensive Income [Member]	Consumers Energy Company [Member]	CMS Energy Common Stock [Member]	Other Paid-in Capital [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Retirement benefits liability [Member]	Investments [Member]	Derivative instruments [Member]	Retained Earnings (Accumulated Deficit) [Member]	Preferred Stock [Member]	Noncontrolling Interest [Member]	Comprehensive Income [Member]	Total
Total Equity, beginning at Mar. 31, 2010	$ 841	$ 2,782	$ (1)	$ (11)	$ 12	$ 382	$ 44		$ 4,132	$ 2	$ 4,564	$ (32)	$ (31)	$ 0	$ (1)	$ (1,876)	$ 239	$ 44		$ 2,941
Common stock issued											6
Common stock repurchased											(1)
Stockholder's contribution		50
Income attributable to noncontrolling interests																		2	2	2
Retirement benefits liability adjustments, net of tax								0					1						1
Unrealized gain (loss) on investments, net of tax					(1)			(1)						0					0
Net Income						88		88	88							82			84	84
Common stock dividends declared						(54)										(35)
Preferred stock dividends declared						(1)										(2)
Distributions and other changes in noncontrolling interests																		(1)
Net Income Attributable to CMS Energy																			82	82
Total Comprehensive Income								87											83
Total Equity, end at Jun. 30, 2010	841	2,832	0	(11)	11	415	44		4,132	2	4,569	(31)	(30)	0	(1)	(1,831)	239	45		2,993
Total Equity, beginning at Dec. 31, 2009	841	2,582	(2)	(11)	13	389	44		3,858	2	4,560	(33)	(32)	0	(1)	(1,927)	239	97		2,938
Common stock issued											10
Common stock repurchased											(1)
Stockholder's contribution		250							250
Income attributable to noncontrolling interests																		2	2	2
Retirement benefits liability adjustments, net of tax								0					2						2
Unrealized gain (loss) on investments, net of tax					(2)			(2)						0					0
Net Income						195		195	195							170			172	172
Common stock dividends declared						(168)										(69)
Preferred stock dividends declared						(1)										(5)
Distributions and other changes in noncontrolling interests																		(54)
Net Income Attributable to CMS Energy																			170	170
Total Comprehensive Income								193											172
Total Equity, end at Jun. 30, 2010	841	2,832	0	(11)	11	415	44		4,132	2	4,569	(31)	(30)	0	(1)	(1,831)	239	45		2,993
Total Equity, beginning at Dec. 31, 2010	841	2,832	0	(16)	16	463	44		4,180	2	4,588	(40)	(39)	0	(1)	(1,757)	0	44		2,837
Common stock issued										1	28
Common stock repurchased											0
Common stock reissued, value											5
Stockholder's contribution		125							125
Income attributable to noncontrolling interests																		1	1	1
Retirement benefits liability adjustments, net of tax				1				1					1						1
Unrealized gain (loss) on investments, net of tax					(1)			(1)						1					1
Net Income						245		245	245							229			236	236
Common stock dividends declared						(196)										(106)
Preferred stock dividends declared						(1)										0
Distributions and other changes in noncontrolling interests																		(1)
Net Income Attributable to CMS Energy																			235	235
Total Comprehensive Income								245											237
Total Equity, end at Jun. 30, 2011	841	2,957	0	(15)	15	511	44		4,353	3	4,621	(38)	(38)	1	(1)	(1,628)	0	44		3,002
Total Equity, beginning at Mar. 31, 2011	841	2,957	0	(15)	15	512	44		4,354	3	4,599	(40)	(39)	0	(1)	(1,675)	0	44		2,931
Common stock issued											22
Common stock repurchased											0
Common stock reissued, value											0
Stockholder's contribution		0
Income attributable to noncontrolling interests																		1	1	1
Retirement benefits liability adjustments, net of tax								0					1						1
Unrealized gain (loss) on investments, net of tax					0			0						1					1
Net Income						92		92	92							100			101	101
Common stock dividends declared						(92)										(53)
Preferred stock dividends declared						(1)										0
Distributions and other changes in noncontrolling interests																		(1)
Net Income Attributable to CMS Energy																			100	100
Total Comprehensive Income								92											102
Total Equity, end at Jun. 30, 2011	$ 841	$ 2,957	$ 0	$ (15)	$ 15	$ 511	$ 44		$ 4,353	$ 3	$ 4,621	$ (38)	$ (38)	$ 1	$ (1)	$ (1,628)	$ 0	$ 44		$ 3,002

XML



Consolidated Statements of Changes in Equity (Parenthetical) (USD $) In Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2010	Jun. 30, 2010	Jun. 30, 2011 Consumers Energy Company [Member]
Retirement benefits liability adjustments, tax	$ 2	$ 1
Unrealized gain (loss) on investments, tax expense (tax benefit)			$ (1)

XML



Basis of Presentation

6 Months Ended

Jun. 30, 2011

Basis of Presentation

These interim consolidated financial statements have been prepared by CMS Energy and Consumers in accordance with GAAP 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 GAAP. 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 the 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 2010 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.

Consumers Energy Company [Member]

Basis of Presentation

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 the 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 2010 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.