10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
	OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended June 30, 2013
	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 T     No o   Consumers Energy Company:  Yes T     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 T     No o   Consumers Energy Company:  Yes T     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 T   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 T   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 T   Consumers Energy Company:  Yes o    No T

Indicate the number of shares outstanding of each of the issuer’s classes of common stock at July 5, 2013:

CMS Energy Corporation:

CMS Energy Common Stock, $0.01 par value
(including 1,091,320 shares owned by Consumers Energy Company)	266,959,461

Consumers Energy Company:

Consumers 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, 2013

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 Corporation	34
	Consumers Energy Company	42
	Notes to the Unaudited Consolidated Financial Statements	49
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	72
Item 4.	Controls and Procedures	72
PART II. Other Information
Item 1.	Legal Proceedings	72
Item 1A.	Risk Factors	73
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	73
Item 3.	Defaults Upon Senior Securities	73
Item 4.	Mine Safety Disclosures	73
Item 5.	Other Information	73
Item 6.	Exhibits	74
Signatures		75

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GLOSSARY

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

2008 Energy Law	Comprehensive energy reform package enacted in Michigan in 2008
2012 Form 10-K	Each of CMS Energy’s and Consumers’ Annual Report on Form 10-K for the year ended December 31, 2012
ABATE	Association of Businesses Advocating Tariff Equity
Bay Harbor	A residential/commercial real estate area located near Petoskey, Michigan, in which CMS Energy sold its interest in 2002
bcf	Billion cubic feet
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
CCR	Coal combustion residual
CEO	Chief Executive Officer
CFO	Chief Financial Officer
Clean Air Act	Federal Clean Air Act of 1963, as amended
Clean Water Act	Federal Water Pollution Control Act of 1972, 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
CMS Field Services	CMS Field Services, Inc., a former wholly owned subsidiary of CMS Gas Transmission

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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 in 2004
Consumers	Consumers Energy Company, a wholly owned subsidiary of CMS Energy
CSAPR	The Cross-State Air Pollution Rule
Customer Choice Act	Customer Choice and Electricity Reliability Act, a Michigan statute
DB SERP	Defined Benefit Supplemental Executive Retirement Plan
Dodd-Frank Act	Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
DOE	U.S. Department of Energy
DOJ	U.S. Department of Justice
DTE Electric	DTE Electric Company, a non-affiliated company
EBITDA	Earnings before interest, taxes, depreciation, and amortization
EGWP	Employer Group Waiver Plan
EnerBank	EnerBank USA, a wholly owned subsidiary of CMS Capital
Entergy	Entergy Corporation, a non-affiliated company
Environmental Mitigation 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
EPA	U.S. Environmental Protection Agency
EPS	Earnings per share
Exchange Act	Securities Exchange Act of 1934, as amended
FDIC	Federal Deposit Insurance Corporation
FERC	The Federal Energy Regulatory Commission
fine particulate matter	Particulate matter that is 2.5 microns or less in diameter

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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
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
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 DTE Electric
MACT	Maximum Achievable Control Technology, which is the emission control that is achieved in practice by the best-controlled similar source
MATS	Mercury and Air Toxics Standards, which limit mercury, acid gases, and other toxic pollution from coal-fueled and oil-fueled power plants
MD&A	Management’s Discussion and Analysis of Financial Condition and Results of Operations
MDEQ	Michigan Department of Environmental Quality
MDL	A pending multi-district litigation case in Nevada
MGP	Manufactured gas plant
Michigan Business Corporation Act	Michigan Business Corporation Act of 1972, as amended
Michigan Mercury Rule	Michigan Air Pollution Control Rules, Part 15, Emission Limitations and Prohibitions – Mercury, addressing mercury emissions from coal-fueled electric generating units
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 Midcontinent Independent System Operator, Inc.

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mothball	To place a generating unit into a state of extended reserve shutdown in which the unit is inactive and unavailable for service for a specified period, during which the unit can be brought back into service after receiving appropriate notification and completing any necessary maintenance or other work; generation owners in MISO must request approval to mothball a unit, and MISO then evaluates the request for reliability impacts
MPSC	Michigan Public Service Commission
MW	Megawatt, a unit of power equal to one million watts
NAV	Net asset value
NERC	The North American Electric Reliability Corporation, a non-affiliated company responsible for developing and enforcing reliability standards, monitoring the bulk power system, and educating and certifying industry personnel
NOV	Notice of Violation
NPDES	National Pollutant Discharge Elimination System, a permit system for regulating point sources of pollution under the Clean Water Act
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	The New York Mercantile Exchange
OPEB	Other Post-Employment Benefits
OPEB Plan	Defined benefit postretirement health-care and life insurance plans of CMS Energy, Consumers, and Panhandle
Palisades	Palisades nuclear power plant, sold by Consumers to Entergy in 2007
Panhandle	Panhandle Eastern Pipe Line 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
PSCR	Power supply cost recovery
PSD	Prevention of Significant Deterioration
REC	Renewable energy credit established under the 2008 Energy Law

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ReliabilityFirst Corporation	ReliabilityFirst Corporation, a non-affiliated company responsible for the preservation and enhancement of bulk power system reliability and security
Renewable Operating Permit	Michigan’s Title V permitting program under the Clean Air Act
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
Sherman Act	Sherman Antitrust Act of 1890
Smart Energy	Consumers’ Smart Energy grid modernization project, which includes the installation of smart meters that transmit and receive 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 of 1980
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.
Trunkline	Trunkline Gas Company, LLC, a non-affiliated company and wholly owned subsidiary of Panhandle

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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 2012 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, but are not limited to, the following, all of which are potentially significant:

·the impact of regulation by the MPSC or FERC and other applicable governmental proceedings and regulations, including any associated impact on electric or gas rates or rate structures;

·potentially adverse regulatory treatment or failure to receive timely regulatory orders affecting Consumers that are or could come before the MPSC, FERC, MISO, or other governmental authorities;

·the adoption of federal or state laws or regulations or changes in applicable laws, rules, regulations, principles, or practices, or in their interpretation, including those related to energy policy and ROA, the environment, regulation or deregulation, health care reforms (including the Health Care Acts), taxes, accounting matters, and other business issues that could have an impact on CMS Energy’s or Consumers’ businesses or financial results, including laws or regulations regarding climate change and air emissions and potential effects of the Dodd-Frank Act and related regulations on CMS Energy, Consumers, or any of their affiliates;

·potentially adverse regulatory or legal interpretations or decisions regarding environmental matters, or delayed regulatory treatment or permitting decisions that are or could come before the MDEQ, EPA, and/or U.S. Army Corps of Engineers, 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;

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·changes in energy markets, including availability and price of electric capacity and the timing and extent of changes in commodity prices and availability of coal, natural gas, natural gas liquids, electricity, oil, and certain related products;

·the price of CMS Energy common stock, the credit ratings of CMS Energy and Consumers, capital and financial market conditions, and the effect of these market conditions on CMS Energy’s and Consumers’ interest costs and access to the capital markets, including availability of financing to CMS Energy, Consumers, or any of their affiliates;

·the investment performance of the assets of CMS Energy’s and Consumers’ pension and benefit plans and the discount rates used in calculating the plans’ obligations, and the resulting impact on future funding requirements;

·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, ability to collect accounts receivable from customers, or cost and availability of capital;

·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;

·national, regional, and local economic, competitive, and regulatory policies, conditions, and developments, including municipal bankruptcy filings such as the recent filing by the City of Detroit;

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

·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;

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

·the availability, cost, coverage, and terms of insurance, the stability of insurance providers, and the ability of Consumers to recover the costs of any insurance from customers;

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

·factors affecting development of electric generation projects and distribution infrastructure replacement and expansion projects, including those related to project site identification, construction material pricing, availability of qualified construction personnel, permitting, and government approvals;

·factors affecting operations, such as costs and availability of personnel, equipment, and materials, unusual weather conditions, catastrophic weather-related damage, scheduled or unscheduled equipment outages, maintenance or repairs, environmental incidents, and electric transmission and distribution or gas pipeline system constraints;

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·potential disruption to, interruption of, or other impacts on facilities, utility infrastructure, or operations due to accidents, explosions, physical disasters, war, or terrorism, and the ability to obtain or maintain insurance coverage for these events;

·changes or disruption in fuel supply, including but not limited to rail or vessel transport of coal and pipeline transport of natural gas;

·potential costs, lost revenues, or other consequences resulting from misappropriation of assets or sensitive information, corruption of data, or operational disruption in connection with a cyber attack or other cyber incident;

·technological developments in energy production, storage, delivery, usage, and metering, including Smart Energy and the success of its implementation;

·the impact of CMS Energy’s and Consumers’ integrated business software system and its operation on their activities, including utility customer billing and collections;

·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;

·restrictions imposed by various financing arrangements and regulatory requirements on the ability of Consumers and other subsidiaries of CMS Energy to transfer funds to CMS Energy in the form of cash dividends, loans, or advances;

·earnings volatility resulting from the application of fair value accounting to certain energy commodity contracts or interest rate contracts;

·changes in financial or regulatory accounting principles or policies, including 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 matters that may be disclosed from time to time in CMS Energy’s and Consumers’ SEC filings, or in other publicly issued documents.

All forward-looking statements should be considered in the context of the risk and other factors described above and as detailed from time to time in CMS Energy’s and Consumers’ SEC filings.  For additional details regarding these and other uncertainties, see Part I – Item 1. Consolidated Financial Statements (Unaudited) – Notes to the Unaudited Consolidated Financial Statements – Note 1, Regulatory Matters and Note 2, Contingencies and Commitments; Part I – Item 2. MD&A – Outlook; and Part II – Item 1A. Risk Factors.

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CMS Energy Corporation

Consumers Energy Company

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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.

CMS Energy’s business strategy emphasizes the key elements depicted below:

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SAFE, EXCELLENT OPERATIONS

The safety of employees, customers, and the general public remains 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 2006 to 2012, Consumers achieved a 76 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.  Also, in order to minimize increases in customer rates, Consumers has undertaken several initiatives to reduce costs through a voluntary separation plan in 2012, accelerated pension funding, employee and retiree health-care cost sharing, negotiated labor agreements, information system efficiencies, and productivity improvement programs.  These initiatives, together with Consumers’ plans to accelerate further cost reductions, should allow Consumers to avoid increasing electric and gas base rates through 2014.  Consumers’ ability to avoid base rate increases is dependent on MPSC approval of certain applications yet to be filed.  Consumers may also reconsider this expectation should its assumptions change regarding the economy or other matters.

UTILITY INVESTMENT

Consumers expects to make capital investments of about $7 billion from 2013 through 2017.  Consumers has limited its capital investment program to those investments it believes are needed to provide safe, reliable, and efficient service to its customers.  Consumers’ capital investment program is expected to result in annual rate base growth of five to seven percent while allowing Consumers to maintain sustainable customer base rate increases (excluding PSCR and GCR charges) at or below the rate of inflation.

Among the key components of Consumers’ investment program are projects that will enhance customer value.  Consumers’ planned base capital investments of $3.2 billion comprise $2.1 billion of electric utility projects to improve reliability and increase capacity and $1.1 billion of gas utility projects to increase capacity and deliverability and enhance pipeline integrity.  An additional $1.4 billion of planned reliability investments at Consumers are aimed at reducing outages and improving customer satisfaction; these investments comprise $0.7 billion at the electric utility to strengthen circuits and substations, replace poles, and upgrade the Ludington pumped-storage plant, and $0.7 billion at the gas utility to replace mains and enhance transmission and storage systems.  Consumers also expects to spend $1.1 billion on environmental investments needed to comply with state and federal laws and regulations.

In December 2012, Consumers announced plans to build a 700-MW gas-fueled electric generating plant at its Thetford complex in Genesee County, Michigan and filed an air permit application with the MDEQ for the proposed plant.  In July 2013, Consumers filed for approval of a certificate of necessity with the MPSC, as allowed under the 2008 Energy Law.  Construction of the plant, at an estimated cost of $750 million, is contingent upon obtaining the certificate of necessity and environmental permits.  Consumers expects the plant to be operational in 2017.

Renewable energy projects are another major component of Consumers’ planned capital investments.  Consumers expects to spend $0.3 billion on renewable energy investments, under an MPSC-approved renewable energy plan, from 2013 through 2017.  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 eight percent of its present power supply coming from such renewable sources as hydropower, landfill gas, biomass, wind, anaerobic digestion, and solar.

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Consumers’ Smart Energy program, with an estimated total project capital cost of $0.8 billion, also represents a major capital investment.  The full-scale deployment of advanced metering infrastructure began in August 2012 and is planned to continue through 2019.  Consumers has spent $0.2 billion through 2012 on its Smart Energy program, and expects to spend an additional $0.3 billion, following a phased approach, from 2013 through 2017.

REGULATION

Regulatory matters are a key aspect of CMS Energy’s and Consumers’ businesses, particularly Consumers’ rate cases and regulatory proceedings before the MPSC.  Michigan Governor Rick Snyder has appointed Sally Talberg to serve on the three-member MPSC for a six-year term starting July 3, 2013 replacing Orjiakor Isiogu.  Talberg has served in various energy-related consulting, management, and public service roles during her career.  She will represent political independents on the Commission.  Her appointment is subject to the advice and consent of the Michigan Senate.  Other important regulatory events and developments are summarized below.

·Electric Rate Cases:  Consumers filed a general electric rate case with the MPSC in September 2012, seeking an annual rate increase of $148 million, based on a 10.5 percent authorized return on equity.  In January 2013, Consumers supplemented its electric rate case application to reflect changes to its environmental compliance and generation outage plans, which reduced its requested annual rate increase to $145 million.

In March 2013, Consumers self-implemented an annual rate increase of $110 million out of its requested $145 million, subject to refund with interest.  Consumers’ self-implementation required no order by the MSPC, and no intervenors in Consumers’ electric rate case opposed Consumers’ self-implementation amount.  The MPSC approved a partial settlement agreement in May 2013, authorizing an annual rate increase of $89 million, based on a 10.3 percent authorized rate of return on equity.

In July 2013, Consumers filed a reconciliation of total revenues collected during self-implementation to those that would have been collected under final rates.  Consumers’ reconciliation indicated that no refund would be required.

·Gas Rate Case:  In February 2013, Consumers filed an application with the MPSC seeking an annual rate increase of $49 million, based on a 10.5 percent authorized return on equity.  The filing requested authority to recover new investments in customer reliability, deliverability, safety, and system enhancements, and sought approval of several rate adjustment mechanisms.  Subsequent to this filing, Consumers’ projection of non-fuel costs decreased.  As a result, in June 2013, Consumers filed a petition with the MPSC to close the docket or, alternatively, to suspend and extend indefinitely the schedule in this case.  The MPSC approved Consumers’ petition to suspend and indefinitely extend the schedule.

·Gas Revenue Decoupling Mechanism:  The gas revenue decoupling mechanism, authorized by the MPSC in its 2009 order in Consumers’ gas rate case and extended through April 2012, allowed Consumers to adjust future gas rates to the degree that actual average weather-adjusted

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sales per customer differed from the rate order.  In December 2012, the MPSC approved Consumers’ first reconciliation of the gas revenue decoupling mechanism, in which Consumers requested recovery of $16 million from customers for the period June 2010 through May 2011.  The MPSC authorized recovery of the full amount over a three-month period that began in February 2013.

Consumers filed its final reconciliation of the gas revenue decoupling mechanism in August 2012, requesting recovery of $17 million from customers for the period June 2011 through April 2012.  At June 30, 2013, Consumers had a $17 million regulatory asset recorded for gas revenue decoupling for that period.

The 2008 Energy Law limits alternative electric supply to ten percent of Consumers’ weather-adjusted retail sales of the preceding calendar year.  At June 30, 2013, Consumers’ electric deliveries under the ROA program were at the ten percent limit.  In February 2013, a bill was introduced to the Michigan Senate that, if enacted, would revise the 2008 Energy Law and allow customers on the ROA program waiting list to switch their service to an alternative electric supplier.  Presently, the proportion of Consumers’ electric deliveries under the ROA program and on the ROA waiting list is 25 percent.  The bill also proposes an increase in the cap of six percentage points per year from 2014 through 2016.  Consumers is unable to predict the outcome of this legislative proposal.

Environmental regulation is another area of importance for CMS Energy and Consumers, and they are monitoring numerous legislative and regulatory initiatives, including initiatives to regulate greenhouse gases, and related litigation.

In 2012, the EPA published its final MACT emission standards for electric generating units, based on Section 112 of the Clean Air Act, calling the final rule MATS.  Although numerous parties, including the State of Michigan, have sought to extend the deadline of MATS, it is expected to take effect in 2015.  Consumers has received from the MDEQ a one-year extension for MATS and the Michigan Mercury Rule for ten of its coal-fueled units, allowing them to run as presently configured until April 2016.  CMS Energy and Consumers are continuing to assess the impact and cost associated with these standards.

In June 2013, President Obama directed the EPA to issue a revised proposal addressing greenhouse gas emissions of new fossil-fuel-fired steam electric generating units by September 20, 2013, and to finalize the rule in a timely fashion.  The EPA was further directed to address existing, modified, and reconstructed fossil-fuel-fired steam electric generating units with proposed standards, regulations, or guidelines to be completed by June 1, 2014, and final standards, regulations, or guidelines to be completed by June 1, 2015.  Subsequent state implementation plans are due by June 30, 2016.  Consumers believes that its balanced energy initiative, its present carbon reduction target, and its emphasis on supply diversity will position it favorably to deal with the impact of carbon regulation, but cannot predict the nature or outcome of these proposals.  Consumers will continue to monitor regulatory activity regarding greenhouse gas emissions standards that may affect electric generating units.

FINANCIAL PERFORMANCE

For the six months ended June 30, 2013, CMS Energy’s net income available to common stockholders was $224 million, and diluted EPS were $0.83.  This compares with net income available to common stockholders of $167 million and diluted EPS of $0.62 for the six months ended June 30, 2012.  The main factors contributing to CMS Energy’s improved performance in 2013 were increased gas deliveries and the absence, in 2013, of the write-off of Consumers’ electric revenue decoupling mechanism regulatory asset in 2012.

Consumers’ utility operations are seasonal.  The consumption of electric energy typically increases in the summer months, due primarily to the use of air conditioners and other cooling equipment, while peak

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demand for natural gas occurs in the winter due to colder temperatures and the resulting use of natural gas as heating fuel.  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 and Consumers believe that economic conditions in Michigan are improving.  Consumers expects its electric sales to increase annually by about 0.5 to 1.0 percent on average through 2017, driven largely by the continued rise in industrial production.  Excluding the impacts of energy efficiency programs, Consumers expects its electric sales to increase by about 1.0 to 1.5 percent annually through 2017.  Consumers is projecting that its gas sales will remain stable through 2017.  This outlook reflects growth in gas demand offset by energy efficiency and conservation.

As Consumers seeks to continue to receive 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.

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RESULTS OF OPERATIONS

CMS ENERGY CONSOLIDATED RESULTS OF OPERATIONS

				In Millions, Except Per Share Amounts
	Three Months Ended									Six Months Ended
June 30	2013			2012			Change			2013			2012			Change
Net Income Available to Common Stockholders	$	80		$	100		$	(20	)	$	224		$	167		$	57
Basic Earnings Per Share	$	0.30		$	0.38		$	(0.08	)	$	0.85		$	0.64		$	0.21
Diluted Earnings Per Share	$	0.29		$	0.37		$	(0.08	)	$	0.83		$	0.62		$	0.21
							In Millions
	Three Months Ended									Six Months Ended
June 30	2013			2012			Change			2013			2012			Change
Electric utility	$	93		$	111		$	(18	)	$	159		$	132		$	27
Gas utility	5			9			(4		)	101			64			37
Enterprises	1			(1		)	2			5			4			1
Corporate interest and other	(19		)	(19		)	-			(41		)	(40		)	(1		)
Discontinued operations	-			-			-			-			7			(7		)
Net Income Available to Common Stockholders	$	80		$	100		$	(20	)	$	224		$	167		$	57

Presented in the following table are specific after-tax changes to net income available to common stockholders for 2013 versus 2012:

						In Millions
	June 30, 2013 better/(worse) than 2012
Reasons for the change	Three Months Ended					Six Months Ended
Gas sales	$	5				$	46
Electric sales	(10)					1
Electric and gas rate orders	17					30
Depreciation and property tax	(10)					(20)
Distribution and restoration cost	(20)					(21)
Absence of recovery of development costs related to canceled coal-fueled plant in 2012	(9)					(9)
Subsidiary earnings of enterprises segment	1					(1)
Higher corporate fixed charges and other, offset by higher EnerBank earnings	-					(1)
Other	(2)		$	(28	)	(6)		$	19
Absence of 2012 charge to write off electric decoupling regulatory asset			-					36
Absence of voluntary separation plan cost in 2012			7					7
Other, including the absence of the elimination, in 2012, of a liability associated with a prior asset sale			1					(5		)
Total change			$	(20	)			$	57

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CONSUMERS ELECTRIC UTILITY RESULTS OF OPERATIONS

										In Millions
	Three Months Ended							Six Months Ended
June 30	2013		2012		Change			2013		2012		Change
Net Income Available to Common Stockholders	$	93	$	111	$	(18	)	$	159	$	132	$	27
Reasons for the change
Electric deliveries and rate increases					$	(2	)					$	78
Power supply costs and related revenue					(1		)					(1		)
Other income, net of expenses					(1		)					(2		)
Maintenance and other operating expenses					(17		)					(13		)
Depreciation and amortization					(8		)					(19		)
General taxes					(1		)					(2		)
Interest charges					-							1
Income taxes					12							(15		)
Total change					$	(18	)					$	27

Electric deliveries and rate increases:  For the three months ended June 30, 2013, electric delivery revenues decreased $2 million compared with 2012.  This decrease reflected $19 million of lower deliveries, due partially to milder weather in 2013, and a $2 million decrease in other revenues.  These decreases were offset largely by a $19 million benefit from a May 2013 rate increase that Consumers self-implemented in March 2013.  Deliveries to end-use customers, excluding deliveries to Consumers’ largest customer, which is on an economic development rate, were 8.6 billion kWh in 2013, a decrease of 0.1 billion kWh, or one percent, compared with 2012.

For the six months ended June 30, 2013, electric delivery revenues increased $78 million compared with 2012.  This increase reflected the absence, in 2013, of a $59 million charge to write off Consumers’ electric decoupling regulatory asset, and a $23 million benefit from a May 2013 rate increase that Consumers self-implemented in March 2013.  These increases were offset partially by a $4 million decrease in other revenues.  Deliveries to end-use customers, excluding deliveries to Consumers’ largest customer, which is on an economic development rate, were 17.3 billion kWh in 2013, an increase of 0.1 billion kWh, or one percent, compared with 2012.

Maintenance and other operating expenses:  For the three months ended June 30, 2013, maintenance and other operating expenses increased $17 million compared with 2012.  This increase reflected the absence, in 2013, of the authorized recovery of $14 million associated with Consumers’ cancelled coal-fueled plant and an $11 million increase in service restoration expenses.  These increases were offset partially by the absence, in 2013, of $8 million of voluntary separation programs expenses.

For the six months ended June 30, 2013, maintenance and other operating expenses increased $13 million compared with 2012.  This increase reflected the absence, in 2013, of the authorized recovery of $14 million associated with Consumers’ cancelled coal-fueled plant, and an $8 million increase in service restoration expenses.  These increases were offset partially by the absence, in 2013, of $8 million of voluntary separation program expenses, and a $1 million decrease in other operating expenses.

Depreciation and amortization:  For the three months ended June 30, 2013, depreciation and amortization expense increased $8 million compared with 2012, and for the six months ended June 30, 2013, depreciation and amortization expense increased $19 million compared with 2012.  These

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increases were due primarily to increased plant in service during 2013 and an increase in depreciation rates that took effect in June 2012.

Income taxes:  For the three months ended June 30, 2013, income taxes decreased $12 million compared with 2012, reflecting lower electric utility earnings for the three months ended June 30, 2013.

For the six months ended June 30, 2013, income taxes increased $15 million compared with 2012, reflecting higher electric utility earnings for the first six months of 2013.

CONSUMERS GAS UTILITY RESULTS OF OPERATIONS

										In Millions
	Three Months Ended							Six Months Ended
June 30	2013		2012		Change			2013		2012		Change
Net Income Available to Common Stockholders	$	5	$	9	$	(4	)	$	101	$	64	$	37
Reasons for the change
Gas deliveries and rate increases					$	2						$	57
Maintenance and other operating expenses					(6		)					1
Depreciation and amortization					-							3
General taxes					-							(1		)
Interest charges					(1		)					-
Income taxes					1							(23		)
Total change					$	(4	)					$	37

Gas deliveries and rate increases:  For the three months ended June 30, 2013, gas delivery revenues increased $2 million compared with 2012.  This increase was due primarily to higher customer deliveries, offset partially by the absence of the gas revenue decoupling mechanism in 2013.  Deliveries to end-use customers were 47 bcf in 2013, an increase of 7 bcf, or 18 percent, compared with 2012.

For the six months ended June 30, 2013, gas delivery revenues increased $57 million compared with 2012.  This increase reflected $51 million of higher customer deliveries, due primarily to colder weather in 2013, offset partially by the absence of the gas revenue decoupling mechanism in 2013, and a $6 million benefit from a June 2012 rate increase that Consumers self-implemented in March 2012.  Deliveries to end-use customers were 179 bcf in 2013, an increase of 33 bcf, or 23 percent, compared with 2012.

Maintenance and other operating expenses:  For the three months ended June 30, 2013, maintenance and other operating expenses increased $6 million compared with 2012.  This increase was due to a $10 million increase in pipeline integrity and gas distribution operating expenses, offset partially by the absence, in 2013, of $4 million of voluntary separation program expenses.

For the six months ended June 30, 2013, maintenance and other operating expenses decreased $1 million compared with 2012.  This decrease was due to the absence, in 2013, of $4 million of voluntary separation program expenses, offset partially by a $3 million increase in gas distribution operating expenses.

Depreciation and amortization:  For the six months ended June 30, 2013, depreciation and amortization expense decreased $3 million compared with 2012, due primarily to decreased depreciation rates that took effect in January 2013.

Income taxes:  For the six months ended June 30, 2013, income taxes increased $23 million compared with 2012, due to higher gas utility earnings in 2013.

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ENTERPRISES RESULTS OF OPERATIONS

										In Millions
	Three Months Ended							Six Months Ended
June 30	2013		2012			Change		2013		2012		Change
Net Income Available to Common Stockholders	$	1	$	(1	)	$	2	$	5	$	4	$	1

For the three months ended June 30, 2013, net income of the enterprises segment increased $2 million compared with 2012, due primarily to improved gross margins.

For the six months ended June 30, 2013, net income of the enterprises segment increased $1 million compared with 2012, due primarily to lower expenses, offset partially by the absence of a $2 million 2012 Michigan tax benefit.

CORPORATE INTEREST AND OTHER RESULTS OF OPERATIONS

												In Millions
	Three Months Ended								Six Months Ended
June 30	2013			2012			Change		2013			2012			Change
Net Income (Reduction) Available to Common Stockholders	$	(19	)	$	(19	)	$	-	$	(41	)	$	(40	)	$	(1	)

For the six months ended June 30, 2013, corporate interest and other net expenses increased $1 million compared with 2012, due primarily to an increase in interest expense, reflecting increased borrowings.

DISCONTINUED OPERATIONS

For the three months ended June 30, 2013, the net loss from discontinued operations was less than $1 million.

For the six months ended June 30, 2013, the net loss from discontinued operations was less than $1 million, compared with income from discontinued operations of $7 million in 2012, reflecting the elimination of a liability related to a prior asset sale.

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CASH POSITION, INVESTING, AND FINANCING

At June 30, 2013, CMS Energy had $566 million of consolidated cash and cash equivalents, which included $29 million of restricted cash and cash equivalents.  At June 30, 2013, Consumers had $314 million of consolidated cash and cash equivalents, which included $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, 2013 and 2012:

							In Millions
Six Months Ended June 30	2013			2012			Change
CMS Energy, including Consumers
Net income	$	225		$	168		$	57
Non-cash transactions1	580			533			47
	805			701			104
Postretirement benefits contributions	(88		)	(37		)	(51		)
Proceeds from government grant	69			-			69
Changes in core working capital2	357			291			66
Changes in other assets and liabilities, net	(48		)	(12		)	(36		)
Net cash provided by operating activities	$	1,095		$	943		$	152
Consumers
Net income	$	262		$	198		$	64
Non-cash transactions1	527			461			66
	789			659			130
Postretirement benefits contributions	(86		)	(34		)	(52		)
Proceeds from government grant	69			-			69
Changes in core working capital2	357			294			63
Changes in other assets and liabilities, net	(44		)	94			(138		)
Net cash provided by operating activities	$	1,085		$	1,013		$	72

1Non-cash transactions comprise depreciation and amortization, changes in deferred income taxes, postretirement benefits expense, and other non-cash items.

2Core working capital comprises accounts receivable and accrued revenues, inventories, and accounts payable.

For the six months ended June 30, 2013, net cash provided by operating activities at CMS Energy increased $152 million compared with 2012, and net cash provided by operating activities at Consumers increased $72 million compared with 2012.  The increases were due primarily to higher net income, net of non-cash transactions, the receipt of a $69 million renewable energy grant for Lake Winds® Energy Park, an increase in refunds to customers, and a larger reduction in working capital, reflecting higher usage of gas inventory.  These changes were offset partially by higher pension contributions.  At Consumers, these changes were also offset partially by an increase in tax payments to CMS Energy.

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INVESTING ACTIVITIES

Presented in the following table are specific components of net cash used in investing activities for the six months ended June 30, 2013 and 2012:

							In Millions
Six Months Ended June 30	2013			2012			Change
CMS Energy, including Consumers
Capital expenditures	$	(580	)	$	(575	)	$	(5	)
Costs to retire property and other	(36		)	(35		)	(1		)
Net cash used in investing activities	$	(616	)	$	(610	)	$	(6	)
Consumers
Capital expenditures	$	(579	)	$	(572	)	$	(7	)
Costs to retire property and other	(34		)	(29		)	(5		)
Net cash used in investing activities	$	(613	)	$	(601	)	$	(12	)

For the six months ended June 30, 2013, net cash used in investing activities at CMS Energy increased $6 million compared with 2012, and net cash used in investing activities at Consumers increased $12 million compared with 2012.  The increases were due primarily to a slight increase in capital expenditures under Consumers’ capital investment program.

FINANCING ACTIVITIES

Presented in the following table are specific components of net cash used in financing activities for the six months ended June 30, 2013 and 2012:

							In Millions
Six Months Ended June 30	2013			2012			Change
CMS Energy, including Consumers
Issuance of debt	$	788		$	914		$	(126	)
Retirement of debt	(586		)	(1,100		)	514
Payment of common stock dividends	(135		)	(125		)	(10		)
Decrease in notes payable	(110		)	-			(110		)
Other financing activities	8			4			4
Net cash used in financing activities	$	(35	)	$	(307	)	$	272
Consumers
Issuance of debt	$	425		$	375		$	50
Retirement of debt	(445		)	(694		)	249
Payment of common and preferred stock dividends	(195		)	(159		)	(36		)
Stockholder contribution from CMS Energy	150			150			-
Decrease in notes payable	(110		)	-			(110		)
Other financing activities	(16		)	(15		)	(1		)
Net cash used in financing activities	$	(191	)	$	(343	)	$	152

For the six months ended June 30, 2013, net cash used in financing activities at CMS Energy decreased $272 million compared with 2012 and net cash used in financing activities at Consumers decreased $152 million compared with 2012.  These changes were due primarily to a decrease in net debt retirements, offset partially by repayments by Consumers under its revolving accounts receivable sales program.

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RETIREMENT BENEFITS

Effective July 1, 2013, CMS Energy and Consumers approved a change to the Medicare drug program provided through their OPEB Plan from an employer-sponsored prescription drug plan with a retiree drug subsidy to an EGWP, to begin on January 1, 2015.  As a result of changes stemming from the Health Care Acts, the EGWP structure can result in reduced costs for employers, without impacting plan participants’ benefit coverage or costs.  Also effective July 1, 2013, CMS Energy and Consumers approved certain benefit changes to the OPEB Plan, to begin on January 1, 2016.  Accordingly, CMS Energy and Consumers performed a remeasurement of the OPEB Plan as of July 1, 2013.  In addition, with the plan remeasurement, the discount rate used to measure the OPEB liability was increased from 4.4 percent at December 31, 2012 to 5.1 percent at July 1, 2013.  Assumptions regarding the expected long-term rate of return on plan assets and the health-care cost trend rate did not change from December 31, 2012 levels.

As a result of these changes, CMS Energy’s (including Consumers’) OPEB liability decreased by $613 million and its OPEB regulatory asset decreased by $599 million as of July 1, 2013.  CMS Energy’s accumulated other comprehensive loss decreased by $14 million.  CMS Energy’s (including Consumers’) OPEB cost is expected to decrease by $46 million in 2013.  Consumers’ OPEB liability decreased by $599 million and its OPEB regulatory asset decreased by $599 million as of July 1, 2013.  Consumers’ OPEB cost is expected to decrease by $45 million in 2013.

The decrease in CMS Energy’s and Consumers’ OPEB liabilities was due primarily to the change in the discount rate used to measure the liabilities and other changes in actuarial assumptions, the benefit changes, and the change in the OPEB Plan’s Medicare drug program to the EGWP structure.  Presented in the following table are the components of the decrease in CMS Energy’s and Consumers’ OPEB liabilities at July 1, 2013.

	In Millions
	OPEB Liability
CMS Energy, including Consumers
Discount rate and other actuarial assumptions	$	250
Benefit changes	208
Medicare drug program structure	155
Total decrease	$	613
Consumers
Discount rate and other actuarial assumptions	$	245
Benefit changes	203
Medicare drug program structure	151
Total decrease	$	599

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Presented in the following table are the most recent estimates of CMS Energy’s and Consumers’ pension cost, OPEB cost, and cash contributions through 2015.  These updated estimates incorporate the OPEB Plan changes that became effective July 1, 2013.

								In Millions
	Pension		OPEB			Pension		OPEB
	Cost		Cost (Credit		)	Contribution		Contribution
CMS Energy, including Consumers
2013	$	119	$	14		$	50	$	72
2014	102		(24		)	4		57
2015	104		(17		)	145		25
Consumers
2013	$	116	$	17		$	49	$	71
2014	100		(20		)	4		56
2015	101		(13		)	141		25

Contribution estimates comprise required amounts and discretionary contributions.  Consumers’ pension and OPEB costs are recoverable through its general ratemaking process.  Actual future costs and contributions will depend on future investment performance, changes in discount rates, and various other factors related to the Pension Plan and OPEB participants.

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 is restricted by certain terms included in its debt covenants and articles of incorporation, and potentially by provisions under the Federal Power Act and the Natural Gas Act and FERC requirements.  For additional details on Consumers’ dividend restrictions, see Note 3, Financings and Capitalization – Dividend Restrictions.  For the six months ended June 30, 2013, Consumers paid $194 million in common stock dividends to CMS Energy.

CMS Energy has entered into two continuous equity offering programs permitting it to sell, from time to time in “at the market” offerings, common stock having an aggregate sales price of up to $50 million per program.  Under the first program, entered into in 2011, CMS Energy issued common stock and received net proceeds of $20 million in March 2013 and $15 million in each of 2012 and 2011.  In April 2013, CMS Energy entered into the second continuous equity offering program, but has not yet issued any equity under this program.

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

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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 diminish or otherwise become restricted, however, CMS Energy and Consumers would implement contingency plans to address debt maturities, which could include reduced capital spending.  CMS Energy and Consumers had the following secured revolving credit facilities available at June 30, 2013:

									In Millions
	Amount of		Amount		Letters of Credit		Amount
	Facility		Borrowed		Outstanding		Available		Expiration Date
CMS Energy
Revolving credit facility1	$	550	$	-	$	2	$	548	December 2017
Consumers
Revolving credit facility2	$	500	$	-	$	2	$	498	December 2017
Revolving credit facility2	150		-		-		150		April 2017
Revolving credit facility2	30		-		30		-		September 2014

1Obligations under this facility are secured by Consumers common stock.

2Obligations 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, 2013, $250 million of accounts receivable were eligible for transfer under this program.

Certain of CMS Energy’s and Consumers’ credit agreements, debt indentures, and other facilities contain covenants that require CMS Energy and Consumers to maintain certain financial ratios, as defined therein.  At June 30, 2013, no events of default had occurred with respect to any financial covenants contained in CMS Energy’s and Consumers’ credit agreements, debt indentures, or other facilities.  CMS Energy and Consumers were each in compliance with these covenants as of June 30, 2013, as presented in the following table:

		June 30, 2013
Credit Agreement, Indenture, or Facility	Description	Limit		Actual
CMS Energy
$550 million revolving credit agreement and
$180 million term loan credit agreement	Debt to EBITDA	<	6.0 to 1.0	4.4 to 1.0
$180 million term loan credit agreement	Interest Coverage	>	2.0 to 1.0	4.4 to 1.0
Consumers
$500 million, $150 million, and $30 million revolving credit
agreements, $35 million and $68 million reimbursement
agreements, and $250 million accounts receivable
purchase agreement	Debt to Capital	<	0.65 to 1.0	0.47 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 2013 and beyond.

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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; the maximum obligation under indemnities for which such amounts were estimable was $482 million at June 30, 2013.  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 2, Contingencies and Commitments – Guarantees.

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 2, Contingencies and Commitments; and Part II – Item 1A. Risk Factors.

CONSUMERS ELECTRIC UTILITY BUSINESS OUTLOOK AND UNCERTAINTIES

Balanced Energy Initiative:  Consumers continues to experience increasing demand for electricity due to Michigan’s recovering economy and increased use of air conditioning, consumer electronics, and other electric devices, offset partially by the predicted effects of energy efficiency and conservation.  In July 2012, customers set a new all-time peak demand record of 9,006 MW.

Consumers plans to mothball seven of its smaller coal-fueled units for a period of three years.  In June 2013, MISO approved Consumers’ applications to delay the mothballing of the units by one year, to 2016.  Consumers will continue to evaluate its options for the plants, which include:

·installing more environmental equipment on the units to reduce emissions further in order to meet new environmental standards and continue to operate the units;

·seeking a further extension of compliance deadlines for new environmental standards;

·converting the units to natural gas instead of coal;

·decommissioning the units; or

·a combination of these options, depending on customer needs and market conditions.

With the potential suspension of these plants’ operations and the potential tightening of the MISO capacity market, Consumers could experience a shortfall in generation capacity of up to 1,500 MW in 2016.  In order to address future capacity requirements and growing electric demand in Michigan, Consumers updated its balanced energy initiative, a comprehensive energy resource plan designed to meet the short-term and long-term electricity needs of its customers through:

·energy efficiency;

·demand management;

·expanded use of renewable energy;

·development of new power plants;

·power or generating asset purchases to complement existing generating sources; and

·continued operation or upgrade of existing units.

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In December 2012, Consumers announced plans to build a 700-MW gas-fueled electric generating plant at its Thetford complex in Genesee County, Michigan and filed an air permit application with the MDEQ for the proposed plant.  In July 2013, Consumers filed for approval of a certificate of necessity with the MPSC, as allowed under the 2008 Energy Law.  Construction of the plant, at an estimated cost of $750 million, is contingent upon obtaining the certificate of necessity and environmental permits.  Consumers expects the plant to be operational in 2017.

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 use RECs in an amount equal to at least ten percent of its electric sales volume (estimated to be 3.3 million RECs annually) in 2015 and each year thereafter.  RECs represent proof that the associated electricity was generated from a renewable energy resource.  Under its renewable energy plan, Consumers expects to meet its renewable energy requirement each year with a combination of newly generated RECs and previously generated RECs carried over from prior years.

The 2008 Energy Law also requires Consumers to obtain 500 MW of new capacity from renewable energy resources by the end of 2015, either through generation resources owned by Consumers or through agreements to purchase capacity from other parties.  To meet its renewable capacity requirements, Consumers expects to add more than 500 MW of owned or contracted renewable capacity.  Through June 2013, Consumers has contracted for the purchase of 302 MW of nameplate capacity from renewable energy suppliers and owns 100 MW of nameplate capacity at its recently constructed Lake Winds® Energy Park.  The combination of the contracted and owned capacity represents 81 percent of the 2015 renewable capacity requirement.  Consumers expects to meet the balance of the requirement through the completion of its Cross Winds® Energy Park, a 105-MW wind park in Tuscola County, Michigan, which is expected to begin operations in late 2014.  In June 2013, Consumers entered into a contract to purchase wind turbine generators for the construction of the Cross Winds® Energy Park.

The extension of federal tax credits for wind projects for which construction begins prior to December 31, 2013 could reduce significantly the cost of meeting the renewable requirements of the 2008 Energy Law.  As a result, Consumers has accelerated the construction of Cross Winds® Energy Park and plans to begin construction in late 2013.  Consumers expects to qualify for $100 million to $120 million of federal production tax credits associated with the Cross Winds® Energy Park.  These cost savings, which will be based on the wind project’s production over its first ten years of operation, will be passed on to customers through a reduced renewable energy surcharge or through a reduction in PSCR costs.

Energy Optimization Plan:  The 2008 Energy Law requires Consumers to achieve energy savings equivalent to annual sales reduction targets through at least 2015.  The targets increase annually, with the goal of achieving a six percent reduction in customers’ electricity use and a four percent reduction in customers’ natural gas use by December 31, 2015.  Under its energy optimization plan, Consumers provides its customers with incentives to reduce usage by offering energy audits, rebates and discounts on purchases of highly efficient appliances, and other incentives and programs.  Consumers estimates that, through its gas and electric energy optimization programs, its customers realized $184 million in energy savings during 2012.

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 in recent years.

Consumers expects weather-adjusted electric deliveries to decrease in 2013 by three percent compared with 2012.  Consumers’ outlook for 2013 includes reduced deliveries to its largest customer, which produces energy-related and computer components.  Consumers has a long-term contract with this customer to provide electricity at a discounted rate for economic development purposes.  Excluding this

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customer, Consumers expects weather-adjusted electric deliveries in 2013 to remain stable compared with 2012.  This outlook reflects Consumers’ belief that economic conditions in Michigan are improving.

Over the next five years, Consumers expects average electric delivery growth of about 0.5 to 1.0 percent annually.  This increase reflects growth in electric demand, offset partially by the predicted effects of energy efficiency programs and appliance efficiency standards.  Actual delivery levels will depend on:

·energy conservation measures and results of energy efficiency programs;

·fluctuations in weather; and

·Michigan economic conditions, including utilization, expansion, or contraction of manufacturing facilities, population trends, and housing activity.

Electric ROA:  The Customer Choice Act allows 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, 2013, electric deliveries under the ROA program were at the ten percent limit and alternative electric suppliers were providing 789 MW of generation service to ROA customers.  Of Consumers’ 1.8 million electric customers, 308 customers purchased electric generation service under the ROA program.  Consumers expects 2013 electric deliveries under the ROA program to be at a similar level to 2012.

In February 2013, a bill was introduced to the Michigan Senate that, if enacted, would revise the 2008 Energy Law and allow customers on the ROA program waiting list to switch their service to an alternative electric supplier.  Presently, the proportion of Consumers’ electric deliveries under the ROA program and on the ROA waiting list is 25 percent.  The bill also proposes an increase in the cap of six percentage points per year from 2014 through 2016.  Consumers is unable to predict the outcome of this legislative proposal.  The Michigan legislature also has conducted hearings on the subject of energy competition.  If a proposal to deregulate electric generation in Michigan were enacted, it could have a material adverse effect on Consumers’ financial results and operations.

Electric Transmission:  In 2011, FERC issued an order in a rulemaking proceeding concerning regional electric transmission planning and cost allocations.  Consumers and several other electric utilities filed a joint petition seeking clarification/rehearing of FERC’s order and opposing the allocation methodology.  In 2012, following FERC’s denial of their requests for clarification/rehearing, Consumers and several other electric utilities filed a petition for review of FERC’s order with the U.S. Court of Appeals.  In May 2013, Consumers, along with other electric utilities, filed briefs in this matter.

In a related matter, in 2010, MISO filed and FERC approved a tariff revision proposing a cost allocation methodology for a new category of transmission projects.  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 2011, Consumers, along with the Michigan Attorney General, ABATE, DTE Electric, and other parties, filed a petition for review of FERC’s order with the U.S. Court of Appeals for the Seventh Circuit following FERC’s denial of their request for rehearing opposing the allocation methodology in the MISO tariff revision.  In June 2013, the Court of Appeals issued an opinion largely affirming FERC’s orders regarding the cost allocation methodology.  Consumers is reviewing this opinion.  Regardless of the final outcome of these appeals, Consumers expects to continue to recover transmission expenses, including those associated with the MISO tariff revision, through the PSCR process.

In 2012, ReliabilityFirst Corporation informed Consumers that Consumers may not be properly registered to meet certain NERC electric reliability standards.  Consumers is assessing its registration status, taking into consideration FERC’s December 2012 order on the definition of a bulk electric system.  In light of

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this order, Consumers is reviewing the status of its electric distribution assets under FERC’s modified test and also reviewing prior correspondence from ReliabilityFirst Corporation as to the potential classification of its assets as within a bulk electric system for reliability purposes.  Consumers believes that it would recover any incremental costs that it might incur in connection with the resolution of any issues in this area.

Governor’s Energy Initiative:  Michigan’s governor has instituted a process pursuant to which a series of reports are to be completed in December 2013 addressing energy efficiency, renewable energy, the electricity market and customer choice, and other subjects.  The process is designed to help the governor and other lawmakers determine the state’s next steps regarding energy policies.  A series of public hearings took place in 2013 to gather input.  Consumers has participated actively in this process but cannot predict its outcome.

Electric Rate Matters:  Rate matters are critical to Consumers’ electric utility business.  For additional details on electric rate matters, see Note 1, Regulatory Matters.

Future Electric Rate Case:  Consumers has undertaken several initiatives to reduce costs through a voluntary separation plan in 2012, accelerated pension funding, employee and retiree health-care cost sharing, negotiated labor agreements, information system efficiencies, and productivity improvement programs.  These initiatives, together with Consumers’ plans to accelerate further cost reductions, should allow Consumers to avoid increasing electric base rates through 2014.  Consumers’ ability to avoid a base rate increase is dependent on MPSC approval of certain applications yet to be filed.  Consumers may also reconsider this expectation should its assumptions change regarding the economy or other matters.

Electric Environmental Estimates:  Consumers’ operations are subject to various state and federal environmental laws and regulations.  Consumers estimates that it will incur expenditures of $1.1 billion from 2013 through 2018 to continue to comply with the Clean Air Act, Clean Water Act, and numerous state and federal environmental 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:

Air Quality:  In 2011, the EPA released CSAPR, a final replacement rule for CAIR, which requires Michigan and 27 other states to improve air quality by reducing power plant emissions that, according to EPA computer models, contribute to ground-level ozone and fine particle pollution in other downwind states.  In 2012, the U.S. Court of Appeals for the D.C. Circuit voided CSAPR and held that CAIR would remain in place until the EPA promulgated a new rule.  After a request by the EPA for a rehearing was denied, the EPA and other parties sought an appeal to the U.S. Supreme Court, which was granted in June 2013.  A decision by the Supreme Court is not expected until 2014.

In 2012, the EPA published its final MACT emission standards for electric generating units, based on Section 112 of the Clean Air Act, calling the final rule MATS.  Under MATS, all of Consumers’ existing coal-fueled electric generating units are required to add additional controls for hazardous air pollutants.  Existing units, unless granted extensions, must meet the standards by mid-April 2015.  Consumers has received from the MDEQ a one-year extension for MATS and the Michigan Mercury Rule for ten of its coal-fueled units, allowing them to run as presently configured until April 2016.

Presently, Consumers’ strategy to comply with air quality regulations, including CAIR and MATS, involves the installation of emission control equipment at some facilities and the suspension of operations at others; however, Consumers continues to evaluate these rules in conjunction with other EPA rulemakings, litigation, and congressional action.  This evaluation could result in:

·changes in environmental compliance costs related to Consumers’ coal-fueled power plants;

·a change in the fuel mix at coal-fueled and oil-fueled power plants;

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·changes in how certain plants are used; and

·the retirement, mothballing, or repowering with an alternative fuel of some of Consumers’ generating units.

The MDEQ renewed and issued the Renewable Operating Permit for the B.C. Cobb plant in August 2011 after an extensive review and a public comment period.  In October 2011, the Sierra Club and the Natural Resources Defense Council filed a petition with the EPA to object to the MDEQ’s issuance of the state Renewable Operating Permit, alleging that the facility is not in compliance with certain provisions of the Clean Air Act, including NSR and Title V.  Consumers responded to these allegations in December 2011.  The EPA could either deny the petition outright or grant the petition and remand the matter to the MDEQ for further action.  The Sierra Club or the Natural Resources Defense Council could also file suit in federal district court seeking EPA action on the petition.  Consumers believes these claims are baseless, but is unable to predict the outcome of this petition.

Fine Particulate Matter:  In December 2012, the EPA finalized a rule that strengthens the air quality standard for fine particulate matter.  Consumers expects short-term impacts to be limited, but this new standard could give rise to air quality concerns in states downwind of Michigan and put pressure on Michigan and other Midwestern states to reduce emissions further.  Given its present strategy for CAIR and MATS compliance, however, Consumers will already be achieving significant reductions in emissions that contribute to the formation of fine particulate matter.

Greenhouse Gases:  In the recent past, there have been numerous legislative and regulatory initiatives at the state, regional, and national levels that involve the regulation of greenhouse gases.  Consumers continues to monitor and comment on these initiatives and to follow 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 2012, the EPA released its proposed “Standards of Performance for Greenhouse Gas Emissions for New Stationary Sources:  Electric Utility Generating Units” pursuant to Section 111 of the Clean Air Act.  This proposed rule applied only to new fossil-fuel-fired steam electric generating units.  The standards would have required that carbon dioxide emissions not exceed those of a modern, efficient natural gas-fueled combined-cycle electric generating plant, regardless of fuel type.  In June 2013, President Obama directed the EPA to issue a revised proposal addressing new fossil-fuel-fired steam electric generating units by September 20, 2013, and to finalize the rule in a timely fashion.  The EPA was further directed to address existing, modified, and reconstructed fossil-fuel-fired steam electric generating units with proposed standards, regulations, or guidelines to be completed by June 1, 2014, and final standards, regulations, or guidelines to be completed by June 1, 2015.  Subsequent state implementation plans are due by June 30, 2016.  Consumers believes that its balanced energy initiative, its present carbon reduction target, and its emphasis on supply diversity will position it favorably to deal with the impact of carbon regulation, but cannot predict the nature or outcome of these proposals.  Consumers will continue to monitor regulatory activity regarding greenhouse gas emissions standards that may affect electric generating units.

Litigation, as well as federal laws, EPA regulations regarding greenhouse gases, or similar treaties, state laws, or rules, if enacted or ratified, could require Consumers to replace equipment, install additional emission control equipment, 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.

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CCRs:  In 2010, the EPA proposed rules regulating CCRs, such as coal ash, under the Resource Conservation and Recovery Act.  Recent communications from the EPA stress the need to coordinate CCR rulemaking guidelines for steam electric generating plants under the Clean Water Act.  A final CCR rule could be issued in 2014.  Michigan already regulates CCRs as low-hazard industrial waste.  The EPA proposed a range of alternatives for regulating CCRs, 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 reuse of this product, which would result in a significant increase in the amount of coal ash requiring costly disposal.  Additionally, if the cost of upgrading existing coal ash disposal areas to meet hazardous waste landfill standards were to become economically prohibitive, existing coal ash disposal areas could close, requiring Consumers to find costly alternative arrangements for disposal.  Consumers is unable to predict the impacts from this wide range of possible outcomes, but significant expenditures are likely.

Water:  In 2011, the EPA issued a proposed rule to regulate existing electric generating plant cooling water intake systems under Section 316(b) of the Clean Water Act aimed at reducing alleged harmful impacts on fish and shellfish.  Consumers continues to evaluate this proposed rule and its potential impacts on Consumers’ electric generating plants.  A final rule is expected in November 2013.  The EPA also proposed new regulations in June 2013 that may require physical and/or chemical treatment facilities for wastewater discharges from electric generating plants.  A final rule is expected in 2014.

PCBs:  In 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 approach would aim to phase out equipment containing PCBs by 2025.  Another approach would eliminate an exemption for small equipment containing PCBs.  To comply with any such regulatory actions, Consumers could incur substantial costs associated with existing electrical equipment potentially containing PCBs.  A proposed rule is expected in 2013.

Other electric environmental matters could have a major impact on Consumers’ outlook.  For additional details on other electric environmental matters, see Note 2, Contingencies and Commitments – Consumers Electric Utility Contingencies – Electric Environmental Matters.

CONSUMERS GAS UTILITY BUSINESS OUTLOOK AND UNCERTAINTIES

Gas Deliveries:  Consumers expects weather-adjusted gas deliveries in 2013 to grow by about three percent compared with 2012.  Over the next five years, Consumers expects average gas deliveries to remain stable.  This outlook reflects modest growth in gas demand offset by the predicted effects of energy efficiency and conservation.  Actual delivery levels from year to year may vary due to:

·fluctuations in weather;

·use by 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 impacts.

Gas Transmission:  In May 2013, the MPSC approved Consumers’ application to build a 24-mile, 36-inch natural gas pipeline in St. Joseph and Branch Counties, Michigan.  Consumers expects to spend about $120 million for this project.  Construction of the pipeline is contingent upon obtaining environmental permits.  Consumers expects the pipeline to be operational by the end of 2014.

Gas Transportation:  In July 2012, Trunkline filed a proposal with FERC to cease transporting natural gas through one of its two main transmission pipelines serving Michigan.  More than 60 percent of the

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natural gas supplied to Consumers’ gas customers is delivered by Trunkline’s two main transmission pipelines.  In August 2012, Consumers filed a motion with FERC to protest against the proposed abandonment on the grounds that it would negatively impact customers and that it could hamper the development of gas-fueled electric generation in Michigan.  Michigan’s governor, the MPSC, and various other parties have also filed protests with FERC.  If Trunkline’s proposal is granted, the abandonment could result in higher gas prices and reduced availability for Michigan gas customers.

Gas Rate Matters:  Rate matters are critical to Consumers’ gas utility business.  For additional details on Consumers’ gas rate matters, see Note 1, Regulatory Matters.

Pending Gas Rate Case:  In February 2013, Consumers filed an application with the MPSC seeking an annual rate increase of $49 million, based on a 10.5 percent authorized return on equity.  The filing requested authority to recover new investments in customer reliability, deliverability, safety, and system enhancements, and sought approval of several rate adjustment mechanisms.  Subsequent to this filing, Consumers’ projection of non-fuel costs decreased.  As a result, in June 2013, Consumers filed a petition with the MPSC to close the docket or, alternatively, to suspend and extend indefinitely the schedule in this case.  The MPSC approved Consumers’ petition to suspend and indefinitely extend the schedule.  Consumers plans to file a new and amended case containing more recent historical data and an updated projected test year, primarily for rate relief associated with projected capital expenditures.

Future Gas Rate Case:Consumers has undertaken several initiatives to reduce costs through a voluntary separation plan in 2012, accelerated pension funding, employee and retiree health-care cost sharing, negotiated labor agreements, information system efficiencies, and productivity improvement programs.  These initiatives, together with Consumers’ plans to accelerate further cost reductions, should allow Consumers to avoid increasing gas base rates through 2014.  Consumers’ ability to avoid a base rate increase is dependent on MPSC approval of certain applications yet to be filed.  Consumers may also reconsider this expectation should its assumptions change regarding the economy or other matters.

Gas Pipeline Safety:  In 2012, President Obama signed the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011.  The law reauthorizes existing federal pipeline safety programs of the Pipeline and Hazardous Materials Safety Administration through 2015 and it contains provisions mandating:

·an increase in the maximum fine for safety violations to $2 million;

·an increase in the number of pipeline inspectors;

·a study regarding application of integrity management requirements outside of “high consequence areas;”

·a survey regarding existing plans for safe management and replacement of cast iron pipelines;

·prescribed notification and on-site incident response times;

·installation of automatic or remotely controlled shut-off valves on new or replaced pipelines where feasible;

·historical design and construction documentation to verify maximum allowable operating pressures; and

·establishment of new regulations for testing (pressure tests or equivalent methods) of previously untested pipelines in high-consequence areas.

Consumers continues to comply with laws and regulations governing natural gas pipeline safety.  These laws and regulations could cause Consumers to 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.

MPSC Investigations:  The MPSC is presently conducting investigations into two natural gas explosions that occurred in Consumers’ gas service territory, in Wayne, Michigan and Royal Oak, Michigan.  Consumers does not expect the outcome of these investigations to have a material adverse impact on its liquidity, financial condition, or results of operations, but cannot predict the financial impact or outcome.

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 2, Contingencies and Commitments – Consumers Gas Utility Contingencies – Gas Environmental Matters.

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CONSUMERS OTHER OUTLOOK AND UNCERTAINTIES

Smart Energy:  Consumers’ grid modernization effort continues.  In August 2012, Consumers began installing smart meters in Muskegon County, Michigan.  One of the functions of smart meters is to allow customers to monitor and manage their energy usage, which should help reduce demand during critical peak times, resulting in lower peak capacity requirements.  The installation of smart meters should also provide for both operational and customer benefits.  As of June 30, 2013, Consumers had upgraded over 90,000 electric residential and small business customers in western Michigan to smart meters.  Consumers is able to read these smart meters remotely; further functionality will continue to be added through mid-2015.  Consumers expects to have installed about 400,000 smart meters throughout western Michigan by the end of 2014.  Consumers also plans to install communication modules on gas meters in areas where Consumers provides both electricity and natural gas to customers.

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;

·obligations related to a tax claim from the government of Equatorial Guinea;

·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 2, 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 two percent of CMS Energy’s net assets at June 30, 2013, and four percent of CMS Energy’s net income available to common stockholders for the six months ended June 30, 2013.  The carrying value of EnerBank’s loan portfolio was $543 million at June 30, 2013.  Its loan portfolio was funded primarily by deposit liabilities of $499 million.  The twelve-month rolling average default rate on loans held by EnerBank has remained stable at 0.7 percent at June 30, 2013.  CMS Energy is required both by law and by contract to provide financial support, including infusing additional capital, to ensure that EnerBank satisfies mandated capital requirements and has sufficient liquidity to operate.  With its self-funding plan, EnerBank has exceeded these requirements historically and exceeded them as of June 30, 2013.

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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 1, Regulatory Matters and Note 2, Contingencies and Commitments.

NEW ACCOUNTING STANDARDS

There are no new accounting standards issued but not yet effective that are expected to have a material impact on CMS Energy’s or Consumers’ consolidated financial statements.

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CMS Energy Corporation

Consolidated Statements of Income

(Unaudited)

					In Millions
	Three Months Ended				Six Months Ended
June 30	2013		2012		2013		2012
Operating Revenue	$	1,406	$	1,333	$	3,385	$	3,076
Operating Expenses
Fuel for electric generation	147		126		301		256
Purchased and interchange power	347		334		680		651
Purchased power – related parties	23		20		46		42
Cost of gas sold	166		133		773		683
Maintenance and other operating expenses	304		282		586		577
Depreciation and amortization	137		130		318		302
General taxes	50		48		120		117
Total operating expenses	1,174		1,073		2,824		2,628
Operating Income	232		260		561		448
Other Income (Expense)
Interest income	2		1		2		2
Allowance for equity funds used during construction	1		2		4		4
Income from equity method investees	3		3		8		8
Other income	2		3		5		6
Other expense	(3)		(3)		(6)		(5)
Total other income	5		6		13		15
Interest Charges
Interest on long-term debt	99		94		193		188
Other interest expense	4		5		9		11
Allowance for borrowed funds used during construction	(1)		(1)		(2)		(2)
Total interest charges	102		98		200		197
Income Before Income Taxes	135		168		374		266
Income Tax Expense	54		67		149		105
Income From Continuing Operations	81		101		225		161
Income From Discontinued Operations, Net of Tax of $-, $-, $-, and $4	-		-		-		7
Net Income	81		101		225		168
Income Attributable to Noncontrolling Interests	1		1		1		1
Net Income Available to Common Stockholders	$	80	$	100	$	224	$	167

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			In Millions, Except Per Share Amounts
	Three Months Ended				Six Months Ended
June 30	2013		2012		2013		2012
Net Income Attributable to Common Stockholders
Amounts attributable to continuing operations	$	80	$	100	$	224	$	160
Amounts attributable to discontinued operations	-		-		-		7
Net income available to common stockholders	$	80	$	100	$	224	$	167
Income Attributable to Noncontrolling Interests
Amounts attributable to continuing operations	$	1	$	1	$	1	$	1
Amounts attributable to discontinued operations	-		-		-		-
Income attributable to noncontrolling interests	$	1	$	1	$	1	$	1
Basic Earnings Per Average Common Share
Basic earnings from continuing operations	$	0.30	$	0.38	$	0.85	$	0.61
Basic earnings from discontinued operations	-		-		-		0.03
Basic earnings attributable to common stock	$	0.30	$	0.38	$	0.85	$	0.64
Diluted Earnings Per Average Common Share
Diluted earnings from continuing operations	$	0.29	$	0.37	$	0.83	$	0.59
Diluted earnings from discontinued operations	-		-		-		0.03
Diluted earnings attributable to common stock	$	0.29	$	0.37	$	0.83	$	0.62
Dividends Declared Per Common Share	$	0.255	$	0.24	$	0.51	$	0.48

The accompanying notes are an integral part of these statements.

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CMS Energy Corporation

Consolidated Statements of Comprehensive Income

(Unaudited)

	In Millions
	Three Months Ended				Six Months Ended
June 30	2013		2012		2013		2012
Net Income	$	81	$	101	$	225	$	168
Retirement Benefits Liability
Retirement benefits liability adjustments, net of tax of $1, $-, $1, and $-	1		1		2		2
Investments
Unrealized gain (loss) on investments, net of tax of $- for all periods	(3)		1		(3)		2
Other Comprehensive Income (Loss)	(2)		2		(1)		4
Comprehensive Income		79		103		224		172
Comprehensive Income Attributable to Noncontrolling Interests	1		1		1		1
Comprehensive Income Attributable to CMS Energy	$	78	$	102	$	223	$	171

The accompanying notes are an integral part of these statements.

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CMS Energy Corporation

Consolidated Statements of Cash Flows

(Unaudited)

			In Millions
Six Months Ended June 30	2013		2012
Cash Flows from Operating Activities
Net income	$	225	$	168
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	318		302
Deferred income taxes and investment tax credit	135		102
Postretirement benefits expense	95		94
Other non-cash operating activities	32		35
Postretirement benefits contributions	(88)		(37)
Proceeds from government grant	69		-
Cash provided by (used in) changes in assets and liabilities
Accounts receivable, notes receivable, and accrued revenue	85		146
Inventories	253		135
Accounts payable	19		10
Accrued expenses	(82)		(82)
Other current and non-current assets and liabilities	34		70
Net cash provided by operating activities	1,095		943
Cash Flows from Investing Activities
Capital expenditures (excludes assets placed under capital lease)	(580)		(575)
Cost to retire property	(23)		(20)
Other investing activities	(13)		(15)
Net cash used in investing activities	(616)		(610)
Cash Flows from Financing Activities
Proceeds from issuance of long-term debt	675		790
Retirements of EnerBank notes, net	(28)		(4)
Issuance of common stock	28		23
Retirement of long-term debt	(445)		(972)
Payment of common stock dividends	(135)		(125)
Decrease in notes payable	(110)		-
Payment of capital lease obligations and other financing costs	(20)		(19)
Net cash used in financing activities	(35)		(307)
Net Increase in Cash and Cash Equivalents	444		26
Cash and Cash Equivalents, Beginning of Period	93		161
Cash and Cash Equivalents, End of Period	$	537	$	187

The accompanying notes are an integral part of these statements.

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CMS Energy Corporation

Consolidated Balance Sheets

(Unaudited)

ASSETS
			In Millions
	June 30		December 31
	2013		2012
Current Assets
Cash and cash equivalents	$	537	$	93
Restricted cash and cash equivalents	29		29
Accounts receivable and accrued revenue, less allowances of $31 in 2013 and $32 in 2012	728		855
Notes receivable	76		41
Accounts receivable – related parties	10		10
Accrued power supply and gas revenue	20		32
Inventories at average cost
Gas in underground storage	568		820
Materials and supplies	103		96
Generating plant fuel stock	159		168
Deferred property taxes	140		190
Regulatory assets	36		35
Prepayments and other current assets	79		53
Total current assets	2,485		2,422
Plant, Property, and Equipment
Plant, property, and equipment, gross	16,086		15,592
Less accumulated depreciation and amortization	5,278		5,121
Plant, property, and equipment, net	10,808		10,471
Construction work in progress	1,108		1,080
Total plant, property, and equipment	11,916		11,551
Other Non-current Assets
Regulatory assets	2,202		2,287
Accounts and notes receivable, less allowances of $5 in 2013 and 2012	504		521
Investments	63		57
Other	259		293
Total other non-current assets	3,028		3,158
Total Assets	$	17,429	$	17,131

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LIABILITIES AND EQUITY
			In Millions
	June 30		December 31
	2013		2012
Current Liabilities
Current portion of long-term debt, capital and finance lease obligations	$	758	$	541
Notes payable	-		110
Accounts payable	512		512
Accounts payable – related parties	9		9
Accrued rate refunds	-		6
Accrued interest	93		95
Accrued taxes	206		279
Deferred income taxes	77		68
Regulatory liabilities	8		25
Other current liabilities	139		152
Total current liabilities	1,802		1,797
Non-current Liabilities
Long-term debt	6,695		6,710
Non-current portion of capital and finance lease obligations	144		153
Regulatory liabilities	2,243		2,101
Postretirement benefits	1,393		1,451
Asset retirement obligations	319		312
Deferred investment tax credit	41		43
Deferred income taxes	1,116		1,015
Other non-current liabilities	316		311
Total non-current liabilities	12,267		12,096
Commitments and Contingencies (Notes 1 and 2)
Equity
Common stockholders equity
Common stock, authorized 350.0 shares; outstanding 265.9 shares in 2013 and 264.1 shares in 2012	3		3
Other paid-in capital	4,710		4,669
Accumulated other comprehensive loss	(56)		(55)
Accumulated deficit	(1,334)		(1,423)
Total common stockholders equity	3,323		3,194
Noncontrolling interests	37		44
Total equity	3,360		3,238
Total Liabilities and Equity	$	17,429	$	17,131

The accompanying notes are an integral part of these statements.

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CMS Energy Corporation

Consolidated Statements of Changes in Equity

(Unaudited)

							In Millions
	Three Months Ended				Six Months Ended
June 30	2013		2012		2013		2012
Total Equity at Beginning of Period	$	3,350	$	3,093	$	3,238	$	3,072
Common Stock
At beginning and end of period	3		3		3		3
Other Paid-in Capital
At beginning of period	4,703		4,641		4,669		4,627
Common stock issued	8		23		37		31
Common stock reissued	-		-		5		6
Common stock repurchased	(1)		-		(1)		-
At end of period	4,710		4,664		4,710		4,664
Accumulated Other Comprehensive Loss
At beginning of period	(54)		(47)		(55)		(49)
Retirement benefits liability
At beginning of period	(55)		(47)		(56)		(48)
Retirement benefits liability adjustments	1		1		2		2
At end of period	(54)		(46)		(54)		(46)
Investments
At beginning of period	2		1		2		-
Unrealized gain (loss) on investments	(3)		1		(3)		2
At end of period	(1)		2		(1)		2
Derivative instruments
At beginning and end of period	(1)		(1)		(1)		(1)
At end of period	(56)		(45)		(56)		(45)
Accumulated Deficit
At beginning of period	(1,346)		(1,548)		(1,423)		(1,553)
Net income attributable to CMS Energy	80		100		224		167
Common stock dividends declared	(68)		(63)		(135)		(125)
At end of period	(1,334)		(1,511)		(1,334)		(1,511)
Noncontrolling Interests
At beginning of period	44		44		44		44
Income attributable to noncontrolling interests	1		1		1		1
Distributions, redemptions, and other changes in noncontrolling interests	(8)		(1)		(8)		(1)
At end of period	37		44		37		44
Total Equity at End of Period	$	3,360	$	3,155	$	3,360	$	3,155

The accompanying notes are an integral part of these statements.

40

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41

Consumers Energy Company

Consolidated Statements of Income

(Unaudited)

						In Millions
	Three Months Ended					Six Months Ended
June 30	2013			2012		2013			2012
Operating Revenue	$	1,342		$	1,282	$	3,261		$	2,957
Operating Expenses
Fuel for electric generation	125			110		258			216
Purchased and interchange power	340			327		669			640
Purchased power – related parties	23			21		46			42
Cost of gas sold	154			124		754			660
Maintenance and other operating expenses	289			266		555			543
Depreciation and amortization	136			128		316			299
General taxes	48			46		117			114
Total operating expenses	1,115			1,022		2,715			2,514
Operating Income	227			260		546			443
Other Income (Expense)
Interest income	2			1		2			2
Allowance for equity funds used during construction	1			2		4			4
Other income	2			3		9			11
Other expense	(3		)	(3)		(6		)	(5)
Total other income	2			3		9			12
Interest Charges
Interest on long-term debt	60			58		119			119
Other interest expense	3			4		6			8
Allowance for borrowed funds used during construction	(1		)	(1)		(2		)	(2)
Total interest charges	62			61		123			125
Income Before Income Taxes	167			202		432			330
Income Tax Expense	67			80		170			132
Net Income	100			122		262			198
Preferred Stock Dividends and Distribution	1			1		1			1
Net Income Available to Common Stockholder	$	99		$	121	$	261		$	197

The accompanying notes are an integral part of these statements.

42

Consumers Energy Company

Consolidated Statements of Comprehensive Income

(Unaudited)

						In Millions
	Three Months Ended					Six Months Ended
June 30	2013			2012		2013			2012
Net Income	$	100		$	122	$	262		$	198
Retirement Benefits Liability
Retirement benefits liability adjustments, net of tax of $1, $-, $1, and $-	1			-		2			1
Investments
Unrealized gain (loss) on investments, net of tax (tax benefit) of $1, $-, $1, and $(2)	(4		)	3		-			-
Reclassification adjustments included in net income, net of tax benefit of $-, $-, $(1), and $-	-			-		(3		)	-
Other Comprehensive Income (Loss)	(3		)	3		(1		)	1
Comprehensive Income	$	97		$	125	$	261		$	199

The accompanying notes are an integral part of these statements.

43

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44

Consumers Energy Company

Consolidated Statements of Cash Flows

(Unaudited)

				In Millions
Six Months Ended June 30	2013			2012
Cash Flows from Operating Activities
Net income	$	262		$	198
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	316			299
Deferred income taxes and investment tax credit	87			39
Postretirement benefits expense	93			92
Other non-cash operating activities	31			31
Postretirement benefits contributions	(86		)	(34		)
Proceeds from government grant	69			-
Cash provided by (used in) changes in assets and liabilities
Accounts receivable, notes receivable, and accrued revenue	85			146
Inventories	249			137
Accounts payable	23			11
Accrued expenses	(73		)	(19		)
Other current and non-current assets and liabilities	29			113
Net cash provided by operating activities	1,085			1,013
Cash Flows from Investing Activities
Capital expenditures (excludes assets placed under capital lease)	(579		)	(572		)
Cost to retire property	(23		)	(20		)
Other investing activities	(11		)	(9		)
Net cash used in investing activities	(613		)	(601		)
Cash Flows from Financing Activities
Proceeds from issuance of long-term debt	425			375
Retirement of long-term debt	(445		)	(694		)
Payment of common and preferred stock dividends	(195		)	(159		)
Stockholder contribution	150			150
Decrease in notes payable	(110		)	-
Payment of capital lease obligations and other financing costs	(16		)	(15		)
Net cash used in financing activities	(191		)	(343		)
Net Increase in Cash and Cash Equivalents	281			69
Cash and Cash Equivalents, Beginning of Period	5			85
Cash and Cash Equivalents, End of Period	$	286		$	154

The accompanying notes are an integral part of these statements.

45

Consumers Energy Company

Consolidated Balance Sheets

(Unaudited)

ASSETS
			In Millions
	June 30		December 31
	2013		2012
Current Assets
Cash and cash equivalents	$	286	$	5
Restricted cash and cash equivalents	28		28
Accounts receivable and accrued revenue, less allowances of $29 in 2013 and $30 in 2012	719		844
Notes receivable	25		-
Accounts receivable – related parties	1		1
Accrued power supply and gas revenue	20		32
Inventories at average cost
Gas in underground storage	568		816
Materials and supplies	99		92
Generating plant fuel stock	159		167
Deferred property taxes	140		190
Regulatory assets	36		35
Prepayments and other current assets	72		45
Total current assets	2,153		2,255
Plant, Property, and Equipment
Plant, property, and equipment, gross	15,951		15,456
Less accumulated depreciation and amortization	5,216		5,061
Plant, property, and equipment, net	10,735		10,395
Construction work in progress	1,106		1,080
Total plant, property, and equipment	11,841		11,475
Other Non-current Assets
Regulatory assets	2,202		2,287
Accounts and notes receivable	11		17
Investments	30		32
Other	172		209
Total other non-current assets	2,415		2,545
Total Assets	$	16,409	$	16,275

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LIABILITIES AND EQUITY
				In Millions
	June 30			December 31
	2013			2012
Current Liabilities
Current portion of long-term debt, capital and finance lease obligations	$	63		$	63
Notes payable	-			110
Accounts payable	502			501
Accounts payable – related parties	13			11
Accrued rate refunds	-			6
Accrued interest	59			65
Accrued taxes	316			376
Deferred income taxes	127			144
Regulatory liabilities	8			25
Other current liabilities	100			109
Total current liabilities	1,188			1,410
Non-current Liabilities
Long-term debt	4,276			4,297
Non-current portion of capital and finance lease obligations	144			153
Regulatory liabilities	2,243			2,101
Postretirement benefits	1,329			1,385
Asset retirement obligations	318			311
Deferred investment tax credit	41			43
Deferred income taxes	1,820			1,741
Other non-current liabilities	259			252
Total non-current liabilities	10,430			10,283
Commitments and Contingencies (Notes 1 and 2)
Equity
Common stockholder equity
Common stock, authorized 125.0 shares; outstanding 84.1 shares for both periods	841			841
Other paid-in capital	3,257			3,107
Accumulated other comprehensive loss	(9		)	(8		)
Retained earnings	665			598
Total common stockholder equity	4,754			4,538
Preferred stock	37			44
Total equity	4,791			4,582
Total Liabilities and Equity	$	16,409		$	16,275

The accompanying notes are an integral part of these statements.

47

Consumers Energy Company

Consolidated Statements of Changes in Equity

(Unaudited)

									In Millions
	Three Months Ended					Six Months Ended
June 30	2013			2012		2013			2012
Total Equity at Beginning of Period	$	4,803		$	4,503	$	4,582		$	4,394
Common Stock
At beginning and end of period	841			841		841			841
Other Paid-in Capital
At beginning of period	3,257			3,107		3,107			2,957
Stockholder contribution	-			-		150			150
At end of period	3,257			3,107		3,257			3,107
Accumulated Other Comprehensive Loss
At beginning of period	(6		)	(4)		(8		)	(2		)
Retirement benefits liability
At beginning of period	(24		)	(18)		(25		)	(19		)
Retirement benefits liability adjustments	1			-		2			1
At end of period	(23		)	(18)		(23		)	(18		)
Investments
At beginning of period	18			14		17			17
Unrealized gain (loss) on investments	(4		)	3		-			-
Reclassification adjustments included in net income	-			-		(3		)	-
At end of period	14			17		14			17
At end of period	(9		)	(1)		(9		)	(1		)
Retained Earnings
At beginning of period	667			515		598			554
Net income	100			122		262			198
Common stock dividends declared	(101		)	(43)		(194		)	(158		)
Preferred stock dividends and distribution declared	(1		)	(1)		(1		)	(1		)
At end of period	665			593		665			593
Preferred Stock
At beginning of period	44			44		44			44
Preferred stock redeemed	(7		)	-		(7		)	-
At end of period	37			44		37			44
Total Equity at End of Period	$	4,791		$	4,584	$	4,791		$	4,584

The accompanying notes are an integral part of these statements.

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CMS Energy Corporation

Consumers Energy Company

NOTES TO THE UNAUDITED 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 unaudited consolidated financial statements and the related unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes contained in the 2012 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:REGULATORY MATTERS

Regulatory matters are critical to Consumers.  The Michigan Attorney General, ABATE, the MPSC Staff, and certain other parties typically participate in MPSC proceedings concerning Consumers, such as Consumers’ rate cases and PSCR and GCR processes.  These parties often challenge various aspects of those proceedings, including the prudence of Consumers’ policies and practices, and seek cost disallowances and other relief.  The parties also have appealed significant MPSC orders.  Depending upon the specific issues, the outcomes of rate cases and proceedings, including judicial proceedings challenging MPSC orders or other actions, 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.

There are multiple appeals pending that involve various issues concerning cost allocation among customers, the allocation of refunds among customer groups, the adequacy of the record evidence supporting the recovery of Smart Energy investments, and other matters.  Consumers is unable to predict the outcome of these appeals.

CONSUMERS ELECTRIC UTILITY

Electric Rate Cases:  In June 2012, the MPSC authorized an annual rate increase of $118 million, based on a 10.3 percent authorized return on equity.  Consumers filed an application in September 2012 requesting that the MPSC find that the total revenues collected during self-implementation did not exceed those that would have been collected under final rates.  In March 2013, the MPSC approved a settlement agreement finding that no refund was required.

In September 2012, Consumers filed an application with the MPSC seeking an annual rate increase of $148 million, based on a 10.5 percent authorized return on equity, in order to recover new investment in system reliability, environmental compliance, and technology enhancements.  In January 2013, Consumers supplemented its electric rate case application to reflect changes to its environmental compliance and generation outage plans, which reduced its requested annual rate increase to $145 million.  In this filing, Consumers also sought approval of several rate adjustment mechanisms.

In March 2013, Consumers self-implemented an annual rate increase of $110 million out of its requested $145 million, subject to refund with interest.  Consumers’ self-implementation required no order by the

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MSPC, and no intervenors in Consumers’ electric rate case opposed Consumers’ self-implementation amount.  The MPSC approved a partial settlement agreement in May 2013, authorizing an annual rate increase of $89 million, based on a 10.3 percent authorized rate of return on equity.  The rate adjustment mechanisms requested by Consumers were not approved.  In June 2013, in connection with this electric rate case, the MPSC approved Consumers’ application for authority to continue the advance metering infrastructure program and implement a non-transmitting meter provision.

In July 2013, Consumers filed a reconciliation of total revenues collected during self-implementation to those that would have been collected under final rates.  Consumers’ reconciliation indicated that no refund would be required.

Electric Revenue Decoupling Mechanism:  The MPSC’s 2009 order in Consumers’ electric rate case authorized Consumers to implement an electric revenue decoupling mechanism.  This decoupling mechanism allowed Consumers to adjust future electric rates to the degree that actual average sales per customer differed from the rate order.  The MPSC extended the electric revenue decoupling mechanism for a second year in its 2010 order in Consumers’ electric rate case.

In April 2012, the Michigan Court of Appeals ruled that the MPSC lacks statutory authority to approve or direct the use of a revenue decoupling mechanism for electric providers.  Subsequently, in November 2012, the Michigan Court of Appeals ruled in an appeal of the MPSC’s 2010 order in Consumers’ electric rate case.  The Court reversed the portion of the 2010 order related to Consumers’ electric revenue decoupling mechanism and remanded the case to the MPSC for further proceedings related to the revenue decoupling mechanism.  In March 2013, the MSPC issued an order in the remand proceedings, stating that, with the exception of the authorization of the revenue decoupling mechanism, its 2010 order in Consumers’ electric rate case stands as issued.

Big Rock Nuclear Decommissioning:  Consumers had recorded an $85 million regulatory asset for $30 million it paid to Entergy to assume ownership responsibility for the Big Rock ISFSI and for $55 million of nuclear fuel storage costs it incurred as a result of the DOE’s failure to accept nuclear fuel.  Consumers filed a complaint against the DOE in 2002 for this failure.

In 2011, Consumers entered into an agreement with the DOE to settle its claims for $120 million.  Consumers subsequently filed an application with the MPSC requesting authority to utilize $85 million of the settlement amount as recovery of its regulatory asset, and to refund to customers $23 million previously collected through rates for spent nuclear fuel costs.  In December 2012, the MPSC approved this treatment, and Consumers refunded $23 million to customers over a six-month period that began in January 2013.  Consumers recognized the remaining $12 million of the settlement as a reduction of maintenance and other operating expenses.  In March 2013, a party filed an appeal with the Michigan Court of Appeals to dispute the MPSC’s December 2012 order.

Renewable Energy Plan:  In January 2013, Consumers received a $69 million renewable energy grant for Lake Winds® Energy Park, which began operations in November 2012.  The grant was received from the U.S. Department of Treasury under Section 1603 of the American Recovery and Reinvestment Tax Act of 2009.

As reflected in Consumers’ 2011 biennial renewable energy plan, which the MPSC approved in 2012, this grant reduces Consumers’ cost of complying with the renewable standards prescribed by the 2008 Energy Law and, accordingly, reduces the overall renewable energy surcharge to be collected from customers.  At June 30, 2013, Consumers had a $68 million regulatory liability recorded for the grant.  The regulatory liability will be amortized over the life of Lake Winds® Energy Park.

In May 2013, Consumers filed a revised renewable energy plan that reduced the size and cost of the Cross Winds® Energy Park.  In June 2013, the MPSC issued an order approving Consumers’ 2011 renewable

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cost reconciliation filing.  In July 2013, Consumers filed its 2012 renewable cost reconciliation and annual report.

Energy Optimization Plan:  In May 2013, Consumers filed its fourth annual report and reconciliation for its energy optimization plan, requesting approval of its energy optimization plan costs for 2012.  Consumers also requested approval to collect $17 million from customers as an incentive payment for exceeding statutory targets under both its gas and electric energy optimization plans during 2012.

CONSUMERS GAS UTILITY

Gas Revenue Decoupling Mechanism:  The MPSC’s 2009 order in Consumers’ gas rate case authorized Consumers to implement a gas revenue decoupling mechanism.  This mechanism, which the MPSC extended through April 2012 in its 2010 order in Consumers’ gas rate case, allowed Consumers to adjust future gas rates to the degree that actual average weather-adjusted sales per customer differed from the rate order.  This mechanism was not affected by a separate Michigan Court of Appeals decision on electric revenue decoupling.

In December 2012, the MPSC approved Consumers’ reconciliation of the gas revenue decoupling mechanism for the period June 2010 through May 2011 and authorized recovery of $16 million over a three-month period that began in February 2013.  Due to high customer deliveries during this three-month period, Consumers collected more than the amount authorized and, at June 30, 2013, had a regulatory liability of $5 million recorded for the amount to be refunded to customers.  In January 2013, ABATE filed an appeal with the Michigan Court of Appeals to dispute the MPSC’s conclusion that Consumers is eligible to recover the portion of the authorized recovery amount allocated to transport customers.

Consumers filed its final reconciliation of the gas revenue decoupling mechanism in August 2012, requesting recovery of $17 million from customers for the period June 2011 through April 2012.  At June 30, 2013, Consumers had a $17 million regulatory asset recorded for gas revenue decoupling for that period.

2:    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.  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, have been named as defendants in various lawsuits arising as a result of alleged inaccurate natural gas price reporting to publications that report trade

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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 Kansas, Missouri, and Wisconsin.  The following provides more detail on the cases in which CMS Energy affiliates remain as parties:

·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 during the putative class period, January 1, 2000 through October 31, 2002, the defendants engaged in a scheme to violate the Kansas Restraint of Trade Act.  The plaintiffs 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 as a putative class action in Missouri state court alleging violations of Missouri antitrust laws.  Defendants, including CMS Energy, CMS Field Services, and CMS MST, are alleged to have violated the Missouri antitrust law in connection with their natural gas reporting activities.  Plaintiffs are seeking full consideration damages and treble 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 that purchased natural gas between January 1, 2000 and October 31, 2002.  The defendants, including CMS Energy, CMS ERM, and Cantera Gas Company, are alleged to have violated Wisconsin’s antitrust statute.  The plaintiffs are seeking full consideration damages, plus exemplary damages and attorneys’ fees.

·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.  In 2010, CMS Energy and Cantera Gas Company were dismissed from the Newpage case.  In 2011, all claims against remaining CMS Energy defendants in the MDL cases were dismissed based on FERC preemption.  Plaintiffs filed appeals in all of the cases.  The issues on appeal were whether the district court erred in dismissing the cases based on FERC preemption and denying the plaintiffs’ motions for leave to amend their complaints to add a federal Sherman Act antitrust claim.  The plaintiffs did not appeal the dismissal of CMS Energy as a defendant in these cases, but other CMS Energy entities remain as defendants.

In April 2013, the U.S. Court of Appeals for the Ninth Circuit reversed the MDL decision and remanded the case to the MDL judge for further proceedings.  The appellate court found that FERC preemption does not apply under the facts of these cases.  The Court affirmed the MDL court’s denial of leave to amend to add federal antitrust claims.

The joint defense group in these cases, of which CMS Energy defendants are members, plans to file a petition with the U.S. Supreme Court in an attempt to overturn the decision of the U.S. Court of Appeals for the Ninth Circuit.  The petition is due in August 2013.

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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:  CMS Energy retained environmental remediation obligations for the collection and treatment of leachate, a liquid consisting of water and other substances, at Bay Harbor after selling its interests in the development in 2002.  Leachate is produced when water enters into cement kiln dust piles left over from former cement plant operations at the site.  In 2012, CMS Energy and the MDEQ finalized an agreement that established the final remedies and the future release criteria at the site.  CMS Energy is in the process of completing all construction necessary to implement the remedies required by the agreement and will continue to maintain and operate a system to discharge treated leachate into Little Traverse Bay under an NPDES permit issued in 2010.  This permit requires renewal every five years.

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 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 has communicated to the EPA that it does not believe that this is a valid claim.

CMS Energy has recorded a cumulative charge related to Bay Harbor of $228 million, which includes accretion expense.  At June 30, 2013, CMS Energy had a recorded liability of $58 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 $77 million.  CMS Energy expects to pay $12 million in 2013, $4 million in each of 2014, 2015, 2016, and 2017, 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:

·a significant increase in the cost of 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;

·the nature and extent of contamination;

·delays in the receipt of requested permits;

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

·unanticipated difficulties in meeting the technical commitments in the agreement with the MDEQ;

·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.

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Equatorial Guinea Tax Claim:  In January 2002, CMS Energy sold its oil, gas, and methanol investments in Equatorial Guinea.  The government of Equatorial Guinea claims that CMS Energy owes $142 million in taxes, plus penalties and interest, in connection with the sale.  CMS Energy has concluded that the government’s tax claim is without merit.  The government of Equatorial Guinea indicated through a request for arbitration in October 2011 that it still intends to pursue its claim.  CMS Energy is vigorously contesting the claim, and 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.  Consumers estimates that its liability for NREPA sites will be between $4 million and $6 million.  At June 30, 2013, Consumers had a recorded liability of $4 million, the minimum amount in the range of its estimated probable NREPA liability.

Consumers is a potentially responsible party at a number of contaminated sites administered under Superfund.  Superfund liability is joint and several.  In 2010, Consumers received official notification from the EPA that identified Consumers as a potentially responsible party for cleanup of PCBs at the Kalamazoo River Superfund site.  The notification claimed that the EPA has reason to believe that Consumers disposed of PCBs and arranged for the disposal and treatment of PCB-containing materials at portions of the site.  In April 2011, Consumers received a follow-up letter from the EPA requesting that Consumers agree to participate in a removal action plan along with several other companies for an area of lower Portage Creek, which is connected to the Kalamazoo River.  All parties, including Consumers, that were asked to participate in the removal action plan declined to accept liability.  In August 2011, the EPA announced that it would proceed with the removal action plan and would continue to pursue potentially responsible parties to perform or pay for some or all of the work.  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, 2013, 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.  Consumers has had several communications with the EPA regarding this matter.  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

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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 Environmental Mitigation 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.  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, but cannot reasonably estimate the extent of cost recovery.  Although Consumers cannot predict the financial impact or outcome of the entirety of these discussions, it does not expect any future loss from civil penalties and/or Environmental Mitigation Projects to be material.

Nuclear Matters:  The matters discussed in this section relate to Consumers’ previously owned nuclear generating plants.  Consumers no longer owns or operates any nuclear generating facilities.

Consumers filed a complaint in 2002 for damages resulting from the DOE’s failure to accept spent nuclear fuel from Palisades and Big Rock.  In 2011, Consumers entered into an agreement with the DOE to settle its claims for $120 million.  As part of this agreement, Consumers also settled its liability to the DOE to fund the disposal of spent nuclear fuel used at Palisades and Big Rock before 1983.  In December 2012, the MPSC issued an order establishing the regulatory treatment of the settlement amount.  In this order, the MPSC also relieved Consumers of its obligation to establish an independent trust fund for the amount that was payable to the DOE prior to the settlement.  In March 2013, a party in this case filed an appeal with the Michigan Court of Appeals to dispute the December 2012 MPSC order.  For further information, see Note 1, Regulatory Matters.

Renewable Energy Matters:  In April 2013, a group of landowners filed a lawsuit alleging, among other things, personal injury and loss of property value and land use as a result of the operations of Lake Winds® Energy Park.  Consumers cannot predict the ultimate financial impact or outcome of this matter.

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.

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At June 30, 2013, Consumers had a recorded liability of $121 million for its remaining obligations for these sites.  This amount represents the present value of long-term projected costs, using a discount rate of 2.57 percent and an inflation rate of 2.5 percent.  Consumers based the discount rate on the interest rate for 20-year U.S. Treasury securities at December 31, 2011.  The undiscounted amount of the remaining obligation is $130 million.  Consumers expects to incur remediation and other response activity costs in 2013 and in each of the next four years as follows:

							In Millions
	2013		2014		2015		2016		2017
Consumers
Remediation and other response activity costs	$	9	$	9	$	16	$	10	$	9

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.

Pursuant to orders issued by the MPSC, Consumers defers its MGP-related remediation costs and recovers them from its customers over a ten-year period.  At June 30, 2013, Consumers had a regulatory asset of $151 million related to the MGP sites.

CONSUMERS OTHER CONTINGENCIES

Other Environmental Matters:  Consumers initiated preliminary investigations during 2012 at a number of potentially contaminated sites it presently owns with the intention of determining whether any contamination exists and the extent of any identified contamination.  The sites being investigated include combustion turbine sites, generating sites, compressor stations, and above-ground fuel storage tanks.  Consumers will continue its preliminary investigations at potentially contaminated sites through 2013.  Consumers cannot predict an outcome at this stage of the investigations.

GUARANTEES

Presented in the following table are CMS Energy’s and Consumers’ guarantees at June 30, 2013:

						In Millions
			Maximum			Carrying
Guarantee Description	Issue Date	Expiration Date	Obligation			Amount
CMS Energy, including Consumers
Indemnity obligations from asset sales and other agreements	Various	Various through September 2029	$	482	1	$	15
Guarantees	Various	Various through March 2021	57			1
Consumers
Indemnity obligations and other guarantees	Various	Various through September 2029	$	30		$	1

1The 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 power purchase agreements, 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.

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

Guarantee Description	How Guarantee Arose	Events That Would Require Performance
CMS Energy, including Consumers
Indemnity obligations from asset sales and other	Stock and asset sale	Findings of misrepresentation,
agreements	agreements	breach of warranties, tax claims, and
		other specific events or
		circumstances
Guarantees	Normal operating	Nonperformance or non-payment by a
	activity	subsidiary under a related contract
Consumers
Indemnity obligations and other guarantees	Normal operating	Nonperformance or claims made by a third
	activity	party under a related contract

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

Other:  In addition to the matters disclosed in this Note and Note 1, 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.

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3:FINANCINGS AND CAPITALIZATION

Presented in the following table is a summary of major long-term debt transactions during the six months ended June 30, 2013:

	Principal				Issue/Retirement
	(In Millions)		Interest Rate		Date	Maturity Date
Debt issuances
CMS Energy
Senior notes1	$	250	4.70	%	March 2013	March 2043
Total CMS Energy parent	$	250
Consumers
FMB	$	425	3.95	%	May 2013	May 2043
Total Consumers	$	425
Total debt issuances	$	675
Debt retirements
Consumers
FMB	$	200	6.00	%	June 2013	February 2014
FMB		225	5.00		June 2013	March 2015
Total Consumers	$	425
Total debt retirements	$	425

1 CMS Energy plans to use these proceeds to retire all $250 million of CMS Energy’s 2.75 percent senior notes due May 2014.

Revolving Credit Facilities:  The following secured revolving credit facilities with banks were available at June 30, 2013:

							In Millions
Expiration Date	Amount of Facility		Amount Borrowed		Letters of Credit Outstanding		Amount Available
CMS Energy
December 21, 20171	$	550	$	-	$	2	$	548
Consumers
December 21, 20172	$	500	$	-	$	2	$	498
April 18, 20172		150		-		-		150
September 9, 20142		30		-		30		-

1 Obligations under this facility are secured by Consumers common stock.

2 Obligations under this facility are secured by FMBs of Consumers.

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, 2013, $250 million of accounts receivable were eligible for transfer.  During the six months ended June 30, 2013, Consumers’ average short-term borrowings totaled $10 million, with a weighted-average annual interest rate of 0.94 percent.

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Contingently Convertible Securities:  Presented in the following table are the significant terms of CMS Energy’s contingently convertible securities at June 30, 2013:

Security	Maturity	Outstanding (In Millions)	Adjusted Conversion Price	Adjusted Trigger Price
5.50% senior notes	2029	$   172	$     13.74	$      17.86

During 20 of the last 30 trading days ended June 30, 2013, the adjusted trigger-price contingencies were met for the contingently convertible senior notes, and as a result, the senior notes are convertible at the option of the note holders for the three months ending September 30, 2013.  The senior notes, if converted, require CMS Energy to pay cash up to the principal amount of the securities.  Any conversion value in excess of the principal amount can be paid in cash or in shares of CMS Energy’s common stock, at the election of CMS Energy.

Dividend Restrictions:  Under provisions of the Michigan Business Corporation Act, at June 30, 2013, payment of common stock dividends by CMS Energy was limited to $3.3 billion.

Under the provisions of its articles of incorporation, at June 30, 2013, Consumers had $603 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, 2013, CMS Energy received $194 million of common stock dividends from Consumers.

Issuance of Common Stock:  CMS Energy has entered into two continuous equity offering programs permitting it to sell, from time to time in “at the market” offerings, common stock having an aggregate sales price of up to $50 million per program.

Presented in the following table are the transactions that CMS Energy entered into under the first program:

	Number of	Average	Proceeds
	Shares Issued	Price per Share	(In Millions)
June 2011	762,925	$   19.66	$   15
June 2012	650,235	23.07	15
March 2013	735,873	27.18	20
Total	2,149,033	$   23.27	$   50

In April 2013, CMS Energy entered into the second continuous equity offering program, but has not yet issued any equity under this program.

Preferred Stock: In May 2013, Consumers gave notice of the mandatory redemption of all of its $4.16 preferred stock.  Holders of record as of June 3, 2013 received a redemption price of $103.25 per share, payable July 1, 2013, which represented an aggregate redemption price of $7 million paid to redeem the 68,451 outstanding shares.

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4: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, 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.

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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, recorded at fair value on a recurring basis:

											In Millions
	June 30, 2013										December 31, 2012
				Level									Level
		Total			1		2		3		Total		1		2		3
CMS Energy, including Consumers
Assets
Cash equivalents		$	339		$	339	$	-	$	-	$	53	$	53	$	-	$	-
Restricted cash equivalents		13			13		-		-		14		14		-		-
Nonqualified deferred compensation plan assets		5			5		-		-		5		5		-		-
DB SERP
Cash equivalents		1			1		-		-		2		2		-		-
Mutual funds		137			137		-		-		126		126		-		-
Derivative instruments
Commodity contracts		12			-		2		10		3		-		-		3
Total		$	507		$	495	$	2	$	10	$	203	$	200	$	-	$	3
Liabilities
Nonqualified deferred compensation plan liabilities		$	5		$	5	$	-	$	-	$	5	$	5	$	-	$	-
Derivative instruments
Commodity contracts		4			-		2		2		4		-		3		1
Total		$	9		$	5	$	2	$	2	$	9	$	5	$	3	$	1
Consumers
Assets
Cash equivalents		$	186		$	186	$	-	$	-	$	-	$	-	$	-	$	-
Restricted cash equivalents		13			13		-		-		13		13		-		-
CMS Energy common stock		30			30		-		-		32		32		-		-
Nonqualified deferred compensation plan assets		4			4		-		-		4		4		-		-
DB SERP
Cash equivalents		1			1		-		-		1		1		-		-
Mutual funds		96			96		-		-		85		85		-		-
Derivative instruments
Commodity contracts		10			-		-		10		2		-		-		2
Total		$	340		$	330	$	-	$	10	$	137	$	135	$	-	$	2
Liabilities
Nonqualified deferred compensation plan liabilities		$	4		$	4	$	-	$	-	$	4	$	4	$	-	$	-
Total		$	4		$	4	$	-	$	-	$	4	$	4	$	-	$	-

Cash Equivalents:  Cash equivalents and restricted cash equivalents consist of money market funds with daily liquidity.  Short-term debt instruments classified as cash equivalents or restricted cash equivalents on the consolidated balance sheets are not included since they are recorded at amortized cost.

Nonqualified Deferred Compensation Plan Assets and Liabilities:  The nonqualified deferred compensation plan assets consist of mutual funds, which are valued using the daily quoted NAVs that are publicly available and are the basis for transactions to buy or sell shares in each fund.  CMS Energy and Consumers value their nonqualified deferred compensation plan liabilities based on the fair values of the

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plan assets, as they reflect what is owed to the plan participants in accordance with their investment elections.  CMS Energy and Consumers report the assets in other non-current assets and the liabilities in other non-current liabilities on their consolidated balance sheets.

DB SERP Assets:  CMS Energy and Consumers value their DB SERP assets using a market approach that incorporates quoted market prices.  The DB SERP cash equivalents consist of a money market fund with daily liquidity.  The DB SERP invests in mutual funds that hold primarily fixed-income instruments of varying maturities.  In order to meet their investment objectives, the funds hold investment-grade debt securities, and may invest a portion of their assets in high-yield securities, foreign debt, and derivative instruments.  CMS Energy and Consumers value these funds using the daily quoted NAVs that are publicly available and are the basis for transactions to buy or sell shares in each fund.  CMS Energy and Consumers report their DB SERP assets in other non-current assets on their consolidated balance sheets.  For additional details about DB SERP securities, see Note 5, Financial Instruments.

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.  CMS Energy values its exchange-traded derivative contracts based on Level 1 quoted prices and values other derivatives using Level 2 inputs, including commodity forward prices and credit risk factors.  CMS Energy and Consumers have classified certain derivatives as Level 3 since the fair value measurements incorporate assumptions that cannot be observed or confirmed through market transactions.

The most significant derivatives classified as Level 3 are FTRs held by Consumers.  Consumers 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 FTRs are deferred as regulatory assets or liabilities until the instruments are settled.  Due to the lack of quoted pricing information, Consumers determines the fair value of its FTRs based on Consumers’ average historical settlements.

ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS USING SIGNIFICANT LEVEL 3INPUTS

The largest change in the fair values of Level 3 assets and liabilities at CMS Energy and Consumers during the three and six months ended June 30, 2013 and 2012 was attributable to the FTRs.

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5:FINANCIAL INSTRUMENTS

Presented in the following table are the carrying amounts and fair values, by level within the fair value hierarchy, of CMS Energy’s and Consumers’ financial instruments that are not recorded at fair value.  The table does not include information on cash, cash equivalents, short-term accounts and notes receivable, short-term investments, and current liabilities since the carrying amounts of these items approximate their fair values because of their short-term nature.  For information about assets and liabilities recorded at fair value and for additional details regarding the fair value hierarchy, see Note 4, Fair Value Measurements.

																	In Millions
	June 30, 2013										December 31, 2012
			Fair Value										Fair Value
	Carrying				Level						Carrying				Level
	Amount		Total		1		2		3		Amount		Total		1			2		3
CMS Energy, including Consumers
Securities held to maturity	$	10	$	10	$	-	$	10	$	-	$	9	$	10	$	-		$	10	$	-
Notes receivable1	543		582		-		-		582		544		581		-			-		581
Long-term debt2	7,432		8,278		-		7,295		983		7,229		8,347		-			7,321		1,026
Consumers
Long-term debt3	$	4,318	$	4,731	$	-	$	3,748	$	983	$	4,338	$	5,015	$	-		$	3,989	$	1,026

1 Includes current portion of notes receivable of $50 million at June 30, 2013 and $40 million at December 31, 2012.

2 Includes current portion of long-term debt of $737 million at June 30, 2013 and $519 million at December 31, 2012.

3 Includes current portion of long-term debt of $42 million at June 30, 2013 and $41 million at December 31, 2012.

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.

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 and models may be used that rely on assumptions that cannot be observed or confirmed through market transactions.  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, 2013 and December 31, 2012, 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.

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Presented in the following table are CMS Energy’s and Consumers’ investment securities classified as available for sale or held to maturity:

In Millions
	June 30, 2013												December 31, 2012
				Unrealized			Unrealized			Fair						Unrealized			Unrealized			Fair
	Cost			Gains			Losses			Value			Cost			Gains			Losses			Value
CMS Energy, including Consumers
Available for sale
DB SERP
Mutual funds		$	138		$	-		$	1		$	137		$	123		$	3		$	-		$	126
Held to maturity
Debt securities		10			-			-			10			9			1			-			10
Consumers
Available for sale
DB SERP
Mutual funds		$	96		$	-		$	-		$	96		$	83		$	2		$	-		$	85
CMS Energy common stock		5			25			-			30			6			26			-			32

The mutual funds classified as available for sale hold primarily fixed-income instruments of varying maturities.  During the six months ended June 30, 2013, CMS Energy contributed $16 million to the DB SERP, which included a contribution of $13 million by Consumers.  The contributions were used to acquire additional shares in the mutual funds.  Debt securities classified as held to maturity consist primarily of mortgage-backed securities held by EnerBank.

Consumers recognized gains of $4 million in January 2013 and $5 million in January 2012 from transferring shares of CMS Energy common stock to a related charitable foundation.  The gains reflected the excess of fair value over cost of the stock donated and were included in income.

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6:NOTES RECEIVABLE

Presented in the following table are details of CMS Energy’s and Consumers’ current and non-current notes receivable:

In Millions
	June 30, 2013		December 31, 2012
CMS Energy, including Consumers
Current
EnerBank notes receivable, net of allowance for loan losses	$	50	$	40
Other		26		1
Non-current
EnerBank notes receivable, net of allowance for loan losses		493		504
Other		-		16
Total notes receivable	$	569	$	561
Consumers
Current
Other	$	25	$	-
Non-current
Other		-		16
Total notes receivable	$	25	$	16

EnerBank notes receivable are unsecured consumer installment loans for financing home improvements.

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.  Loan 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 Ended					Six Months Ended
June 30	2013		2012			2013		2012
Balance at beginning of period	$	5	$	5		$	5	$	5
Charge-offs		(2	)	(1	)		(3	)	(2	)
Recoveries		1		-			1		-
Provision for loan losses		1		1			2		2
Balance at end of period	$	5	$	5		$	5	$	5

Loans that are 30 days or more past due are considered delinquent.  The balance of EnerBank’s delinquent consumer loans was $2 million at June 30, 2013 and $3 million at December 31, 2012.

At June 30, 2013 and December 31, 2012, $1 million of EnerBank’s loans had been modified as troubled debt restructurings.

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7:RETIREMENT BENEFITS

CMS Energy and Consumers provide pension, OPEB, and other retirement benefits to employees under a number of different plans.

Presented in the following tables are the costs incurred in CMS Energy’s and Consumers’ retirement benefits plans:

								In Millions
	Pension
	Three Months Ended							Six Months Ended
June 30		2013			2012			2013			2012
CMS Energy, including Consumers
Net periodic pension cost
Service cost		$	14		$	12		$	27		$	24
Interest expense			23			25			47			50
Expected return on plan assets			(32	)		(32	)		(64	)		(63	)
Amortization of:
Net loss			24			19			48			38
Prior service cost			1			2			2			3
Net periodic pension cost		$	30		$	26		$	60		$	52
Consumers
Net periodic pension cost
Service cost		$	13		$	11		$	26		$	23
Interest expense			23			24			46			48
Expected return on plan assets			(32	)		(31	)		(63	)		(61	)
Amortization of:
Net loss			24			19			47			37
Prior service cost			1			2			2			3
Net periodic pension cost		$	29		$	25		$	58		$	50

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								In Millions
	OPEB
	Three Months Ended							Six Months Ended
June 30		2013			2012			2013			2012
CMS Energy, including Consumers
Net periodic OPEB cost
Service cost		$	9		$	8		$	18		$	16
Interest expense			19			20			38			41
Expected return on plan assets			(19	)		(16	)		(38	)		(33	)
Amortization of:
Net loss			10			12			21			23
Prior service credit			(5	)		(5	)		(10	)		(10	)
Net periodic OPEB cost		$	14		$	19		$	29		$	37
Consumers
Net periodic OPEB cost
Service cost		$	9		$	8		$	18		$	16
Interest expense			18			20			36			40
Expected return on plan assets			(17	)		(16	)		(35	)		(31	)
Amortization of:
Net loss			10			12			21			23
Prior service credit			(5	)		(5	)		(10	)		(10	)
Net periodic OPEB cost		$	15		$	19		$	30		$	38

Effective July 1, 2013, CMS Energy and Consumers changed the Medicare drug program provided through their OPEB Plan from an employer-sponsored prescription drug plan with a retiree drug subsidy to an EGWP to begin on January 1, 2015.  Also effective July 1, 2013, the OPEB Plan incorporated certain benefit changes to begin on January 1, 2016.  Accordingly, CMS Energy and Consumers performed a remeasurement of the OPEB Plan as of July 1, 2013.  In addition, with the plan remeasurement, the discount rate used to measure the liability was increased from 4.4 percent at December 31, 2012 to 5.1 percent at July 1, 2013.  Assumptions regarding the expected long-term rate of return on plan assets and the health-care cost trend rate did not change from December 31, 2012 levels.

67

8: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	2013		2012		2013		2012
Income available to common stockholders
Income from continuing operations	$	81	$	101	$	225	$	161
Less income attributable to noncontrolling interests	1		1		1		1
Income from continuing operations available to common stockholders – basic and diluted	$	80	$	100	$	224	$	160
Average common shares outstanding
Weighted-average shares – basic	264.5		261.2		264.1		258.4
Add dilutive contingently convertible securities	6.4		5.9		6.2		8.3
Add dilutive non-vested stock awards	1.3		1.1		1.2		1.0
Weighted-average shares – diluted	272.2		268.2		271.5		267.7
Income from continuing operations per average common share available to common stockholders
Basic	$	0.30	$	0.38	$	0.85	$	0.61
Diluted	0.29		0.37		0.83		0.59

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.

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.

68

9: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.

69

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

										In Millions
	Three Months Ended						Six Months Ended
June 30	2013			2012			2013			2012
CMS Energy, including Consumers
Operating revenue
Electric utility	$	1,026		$	998		$	1,987		$	1,834
Gas utility	316			284			1,274			1,123
Enterprises	48			38			92			92
Other	16			13			32			27
Total operating revenue – CMS Energy	$	1,406		$	1,333		$	3,385		$	3,076
Consumers
Operating revenue
Electric utility	$	1,026		$	998		$	1,987		$	1,834
Gas utility	316			284			1,274			1,123
Total operating revenue – Consumers	$	1,342		$	1,282		$	3,261		$	2,957
CMS Energy, including Consumers
Net income (loss) available to common stockholders
Electric utility	$	93		$	111		$	159		$	132
Gas utility	5			9			101			64
Enterprises	1			(1		)	5			4
Other	(19		)	(19		)	(41		)	(33		)
Total net income available to common stockholders – CMS Energy	$	80		$	100		$	224		$	167
Consumers
Net income available to common stockholder
Electric utility	$	93		$	111		$	159		$	132
Gas utility	5			9			101			64
Other	1			1			1			1
Total net income available to common stockholder – Consumers	$	99		$	121		$	261		$	197

70

			In Millions
	June 30, 2013		December 31, 2012
CMS Energy, including Consumers
Plant, property, and equipment, gross
Electric utility	$	11,275	$	11,041
Gas utility	4,661		4,400
Enterprises	112		113
Other	38		38
Total plant, property, and equipment, gross – CMS Energy	$	16,086	$	15,592
Consumers
Plant, property, and equipment, gross
Electric utility	$	11,275	$	11,041
Gas utility	4,661		4,400
Other	15		15
Total plant, property, and equipment, gross – Consumers	$	15,951	$	15,456
CMS Energy, including Consumers
Total assets
Electric utility1	$	10,769	$	10,423
Gas utility1	4,922		5,016
Enterprises	180		181
Other	1,558		1,511
Total assets – CMS Energy	$	17,429	$	17,131
Consumers
Total assets
Electric utility1	$	10,769	$	10,423
Gas utility1	4,922		5,016
Other	718		836
Total assets – Consumers	$	16,409	$	16,275

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

71

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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 2012 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.

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 Part I – Item 3. Legal Proceedings, of the 2012 Form 10-K, see Part I – Item 1. Consolidated Financial Statements (Unaudited) – Notes to the Unaudited Consolidated Financial Statements – Note 1, Regulatory Matters and Note 2, Contingencies and Commitments.

72

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 2012 Form 10-K, which Risk Factors are incorporated herein by reference.

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, 2013:

					Total Number of	Maximum Number of
					Shares Purchased as	Shares That May Yet Be
	Total Number	Average			Part of Publicly	Purchased Under Publicly
	of Shares	Price Paid			Announced Plans or	Announced Plans or
Period	Purchased1	per Share			Programs	Programs
April 1, 2013 to	1		$	27.80	-	-
April 30, 2013
May 1, 2013 to
May 31, 2013	55,050			28.81	-	-
June 1, 2013 to
June 30, 2013	-			-	-	-
Total	55,051		$	28.81	-	-

1 Common shares were purchased to satisfy the minimum statutory income tax withholding obligation for common shares that have vested under the Performance Incentive Stock Plan.  The value of shares repurchased is based on the market price on the vesting date.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

73

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 of the parties to each of the agreements that 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	—	121st Supplemental Indenture dated as of May 17, 2013 between Consumers and The Bank of New York Mellon, as Trustee (Exhibit 4.1 to Form 8-K filed May 17, 2013 and incorporated herein by reference)
10.1	—	$500 million Second Amended and Restated Revolving Credit Agreement dated as of May 23, 2013 among Consumers, the Banks, as defined therein, and JPMorgan Chase Bank, N.A., as Agent
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 The financial information contained in the XBRL-related information is “unaudited” and “unreviewed.”

74

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 25, 2013	By:	/s/ Thomas J. Webb
		Thomas J. Webb
		Executive Vice President and
		Chief Financial Officer
		CONSUMERS ENERGY COMPANY
		(Registrant)
Dated: July 25, 2013	By:	/s/ Thomas J. Webb
		Thomas J. Webb
		Executive Vice President and
		Chief Financial Officer

75

EXHIBITS

CMS ENERGY’S AND CONSUMERS’ EXHIBIT INDEX

Exhibits		Description
10.1	—	$500 million Second Amended and Restated Revolving Credit Agreement dated as of May 23, 2013 among Consumers, the Banks, as defined therein, and JPMorgan Chase Bank, N.A., as Agent
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 The financial information contained in the XBRL-related information is “unaudited” and “unreviewed.”

EX-10.1

Exhibit 10.1

EXECUTION COPY

$500,000,000

SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT

Dated as of May 23, 2013

among

CONSUMERS ENERGY COMPANY,
as the Company,

THE FINANCIAL INSTITUTIONS NAMED HEREIN,
as the Banks,

JPMORGAN CHASE BANK, N.A.,
as Agent and an LC Issuer,

BARCLAYS BANK PLC AND UNION BANK, N.A.,

as Co-Syndication Agents,

and

THE ROYAL BANK OF SCOTLAND PLC,
as Documentation Agent

J.P. MORGAN SECURITIES LLC, BARCLAYS BANK PLC, UNION BANK, N.A. AND RBS SECURITIES INC.,
as Joint Lead Arrangers and Joint Bookrunners

TABLE OF CONTENTS

		Page
ARTICLE I DEFINITIONS		1
1.1	Definitions	1
1.2	Interpretation	15
1.3	Accounting Terms	16
1.4	Amendment and Restatement of Existing Credit Agreement	16
ARTICLE II THE ADVANCES		17
2.1	Commitment	17
2.2	Repayment	17
2.3	Ratable Loans	18
2.4	Types of Advances	18
2.5	Fees and Changes in Commitments	18
2.6	Minimum Amount of Advances	18
2.7	Principal Payments	18
2.8	Method of Selecting Types and Interest Periods for New Advances	19
2.9	Conversion and Continuation of Outstanding Advances	19
2.10	Interest Rates, Interest Payment Dates	20
2.11	Rate after Maturity	20
2.12	Method of Payment; Sharing Set-Offs	20
2.13	Bonds; Record-keeping; Telephonic Notices	21
2.14	Lending Installations	22
2.15	Non-Receipt of Funds by the Agent	22
2.16	Expansion Option	22
ARTICLE III LETTER OF CREDIT FACILITY		23
3.1	Issuance	23
3.2	Participations	24
3.3	Notice	24
3.4	LC Fees	24
3.5	Administration; Reimbursement by Banks	24
3.6	Reimbursement by Company	25
3.7	Obligations Absolute	25
3.8	Actions of LC Issuers	26
3.9	Indemnification	26
3.10	Banks’ Indemnification	27
3.11	Rights as a Bank	27
ARTICLE IV CHANGE IN CIRCUMSTANCES		27
4.1	Yield Protection	27
4.2	Replacement of Banks	28
4.3	Availability of Eurodollar Rate Loans	29
4.4	Funding Indemnification	29
4.5	Taxes	29

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4.6	Bank Certificates, Survival of Indemnity	32
4.7	Defaulting Banks	32
ARTICLE V REPRESENTATIONS AND WARRANTIES		34
5.1	Incorporation and Good Standing	34
5.2	Corporate Power and Authority: No Conflicts	34
5.3	Governmental Approvals	34
5.4	Legally Enforceable Agreements	34
5.5	Financial Statements	34
5.6	Litigation	35
5.7	Margin Stock	35
5.8	ERISA	35
5.9	Insurance	35
5.10	Taxes	35
5.11	Investment Company Act	35
5.12	Bonds	35
5.13	Disclosure	36
5.14	OFAC	36
5.15	Delivery of Documents	36
ARTICLE VI AFFIRMATIVE COVENANTS		36
6.1	Payment of Taxes, Etc.	36
6.2	Maintenance of Insurance	36
6.3	Preservation of Corporate Existence, Etc.	36
6.4	Compliance with Laws, Etc.	36
6.5	Visitation Rights	37
6.6	Keeping of Books	37
6.7	Reporting Requirements	37
6.8	Use of Proceeds	39
6.9	Maintenance of Properties, Etc.	39
6.10	Bonds	39
ARTICLE VII NEGATIVE COVENANTS		39
7.1	Liens	39
7.2	Sale of Assets	41
7.3	Mergers, Etc.	41
7.4	Compliance with ERISA	41
7.5	Organizational Documents	41
7.6	Change in Nature of Business	41
7.7	Transactions with Affiliates	41
ARTICLE VIII FINANCIAL COVENANT		41
ARTICLE IX EVENTS OF DEFAULT		42
9.1	Events of Default	42
9.2	Remedies	43

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ARTICLE X WAIVERS, AMENDMENTS AND REMEDIES		45
10.1	Amendments	45
10.2	Preservation of Rights	45
ARTICLE XI CONDITIONS PRECEDENT		46
11.1	Effectiveness of this Agreement	46
11.2	Each Credit Extension	47
ARTICLE XII GENERAL PROVISIONS		47
12.1	Successors and Assigns	47
12.2	Survival of Representations	50
12.3	Governmental Regulation	50
12.4	Taxes	50
12.5	Choice of Law	50
12.6	Headings	50
12.7	Entire Agreement	50
12.8	Expenses; Indemnification	50
12.9	Severability of Provisions	51
12.10	Setoff	51
12.11	Ratable Payments	51
12.12	Nonliability	52
12.13	Other Agents	52
12.14	USA Patriot Act	52
12.15	Electronic Delivery	53
12.16	Confidentiality	54
12.17	No Advisory or Fiduciary Responsibility	54
ARTICLE XIII THE AGENT		55
13.1	Appointment	55
13.2	Powers	55
13.3	General Immunity	55
13.4	No Responsibility for Recitals, Etc.	55
13.5	Action on Instructions of Banks	55
13.6	Employment of Agents and Counsel	56
13.7	Reliance on Documents; Counsel	56
13.8	Agent’s Reimbursement and Indemnification	56
13.9	Rights as a Bank	56
13.10	Bank Credit Decision	56
13.11	Successor Agent	57
ARTICLE XIV NOTICES		58
14.1	Giving Notice	58
14.2	Change of Address	58
ARTICLE XV COUNTERPARTS		58

-iii-

SCHEDULES

Schedule 1	Pricing Schedule
Schedule 2	Commitment Schedule
Schedule 3.1	Existing LCs
EXHIBITS
Exhibit A	Form of Opinion from Kimberly C. Wilson, Supervisory Assistant General Counsel of the Company
Exhibit B	Form of Compliance Certificate
Exhibit C	Form of Assignment and Assumption Agreement
Exhibit D	Terms of Subordination (Junior Subordinated Debt)
Exhibit E	Terms of Subordination (Guaranty of Hybrid Equity Securities/Hybrid Preferred Securities)
Exhibit F	Form of Increasing Bank Supplement
Exhibit G	Form of Augmenting Bank Supplement

-iv-

SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT

This SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT, dated as of May 23, 2013, is among CONSUMERS ENERGY COMPANY, a Michigan corporation (the “Company”), the financial institutions listed on the signature pages hereof (together with their respective successors and assigns and any other Person that shall have become a Bank hereunder pursuant to Section 2.16, the “Banks”) and JPMORGAN CHASE BANK, N.A., as Agent.

W I T N E S S E T H:

WHEREAS, the Company, the banks party thereto and JPMorgan Chase Bank, N.A., as administrative agent thereunder, are currently party to the Amended and Restated Revolving Credit Agreement, dated as of December 21, 2012 (as amended, supplemented or otherwise modified prior to the date hereof, the “Existing Credit Agreement”);

WHEREAS, the Company, the Banks and the Agent have agreed to enter into this Agreement in order to (i) amend and restate the Existing Credit Agreement in its entirety; (ii) re-evidence the “Obligations” under, and as defined in, the Existing Credit Agreement, which shall be repayable in accordance with the terms of this Agreement; and (iii) set forth the terms and conditions under which the Banks will, from time to time, make loans and extend other financial accommodations to or for the benefit of the Company in an aggregate amount not to exceed $500,000,000 at any time outstanding;

NOW THEREFORE, the parties hereto agree as follows:

ARTICLE I
DEFINITIONS

1.1Definitions.  As used in this Agreement:

“Accounting Changes” – see Section 1.3.

“Administrative Questionnaire” means an administrative questionnaire, substantially in the form supplied by the Agent, completed by a Bank and furnished to the Agent in connection with this Agreement.

“Advance” means a group of Loans made by the Banks hereunder of the same Type, made, converted or continued on the same day and, in the case of Eurodollar Rate Loans, having the same Interest Period.

“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling (including all directors and officers of such Person), controlled by, or under direct or indirect common control with such Person.  A Person shall be deemed to control another entity if such Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such entity, whether through the ownership of voting securities, by contract or otherwise.

-1-

“Agent” means JPMorgan Chase Bank, N.A., in its capacity as administrative agent for the Banks pursuant to Article XIII, and not in its individual capacity as a Bank, and any successor Agent appointed pursuant to Article XIII.

“Aggregate Commitment” means the aggregate amount of the Commitments of all Banks.

“Aggregate Outstanding Credit Exposure” means, at any time, the aggregate of the Outstanding Credit Exposure of all the Banks.

“Agreement” means this Second Amended and Restated Revolving Credit Agreement, as amended from time to time.

“Alternate Base Rate” means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus ½ of 1% and (c) the Eurodollar Rate for a one month Interest Period on such day (or if such day is not a Business Day, the immediately preceding Business Day) plus 1%, provided that, for the avoidance of doubt, the Eurodollar Rate for any day shall be based on the rate appearing on Reuters Screen LIBOR01 Page (or on any successor or substitute page of such page) at approximately 11:00 a.m. London time on such day.  Any change in the Alternate Base Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or the Eurodollar Rate shall be effective from and including the effective date of such change in the Prime Rate, the Federal Funds Effective Rate or the Eurodollar Rate, respectively.

“Applicable Margin” means, with respect to Advances of any Type at any time, the percentage rate per annum which is applicable at such time with respect to Advances of such Type as set forth in Schedule 1.

“Arranger” means each of J.P. Morgan Securities LLC, Barclays Bank PLC, Union Bank, N.A. and RBS Securities Inc.

“Assignment Agreement” – see Section 12.1(e).

“Augmenting Bank” – see Section 2.16.

“Available Aggregate Commitment” means, at any time, the Available Commitment then in effect minus the Aggregate Outstanding Credit Exposure at such time.

“Available Commitment” means, at any time, the lesser of (i) the Aggregate Commitment and (ii) the face amount of the Bonds.

“Bankruptcy Event” means, with respect to any Person, such Person becomes the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business appointed for it, or, in the good faith determination of the Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment, provided that a Bankruptcy Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest,

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in such Person by a Governmental Authority or instrumentality thereof, provided, further, that such ownership interest does not result in or provide such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Person (or such Governmental Authority or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person.

“Banks” – see the preamble.

“Base Eurodollar Rate” means, with respect to a Eurodollar Advance for the relevant Interest Period, the per annum interest rate determined by the offered rate per annum at which deposits in U.S. dollars, for a period equal or comparable to such Interest Period, appears on page 3750 (or any successor page) of the Dow Jones Market Service as of 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period (rounded upwards, if necessary, to the next 1/100 of 1%), or in the event such offered rate is not available from the Dow Jones Market Service page, the average rate offered on deposits in U.S. dollars, for a period equal or comparable to such Interest Period, to the Agent by prime banks in the London interbank market at approximately 11:00 a.m. (London time), two Business Days prior to the first day of such Interest Period (rounded upwards, if necessary, to the next 1/100 of 1%), and in an amount substantially equal to the amount of JPMorgan Chase Bank, N.A.’s relevant Eurodollar Rate Loan for such Interest Period (or, in the event that JPMorgan Chase Bank, N.A. is not a Bank hereunder, in the amount of $5,000,000) .

“Bond Delivery Agreement” means that certain Bond Delivery Agreement, dated as of March 31, 2011, between the Company and the Agent, as the same may be amended, restated, supplemented or otherwise modified from time to time.

“Bonds” means the series of interest-bearing First Mortgage Bonds created under the Supplemental Indenture and issued in favor of the Agent, including any new interest-bearing First Mortgage Bonds issued in favor of the Agent pursuant to any supplemental indenture acceptable to the Agent in accordance with Section 2.16.

“Borrowing Date” means a date on which a Credit Extension is made hereunder.

“Borrowing Notice” – see Section 2.8.

“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed; provided that, when used in connection with a Eurodollar Rate Loan, the term “Business Day” shall also exclude any day on which banks are not open for dealings in Dollars in the London interbank market.

“Capital Lease” means any lease which has been or would be capitalized on the books of the lessee in accordance with GAAP.

“Change in Control” means (a) any “person” or “group” within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act shall become the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act) of more than 50% of the then outstanding voting capital stock of

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CMS, or (b) the majority of the board of directors of CMS shall fail to consist of Continuing Directors, or (c) a consolidation or merger of CMS shall occur after which the holders of the outstanding voting capital stock of CMS immediately prior thereto hold less than 50% of the outstanding voting capital stock of the surviving entity, or (d) more than 50% of the outstanding voting capital stock of CMS shall be transferred to any entity of which CMS owns less than 50% of the outstanding voting capital stock, or (e) CMS shall own less than 80% of the Equity Interests of the Company.

“Change in Law” means the occurrence, after the date of this Agreement (or with respect to any Bank, if later, the date on which such Bank becomes a Bank), of any of the following:  (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority, or (c) the making or issuance of any request, rules, guideline, requirement or directive (whether or not having the force of law) by any Governmental Authority; provided however, that notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines, requirements and directives thereunder, issued in connection therewith or in implementation thereof, and (ii) all requests, rules, guidelines, requirements and directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law” regardless of the date enacted, adopted, issued or implemented.

“Closing Date” means May 23, 2013.

“CMS” means CMS Energy Corporation, a Michigan corporation.

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

“Collateral Shortfall Amount” – see Section 9.2.

“Commitment” means, for each Bank, the obligation of such Bank to make Loans to, and participate in Facility LCs issued upon the application of, the Company in an aggregate amount not exceeding the amount set forth on Schedule 2 or as set forth in any Assignment Agreement that has become effective pursuant to Section 12.1, as such amount may be increased pursuant to Section 2.16, or otherwise modified, from time to time.

“Commitment Fee” – see Section 2.5.

“Commitment Fee Rate” means, at any time, the percentage rate per annum at which Commitment Fees are accruing on the Unused Commitment as set forth in Schedule 1.

“Company” – see the preamble.

“Consolidated Subsidiary” means any Subsidiary the accounts of which are or are required to be consolidated with the accounts of the Company in accordance with GAAP.

“Continuing Director” means, as of any date of determination, any member of the board

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of directors of CMS who (a) was a member of such board of directors on the Closing Date, or (b) was nominated for election or elected to such board of directors with the approval of the Continuing Directors who were members of such board of directors at the time of such nomination or election; provided that an individual who is so elected or nominated in connection with a merger, consolidation, acquisition or similar transaction shall not be a Continuing Director unless such individual was a Continuing Director prior thereto.

“Credit Documents” means this Agreement, the Facility LC Applications (if any), the Supplemental Indenture, the Bond Delivery Agreement and the Bonds.

“Credit Extension” means the making of an Advance or the issuance of a Facility LC hereunder.

“Credit Party” means the Agent, any LC Issuer or any other Bank.

“Debt” means, with respect to any Person, and without duplication, (a) all indebtedness of such Person for borrowed money, (b) all indebtedness of such Person for the deferred purchase price of property or services (other than trade accounts payable arising in the ordinary course of business which are not overdue), (c) liabilities for accumulated funding deficiencies (prior to the effectiveness of the applicable provisions of the Pension Protection Act of 2006 with respect to a Plan) and liabilities for failure to make a payment required to satisfy the minimum funding standard within the meaning of Section 412 of the Code or Section 302 of ERISA (on and after the effectiveness of the applicable provisions of the Pension Protection Act of 2006 with respect to a Plan), (d) all liabilities arising in connection with any withdrawal liability under ERISA to any Multiemployer Plan, (e) all obligations of such Person arising under acceptance facilities, (f) all obligations of such Person as lessee under Capital Leases, (g) all obligations of such Person arising under any interest rate swap, “cap”, “collar” or other hedging agreement; provided that for purposes of the calculation of Debt for this clause (g) only, the actual amount of Debt of such Person shall be determined on a net basis to the extent such agreements permit such amounts to be calculated on a net basis, (h) Off-Balance Sheet Liabilities, (i) non-contingent obligations of such Person in respect of letters of credit and bankers’ acceptances, and (j) all guaranties, endorsements (other than for collection in the ordinary course of business) and other contingent obligations of such Person to assure a creditor against loss (whether by the purchase of goods or services, the provision of funds for payment, the supply of funds to invest in any Person or otherwise) in respect of indebtedness or obligations of any other Person of the kinds referred to in clauses (a) through (i) above.  Notwithstanding the foregoing, solely for purposes of the calculation required under Article VIII, Debt shall not include any Junior Subordinated Debt issued by the Company and owned by any Hybrid Preferred Securities Subsidiary.

“Default” means an event which but for the giving of notice or lapse of time, or both, would constitute an Event of Default.

“Defaulting Bank” means any Bank that (a) has failed, within two Business Days of the date required to be funded or paid, to (i) fund any portion of its Loans, (ii) fund any portion of its participations in Facility LCs or (iii) pay over to any Credit Party any other amount required to be paid by it hereunder, unless, in the case of clause (i) above, such Bank notifies the Agent in writing that such failure is the result of such Bank’s good faith determination that a condition

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precedent to funding (specifically identified and including the particular default, if any) has not been satisfied, (b) has notified the Company or any Credit Party in writing, or has made a public statement to the effect, that it does not intend or expect to comply with any of its funding obligations under this Agreement (unless such writing or public statement indicates that such position is based on such Bank’s good faith determination that a condition precedent (specifically identified and including the particular default, if any) to funding a loan under this Agreement cannot be satisfied) or generally under other agreements in which it commits to extend credit, (c) has failed, within three Business Days after request by a Credit Party, acting in good faith, to provide a certification in writing from an authorized officer of such Bank that it will comply with its obligations to fund prospective Loans and participations in then outstanding Facility LCs under this Agreement, provided that such Bank shall cease to be a Defaulting Bank pursuant to this clause (c) upon such Credit Party’s receipt of such certification in form and substance satisfactory to it and the Agent, or (d) has become the subject of a Bankruptcy Event.

“Designated Officer” means the Chief Financial Officer, the Treasurer, an Assistant Treasurer, any Vice President in charge of financial or accounting matters or the principal accounting officer of the Company.

“Environmental Laws” means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any governmental agency or authority relating in any way to the environment, preservation or reclamation of natural resources, the management, release or threatened release of any Hazardous Substance or to health and safety matters.

“Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Substance, (c) exposure to any Hazardous Substance, (d) the release or threatened release of any Hazardous Substance into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

“Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any of the foregoing.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.

“ERISA Affiliate” means any corporation or trade or business which is a member of the same controlled group of corporations (within the meaning of Section 414(b) of the Code) as the Company or is under common control (within the meaning of Section 414(c) of the Code) with the Company.

“Eurodollar Advance” means an Advance consisting of Eurodollar Rate Loans.

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“Eurodollar Rate” means, with respect to a Eurodollar Advance for the relevant Interest Period, an interest rate per annum equal to the sum of (i) the quotient obtained by dividing (a) the Base Eurodollar Rate applicable to such Interest Period by (b) one minus the Reserve Requirement (expressed as a decimal) applicable to such Interest Period, plus (ii) the Applicable Margin.

“Eurodollar Rate Loan” means a Loan which bears interest by reference to the Eurodollar Rate.

“Event of Default” means an event described in Article IX.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Excluded Taxes” means, in the case of each Bank, LC Issuer or applicable Lending Installation and the Agent, (i) taxes imposed on its overall net income, and franchise taxes imposed on it, including Michigan Business Tax, by (a) the jurisdiction under the laws of which such Bank, such LC Issuer or the Agent is incorporated or organized or (b) the jurisdiction in which the Agent’s, such LC Issuer’s or such Bank’s principal executive office or such Bank’s or such LC Issuer’s applicable Lending Installation is located , and (ii) any U.S. Federal withholding taxes resulting from FATCA.

“Existing Credit Agreement” – see the recitals.

“Existing LC” – see Section 3.1.

“Facility LC” – see Section 3.1.

“Facility LC Application” – see Section 3.3.

“Facility LC Collateral Account” means a special, interest-bearing account maintained (pursuant to arrangements satisfactory to the Agent) at the Agent’s office at the address specified pursuant to Article XIV, which account shall be in the name of the Company but under the sole dominium and control of the Agent, for the benefit of the Banks.

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreement entered into pursuant to Section 1471(b)(1) of the Code.

“Federal Funds Effective Rate” means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Agent from three Federal funds brokers of recognized standing selected by the Agent in its sole discretion.

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“First Mortgage Bonds” means bonds issued by the Company pursuant to the Indenture.

“Fitch” means Fitch Inc. or any successor thereto.

“Floating Rate” means, with respect to a Floating Rate Advance, an interest rate per annum equal to (i) the Alternate Base Rate plus (ii) the Applicable Margin, changing when and as the Alternate Base Rate or the Applicable Margin changes.

“Floating Rate Advance” means an Advance consisting of Floating Rate Loans.

“Floating Rate Loan” means a Loan which bears interest at the Floating Rate.

“FRB” means the Board of Governors of the Federal Reserve System or any successor thereto.

“GAAP” means generally accepted accounting principles in the United States of America as in effect on the Closing Date, applied on a basis consistent with those used in the preparation of the financial statements referred to in Section 5.5 (except, for purposes of the financial statements required to be delivered pursuant to Sections 6.7(b) and (c), for changes concurred in by the Company’s independent public accountants).

“Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

“Hazardous Substance” means any waste, substance or material identified as hazardous, dangerous or toxic by any office, agency, department, commission, board, bureau or instrumentality of the United States or of the State or locality in which the same is located having or exercising jurisdiction over such waste, substance or material.

“Hybrid Equity Securities” means securities issued by the Company or a Hybrid Equity Securities Subsidiary that (i) are classified as possessing a minimum of at least two of the following:  (x) “intermediate equity content” by S&P; (y) “Basket C equity credit” by Moody’s; and (z) “50% equity credit” by Fitch and (ii) require no repayment, prepayment, mandatory redemption or mandatory repurchase prior to the date that is at least 91 days after the later of the termination of the Commitments and the repayment in full of all Obligations.

“Hybrid Equity Securities Subsidiary” means any Delaware business trust (or similar entity) (i) all of the common equity interest of which is owned (either directly or indirectly through one or more wholly-owned Subsidiaries of the Company) at all times by the Company or a wholly-owned direct or indirect Subsidiary of the Company, (ii) that has been formed for the purpose of issuing Hybrid Equity Securities and (iii) substantially all of the assets of which consist at all times solely of Junior Subordinated Debt issued by the Company or a wholly-owned direct or indirect Subsidiary of the Company (as the case may be) and payments made from time to time on such Junior Subordinated Debt.

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“Hybrid Preferred Securities” means any preferred securities issued by a Hybrid Preferred Securities Subsidiary, where such preferred securities have the following characteristics:

(i)such Hybrid Preferred Securities Subsidiary lends substantially all of the proceeds from the issuance of such preferred securities to the Company or a wholly-owned direct or indirect Subsidiary of the Company in exchange for Junior Subordinated Debt issued by the Company or such wholly-owned direct or indirect Subsidiary, respectively;

(ii)such preferred securities contain terms providing for the deferral of interest payments corresponding to provisions providing for the deferral of interest payments on such Junior Subordinated Debt; and

(iii)the Company or a wholly-owned direct or indirect Subsidiary of the Company (as the case may be) makes periodic interest payments on such Junior Subordinated Debt, which interest payments are in turn used by the Hybrid Preferred Securities Subsidiary to make corresponding payments to the holders of the preferred securities.

“Hybrid Preferred Securities Subsidiary” means any Delaware business trust (or similar entity) (i) all of the common equity interest of which is owned (either directly or indirectly through one or more wholly-owned Subsidiaries of the Company) at all times by the Company or a wholly-owned direct or indirect Subsidiary of the Company, (ii) that has been formed for the purpose of issuing Hybrid Preferred Securities and (iii) substantially all of the assets of which consist at all times solely of Junior Subordinated Debt issued by the Company or a wholly-owned direct or indirect Subsidiary of the Company (as the case may be) and payments made from time to time on such Junior Subordinated Debt.

“Increase Date” means any date on which an increase of the Commitments pursuant to Section 2.16 occurs.

“Increasing Bank” – see Section 2.16.

“Indenture” means the Indenture, dated as of September 1, 1945, as supplemented and amended from time to time, from the Company to The Bank of New York Mellon, as successor trustee.

“Interest Period” means, with respect to a Eurodollar Advance, a period of one, two, three or six months, or such shorter period agreed to by the Company and the Banks, commencing on a Business Day selected by the Company pursuant to this Agreement.  Such Interest Period shall end on the day which corresponds numerically to such date one, two, three or six months thereafter (or such shorter period agreed to by the Company and the Banks); provided that if there is no such numerically corresponding day in such next, second, third or sixth succeeding month (or such shorter period, as applicable), such Interest Period shall end on the last Business Day of such next, second, third or sixth succeeding month (or such shorter period, as applicable).  If an Interest Period would otherwise end on a day which is not a Business Day, such Interest Period shall end on the next succeeding Business Day; provided that if said next succeeding

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Business Day falls in a new calendar month, such Interest Period shall end on the immediately preceding Business Day.  The Company may not select any Interest Period that ends after the scheduled Termination Date.

“Junior Subordinated Debt” means any unsecured Debt of the Company or a Subsidiary of the Company that is (i) issued in exchange for the proceeds of Hybrid Equity Securities or Hybrid Preferred Securities and (ii) subordinated to the rights of the Banks hereunder and under the other Credit Documents pursuant to terms of subordination substantially similar to those set forth in Exhibit D, or pursuant to other terms and conditions satisfactory to the Majority Banks.

“LC Fee” – see Section 3.4.

“LC Issuer” means each of JPMorgan Chase Bank, N.A., Barclays Bank PLC and Union Bank, N.A. (or any subsidiary or affiliate of any of the foregoing designated by such Person) in its capacity as an issuer of Facility LCs hereunder, and any other Bank designated by the Company that (i) agrees to be an issuer of Facility LCs hereunder (which agreement may include a maximum limit on the aggregate face amount of all Facility LCs to be issued by such Bank hereunder, and such Bank and the Company shall provide notice of such limitation to the Agent) and (ii) is approved by the Agent (such approval not to be unreasonably withheld or delayed).

“LC Obligations” means, at any time, the sum, without duplication, of (i) the aggregate undrawn stated amount under all Facility LCs outstanding at such time plus (ii) the aggregate unpaid amount at such time of all Reimbursement Obligations.

“LC Payment Date” – see Section 3.5.

“Lending Installation” means any office, branch, subsidiary or Affiliate of a Bank.

“Lien” means any lien (statutory or otherwise), security interest, mortgage, deed of trust, priority, pledge, charge, conditional sale, title retention agreement, financing lease or other encumbrance or similar right of others, or any agreement to give any of the foregoing.

“Loan” – see Section 2.1.

“Majority Banks” means, as of any date of determination, Banks in the aggregate having more than 50% of the Aggregate Commitment as of such date or, if the Aggregate Commitment has been terminated, Banks in the aggregate holding more than 50% of the aggregate unpaid principal amount of the Aggregate Outstanding Credit Exposure as of such date.

“Material Adverse Change” means any event, development or circumstance that has had or could reasonably be expected to have a material adverse effect on (a) the financial condition or results of operations of the Company and its Consolidated Subsidiaries, taken as a whole, (b) the Company’s ability to perform its obligations under any Credit Document or (c) the validity or enforceability of any Credit Document or the rights or remedies of the Agent or the Banks thereunder.

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“Material Subsidiary” means any Subsidiary of the Company that, on a consolidated basis with any of its Subsidiaries as of any date of determination, accounts for more than 10 % of the consolidated assets of the Company and its Consolidated Subsidiaries.

“Modify” and “Modification” – see Section 3.1.

“Moody’s” means Moody’s Investors Service, Inc. or any successor thereto.

“Multiemployer Plan” means a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA.

“Net Proceeds” means, with respect to any sale or issuance of securities or incurrence of Debt by any Person, the excess of (i) the gross cash proceeds received by or on behalf of such Person in respect of such sale, issuance or incurrence (as the case may be) over (ii) customary underwriting commissions, auditing and legal fees, printing costs, rating agency fees and other customary and reasonable fees and expenses incurred by such Person in connection therewith.

“Net Worth” means, with respect to any Person, the excess of such Person’s total assets over its total liabilities, total assets and total liabilities each to be determined in accordance with GAAP consistently applied, excluding from the determination of total assets (i) goodwill, organizational expenses, research and development expenses, trademarks, trade names, copyrights, patents, patent applications, licenses and rights in any thereof, and other similar intangibles, (ii) cash held in a sinking or other analogous fund established for the purpose of redemption, retirement or prepayment of capital stock or Debt, and (iii) any item not included in clause (i) or (ii) above, that is treated as an intangible asset in conformity with GAAP.

“Obligations” means all unpaid principal of and accrued and unpaid interest on the Loans, all Reimbursement Obligations, all accrued and unpaid fees and all other obligations (including indemnities and interest and fees accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) of the Company to the Banks or to any Bank, any LC Issuer or the Agent arising under the Credit Documents.

“Off-Balance Sheet Liability” of a Person means (i) any repurchase obligation or liability of such Person with respect to accounts or notes receivable sold by such Person, (ii) any liability under any sale and leaseback transaction which is not a Capital Lease, or (iii) any liability under any so-called “synthetic lease” transaction entered into by such Person; but excluding from this definition, any Operating Leases.

“Operating Lease” of a Person means any lease of Property (other than a Capital Lease) by such Person as lessee.

“Other Taxes” – see Section 4.5(b).

“Outstanding Credit Exposure” means, as to any Bank at any time, the sum of (i) the aggregate principal amount of its Loans outstanding at such time, plus (ii) an amount equal to its Pro Rata Share of the LC Obligations at such time.

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“Parent” means, with respect to any Bank, any Person as to which such Bank is, directly or indirectly, a subsidiary.

“Payment Date” means the second Business Day of each calendar quarter occurring after the Closing Date.

“PBGC” means the Pension Benefit Guaranty Corporation and any entity succeeding to any or all of its functions under ERISA.

“Person” means an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, governmental authority or other entity of whatever nature.

“Plan” means any employee benefit plan (other than a Multiemployer Plan) maintained for employees of the Company or any ERISA Affiliate and covered by Title IV of ERISA.

“Plan Termination Event” means (a) a Reportable Event described in Section 4043 of ERISA and the regulations issued thereunder (other than a Reportable Event not subject to the provision for 30-day notice to the PBGC under such regulations), (b) the withdrawal of the Company or any ERISA Affiliate from a Plan during a plan year in which it was a “substantial employer” as defined in Section 4001(a)(2) of ERISA, (c) the filing of a notice of intent to terminate a Plan or the treatment of a Plan amendment as a termination under Section 4041 of ERISA, or (d) the institution of proceedings to terminate a Plan by the PBGC or to appoint a trustee to administer any Plan.

“Prime Rate” means the rate of interest per annum publicly announced from time to time by JPMorgan Chase Bank, N.A. as its prime rate in effect at its principal office in New York City; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective.

“Property” of a Person means any and all property, whether real, personal, tangible, intangible, or mixed, of such Person, or other assets owned, leased or operated by such Person.

“Pro Rata Share” means, with respect to a Bank, a portion equal to (i) a fraction the numerator of which is such Bank’s Commitment and the denominator of which is the Aggregate Commitment and (ii) after the Commitments of all of the Banks have terminated, a fraction the numerator of which is the Outstanding Credit Exposure for such Bank, and the denominator of which is the Aggregate Outstanding Credit Exposure at such time; provided, that in the case of Section 4.7(c)(i), when a Defaulting Bank shall exist the Commitment or Outstanding Credit Exposure, as applicable, of such Defaulting Bank shall be disregarded when calculating such Bank’s “Pro Rata Share”.

“Regulation D” means Regulation D of the FRB from time to time in effect and shall include any successor or other regulation or official interpretation of the FRB relating to reserve requirements applicable to member banks of the Federal Reserve System.

“Regulation U” means Regulation U of the FRB from time to time in effect and shall include any successor or other regulation or official interpretation of the FRB relating to the

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extension of credit by banks, non-banks and non-broker-dealers for the purpose of purchasing or carrying margin stocks.

“Reimbursement Obligations” means, at any time, the aggregate of all obligations of the Company then outstanding under Article III to reimburse the applicable LC Issuer for amounts paid by such LC Issuer in respect of any one or more drawings under Facility LCs issued by such LC Issuer.

“Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person’s Affiliates.

“Reportable Event” has the meaning assigned to that term in Title IV of ERISA.

“Reserve Requirement” means, with respect to an Interest Period, the maximum aggregate reserve requirement (including all basic, supplemental, marginal and other reserves) which is imposed under Regulation D on Eurocurrency liabilities.

“S&P” means Standard and Poor’s Rating Services, a Standard & Poor’s Financial Services LLC business, or any successor thereto.

“SEC” means the Securities and Exchange Commission or any governmental authority which may be substituted therefor.

“Secured Debt” has the meaning assigned to such term in Schedule 1.

“Securitized Bonds” means nonrecourse bonds or similar asset-backed securities issued by a special-purpose Subsidiary of the Company which are payable solely from specialized charges authorized by the utility commission of the relevant state in connection with the recovery of (x) stranded regulatory costs, (y) stranded clean air and pension costs and (z) other “Qualified Costs” (as defined in M.C.L. §460.10h(g)) authorized to be securitized by the Michigan Public Service Commission.

“Senior Debt Rating” has the meaning assigned to such term in Schedule 1.

“Single Employer Plan” means a Plan maintained by the Company or any ERISA Affiliate for employees of the Company or any ERISA Affiliate.

“Subsidiary” means, as to any Person, any corporation or other entity of which at least a majority of the securities or other ownership interests having ordinary voting power (absolutely or contingently) for the election of directors or other Persons performing similar functions are at the time owned directly or indirectly by such Person. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Company.

“Substitute Rating Agency” has the meaning assigned to such term in Schedule 1.

“Supplemental Indenture” means that certain Supplemental Indenture, dated as of March

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31, 2011, between the Company and The Bank of New York Mellon, as successor trustee, as the same may be amended, restated, supplemented or otherwise modified from time to time, including any supplemental indenture entered into in connection with the issuance of any Bonds in accordance with Section 2.16.

“Taxes” means any and all present or future taxes, duties, assessments, fees, levies, imposts, deductions, charges or withholdings, and any and all liabilities with respect to the foregoing, that are imposed by a Governmental Authority on or with respect to any payment made by the Company hereunder or under any Bond or Facility LC, but excluding Excluded Taxes and Other Taxes.

“Termination Date” means the earlier of (i) December 21, 2017 and (ii) the date on which the Commitments are terminated.

“Total Consolidated Capitalization” means, at any date of determination, without duplication, the sum of (a) Total Consolidated Debt plus all amounts excluded from Total Consolidated Debt pursuant to clauses (ii), (iii), (iv) and (vi) of the proviso to the definition of such term (but only, in the case of securities of the type described in clause (iii) or (iv) of such proviso, to the extent such securities have been deemed to be equity pursuant to Financial Accounting Standards Board Statement No. 150), (b) equity of the common stockholders of the Company, (c) equity of the preference stockholders of the Company and (d) equity of the preferred stockholders of the Company, in each case determined at such date.

“Total Consolidated Debt” means, at any date of determination, the aggregate Debt of the Company and its Consolidated Subsidiaries (including, without limitation, all Off-Balance Sheet Liabilities); provided that Total Consolidated Debt shall exclude, without duplication, (i) the principal amount of any Securitized Bonds, (ii) any Junior Subordinated Debt of the Company owned by any Hybrid Equity Securities Subsidiary or Hybrid Preferred Securities Subsidiary, (iii) Hybrid Equity Securities or Hybrid Preferred Securities outstanding as of December 31, 2002 (including any guaranty by the Company of payments with respect to such Hybrid Equity Securities or Hybrid Preferred Securities, provided that such guaranty is subordinated to the rights of the Banks hereunder and under the other Credit Documents pursuant to terms of subordination substantially similar to those set forth in Exhibit E, or pursuant to other terms and conditions satisfactory to the Majority Banks), (iv) such percentage of the Net Proceeds from any issuance of hybrid debt/equity securities (other than Junior Subordinated Debt, Hybrid Equity Securities and Hybrid Preferred Securities) by the Company or any Consolidated Subsidiary as shall be agreed to be deemed equity by the Agent and the Company prior to the issuance thereof (which determination shall be based on, among other things, the treatment (if any) given to such securities by the applicable rating agencies), (v) to the extent that any portion of the disposition of the Company’s Palisades Nuclear Plant shall be required to be accounted for as a financing under GAAP rather than as a sale, the amount of liabilities reflected on the Company’s consolidated balance sheet as the result of such disposition, (vi) Debt of any Affiliate of the Company that is (1) consolidated on the financial statements of the Company solely as a result of the effect and application of Financial Accounting Standards Board No. 46 and of Accounting Research Bulletin No. 51, Consolidated Financial Statements, as modified by Statement of Financial Accounting Standards No. 94, and (2) non-recourse to the Company or any of its Affiliates (other than the primary obligor of such Debt and any of its Subsidiaries), (vii) Debt of

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the Company and its Affiliates that is re-categorized as such from certain lease obligations pursuant to Emerging Issues Task Force (“EITF”) Issue 01-8, any subsequent EITF Issue or recommendation or other interpretation, bulletin or other similar document by the Financial Accounting Standards Board on or related to such re-categorization and (viii) any non-cash obligations resulting from the adoption of Financial Accounting Standards Board Statement No. 158 and any proposed amendment thereto, to the extent such obligations are required to be treated as debt.

“Type” – see Section 2.4.

“Unsecured Debt” has the meaning assigned to such term in Schedule 1.

“Unused Commitment” means, at any time, the Aggregate Commitment then in effect minus the Aggregate Outstanding Credit Exposure at such time.

“USA Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. No. 107-56, 115 Stat. 272 (2001), as amended.

1.2Interpretation.

(a)The foregoing definitions shall be equally applicable to both the singular and plural forms of the defined terms.

(b)The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.”

(c)Unless otherwise specified, each reference to an Article, Section, Exhibit and Schedule means an Article or Section of or an Exhibit or Schedule to this Agreement.

(d)Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.

(e)The word “will” shall be construed to have the same meaning and effect as the word “shall”.

(f)The word “law” shall be construed as referring to all statutes, rules, regulations, codes and other laws (including official rulings and interpretations thereunder having the force of law or with which affected Persons customarily comply), and all judgments, orders and decrees, of all Governmental Authorities.

(g)Unless the context requires otherwise, any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, restated, supplemented or otherwise modified (subject to any restrictions on such amendments, restatements, supplements or modifications set forth herein).

(h)Unless the context requires otherwise, any definition of or reference to any

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statute, rule or regulation shall be construed as referring thereto as from time to time amended, supplemented or otherwise modified (including by succession of comparable successor laws).

(i)Unless the context requires otherwise, any reference herein to any Person shall be construed to include such Person’s successors and assigns (subject to any restrictions on assignment set forth herein) and, in the case of any Governmental Authority, any other Governmental Authority that shall have succeeded to any or all functions thereof.

(j)Unless the context requires otherwise, the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof.

(k)Unless the context requires otherwise, the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

1.3Accounting Terms.  All accounting terms not specifically defined herein shall be construed in accordance with GAAP.  If any changes in generally accepted accounting principles are hereafter required or permitted and are adopted by the Company or any of its Subsidiaries, or the Company or any of its Subsidiaries shall change its application of generally accepted accounting principles with respect to any Off-Balance Sheet Liabilities (including the application of Financial Accounting Standards Board Interpretation Nos. 45 and 46 and Financial Accounting Standards Board Statement No. 150), in each case with the agreement of its independent certified public accountants, and such changes result in a change in the method of calculation of any of the financial covenants, tests, restrictions or standards herein or in the related definitions or terms used therein (“Accounting Changes”), the parties hereto agree, at the Company’s request, to enter into negotiations, in good faith, in order to amend such provisions in a credit neutral manner so as to reflect equitably such changes with the desired result that the criteria for evaluating the Company’s and its Subsidiaries’ financial condition shall be the same after such changes as if such changes had not been made; provided that, until such provisions are amended in a manner reasonably satisfactory to the Majority Banks, no Accounting Change shall be given effect in such calculations.  In the event such amendment is entered into, all references in this Agreement to GAAP shall mean generally accepted accounting principles as of the date of such amendment.  Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made, (i) without giving effect to any election under Accounting Standards Codification 825-10-25 (previously referred to as Statement of Financial Accounting Standards 159) (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any Debt or other liabilities of the Company or any Subsidiary at “fair value”, as defined therein and (ii) without giving effect to any treatment of Debt in respect of convertible debt instruments under Accounting Standards Codification 470-20 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any such Debt in a reduced or bifurcated manner as described therein, and such Debt shall at all times be valued at the full stated principal amount thereof.

1.4Amendment and Restatement of Existing Credit Agreement.  The parties to this

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Agreement agree that, on the Closing Date, the terms and provisions of the Existing Credit Agreement shall be and hereby are amended, superseded and restated in their entirety by the terms and provisions of this Agreement.  This Agreement is not intended to and shall not constitute a novation, payment and reborrowing or termination of the “Obligations” under (and as defined in) the Existing Credit Agreement and the other Credit Documents as in effect prior to the Closing Date.  All “Loans” made and “Obligations” incurred under (and as defined in) the Existing Credit Agreement which are outstanding on the Closing Date shall continue as Loans and Obligations, respectively, under (and shall be governed by the terms of) this Agreement and the other Credit Documents.  Without limiting the foregoing, upon the effectiveness hereof: (a) all references in the “Credit Documents” (as defined in the Existing Credit Agreement) to the “Agent”, the “Credit Agreement” and the “Credit Documents” shall be deemed to refer to the Agent, this Agreement and the Credit Documents, (b) all obligations constituting “Obligations” (under and as defined in the Existing Credit Agreement) with any Bank or any Affiliate of any Bank which are outstanding on the Closing Date shall continue as Obligations under this Agreement and the other Credit Documents, (c) the Company hereby agrees to compensate each Bank for any and all losses, costs and expenses incurred by such Bank in connection with the sale and assignment of any Eurodollar Rate Loans (including the “Eurodollar Rate Loans” under the Existing Credit Agreement) and such reallocation described below and in Section 2.1, in each case on the terms and in the manner set forth in Section 4.4 hereof and (d) the “Loans” (as defined in the Existing Credit Agreement) shall be reallocated as Loans owing to the Banks under this Agreement on the Closing Date in accordance with each Bank’s Pro Rata Share and, in connection therewith, the Agent shall, and is hereby authorized to, make such reallocations, sales, assignments or other relevant actions in respect of each Bank’s Loans under the Existing Credit Agreement as are necessary in order that each such Bank’s outstanding Loans hereunder reflect such Bank’s Pro Rata Share of the Aggregate Commitment on the Closing Date.

The Company hereby (a) agrees that this Agreement and the transactions contemplated hereby and thereby shall not limit or diminish its obligations arising under or pursuant to the Credit Documents to which it is a party, (b) reaffirms all of its obligations under the Credit Documents to which it is a party and (c) acknowledges and agrees that each Credit Document executed by it remains in full force and effect and is hereby reaffirmed, ratified and confirmed.

ARTICLE II
THE ADVANCES

2.1Commitment.  From and including the Closing Date and prior to the Termination Date, each Bank severally agrees, on the terms and conditions set forth in this Agreement, (a) to make loans to the Company from time to time (the “Loans”), and (b) to participate in Facility LCs issued upon the request of the Company from time to time; provided that, after giving effect to the making of each such Loan and the issuance of each such Facility LC, such Bank’s Outstanding Credit Exposure shall not exceed its Commitment.  In no event may the Aggregate Outstanding Credit Exposure exceed the Available Commitment.  Subject to the terms and conditions of this Agreement, the Company may borrow, repay and reborrow at any time prior to the Termination Date.  The Commitments shall expire on the Termination Date.

2.2Repayment.  The Aggregate Outstanding Credit Exposure and all other unpaid obligations of the Company hereunder shall be paid in full on the Termination Date.

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2.3Ratable Loans.  Each Advance shall consist of Loans made by the several Banks ratably according to their Pro Rata Shares.

2.4Types of Advances.  The Advances may be Floating Rate Advances or Eurodollar Advances (each a “Type” of Advance), or a combination thereof, as selected by the Company in accordance with Sections 2.8 and 2.9.

2.5Fees and Changes in Commitments.

(a)The Company agrees to pay to the Agent for the account of each Bank according to its Pro Rata Share a commitment fee (the “Commitment Fee”) at the Commitment Fee Rate on the daily Unused Commitment from the Closing Date to but not including the date on which this Agreement is terminated in full and all of the Obligations hereunder have been paid in full.  The Commitment Fee shall be payable quarterly in arrears on each Payment Date (for the quarter then most recently ended), on the date of any reduction of the Aggregate Commitment pursuant to clause (b) below and on the Termination Date (for the period then ended for which such fee has not previously been paid) and shall be calculated for actual days elapsed on the basis of a 360 day year.

(b)The Company may permanently reduce the Aggregate Commitment in whole, or in part ratably among the Banks in the minimum amount of $10,000,000 (and in multiples of $1,000,000 if in excess thereof), upon at least five (5) Business Days’ prior written notice to the Agent, which notice shall specify the amount of any such reduction; provided that the Aggregate Commitment may not be reduced below the Aggregate Outstanding Credit Exposure.  All accrued Commitment Fees shall be payable on the effective date of any termination of the obligation of the Banks to make Credit Extensions hereunder.

2.6Minimum Amount of Advances.  Each Advance shall be in the minimum amount of $10,000,000 (and in integral multiples of $1,000,000 if in excess thereof); provided that any Floating Rate Advance may be in the amount of the Available Aggregate Commitment (rounded down, if necessary, to an integral multiple of $1,000,000).

2.7Principal Payments.  The Company may from time to time prepay, without penalty or premium, all outstanding Floating Rate Advances or, in a minimum aggregate amount of $10,000,000 or a higher integral multiple of $1,000,000, any portion of the outstanding Floating Rate Advances upon one (1) Business Day’s prior written notice to the Agent.  The Company may from time to time pay, subject to the payment of any funding indemnification amounts required by Section 4.4 but without penalty or premium, all outstanding Eurodollar Advances or, in a minimum aggregate amount of $10,000,000 or a higher integral multiple of $1,000,000, any portion of any outstanding Eurodollar Advance upon three (3) Business Days’ prior written notice to the Agent; provided that if, after giving effect to any such prepayment, the principal amount of any Eurodollar Advance is less than $10,000,000, such Eurodollar Advance shall automatically convert into a Floating Rate Advance.  If at any time the Aggregate Outstanding Credit Exposure exceeds the Available Aggregate Commitment, the Company shall immediately repay Advances or cash collateralize LC Obligations in the Facility LC Collateral Account in accordance with the procedures set forth in Section 9.2, as applicable, in an aggregate principal amount sufficient to cause the Aggregate Outstanding Credit Exposure to be less than

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or equal to the Available Aggregate Commitment.

2.8Method of Selecting Types and Interest Periods for New Advances.  The Company shall select the Type of Advance and, in the case of each Eurodollar Advance, the Interest Period applicable thereto from time to time.  The Company shall give the Agent irrevocable notice (a “Borrowing Notice”) not later than 12:00 noon (New York City time) on the Borrowing Date of each Floating Rate Advance and not later than 12:00 noon (New York City time) three (3) Business Days before the Borrowing Date for each Eurodollar Advance, specifying:

(i)the Borrowing Date, which shall be a Business Day;

(ii)the aggregate amount of such Advance;

(iii)the Type of Advance selected; and

(iv)in the case of each Eurodollar Advance, the initial Interest Period applicable thereto.

Promptly after receipt thereof, the Agent will notify each Bank of the contents of each Borrowing Notice.  Not later than 3:00 p.m. (New York City time) on each Borrowing Date, each Bank shall make available its Loan in funds immediately available in Chicago, Illinois to the Agent at its address specified pursuant to Section 14.1.  To the extent funds are received from the Banks, the Agent will make such funds available to the Company at the Agent’s aforesaid address.  No Bank’s obligation to make any Loan shall be affected by any other Bank’s failure to make any Loan.

2.9Conversion and Continuation of Outstanding Advances.  Floating Rate Advances shall continue as Floating Rate Advances unless and until such Floating Rate Advances are converted into Eurodollar Advances pursuant to this Section 2.9 or are repaid in accordance with Section 2.2 or 2.7.  Each Eurodollar Advance shall continue as a Eurodollar Advance until the end of the then applicable Interest Period therefor, at which time such Eurodollar Advance shall be automatically converted into a Floating Rate Advance unless (x) such Eurodollar Advance is or was repaid in accordance with Section 2.2 or 2.7 or (y) the Company shall have given the Agent a Conversion/Continuation Notice (as defined below) requesting that, at the end of such Interest Period, such Eurodollar Advance continue as a Eurodollar Advance for the same or another Interest Period.  Subject to the terms of Section 2.6, the Company may elect from time to time to convert all or any part of a Floating Rate Advance into a Eurodollar Advance.  The Company shall give the Agent irrevocable notice (a “Conversion/Continuation Notice”) of each conversion of a Floating Rate Advance into a Eurodollar Advance or continuation of a Eurodollar Advance not later than 12:00 noon (New York City time) at least three Business Days prior to the date of the requested conversion or continuation, specifying:

(i)the requested date, which shall be a Business Day, of such conversion or continuation;

(ii)the aggregate amount and Type of the Advance which is to be converted or continued; and

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(iii)the amount of the Advance which is to be converted into or continued as a Eurodollar Advance and the duration of the Interest Period applicable thereto;

provided that no Advance may be continued as, or converted into, a Eurodollar Advance if (x) such continuation or conversion would violate any provision of this Agreement or (y) a Default or Event of Default exists.

2.10Interest Rates, Interest Payment Dates.  (a) Subject to Section 2.11, each Advance shall bear interest as follows:

(i)at any time such Advance is a Floating Rate Advance, at a rate per annum equal to the Floating Rate from time to time in effect; and

(ii)at any time such Advance is a Eurodollar Advance, at a rate per annum equal to the Eurodollar Rate for each applicable Interest Period.

Changes in the rate of interest on that portion or any Advance maintained as a Floating Rate Advance will take effect simultaneously with each change in the Floating Rate.

(b)Interest accrued on each Floating Rate Advance shall be payable on each Payment Date and on the Termination Date.  Interest accrued on each Eurodollar Advance shall be payable on the last day of its applicable Interest Period, on any date on which such Eurodollar Advance is prepaid and on the Termination Date.  Interest accrued on each Eurodollar Advance having an Interest Period longer than three months shall also be payable on the last day of each three-month interval during such Interest Period.  Interest on Eurodollar Advances, interest on Floating Rate Advances based on the Federal Funds Effective Rate and the LC Fee shall be calculated for actual days elapsed on the basis of a 360-day year.  Interest on Floating Rate Advances based on the Prime Rate shall be calculated for actual days elapsed on the basis of a 365- or 366-day year, as appropriate.  Interest on each Advance shall accrue from and including the date such Advance is made to but excluding the date payment thereof is received in accordance with Section 2.12.  If any payment of principal of or interest on an Advance shall become due on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day (unless, in the case of a Eurodollar Advance, such next succeeding Business Day falls in a new calendar month, in which case such payment shall be due on the immediately preceding Business Day) and, in the case of a principal payment, such extension of time shall be included in computing interest in connection with such payment.

2.11Rate after Maturity.  Any Advance not paid by the Company at maturity, whether by acceleration or otherwise, shall bear interest until paid in full at a rate per annum equal to the higher of (i) the rate otherwise applicable thereto plus 2.00% or (ii) the Floating Rate plus 2.00%.

2.12Method of Payment; Sharing Set-Offs.  (a) All payments of principal, interest and fees hereunder shall be made in immediately available funds to the Agent at its address specified on its signature page to this Agreement (or at any other Lending Installation of the Agent specified in writing by the Agent to the Company), without setoff or counterclaim, not later than 12:00 noon (New York City time) on the date when due and shall (except in the case of Reimbursement Obligations for which the applicable LC Issuer has not been fully indemnified

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by the Banks, or as otherwise specifically required hereunder) be applied ratably by the Agent among the Banks.  Funds received after such time shall be deemed received on the following Business Day unless the Agent shall have received from, or on behalf of, the Company a Federal Reserve reference number with respect to such payment before 1:00 p.m. (New York City time) on the date of such payment.  Each payment delivered to the Agent for the account of any Bank shall be delivered promptly by the Agent in the same type of funds received by the Agent to such Bank at the address specified for such Bank in its Administrative Questionnaire or at any Lending Installation specified in a notice received by the Agent from such Bank.  The Agent is hereby authorized to charge the account of the Company maintained with JPMorgan Chase Bank, N.A., if any, for each payment of principal, interest, Reimbursement Obligations and fees as such payment becomes due hereunder.  Each reference to the Agent in this Section 2.12 shall also be deemed to refer, and shall apply equally, to each LC Issuer, in the case of payments required to be made by the Company to such LC Issuer pursuant to Section 3.6.

(b)If any Bank shall fail to make any payment required to be made by it pursuant to Section 2.8, Section 2.15, Section 3.5 or Section 13.8, then the Agent may, in its discretion and notwithstanding any contrary provision hereof, apply any amounts thereafter received by the Agent for the account of such Bank and for the benefit of the Agent or the LC Issuer to satisfy such Bank’s obligations under such Sections until all such unsatisfied obligations are fully paid.

2.13Bonds; Record-keeping; Telephonic Notices.

(a)The obligation of the Company to repay the Obligations shall be evidenced by one or more Bonds.

(b)Each Bank shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Company to such Bank resulting from each Loan made by such Bank from time to time, including the amounts of principal and interest payable and paid to such Bank from time to time hereunder.

(c)The Agent shall also maintain accounts in which it will record (i) the amount of each Loan made hereunder, the Type thereof and, if applicable, the Interest Period with respect thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Company to each Bank hereunder, (iii) the original stated amount of each Facility LC and the amount of LC Obligations outstanding at any time, and (iv) the amount of any sum received by the Agent hereunder from the Company and each Bank’s share thereof.

(d)The entries maintained in the accounts maintained pursuant to clauses (b) and (c) above shall be prima facie evidence of the existence and amounts of the Obligations therein recorded absent manifest error; provided that the failure of the Agent or any Bank to maintain such accounts or any error therein shall not in any manner affect the obligation of the Company to repay the Obligations in accordance with their terms.

(e)The Company hereby authorizes the Banks and the Agent to make Advances based on telephonic notices made by any person or persons the Agent or any Bank in good faith believes to be acting on behalf of the Company.  The Company agrees to deliver promptly to the

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Agent a written confirmation of each telephonic notice signed by a Designated Officer.  If the written confirmation differs in any material respect from the action taken by the Agent and the Banks, the records of the Agent and the Banks shall govern absent manifest error.

2.14Lending Installations.  Subject to the provisions of Section 4.6, each Bank may book its Loans and its participation in any LC Obligations and each LC Issuer may book the Facility LCs issued by it at any Lending Installation selected by such Bank or such LC Issuer, as the case may be, and may change its Lending Installation from time to time.  All terms of this Agreement shall apply to any such Lending Installation and the Loans shall be deemed held by the applicable Bank for the benefit of such Lending Installation.  Each Bank may, by written or facsimile notice to the Company, designate a Lending Installation through which Loans will be made by it or Facility LCs will be issued by it and for whose account payments on the Loans or payments with respect to Facility LCs are to be made.

2.15Non-Receipt of Funds by the Agent.  Unless a Bank or the Company, as the case may be, notifies the Agent prior to the time on the date on which it is scheduled to make payment to the Agent of (i) in the case of a Bank, the proceeds of a Loan or (ii) in the case of the Company, a payment of principal, interest or fees to the Agent for the account of the Banks, that it does not intend to make such payment, the Agent may assume that such payment has been made.  The Agent may, but shall not be obligated to, make the amount of such payment available to the intended recipient in reliance upon such assumption.  If such Bank or the Company, as the case may be, has not in fact made such payment to the Agent, the recipient of such payment shall, on demand by the Agent, repay to the Agent the amount so made available together with interest thereon in respect of each day during the period commencing on the date such amount was so made available by the Agent until the date the Agent recovers such amount at a rate per annum equal to (i) in the case of payment by a Bank, the Federal Funds Rate for such day or (ii) in the case of payment by the Company, the interest rate applicable to the relevant Loan.

2.16Expansion Option.  The Company may from time to time elect to increase the Commitments in minimum increments of $50,000,000 so long as, after giving effect thereto, the aggregate amount of such increases does not exceed $200,000,000.  The Company may arrange for any such increase to be provided by one or more Banks (each Bank so agreeing to an increase in its Commitment, an “Increasing Bank”), or by one or more new banks, financial institutions or other entities (each such new bank, financial institution or other entity, an “Augmenting Bank”), to increase their existing Commitments, or extend Commitments, as the case may be; provided that (i) each Increasing Bank and each Augmenting Bank shall be subject to the approval of the Company, the Agent and each LC Issuer and (ii) (x) in the case of an Increasing Bank, the Company and such Increasing Bank execute an agreement substantially in the form of Exhibit F hereto, and (y) in the case of an Augmenting Bank, the Company and such Augmenting Bank execute an agreement substantially in the form of Exhibit G hereto.  No consent of any Bank (other than the Banks participating in the increase and the Agent and each LC Issuer) shall be required for any increase in Commitments pursuant to this Section 2.16.  Increases and new Commitments created pursuant to this Section 2.16 shall become effective on the date agreed by the Company, the Agent and the relevant Increasing Banks or Augmenting Banks, and the Agent shall notify each Bank thereof.  Notwithstanding the foregoing, no increase in the Commitments (or in the Commitment of any Bank) shall become effective under this paragraph unless, (i) on the proposed date of the effectiveness of such increase, (A) the conditions set forth in clauses (i)

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and (ii) of Section 11.2 shall be satisfied or waived by the Majority Banks and the Agent shall have received a certificate to that effect dated such date and executed by a Designated Officer of the Company and (B) the Company shall be in compliance (on a pro forma basis) with the covenant contained in Article VIII, (ii) the Agent shall have received documents consistent with those delivered on the Closing Date as to the organizational power and authority of the Company to borrow hereunder after giving effect to such increase and (iii) the Company shall have issued a new interest-bearing First Mortgage Bond in favor of the Agent in the amount of the Aggregate Commitment (giving effect to such increase).  On the effective date of any increase in the Commitments, (i) each relevant Increasing Bank and Augmenting Bank shall make available to the Agent such amounts in immediately available funds as the Agent shall determine, for the benefit of the other Banks, as being required in order to cause, after giving effect to such increase and the use of such amounts to make payments to such other Banks, each Bank’s portion of the outstanding Loans of all the Banks to equal its Pro Rata Share of such outstanding Loans, and (ii) the Company shall be deemed to have repaid and reborrowed all outstanding Loans as of the date of any increase in the Commitments (with such reborrowing to consist of the Types of Loans, with related Interest Periods if applicable, specified in a notice delivered by the Company, in accordance with the requirements of Section 2.8).  The deemed payments made pursuant to clause (ii) of the immediately preceding sentence shall be accompanied by payment of all accrued interest on the amount prepaid and, in respect of each Eurodollar Advance, shall be subject to indemnification by the Company pursuant to the provisions of Section 4.4 if the deemed payment occurs other than on the last day of the related Interest Periods.  Nothing contained in this Section 2.16 shall constitute, or otherwise be deemed to be, a commitment on the part of any Bank to increase its Commitment hereunder at any time.

ARTICLE III
LETTER OF CREDIT FACILITY

3.1Issuance.  Each LC Issuer hereby agrees, on the terms and conditions set forth in this Agreement, to issue standby letters of credit and, to the extent agreed to by any applicable LC Issuer, direct-pay letters of credit, denominated in U.S. dollars (each, a “Facility LC”) and to renew, extend, increase, decrease or otherwise modify each Facility LC (“Modify,” and each such action a “Modification”), from time to time from and including the Closing Date and prior to the Termination Date upon the request of the Company; provided, however, that in no event shall (i) immediately after each such Facility LC is issued or Modified, the Aggregate Outstanding Credit Exposure exceed the Available Commitment, (ii) immediately after each such Facility LC is issued or Modified, the amount of the LC Obligations exceed $75,000,000, (iii) immediately after each such Facility LC is issued or Modified, the LC Obligations in respect of all Facility LCs issued by any LC Issuer exceed $25,000,000 and (iv) a Facility LC (x) be issued later than 30 days prior to the scheduled Termination Date, (y) have an expiry date later than the earlier of (1) the date one year after the date of the issuance of such Facility LC (or, in the case of any renewal or extension thereof, one year after such renewal or extension and provided that such Facility LC may contain customary “evergreen” provisions pursuant to which the expiry date is automatically extended by a specific time period unless such LC Issuer gives notice to the beneficiary of such Facility LC at least a specified time period prior to the expiry date then in effect) and (2) the fifth Business Day prior to the scheduled Termination Date or (z) provide for time drafts.  Notwithstanding the foregoing, the letters of credit identified on Schedule 3.1 (the “Existing LCs”) shall be deemed to be “Facility LCs” issued on the Closing

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Date for all purposes of the Credit Documents.

3.2Participations.  Upon the issuance or Modification by an LC Issuer of a Facility LC in accordance with this Article III, such LC Issuer shall be deemed, without further action by any party hereto, to have unconditionally and irrevocably sold to each Bank, and each Bank shall be deemed, without further action by any party hereto, to have unconditionally and irrevocably purchased from such LC Issuer, a participation in such Facility LC (and each Modification thereof) and the related LC Obligations in proportion to its Pro Rata Share.

3.3Notice.  Subject to Section 3.1, the Company shall give the Agent and the applicable LC Issuer notice prior to 12:00 noon (New York City time) at least three (3) Business Days prior to the proposed date of issuance or Modification of each Facility LC, specifying the beneficiary, the proposed date of issuance (or Modification) and the expiry date of such Facility LC, and describing the proposed terms of such Facility LC and the nature of the transactions proposed to be supported thereby and including agreed-upon draft language for such Facility LC reasonably acceptable to the applicable LC Issuer.  Upon receipt of such notice, the Agent shall promptly notify each Bank, of the contents thereof and of the amount of such Bank’s participation in such proposed Facility LC.  The issuance or Modification by an LC Issuer of any Facility LC shall, in addition to the conditions precedent set forth in Article XI (the satisfaction of which such LC Issuer shall have no duty to ascertain), be subject to the conditions precedent that such Facility LC shall be satisfactory to such LC Issuer and that the Company shall have executed and delivered such application agreement and/or such other instruments and agreements relating to such Facility LC as such LC Issuer shall have reasonably requested (each, a “Facility LC Application”).  In the event of any conflict between the terms of this Agreement and the terms of any Facility LC Application, the terms of this Agreement shall control.

3.4LC Fees.  The Company shall pay to the Agent, for the account of the Banks ratably in accordance with their respective Pro Rata Shares, a letter of credit fee (the “LC Fee”) at a per annum rate equal to the Applicable Margin for Eurodollar Rate Loans in effect from time to time on the daily undrawn stated amount of each Facility LC, such fee to be payable in arrears on each Payment Date and the Termination Date (and, if applicable, thereafter on demand).  The Company shall also pay to each LC Issuer for its own account (a) a fronting fee for each Facility LC at the time and in the amount separately agreed by the Company and such LC Issuer, and (b) documentary and processing charges in connection with the issuance or Modification of and draws under Facility LCs in accordance with such LC Issuer’s standard schedule for such charges as in effect from time to time.

3.5Administration; Reimbursement by Banks.  Upon receipt from the beneficiary of any Facility LC of any demand for payment under such Facility LC, the applicable LC Issuer shall notify the Agent and the Agent shall promptly notify the Company and each other Bank as to the amount to be paid by such LC Issuer as a result of such demand and the proposed payment date (the “LC Payment Date”).  The responsibility of an LC Issuer to the Company and each Bank shall be only to determine that the documents (including each demand for payment) delivered under each Facility LC issued by such LC Issuer in connection with such presentment shall be in conformity in all material respects with such Facility LC.  Each LC Issuer shall endeavor to exercise the same care in the issuance and administration of the Facility LCs as it does with respect to letters of credit in which no participations are granted, it being understood

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that in the absence of any gross negligence or willful misconduct by such LC Issuer, each Bank shall be unconditionally and irrevocably liable without regard to the occurrence of any Default, Event of Default or any condition precedent whatsoever, to reimburse such LC Issuer on demand for (i) such Bank’s Pro Rata Share of the amount of each payment made by such LC Issuer under each Facility LC issued by it to the extent such amount is not reimbursed by the Company pursuant to Section 3.6 below, plus (ii) interest on the foregoing amount to be reimbursed by such Bank, for each day from the date of such LC Issuer’s demand for such reimbursement (or, if such demand is made after 12:00 noon (New York City time) on such date, from the next succeeding Business Day) to the date on which such Bank pays the amount to be reimbursed by it, at a rate of interest per annum equal to the Federal Funds Effective Rate for the first three days and, thereafter, at a rate of interest equal to the rate applicable to Floating Rate Advances.

3.6Reimbursement by Company.  The Company shall be irrevocably and unconditionally obligated to reimburse the applicable LC Issuer on the applicable LC Payment Date for any amounts to be paid by such LC Issuer upon any drawing under any Facility LC issued by it, without presentment, demand, protest or other formalities of any kind; provided that neither the Company nor any Bank shall hereby be precluded from asserting any claim for direct (but not consequential) damages suffered by the Company or such Bank to the extent, but only to the extent, caused by (i) the willful misconduct or gross negligence of such LC Issuer in determining whether a request presented under any Facility LC issued by it complied with the terms of such Facility LC or (ii) such LC Issuer’s failure to pay under any Facility LC issued by it after the presentation to it of a request strictly complying with the terms and conditions of such Facility LC.  All such amounts paid by the applicable LC Issuer and remaining unpaid by the Company shall bear interest, payable on demand, for each day until paid at a rate per annum equal to (x) the rate applicable to Floating Rate Advances for such day if such day falls on or before the applicable LC Payment Date and (y) the sum of 1.00% plus the rate applicable to Floating Rate Advances for such day if such day falls after such LC Payment Date.  The applicable LC Issuer will pay to each Bank ratably in accordance with its Pro Rata Share all amounts received by such LC Issuer from the Company for application in payment, in whole or in part, of the Reimbursement Obligation in respect of any Facility LC issued by such LC Issuer, but only to the extent such Bank has made payment to such LC Issuer in respect of such Facility LC pursuant to Section 3.5.  Subject to the terms and conditions of this Agreement (including the submission of a Borrowing Notice in compliance with Section 2.8 and the satisfaction of the applicable conditions precedent set forth in Article XI), the Company may request an Advance hereunder for the purpose of satisfying any Reimbursement Obligation.

3.7Obligations Absolute.  The Company’s obligations under this Article III shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment which the Company may have or have had against any LC Issuer, any Bank or any beneficiary of a Facility LC.  The Company further agrees with the LC Issuers and the Banks that the LC Issuers and the Banks shall not be responsible for, and the Company’s Reimbursement Obligation in respect of any Facility LC shall not be affected by, among other things, the validity or genuineness of documents or of any endorsements thereon, even if such documents should in fact prove to be in any or all respects invalid, fraudulent or forged, or any dispute between or among the Company, any of its Affiliates, the beneficiary of any Facility LC or any financing institution or other party to whom any Facility LC may be transferred or any claims or defenses whatsoever of the Company or of any of its Affiliates

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against the beneficiary of any Facility LC or any such transferee.  Subject to the proviso contained in the first sentence of Section 3.6, no LC Issuer shall be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Facility LC.  The Company agrees that any action taken or omitted by any LC Issuer or any Bank under or in connection with a Facility LC and the related drafts and documents, if done without gross negligence or willful misconduct, shall be binding upon the Company and shall not put any LC Issuer or any Bank under any liability to the Company.  Nothing in this Section 3.7 is intended to limit the right of the Company to make a claim against any LC Issuer for damages as contemplated by the proviso to the first sentence of Section 3.6.

3.8Actions of LC Issuers.  Each LC Issuer shall be entitled to rely, and shall be fully protected in relying, upon any Facility LC, draft, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex, teletype or electronic message, statement, order or other document believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and statements of legal counsel, independent accountants and other experts selected by such LC Issuer.  Each LC Issuer shall be fully justified in failing or refusing to take any action under this Agreement unless it shall first have received such advice or concurrence of the Majority Banks as it reasonably deems appropriate or it shall first be indemnified to its reasonable satisfaction by the Banks against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action.  Notwithstanding any other provision of this Article III, each LC Issuer shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement in accordance with a request of the Majority Banks, and such request and any action taken or failure to act pursuant thereto shall be binding upon the Banks and any future holders of a participation in any Facility LC.

3.9Indemnification.  The Company hereby agrees to indemnify and hold harmless each Bank, each LC Issuer and the Agent, and their respective directors, officers, agents and employees from and against any and all claims and damages, losses, liabilities, reasonable costs or expenses which such Bank, such LC Issuer or the Agent may incur (or which may be claimed against such Bank, such LC Issuer or the Agent by any Person whatsoever) by reason of or in connection with the issuance, execution and delivery or transfer of or payment or failure to pay under any Facility LC or any actual or proposed use of any Facility LC, including any claims, damages, losses, liabilities, costs or expenses which any LC Issuer may incur by reason of or in connection with (i) the failure of any other Bank to fulfill or comply with its obligations to such LC Issuer hereunder (but nothing herein contained shall affect any rights the Company may have against any Defaulting Bank) or (ii) by reason of or on account of such LC Issuer issuing any Facility LC which specifies that the term “Beneficiary” included therein includes any successor by operation of law of the named Beneficiary, but which Facility LC does not require that any drawing by any such successor Beneficiary be accompanied by a copy of a legal document, satisfactory to such LC Issuer, evidencing the appointment of such successor Beneficiary; provided that the Company shall not be required to indemnify any Bank, any LC Issuer or the Agent for any claims, damages, losses, liabilities, costs or expenses to the extent, but only to the extent, caused by (x) the willful misconduct or gross negligence of any LC Issuer in determining whether a request presented under any Facility LC issued by it complied with the terms of such Facility LC or (y) any LC Issuer’s failure to pay under any Facility LC issued by it after the

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presentation to it of a request strictly complying with the terms and conditions of such Facility LC.  Nothing in this Section 3.9 is intended to limit the obligations of the Company under any other provision of this Agreement.

3.10Banks’ Indemnification.  Each Bank shall, ratably in accordance with its Pro Rata Share, indemnify each LC Issuer (in such LC Issuer’s capacity as an LC Issuer), its Affiliates and their respective directors, officers, agents and employees (to the extent not reimbursed by the Company) against any cost, expense (including reasonable counsel fees and disbursements), claim, demand, action, loss or liability (except such as result from such indemnitees’ gross negligence or willful misconduct as determined in a final, non-appealable judgment by a court of competent jurisdiction or such LC Issuer’s failure to pay under any Facility LC issued by it after the presentation to it of a request strictly complying with the terms and conditions of the Facility LC) that such indemnitees may suffer or incur in connection with this Article III or any action taken or omitted by such indemnitees hereunder (in such LC Issuer’s capacity as an LC Issuer).

3.11Rights as a Bank.  In its capacity as a Bank, each LC Issuer shall have the same rights and obligations as any other Bank.

ARTICLE IV
CHANGE IN CIRCUMSTANCES

4.1Yield Protection.

(a)If any Change in Law,

(i)subjects any Bank, any LC Issuer or any applicable Lending Installation to any tax, duty, charge, withholding levy, imposts, deduction, assessment or fee on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto (other than (A) Taxes, (B) Excluded Taxes, and (C) Other Taxes), or

(ii)imposes or increases or deems applicable any reserve, assessment, insurance charge, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by any Bank, any LC Issuer or any applicable Lending Installation (including any reserve costs under Regulation D with respect to Eurocurrency liabilities (as defined in Regulation D)), or

(iii)imposes any other condition the result of which is to increase the cost to any Bank, any LC Issuer or any applicable Lending Installation of making, funding or maintaining Credit Extensions (including any participations in Facility LCs), or reduces any amount receivable by any Bank, any LC Issuer or any applicable Lending Installation in connection with Credit Extensions (including any participations in Facility LCs) or requires any Bank, any LC Issuer or any applicable Lending Installation to make any payment calculated by reference to its Outstanding Credit Exposure or interest received by it, by an amount deemed material by such Bank or such LC Issuer, or

(iv)affects the amount of capital or liquidity required or expected to be maintained by any Bank, any LC Issuer or any applicable Lending Installation or any

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corporation controlling any Bank or any LC Issuer and such Bank or such LC Issuer, as applicable, determines the amount of capital or liquidity required is increased by or based upon the existence of this Agreement or its obligation to make Credit Extensions (including any participations in Facility LCs) hereunder or of commitments of this type,

then, upon presentation by such Bank or such LC Issuer to the Company of a certificate (as referred to in the immediately succeeding sentence of this Section 4.1) setting forth the basis for such determination and the additional amounts reasonably determined by such Bank or such LC Issuer for the period of up to ninety (90) days prior to the date on which such certificate is delivered to the Company and the Agent, to be sufficient to compensate such Bank or such LC Issuer, as applicable, in light of such circumstances, the Company shall within thirty (30) days of such delivery of such certificate pay to the Agent for the account of such Bank or such LC Issuer, as applicable, the specified amounts set forth on such certificate.  The affected Bank or LC Issuer, as applicable, shall deliver to the Company and the Agent a certificate setting forth the basis of the claim and specifying in reasonable detail the calculation of such increased expense, which certificate shall be prima facie evidence as to such increase and such amounts.  An affected Bank or LC Issuer, as applicable, may deliver more than one certificate to the Company during the term of this Agreement.  In making the determinations contemplated by the above-referenced certificate, any Bank and any LC Issuer may make such reasonable estimates, assumptions, allocations and the like that such Bank or such LC Issuer, as applicable, in good faith determines to be appropriate, and such Bank’s or such LC Issuer’s selection thereof in accordance with this Section 4.1 shall be conclusive and binding on the Company, absent manifest error.

(b)No Bank or LC Issuer shall be entitled to demand compensation or be compensated hereunder to the extent that such compensation relates to any period of time more than ninety (90) days prior to the date upon which such Bank or such LC Issuer, as applicable, first notified the Company of the occurrence of the event entitling such Bank or such LC Issuer, as applicable, to such compensation (unless, and to the extent, that any such compensation so demanded shall relate to the retroactive application of any event so notified to the Company).

4.2Replacement of Banks.

(a)If any Bank shall make a demand for payment under Section 4.1, then within thirty (30) days after such demand, the Company may, with the approval of the Agent and each LC Issuer which has issued a Facility LC which is then outstanding or in respect of which there is any unreimbursed Reimbursement Obligation (which approvals shall not be unreasonably withheld) and provided that no Default or Event of Default shall then have occurred and be continuing, demand, at the Company’s sole cost and expense, that such Bank assign to one or more financial institutions designated by the Company and approved by the Agent all (but not less than all) of such Bank’s Commitment and Outstanding Credit Exposure within the period ending on the later of such 30th day and the last day of the longest of the then current Interest Periods or maturity dates for such Outstanding Credit Exposure.  Any such assignment shall be consummated on terms satisfactory to the assigning Bank; provided that such Bank’s consent to such assignment shall not be unreasonably withheld.

(b)If the Company shall elect to replace a Bank pursuant to clause (a) above, the

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Company shall prepay the Outstanding Credit Exposure of such Bank, and the financial institution or institutions selected by the Company shall replace such Bank as a Bank hereunder pursuant to an instrument satisfactory to the Company, the Agent and the Bank being replaced by making Credit Extensions to the Company in the amount of the Outstanding Credit Exposure of such assigning Bank and assuming all the same rights and responsibilities hereunder as such assigning Bank and having the same Commitment as such assigning Bank.

(c)If any Bank becomes a Defaulting Bank, then the Company may, at its sole expense and effort, upon notice to such Bank and the Agent, require such Bank to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 12.1), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Bank, if such Bank accepts such assignment); provided that (i) to the extent required pursuant to Section 12.1(c), the Company shall have received the necessary consents from the Agent and the LC Issuer, if any, and (ii) such Bank shall have received payment of an amount equal to its Outstanding Credit Exposure, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such Outstanding Credit Exposure and accrued interest and fees) or the Company (in the case of all other amounts).  A Bank shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Bank or otherwise, the circumstances entitling the Company to require such assignment and delegation cease to apply.

4.3Availability of Eurodollar Rate Loans.  If:

(a)any Bank determines that maintenance of a Eurodollar Rate Loan at a suitable Lending Installation would violate any applicable law, rule, regulation or directive, whether or not having the force of law, or

(b)the Majority Banks determine that (i) deposits of a type and maturity appropriate to match fund Eurodollar Rate Loans are not available or (ii) the Base Eurodollar Rate does not accurately reflect the cost of making or maintaining a Eurodollar Rate Loan,

then the Agent shall suspend the availability of Eurodollar Rate Loans and, in the case of clause (a), require any outstanding Eurodollar Rate Loans to be converted to Floating Rate Loans on such date as is required by the applicable law, rule, regulation or directive.

4.4Funding Indemnification.  If any payment of a Eurodollar Rate Loan occurs on a date which is not the last day of an applicable Interest Period, whether because of prepayment or otherwise, or a Eurodollar Rate Loan is not made on the date specified by the Company for any reason other than default by the Banks, the Company will indemnify each Bank for any loss or cost (but not lost profits) incurred by it resulting therefrom, including any loss or cost in liquidating or employing deposits acquired to fund or maintain such Eurodollar Rate Loan.

4.5Taxes.

(a)All payments by the Company to or for the account of any Bank, any LC Issuer or the Agent hereunder or under any Bond or Facility LC Application shall be made free and clear of and without deduction for any and all Taxes unless such deduction is required by law.  If the Company shall be required by law to deduct any Taxes from or in respect of any sum payable

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hereunder to any Bank, any LC Issuer or the Agent, (i) the sum payable shall be increased by the amount of such Taxes required to be withheld as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 4.5) such Bank, such LC Issuer or the Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Company shall make such deductions, (iii) the Company shall pay the full amount deducted to the relevant authority in accordance with applicable law and (iv) the Company shall furnish to the Agent the original copy of a receipt evidencing payment thereof within thirty (30) days after such payment is made.

(b)In addition, the Company hereby agrees to pay any present or future stamp or documentary taxes and any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or under any Bond or Facility LC Application or from the execution or delivery of, or otherwise with respect to, this Agreement or any Bond or Facility LC Application (“Other Taxes”).

(c)The Company hereby agrees to indemnify the Agent, each LC Issuer and each Bank for the full amount of Taxes or Other Taxes (including any Taxes or Other Taxes imposed on amounts payable under this Section 4.5) paid by the Agent, such LC Issuer or such Bank and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto.  Payments due under this indemnification shall be made within thirty (30) days of the date the Agent, such LC Issuer or such Bank makes demand therefor pursuant to Section 4.6.

(d)Each Bank that is not incorporated under the laws of the United States of America or a state thereof (each a “Non-U.S. Bank”) agrees that it will, not more than ten (10) Business Days after the Closing Date, or, if later, not more than ten (10) Business Days after becoming a Bank hereunder, (i) deliver to each of the Company and the Agent two duly completed copies of United States Internal Revenue Service Form W-8BEN or W-8ECI, or any other form or documentation prescribed by applicable law, certifying in either case that such Bank is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes, and (ii) deliver to each of the Company and the Agent a United States Internal Revenue Form W-8 or W-9, as the case may be, and certify that it is entitled to an exemption from United States backup withholding tax.  Each Non-U.S. Bank further undertakes to deliver to each of the Company and the Agent (x) renewals or additional copies of such form (or any successor form) on or before the date that such form expires or becomes obsolete, and (y) after the occurrence of any event requiring a change in the most recent forms so delivered by it, such additional forms or amendments thereto as may be reasonably requested by the Company or the Agent.  All forms or amendments described in the preceding sentence shall certify that such Bank is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes, unless an event (including any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms inapplicable or which would prevent such Bank from duly completing and delivering any such form or amendment with respect to it and such Bank advises the Company and the Agent that it is not capable of receiving payments without any deduction or withholding of United States federal income tax.

(e)For any period during which a Non-U.S. Bank has failed to provide the Company with an appropriate form pursuant to clause (d), above (unless such failure is due to a change in

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treaty, law or regulation, or any change in the interpretation or administration thereof by any governmental authority, occurring subsequent to the date on which a form originally was required to be provided), such Non-U.S. Bank shall not be entitled to indemnification under this Section 4.5 with respect to Taxes imposed by the United States; provided that, should a Non-U.S. Bank which is otherwise exempt from or subject to a reduced rate of withholding tax become subject to Taxes because of its failure to deliver a form required under clause (d) above, the Company shall take such steps as such Non-U.S. Bank shall reasonably request to assist such Non-U.S. Bank to recover such Taxes.

(f)Any Bank that is entitled to an exemption from or reduction of withholding tax with respect to payments under this Agreement or any Bond pursuant to the law of any relevant jurisdiction or any treaty shall deliver to the Company (with a copy to the Agent), at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate.

(g)If a payment made to a Bank under any Credit Document would be subject to U.S. federal withholding tax imposed by FATCA if such Bank were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Bank shall deliver to the Company and the Agent at the time or times prescribed by law and at such time or times reasonably requested by the Company or the Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Company or the Agent as may be necessary for the Company and the Agent to comply with their obligations under FATCA and to determine that such Bank has complied with such Bank’s obligations under FATCA or to determine the amount to deduct and withhold from such payment.  Solely for purposes of this clause (g), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.  Notwithstanding anything to the contrary herein, the completion, execution and submission of such documentation shall not be required if in a Bank’s reasonable judgment such completion, execution or submission would subject such Bank to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Bank.

(h)Each Bank and each LC Issuer shall severally indemnify the Agent for any taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any taxing authority (but, in the case of any Taxes, only to the extent that the Company has not already indemnified the Agent for such Taxes and without limiting the obligation of the Company to do so) attributable to such Bank or LC Issuer that are paid or payable by the Agent in connection with this Agreement, any Bond or any Facility LC and any reasonable expenses arising therefrom or with respect thereto, whether or not such amounts were correctly or legally imposed or asserted by the relevant taxing authority.  The indemnity under this Section 4.5(h) shall be paid within ten (10) days after the Agent delivers to the applicable Bank or LC Issuer a certificate stating the amount so paid or payable by the Agent.  Such certificate shall be conclusive of the amount so paid or payable absent manifest error.  The obligations of the Banks and LC Issuers under this clause (h) shall survive the payment of the Obligations and termination of this Agreement.

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4.6Bank Certificates, Survival of Indemnity.  To the extent reasonably possible, each Bank shall designate an alternate Lending Installation with respect to Eurodollar Rate Loans to reduce any liability of the Company to such Bank under Section 4.1 or to avoid the unavailability of Eurodollar Rate Loans under Section 4.3, so long as such designation is not disadvantageous to such Bank.  A certificate of such Bank as to the amount due under Section 4.1, 4.4 or 4.5 shall be final, conclusive and binding on the Company in the absence of manifest error.  Determination of amounts payable under such Sections in connection with a Eurodollar Rate Loan shall be calculated as though each Bank funded each Eurodollar Rate Loan through the purchase of a deposit of the type and maturity corresponding to the deposit used as a reference in determining the Base Eurodollar Rate applicable to such Loan whether in fact that is the case or not.  Unless otherwise provided herein, the amount specified in any certificate shall be payable on demand after receipt by the Company of such certificate.  The obligations of the Company under Sections 4.1, 4.4 and 4.5 shall survive payment of the Obligations and termination of this Agreement; provided that no Bank shall be entitled to compensation to the extent that such compensation relates to any period of time more than ninety (90) days after the termination of this Agreement.

4.7Defaulting Banks.

Notwithstanding any provision of this Agreement to the contrary, if any Bank becomes a Defaulting Bank, then the following provisions shall apply for so long as such Bank is a Defaulting Bank:

(a)Commitment Fees shall cease to accrue on the unfunded portion of the Commitment of such Defaulting Bank pursuant to Section 2.5(a);

(b)the Commitment and Outstanding Credit Exposure of such Defaulting Bank shall not be included in determining whether the Majority Banks have taken or may take any action hereunder (including any consent to any amendment or waiver pursuant to Section 10.1); provided, that this clause (b) shall not apply to the vote of a Defaulting Bank in the case of an amendment, waiver or other modification requiring the consent of such Bank or each Bank affected thereby;

(c)if any LC Obligations exist at the time a Bank becomes a Defaulting Bank then:

(i)so long as no Default or Event of Default shall be continuing immediately before or after giving effect to such reallocation, all or any part of such LC Obligation shall be reallocated among the non-Defaulting Banks in accordance with their respective Pro Rata Share but only to the extent (x) the sum of all non-Defaulting Banks’ Outstanding Credit Exposure does not exceed the total of all non-Defaulting Banks’ Commitments, (y) no Bank’s Outstanding Credit Exposure shall exceed its Commitment and (z) the conditions set forth in Section 11.2 are satisfied at such time;

(ii)if the reallocation described in subclause (i) above cannot, or can only partially, be effected, the Company shall within one (1) Business Day following notice by the Agent, cash collateralize for the benefit of the relevant LC Issuer such Defaulting Bank’s Pro Rata Share of the LC Obligations (after giving effect to any partial

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reallocation pursuant to subclause (i) above) in accordance with the procedures set forth in Section 9.2 for so long as such LC Obligation is outstanding;

(iii)if the Company cash collateralizes any portion of such Defaulting Bank’s Pro Rata Share of the LC Obligations pursuant this clause (c), the Company shall not be required to pay any fees to such Defaulting Bank pursuant to Section 3.4 with respect to such Defaulting Bank’s Pro Rata Share of the LC Obligations during the period such Defaulting Bank’s Pro Rata Share of the LC Obligations is cash collateralized;

(iv)if the non-Defaulting Banks’ Pro Rata Share of the LC Obligations is reallocated pursuant to this clause (c), then the fees payable to the Banks pursuant to Section 2.5(a) and Section 3.4 shall be adjusted in accordance with such non-Defaulting Banks’ Pro Rata Shares; or

(v)if any Defaulting Bank’s Pro Rata Share of the LC Obligations is neither reallocated nor cash collateralized pursuant to this clause (c), then, without prejudice to any rights or remedies of any LC Issuer or any Bank hereunder, all fees that otherwise would have been payable to such Defaulting Bank (solely with respect to the portion of such Defaulting Bank’s Commitment that was utilized by such LC Obligations) and LC Fees payable under Section 3.4 with respect to such Defaulting Bank’s Pro Rata Share of the LC Obligations shall be payable to the applicable LC Issuer until such Defaulting Bank’s Pro Rata Share of the LC Obligation is cash collateralized and/or reallocated; and

(d)so long as any Bank is a Defaulting Bank, no LC Issuer shall be required to issue or Modify any Facility LC, unless it is satisfied that the related exposure will be 100% covered by the Commitments of the non-Defaulting Banks and/or cash collateral will be provided by the Company in accordance with clause (c) above, and participating interests in any such newly issued or Modified Facility LC shall be allocated among non-Defaulting Banks in a manner consistent with clause(c)(i) above (and Defaulting Banks shall not participate therein).

(e)If (i) a Bankruptcy Event with respect to a Parent of any Bank shall occur following the date hereof and for so long as such event shall continue or (ii) any LC Issuer has a good faith belief that any Bank has defaulted in fulfilling its obligations under one or more other agreements in which such Bank commits to extend credit, such LC Issuer shall not be required to issue, amend or increase any Facility LC, unless such LC Issuer, as the case may be, shall have entered into arrangements with the Company or such Bank, satisfactory to such LC Issuer, as the case may be, to defease any risk to it in respect of such Bank hereunder.

(f)In the event that the Agent, the Company, and each LC Issuer each agrees that a Defaulting Bank has adequately remedied all matters that caused such Bank to be a Defaulting Bank, then the Banks’ Pro Rata Shares of the LC Obligations shall be readjusted to reflect the inclusion of such Bank’s Commitment and on such date such Bank shall purchase at par such of the Loans of the other Banks as the Agent shall determine may be necessary in order for such Bank to hold such Loans in accordance with its Pro Rata Share of the Aggregate Commitment; provided, that if the Company cash collateralized any portion of such Defaulting Bank’s Pro Rata Share of the LC Obligations pursuant to Section 4.7(c), such cash shall be returned to the Company.

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ARTICLE V

REPRESENTATIONS AND WARRANTIES

The Company hereby represents and warrants that:

5.1Incorporation and Good Standing.  Each of the Company and its Material Subsidiaries is duly incorporated, validly existing and in good standing under the laws of its jurisdiction of organization.

5.2Corporate Power and Authority: No Conflicts.  The execution, delivery and performance by the Company of the Credit Documents are within the Company’s corporate powers, have been duly authorized by all necessary corporate action and do not (i) violate the Company’s charter, bylaws or any applicable law, or (ii) breach or result in an event of default under any indenture or material agreement, and do not result in or require the creation of any Lien upon or with respect to any of its properties (except the Lien of the Indenture securing the Bonds and any Lien in favor of the Agent on the Facility LC Collateral Account or any funds therein).

5.3Governmental Approvals.  No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery and performance by the Company of any Credit Document, except for the authorization to issue, sell or guarantee secured and/or unsecured long-term debt granted by the Federal Energy Regulatory Commission, which authorization has been obtained and is in full force and effect.

5.4Legally Enforceable Agreements.  Each Credit Document constitutes a legal, valid and binding obligation of the Company, enforceable in accordance with its terms, subject to (a) the effect of applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (b) the application of general principles of equity (regardless of whether considered in a proceeding in equity or at law).

5.5Financial Statements.  (a) The audited balance sheet of the Company and its Consolidated Subsidiaries as at December 31, 2012, and the related statements of income and cash flows of the Company and its Consolidated Subsidiaries for the fiscal year then ended, as set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012 (copies of which have been furnished to each Bank), fairly present the financial condition of the Company and its Consolidated Subsidiaries as at such date and the results of operations of the Company and its Consolidated Subsidiaries for the fiscal year ended on such date, all in accordance with GAAP.

(b)The unaudited balance sheet of the Company and its Consolidated Subsidiaries as at March 31, 2013, and the related statements of income and cash flows of the Company and its Consolidated Subsidiaries for the three-month period then ended, as set forth in the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2013 (copies of which have been furnished to each Bank), fairly present (subject to year-end audit adjustments) the

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financial condition of the Company and its Consolidated Subsidiaries as at such date and the results of operations of the Company and its Consolidated Subsidiaries for the three-month period ended on such date, all in accordance with GAAP.

(c)Since December 31, 2012, there has been no Material Adverse Change.

5.6Litigation.  Except (i) to the extent described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 and Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2013, in each case as filed with the SEC, and (ii) such other similar actions, suits and proceedings predicated on the occurrence of the same events giving rise to any actions, suits and proceedings described in the reports referred to in the foregoing clause (i) (all matters described in clauses (i) and (ii) above, the “Disclosed Matters”), there is no pending or threatened action, suit, investigation or proceeding against the Company or any of its Consolidated Subsidiaries before any court, governmental agency or arbitrator, which, if adversely determined, might reasonably be expected to result in a Material Adverse Change.  As of the Closing Date, (a) there is no litigation challenging the validity or the enforceability of any of the Credit Documents and (b) there have been no adverse developments with respect to the Disclosed Matters that have resulted, or could reasonably be expected to result, in a Material Adverse Change.

5.7Margin Stock.  The Company is not engaged in the business of extending credit for the purpose of buying or carrying margin stock (within the meaning of Regulation U), and no proceeds of any Credit Extension will be used to buy or carry any margin stock or to extend credit to others for the purpose of buying or carrying any margin stock.

5.8ERISA.  No Plan Termination Event has occurred or is reasonably expected to occur with respect to any Plan.  Neither the Company nor any ERISA Affiliate is an employer under or has any liability with respect to a Multiemployer Plan.

5.9Insurance.  All insurance required by Section 6.2 is in full force and effect.

5.10Taxes.  The Company and its Subsidiaries have filed all tax returns (Federal, state and local) required to be filed and paid all taxes shown thereon to be due, including interest and penalties, or, to the extent the Company or any of its Subsidiaries is contesting in good faith an assertion of liability based on such returns, has provided adequate reserves for payment thereof in accordance with GAAP.

5.11Investment Company Act.  The Company is not an investment company (within the meaning of the Investment Company Act of 1940, as amended).

5.12Bonds.  The issuance to the Agent of Bonds pursuant to the terms of this Agreement as evidence of the Obligations (i) does not violate any provision of the Indenture or any other agreement or instrument, or any law or regulation, or judicial or regulatory order, judgment or decree, to which the Company or any of its Subsidiaries is a party or by which any of the foregoing is bound and (ii) does provide the Banks, as beneficial holders of the Bonds through the Agent, the benefit of the Lien of the Indenture equally and ratably with the holders of other First Mortgage Bonds.

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5.13Disclosure.  The Company has not withheld any fact from the Agent or the Banks in regard to the occurrence of a Material Adverse Change; and all financial information delivered by the Company to the Agent and the Banks on and after the date of this Agreement is true and correct in all material respects as at the dates and for the periods indicated therein.

5.14OFAC.  Neither the Company nor any Subsidiary or Affiliate of the Company is named on the United States Department of the Treasury’s Specially Designated Nationals or Blocked Persons list available through http://www.treas.gov/offices/eotffc/ofac/sdn/t11sdn.pdf or as otherwise published from time.

5.15Delivery of Documents.  Prior to the Closing Date, the Company delivered, or caused to be delivered, true, accurate and complete copies of the Bonds, the Supplemental Indenture and the Bond Delivery Agreement, each as in effect as of the Closing Date.  On or prior to any Increase Date, the Company delivered, or caused to be delivered, true, accurate and complete copies of the Bonds, the Supplemental Indenture and the Bond Delivery Agreement, each as in effect as of such Increase Date.

ARTICLE VI

AFFIRMATIVE COVENANTS

So long as any Obligations shall remain unpaid, any Facility LC shall remain outstanding or any Bank shall have any Commitment under this Agreement:

6.1Payment of Taxes, Etc.  The Company shall, and shall cause each of its Subsidiaries to, pay and discharge, before the same shall become delinquent, (a) all taxes, assessments and governmental charges or levies imposed upon it or upon its property, and (b) all lawful claims which, if unpaid, might by law become a Lien upon its property; provided that the Company shall not be required to pay or discharge any such tax, assessment, charge or claim (i) which is being contested by it in good faith and by proper procedures or (ii) the non-payment of which will not result in a Material Adverse Change.

6.2Maintenance of Insurance.  The Company shall, and shall cause each of its Material Subsidiaries to, maintain insurance in such amounts and covering such risks with respect to its business and properties as is usually carried by companies engaged in similar businesses and owning similar properties, either with reputable insurance companies or, in whole or in part, by establishing reserves or one or more insurance funds, either alone or with other corporations or associations.

6.3Preservation of Corporate Existence, Etc.  Except as provided in Section 7.3, the Company shall, and shall cause each of its Material Subsidiaries to, (a) preserve and maintain its corporate existence, rights and franchises, and (b) qualify and remain qualified as a foreign corporation in each jurisdiction in which such qualification is necessary in view of its business and operations or the ownership of its properties; provided that the Company shall not be required to preserve any such right or franchise under clause (a) above or to remain so qualified under clause (b) above unless the failure to do so would reasonably be expected to result in a Material Adverse Change.

6.4Compliance with Laws, Etc.  The Company shall, and shall cause each of its

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Consolidated Subsidiaries to, comply with the requirements of all applicable laws, rules, regulations and orders of any governmental authority, the non-compliance of which would reasonably be expected to result in a Material Adverse Change.

6.5Visitation Rights.  The Company shall, and shall cause each of its Material Subsidiaries to, at any reasonable time and from time to time, permit the Agent, any of the Banks or any agents or representatives thereof to examine and make copies of and abstracts from its records and books of account, visit its properties and discuss its affairs, finances and accounts with any of its officers.

6.6Keeping of Books.  The Company shall, and shall cause each of its Consolidated Subsidiaries to, keep adequate records and books of account, in which full and correct entries shall be made of all of its financial transactions and its assets and business so as to permit the Company and its Consolidated Subsidiaries to present financial statements in accordance with GAAP.

6.7Reporting Requirements.  The Company shall furnish to the Agent, with sufficient copies for each of the Banks (and the Agent shall thereafter promptly make available to the Banks):

(a)as soon as practicable and in any event within five (5) Business Days after becoming aware of the occurrence of any Default or Event of Default, a statement of a Designated Officer as to the nature thereof, and as soon as practicable and in any event within five (5) Business Days thereafter, a statement of a Designated Officer as to the action which the Company has taken, is taking or proposes to take with respect thereto;

(b)as soon as available and in any event within sixty (60) days after the end of each of the first three quarters of each fiscal year of the Company, a consolidated balance sheet of the Company and its Consolidated Subsidiaries as at the end of such quarter, and the related consolidated statements of income, cash flows and common stockholder’s equity of the Company and its Consolidated Subsidiaries as at the end of and for the period commencing at the end of the previous fiscal year and ending with the end of such quarter, setting forth in each case in comparative form the corresponding figures for the corresponding date or period of the preceding fiscal year, or statements providing substantially similar information (which requirement shall be deemed satisfied by the delivery of the Company’s quarterly report on Form 10-Q for such quarter), all in reasonable detail and duly certified (subject to the absence of footnotes and to year-end audit adjustments) by a Designated Officer as having been prepared in accordance with GAAP, together with (i) a certificate of a Designated Officer stating that such officer has no knowledge (having made due inquiry with respect thereto) that a Default or Event of Default has occurred and is continuing, or, if a Default or Event of Default has occurred and is continuing, a statement as to the nature thereof and the actions which the Company has taken, is taking or proposes to take with respect thereto, and (ii) a certificate of a Designated Officer, in substantially the form of Exhibit B hereto, setting forth the Company’s computation of the financial ratio specified in Article VIII as of the end of the immediately preceding fiscal quarter or year, as the case may be, of the Company;

(c)as soon as available and in any event within one hundred twenty (120) days after

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the end of each fiscal year of the Company, a copy of the Company’s Annual Report on Form 10-K (or any successor form) for such year, including therein the consolidated balance sheet of the Company and its Consolidated Subsidiaries as at the end of such year and the consolidated statements of income, cash flows and common stockholder’s equity of the Company and its Consolidated Subsidiaries as at the end of and for such year, or statements providing substantially similar information, in each case (i) certified by independent public accountants of recognized national standing selected by the Company and not objected to by the Majority Banks (without a “going concern” or like qualification or exception and without any qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of the Company and its Consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, and (ii) together with (a) a certificate of a Designated Officer stating that such officer has no knowledge (having made due inquiry with respect thereto) that a Default or Event of Default has occurred and is continuing, or, if a Default or Event of Default has occurred and is continuing, a statement as to the nature thereof and the actions which the Company has taken, is taking or proposes to take with respect thereto and (b) a certificate of a Designated Officer, in substantially the form of Exhibit B hereto, setting forth the Company’s computation of the financial ratio specified in Article VIII as of the end of the immediately preceding fiscal year of the Company;

(d)promptly after the sending or filing thereof, notice of all proxy statements which the Company sends to its stockholders, copies of all regular, periodic and special reports (other than those which relate solely to employee benefit plans) which the Company files with the SEC and notice of the sending or filing of (and, upon the request of the Agent or any Bank, a copy of) any final prospectus filed with the SEC;

(e)as soon as possible and in any event (i) within thirty (30) days after the Company or any ERISA Affiliate knows or has reason to know that any Plan Termination Event described in clause (a) of the definition of Plan Termination Event with respect to any Plan has occurred and (ii) within ten (10) days after the Company or any ERISA Affiliate knows or has reason to know that any other Plan Termination Event with respect to any Plan has occurred and could reasonably be expected to result in a material liability to the Company, a statement of the Chief Financial Officer of the Company describing such Plan Termination Event and the action, if any, which the Company or such ERISA Affiliate, as the case may be, proposes to take with respect thereto;

(f)promptly, and in any event within five (5) Business Days, after becoming aware thereof, notice of any upgrading or downgrading of the rating of the Secured Debt (or, if applicable, the Unsecured Debt) by Moody’s or S&P;

(g)as soon as possible and in any event within five (5) Business Days after the occurrence of any default under any agreement to which the Company or any of its Subsidiaries is a party, which default would reasonably be expected to result in a Material Adverse Change, and which is continuing on the date of such certificate, a certificate of the president or chief financial officer of the Company setting forth the details of such default and the action which the Company or any such Subsidiary proposes to take with respect thereto; and

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(h)promptly after requested, such other information respecting the business, properties or financial condition of the Company as the Agent or any Bank through the Agent may from time to time reasonably request in writing.

6.8Use of Proceeds.  The Company will use the proceeds of the Credit Extensions for general corporate purposes and working capital.  The Company will not, nor will it permit any Subsidiary to, use any of the proceeds of the Credit Extensions to purchase or carry any “margin stock” (as defined in Regulation U).

6.9Maintenance of Properties, Etc.  The Company shall, and shall cause each of its Material Subsidiaries to, maintain in all material respects all of its respective owned and leased Property in good and safe condition and repair to the same degree as other companies engaged in similar businesses and owning similar properties, and not permit, commit or suffer any waste or abandonment of any such Property, and from time to time make or cause to be made all material repairs, renewals and replacements thereof, including any capital improvements which may be required; provided that such Property may be altered or renovated in the ordinary course of the Company’s or its Subsidiaries’ business; and provided, further, that the foregoing shall not restrict the sale of any asset of the Company or any Subsidiary to the extent not prohibited by Section 7.2.

6.10Bonds.  The Company shall, until the date on which the Commitments and Facility LCs have terminated and all Obligations have been paid in full, cause the face amount of all Bonds to at all times be equal to or greater than the greater of (a) the Aggregate Commitment and (b) the Aggregate Outstanding Credit Exposure.

ARTICLE VII

NEGATIVE COVENANTS

So long as any Obligations shall remain unpaid, any Facility LC shall remain outstanding or any Bank shall have any Commitment under this Agreement:

7.1Liens.  The Company shall not create, incur, assume or suffer to exist any Lien upon or with respect to any of its properties, now owned or hereafter acquired, except:

(a)Liens created pursuant to the Indenture securing the First Mortgage Bonds and any Lien in favor of the Agent on the Facility LC Collateral Account or any funds therein;

(b)Liens securing pollution control bonds, or bonds issued to refund or refinance pollution control bonds (including Liens securing obligations (contingent or otherwise) of the Company under letter of credit agreements or other reimbursement or similar credit enhancement agreements with respect to pollution control bonds); provided that the aggregate face amount of any such bonds so issued shall not exceed the aggregate face amount of such pollution control bonds, as the case may be, so refunded or refinanced;

(c)Liens in (and only in) assets acquired to secure Debt incurred to finance the acquisition of such assets;

(d)statutory and common law banker’s Liens on bank deposits;

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(e)Liens in respect of accounts receivable sold, transferred or assigned by the Company;

(f)Liens for taxes, assessments or other governmental charges or levies not at the time delinquent or thereafter payable without penalty or being contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books;

(g)Liens of carriers, warehousemen, mechanics, materialmen and landlords incurred in the ordinary course of business for sums not overdue or being contested in good faith by appropriate proceedings and for which adequate reserves shall have been set aside on its books;

(h)Liens incurred in the ordinary course of business in connection with workers’ compensation, unemployment insurance or other forms of governmental insurance or benefits, or to secure performance of tenders, statutory obligations, leases and contracts (other than for borrowed money) entered into in the ordinary course of business or to secure obligations on surety or appeal bonds;

(i)judgment Liens in existence less than thirty (30) days after the entry thereof or with respect to which execution has been stayed or the payment of which is covered (subject to a customary deductible) by insurance;

(j)zoning restrictions, easements, licenses, covenants, reservations, utility company rights, restrictions on the use of real property or minor irregularities of title incident thereto which do not in the aggregate materially detract from the value of the property or assets of the Company or any Subsidiary or materially impair the operation of its business;

(k)Liens arising in connection with the financing of the Company’s fuel resources, including nuclear fuel;

(l)Liens arising pursuant to M.C.L. 324.20138; provided that the aggregate amount of all obligations secured by such Liens (excluding any such Liens of which the Company has no knowledge or which are permitted by clause (f) above) shall not exceed $20,000,000;

(m)Liens arising in connection with Securitized Bonds;

(n)Liens on natural gas, oil and mineral, or on stock in trade, material or supplies manufactured or acquired for the purpose of sale and or resale in the usual course of business or consumable in the operation of any of the properties of the Company; provided that such Liens secure obligations not exceeding $500,000,000 in aggregate principal amount; and

(o)other Liens securing obligations in an aggregate amount not in excess of $500,000,000.

In addition, the Company will not, and will not permit any Subsidiary to, create, incur, assume or suffer to exist any Lien on the Equity Interests of any Material Subsidiary other than Liens permitted to exist under clauses (f), (g), (h) or (i) above.

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7.2Sale of Assets.  The Company will not, and will not permit any Material Subsidiary to, sell, lease, assign, transfer or otherwise dispose of 25% or more of its assets calculated with reference to total assets as reflected on the Company’s consolidated balance sheet as at December 31, 2011, during the term of this Agreement.

7.3Mergers, Etc.  The Company will not, and will not permit any Material Subsidiary to, merge with or into or consolidate with or into any other Person, except that the Company or any Material Subsidiary may merge with any other Person; provided that, in each case, immediately after giving effect thereto, (a) no event shall occur and be continuing which constitutes a Default or Event of Default, (b) if the Company is party thereto, the Company is the surviving corporation, or, if the Company is not party thereto, a Material Subsidiary is the surviving corporation, (c) neither the Company nor any Material Subsidiary shall be liable with respect to any Debt or allow its Property to be subject to any Lien which it could not become liable with respect to or allow its Property to become subject to under this Agreement on the date of such transaction and (d) the Company’s Net Worth shall be equal to or greater than its Net Worth immediately prior to such merger.

7.4Compliance with ERISA.  The Company will not, and will not permit any ERISA Affiliate to, permit to exist any occurrence of any Reportable Event, or any other event or condition which presents a material (in the reasonable opinion of the Majority Banks) risk of a termination by the PBGC of any Plan, which termination will result in any material (in the reasonable opinion of the Majority Banks) liability of the Company or such ERISA Affiliate to the PBGC.

7.5Organizational Documents.  The Company will not, and will not permit any Consolidated Subsidiary to, amend, modify or otherwise change any of the terms or provisions in any of their respective certificate of incorporation and by-laws (or comparable constitutive documents) as in effect on the Closing Date to the extent that such change is reasonably expected to result in a Material Adverse Change.

7.6Change in Nature of Business.  The Company will not, and will not permit any Material Subsidiary to, make any material change in the nature of its business as carried on as of the Closing Date.

7.7Transactions with Affiliates.  The Company will not, and will not permit any Subsidiary to, enter into any transaction with any of its Affiliates (other than the Company or any Subsidiary) unless such transaction is on terms no less favorable to the Company or such Subsidiary than if the transaction had been negotiated in good faith on an arm’s-length basis with a non-Affiliate; provided that the foregoing shall not prohibit (a) the payment by the Company or any Subsidiary of dividends or other distributions on, or redemptions of, its capital stock, (b) the purchase, acquisition or retirement by the Company or any Subsidiary of the Company’s capital stock or (c) intercompany loans and advances not otherwise prohibited by this Agreement.

ARTICLE VIII

FINANCIAL COVENANT

So long as any of the Obligations shall remain unpaid, any Facility LC shall remain

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outstanding or any Bank shall have any Commitment under this Agreement, the Company shall at all times maintain a ratio of Total Consolidated Debt to Total Consolidated Capitalization of not greater than 0.65 to 1.0.

ARTICLE IX

EVENTS OF DEFAULT

9.1Events of Default.  The occurrence of any of the following events shall constitute an “Event of Default”:

(a)the Company shall fail to pay (i) any principal of any Advance when due and payable, or (ii) any Reimbursement Obligation within one (1) Business Day after the same becomes due, or (iii) any interest on any Advance or any fee or other Obligation payable hereunder within five (5) Business Days after such interest or fee or other Obligation becomes due and payable;

(b)any representation or warranty made by or on behalf of the Company in this Agreement or any other Credit Document or in any certificate, document, report, financial or other written statement furnished at any time pursuant to any Credit Document shall prove to have been incorrect in any material respect on or as of the date made or deemed made;

(c)(i) the Company or any of its Subsidiaries shall fail to perform or observe any term, covenant or agreement contained in Section 6.3(a) (solely with respect to the Company), Section 6.10, Article VII or Article VIII; or (ii) the Company shall fail to perform or observe any other term, covenant or agreement on its part to be performed or observed in this Agreement or in any other Credit Document and such failure under this clause (ii) shall continue for thirty (30) consecutive days after the earlier of (x) a Designated Officer obtaining knowledge of such breach and (y) written notice thereof by means of facsimile, regular mail or written notice delivered in person (or telephonic notice thereof confirmed in writing) having been given to the Company by the Agent or the Majority Banks;

(d)the Company or any Material Subsidiary shall: (i) fail to pay any Debt (other than the payment obligations described in clause (a) above) in excess of $50,000,000, or any interest or premium thereon, when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) and such failure shall continue after the applicable grace period, if any, specified in the instrument or agreement relating to such Debt; or (ii) fail to perform or observe any term, covenant or condition on its part to be performed or observed under any agreement or instrument relating to any such Debt, when required to be performed or observed, if the effect of such failure to perform or observe is to accelerate, or to permit the acceleration of, the maturity of such Debt, unless the obligee under or holder of such Debt shall have waived in writing such circumstance, or such circumstance has been cured, so that such circumstance is no longer continuing; or (iii) any such Debt shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), in each case in accordance with the terms of such agreement or instrument, prior to the stated maturity thereof; or (iv) generally not, or shall admit in writing its inability to, pay its debts as such debts become due;

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(e)the Company or any Material Subsidiary: (i) shall make an assignment for the benefit of creditors, or petition or apply to any tribunal for the appointment of a custodian, receiver or trustee for it or a substantial part of its assets; or (ii) shall commence any proceeding under any bankruptcy, reorganization, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction, whether now or hereafter in effect; or (iii) shall have had any such petition or application filed or any such proceeding shall have been commenced, against it, in which an adjudication or appointment is made or order for relief is entered, or which petition, application or proceeding remains undismissed for a period of sixty (60) consecutive days or more; or (iv) by any act or omission shall indicate its consent to, approval of or acquiescence in any such petition, application or proceeding or order for relief or the appointment of a custodian, receiver or trustee for all or any substantial part of its property; or (v) shall suffer any such custodianship, receivership or trusteeship to continue undischarged for a period of sixty (60) days or more; or (vi) shall take any corporate action to authorize any of the actions set forth above in this clause (e);

(f)one or more judgments, decrees or orders for the payment of money in excess of $50,000,000 in the aggregate shall be rendered against the Company or any Material Subsidiary and either (i) enforcement proceedings shall have been commenced by any creditor upon any such judgment or order or (ii) there shall be any period of more than thirty (30) consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect;

(g)any material provision of any Credit Document, after execution hereof or delivery thereof under Article XI, shall for any reason other than the express terms hereof or thereof cease to be valid and binding on any party thereto; or the Company shall so assert in writing;

(h)any Plan Termination Event with respect to a Plan shall have occurred, and thirty (30) days after notice thereof shall have been given to the Company by the Agent, (i) such Plan Termination Event (if correctable) shall not have been corrected and (ii) the then present value of such Plan’s vested benefits exceeds the then current value of the assets accumulated in such Plan by more than the amount of $50,000,000 (or in the case of a Plan Termination Event involving the withdrawal of a “substantial employer” (as defined in Section 4001(A)(2) of ERISA), the withdrawing employer’s proportionate share of such excess shall exceed such amount);

(i)(i) any Bond shall cease to be in full force and effect (other than in connection with the replacement thereof pursuant to any increase of the Commitments in accordance with Section 2.16) or (ii) the Company shall deny that it has any liability or obligation under any Bond or purport to revoke, terminate, rescind or redeem any Bond (other than (x) in accordance with the terms of the Bonds and the Indenture and (y) in connection with the replacement thereof pursuant to any increase of the Commitments in accordance with Section 2.16); or

(j)a Change in Control shall occur.

9.2Remedies.

(a)If any Event of Default shall occur and be continuing, the Agent shall upon the request, or may with the consent, of the Majority Banks, by notice to the Company, (i) declare

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the Commitments and the obligations and powers of the LC Issuers to issue Facility LCs to be terminated or suspended, whereupon the same shall forthwith terminate, and/or (ii) declare the Obligations to be forthwith due and payable, whereupon the Aggregate Outstanding Credit Exposure and all other Obligations shall become and be forthwith due and payable, and/or (iii) in addition to the continuing right to demand payment of all amounts payable under this Agreement, make demand on the Company to pay, and the Company will, forthwith upon such demand and without any further notice or act, pay to the Agent the Collateral Shortfall Amount (as defined below), which funds shall be deposited in the Facility LC Collateral Account, in each case without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Company; provided that in the case of an Event of Default referred to in Section 9.1(e), the Commitments shall automatically terminate, the obligations and powers of the LC Issuers to issue Facility LCs shall automatically terminate and the Obligations shall automatically become due and payable without notice, presentment, demand, protest or other formalities of any kind, all of which are hereby expressly waived by the Company, and the Company will be and become thereby unconditionally obligated, without any further notice, act or demand, to pay to the Agent an amount in immediately available funds, which funds shall be held in the Facility LC Collateral Account, equal to the difference of (x) the amount of LC Obligations at such time, less (y) the amount on deposit in the Facility LC Collateral Account at such time which is free and clear of all rights and claims of third parties and has not been applied against the Obligations (such difference, the “Collateral Shortfall Amount”).

(b)If at any time while any Event of Default is continuing, the Agent determines that the Collateral Shortfall Amount at such time is greater than zero, the Agent may make demand on the Company to pay, and the Company will, forthwith upon such demand and without any further notice or act, pay to the Agent the Collateral Shortfall Amount, which funds shall be deposited in the Facility LC Collateral Account.

(c)The Agent may, at any time or from time to time after funds are deposited in the Facility LC Collateral Account, apply such funds to the payment of the Obligations and any other amounts as shall from time to time have become due and payable by the Company to the Banks or the LC Issuers under the Credit Documents.  The Company hereby pledges, assigns and grants to the Agent, on behalf of and for the ratable benefit of the Banks and the LC Issuers, a security interest in all of the Company’s right, title and interest in and to all funds which may from time to time be on deposit in the Facility LC Collateral Account to secure the prompt and complete payment and performance of the Obligations.  The Agent will invest any funds on deposit from time to time in the Facility LC Collateral Account in certificates of deposit of JPMorgan Chase Bank, N.A. having a maturity not exceeding thirty (30) days.

(d)At any time while any Event of Default is continuing, neither the Company nor any Person claiming on behalf of or through the Company shall have any right to withdraw any of the funds held in the Facility LC Collateral Account.  After all of the Obligations have been indefeasibly paid in full, all Facility LCs have expired or been terminated and the Aggregate Commitment has been terminated, any funds remaining in the Facility LC Collateral Account shall be returned by the Agent to the Company or paid to whomever may be legally entitled thereto at such time.

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ARTICLE X

WAIVERS, AMENDMENTS AND REMEDIES

10.1Amendments.  Subject to the provisions of this Article X, the Majority Banks (or the Agent with the consent in writing of the Majority Banks) and the Company may enter into written agreements supplemental hereto for the purpose of adding or modifying any provisions to the Credit Documents or changing in any manner the rights of the Banks or the Company hereunder or waiving any Event of Default hereunder; provided that no such supplemental agreement shall, without the consent of all of the Banks:

(a)Extend the maturity of any Loan or reduce the principal amount thereof, or extend the expiry date of any Facility LC to a date after the scheduled Termination Date, or reduce the rate or extend the time of payment of interest thereon or fees thereon or Reimbursement Obligations related thereto.

(b)Modify the percentage specified in the definition of Majority Banks.

(c)Extend the Termination Date or increase the amount of the Commitment of any Bank hereunder (other than pursuant to Section 2.16) or the commitment to issue Facility LCs, or permit the Company to assign its rights under this Agreement.

(d)Amend Section 3.1, Section 6.10, this Section 10.1 or Section 12.11.

(e)Make any change in an express right in this Agreement of a single Bank to give its consent, make a request or give a notice.

(f)Authorize the Agent to vote in favor of the release of all or substantially all of the collateral securing the Bonds.

(g)Release all or any substantial portion of the Bonds (other than in connection with the replacement thereof pursuant to any increase of the Commitments in accordance with Section 2.16).

(h)Amend any provisions hereunder relating to the pro rata treatment of the Banks.

No amendment of any provision of this Agreement relating to the Agent shall be effective without the written consent of the Agent, and no amendment of any provision relating to any LC Issuer shall be effective without the written consent of such LC Issuer.  Notwithstanding the foregoing, no amendment to Section 4.7 shall be effective unless the same shall be in writing and signed by the Agent, the LC Issuer, if applicable, and the Majority Banks.

10.2Preservation of Rights.  No delay or omission of the Banks, the LC Issuers or the Agent to exercise any right under the Credit Documents shall impair such right or be construed to be a waiver of any Default or Event of Default or an acquiescence therein, and the making of a Credit Extension notwithstanding the existence of a Default or Event of Default or the inability of the Company to satisfy the conditions precedent to such Credit Extension shall not constitute any waiver or acquiescence.  Any single or partial exercise of any such right shall not preclude other or further exercise thereof or the exercise of any other right, and no waiver, amendment or other variation of the terms, conditions or provisions of the Credit Documents whatsoever shall

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be valid unless in writing signed by the Banks required pursuant to Section 10.1, and then only to the extent in such writing specifically set forth.  All remedies contained in the Credit Documents or by law afforded shall be cumulative and all shall be available to the Agent, the LC Issuers and the Banks until the Obligations have been paid in full.

ARTICLE XI

CONDITIONS PRECEDENT

11.1Effectiveness of this Agreement.  This Agreement shall not become effective unless the Agent shall have received (or such delivery shall have been waived in accordance with Section 10.1):

(a)(i) Counterparts of this Agreement executed by the Company, the LC Issuers and the Banks or (ii) written evidence satisfactory to the Agent (which may include telecopy or electronic transmission of a signed signature page of this Agreement) that such party has signed a counterpart of this Agreement.

(b)A certificate, executed by the Secretary or an Assistant Secretary of the Company, which shall (i) certify that, except as attached to such certificate, there have been no changes to the Restated Articles of Incorporation, the by-laws and the Board of Directors’ resolutions of the Company, in each case delivered and certified in connection with the Existing Credit Agreement, since December 21, 2012 and (ii) identify by name and title and bear the original or facsimile signature of the officers of the Company authorized to sign the Credit Documents and the officers or other employees authorized to make borrowings hereunder, upon which certificate the Banks shall be entitled to rely until informed of any change in writing by the Company.

(c)A certificate, signed by a Designated Officer of the Company, stating that on the Closing Date (i) no Default or Event of Default has occurred and is continuing and (ii) each representation or warranty contained in Article V is true and correct.

(d)A favorable opinion of (i) Kimberly C. Wilson, Supervisory Assistant General Counsel of the Company, as to such matters as the Agent may reasonably request and (ii) Sidley Austin LLP, counsel for the Agent, as to such matters as the Agent may reasonably request.  Such opinions shall be addressed to the Agent, the LC Issuers and the Banks and shall be satisfactory in form and substance to the Agent.

(e)Evidence, in form and substance satisfactory to the Agent, that the Company has obtained all governmental approvals, if any, necessary for it to enter into the Credit Documents.

(f)Evidence satisfactory to it of the payment, prior to or simultaneously with the initial Loans hereunder, of all interest, fees and premiums, if any, on all loans and other extensions of credit outstanding under the Existing Credit Agreement (other than contingent indemnity obligations).

(g)(i) Satisfactory audited consolidated financial statements of the Company for the two most recent fiscal years ended prior to the Closing Date as to which such financial statements are available, (ii) satisfactory unaudited interim consolidated financial statements of the Company for each quarterly period ended subsequent to the date of the latest financial

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statements delivered pursuant to clause (i) of this paragraph as to which such financial statements are available and (iii) satisfactory financial statement projections through and including the Company’s 2017 fiscal year, together with such information as the Agent and the Banks shall reasonably request (including, without limitation, a detailed description of the assumptions used in preparing such projections).

(h)To the extent requested by any of the Banks, all documentation and other information required by bank regulatory authorities under applicable “know-your-customer” and anti-money laundering rules and regulations, including the USA Patriot Act.

(i)All fees and other amounts due and payable on or prior to the Closing Date, including, to the extent invoiced at least three (3) Business Days prior to the Closing Date, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Company hereunder.

(j)Such other documents as any Bank or its counsel may have reasonably requested.

11.2Each Credit Extension.  The Banks shall not be required to make any Credit Extension if on the applicable Borrowing Date, (i) any Default or Event of Default exists or would result from such Credit Extension, (ii) any representation or warranty contained in Article V is not true and correct as of such Borrowing Date, except Section 5.5(c) and the first sentence of Section 5.6, (iii) after giving effect to such Credit Extension the Aggregate Outstanding Credit Exposure would exceed the face amount of all Bonds or (iv) all legal matters incident to the making of such Credit Extension are not satisfactory to the Banks and their counsel.  Each Borrowing Notice and each request for issuance of a Facility LC shall constitute a representation and warranty by the Company that the conditions contained in clauses (i), (ii) and (iii) above will be satisfied on the relevant Borrowing Date.  For the avoidance of doubt, the conversion or continuation of an Advance shall not be considered the making of a Credit Extension.

ARTICLE XII

GENERAL PROVISIONS

12.1Successors and Assigns.  (a) The terms and provisions of the Credit Documents shall be binding upon and inure to the benefit of the Company and the Banks and their respective successors and assigns, except that the Company shall not have the right to assign its rights under the Credit Documents.  Any Bank may sell participations in all or a portion of its rights and obligations under this Agreement pursuant to clause (b) below and any Bank may assign all or any part of its rights and obligations under this Agreement pursuant to clause (c) below.

(b)Any Bank may sell participations to one or more banks or other entities (other than the Company and its Affiliates) (each a “Participant”) in all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and its Outstanding Credit Exposure); provided that (i) such Bank’s obligations under this Agreement (including its Commitment to the Company hereunder) shall remain unchanged, (ii) such Bank shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) such Bank shall remain the holder of the Outstanding Credit Exposure of such Bank for all purposes of this Agreement and (iv) the Company shall continue to deal solely and

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directly with such Bank in connection with such Bank’s rights and obligations under this Agreement.  Each Bank shall retain the sole right to approve, without the consent of any Participant, any amendment, modification or waiver of any provision of the Credit Documents other than any amendment, modification or waiver with respect to any Loan or Commitment in which such Participant has an interest which would require consent of all of the Banks pursuant to the terms of Section 10.1 or of any other Credit Document.  The Company agrees that each Participant shall be deemed to have the right of setoff provided in Section 12.10 in respect of its participating interest in amounts owing under the Credit Documents to the same extent as if the amount of its participating interest were owing directly to it as a Bank under the Credit Documents; provided that each Bank shall retain the right of setoff provided in Section 12.10 with respect to the amount of participating interests sold to each Participant.  The Banks agree to share with each Participant, and each Participant, by exercising the right of setoff provided in Section 12.10, agrees to share with each Bank, any amount received pursuant to the exercise of its right of setoff, such amounts to be shared in accordance with Section 12.11 as if each Participant were a Bank.  The Company further agrees that each Participant shall be entitled to the benefits of Sections 4.1, 4.3, 4.4 and 4.5  to the same extent as if it were a Bank and had acquired its interest by assignment pursuant to Section 12.1(c); provided that (i) a Participant shall not be entitled to receive any greater payment under Section 4.1, 4.3, 4.4 or 4.5 than the Bank that sold the participating interest to such Participant would have received had it retained such interest for its own account, unless the sale of such interest to such Participant is made with the prior written consent of the Company, and (ii) any Participant not incorporated under the laws of the United States of America or any State thereof agrees to comply with the provisions of Section 4.5 to the same extent as if it were a Bank (it being understood that the documentation required under Section 4.5 shall be delivered to the participating Bank).  Each Bank that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Company, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the obligations under this Agreement (the “Participant Register”); provided that no Bank shall have any obligation to disclose all or any portion of the Participant Register to any Person (including the identity of any Participant or any information relating to a Participant’s interest in the obligations under this Agreement) except to the extent that such disclosure is necessary to establish that such interest is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations.  The entries in the Participant Register shall be conclusive absent manifest error, and such Bank shall treat each person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.  For the avoidance of doubt, the Agent (in its capacity as Agent) shall have no responsibility for maintaining a Participant Register.

(c)Any Bank may, in the ordinary course of its business and in accordance with applicable law, at any time assign to one or more financial institutions or other Persons (other than the Company and its Affiliates) all or any part of its rights and obligations under this Agreement; provided that (i) (x) such Bank has received the prior written consent of each LC Issuer and (y) unless such assignment is to another Bank, an Affiliate of such assigning Bank, or any direct or indirect contractual counterparty in any swap agreement relating to the Loans to the extent required in connection with the settlement of such Bank’s obligations pursuant thereto, such Bank has received the prior written consent of the Agent and the Company (so long as no Event of Default exists), which consents of the Agent and the Company shall not be

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unreasonably withheld or delayed, provided that the Company shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Agent within ten (10) Business Days after having received notice thereof, and (ii) the minimum principal amount of any such assignment (other than assignments to a Federal Reserve Bank, to another Bank, to an Affiliate of such assigning Bank or any direct or indirect contractual counterparty in any swap agreement relating to the Loans to the extent required in connection with the settlement of such Bank’s obligations pursuant thereto) shall be $5,000,000 (or such lesser amount consented to by the Agent and, so long as no Event of Default shall be continuing, the Company, which consents shall not be unreasonably withheld or delayed); provided that after giving effect to such assignment the assigning Bank shall have a Commitment of not less than $5,000,000 (unless otherwise consented to by the Agent and, so long as no Event of Default shall be continuing, the Company), unless such assignment constitutes an assignment of all of the assigning Bank’s Commitment, Loans and other rights and obligations hereunder to a single assignee.  Notwithstanding the foregoing sentence, (x) any Bank may at any time, without the consent of the Company, any LC Issuer or the Agent, pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Bank, including, without limitation, any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such assignment shall release the transferor Bank from its obligations hereunder or substitute any such pledgee or assignee for such Bank as a party hereto; and (y) no assignment by a Bank to any Affiliate of such Bank shall release such Bank from its obligations hereunder unless (I) the Agent and, so long as no Event of Default exists, the Company have approved such assignment or (II) the creditworthiness of such Affiliate (as determined in accordance with customary standards of the banking industry) is no less than that of the assigning Bank.

(d)Any Bank may, in connection with any sale or participation or proposed sale or participation pursuant to this Section 12.1, disclose to the purchaser or participant or proposed purchaser or participant any information relating to the Company furnished to such Bank by or on behalf of the Company; provided that prior to any such disclosure of non-public information, the purchaser or participant or proposed purchaser or participant (which purchaser or participant is not an Affiliate of a Bank) shall agree to preserve the confidentiality of any confidential information (except any such disclosure as may be required by law or regulatory process) relating to the Company received by it from such Bank.

(e)Assignments under this Section 12.1 shall be made pursuant to an agreement (an “Assignment Agreement”) substantially in the form of Exhibit C hereto or in such other form as may be agreed to by the parties thereto and shall not be effective until a $3,500 fee has been paid to the Agent by the assignee, which fee shall cover the cost of processing such assignment; provided that such fee shall not be incurred in the event of an assignment by any Bank of all or a portion of its rights under this Agreement to (i) a Federal Reserve Bank, (ii) a Bank or an Affiliate of the assigning Bank or (iii) any direct or indirect contractual counterparty in any swap agreement relating to the Loans to the extent required in connection with the settlement of such Bank’s obligations pursuant thereto.  The Agent, acting for this purpose as a non-fiduciary agent of the Company, shall maintain at one of its offices a copy of each Assignment Agreement delivered to it and a register for the recordation of the names and addresses of the Banks, and the Commitment of, and principal amount of the Loans, Bonds, and Facility LCs owing to, each Bank pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be conclusive and the Company, the Agent, the LC Issuers and the Banks shall treat each

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Person whose name is recorded in the Register pursuant to the terms hereof as a Bank hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.  The Register shall be available for inspection by the Company, any LC Issuer, and any Bank at any reasonable time and from time to time upon reasonable prior notice.

12.2Survival of Representations.  All representations and warranties of the Company contained in this Agreement shall survive the making of the Credit Extensions herein contemplated.

12.3Governmental Regulation.  Anything contained in this Agreement to the contrary notwithstanding, no LC Issuer or Bank shall be obligated to extend credit to the Company in violation of any limitation or prohibition provided by any applicable statute or regulation.

12.4Taxes.  Any taxes (excluding income taxes) payable or ruled payable by any Federal or State authority in respect of the execution of the Credit Documents shall be paid by the Company, together with interest and penalties, if any.

12.5Choice of Law.  THE CREDIT DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAW (INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF NEW YORK, BUT OTHERWISE WITHOUT REGARD TO THE LAW OF CONFLICTS) OF THE STATE OF NEW YORK, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.  THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK, NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY CREDIT DOCUMENT AND THE COMPANY HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT.  EACH OF THE COMPANY, THE AGENT, THE LC ISSUERS AND THE BANKS HEREBY WAIVES ANY RIGHT TO A JURY TRIAL IN ANY ACTION OR ARISING HEREUNDER OR UNDER ANY CREDIT DOCUMENT.

12.6Headings.  Section headings in the Credit Documents are for convenience of reference only, and shall not govern the interpretation of any of the provisions of the Credit Documents.

12.7Entire Agreement.  The Credit Documents embody the entire agreement and understanding between the Company, the LC Issuers, the Agent and the Banks and supersede all prior agreements and understandings between the Company, the LC Issuers, the Agent and the Banks relating to the subject matter thereof.

12.8Expenses; Indemnification.  The Company shall reimburse the Agent and each Arranger for (a) any reasonable costs and out-of-pocket expenses (including reasonable attorneys’ fees, time charges and expenses of counsel for the Agent) paid or incurred by the Agent or such Arranger in connection with the preparation, review, execution, delivery, syndication, distribution (including via the internet), administration, amendment and modification of the Credit Documents and (b) any reasonable costs and out-of-pocket expenses

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(including reasonable attorneys’ fees, time charges and expenses of counsel) paid or incurred by the Agent or such Arranger on its own behalf or on behalf of any LC Issuer or any Bank and, on or after the date upon which an Event of Default specified in Section 9.1(a) or 9.1(e) has occurred and is continuing, each Bank, in connection with the collection and enforcement of the Credit Documents.  The Company further agrees to indemnify the Agent, each Arranger, each LC Issuer, each Bank and their respective Affiliates, and the directors, officers, employees and agents of the foregoing (all of the foregoing, the “Indemnified Persons), against all losses, claims, damages, penalties, judgments, liabilities and reasonable expenses (including all reasonable expenses of litigation or preparation therefor whether or not an Indemnified Person is a party thereto), regardless of whether such matter is initiated by a third party or by the Company or any of its Affiliates or equityholders, which any of them may pay or incur arising out of or relating to this Agreement, the other Credit Documents, the transactions contemplated hereby, the direct or indirect application or proposed application of the proceeds of any Credit Extension hereunder, any actual or alleged presence or release of any Hazardous Substance on or from any property owned or operated by the Company or any Subsidiary or any Environmental Liability related in any way to the Company or any Subsidiary; provided that the Company shall not be liable to any Indemnified Person for any of the foregoing to the extent they are determined by a court of competent jurisdiction by final and nonappealable judgment to have arisen from the gross negligence or willful misconduct of such Indemnified Person.  Without limiting the foregoing, the Company shall pay any civil penalty or fine assessed by the Office of Foreign Assets Control against any Indemnified Person, and all reasonable costs and expenses (including reasonable fees and expenses of counsel to such Indemnified Person) incurred in connection with defense thereof, as a result of any breach or inaccuracy of the representation made in Section 5.14.  The obligations of the Company under this Section shall survive the termination of this Agreement.

12.9Severability of Provisions.  Any provision in any Credit Document that is held to be inoperative, unenforceable or invalid in any jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable or invalid without affecting the remaining provisions in that jurisdiction or the operation, enforceability or validity of that provision in any other jurisdiction, and to this end the provisions of all Credit Documents are declared to be severable.

12.10Setoff.  In addition to, and without limitation of, any rights of the Banks under applicable law, if the Company becomes insolvent, however evidenced, or during the continuance of an Event of Default, any indebtedness from any Bank or any of its Affiliates to the Company (including all account balances, whether provisional or final and whether or not collected or available) may be, upon prior notice to the Agent, offset and applied toward the payment of the Obligations owing to such Bank or such Affiliate, whether or not the Obligations, or any part hereof, shall then be due.  The Company agrees that any purchaser or participant under Section 12.1 may, to the fullest extent permitted by law and in accordance with this Agreement, exercise all its rights of payment with respect to such purchase or participation as if it were the direct creditor of the Company in the amount of such purchase or participation.

12.11Ratable Payments.  If any Bank, whether by setoff or otherwise, has payment made to it upon its Outstanding Credit Exposure in a greater proportion than that received by any other Bank, such Bank agrees, promptly upon demand, to purchase a portion of the Aggregate Outstanding Credit Exposure held by the other Banks so that after such purchase each Bank will

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hold its Pro Rata Share of the Aggregate Outstanding Credit Exposure.  If any Bank, whether in connection with setoff or amounts which might be subject to setoff or otherwise, receives collateral or other protection for its Obligations or such amounts which may be subject to setoff, such Bank agrees, promptly upon demand, to take such action necessary such that all Banks share in the benefits of such collateral ratably in proportion to their respective Pro Rata Share of the Aggregate Outstanding Credit Exposure.  In case any such payment is disturbed by legal process, or otherwise, appropriate further adjustments shall be made.

12.12Nonliability.  The relationship between the Company, on the one hand, and the Banks, the Arrangers, the LC Issuers and the Agent, on the other hand, shall be solely that of borrower and lender.  None of the Agent, any Arranger, any LC Issuer or any Bank shall have any fiduciary responsibilities to the Company.  To the fullest extent permitted by law, the Company hereby waives and releases any claims that it may have against each of the Agent, the Arrangers, each LC Issuer and each Bank with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.  None of the Agent, any Arranger, any LC Issuer or any Bank undertakes any responsibility to the Company to review or inform the Company of any matter in connection with any phase of the Company’s business or operations.  The Company shall rely entirely upon its own judgment with respect to its business, and any review, inspection, supervision or information supplied to the Company by the Banks is for the protection of the Banks and neither the Company nor any third party is entitled to rely thereon.  The Company agrees that none of the Agent, any Arranger, any LC Issuer or any Bank shall have liability to the Company (whether sounding in tort, contract or otherwise) for losses suffered by the Company in connection with, arising out of, or in any way related to, the transactions contemplated and the relationship established by the Credit Documents, or any act, omission or event occurring in connection therewith, unless it is determined in a final non-appealable judgment by a court of competent jurisdiction that such losses resulted from the gross negligence or willful misconduct of the party from which recovery is sought.  None of the Agent, any Arranger, any LC Issuer or any Bank shall have any liability with respect to, and the Company hereby waives, releases and agrees not to sue for, any special, indirect, consequential or punitive damages suffered by the Company in connection with, arising out of, or in any way related to the Credit Documents or the transactions contemplated thereby.

12.13Other Agents.  The Banks identified on the signature pages of this Agreement or otherwise herein, or in any amendment hereof or other document related hereto, as being a “Co-Syndication Agent” or a “Documentation Agent” (the “Other Agents”) shall have no rights, powers, obligations, liabilities, responsibilities or duties under this Agreement other than those applicable to all Banks as such.  Without limiting the foregoing, the Other Agents shall not have or be deemed to have any fiduciary relationship with any Bank.  Each Bank acknowledges that it has not relied, and will not rely, on the Other Agents in deciding to enter into this Agreement or in taking or refraining from taking any action hereunder or pursuant hereto.  Nothing contained in this Agreement or otherwise shall be construed to impose any obligation or duty on any Other Agent, other than those applicable to all Banks as such.

12.14USA Patriot Act.  Each Bank hereby notifies the Company that pursuant to requirements of the USA Patriot Act, such Bank is required to obtain, verify and record information that identifies the Company, which information includes the name and address of the Company and other information that will allow such Bank to identify the Company in

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accordance with the USA Patriot Act.

12.15Electronic Delivery.

(a)The Company shall use its commercially reasonable best efforts to transmit to the Agent all information, documents and other materials that it is obligated to furnish to the Agent pursuant to this Agreement and the other Credit Documents, including all notices, requests, financial statements, financial and other reports, certificates and other information materials, but excluding (i) any Borrowing Notice, Conversion/Continuation Notice or notice of prepayment, (ii) any notice of a Default or an Event of Default or (iii) any communication that is required to be delivered to satisfy any condition precedent to the effectiveness of this Agreement and/or any Advance hereunder (all such non-excluded communications, collectively, “Communications”), in an electronic/soft medium in a format reasonably acceptable to the Agent to such e-mail address as designated by the Agent from time to time.  In addition, the Company shall continue to provide Communications to the Agent or any Bank in the manner specified in this Agreement but only to the extent requested by the Agent or such Bank.  Each Bank and the Company further agrees that the Agent may make Communications available to the Banks by posting Communications on IntraLinks or a substantially similar electronic transmission system (the “Platform”).  Subject to the conditions set forth in the proviso in the immediately preceding sentence, nothing in this Section 12.15 shall prejudice the right of the Agent to make Communications available to the Banks in any other manner specified herein.

(b)Each Bank agrees that an e-mail notice to it (at the address provided pursuant to the next sentence and deemed delivered as provided in clause (c) below) specifying that a Communication has been posted to the Platform shall constitute effective delivery of such Communication to such Bank for purposes of this Agreement.  Each Bank agrees (i) to notify the Agent in writing (including by electronic communication) from time to time to ensure that the Agent has on record an effective e-mail address for such Bank to which the foregoing notice may be sent by electronic transmission and (ii) that the foregoing notice may be sent to such e-mail address.

(c)Each party hereto agrees that any electronic Communication referred to in this Section 12.15 shall be deemed delivered upon the posting of a record of such Communication as “sent” in the e-mail system of the sending party or, in the case of any such Communication to the Agent, upon the posting of a record of such Communication as “received” in the e-mail system of the Agent, provided that if such Communication is not so received by a Person during the normal business hours of such Person, such Communication shall be deemed delivered at the opening of business on the next business day for such Person.

(d)Each party hereto acknowledges that the distribution of material through an electronic medium is not necessarily secure and there are confidentiality and other risks associated with such distribution.

(e)EACH PARTY HERETO FURTHER ACKNOWLEDGES AND AGREES THAT:

(i)NONE OF THE AGENT OR ITS AFFILIATES OR ANY OF THEIR

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RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ADVISORS OR REPRESENTATIVES (COLLECTIVELY, THE “AGENT PARTIES”) WARRANTS THE ADEQUACY OF THE PLATFORM OR THE ACCURACY OR COMPLETENESS OF ANY COMMUNICATION, AND EACH AGENT PARTY EXPRESSLY DISCLAIMS LIABILITY FOR ERRORS OR OMISSIONS IN ANY COMMUNICATION; AND

(ii)NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH ANY COMMUNICATION OR THE PLATFORM.

12.16Confidentiality.  Each of the Agent, the LC Issuers and the Banks agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority or self-regulatory body, (c) to the extent required by applicable laws or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or any other Credit Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (ii)  any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Company and its obligations, (g) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Agent, any LC Issuer or any Bank on a non-confidential basis from a source other than the Company, (h) on a confidential basis to the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers or other market identifiers with respect to the credit facilities provided hereunder or (i) with the written consent of the Company.  For the purposes of this Section, “Information” means all information received from the Company relating to the Company, its Subsidiaries or their business, other than any such information that is available to the Agent, any LC Issuer or any Bank on a non-confidential basis prior to disclosure by the Company; provided that, in the case of information received from the Company after the date hereof, such information is clearly identified at the time of delivery as confidential.  Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

12.17No Advisory or Fiduciary Responsibility.  In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Credit Document), the Company acknowledges and agrees

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that:  (i) none of the Arrangers, the LC Issuers, the Agent or the Banks or their respective Affiliates are subject to any fiduciary or other implied duties, (ii) none of the Arrangers, the LC Issuers, the Agent or the Banks or their respective Affiliates are advising the Company or any of its Affiliates as to any legal, tax, investment, accounting or regulatory matters in any jurisdiction and (iii) the Company has consulted with its own advisors concerning such matters and is responsible for making its own independent investigation and appraisal of the transactions contemplated hereby, and none of the Arrangers, the LC Issuers, the Agent or the Banks or their respective Affiliates have any responsibility or liability to the Company or any of its affiliates with respect thereto.

ARTICLE XIII

THE AGENT

13.1Appointment.  JPMorgan Chase Bank, N.A. is hereby appointed Agent hereunder, and each of the Banks irrevocably authorizes the Agent to act as the contractual representative on behalf of such Bank.  The Agent agrees to act as such upon the express conditions contained in this Article XIII.  The Agent shall not have a fiduciary relationship in respect of any Bank by reason of this Agreement nor shall the have any implied duties, regardless of whether a Default or Event of Default has occurred and is continuing.

13.2Powers.  The Agent shall have and may exercise such powers hereunder as are specifically delegated to the Agent by the terms hereof, together with such powers as are reasonably incidental thereto.  The Agent shall be deemed not to have knowledge of any Default or Event of Default unless and until written notice thereof is given to the Agent by the Company or a Bank or any implied duties to the Banks or any obligation to the Banks to take any action hereunder (whether a Default or Event of Default has occurred and is continuing), except any action specifically provided by this Agreement to be taken by the Agent.

13.3General Immunity.  Neither the Agent nor any of its directors, officers, agents or employees shall be liable to the Banks or any Bank for any action taken or omitted to be taken by it or them hereunder or in connection herewith except for its or their own gross negligence or willful misconduct as determined in a final, non-appealable judgment by a court of competent jurisdiction.

13.4No Responsibility for Recitals, Etc.  The Agent shall not be responsible to the Banks for any recitals, reports, statements, warranties or representations herein or in any Credit Document or be bound to ascertain or inquire as to the performance or observance of any of the terms of this Agreement.

13.5Action on Instructions of Banks.  The Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder and under any other Credit Document in accordance with written instructions signed by the Majority Banks (or all of the Banks if required by Section 10.1), and such instructions and any action taken or failure to act pursuant thereto shall be binding on all of the Banks.  The Banks hereby acknowledge that the Agent shall be under no duty to take any discretionary action permitted to be taken by it pursuant to the provisions of this Agreement or any other Credit Document unless it shall be requested in writing to do so by the Majority Banks.  The Agent shall be fully justified in failing or refusing

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to take any action hereunder and under any other Credit Document unless it shall first be indemnified to its satisfaction by the Banks pro rata against any and all liability, cost and expense that it may incur by reason of taking or continuing to take any such action.

13.6Employment of Agents and Counsel.  The Agent may execute any of its duties as Agent hereunder by or through employees, agents and attorneys-in-fact and shall not be answerable to the Banks, except as to money or securities received by it or its authorized agents, for the default or misconduct of any such agents or attorneys-in-fact selected by it with reasonable care.  The Agent shall be entitled to advice of counsel concerning all matters pertaining to the agency hereby created and its duties hereunder.

13.7Reliance on Documents; Counsel.  The Agent shall be entitled to rely upon any notice, consent, certificate, affidavit, letter, telegram, statement, paper or document believed by it to be genuine and correct and to have been signed or sent by the proper person or persons, and, in respect to legal matters, upon the opinion of counsel selected by the Agent, which counsel may be employees of the Agent.

13.8Agent’s Reimbursement and Indemnification.  The Banks agree to reimburse and indemnify the Agent (in the Agent’s capacity as Agent) ratably in accordance with their respective Pro Rata Shares (i) for any amounts not reimbursed by the Company for which the Agent (in the Agent’s capacity as Agent) is entitled to reimbursement by the Company under the Credit Documents, (ii) for any other expenses reasonably incurred by the Agent on behalf of the Banks, in connection with the preparation, execution, delivery, administration and enforcement of the Credit Documents, and for which the Agent (in the Agent’s capacity as Agent) is not entitled to reimbursement by the Company under the Credit Documents, and (iii) for any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, reasonable expenses or disbursements of any kind and nature whatsoever which may be imposed on, incurred by or asserted against the Agent in any way relating to or arising out of this Agreement or any other document delivered in connection with this Agreement or the transactions contemplated hereby or the enforcement of any of the terms hereof or of any such other documents, and for which the Agent is not entitled to reimbursement by the Company under the Credit Documents; provided that no Bank shall be liable for any of the foregoing to the extent they arise from the gross negligence or willful misconduct as determined in a final, non-appealable judgment by a court of competent jurisdiction of the Agent.

13.9Rights as a Bank.  With respect to its Commitment and any Credit Extension made by it, the Agent shall have the same rights and powers hereunder as any Bank and may exercise the same as though it were not the Agent, and the term “Bank” or “Banks” shall, unless the context otherwise indicates, include JPMorgan Chase Bank, N.A. in its individual capacity.  The Agent may accept deposits from, lend money to, and generally engage in any kind of banking or trust business with the Company or any Subsidiary as if it were not the Agent.

13.10Bank Credit Decision.  (a)  Each Bank acknowledges that it has, independently and without reliance upon the Agent or any other Bank and based on the financial statements prepared by the Company and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement.  Each Bank also acknowledges that it will, independently and without reliance upon the Agent or any other

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Bank and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement.

(b)Without limiting clause (a) above, each Bank acknowledges and agrees that neither such Bank nor any of its Affiliates, participants or assignees may rely on the Agent to carry out such Bank’s or other Person’s customer identification program, or other obligations required or imposed under or pursuant to the USA Patriot Act or the regulations thereunder, including the regulations contained in 31 C.F.R. 103.121 (as amended or replaced, the “CIP Regulations”), or any other applicable law, rule, regulation or order of any governmental authority, including any program involving any of the following items relating to or in connection with the Company or any of its Subsidiaries or Affiliates or agents, the Credit Documents or the transactions contemplated hereby: (i) any identity verification procedure; (ii) any recordkeeping; (iii) any comparison with a government list; (iv) any customer notice or (v) any other procedure required under the CIP Regulations or such other law, rule, regulation or order.

(c)Within ten (10) days after the date of this Agreement and at such other times as are required under the USA Patriot Act, each Bank and each assignee and participant that is not incorporated under the laws of the United States of America or a state thereof (and is not excepted from the certification requirement contained in Section 313 of the USA Patriot Act and the applicable regulations because it is both (i) an Affiliate of a depository institution or foreign bank that maintains a physical presence in the United States or foreign country and (ii) subject to supervision by a banking authority regulating such affiliated depository institution or foreign bank) shall deliver to the Agent a certification, or, if applicable, recertification, certifying that such Bank is not a “shell” and certifying as to other matters as required by Section 313 of the USA Patriot Act and the applicable regulations.

13.11Successor Agent.  Subject to the appointment and acceptance of a successor Agent as provided in this paragraph, the Agent may resign at any time by notifying the Banks, the LC Issuers and the Company.  Upon any such resignation, the Majority Banks shall have the right, in consultation with the Company, to appoint a successor.  If no successor shall have been so appointed by the Majority Banks and shall have accepted such appointment within thirty (30) days after the retiring Agent gives notice of its resignation, then the retiring Agent may, on behalf of the Banks and the LC Issuers, appoint a successor Agent which shall be a bank with an office in the United States, or an Affiliate of any such bank.  Upon the acceptance of its appointment as Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder.  The fees payable by the Company to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Company and such successor.  After the Agent’s resignation hereunder, the provisions of this Article and Section 12.8 shall continue in effect for the benefit of such retiring Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while it was acting as Agent.

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ARTICLE XIV

NOTICES

14.1Giving Notice.  Except as otherwise permitted by Section 2.13(e) with respect to borrowing notices, all notices, requests and other communications to any party hereunder shall be in writing (including electronic transmission, facsimile transmission or similar writing) and shall be given to such party: (a) in the case of the Company or the Agent, at its address or facsimile number set forth on the signature pages hereof, (b) in the case of any Bank, at its address or facsimile number set forth in its Administrative Questionnaire or (c) in the case of any party, at such other address or facsimile number as such party may hereafter specify for such purpose by notice to the Agent and the Company in accordance with the provisions of this Section 14.1.  Each such notice, request or other communication shall be effective (i) if given by facsimile transmission, when transmitted to the facsimile number specified in this Section and confirmation of receipt is received, (ii) if given by mail, 72 hours after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid, or (iii) if given by any other means, when delivered (or, in the case of electronic transmission, received) at the address specified in this Section; provided that notices to the Agent under Article II shall not be effective until received.

14.2Change of Address.  The Company, the Agent, any LC Issuer and any Bank may each change the address for service of notice upon it by a notice in writing to the other parties hereto.

ARTICLE XV

COUNTERPARTS

This Agreement may be executed in any number of counterparts, all of which when taken together shall constitute one agreement, and any of the parties hereto may execute this Agreement by signing any such counterpart.  Except as provided in Section 11.1, this Agreement shall be effective when it has been executed by the Company, the Agent, the LC Issuers and the Banks and the Agent has received counterparts of this Agreement executed by the Company, the LC Issuers and the Banks or written evidence satisfactory to the Agent (which may include telecopy or electronic transmission of a signed signature page of this Agreement) that such party has signed a counterpart of this Agreement.

[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

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IN WITNESS WHEREOF, the Company, the Banks, the LC Issuers and the Agent have executed this Agreement as of the date first above written.

CONSUMERS ENERGY COMPANY
By:	/s/ DV Rao
	Name: Venkat Dhenuvakonda Rao
	Title: Vice President of Financial Planning and Treasurer
Address:
One Energy Plaza
Jackson, MI 49201
Attention: Beverly S. Burger
Facsimile No.: (517) 788-0412
Confirmation (Phone) No: (517) 788-2541
E-Mail Address: bsburger@cmsenergy.com

Signature Page to

Second Amended and Restated Revolving Credit Agreement

Consumers Energy Company

JPMORGAN CHASE BANK, N.A., as Agent, as an LC Issuer and as a Bank
By:	/s/ Nancy R. Barwig
	Name: Nancy R. Barwig
	Title: Credit Executive
Address:
Notices for Borrowing:
JPMorgan Chase Bank, N.A.
10 South Dearborn, Floor 7
Chicago, IL 60603
Attention:  Nida Mischke
Fax: 888-292-9533
Email: leonida.g.mischke@jpmchase.com
For all Other Matters:
JPMorgan Chase Bank, N.A.
10 South Dearborn, Floor 9
Chicago, IL 60603
Attention:  Nancy Barwig
Fax: 312-732-1762
Email: nancy.r.barwig@jpmorgan.com
With a copy to:
JPMorgan Chase Bank, N.A.
10 South Dearborn, Floor 9
Chicago, IL 60603
Attention:  Lisa Tverdek
Fax: 312-325-3238
Email: lisa.tverdek@jpmorgan.com

Signature Page to

Second Amended and Restated Revolving Credit Agreement

Consumers Energy Company

BARCLAYS BANK PLC, as an LC Issuer and as a Bank
By:	/s/ Ann E. Sutton
	Name: Ann E. Sutton
	Title: Director

Signature Page to

Second Amended and Restated Revolving Credit Agreement

Consumers Energy Company

UNION BANK, N.A., as an LC Issuer and as a Bank
By:	/s/ J. Fesenmaier
	Name: Jeff Fesenmaier
	Title: Director

Signature Page to

Second Amended and Restated Revolving Credit Agreement

Consumers Energy Company

THE ROYAL BANK OF SCOTLAND PLC, as a Bank
By:	/s/ Andrew Taylor
	Name: Andrew Taylor
	Title: Vice President

Signature Page to

Second Amended and Restated Revolving Credit Agreement

Consumers Energy Company

BANK OF AMERICA, N.A., as a Bank
By:	/s/ Gregory J. Bosio
	Name: Gregory J. Bosio
	Title: Vice President

Signature Page to

Second Amended and Restated Revolving Credit Agreement

Consumers Energy Company

THE BANK OF NOVA SCOTIA, as a Bank
By:	/s/ Thane Rattew
	Name: Thane Rattew
	Title: Managing Director

Signature Page to

Second Amended and Restated Revolving Credit Agreement

Consumers Energy Company

BNP PARIBAS, as a Bank
By:	/s/ Pasquale Perraglia
	Name: Pasquale Perraglia
	Title: Director
By:	/s/ Francis J. Delaney
	Name: Francis J. Delaney
	Title: Managing Director

Signature Page to

Second Amended and Restated Revolving Credit Agreement

Consumers Energy Company

CITIBANK, N.A., as a Bank
By:	/s/ D. Scott McMurtry
	Name: D. Scott McMurtry
	Title: Vice President

Signature Page to

Second Amended and Restated Revolving Credit Agreement

Consumers Energy Company

DEUTSCHE BANK AG NEW YORK BRANCH, as a Bank
By:	/s/ Michael Getz
	Name: Michael Getz
	Title: Vice President
By:	/s/ M. Tarkington
	Name: Marcus M. Tarkington
	Title: Director

Signature Page to

Second Amended and Restated Revolving Credit Agreement

Consumers Energy Company

FIFTH THIRD BANK, as a Bank
By:	/s/ Randal Wolffis
	Name: Randal Wolffis
	Title: Vice President

Signature Page to

Second Amended and Restated Revolving Credit Agreement

Consumers Energy Company

GOLDMAN SACHS BANK USA, as a Bank
By:	/s/ Michelle Latzoni
	Name: Michelle Latzoni
	Title: Authorized Signatory

Signature Page to

Second Amended and Restated Revolving Credit Agreement

Consumers Energy Company

PNC BANK, NATIONAL ASSOCIATION, as a Bank
By:	/s/ Jon R. Hinard
	Name: Jon R. Hinard
	Title: Senior Vice President

Signature Page to

Second Amended and Restated Revolving Credit Agreement

Consumers Energy Company

ROYAL BANK OF CANADA, as a Bank
By:	/s/ Kyle E. Hoffman
	Name: Kyle E. Hoffman
	Title: Authorized Signatory

Signature Page to

Second Amended and Restated Revolving Credit Agreement

Consumers Energy Company

SUMITOMO MITSUI BANKING CORPORATION, as a Bank
By:	/s/ James D. Weinstein
	Name: James D. Weinstein
	Title: Managing Director

Signature Page to

Second Amended and Restated Revolving Credit Agreement

Consumers Energy Company

SUNTRUST BANK, as a Bank
By:	/s/ Andrew Johnson
	Name: Andrew Johnson
	Title: Director

Signature Page to

Second Amended and Restated Revolving Credit Agreement

Consumers Energy Company

UBS LOAN FINANCE LLC, as a Bank
By:	/s/ Lana Gifas
	Name: Lana Gifas
	Title: Director
By:	/s/ J
	Name: Joselin Fernandes
	Title: Associate Director

Signature Page to

Second Amended and Restated Revolving Credit Agreement

Consumers Energy Company

WELLS FARGO BANK, NATIONAL ASSOCIATION, as a Bank
By:	/s/ Nick Brokke
	Name: Nick Brokke
	Title: Assistant Vice President

Signature Page to

Second Amended and Restated Revolving Credit Agreement

Consumers Energy Company

COMERICA BANK, as a Bank
By:	/s/ Kimberly S. Kersten
	Name: Kimberly S. Kersten
	Title: Vice President

Signature Page to

Second Amended and Restated Revolving Credit Agreement

Consumers Energy Company

KEYBANK NATIONAL ASSOCIATION, as a Bank
By:	/s/ Sherrie I. Manson
	Name: Sherrie I. Manson
	Title: Senior Vice President

Signature Page to

Second Amended and Restated Revolving Credit Agreement

Consumers Energy Company

U.S. BANK NATIONAL ASSOCIATION, as a Bank
By:	/s/ John M. Eyerman
	Name: John M. Eyerman
	Title: Vice President

Signature Page to

Second Amended and Restated Revolving Credit Agreement

Consumers Energy Company

EXHIBIT A

FORM OF OPINION FROM

KIMBERLY C. WILSON

[Attached]

A-1

A CMS Energy Company	General Offices: One Energy Plaza Jackson, MI 49201 *Washington Office: 1730 Rhode Island Ave. N.W. Suite 1007  Washington, DC 20036	Tel: Fax: Tel: Fax:	(517) 788-0550 (517) 788-2470 (202) 778-3340 (202) 778-3355	LEGAL DEPARTMENT JAMES E BRUNNER   Senior Vice President   and General Counsel JON R ROBINSON   Vice President and   Deputy General Counsel   Utility Law and	David E Barth H Richard Chambers Neil R Fellows Gary L Kelterborn Chantez P Knowles Eric V Luoma Raymond E McQuillan Rhonda M Morris Deborah A Moss*
May 23, 2013 To:   The Agent, the LC Issuers and the Banks which are parties to the Agreement referred to below	Writer’s Direct Dial Number:  (517) 788-2194 Writer’s E-mail Address:  kimberly.wilson@cmsenergy.com			Regulation CATHERINE M REYNOLDS   Vice President, Deputy   General Counsel   & Corporate Secretary Melissa M Gleespen Shelley J Ruckman Kimberly C Wilson Michael G Wilson   Assistant General   Counsel	Mirče Michael Nestor Jeffrey D Pintar James D W Roush Jason M. Milstone John C Shea Scott J Sinkwitts Adam C Smith Bret A Totoraitis Charlotte A Walls Mary Jo Weindorf               Attorney

Ladies and Gentlemen:

I am Supervisory Assistant General Counsel for Consumers Energy Company, a Michigan corporation (the “Company”).  As counsel for the Company, I, or an attorney or attorneys under my general supervision, have represented the Company in connection with its execution and delivery of a Second Amended and Restated Revolving Credit Agreement among the Company, JPMorgan Chase Bank, N.A., as Agent and as an LC Issuer, and the Banks named therein, dated as of May 23, 2013 (the “Agreement”).  All capitalized terms used in this opinion shall have the meanings attributed to them in the Agreement.

I, or an attorney or attorneys under my general supervision, have examined the Company’s Restated Articles of Incorporation, as amended, and Amended and Restated Bylaws, resolutions of the Board of Directors of the Company, the Credit Documents and such other documents and records as I have deemed necessary in order to render this opinion.  Based upon the foregoing, it is my opinion that:

1.         The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Michigan.

2.         The execution and delivery of the Credit Documents by the Company and the performance by the Company of the Obligations have been duly authorized by all necessary corporate action and proceedings on the part of the Company and will not:

(a)        contravene the Company’s Restated Articles of Incorporation, as amended, or Amended and Restated Bylaws;

(b)        contravene any law or any contractual restriction imposed by any indenture or any other agreement or instrument evidencing or governing indebtedness for borrowed money of the Company (including but not limited to the Company Indentures (as defined below)); or

A-2

(c)        result in or require the creation of any Lien upon or with respect to any of the Company’s properties except the lien of the Indenture securing the Bonds and any Lien in favor of the Agent on the Facility LC Collateral Account or any funds therein.

As used in this paragraph 2, “Company Indentures” means collectively, (i) the Indenture dated as of January 1, 1996, as supplemented and amended from time to time, between the Company (formerly known as Consumers Power Company) and The Bank of New York Mellon (formerly known as The Bank of New York), as Trustee, and (ii) the Indenture dated as of February 1, 1998, as supplemented and amended from time to time, between the Company and The Bank of New York Mellon (successor trustee to JPMorgan Chase Bank, N.A.), as Trustee.

3.         The Credit Documents have been duly executed and delivered by the Company.

4.         To the best of my knowledge, there is no pending or threatened action or proceeding against the Company or any of its Consolidated Subsidiaries before any court, governmental agency or arbitrator (except (i) to the extent described in the Company’s annual report on Form 10-K for the year ended December 31, 2012 and quarterly reports on Form 10-Q for the quarter ended March 31, 2013  as filed with the SEC, and (ii) such other similar actions, suits and proceedings predicated on the occurrence of the same events giving rise to any actions, suits and proceedings described in the reports filed with the SEC set forth in clause (i) of this paragraph 4) which might reasonably be expected to materially adversely affect the financial condition or results of operations of the Company and its Consolidated Subsidiaries, taken as a whole, or that would materially adversely affect the Company’s ability to perform its obligations under any Credit Document.  To the best of my knowledge, there is no litigation challenging the validity or the enforceability of any of the Credit Documents.

5.         No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery and performance by the Company of any Credit Document, except for the authorization to issue, sell or guarantee secured and/or unsecured long-term debt granted by the Federal Energy Regulatory Commission in Docket No.  ES12-35-000 (hereinafter the “FERC Order”).   The FERC Order is in full force and effect as of the date hereof.

6.         The Bonds executed in connection with the Revolving Credit Agreement among the Company, JPMorgan Chase Bank, N.A., as agent and as an lc issuer, and the banks named therein, dated as of March 31, 2011, (a) are in due and proper form, (b) evidence and secure the Obligations owing under the Agreement and (c) are valid and enforceable obligations of the Company in accordance with their terms, secured by the lien of the Indenture on an equal and ratable basis with all other bonds issued thereunder and otherwise entitled to the benefits provided by the Indenture.

7.         The Indenture has been qualified under the Trust Indenture Act of 1939, as amended, and the execution and delivery of the Supplemental Indenture will not cause the Indenture to not be so qualified.

8.         The Company is not an “investment company” or a company “controlled” by an “investment company” as such terms are defined in the Investment Company Act of 1940, as

A-3

amended.

9.         In a properly presented case, a Michigan court or a federal court applying Michigan choice of law rules should give effect to the choice of law provisions of the Agreement and should hold that the Agreement is to be governed by the laws of the State of New York rather than the laws of the State of Michigan, except in the case of those provisions set forth in the Agreement the enforcement of which would contravene a fundamental policy of the State of Michigan.  In the course of our review of the Agreement, nothing has come to my attention to indicate that any of such provisions would do so.  Notwithstanding the foregoing, even if a Michigan court or a federal court holds that the Agreement is to be governed by the laws of the State of Michigan, the Agreement constitutes a legal, valid and binding obligation of the Company, enforceable under Michigan law (including usury provisions) against the Company in accordance with its terms, subject to (a) the effect of applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (b) the application of general principles of equity (regardless of whether considered in a proceeding in equity or at law).

I am a member of the bar of the State of Michigan, and as such, have made no investigation of, and give no opinion on, the laws of any state or country other than those of the State of Michigan, and, to the extent pertinent, of the United States of America.

This opinion may be relied upon, and is solely for the benefit of, the Agent, the LC Issuers and the Banks and their participants and assignees under the Agreement, and is not to be otherwise used, circulated, quoted, referred to or relied upon for any purpose without my express written permission, except that a copy of this opinion may be provided to any regulatory agency or governmental authority having jurisdiction over the Agent, any LC Issuer or any Bank.

Sincerely,

Kimberly C. Wilson

Supervisory Assistant General Counsel

A-4

EXHIBIT B

FORM OF COMPLIANCE CERTIFICATE

I,                                   ,                              of Consumers Energy Company, a Michigan corporation (the “Company”), DO HEREBY CERTIFY in connection with the Second Amended and Restated Revolving Credit Agreement, dated as of May 23, 2013 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”; the terms defined therein being used herein as so defined), among the Company, various financial institutions and JPMorgan Chase Bank, N.A., as Agent and an LC Issuer, that:

Article VIII of the Credit Agreement provides that the Company shall:  “At all times, maintain a ratio of Total Consolidated Debt to Total Consolidated Capitalization of not greater than 0.65 to 1.0.”

The following calculations are made in accordance with the definitions of Total Consolidated Debt and Total Consolidated Capitalization in the Credit Agreement and are correct and accurate as of                           ,       :

A.        Total Consolidated Debt

	(a)	Indebtedness for borrowed money	$
plus	(b)	Indebtedness for deferred purchase price of property/services	(+) $
plus	(c)	Liabilities for accumulated funding deficiencies (prior to the effectiveness of the applicable provisions of the Pension Protection Act of 2006 with respect to a Plan) and liabilities for failure to make a payment required to satisfy the minimum funding standard within the meaning of Section 412 of the Code or Section 302 of ERISA (on and after the effectiveness of the applicable provisions of the Pension Protection Act of 2006 with respect to a Plan).	(+) $
plus	(d)	Liabilities in connection with withdrawal liability under ERISA	(+) $
plus	(e)	Obligations under acceptance facilities	(+) $
plus	(f)	Obligations under Capital Leases	(+) $
plus	(g)	Obligations under interest rate swap, “cap”, “collar” or other hedging agreement	(+) $
plus	(h)	Guaranties, endorsements and other contingent obligations	(+) $
plus	(i)	Off-Balance Sheet Liabilities	(+) $

B-1

plus	(j)	non-contingent obligations in respect of letters of credit and bankers’ acceptances	(+) $
minus	(k)	Principal amount of any Securitized Bonds	(-) $
minus	(l)	Junior Subordinated Debt of the Company owned by any Hybrid Equity Securities Subsidiary or Hybrid Preferred Securities Subsidiary	(-) $
minus	(m)	Hybrid Equity Securities and Hybrid Preferred Securities outstanding as of December 31, 2002 (including subordinated guaranties by the Company of payments with respect thereto)	(-) $
minus	(n)	Agreed upon percentage of Net Proceeds from issuance of hybrid debt/equity securities (other than Junior Subordinated Debt, Hybrid Equity Securities and Hybrid Preferred Securities)	(-) $
minus	(o)	Liabilities on the Company’s balance sheet resulting from the disposition of the Palisades Nuclear Plant	(-) $
minus	(p)	Debt of Affiliates of the Company of the type described in clause (vi) of the definition of “Total Consolidated Debt”	(-) $
minus	(q)	Debt of the Company and its Affiliates that is re-categorized as such from certain lease obligations pursuant to Emerging Issues Task Force Issue 01-8	(-) $
minus	(r)	Non-cash obligations resulting from the adoption of FASB No. 158 to the extent such obligations are required to be treated as debt	(-) $
		Total	$

B.        Total Consolidated Capitalization:

	(a)	Total Consolidated Debt	$
plus	(b)	The sum of Items A(l), A(m), A(n) and A(p) above1	(+) $
plus	(c)	Equity of common stockholders	(+) $
plus	(d)	Equity of preference stockholders	(+) $

1  In the case of securities of the type described in A(m) and A(n), only to the extent such securities have been deemed to be equity pursuant to Financial Accounting Standards Board Statement No. 150.

B-2

plus	(e)	Equity of preferred stockholders	(+) $
		Total	$
C.	Debt to Capital Ratio (total of A divided by total of B)		to 1.00

IN WITNESS WHEREOF, I have signed this Certificate this        day of                   ,       .

Name:

Title:

B-3

EXHIBIT C

ASSIGNMENT AND ASSUMPTION AGREEMENT

This Assignment and Assumption (the “Assignment and Assumption”) is dated as of the Effective Date set forth below and is entered into by and between [Insert name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the “Assignee”).  Capitalized terms used but not defined herein shall have the meanings given to them in the Second Amended and Restated Revolving Credit Agreement identified below (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee.  The Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Agent as contemplated below, the interest in and to all of the Assignor’s rights and obligations in its capacity as a Bank under the Credit Agreement and any other documents or instruments delivered pursuant thereto that represents the amount and percentage interest identified below of all of the Assignor’s outstanding rights and obligations under the respective facilities identified below (including any letters of credit and guaranties included in such facilities and, to the extent permitted to be assigned under applicable law, all claims (including contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity), suits, causes of action and any other right of the Assignor against any Person whether known or unknown arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby) (the “Assigned Interest”).  Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.

1.	Assignor:
2.	Assignee:			[and is an Affiliate of Assignor]
3.	Borrower:	Consumers Energy Company
4.	Agent:	JPMorgan Chase Bank, N.A., as the Agent under the Credit Agreement.
5.	Credit Agreement:		Second Amended and Restated Revolving Credit Agreement, dated as of May 23, 2013, among Consumers Energy Company, the Banks party thereto, and JPMorgan Chase Bank, N.A., as Agent and an LC Issuer.
6.	Assigned Interest:

C-1

Facility Assigned	Aggregate Amount of Commitment/Outstanding Credit Exposure for all Banks1	Amount of Commitment/Outstanding Credit Exposure Assigned1	Percentage Assigned of Commitment/Outstanding Credit Exposure2
_________	$	$	%
_________	$	$	%
_________	$	$	%

7. Trade Date:  3

Effective Date:                        , 20     [TO BE INSERTED BY AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER BY THE AGENT.]

1Amount to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date.

2.Set forth, to at least 9 decimals, as a percentage of the Commitment/Outstanding Credit Exposure of all Banks thereunder.

3.Insert if satisfaction of minimum amounts is to be determined as of the Trade Date.

C-2

The terms set forth in this Assignment and Assumption are hereby agreed to:

		ASSIGNOR
		[NAME OF ASSIGNOR]
		By:
			Name:
			Title:
		ASSIGNEE
		[NAME OF ASSIGNEE]
		By:
			Name:
			Title:
[Consented to and]4 Accepted:
JPMORGAN CHASE BANK, N.A., as Agent
By:
	Name:
	Title:
[Consented to:]5
[NAME OF RELEVANT PARTY]
By:
	Name:
	Title:

4.To be added only if the consent of the Agent is required by the terms of the Credit Agreement.

5.To be added only if the consent of the Company and/or other parties (e.g., the LC Issuers) is required by the terms of the Credit Agreement.

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ANNEX 1
TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION

1.         Representations and Warranties.

1.1       Assignor.  The Assignor represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby.  Neither the Assignor nor any of its officers, directors, employees, agents or attorneys shall be responsible for (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Credit Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency, perfection, priority, collectibility, or value of the Credit Documents or any collateral thereunder, (iii) the financial condition of the Company, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Credit Document, (iv) the performance or observance by the Company, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Credit Document, (v) inspecting any of the property, books or records of the Company, or any guarantor, or (vi) any mistake, error of judgment, or action taken or omitted to be taken in connection with the Credit Extensions or the Credit Documents.

1.2.      Assignee.  The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Bank under the Credit Agreement, (ii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Bank thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Bank thereunder, (iii) agrees that its payment instructions and notice instructions are as set forth in Schedule 1 to this Assignment and Assumption, (iv) confirms that none of the funds, monies, assets or other consideration being used to make the purchase and assumption hereunder are “plan assets” as defined under ERISA and that its rights, benefits and interests in and under the Credit Documents will not be “plan assets” under ERISA, (v) agrees to indemnify and hold the Assignor harmless against all losses, costs and expenses (including reasonable attorneys’ fees) and liabilities incurred by the Assignor in connection with or arising in any manner from the Assignee’s non-performance of the obligations assumed under this Assignment and Assumption, (vi) it has received a copy of  the Credit Agreement, together with copies of financial statements and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on the Agent or any other Bank, and (vii) attached as Schedule 2 to this Assignment and Assumption is any documentation required to be delivered by the Assignee with respect to its tax status pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; (b) appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under the Credit Documents as are delegated to the Agent by the terms thereof, together with such powers as are reasonably incidental thereto; and (c) agrees that (i) it will, independently and without reliance

Annex 1

on the Agent, the Assignor or any other Bank, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Credit Documents are required to be performed by it as a Bank.

2.         Payments.  The Assignee shall pay the Assignor, on the Effective Date, the amount agreed to by the Assignor and the Assignee.  From and after the Effective Date, the Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, Reimbursement Obligations, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.

3.         General Provisions.  This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns.  This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument.  Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption.  This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York.

Annex 1

SCHEDULE 1

TO

TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION AGREEMENT

Administrative Questionnaire

On File with Agent

SCHEDULE 2

TO

TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION AGREEMENT

US and Non-US Tax Information Reporting Requirements

EXHIBIT D

TERMS OF SUBORDINATION

[JUNIOR SUBORDINATED DEBT]

ARTICLE ____
SUBORDINATION

Section __.1.  Applicability of Article; Securities Subordinated to Senior Indebtedness.

(a)        This Article ____ shall apply only to the Securities of any series which, pursuant to Section ___, are expressly made subject to this Article.  Such Securities are referred to in this Article ____ as “Subordinated Securities.”

(b)        The Issuer covenants and agrees, and each Holder of Subordinated Securities by his acceptance thereof likewise covenants and agrees, that the indebtedness represented by the Subordinated Securities and the payment of the principal and interest, if any, on the Subordinated Securities is subordinated and subject in right, to the extent and in the manner provided in this Article, to the prior payment in full of all Senior Indebtedness.

“Senior Indebtedness” means the principal of and premium, if any, and interest on the following, whether outstanding on the date hereof or thereafter incurred, created or assumed: (i) indebtedness of the Issuer for money borrowed by the Issuer (including purchase money obligations) or evidenced by debentures (other than the Subordinated Securities), notes, bankers’ acceptances or other corporate debt securities, or similar instruments issued by the Issuer; (ii) all capital lease obligations of the Issuer; (iii) all obligations of the Issuer issued or assumed as the deferred purchase price of property, all conditional sale obligations of the Issuer and all obligations of the Issuer under any title retention agreement (but excluding trade accounts payable arising in the ordinary course of business); (iv) obligations with respect to letters of credit; (v) all indebtedness of others of the type referred to in the preceding clauses (i) through (iv) assumed by or guaranteed in any manner by the Issuer or in effect guaranteed by the Issuer; (vi) all obligations of the type referred to in clauses (i) through (v) above of other persons secured by any lien on any property or asset of the Issuer (whether or not such obligation is assumed by the Issuer), except for (1) any such indebtedness that is by its terms subordinated to or pari passu with the Subordinated Securities, as the case may be, including all other debt securities and guaranties in respect of those debt securities, issued to any other trusts, partnerships or other entities affiliated with the Issuer which act as a financing vehicle of the Issuer in connection with the issuance of preferred securities by such entity or other securities which rank pari passu with, or junior to, the Preferred Securities, and (2) any indebtedness between or among the Issuer and its affiliates; and/or (vii) renewals, extensions or refundings of any of the indebtedness referred to in the preceding clauses unless, in the case of any particular indebtedness, renewal, extension or refunding, under the express provisions of the instrument creating or evidencing the same or the assumption or guarantee of the same, or pursuant to which the same is outstanding, such indebtedness or such renewal, extension or refunding thereof is not superior in right of payment to the Subordinated Securities.

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This Article shall constitute a continuing obligation to all Persons who, in reliance upon such provisions become holders of, or continue to hold, Senior Indebtedness, and such provisions are made for the benefit of the holders of Senior Indebtedness, and such holders are made obligees hereunder and they and/or each of them may enforce such provisions.

Section __.2.  Issuer Not to Make Payments with Respect to Subordinated Securities in Certain Circumstances.

(a)        Upon the maturity of any Senior Indebtedness by lapse of time, acceleration or otherwise, all principal thereof and premium and interest thereon shall first be paid in full, or such payment duly provided for in cash in a manner satisfactory to the holders of such Senior Indebtedness, before any payment is made on account of the principal of, or interest on, Subordinated Securities or to acquire any Subordinated Securities or on account of any sinking fund provisions of any Subordinated Securities (except payments made in capital stock of the Issuer or in warrants, rights or options to purchase or acquire capital stock of the Issuer, sinking fund payments made in Subordinated Securities acquired by the Issuer before the maturity of such Senior Indebtedness, and payments made through the exchange of other debt obligations of the Issuer for such Subordinated Securities in accordance with the terms of such Subordinated Securities, provided that such debt obligations are subordinated to Senior Indebtedness at least to the extent that the Subordinated Securities for which they are exchanged are so subordinated pursuant to this Article ____).

(b)        Upon the happening and during the continuation of any default in payment of the principal of, or interest on, any Senior Indebtedness when the same becomes due and payable or in the event any judicial proceeding shall be pending with respect to any such default, then, unless and until such default shall have been cured or waived or shall have ceased to exist, no payment shall be made by the Issuer with respect to the principal of, or interest on, Subordinated Securities or to acquire any Subordinated Securities or on account of any sinking fund provisions of Subordinated Securities (except payments made in capital stock of the Issuer or in warrants, rights, or options to purchase or acquire capital stock of the Issuer, sinking fund payments made in Subordinated Securities acquired by the Issuer before such default and notice thereof, and payments made through the exchange of other debt obligations of the Issuer for such Subordinated Securities in accordance with the terms of such Subordinated Securities, provided that such debt obligations are subordinated to Senior Indebtedness at least to the extent that the Subordinated Securities for which they are exchanged are so subordinated pursuant to this Article ____).

(c)        In the event that, notwithstanding the provisions of this Section ___.2, the Issuer shall make any payment to the Trustee on account of the principal of or interest on Subordinated Securities, or on account of any sinking fund provisions of such Subordinated Securities, after the maturity of any Senior Indebtedness as described in Section ___.2(a) above or after the happening of a default in payment of the principal of or interest on any Senior Indebtedness as described in Section ___.2(b) above, then, unless and until all Senior Indebtedness which shall have matured, and all premium and interest thereon, shall have been paid in full (or the declaration of acceleration thereof shall have been rescinded or annulled), or such default shall have been cured or waived or shall have ceased to exist, such payment (subject to the provisions of Sections ___.6 and ___.7) shall be held by the Trustee, in trust for the benefit of, and shall be

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paid forthwith over and delivered to, the holders of such Senior Indebtedness (pro rata as to each of such holders on the basis of the respective amounts of Senior Indebtedness held by them) or their representative or the trustee under the indenture or other agreement (if any) pursuant to which such Senior Indebtedness may have been issued, as their respective interests may appear, for application to the payment of all such Senior Indebtedness remaining unpaid to the extent necessary to pay the same in full in accordance with its terms, after giving effect to any concurrent payment or distribution to or for the holders of Senior Indebtedness.  The Issuer shall give prompt written notice to the Trustee of any default in the payment of principal of or interest on any Senior Indebtedness.

Section __.3.  Subordinated Securities Subordinated to Prior Payment of All Senior Indebtedness on Dissolution, Liquidation or Reorganization of Issuer.  Upon any distribution of assets of the Issuer in any dissolution, winding up, liquidation or reorganization of the Issuer (whether voluntary or involuntary, in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefit of creditors or otherwise):

(a)        the holders of all Senior Indebtedness shall first be entitled to receive payments in full of the principal thereof and premium and interest due thereon, or provision shall be made for such payment, before the Holders of Subordinated Securities are entitled to receive any payment on account of the principal of or interest on such Subordinated Securities;

(b)        any payment or distribution of assets of the Issuer of any kind or character, whether in cash, property or securities (other than securities of the Issuer as reorganized or readjusted or securities of the Issuer or any other corporation provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in this Article ____ with respect to Subordinated Securities, to the payment in full without diminution or modification by such plan of all Senior Indebtedness), to which the Holders of Subordinated Securities or the Trustee on behalf of the Holders of Subordinated Securities would be entitled except for the provisions of this Article ____ shall be paid or delivered by the liquidating trustee or agent or other person making such payment or distribution directly to the holders of Senior Indebtedness or their representative, or to the trustee under any indenture under which Senior Indebtedness may have been issued (pro rata as to each such holder, representative or trustee on the basis of the respective amounts of unpaid Senior Indebtedness held or represented by each), to the extent necessary to make payment in full of all Senior Indebtedness remaining unpaid, after giving effect to any concurrent payment or distribution or provision thereof to the holders of such Senior Indebtedness; and

(c)        in the event that notwithstanding the foregoing provisions of this Section ___.3, any payment or distribution of assets of the Issuer of any kind or character, whether in cash, property or securities (other than securities of the Issuer as reorganized or readjusted or securities of the Issuer or any other corporation provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in this Article ____ with respect to Subordinated Securities, to the payment in full without diminution or modification by such plan of all Senior Indebtedness), shall be received by the Trustee or the Holders of the Subordinated Securities on account of principal of or interest on the Subordinated Securities before all Senior Indebtedness is paid in full, or effective provision made for its payment, such payment or distribution (subject to the provisions of Section ___.6 and ___.7) shall be received

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and held in trust for and shall be paid over to the holders of the Senior Indebtedness remaining unpaid or unprovided for or their representative, or to the trustee under any indenture under which such Senior Indebtedness may have been issued (pro rata as provided in clause (b) above), for application to the payment of such Senior Indebtedness until all such Senior Indebtedness shall have been paid in full, after giving effect to any concurrent payment or distribution or provision therefor to the holders of such Senior Indebtedness.

The Issuer shall give prompt written notice to the Trustee of any dissolution, winding up, liquidation or reorganization of the Issuer.

The consolidation of the Issuer with, or the merger of the Issuer into, another corporation or the liquidation or dissolution of the Issuer following the conveyance or transfer of its property as an entirety, or substantially as an entirety, to another corporation upon the terms and conditions provided for in Article ____ hereof shall not be deemed a dissolution, winding up, liquidation or reorganization for the purposes of this Section ___.3 if such other corporation shall, as a part of such consolidation, merger, conveyance or transfer, comply with the conditions stated such in Article ____.

Section __.4.  Holders of Subordinated Securities to be Subrogated to Right of Holders of Senior Indebtedness.  Subject to the payment in full of all Senior Indebtedness, the Holders of Subordinated Securities shall be subrogated to the rights of the holders of Senior Indebtedness to receive payments or distributions of assets of the Issuer applicable to the Senior Indebtedness until all amounts owing on Subordinated Securities shall be paid in full, and for the purposes of such subrogation no payments or distributions to the holders of the Senior Indebtedness by or on behalf of the Issuer or by or on behalf of the Holders of Subordinated Securities by virtue of this Article ____ which otherwise would have been made to the Holders of Subordinated Securities shall, as between the Issuer, its creditors other than holders of Senior Indebtedness and the Holders of Subordinated Securities, be deemed to be payment by the Issuer to or on account of the Senior Indebtedness, it being understood that the provisions of this Article ____ are and are intended solely for the purpose of defining the relative rights of the Holders of the Subordinated Securities, on the one hand, and the holders of the Senior Indebtedness, on the other hand.

Section __.5.  Obligation of the Issuer Unconditional.  Nothing contained in this Article ____ or elsewhere in this Indenture or in any Subordinated Security is intended to or shall impair, as among the Issuer, its creditors other than holders of Senior Indebtedness and the Holders of Subordinated Securities, the obligation of the Issuer, which is absolute and unconditional, to pay to the Holders of Subordinated Securities the principal of, and interest on, Subordinated Securities as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Holders of Subordinated Securities and creditors of the Issuer other than the holders of the Senior Indebtedness, nor shall anything herein or therein prevent the Trustee or the Holder of any Subordinated Security from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article ____ of the holders of Senior Indebtedness in respect of cash, property or securities of the Issuer received upon the exercise of any such remedy.  Upon any payment or distribution of assets of the Issuer referred to in this Article ____, the Trustee and Holders of Subordinated Securities shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which such dissolution, winding up,

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liquidation or reorganization proceedings are pending, or, subject to the provisions of Section ___ and ___, a certificate of the receiver, trustee in bankruptcy, liquidating trustee or agent or other Person making such payment or distribution to the Trustee or the Holders of Subordinated Securities, for the purposes of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Indebtedness and other indebtedness of the Issuer, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article ____.

Nothing contained in this Article ____ or elsewhere in this Indenture or in any Subordinated Security is intended to or shall affect the obligation of the Issuer to make, or prevent the Issuer from making, at any time except during the pendency of any dissolution, winding up, liquidation or reorganization proceeding, and, except as provided in subsections (a) and (b) of Section ___.2, payments at any time of the principal of, or interest on, Subordinated Securities.

Section __.6.  Trustee Entitled to Assume Payments Not Prohibited in Absence of Notice.  The Issuer shall give prompt written notice to the Trustee of any fact known to the Issuer which would prohibit the making of any payment or distribution to or by the Trustee in respect of the Subordinated Securities.  Notwithstanding the provisions of this Article ____ or any provision of this Indenture, the Trustee shall not at any time be charged with knowledge of the existence of any facts which would prohibit the making of any payment or distribution to or by the Trustee, unless at least two Business Days prior to the making of any such payment, the Trustee shall have received written notice thereof from the Issuer or from one or more holders of Senior Indebtedness or from any representative thereof or from any trustee therefor, together with proof satisfactory to the Trustee of such holding of Senior Indebtedness or of the authority of such representative or trustee; and, prior to the receipt of any such written notice, the Trustee, subject to the provisions of Sections ___ and ___, shall be entitled to assume conclusively that no such facts exist.  The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself to be a holder of Senior Indebtedness (or a representative or trustee on behalf of the holder) to establish that such notice has been given by a holder of Senior Indebtedness (or a representative of or trustee on behalf of any such holder).  In the event that the Trustee determines, in good faith, that further evidence is required with respect to the right of any Person as a holder of Senior Indebtedness to participate in any payments or distribution pursuant of this Article ____, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness held by such Person, as to the extent to which such Person is entitled to participate in such payment or distribution, and as to other facts pertinent to the rights of such Person under this Article ____, and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment.  The Trustee, however, shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness and nothing in this Article ____ shall apply to claims of, or payments to, the Trustee under or pursuant to Section ___.

Section __.7.  Application by Trustee of Monies or Government Obligations Deposited with It.  Money or Government Obligations deposited in trust with the Trustee pursuant to and in accordance with Section ____ shall be for the sole benefit of Securityholders and, to the extent allocated for the payment of Subordinated Securities, shall not be subject to the subordination

D-5

provisions of this Article ____, if the same are deposited in trust prior to the happening of any event specified in Section ___.2.  Otherwise, any deposit of monies or Government Obligations by the Issuer with the Trustee or any paying agent (whether or not in trust) for the payment of the principal of, or interest on, any Subordinated Securities shall be subject to the provisions of Section ___.1, ___.2 and ___.3 except that, if prior to the date on which by the terms of this Indenture any such monies may become payable for any purposes (including, without limitation, the payment of the principal of, or the interest, if any, on any Subordinated Security) the Trustee shall not have received with respect to such monies the notice provided for in Section ___.6, then the Trustee or the paying agent shall have full power and authority to receive such monies and Government Obligations and to apply the same to the purpose for which they were received, and shall not be affected by any notice to the contrary which may be received by it on or after such date.  This Section ___.7 shall be construed solely for the benefit of the Trustee and paying agent and, as to the first sentence hereof, the Securityholders, and shall not otherwise effect the rights of holders of Senior Indebtedness.

Section __.8.  Subordination Rights Not Impaired by Acts or Omissions of Issuer or Holders of Senior Indebtedness.  No rights of any present or future holders of any Senior Indebtedness to enforce subordination as provided herein shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Issuer or by any act or failure to act, in good faith, by any such holders or by any noncompliance by the Issuer with the terms of this Indenture, regardless of any knowledge thereof which any such holder may have or be otherwise charged with.

Without in any way limiting the generality of the foregoing paragraph, the holders of Senior Indebtedness of the Issuer may, at any time and from time to time, without the consent of or notice to the Trustee or the Holders of the Subordinated Securities, without incurring responsibility to the Holders of the Subordinated Securities and without impairing or releasing the subordination provided in this Article ____ or the obligations hereunder of the Holders of the Subordinated Securities to the holders of such Senior Indebtedness, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, such Senior Indebtedness, or otherwise amend or supplement in any manner such Senior Indebtedness or any instrument evidencing the same or any agreement under which such Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing such Senior Indebtedness; (iii) release any Person liable in any manner for the collection for such Senior Indebtedness; and (iv) exercise or refrain from exercising any rights against the Issuer, as the case may be, and any other Person.

Section __.9.  Securityholders Authorize Trustee to Effectuate Subordination of Securities.  Each Holder of Subordinated Securities by his acceptance thereof authorizes and expressly directs the Trustee on his behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in this Article ____ and appoints the Trustee his attorney-in-fact for such purpose, including in the event of any dissolution, winding up, liquidation or reorganization of the Issuer (whether in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefit of creditors or otherwise) the immediate filing of a claim for the unpaid balance of his Subordinated Securities in the form required in said proceedings and causing said claim to be approved.  If the Trustee does not file a proper claim or proof of debt in the form required in such proceeding prior to 30 days before the expiration of the

D-6

time to file such claim or claims, then the holders of Senior Indebtedness have the right to file and are hereby authorized to file an appropriate claim for and on behalf of the Holders of said Subordinated Securities.

Section __.10.  Right of Trustee to Hold Senior Indebtedness.  The Trustee in its individual capacity shall be entitled to all of the rights set forth in this Article ____ in respect of any Senior Indebtedness at any time held by it to the same extent as any other holder of Senior Indebtedness, and nothing in this Indenture shall be construed to deprive the Trustee of any of its rights as such holder.

With respect to the holders of Senior Indebtedness of the Issuer, the Trustee undertakes to perform or to observe only such of its covenants and obligations as are specifically set forth in this Article ____, and no implied covenants or obligations with respect to the holders of such Senior Indebtedness shall be read into this Indenture against the Trustee.  The Trustee shall not be deemed to owe any fiduciary duty to the holders of such Senior Indebtedness and, subject to the provisions of Sections ___.2 and ___.3, the Trustee shall not be liable to any holder of such Senior Indebtedness if it shall pay over or deliver to Holders of Subordinated Securities, the Issuer or any other Person money or assets to which any holder of such Senior Indebtedness shall be entitled by virtue of this Article ____ or otherwise.

Section __.11.  Article ____ Not to Prevent Events of Defaults.  The failure to make a payment on account of principal or interest by reason of any provision in this Article ____ shall not be construed as preventing the occurrence of an Event of Default under Section ____.

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EXHIBIT E

TERMS OF SUBORDINATION

[GUARANTY OF HYBRID EQUITY SECURITIES/HYBRID PREFERRED SECURITIES]

SECTION ___.  This Guarantee will constitute an unsecured obligation of the Guarantor and will rank subordinate and junior in right of payment to all other liabilities of the Guarantor and pari passu with any guarantee now or hereafter entered into by the Guarantor in respect of the securities representing common beneficial interests in the assets of the Issuer or of any preferred or preference stock of any affiliate of the Guarantor.

E-1

EXHIBIT F

FORM OF INCREASING BANK SUPPLEMENT

INCREASING BANK SUPPLEMENT, dated __________, 20___ (this “Supplement”), by and among each of the signatories hereto, to the Second Amended and Restated Revolving Credit Agreement, dated as of May 23, 2013 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Consumers Energy Company, a Michigan corporation (the “Company”), the Banks party thereto and JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the “Agent”).

W I T N E S S E T H

WHEREAS, pursuant to Section 2.16 of the Credit Agreement, the Company has the right, subject to the terms and conditions thereof, to effectuate from time to time an increase in the Aggregate Commitment under the Credit Agreement by requesting one or more Banks to increase the amount of its Commitment;

WHEREAS, the Company has given notice to the Agent of its intention to increase the Aggregate Commitment pursuant to such Section 2.16; and

WHEREAS, pursuant to Section 2.16 of the Credit Agreement, the undersigned Increasing Bank now desires to increase the amount of its Commitment under the Credit Agreement by executing and delivering to the Company and the Agent this Supplement;

NOW, THEREFORE, each of the parties hereto hereby agrees as follows:

1.         The undersigned Increasing Bank agrees, subject to the terms and conditions of the Credit Agreement, that on the date of this Supplement it shall have its Commitment increased by $[__________], thereby making the aggregate amount of its total Commitments equal to $[__________].

2.         The Company hereby represents and warrants that no Default or Event of Default has occurred and is continuing on and as of the date hereof.

3.         Terms defined in the Credit Agreement shall have their defined meanings when used herein.

4.         This Supplement shall be governed by, and construed in accordance with, the laws of the State of New York.

5.         This Supplement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same document.

F-1

IN WITNESS WHEREOF, each of the undersigned has caused this Supplement to be executed and delivered by a duly authorized officer on the date first above written.

	[INSERT NAME OF INCREASING BANK]
	By:
		Name:
		Title:
Accepted and agreed to as of the date first written above:
CONSUMERS ENERGY COMPANY
By:
Name:
Title:

F-2

Acknowledged as of the date first written above:

JPMORGAN CHASE BANK, N.A.

as Agent and as an LC Issuer

By:

Name:

Title:

BARCLAYS BANK PLC

as an LC Issuer

By:

Name:

Title:

UNION BANK, N.A.

as an LC Issuer

By:

Name:

Title:

[[OTHER LC ISSUER],

as an LC Issuer

By:

Name:

Title:]

F-3

EXHIBIT G

FORM OF AUGMENTING BANK SUPPLEMENT

AUGMENTING BANK SUPPLEMENT, dated __________, 20___ (this “Supplement”), by and among each of the signatories hereto, to the Second Amended and Restated Revolving Credit Agreement, dated as of May 23, 2013 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Consumers Energy Company, a Michigan corporation (the “Company”), the Banks party thereto and JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the “Agent”).

W I T N E S S E T H

WHEREAS, the Credit Agreement provides in Section 2.16 thereof that any bank, financial institution or other entity may extend Commitments under the Credit Agreement subject to the approval of the Company, the Agent and each LC Issuer, by executing and delivering to the Company and the Agent a supplement to the Credit Agreement in substantially the form of this Supplement; and

WHEREAS, the undersigned Augmenting Bank was not an original party to the Credit Agreement but now desires to become a party thereto;

NOW, THEREFORE, each of the parties hereto hereby agrees as follows:

1.         The undersigned Augmenting Bank agrees to be bound by the provisions of the Credit Agreement and agrees that it shall, on the date of this Supplement, become a Bank for all purposes of the Credit Agreement to the same extent as if originally a party thereto, with a Commitment of $[__________].

2.         The undersigned Augmenting Bank (a) represents and warrants that it is legally authorized to enter into this Supplement; (b) confirms that it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section 6.7 thereof, as applicable, and has reviewed such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Supplement; (c) agrees that it will, independently and without reliance upon the Agent or any other Bank and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement or any other instrument or document furnished pursuant hereto or thereto; (d) appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Credit Agreement or any other instrument or document furnished pursuant hereto or thereto as are delegated to the Agent by the terms thereof, together with such powers as are incidental thereto; and (e) agrees that it will be bound by the provisions of the Credit Agreement and will perform in accordance with its terms all the obligations which by the terms of the Credit Agreement are required to be performed by it as a Bank.

3.         The undersigned’s address for notices for the purposes of the Credit Agreement is as follows:

G-1

[___________]

4.         The Company hereby represents and warrants that no Default or Event of Default has occurred and is continuing on and as of the date hereof.

5.         Terms defined in the Credit Agreement shall have their defined meanings when used herein.

6.         This Supplement shall be governed by, and construed in accordance with, the laws of the State of New York.

7.         This Supplement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same document.

[remainder of this page intentionally left blank]

G-2

IN WITNESS WHEREOF, each of the undersigned has caused this Supplement to be executed and delivered by a duly authorized officer on the date first above written.

	[INSERT NAME OF AUGMENTING BANK]
	By:
		Name:
		Title:
Accepted and agreed to as of the date first written above:
CONSUMERS ENERGY COMPANY
By:
Name:
Title:

G-3

Acknowledged as of the date first written above:

JPMORGAN CHASE BANK, N.A.

as Agent and as an LC Issuer

By:

Name:

Title:

BARCLAYS BANK PLC

as an LC Issuer

By:

Name:

Title:

UNION BANK, N.A.

as an LC Issuer

By:

Name:

Title:

[[OTHER LC ISSUER],

as an LC Issuer

By:

Name:

Title:]

G-4

SCHEDULE 1

PRICING SCHEDULE

The Applicable Margin shall be determined pursuant to the table below.

	Pricing Level I	Pricing Level II	Pricing Level III	Pricing Level IV	Pricing Level V
Commitment Fee Rate	0.075%	0.100%	0.125%	0.175%	0.225%
Applicable Margin for Eurodollar Rate Loans	0.875%	1.000%	1.125%	1.250%	1.500%
Applicable Margin for Floating Rate Loans	0.000%	0.000%	0.125%	0.250%	0.500%

For purposes of the foregoing:

Changes in the Applicable Margin and the Commitment Fee Rate resulting from a change in the Pricing Level shall become effective on the effective date of any change in the Senior Debt Rating from S&P or Moody’s.  In the event of a split in the Senior Debt Rating from S&P and Moody’s that would otherwise result in the application of more than one Pricing Level (had the provisions regarding the applicability of other Pricing Levels contained in the definitions thereof not been given effect), then the Applicable Margin and the Commitment Fee Rate shall be determined as follows:  (x) if the split in the Senior Debt Rating is one Pricing Level, then the higher Senior Debt Rating will be the applicable Pricing Level, (y) if the split in the Senior Debt Rating is two Pricing Levels, the midpoint between the two will be the applicable Pricing Level, and (z) if the split in the Senior Debt Rating is more than two Pricing Levels, the Pricing Level will be the Pricing Level immediately below the higher Pricing Level.  If either (but not both) Moody’s or S&P shall cease to be in the business of rating corporate debt obligations, the Pricing Levels shall be determined on the basis of the Senior Debt Ratings provided by the other rating agency.  If at any time both the Secured Debt and the Unsecured Debt of the Company is unrated by Moody’s and S&P, the Pricing Level will be Pricing Level V; provided that if the reason that there is no such Senior Debt Rating results from Moody’s and S&P ceasing to issue debt ratings generally, then the Company and the Agent may select a Substitute Rating Agency for purposes of the foregoing Pricing Schedule (and all references in the Credit Agreement to Moody’s and S&P, as applicable, shall refer to such Substitute Rating Agency), and until a Substitute Rating Agency is so selected, the Pricing Level shall be determined by reference to the Senior Debt Rating most recently in effect prior to cessation.

“Pricing Level” means Pricing Level I, Pricing Level II, Pricing Level III, Pricing Level IV or Pricing Level V, as the context may require.

“Pricing Level I” means any time when (i) no Event of Default has occurred and is continuing and (ii) the Senior Debt Rating is A+ or higher by S&P or A1 or higher by Moody’s.

Sch.-1

“Pricing Level II” means any time when (i) no Event of Default has occurred and is continuing, (ii) the Senior Debt Rating is A or higher by S&P or A2 or higher by Moody’s and (iii) Pricing Level I does not apply.

“Pricing Level III” means any time when (i) no Event of Default has occurred and is continuing, (ii) the Senior Debt Rating is A- or higher by S&P or A3 or higher by Moody’s and (iii) none of Pricing Level I or Pricing Level II is applicable.

“Pricing Level IV” means any time when (i) no Event of Default has occurred and is continuing, (ii) the Senior Debt Rating is BBB+ or higher by S&P or Baa1 or higher by Moody’s and (iii) none of Pricing Level I, Pricing Level II or Pricing Level III is applicable.

“Pricing Level V” means any time when none of Pricing Levels I, II, III or IV is applicable.

“Secured Debt” means senior, secured, long-term indebtedness for borrowed money of the Company that is not guaranteed by any other Person or subject to any other credit enhancement, including, for the avoidance of doubt, the First Mortgage Bonds.

“Senior Debt Rating” means at any date, the credit rating identified by S&P or Moody’s as the credit rating which (i) it has assigned to Secured Debt of the Company or (ii) would assign to Secured Debt of the Company were the Company to issue or have outstanding any Secured Debt on such date; provided that if the Secured Debt of the Company is unrated by both of Moody’s and S&P, “Senior Debt Rating” means the credit rating that is one level higher than the credit rating identified by S&P or Moody’s as the credit rating which (i) it has assigned to Unsecured Debt of the Company or (ii) would assign to Unsecured Debt of the Company were the Company to issue any Unsecured Debt on such date.

“Substitute Rating Agency” means a nationally-recognized rating agency (other than Moody’s and S&P).

“Unsecured Debt” means senior, unsecured, long-term indebtedness for borrowed money of the Company that is not guaranteed by any other Person or subject to any other credit enhancement.

Sch.-1

SCHEDULE 2

COMMITMENT SCHEDULE

BANK	COMMITMENT
JPMorgan Chase Bank, N.A.	$31,047,619.06
Barclays Bank PLC	$31,047,619.06
Union Bank, N.A.	$31,047,619.06
The Royal Bank of Scotland plc	$31,047,619.06
Bank of America, N.A.	$24,523,809.52
The Bank of Nova Scotia	$24,523,809.52
BNP Paribas	$24,523,809.52
Citibank, N.A.	$24,523,809.52
Deutsche Bank AG New York Branch	$24,523,809.52
Fifth Third Bank	$24,523,809.52
Goldman Sachs Bank USA	$24,523,809.52
PNC Bank, National Association	$24,523,809.52
Royal Bank of Canada	$24,523,809.52
Sumitomo Mitsui Banking Corporation	$24,523,809.52
SunTrust Bank	$24,523,809.52
UBS Loan Finance LLC	$24,523,809.52
Wells Fargo Bank, National Association	$24,523,809.52
Comerica Bank	$19,000,000.00
KeyBank National Association	$19,000,000.00
U.S. Bank National Association	$19,000,000.00
AGGREGATE COMMITMENT	$500,000,000.00

Sch.-2

SCHEDULE 3.1

EXISTING LCs

	L/C	Facility		EFFECTIVE	EXPIRATION	AMOUNT
ENTITY /
PROJECT	NUMBER	Issuer	BENEFICIARY	DATE	DATE	OUTSTANDING
Consumers Energy Company	SLT332011	JPMorgan	City of Sterling Heights, Michigan*	-05/19/03	05/19/2014	$10,000.00
Consumers Energy Company	CPCS-206214	JPMorgan	City of Novi	10/14/2005	10/11/2013	$20,000.00
Consumers Energy Company	CPCS-250893	JPMorgan	Department of Public Works-City of Wixom	11/21/2007	11/19/2013	$5,000.00
Consumers Energy Company	CPCS-275535	JPMorgan	Supervisor of Mineral Wells – Michigan Dept. of Environmental Quality	01/16/2008	12/21/2013	$166,480.00
Consumers Energy Company	CPCS-252802	JPMorgan	Midwest Independent Transmission System Operator	06/22/2012	06/22/2014	$480,780.00
Consumers Energy Company	CPCS-248222	JPMorgan	Midwest Independent Transmission System Operator	06/18/2012	06/15/2014	$1,116,648.00
Consumers Energy Company	CPCS-260477	JPMorgan	City of Huntington Woods	03/28/13	03/26/2014	$25,000.00
Total LCs						$1,834,908.00

Sch.-3.1

EX-12.1

Exhibit 12.1

CMS ENERGY CORPORATION

Ratios of Earnings to Fixed Charges and Combined Fixed Charges and Preferred Dividends

						In Millions, Except Ratios
	Six Months
		Ended				Year Ended December 31
	June 30, 2013					2012			2011			2010			2009		2008
Earnings as defined1
Pretax income from continuing operations			$	374		$	622		$	606		$	590		$	335	$	440
Exclude equity basis subsidiaries			(5		)	(7		)	(1		)	(2		)	2		(1		)
Fixed charges as defined2			214			414			437			449			456		429
Earnings as defined2			$	583		$	1,029		$	1,042		$	1,037		$	793	$	868
Fixed charges as defined1
Interest on long-term debt			$	193		$	372		$	396		$	394		$	383	$	371
Estimated interest portion of lease rental			12			21			18			16			17		25
Other interest charges			10			23			25			42			58		35
Fixed charges as defined2			215			416			439			452			458		431
Preferred dividends			-			-			-			13			17		17
Combined fixed charges and preferred dividends			$	215		$	416		$	439		$	465		$	475	$	448
Ratio of earnings to fixed charges			2.71			2.47			2.37			2.29			1.73		2.01
Ratio of earnings to combined fixed charges and preferred dividends			2.71			2.47			2.37			2.23			1.67		1.94

NOTES:

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

2 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

Ratios of Earnings to Fixed Charges and Combined Fixed Charges and Preferred Dividends

					In Millions, Except Ratios
	Six Months
		Ended			Year Ended December 31
	June 30, 2013				2012		2011		2010		2009		2008
Earnings as defined1
Pretax income from continuing operations			$	432	$	736	$	734	$	688	$	456	$	562
Exclude equity basis subsidiaries			-		-		-		-		-		-
Fixed charges as defined			137		269		287		296		313		276
Earnings as defined			$	569	$	1,005	$	1,021	$	984	$	769	$	838
Fixed charges as defined1
Interest on long-term debt			$	119	$	232	$	251	$	246	$	250	$	229
Estimated interest portion of lease rental			12		21		18		16		17		25
Other interest charges			6		16		18		34		46		22
Fixed charges as defined			137		269		287		296		313		276
Preferred dividends			2		3		3		3		3		3
Combined fixed charges and preferred dividends			$	139	$	272	$	290	$	299	$	316	$	279
Ratio of earnings to fixed charges			4.15		3.74		3.56		3.32		2.46		3.04
Ratio of earnings to combined fixed charges and preferred dividends			4.09		3.69		3.52		3.29		2.43		3.00

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 25, 2013	By:	/s/ John 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 25, 2013	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 25, 2013	By:	/s/ John 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 25, 2013	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, 2013 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 Russell
Name:	John G. Russell
Title:	President and Chief Executive Officer
Date:	July 25, 2013
/s/ Thomas J. Webb
Name:	Thomas J. Webb
Title:	Executive Vice President and Chief Financial Officer
Date:	July 25, 2013

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, 2013 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 Russell
Name:	John G. Russell
Title:	President and Chief Executive Officer
Date:	July 25, 2013
/s/ Thomas J. Webb
Name:	Thomas J. Webb
Title:	Executive Vice President and Chief Financial Officer
Date:	July 25, 2013

XML

Earnings Per Share - CMS Energy

6 Months Ended

Jun. 30, 2013

Earnings Per Share - CMS Energy [Abstract]

Earnings Per Share - CMS Energy

8: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	2013			2012			2013			2012
Income available to common stockholders
Income from continuing operations		$	81		$	101		$	225		$	161
Less income attributable to noncontrolling interests			1			1			1			1
Income from continuing operations available to    common stockholders – basic and diluted		$	80		$	100		$	224		$	160
Average common shares outstanding
Weighted-average shares – basic			264.5			261.2			264.1			258.4
Add dilutive contingently convertible securities			6.4			5.9			6.2			8.3
Add dilutive non-vested stock awards			1.3			1.1			1.2			1.0
Weighted-average shares – diluted			272.2			268.2			271.5			267.7
Income from continuing operations per average
common share available to common stockholders
Basic		$	0.30		$	0.38		$	0.85		$	0.61
Diluted			0.29			0.37			0.83			0.59

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.

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.

XML

Consolidated Statements Of Comprehensive Income (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Net Income	$ 81	$ 101	$ 225	$ 168
Retirement benefits liability adjustments, net of tax	1	1	2	2
Unrealized gain (loss) on investments, net of tax	(3)	1	(3)	2
Other Comprehensive Income (Loss)	(2)	2	(1)	4
Comprehensive Income	79	103	224	172
Comprehensive Income Attributable to Noncontrolling Interest	1	1	1	1
Comprehensive Income Attributable to CMS Energy	78	102	223	171
Consumers Energy Company [Member]
Net Income	100	122	262	198
Retirement benefits liability adjustments, net of tax	1		2	1
Unrealized gain (loss) on investments, net of tax	(4)	3
Reclassification adjustments included in net income, net of tax			(3)
Other Comprehensive Income (Loss)	(3)	3	(1)	1
Comprehensive Income	$ 97	$ 125	$ 261	$ 199

XML

Regulatory Matters

6 Months Ended

Jun. 30, 2013

Regulatory Matters

1:REGULATORY MATTERS

Regulatory matters are critical to Consumers.  The Michigan Attorney General, ABATE, the MPSC Staff, and certain other parties typically participate in MPSC proceedings concerning Consumers, such as Consumers’ rate cases and PSCR and GCR processes.  These parties often challenge various aspects of those proceedings, including the prudence of Consumers’ policies and practices, and seek cost disallowances and other relief.  The parties also have appealed significant MPSC orders.  Depending upon the specific issues, the outcomes of rate cases and proceedings, including judicial proceedings challenging MPSC orders or other actions, 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.

There are multiple appeals pending that involve various issues concerning cost allocation among customers, the allocation of refunds among customer groups, the adequacy of the record evidence supporting the recovery of Smart Energy investments, and other matters.  Consumers is unable to predict the outcome of these appeals.

Consumers Electric Utility

Electric Rate Cases:  In June 2012, the MPSC authorized an annual rate increase of $118 million, based on a 10.3 percent authorized return on equity.  Consumers filed an application in September 2012 requesting that the MPSC find that the total revenues collected during self-implementation did not exceed those that would have been collected under final rates.  In March2013, the MPSC approved a settlement agreement finding that no refund was required.

In September 2012, Consumers filed an application with the MPSC seeking an annual rate increase of $148 million, based on a 10.5 percent authorized return on equity, in order to recover new investment in system reliability, environmental compliance, and technology enhancements.  In January 2013, Consumers supplemented its electric rate case application to reflect changes to its environmental compliance and generation outage plans, which reduced its requested annual rate increase to $145 million.  In this filing, Consumers also sought approval of several rate adjustment mechanisms.

In March 2013, Consumers self-implemented an annual rate increase of $110 million out of its requested $145 million, subject to refund with interest.  Consumers’ self-implementation required no order by the MSPC, and no intervenors in Consumers’ electric rate case opposed Consumers’ self-implementation amount.  The MPSC approved a partial settlement agreement in May 2013, authorizing an annual rate increase of $89 million, based on a 10.3 percent authorized rate of return on equity.  The rate adjustment mechanisms requested by Consumers were not approved.  In June 2013, in connection with this electric rate case, the MPSC approved Consumers’ application for authority to continue the advance metering infrastructure program and implement a non‑transmitting meter provision.

In July 2013, Consumers filed a reconciliation of total revenues collected during self-implementation to those that would have been collected under final rates.  Consumers’ reconciliation indicated that no refund would be required.

Electric Revenue Decoupling Mechanism:The MPSC’s 2009 order in Consumers’ electric rate case authorized Consumers to implement an electric revenue decoupling mechanism.  This decoupling mechanism allowed Consumers to adjust future electric rates to the degree that actual average sales per customer differed from the rate order.  The MPSC extended the electric revenue decoupling mechanism for a second year in its 2010 order in Consumers’ electric rate case.

In April 2012, the Michigan Court of Appeals ruled that the MPSC lacks statutory authority to approve or direct the use of a revenue decoupling mechanism for electric providers.  Subsequently, in November 2012, the Michigan Court of Appeals ruled in an appeal of the MPSC’s 2010 order in Consumers’ electric rate case.  The Court reversed the portion of the 2010 order related to Consumers’ electric revenue decoupling mechanism and remanded the case to the MPSC for further proceedings related to the revenue decoupling mechanism.  In March 2013, the MSPC issued an order in the remand proceedings, stating that, with the exception of the authorization of the revenuedecoupling mechanism, its 2010 order in Consumers’ electric rate case stands as issued.

Big Rock Nuclear Decommissioning:Consumers had recorded an $85 million regulatory asset for $30 million it paid to Entergy to assume ownership responsibility for the Big Rock ISFSI and for $55 million of nuclear fuel storage costs it incurred as a result of the DOE’s failure to accept nuclear fuel.  Consumers filed a complaint against the DOE in 2002 for this failure.

In 2011, Consumers entered into an agreement with the DOE to settle its claims for $120 million.  Consumers subsequently filed an application with the MPSC requesting authority to utilize $85 million of the settlement amount as recovery of its regulatory asset, and to refund to customers $23 million previously collected through rates for spent nuclear fuel costs.  In December 2012, the MPSC approved this treatment, and Consumers refunded $23 million to customers over a six-month period that began in January 2013.  Consumers recognized the remaining $12 million of the settlement as a reduction of maintenance and other operating expenses.  In March 2013, a party filed an appeal with the Michigan Court of Appeals to dispute the MPSC’s December 2012 order.

Renewable Energy Plan:  In January 2013, Consumers received a $69 million renewable energy grant for Lake Winds^® Energy Park, which began operations in November 2012.  The grant was received from the U.S. Department of Treasury under Section 1603 of the American Recovery and Reinvestment Tax Act of 2009.

As reflected in Consumers’ 2011 biennial renewable energy plan, which the MPSC approved in 2012, this grant reduces Consumers’ cost of complying with the renewable standards prescribed by the 2008 Energy Law and, accordingly, reduces the overall renewable energy surcharge to be collected from customers.  At June 30, 2013, Consumers had a $68 million regulatory liability recorded for the grant.  The regulatory liability will be amortized over the life of Lake Winds^® Energy Park.

In May 2013, Consumers filed a revised renewable energy plan that reduced the size and cost of the Cross Winds^® Energy Park.  In June2013, the MPSC issued an order approving Consumers’ 2011 renewable cost reconciliation filing.  In July2013, Consumers filed its 2012 renewable cost reconciliation and annual report.

Energy Optimization Plan:In May 2013, Consumers filed its fourth annual report and reconciliation for its energy optimization plan, requesting approval of its energy optimization plan costs for 2012.  Consumers also requested approval to collect $17 million from customers as an incentive payment for exceeding statutory targets under both its gas and electric energy optimization plans during 2012.

Consumers Gas Utility

Gas Revenue Decoupling Mechanism:The MPSC’s 2009 order in Consumers’ gas rate case authorized Consumers to implement a gas revenue decoupling mechanism.  This mechanism, which the MPSC extended through April 2012 in its 2010 order in Consumers’ gas rate case, allowed Consumers to adjust future gas rates to the degree that actual average weather-adjusted sales per customer differed from the rate order.  This mechanism was not affected by a separate Michigan Court of Appeals decision on electric revenue decoupling.

In December 2012, the MPSC approved Consumers’ reconciliation of the gas revenue decoupling mechanism for the period June 2010 through May 2011 and authorized recovery of $16 million over a three-month period that began in February 2013.  Due to high customer deliveries during this three-month period, Consumers collected more than the amount authorized and, at June30,2013, had a regulatory liability of $5million recorded for the amount to be refunded to customers.  In January 2013, ABATE filed an appeal with the Michigan Court of Appeals to dispute the MPSC’s conclusion that Consumers is eligible to recover the portion of the authorized recovery amount allocated to transport customers.

Consumers filed its final reconciliation of the gas revenue decoupling mechanism in August 2012, requesting recovery of $17 million from customers for the period June 2011 through April 2012.  At June 30, 2013, Consumers had a $17 million regulatory asset recorded for gas revenue decoupling for that period.

Consumers Energy Company [Member]

Regulatory Matters

1:REGULATORY MATTERS

Regulatory matters are critical to Consumers.  The Michigan Attorney General, ABATE, the MPSC Staff, and certain other parties typically participate in MPSC proceedings concerning Consumers, such as Consumers’ rate cases and PSCR and GCR processes.  These parties often challenge various aspects of those proceedings, including the prudence of Consumers’ policies and practices, and seek cost disallowances and other relief.  The parties also have appealed significant MPSC orders.  Depending upon the specific issues, the outcomes of rate cases and proceedings, including judicial proceedings challenging MPSC orders or other actions, 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.

There are multiple appeals pending that involve various issues concerning cost allocation among customers, the allocation of refunds among customer groups, the adequacy of the record evidence supporting the recovery of Smart Energy investments, and other matters.  Consumers is unable to predict the outcome of these appeals.

Consumers Electric Utility

Electric Rate Cases:  In June 2012, the MPSC authorized an annual rate increase of $118 million, based on a 10.3 percent authorized return on equity.  Consumers filed an application in September 2012 requesting that the MPSC find that the total revenues collected during self-implementation did not exceed those that would have been collected under final rates.  In March2013, the MPSC approved a settlement agreement finding that no refund was required.

In September 2012, Consumers filed an application with the MPSC seeking an annual rate increase of $148 million, based on a 10.5 percent authorized return on equity, in order to recover new investment in system reliability, environmental compliance, and technology enhancements.  In January 2013, Consumers supplemented its electric rate case application to reflect changes to its environmental compliance and generation outage plans, which reduced its requested annual rate increase to $145 million.  In this filing, Consumers also sought approval of several rate adjustment mechanisms.

In March 2013, Consumers self-implemented an annual rate increase of $110 million out of its requested $145 million, subject to refund with interest.  Consumers’ self-implementation required no order by the MSPC, and no intervenors in Consumers’ electric rate case opposed Consumers’ self-implementation amount.  The MPSC approved a partial settlement agreement in May 2013, authorizing an annual rate increase of $89 million, based on a 10.3 percent authorized rate of return on equity.  The rate adjustment mechanisms requested by Consumers were not approved.  In June 2013, in connection with this electric rate case, the MPSC approved Consumers’ application for authority to continue the advance metering infrastructure program and implement a non‑transmitting meter provision.

In July 2013, Consumers filed a reconciliation of total revenues collected during self-implementation to those that would have been collected under final rates.  Consumers’ reconciliation indicated that no refund would be required.

Electric Revenue Decoupling Mechanism:The MPSC’s 2009 order in Consumers’ electric rate case authorized Consumers to implement an electric revenue decoupling mechanism.  This decoupling mechanism allowed Consumers to adjust future electric rates to the degree that actual average sales per customer differed from the rate order.  The MPSC extended the electric revenue decoupling mechanism for a second year in its 2010 order in Consumers’ electric rate case.

In April 2012, the Michigan Court of Appeals ruled that the MPSC lacks statutory authority to approve or direct the use of a revenue decoupling mechanism for electric providers.  Subsequently, in November 2012, the Michigan Court of Appeals ruled in an appeal of the MPSC’s 2010 order in Consumers’ electric rate case.  The Court reversed the portion of the 2010 order related to Consumers’ electric revenue decoupling mechanism and remanded the case to the MPSC for further proceedings related to the revenue decoupling mechanism.  In March 2013, the MSPC issued an order in the remand proceedings, stating that, with the exception of the authorization of the revenuedecoupling mechanism, its 2010 order in Consumers’ electric rate case stands as issued.

Big Rock Nuclear Decommissioning:Consumers had recorded an $85 million regulatory asset for $30 million it paid to Entergy to assume ownership responsibility for the Big Rock ISFSI and for $55 million of nuclear fuel storage costs it incurred as a result of the DOE’s failure to accept nuclear fuel.  Consumers filed a complaint against the DOE in 2002 for this failure.

In 2011, Consumers entered into an agreement with the DOE to settle its claims for $120 million.  Consumers subsequently filed an application with the MPSC requesting authority to utilize $85 million of the settlement amount as recovery of its regulatory asset, and to refund to customers $23 million previously collected through rates for spent nuclear fuel costs.  In December 2012, the MPSC approved this treatment, and Consumers refunded $23 million to customers over a six-month period that began in January 2013.  Consumers recognized the remaining $12 million of the settlement as a reduction of maintenance and other operating expenses.  In March 2013, a party filed an appeal with the Michigan Court of Appeals to dispute the MPSC’s December 2012 order.

Renewable Energy Plan:  In January 2013, Consumers received a $69 million renewable energy grant for Lake Winds^® Energy Park, which began operations in November 2012.  The grant was received from the U.S. Department of Treasury under Section 1603 of the American Recovery and Reinvestment Tax Act of 2009.

As reflected in Consumers’ 2011 biennial renewable energy plan, which the MPSC approved in 2012, this grant reduces Consumers’ cost of complying with the renewable standards prescribed by the 2008 Energy Law and, accordingly, reduces the overall renewable energy surcharge to be collected from customers.  At June 30, 2013, Consumers had a $68 million regulatory liability recorded for the grant.  The regulatory liability will be amortized over the life of Lake Winds^® Energy Park.

In May 2013, Consumers filed a revised renewable energy plan that reduced the size and cost of the Cross Winds^® Energy Park.  In June2013, the MPSC issued an order approving Consumers’ 2011 renewable cost reconciliation filing.  In July2013, Consumers filed its 2012 renewable cost reconciliation and annual report.

Energy Optimization Plan:In May 2013, Consumers filed its fourth annual report and reconciliation for its energy optimization plan, requesting approval of its energy optimization plan costs for 2012.  Consumers also requested approval to collect $17 million from customers as an incentive payment for exceeding statutory targets under both its gas and electric energy optimization plans during 2012.

Consumers Gas Utility

Gas Revenue Decoupling Mechanism:The MPSC’s 2009 order in Consumers’ gas rate case authorized Consumers to implement a gas revenue decoupling mechanism.  This mechanism, which the MPSC extended through April 2012 in its 2010 order in Consumers’ gas rate case, allowed Consumers to adjust future gas rates to the degree that actual average weather-adjusted sales per customer differed from the rate order.  This mechanism was not affected by a separate Michigan Court of Appeals decision on electric revenue decoupling.

In December 2012, the MPSC approved Consumers’ reconciliation of the gas revenue decoupling mechanism for the period June 2010 through May 2011 and authorized recovery of $16 million over a three-month period that began in February 2013.  Due to high customer deliveries during this three-month period, Consumers collected more than the amount authorized and, at June30,2013, had a regulatory liability of $5million recorded for the amount to be refunded to customers.  In January 2013, ABATE filed an appeal with the Michigan Court of Appeals to dispute the MPSC’s conclusion that Consumers is eligible to recover the portion of the authorized recovery amount allocated to transport customers.

Consumers filed its final reconciliation of the gas revenue decoupling mechanism in August 2012, requesting recovery of $17 million from customers for the period June 2011 through April 2012.  At June 30, 2013, Consumers had a $17 million regulatory asset recorded for gas revenue decoupling for that period.

XML

Notes Receivable (Tables)

6 Months Ended

Jun. 30, 2013

Schedule Of Current And Non-Current Notes Receivable

In Millions
	June 30, 2013			December 31, 2012
CMS Energy, including Consumers
Current
EnerBank notes receivable, net of allowance for loan losses		$	50		$	40
Other			26			1
Non-current
EnerBank notes receivable, net of allowance for loan losses			493			504
Other			-			16
Total notes receivable		$	569		$	561
Consumers
Current
Other		$	25		$	-
Non-current
Other			-			16
Total notes receivable		$	25		$	16

Schedule Of Allowance For Loan Losses

In Millions
	Three Months Ended						Six Months Ended
June 30	2013			2012			2013			2012
Balance at beginning of period		$	5		$	5		$	5		$	5
Charge-offs			(2)			(1)			(3)			(2)
Recoveries			1			-			1			-
Provision for loan losses			1			1			2			2
Balance at end of period		$	5		$	5		$	5		$	5

Consumers Energy Company [Member]

Schedule Of Current And Non-Current Notes Receivable

In Millions
	June 30, 2013			December 31, 2012
CMS Energy, including Consumers
Current
EnerBank notes receivable, net of allowance for loan losses		$	50		$	40
Other			26			1
Non-current
EnerBank notes receivable, net of allowance for loan losses			493			504
Other			-			16
Total notes receivable		$	569		$	561
Consumers
Current
Other		$	25		$	-
Non-current
Other			-			16
Total notes receivable		$	25		$	16

XML

Reportable Segments

6 Months Ended

Jun. 30, 2013

Reportable Segments

9: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	2013			2012			2013			2012
CMS Energy, including Consumers
Operating revenue
Electric utility		$	1,026		$	998		$	1,987		$	1,834
Gas utility			316			284			1,274			1,123
Enterprises			48			38			92			92
Other			16			13			32			27
Total operating revenue – CMS Energy		$	1,406		$	1,333		$	3,385		$	3,076
Consumers
Operating revenue
Electric utility		$	1,026		$	998		$	1,987		$	1,834
Gas utility			316			284			1,274			1,123
Total operating revenue – Consumers		$	1,342		$	1,282		$	3,261		$	2,957
CMS Energy, including Consumers
Net income (loss) available to common stockholders
Electric utility		$	93		$	111		$	159		$	132
Gas utility			5			9			101			64
Enterprises			1			(1)			5			4
Other			(19)			(19)			(41)			(33)
Total net income available to common
stockholders – CMS Energy		$	80		$	100		$	224		$	167
Consumers
Net income available to common stockholder
Electric utility		$	93		$	111		$	159		$	132
Gas utility			5			9			101			64
Other			1			1			1			1
Total net income available to common
stockholder – Consumers		$	99		$	121		$	261		$	197

In Millions
	June 30, 2013			December 31, 2012
CMS Energy, including Consumers
Plant, property, and equipment, gross
Electric utility		$	11,275		$	11,041
Gas utility			4,661			4,400
Enterprises			112			113
Other			38			38
Total plant, property, and equipment, gross – CMS Energy		$	16,086		$	15,592
Consumers
Plant, property, and equipment, gross
Electric utility		$	11,275		$	11,041
Gas utility			4,661			4,400
Other			15			15
Total plant, property, and equipment, gross – Consumers		$	15,951		$	15,456
CMS Energy, including Consumers
Total assets
Electric utility1		$	10,769		$	10,423
Gas utility1			4,922			5,016
Enterprises			180			181
Other			1,558			1,511
Total assets – CMS Energy		$	17,429		$	17,131
Consumers
Total assets
Electric utility1		$	10,769		$	10,423
Gas utility1			4,922			5,016
Other			718			836
Total assets – Consumers		$	16,409		$	16,275

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

Consumers Energy Company [Member]

Reportable Segments

9: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	2013			2012			2013			2012
CMS Energy, including Consumers
Operating revenue
Electric utility		$	1,026		$	998		$	1,987		$	1,834
Gas utility			316			284			1,274			1,123
Enterprises			48			38			92			92
Other			16			13			32			27
Total operating revenue – CMS Energy		$	1,406		$	1,333		$	3,385		$	3,076
Consumers
Operating revenue
Electric utility		$	1,026		$	998		$	1,987		$	1,834
Gas utility			316			284			1,274			1,123
Total operating revenue – Consumers		$	1,342		$	1,282		$	3,261		$	2,957
CMS Energy, including Consumers
Net income (loss) available to common stockholders
Electric utility		$	93		$	111		$	159		$	132
Gas utility			5			9			101			64
Enterprises			1			(1)			5			4
Other			(19)			(19)			(41)			(33)
Total net income available to common
stockholders – CMS Energy		$	80		$	100		$	224		$	167
Consumers
Net income available to common stockholder
Electric utility		$	93		$	111		$	159		$	132
Gas utility			5			9			101			64
Other			1			1			1			1
Total net income available to common
stockholder – Consumers		$	99		$	121		$	261		$	197

In Millions
	June 30, 2013			December 31, 2012
CMS Energy, including Consumers
Plant, property, and equipment, gross
Electric utility		$	11,275		$	11,041
Gas utility			4,661			4,400
Enterprises			112			113
Other			38			38
Total plant, property, and equipment, gross – CMS Energy		$	16,086		$	15,592
Consumers
Plant, property, and equipment, gross
Electric utility		$	11,275		$	11,041
Gas utility			4,661			4,400
Other			15			15
Total plant, property, and equipment, gross – Consumers		$	15,951		$	15,456
CMS Energy, including Consumers
Total assets
Electric utility1		$	10,769		$	10,423
Gas utility1			4,922			5,016
Enterprises			180			181
Other			1,558			1,511
Total assets – CMS Energy		$	17,429		$	17,131
Consumers
Total assets
Electric utility1		$	10,769		$	10,423
Gas utility1			4,922			5,016
Other			718			836
Total assets – Consumers		$	16,409		$	16,275

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

XML

Financial Instruments (Narrative) (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Financial Instruments [Line Items]
Portion of long-term debt supported by third-party credit enhancements	$ 103		$ 103
Consumers Energy Company [Member]
Financial Instruments [Line Items]
Portion of long-term debt supported by third-party credit enhancements	103		103
Gain on donation of CMS Energy common stock	4	5
Supplemental Executive Retirement Plan [Member]
Financial Instruments [Line Items]
Contributions made to the plan	16
Supplemental Executive Retirement Plan [Member] | Consumers Energy Company [Member]
Financial Instruments [Line Items]
Contributions made to the plan	$ 13

XML

Reportable Segments (Tables)

6 Months Ended

Jun. 30, 2013

Reconciliation Of Segments To Consolidated

In Millions
	Three Months Ended						Six Months Ended
June 30	2013			2012			2013			2012
CMS Energy, including Consumers
Operating revenue
Electric utility		$	1,026		$	998		$	1,987		$	1,834
Gas utility			316			284			1,274			1,123
Enterprises			48			38			92			92
Other			16			13			32			27
Total operating revenue – CMS Energy		$	1,406		$	1,333		$	3,385		$	3,076
Consumers
Operating revenue
Electric utility		$	1,026		$	998		$	1,987		$	1,834
Gas utility			316			284			1,274			1,123
Total operating revenue – Consumers		$	1,342		$	1,282		$	3,261		$	2,957
CMS Energy, including Consumers
Net income (loss) available to common stockholders
Electric utility		$	93		$	111		$	159		$	132
Gas utility			5			9			101			64
Enterprises			1			(1)			5			4
Other			(19)			(19)			(41)			(33)
Total net income available to common
stockholders – CMS Energy		$	80		$	100		$	224		$	167
Consumers
Net income available to common stockholder
Electric utility		$	93		$	111		$	159		$	132
Gas utility			5			9			101			64
Other			1			1			1			1
Total net income available to common
stockholder – Consumers		$	99		$	121		$	261		$	197

In Millions
	June 30, 2013			December 31, 2012
CMS Energy, including Consumers
Plant, property, and equipment, gross
Electric utility		$	11,275		$	11,041
Gas utility			4,661			4,400
Enterprises			112			113
Other			38			38
Total plant, property, and equipment, gross – CMS Energy		$	16,086		$	15,592
Consumers
Plant, property, and equipment, gross
Electric utility		$	11,275		$	11,041
Gas utility			4,661			4,400
Other			15			15
Total plant, property, and equipment, gross – Consumers		$	15,951		$	15,456
CMS Energy, including Consumers
Total assets
Electric utility1		$	10,769		$	10,423
Gas utility1			4,922			5,016
Enterprises			180			181
Other			1,558			1,511
Total assets – CMS Energy		$	17,429		$	17,131
Consumers
Total assets
Electric utility1		$	10,769		$	10,423
Gas utility1			4,922			5,016
Other			718			836
Total assets – Consumers		$	16,409		$	16,275

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

Consumers Energy Company [Member]

Reconciliation Of Segments To Consolidated

In Millions
	Three Months Ended						Six Months Ended
June 30	2013			2012			2013			2012
CMS Energy, including Consumers
Operating revenue
Electric utility		$	1,026		$	998		$	1,987		$	1,834
Gas utility			316			284			1,274			1,123
Enterprises			48			38			92			92
Other			16			13			32			27
Total operating revenue – CMS Energy		$	1,406		$	1,333		$	3,385		$	3,076
Consumers
Operating revenue
Electric utility		$	1,026		$	998		$	1,987		$	1,834
Gas utility			316			284			1,274			1,123
Total operating revenue – Consumers		$	1,342		$	1,282		$	3,261		$	2,957
CMS Energy, including Consumers
Net income (loss) available to common stockholders
Electric utility		$	93		$	111		$	159		$	132
Gas utility			5			9			101			64
Enterprises			1			(1)			5			4
Other			(19)			(19)			(41)			(33)
Total net income available to common
stockholders – CMS Energy		$	80		$	100		$	224		$	167
Consumers
Net income available to common stockholder
Electric utility		$	93		$	111		$	159		$	132
Gas utility			5			9			101			64
Other			1			1			1			1
Total net income available to common
stockholder – Consumers		$	99		$	121		$	261		$	197

In Millions
	June 30, 2013			December 31, 2012
CMS Energy, including Consumers
Plant, property, and equipment, gross
Electric utility		$	11,275		$	11,041
Gas utility			4,661			4,400
Enterprises			112			113
Other			38			38
Total plant, property, and equipment, gross – CMS Energy		$	16,086		$	15,592
Consumers
Plant, property, and equipment, gross
Electric utility		$	11,275		$	11,041
Gas utility			4,661			4,400
Other			15			15
Total plant, property, and equipment, gross – Consumers		$	15,951		$	15,456
CMS Energy, including Consumers
Total assets
Electric utility1		$	10,769		$	10,423
Gas utility1			4,922			5,016
Enterprises			180			181
Other			1,558			1,511
Total assets – CMS Energy		$	17,429		$	17,131
Consumers
Total assets
Electric utility1		$	10,769		$	10,423
Gas utility1			4,922			5,016
Other			718			836
Total assets – Consumers		$	16,409		$	16,275

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

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Earnings Per Share - CMS Energy (Tables)

6 Months Ended

Jun. 30, 2013

Earnings Per Share - CMS Energy [Abstract]

Basic And Diluted EPS Computations

In Millions, Except Per Share Amounts
	Three Months Ended						Six Months Ended
June 30	2013			2012			2013			2012
Income available to common stockholders
Income from continuing operations		$	81		$	101		$	225		$	161
Less income attributable to noncontrolling interests			1			1			1			1
Income from continuing operations available to    common stockholders – basic and diluted		$	80		$	100		$	224		$	160
Average common shares outstanding
Weighted-average shares – basic			264.5			261.2			264.1			258.4
Add dilutive contingently convertible securities			6.4			5.9			6.2			8.3
Add dilutive non-vested stock awards			1.3			1.1			1.2			1.0
Weighted-average shares – diluted			272.2			268.2			271.5			267.7
Income from continuing operations per average
common share available to common stockholders
Basic		$	0.30		$	0.38		$	0.85		$	0.61
Diluted			0.29			0.37			0.83			0.59

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Financings And Capitalization (Revolving Credit Facilities) (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2013
Revolving Credit Facilities December 21, 2017 [Member] | CMS Energy [Member]
Expiration Date	Dec. 21, 2017	[1]
Amount of Facility	$ 550	[1]
Amount Borrowed		[1]
Letters of Credit Outstanding	2	[1]
Amount Available	548	[1]
Revolving Credit Facilities December 21, 2017 [Member] | Consumers Energy Company [Member]
Expiration Date	Dec. 21, 2017	[2]
Amount of Facility	500	[2]
Amount Borrowed		[2]
Letters of Credit Outstanding	2	[2]
Amount Available	498	[2]
Revolving Credit Facilities April 18, 2017 [Member] | Consumers Energy Company [Member]
Expiration Date	Apr. 18, 2017	[2]
Amount of Facility	150	[2]
Amount Borrowed		[2]
Amount Available	150	[2]
Revolving Credit Facilities September 9, 2014 [Member] | Consumers Energy Company [Member]
Expiration Date	Sep. 09, 2014	[2]
Amount of Facility	30	[2]
Amount Borrowed		[2]
Letters of Credit Outstanding	$ 30	[2]

[1] Obligations under this facility are secured by Consumers common stock.

[2] Obligations under this facility are secured by FMBs of Consumers.

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Financial Instruments (Schedule Of Investment Securities) (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Held to maturity Debt securities - Cost	$ 10	$ 9
Held to maturity Debt securities - Unrealized Gains		1
Held to maturity Debt securities - Unrealized Losses
Held to maturity Debt securities - Fair Value	10	10
CMS Energy Common Stock [Member] | Consumers Energy Company [Member]
Available for sale - Cost	5	6
Available for sale - Unrealized Gains	25	26
Available for sale - Unrealized Losses
Available for sale - Fair Value	30	32
Supplemental Executive Retirement Plan [Member] | Mutual Fund [Member]
Available for sale - Cost	138	123
Available for sale - Unrealized Gains		3
Available for sale - Unrealized Losses	1
Available for sale - Fair Value	137	126
Supplemental Executive Retirement Plan [Member] | Mutual Fund [Member] | Consumers Energy Company [Member]
Available for sale - Cost	96	83
Available for sale - Unrealized Gains		2
Available for sale - Unrealized Losses
Available for sale - Fair Value	$ 96	$ 85

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Contingencies And Commitments (Guarantees) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Jun. 30, 2013
Consumers Energy Company [Member]
Guarantee Description	Indemnity obligations and other guarantees
Expiration Date	Various through September 2029
Maximum obligation	$ 30
Carrying Amount	1
Guarantees [Member]
Guarantee Description	Guarantees
Expiration Date	Various through March 2021
Maximum obligation	57
Carrying Amount	1
Indemnity Obligations From Asset Sales And Other Agreements [Member]
Guarantee Description	Indemnity obligations from asset sales   and other agreements
Expiration Date	Various through September 2029
Maximum obligation	482	[1]
Carrying Amount	$ 15

[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 power purchase agreements, 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.

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Retirement Benefits (Schedule Of Net Benefit Costs) (Details) (USD $) In Millions, unless otherwise specified					3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended
	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2013 Consumers Energy Company [Member]	Dec. 31, 2012 Consumers Energy Company [Member]	Jun. 30, 2013 Pension Plans, Defined Benefit [Member]	Jun. 30, 2012 Pension Plans, Defined Benefit [Member]	Jun. 30, 2013 Pension Plans, Defined Benefit [Member]	Jun. 30, 2012 Pension Plans, Defined Benefit [Member]	Jun. 30, 2013 Pension Plans, Defined Benefit [Member] Consumers Energy Company [Member]	Jun. 30, 2012 Pension Plans, Defined Benefit [Member] Consumers Energy Company [Member]	Jun. 30, 2013 Pension Plans, Defined Benefit [Member] Consumers Energy Company [Member]	Jun. 30, 2012 Pension Plans, Defined Benefit [Member] Consumers Energy Company [Member]	Jun. 30, 2013 Other Postretirement Benefit Plans, Defined Benefit [Member]	Jun. 30, 2012 Other Postretirement Benefit Plans, Defined Benefit [Member]	Jun. 30, 2013 Other Postretirement Benefit Plans, Defined Benefit [Member]	Jun. 30, 2012 Other Postretirement Benefit Plans, Defined Benefit [Member]	Jun. 30, 2013 Other Postretirement Benefit Plans, Defined Benefit [Member] Consumers Energy Company [Member]	Jun. 30, 2012 Other Postretirement Benefit Plans, Defined Benefit [Member] Consumers Energy Company [Member]	Jun. 30, 2013 Other Postretirement Benefit Plans, Defined Benefit [Member] Consumers Energy Company [Member]	Jun. 30, 2012 Other Postretirement Benefit Plans, Defined Benefit [Member] Consumers Energy Company [Member]
Service cost					$ 14	$ 12	$ 27	$ 24	$ 13	$ 11	$ 26	$ 23	$ 9	$ 8	$ 18	$ 16	$ 9	$ 8	$ 18	$ 16
Interest expense					23	25	47	50	23	24	46	48	19	20	38	41	18	20	36	40
Expected return on plan assets					(32)	(32)	(64)	(63)	(32)	(31)	(63)	(61)	(19)	(16)	(38)	(33)	(17)	(16)	(35)	(31)
Amortization of Net loss					24	19	48	38	24	19	47	37	10	12	21	23	10	12	21	23
Amortization of Prior service cost					1	2	2	3	1	2	2	3	(5)	(5)	(10)	(10)	(5)	(5)	(10)	(10)
Net periodic cost					$ 30	$ 26	$ 60	$ 52	$ 29	$ 25	$ 58	$ 50	$ 14	$ 19	$ 29	$ 37	$ 15	$ 19	$ 30	$ 38
Discount rate	5.10%	4.40%	5.10%	4.40%

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Retirement Benefits (Tables)

6 Months Ended

Jun. 30, 2013

Schedule Of Net Benefit Costs

In Millions
	Pension
	Three Months Ended						Six Months Ended
June 30	2013			2012			2013			2012
CMS Energy, including Consumers
Net periodic pension cost
Service cost		$	14		$	12		$	27		$	24
Interest expense			23			25			47			50
Expected return on plan assets			(32)			(32)			(64)			(63)
Amortization of:
Net loss			24			19			48			38
Prior service cost			1			2			2			3
Net periodic pension cost		$	30		$	26		$	60		$	52
Consumers
Net periodic pension cost
Service cost		$	13		$	11		$	26		$	23
Interest expense			23			24			46			48
Expected return on plan assets			(32)			(31)			(63)			(61)
Amortization of:
Net loss			24			19			47			37
Prior service cost			1			2			2			3
Net periodic pension cost		$	29		$	25		$	58		$	50

In Millions
	OPEB
	Three Months Ended						Six Months Ended
June 30	2013			2012			2013			2012
CMS Energy, including Consumers
Net periodic OPEB cost
Service cost		$	9		$	8		$	18		$	16
Interest expense			19			20			38			41
Expected return on plan assets			(19)			(16)			(38)			(33)
Amortization of:
Net loss			10			12			21			23
Prior service credit			(5)			(5)			(10)			(10)
Net periodic OPEB cost		$	14		$	19		$	29		$	37
Consumers
Net periodic OPEB cost
Service cost		$	9		$	8		$	18		$	16
Interest expense			18			20			36			40
Expected return on plan assets			(17)			(16)			(35)			(31)
Amortization of:
Net loss			10			12			21			23
Prior service credit			(5)			(5)			(10)			(10)
Net periodic OPEB cost		$	15		$	19		$	30		$	38

Consumers Energy Company [Member]

Schedule Of Net Benefit Costs

In Millions
	Pension
	Three Months Ended						Six Months Ended
June 30	2013			2012			2013			2012
CMS Energy, including Consumers
Net periodic pension cost
Service cost		$	14		$	12		$	27		$	24
Interest expense			23			25			47			50
Expected return on plan assets			(32)			(32)			(64)			(63)
Amortization of:
Net loss			24			19			48			38
Prior service cost			1			2			2			3
Net periodic pension cost		$	30		$	26		$	60		$	52
Consumers
Net periodic pension cost
Service cost		$	13		$	11		$	26		$	23
Interest expense			23			24			46			48
Expected return on plan assets			(32)			(31)			(63)			(61)
Amortization of:
Net loss			24			19			47			37
Prior service cost			1			2			2			3
Net periodic pension cost		$	29		$	25		$	58		$	50

In Millions
	OPEB
	Three Months Ended						Six Months Ended
June 30	2013			2012			2013			2012
CMS Energy, including Consumers
Net periodic OPEB cost
Service cost		$	9		$	8		$	18		$	16
Interest expense			19			20			38			41
Expected return on plan assets			(19)			(16)			(38)			(33)
Amortization of:
Net loss			10			12			21			23
Prior service credit			(5)			(5)			(10)			(10)
Net periodic OPEB cost		$	14		$	19		$	29		$	37
Consumers
Net periodic OPEB cost
Service cost		$	9		$	8		$	18		$	16
Interest expense			18			20			36			40
Expected return on plan assets			(17)			(16)			(35)			(31)
Amortization of:
Net loss			10			12			21			23
Prior service credit			(5)			(5)			(10)			(10)
Net periodic OPEB cost		$	15		$	19		$	30		$	38

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Consolidated Statements Of Cash Flows (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Cash Flows from Operating Activities
Net income	$ 225	$ 168
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	318	302
Deferred income taxes and investment tax credit	135	102
Postretirement benefits expense	95	94
Other non-cash operating activities	32	35
Postretirement benefits contributions	(88)	(37)
Proceeds from government grant	69
Cash provided by (used in) changes in assets and liabilities
Decrease (increase) in accounts receivable, notes receivable, and accrued revenue	85	146
Decrease (increase) in inventories	253	135
Increase (decrease) in accounts payable	19	10
Increase (decrease) in accrued expenses	(82)	(82)
Other current and non-current assets and liabilities	34	70
Net cash provided by operating activities	1,095	943
Cash Flows from Investing Activities
Capital expenditures (excludes assets placed under capital lease)	(580)	(575)
Cost to retire property	(23)	(20)
Other investing activities	(13)	(15)
Net cash used in investing activities	(616)	(610)
Cash Flows from Financing Activities
Proceeds from issuance of long-term debt	675	790
Proceeds from (retirements of) EnerBank notes, net	(28)	(4)
Issuance of common stock	28	23
Retirement of long-term debt	(445)	(972)
Payment of common stock dividends	(135)	(125)
Increase (decrease) in notes payable	(110)
Payment of capital lease obligations and other financing costs	(20)	(19)
Net cash provided by (used in) financing activities	(35)	(307)
Net Increase in Cash and Cash Equivalents	444	26
Cash and Cash Equivalents, Beginning of Period	93	161
Cash and Cash Equivalents, End of Period	537	187
Consumers Energy Company [Member]
Cash Flows from Operating Activities
Net income	262	198
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	316	299
Deferred income taxes and investment tax credit	87	39
Postretirement benefits expense	93	92
Other non-cash operating activities	31	31
Postretirement benefits contributions	(86)	(34)
Proceeds from government grant	69
Cash provided by (used in) changes in assets and liabilities
Decrease (increase) in accounts receivable, notes receivable, and accrued revenue	85	146
Decrease (increase) in inventories	249	137
Increase (decrease) in accounts payable	23	11
Increase (decrease) in accrued expenses	(73)	(19)
Other current and non-current assets and liabilities	29	113
Net cash provided by operating activities	1,085	1,013
Cash Flows from Investing Activities
Capital expenditures (excludes assets placed under capital lease)	(579)	(572)
Cost to retire property	(23)	(20)
Other investing activities	(11)	(9)
Net cash used in investing activities	(613)	(601)
Cash Flows from Financing Activities
Proceeds from issuance of long-term debt	425	375
Retirement of long-term debt	(445)	(694)
Payment of common stock dividends	(195)	(159)
Stockholder contribution	150	150
Increase (decrease) in notes payable	(110)
Payment of capital lease obligations and other financing costs	(16)	(15)
Net cash provided by (used in) financing activities	(191)	(343)
Net Increase in Cash and Cash Equivalents	281	69
Cash and Cash Equivalents, Beginning of Period	5	85
Cash and Cash Equivalents, End of Period	$ 286	$ 154

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Consolidated Balance Sheets (Parenthetical) (USD $) In Millions, except Share data, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Allowances for doubtful accounts receivable	$ 31	$ 32
Allowances for doubtful notes receivable	5	5
Common stock, shares authorized	350,000,000	350,000,000
Common stock, shares outstanding	265,900,000	264,100,000
Consumers Energy Company [Member]
Allowances for doubtful accounts receivable	$ 29	$ 30
Common stock, shares authorized	125,000,000	125,000,000
Common stock, shares outstanding	84,100,000	84,100,000

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Contingencies And Commitments

6 Months Ended

Jun. 30, 2013

Contingencies And Commitments

2: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.  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, have been 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 Kansas, Missouri, and Wisconsin.  The following provides more detail on the cases in which CMS Energy affiliates remain as parties:

· 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 during the putative class period, January 1, 2000 through October 31, 2002, the defendants engaged in a scheme to violate the Kansas Restraint of Trade Act.  The plaintiffs 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 as a putative class action in Missouri state court alleging violations of Missouri antitrust laws.  Defendants, including CMS Energy, CMS Field Services, and CMS MST, are alleged to have violated the Missouri antitrust law in connection with their natural gas reporting activities.  Plaintiffs are seeking full consideration damages and treble 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 that purchased natural gas between January 1, 2000 and October 31, 2002.  The defendants, including CMS Energy, CMS ERM, and Cantera Gas Company, are alleged to have violated Wisconsin’s antitrust statute.  The plaintiffs are seeking full consideration damages, plus exemplary damages and attorneys’ fees.

· 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.  In 2010, CMS Energy and Cantera Gas Company were dismissed from the Newpage case.  In 2011, all claims against remaining CMS Energy defendants in the MDL cases were dismissed based on FERC preemption.  Plaintiffs filed appeals in all of the cases.  The issues on appeal were whether the district court erred in dismissing the cases based on FERC preemption and denying the plaintiffs’ motions for leave to amend their complaints to add a federal Sherman Act antitrust claim.  The plaintiffs did not appeal the dismissal of CMS Energy as a defendant in these cases, but other CMS Energy entities remain as defendants.

In April2013, the U.S. Court of Appeals for the Ninth Circuit reversed the MDL decision and remanded the case to the MDL judge for further proceedings. The appellate court found that FERC preemption does not apply under the facts of these cases. The Court affirmed the MDL court’s denial of leave to amend to add federal antitrust claims.

The joint defense group in these cases, of which CMS Energy defendants are members, plans to file a petition with the U.S. Supreme Court in an attempt to overturn the decision of the U.S. Court of Appeals for the Ninth Circuit.  The petition is due in August 2013.

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:  CMS Energy retained environmental remediation obligations for the collection and treatment of leachate, a liquid consisting of water and other substances, at Bay Harbor after selling its interests in the development in 2002.  Leachate is produced when water enters into cement kiln dust piles left over from former cement plant operations at the site.  In 2012, CMS Energy and the MDEQ finalized an agreement that established the final remedies and the future release criteria at the site.  CMS Energy is in the process of completing all construction necessary to implement the remedies required by the agreement and will continue to maintain and operate a system to discharge treated leachate into Little Traverse Bay under an NPDES permit issued in 2010.  This permit requires renewal every five years.

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 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 has communicated to the EPA that it does not believe that this is a valid claim.

CMS Energy has recorded a cumulative charge related to Bay Harbor of $228 million, which includes accretion expense.  At June 30, 2013, CMS Energy had a recorded liability of $58 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 $77 million.  CMS Energy expects to pay $12 million in 2013, $4 million in each of 2014, 2015,  2016, and 2017, 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:

· a significant increase in the cost of 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;

· the nature and extent of contamination;

· delays in the receipt of requested permits;

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

· unanticipated difficulties in meeting the technical commitments in the agreement with the MDEQ;

· 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 January 2002, CMS Energy sold its oil, gas, and methanol investments in Equatorial Guinea.  The government of Equatorial Guinea claims that CMS Energy owes $142 million in taxes, plus penalties and interest, in connection with the sale.  CMS Energy has concluded that the government’s tax claim is without merit.  The government of Equatorial Guinea indicated through a request for arbitration in October 2011 that it still intends to pursue its claim.  CMS Energy is vigorously contesting the claim, and 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.  Consumers estimates that its liability for NREPA sites will be between $4 million and $6 million.  At June 30, 2013, Consumers had a recorded liability of $4 million, the minimum amount in the range of its estimated probable NREPA liability.

Consumers is a potentially responsible party at a number of contaminated sites administered under Superfund.  Superfund liability is joint and several.  In 2010, Consumers received official notification from the EPA that identified Consumers as a potentially responsible party for cleanup of PCBs at the Kalamazoo River Superfund site.  The notification claimed that the EPA has reason to believe that Consumers disposed of PCBs and arranged for the disposal and treatment of PCB-containing materials at portions of the site.  In April 2011, Consumers received a follow‑up letter from the EPA requesting that Consumersagree to participate in a removal action plan along with several other companies for an area of lower Portage Creek, which is connected to the Kalamazoo River.  All parties, including Consumers, that were asked to participate in the removal action plan declined to accept liability.  In August 2011, the EPA announced that it would proceed with the removal action plan and would continue to pursue potentially responsible parties to perform or pay for some or all of the work.  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, 2013, 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.  Consumers has had several communications with the EPA regarding this matter.  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 Environmental Mitigation 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.  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, but cannot reasonably estimate the extent of cost recovery.  Although Consumers cannot predict the financial impact or outcome of the entirety of these discussions, it does not expect any future loss from civil penalties and/or Environmental Mitigation Projects to be material.

Nuclear Matters:  The matters discussed in this section relate to Consumers’ previously owned nuclear generating plants.  Consumers no longer owns or operates any nuclear generating facilities.

Consumers filed a complaint in 2002 for damages resulting from the DOE’s failure to accept spent nuclear fuel from Palisades and Big Rock.  In 2011, Consumers entered into an agreement with the DOE to settle its claims for $120 million.  As part of this agreement, Consumers also settled its liability to the DOE to fund the disposal of spent nuclear fuel used at Palisades and Big Rock before 1983.  In December 2012, the MPSC issued an order establishing the regulatory treatment of the settlement amount.  In this order, the MPSC also relieved Consumers of its obligation to establish an independent trust fund for the amount that was payable to the DOE prior to the settlement.  In March 2013, a party in this case filed an appeal with the Michigan Court of Appeals to dispute the December 2012 MPSC order.  For further information, see Note 1, Regulatory Matters.

Renewable Energy Matters:  In April 2013, a group of landowners filed a lawsuit alleging, among other things, personal injury and loss of property value and land use as a result of the operations of Lake Winds^® Energy Park.  Consumers cannot predict the ultimate financial impact or outcome of this matter.

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, 2013, Consumers had a recorded liability of $121 million for its remaining obligations for these sites.  This amount represents the present value of long-term projected costs, using a discount rate of 2.57 percent and an inflation rate of 2.5 percent.  Consumers based the discount rate on the interest rate for 20‑year U.S. Treasury securities at December 31, 2011.  The undiscounted amount of the remaining obligation is $130 million.  Consumers expects to incur remediation and other response activity costs in 2013 and in each of the next four years as follows:

In Millions
	2013			2014			2015			2016			2017
Consumers
Remediation and other response activity costs		$	9		$	9		$	16		$	10		$	9

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.

Pursuant to orders issued by the MPSC, Consumers defers its MGP-related remediation costs and recovers them from its customers over a ten-year period.  At June 30, 2013, Consumers had a regulatory asset of $151 million related to the MGP sites.

Consumers Other Contingencies

Other Environmental Matters:  Consumers initiated preliminary investigations during 2012 at a number of potentially contaminated sites it presently owns with the intention of determining whether any contamination exists and the extent of any identified contamination.  The sites being investigated include combustion turbine sites, generating sites, compressor stations, and above-ground fuel storage tanks.  Consumers will continue its preliminary investigations at potentially contaminated sites through 2013.  Consumers cannot predict an outcome at this stage of the investigations.

Guarantees

Presented in the following table are CMS Energy’s and Consumers’ guarantees at June 30, 2013:

In Millions
			Maximum				Carrying
Guarantee Description	Issue Date	Expiration Date	Obligation				Amount
CMS Energy, including Consumers
Indemnity obligations from asset sales    and other agreements	Various	Various through September 2029		$	482	1		$	15
Guarantees	Various	Various through March 2021			57				1
Consumers
Indemnity obligations and other guarantees	Various	Various through September 2029		$	30			$	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 power purchase agreements, 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.

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

Guarantee Description	How Guarantee Arose	Events That Would Require Performance
CMS Energy, including Consumers
Indemnity obligations from asset	Stock and asset sale	Findings of misrepresentation,
sales and other agreements	agreements	breach of warranties, tax claims, and
		other specific events or
		circumstances
Guarantees	Normal operating	Nonperformance or non-payment by a
	activity	subsidiary under a related contract
Consumers
Indemnity obligations and	Normal operating	Nonperformance or claims made by a third
other guarantees	activity	party under a related contract

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

Other:  In addition to the matters disclosed in this Note and Note 1, 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

2: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.  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, have been 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 Kansas, Missouri, and Wisconsin.  The following provides more detail on the cases in which CMS Energy affiliates remain as parties:

· 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 during the putative class period, January 1, 2000 through October 31, 2002, the defendants engaged in a scheme to violate the Kansas Restraint of Trade Act.  The plaintiffs 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 as a putative class action in Missouri state court alleging violations of Missouri antitrust laws.  Defendants, including CMS Energy, CMS Field Services, and CMS MST, are alleged to have violated the Missouri antitrust law in connection with their natural gas reporting activities.  Plaintiffs are seeking full consideration damages and treble 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 that purchased natural gas between January 1, 2000 and October 31, 2002.  The defendants, including CMS Energy, CMS ERM, and Cantera Gas Company, are alleged to have violated Wisconsin’s antitrust statute.  The plaintiffs are seeking full consideration damages, plus exemplary damages and attorneys’ fees.

· 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.  In 2010, CMS Energy and Cantera Gas Company were dismissed from the Newpage case.  In 2011, all claims against remaining CMS Energy defendants in the MDL cases were dismissed based on FERC preemption.  Plaintiffs filed appeals in all of the cases.  The issues on appeal were whether the district court erred in dismissing the cases based on FERC preemption and denying the plaintiffs’ motions for leave to amend their complaints to add a federal Sherman Act antitrust claim.  The plaintiffs did not appeal the dismissal of CMS Energy as a defendant in these cases, but other CMS Energy entities remain as defendants.

In April2013, the U.S. Court of Appeals for the Ninth Circuit reversed the MDL decision and remanded the case to the MDL judge for further proceedings. The appellate court found that FERC preemption does not apply under the facts of these cases. The Court affirmed the MDL court’s denial of leave to amend to add federal antitrust claims.

The joint defense group in these cases, of which CMS Energy defendants are members, plans to file a petition with the U.S. Supreme Court in an attempt to overturn the decision of the U.S. Court of Appeals for the Ninth Circuit.  The petition is due in August 2013.

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:  CMS Energy retained environmental remediation obligations for the collection and treatment of leachate, a liquid consisting of water and other substances, at Bay Harbor after selling its interests in the development in 2002.  Leachate is produced when water enters into cement kiln dust piles left over from former cement plant operations at the site.  In 2012, CMS Energy and the MDEQ finalized an agreement that established the final remedies and the future release criteria at the site.  CMS Energy is in the process of completing all construction necessary to implement the remedies required by the agreement and will continue to maintain and operate a system to discharge treated leachate into Little Traverse Bay under an NPDES permit issued in 2010.  This permit requires renewal every five years.

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 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 has communicated to the EPA that it does not believe that this is a valid claim.

CMS Energy has recorded a cumulative charge related to Bay Harbor of $228 million, which includes accretion expense.  At June 30, 2013, CMS Energy had a recorded liability of $58 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 $77 million.  CMS Energy expects to pay $12 million in 2013, $4 million in each of 2014, 2015,  2016, and 2017, 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:

· a significant increase in the cost of 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;

· the nature and extent of contamination;

· delays in the receipt of requested permits;

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

· unanticipated difficulties in meeting the technical commitments in the agreement with the MDEQ;

· 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 January 2002, CMS Energy sold its oil, gas, and methanol investments in Equatorial Guinea.  The government of Equatorial Guinea claims that CMS Energy owes $142 million in taxes, plus penalties and interest, in connection with the sale.  CMS Energy has concluded that the government’s tax claim is without merit.  The government of Equatorial Guinea indicated through a request for arbitration in October 2011 that it still intends to pursue its claim.  CMS Energy is vigorously contesting the claim, and 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.  Consumers estimates that its liability for NREPA sites will be between $4 million and $6 million.  At June 30, 2013, Consumers had a recorded liability of $4 million, the minimum amount in the range of its estimated probable NREPA liability.

Consumers is a potentially responsible party at a number of contaminated sites administered under Superfund.  Superfund liability is joint and several.  In 2010, Consumers received official notification from the EPA that identified Consumers as a potentially responsible party for cleanup of PCBs at the Kalamazoo River Superfund site.  The notification claimed that the EPA has reason to believe that Consumers disposed of PCBs and arranged for the disposal and treatment of PCB-containing materials at portions of the site.  In April 2011, Consumers received a follow‑up letter from the EPA requesting that Consumersagree to participate in a removal action plan along with several other companies for an area of lower Portage Creek, which is connected to the Kalamazoo River.  All parties, including Consumers, that were asked to participate in the removal action plan declined to accept liability.  In August 2011, the EPA announced that it would proceed with the removal action plan and would continue to pursue potentially responsible parties to perform or pay for some or all of the work.  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, 2013, 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.  Consumers has had several communications with the EPA regarding this matter.  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 Environmental Mitigation 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.  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, but cannot reasonably estimate the extent of cost recovery.  Although Consumers cannot predict the financial impact or outcome of the entirety of these discussions, it does not expect any future loss from civil penalties and/or Environmental Mitigation Projects to be material.

Nuclear Matters:  The matters discussed in this section relate to Consumers’ previously owned nuclear generating plants.  Consumers no longer owns or operates any nuclear generating facilities.

Consumers filed a complaint in 2002 for damages resulting from the DOE’s failure to accept spent nuclear fuel from Palisades and Big Rock.  In 2011, Consumers entered into an agreement with the DOE to settle its claims for $120 million.  As part of this agreement, Consumers also settled its liability to the DOE to fund the disposal of spent nuclear fuel used at Palisades and Big Rock before 1983.  In December 2012, the MPSC issued an order establishing the regulatory treatment of the settlement amount.  In this order, the MPSC also relieved Consumers of its obligation to establish an independent trust fund for the amount that was payable to the DOE prior to the settlement.  In March 2013, a party in this case filed an appeal with the Michigan Court of Appeals to dispute the December 2012 MPSC order.  For further information, see Note 1, Regulatory Matters.

Renewable Energy Matters:  In April 2013, a group of landowners filed a lawsuit alleging, among other things, personal injury and loss of property value and land use as a result of the operations of Lake Winds^® Energy Park.  Consumers cannot predict the ultimate financial impact or outcome of this matter.

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, 2013, Consumers had a recorded liability of $121 million for its remaining obligations for these sites.  This amount represents the present value of long-term projected costs, using a discount rate of 2.57 percent and an inflation rate of 2.5 percent.  Consumers based the discount rate on the interest rate for 20‑year U.S. Treasury securities at December 31, 2011.  The undiscounted amount of the remaining obligation is $130 million.  Consumers expects to incur remediation and other response activity costs in 2013 and in each of the next four years as follows:

In Millions
	2013			2014			2015			2016			2017
Consumers
Remediation and other response activity costs		$	9		$	9		$	16		$	10		$	9

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.

Pursuant to orders issued by the MPSC, Consumers defers its MGP-related remediation costs and recovers them from its customers over a ten-year period.  At June 30, 2013, Consumers had a regulatory asset of $151 million related to the MGP sites.

Consumers Other Contingencies

Other Environmental Matters:  Consumers initiated preliminary investigations during 2012 at a number of potentially contaminated sites it presently owns with the intention of determining whether any contamination exists and the extent of any identified contamination.  The sites being investigated include combustion turbine sites, generating sites, compressor stations, and above-ground fuel storage tanks.  Consumers will continue its preliminary investigations at potentially contaminated sites through 2013.  Consumers cannot predict an outcome at this stage of the investigations.

Guarantees

Presented in the following table are CMS Energy’s and Consumers’ guarantees at June 30, 2013:

In Millions
			Maximum				Carrying
Guarantee Description	Issue Date	Expiration Date	Obligation				Amount
CMS Energy, including Consumers
Indemnity obligations from asset sales    and other agreements	Various	Various through September 2029		$	482	1		$	15
Guarantees	Various	Various through March 2021			57				1
Consumers
Indemnity obligations and other guarantees	Various	Various through September 2029		$	30			$	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 power purchase agreements, 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.

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

Guarantee Description	How Guarantee Arose	Events That Would Require Performance
CMS Energy, including Consumers
Indemnity obligations from asset	Stock and asset sale	Findings of misrepresentation,
sales and other agreements	agreements	breach of warranties, tax claims, and
		other specific events or
		circumstances
Guarantees	Normal operating	Nonperformance or non-payment by a
	activity	subsidiary under a related contract
Consumers
Indemnity obligations and	Normal operating	Nonperformance or claims made by a third
other guarantees	activity	party under a related contract

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

Other:  In addition to the matters disclosed in this Note and Note 1, 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.

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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]	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]	Noncontrolling Interest [Member]	Total
Total Equity, beginning at Mar. 31, 2012	$ 841	$ 3,107	$ (4)	$ (18)	$ 14	$ 515	$ 44	$ 4,503	$ 3	$ 4,641	$ (47)	$ (47)	$ 1	$ (1)	$ (1,548)	$ 44	$ 3,093
Common stock issued										23
Common stock reissued
Stockholder contribution
Retirement benefits liability adjustments												1					(1)
Unrealized gain (loss) on investments, net of tax					3			3					1				1
Reclassification adjustments included in net income, net of tax
Net income attributable to CMS Energy															100
Net income						122		122									101
Common stock dividends declared						(43)									(63)
Preferred stock dividends and distributions declared						(1)
Income attributable to noncontrolling interests																1	1
Distributions and other changes in noncontrolling interests																(1)
Total Equity, end at Jun. 30, 2012	841	3,107	(1)	(18)	17	593	44	4,584	3	4,664	(45)	(46)	2	(1)	(1,511)	44	3,155
Total Equity, beginning at Dec. 31, 2011	841	2,957	(2)	(19)	17	554	44	4,394	3	4,627	(49)	(48)		(1)	(1,553)	44	3,072
Common stock issued										31
Common stock reissued										6
Stockholder contribution		150						150
Retirement benefits liability adjustments				1				(1)				2					(2)
Unrealized gain (loss) on investments, net of tax													2				2
Reclassification adjustments included in net income, net of tax
Net income attributable to CMS Energy															167
Net income						198		198									168
Common stock dividends declared						(158)									(125)
Preferred stock dividends and distributions declared						(1)
Income attributable to noncontrolling interests																1	1
Distributions and other changes in noncontrolling interests																(1)
Total Equity, end at Jun. 30, 2012	841	3,107	(1)	(18)	17	593	44	4,584	3	4,664	(45)	(46)	2	(1)	(1,511)	44	3,155
Total Equity, beginning at Dec. 31, 2012	841	3,107	(8)	(25)	17	598	44	4,582	3	4,669	(55)	(56)	2	(1)	(1,423)	44	3,238
Common stock issued										37
Common stock reissued										5
Common stock repurchased										(1)
Stockholder contribution		150						150
Retirement benefits liability adjustments				2				(2)				2					(2)
Unrealized gain (loss) on investments, net of tax													(3)				(3)
Reclassification adjustments included in net income, net of tax					(3)			3
Net income attributable to CMS Energy															224
Net income						262		262									225
Common stock dividends declared						(194)									(135)
Preferred stock dividends and distributions declared						(1)
Income attributable to noncontrolling interests																1	1
Distributions and other changes in noncontrolling interests																(8)
Preferred stock redeemed							(7)
Total Equity, end at Jun. 30, 2013	841	3,257	(9)	(23)	14	665	37	4,791	3	4,710	(56)	(54)	(1)	(1)	(1,334)	37	3,360
Total Equity, beginning at Mar. 31, 2013	841	3,257	(6)	(24)	18	667	44	4,803	3	4,703	(54)	(55)	2	(1)	(1,346)	44	3,350
Common stock issued										8
Common stock reissued
Common stock repurchased										(1)
Stockholder contribution
Retirement benefits liability adjustments				1				(1)				1					(1)
Unrealized gain (loss) on investments, net of tax					(4)			(4)					(3)				(3)
Reclassification adjustments included in net income, net of tax
Net income attributable to CMS Energy															80
Net income						100		100									81
Common stock dividends declared						(101)									(68)
Preferred stock dividends and distributions declared						(1)
Income attributable to noncontrolling interests																1	1
Distributions and other changes in noncontrolling interests																(8)
Preferred stock redeemed							(7)
Total Equity, end at Jun. 30, 2013	$ 841	$ 3,257	$ (9)	$ (23)	$ 14	$ 665	$ 37	$ 4,791	$ 3	$ 4,710	$ (56)	$ (54)	$ (1)	$ (1)	$ (1,334)	$ 37	$ 3,360

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Notes Receivable (Schedule Of Current And Non-Current Notes Receivable) (Details) (USD $) In Millions, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Current notes receivable	$ 76	$ 41
Total notes receivable	569	561
Consumers Energy Company [Member]
Current notes receivable	25
Total notes receivable	25	16
EnerBank [Member]
Current notes receivable	50	40
Noncurrent notes receivable	493	504
Other [Member]
Current notes receivable	26	1
Noncurrent notes receivable		16
Other [Member] | Consumers Energy Company [Member]
Current notes receivable	25
Noncurrent notes receivable		$ 16

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Regulatory Matters (Narrative) (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended		6 Months Ended											1 Months Ended	12 Months Ended	1 Months Ended
	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2013 Consumers Energy Company [Member]	Dec. 31, 2012 Consumers Energy Company [Member]	May 31, 2013 Electric Rate Case [Member] Consumers Energy Company [Member]	Mar. 31, 2013 Electric Rate Case [Member] Consumers Energy Company [Member]	Jan. 31, 2013 Electric Rate Case [Member] Consumers Energy Company [Member]	Sep. 30, 2012 Electric Rate Case [Member] Consumers Energy Company [Member]	Jun. 30, 2012 Electric Rate Case [Member] Consumers Energy Company [Member]	Dec. 31, 2012 2010-2011 Gas Revenue Decoupling Mechanism [Member] Consumers Energy Company [Member]	Aug. 31, 2012 2011-2012 Gas Revenue Decoupling Mechanism [Member] Consumers Energy Company [Member]	Jun. 30, 2013 Gas Revenue Decoupling Mechanism [Member] Consumers Energy Company [Member]	Dec. 31, 2011 Big Rock Decommissioning [Member] Consumers Energy Company [Member]	Jul. 31, 2011 DOE Settlement [Member] Consumers Energy Company [Member]	Dec. 31, 2012 DOE Settlement [Member] Consumers Energy Company [Member]	Jan. 31, 2013 Renewable Energy Grant [Member] Consumers Energy Company [Member]	Jun. 30, 2013 Renewable Energy Grant [Member] Consumers Energy Company [Member]
Annual rate increase requested							$ 145	$ 148
Annual rate increase self-implemented						110
Annual rate increase authorized					89				118
Rate of return on equity authorized					10.30%				10.30%
Rate of return on equity requested								10.50%
Regulatory assets, noncurrent	2,202	2,287	2,202	2,287									85
Amount paid to transfer ownership and responsibility													30
Nuclear fuel storage costs incurred as a result of the DOE's failure to accept spent nuclear fuel													55
Litigation settlement, gross														120
Proposed recovery of regulatory asset													85
Proposed refund of spent nuclear fuel disposal costs collected													23
Authorized Refund Of Spent Nuclear Fuel Disposal Costs Collected															23
Remaining Portion Of Litigation Settlement															12
Renewable energy grant received	69		69													69
Recorded liability												5					68
Energy Optimization Incentive Requested for Exceeding 2012 Savings Targets				17
Authorized Recovery										16
Regulatory asset												17
Requested recovery											$ 17

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Financings and Capitalization (Narrative) (Details) (USD $)		6 Months Ended			6 Months Ended	23 Months Ended
	Jun. 30, 2013	Jun. 30, 2013 CMS Energy [Member]	Jun. 30, 2013 Consumers Energy Company [Member]	May 31, 2013 Consumers Energy Company [Member] $4.16 Series [Member]	Jun. 30, 2013 Short-Term Borrowings [Member] Consumers Energy Company [Member]	Apr. 25, 2013 Continuous Equity Program [Member]	Jun. 30, 2013 Senior Notes 5.5% Due June 2029 [Member]
Financing And Capitalization [Line Items]
Amount of Facility					$ 250,000,000
Accounts receivable sales facility, current borrowing capacity					250,000,000
Average short-term borrowings					10,000,000
Weighted average annual interest rate					0.94%
Number of trading days, adjusted trigger price contingencies were met							20 days
Number of trading days							30 days
Limitation on payment of stock dividends	3,300,000,000
Unrestricted retained earnings			603,000,000
Common stock dividends from Consumers		194,000,000
Aggregate sales price of an equity offering program						50,000,000
Preferred stock, par value				$ 4.16
Redemption price per share				$ 103.25
Redemption price				$ 7,000,000
Preferred shares outstanding				68,451

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Fair Value Measurements (Assets And Liabilties Measured At Fair Value On A Recurring Basis) (Details) (USD $) In Millions, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Cash equivalents	$ 339	$ 53
Restricted cash equivalents	13	14
Nonqualified deferred compensation plan assets	5	5
Commodity contracts	12	3
Total	507	203
Nonqualified deferred compensation plan liabilities	5	5
Commodity contracts	4	4
Total	9	9
Consumers Energy Company [Member]
Cash equivalents	186
Restricted cash equivalents	13	13
Nonqualified deferred compensation plan assets	4	4
Commodity contracts	10	2
Total	340	137
Nonqualified deferred compensation plan liabilities	4	4
Total	4	4
Fair Value, Inputs, Level 1 [Member]
Cash equivalents	339	53
Restricted cash equivalents	13	14
Nonqualified deferred compensation plan assets	5	5
Total	495	200
Nonqualified deferred compensation plan liabilities	5	5
Total	5	5
Fair Value, Inputs, Level 1 [Member] | Consumers Energy Company [Member]
Cash equivalents	186
Restricted cash equivalents	13	13
Nonqualified deferred compensation plan assets	4	4
Total	330	135
Nonqualified deferred compensation plan liabilities	4	4
Total	4	4
Fair Value, Inputs, Level 2 [Member]
Commodity contracts	2
Total	2
Commodity contracts	2	3
Total	2	3
Fair Value, Inputs, Level 3 [Member]
Commodity contracts	10	3
Total	10	3
Commodity contracts	2	1
Total	2	1
Fair Value, Inputs, Level 3 [Member] | Consumers Energy Company [Member]
Commodity contracts	10	2
Total	10	2
Supplemental Executive Retirement Plan [Member] | Cash Equivalents [Member]
Available for sale - Fair Value	1	2
Supplemental Executive Retirement Plan [Member] | Cash Equivalents [Member] | Consumers Energy Company [Member]
Available for sale - Fair Value	1	1
Supplemental Executive Retirement Plan [Member] | Mutual Fund [Member]
Available for sale - Fair Value	137	126
Supplemental Executive Retirement Plan [Member] | Mutual Fund [Member] | Consumers Energy Company [Member]
Available for sale - Fair Value	96	85
Supplemental Executive Retirement Plan [Member] | Fair Value, Inputs, Level 1 [Member] | Cash Equivalents [Member]
Available for sale - Fair Value	1	2
Supplemental Executive Retirement Plan [Member] | Fair Value, Inputs, Level 1 [Member] | Cash Equivalents [Member] | Consumers Energy Company [Member]
Available for sale - Fair Value	1	1
Supplemental Executive Retirement Plan [Member] | Fair Value, Inputs, Level 1 [Member] | Mutual Fund [Member]
Available for sale - Fair Value	137	126
Supplemental Executive Retirement Plan [Member] | Fair Value, Inputs, Level 1 [Member] | Mutual Fund [Member] | Consumers Energy Company [Member]
Available for sale - Fair Value	96	85
CMS Energy Common Stock [Member] | Consumers Energy Company [Member]
Available for sale - Fair Value	30	32
CMS Energy Common Stock [Member] | Fair Value, Inputs, Level 1 [Member] | Consumers Energy Company [Member]
Available for sale - Fair Value	$ 30	$ 32

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Reportable Segments (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Operating Revenue	$ 1,406	$ 1,333	$ 3,385	$ 3,076
Total Net Income Available to Common Stockholders	80	100	224	167
Total Plant, Property, and Equipment, Gross	16,086		16,086		15,592
Total Assets	17,429		17,429		17,131
Consumers Energy Company [Member]
Operating Revenue	1,342	1,282	3,261	2,957
Total Net Income Available to Common Stockholders	99	121	261	197
Total Plant, Property, and Equipment, Gross	15,951		15,951		15,456
Total Assets	16,409		16,409		16,275
Electric Utility [Member]
Operating Revenue	1,026	998	1,987	1,834
Total Net Income Available to Common Stockholders	93	111	159	132
Total Plant, Property, and Equipment, Gross	11,275		11,275		11,041
Total Assets	10,769		10,769		10,423
Electric Utility [Member] | Consumers Energy Company [Member]
Operating Revenue	1,026	998	1,987	1,834
Total Net Income Available to Common Stockholders	93	111	159	132
Total Plant, Property, and Equipment, Gross	11,275		11,275		11,041
Total Assets	10,769		10,769		10,423
Gas Utility [Member]
Operating Revenue	316	284	1,274	1,123
Total Net Income Available to Common Stockholders	5	9	101	64
Total Plant, Property, and Equipment, Gross	4,661		4,661		4,400
Total Assets	4,922		4,922		5,016
Gas Utility [Member] | Consumers Energy Company [Member]
Operating Revenue	316	284	1,274	1,123
Total Net Income Available to Common Stockholders	5	9	101	64
Total Plant, Property, and Equipment, Gross	4,661		4,661		4,400
Total Assets	4,922		4,922		5,016
Enterprises [Member]
Operating Revenue	48	38	92	92
Total Net Income Available to Common Stockholders	1	(1)	5	4
Total Plant, Property, and Equipment, Gross	112		112		113
Total Assets	180		180		181
Other [Member]
Operating Revenue	16	13	32	27
Total Net Income Available to Common Stockholders	(19)	(19)	(41)	(33)
Total Plant, Property, and Equipment, Gross	38		38		38
Total Assets	1,558		1,558		1,511
Other [Member] | Consumers Energy Company [Member]
Total Net Income Available to Common Stockholders	1	1	1	1
Total Plant, Property, and Equipment, Gross	15		15		15
Total Assets	$ 718		$ 718		$ 836

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Consolidated Statements Of Income (Parenthetical) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Consolidated Statements Of Income
Tax expense included in income from discontinued operations				$ 4

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Financial Instruments

6 Months Ended

Jun. 30, 2013

Financial Instruments

5:FINANCIAL INSTRUMENTS

Presented in the following table are the carrying amounts and fair values, by level within the fair value hierarchy, of CMS Energy’s and Consumers’ financial instruments that are not recorded at fair value.  The table does not include information on cash, cash equivalents, short-term accounts and notes receivable, short-term investments, and current liabilities since the carrying amounts of these items approximate their fair values because of their short-term nature.  For information about assets and liabilities recorded at fair value and for additional details regarding the fair value hierarchy, see Note 4, Fair Value Measurements.

In Millions
	June 30, 2013															December 31, 2012
				Fair Value															Fair Value
	Carrying						Level									Carrying						Level
	Amount			Total			1			2			3			Amount			Total			1			2			3
CMS Energy, including Consumers
Securities held    to maturity		$	10		$	10		$	-		$	10		$	-		$	9		$	10		$	-		$	10		$	-
Notes    receivable1			543			582			-			-			582			544			581			-			-			581
Long-term    debt2			7,432			8,278			-			7,295			983			7,229			8,347			-			7,321			1,026
Consumers
Long-term    debt3		$	4,318		$	4,731		$	-		$	3,748		$	983		$	4,338		$	5,015		$	-		$	3,989		$	1,026

¹ Includes current portion of notes receivable of $50 million at June 30, 2013 and $40 million at December 31, 2012.

² Includes current portion of long-term debt of $737 million at June 30, 2013 and $519 million at December 31, 2012.

³ Includes current portion of long-term debt of $42 million at June 30, 2013 and $41 million at December 31, 2012.

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. 

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 and models may be used that rely on assumptions that cannot be observed or confirmed through market transactions.  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, 2013 and December 31, 2012, 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 classified as available for sale or held to maturity:

In Millions
	June 30, 2013												December 31, 2012
				Unrealized			Unrealized			Fair						Unrealized			Unrealized			Fair
	Cost			Gains			Losses			Value			Cost			Gains			Losses			Value
CMS Energy, including Consumers
Available for sale
DB SERP
Mutual funds		$	138		$	-		$	1		$	137		$	123		$	3		$	-		$	126
Held to maturity
Debt securities			10			-			-			10			9			1			-			10
Consumers
Available for sale
DB SERP
Mutual funds		$	96		$	-		$	-		$	96		$	83		$	2		$	-		$	85
CMS Energy
common stock			5			25			-			30			6			26			-			32

The mutual funds classified as available for sale hold primarily fixed-income instruments of varying maturities.  During the six months ended June 30, 2013, CMS Energy contributed $16 million to the DB SERP, which included a contribution of $13 million by Consumers.  The contributions were used to acquire additional shares in the mutual funds.  Debt securities classified as held to maturity consist primarily of mortgage-backed securities held by EnerBank.

Consumers recognized gains of $4 million in January 2013 and $5 million in January 2012 from transferring shares of CMS Energy common stock to a related charitable foundation.  The gains reflected the excess of fair value over cost of the stock donated and were included in income.

Consumers Energy Company [Member]

Financial Instruments

5:FINANCIAL INSTRUMENTS

Presented in the following table are the carrying amounts and fair values, by level within the fair value hierarchy, of CMS Energy’s and Consumers’ financial instruments that are not recorded at fair value.  The table does not include information on cash, cash equivalents, short-term accounts and notes receivable, short-term investments, and current liabilities since the carrying amounts of these items approximate their fair values because of their short-term nature.  For information about assets and liabilities recorded at fair value and for additional details regarding the fair value hierarchy, see Note 4, Fair Value Measurements.

In Millions
	June 30, 2013															December 31, 2012
				Fair Value															Fair Value
	Carrying						Level									Carrying						Level
	Amount			Total			1			2			3			Amount			Total			1			2			3
CMS Energy, including Consumers
Securities held    to maturity		$	10		$	10		$	-		$	10		$	-		$	9		$	10		$	-		$	10		$	-
Notes    receivable1			543			582			-			-			582			544			581			-			-			581
Long-term    debt2			7,432			8,278			-			7,295			983			7,229			8,347			-			7,321			1,026
Consumers
Long-term    debt3		$	4,318		$	4,731		$	-		$	3,748		$	983		$	4,338		$	5,015		$	-		$	3,989		$	1,026

¹ Includes current portion of notes receivable of $50 million at June 30, 2013 and $40 million at December 31, 2012.

² Includes current portion of long-term debt of $737 million at June 30, 2013 and $519 million at December 31, 2012.

³ Includes current portion of long-term debt of $42 million at June 30, 2013 and $41 million at December 31, 2012.

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. 

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 and models may be used that rely on assumptions that cannot be observed or confirmed through market transactions.  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, 2013 and December 31, 2012, 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 classified as available for sale or held to maturity:

In Millions
	June 30, 2013												December 31, 2012
				Unrealized			Unrealized			Fair						Unrealized			Unrealized			Fair
	Cost			Gains			Losses			Value			Cost			Gains			Losses			Value
CMS Energy, including Consumers
Available for sale
DB SERP
Mutual funds		$	138		$	-		$	1		$	137		$	123		$	3		$	-		$	126
Held to maturity
Debt securities			10			-			-			10			9			1			-			10
Consumers
Available for sale
DB SERP
Mutual funds		$	96		$	-		$	-		$	96		$	83		$	2		$	-		$	85
CMS Energy
common stock			5			25			-			30			6			26			-			32

The mutual funds classified as available for sale hold primarily fixed-income instruments of varying maturities.  During the six months ended June 30, 2013, CMS Energy contributed $16 million to the DB SERP, which included a contribution of $13 million by Consumers.  The contributions were used to acquire additional shares in the mutual funds.  Debt securities classified as held to maturity consist primarily of mortgage-backed securities held by EnerBank.

Consumers recognized gains of $4 million in January 2013 and $5 million in January 2012 from transferring shares of CMS Energy common stock to a related charitable foundation.  The gains reflected the excess of fair value over cost of the stock donated and were included in income.

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Consolidated Statements Of Comprehensive Income (Parenthetical) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Retirement benefits liability adjustments, tax expense (tax benefit)	$ 1		$ 1
Unrealized gain (loss) on investments, tax expense (tax benefit)
Consumers Energy Company [Member]
Retirement benefits liability adjustments, tax expense (tax benefit)	1		1
Unrealized gain (loss) on investments, tax expense (tax benefit)	1		1	(2)
Reclassification adjustments included in net income, tax			$ (1)

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Consolidated Statements Of Income (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Operating Revenue	$ 1,406	$ 1,333	$ 3,385	$ 3,076
Operating Expenses
Fuel for electric generation	147	126	301	256
Purchased and interchange power	347	334	680	651
Purchased power - related parties	23	20	46	42
Cost of gas sold	166	133	773	683
Maintenance and other operating expenses	304	282	586	577
Depreciation and amortization	137	130	318	302
General taxes	50	48	120	117
Total operating expenses	1,174	1,073	2,824	2,628
Operating Income	232	260	561	448
Other Income (Expense)
Interest income	2	1	2	2
Allowance for equity funds used during construction	1	2	4	4
Income from equity method investees	3	3	8	8
Other income	2	3	5	6
Other expense	(3)	(3)	(6)	(5)
Total other income	5	6	13	15
Interest Charges
Interest on long-term debt	99	94	193	188
Other interest expense	4	5	9	11
Allowance for borrowed funds used during construction	(1)	(1)	(2)	(2)
Total interest charges	102	98	200	197
Income Before Income Taxes	135	168	374	266
Income Tax Expense	54	67	149	105
Income From Continuing Operations	81	101	225	161
Income From Discontinued Operations, Net				7
Net Income	81	101	225	168
Income Attributable to Noncontrolling Interests	1	1	1	1
Net Income Attributable to Common Stockholders
Amounts attributable to continuing operations	80	100	224	160
Amounts attributable to discontinued operations				7
Net Income Available to Common Stockholders	80	100	224	167
Income Attributable to Noncontrolling Interests
Amounts attributable to continuing operations	1	1	1	1
Amounts attributable to discontinued operations
Income attributable to noncontrolling interests	1	1	1	1
Basic Earnings Per Average Common Share
Basic earnings from continuing operations	$ 0.30	$ 0.38	$ 0.85	$ 0.61
Basic earnings from discontinued operations				$ 0.03
Basic earnings attributable to common stock	$ 0.30	$ 0.38	$ 0.85	$ 0.64
Diluted Earnings Per Average Common Share
Diluted earnings from continuing operations	$ 0.29	$ 0.37	$ 0.83	$ 0.59
Diluted earnings from discontinued operations				$ 0.03
Diluted earnings attributable to common stock	$ 0.29	$ 0.37	$ 0.83	$ 0.62
Dividends Declared Per Common Share	$ 0.255	$ 0.24	$ 0.51	$ 0.48
Consumers Energy Company [Member]
Operating Revenue	1,342	1,282	3,261	2,957
Operating Expenses
Fuel for electric generation	125	110	258	216
Purchased and interchange power	340	327	669	640
Purchased power - related parties	23	21	46	42
Cost of gas sold	154	124	754	660
Maintenance and other operating expenses	289	266	555	543
Depreciation and amortization	136	128	316	299
General taxes	48	46	117	114
Total operating expenses	1,115	1,022	2,715	2,514
Operating Income	227	260	546	443
Other Income (Expense)
Interest income	2	1	2	2
Allowance for equity funds used during construction	1	2	4	4
Other income	2	3	9	11
Other expense	(3)	(3)	(6)	(5)
Total other income	2	3	9	12
Interest Charges
Interest on long-term debt	60	58	119	119
Other interest expense	3	4	6	8
Allowance for borrowed funds used during construction	(1)	(1)	(2)	(2)
Total interest charges	62	61	123	125
Income Before Income Taxes	167	202	432	330
Income Tax Expense	67	80	170	132
Net Income	100	122	262	198
Preferred Stock Dividends and Distribution	1	1	1	1
Net Income Attributable to Common Stockholders
Net Income Available to Common Stockholders	$ 99	$ 121	$ 261	$ 197

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Contingencies And Commitments (Contingencies And Commitments) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended									1 Months Ended
	Jun. 30, 2013	Dec. 31, 2012	Oct. 31, 2010	Jun. 30, 2013 Consumers Energy Company [Member]	Dec. 31, 2012 Consumers Energy Company [Member]	Jun. 30, 2013 NREPA [Member] Consumers Energy Company [Member]	Jun. 30, 2013 Superfund Liability [Member] Consumers Energy Company [Member]	Jun. 30, 2013 Manufactured Gas Plant [Member] Consumers Energy Company [Member] item	Dec. 31, 2011 Big Rock Decommissioning [Member] Consumers Energy Company [Member]	Jul. 31, 2011 DOE Settlement [Member] Consumers Energy Company [Member]
Demand for payment by USEPA			$ 7
Cumulative environmental charge	228
Accrual for environmental loss contingencies	58					4	2	121
Discounted projected costs rate	4.34%							2.57%
Accrual for environmental loss contingencies, inflation rate	1.00%							2.50%
Remaining undiscounted obligation amount	77							130
Foreign government tax claim on sale	142
Remediation and other response activity costs, minimum						4	2
Remediation and other response activity costs. maximum						6	8
Litigation settlement, gross										120
Number of former MGPs								23
Regulatory assets, noncurrent	$ 2,202	$ 2,287		$ 2,202	$ 2,287			$ 151	$ 85

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Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2013

Schedule Of Carrying Amounts And Fair Values Of Financial Instruments

In Millions
	June 30, 2013															December 31, 2012
				Fair Value															Fair Value
	Carrying						Level									Carrying						Level
	Amount			Total			1			2			3			Amount			Total			1			2			3
CMS Energy, including Consumers
Securities held    to maturity		$	10		$	10		$	-		$	10		$	-		$	9		$	10		$	-		$	10		$	-
Notes    receivable1			543			582			-			-			582			544			581			-			-			581
Long-term    debt2			7,432			8,278			-			7,295			983			7,229			8,347			-			7,321			1,026
Consumers
Long-term    debt3		$	4,318		$	4,731		$	-		$	3,748		$	983		$	4,338		$	5,015		$	-		$	3,989		$	1,026

¹ Includes current portion of notes receivable of $50 million at June 30, 2013 and $40 million at December 31, 2012.

² Includes current portion of long-term debt of $737 million at June 30, 2013 and $519 million at December 31, 2012.

³ Includes current portion of long-term debt of $42 million at June 30, 2013 and $41 million at December 31, 2012.

Schedule Of Investment Securities

In Millions
	June 30, 2013												December 31, 2012
				Unrealized			Unrealized			Fair						Unrealized			Unrealized			Fair
	Cost			Gains			Losses			Value			Cost			Gains			Losses			Value
CMS Energy, including Consumers
Available for sale
DB SERP
Mutual funds		$	138		$	-		$	1		$	137		$	123		$	3		$	-		$	126
Held to maturity
Debt securities			10			-			-			10			9			1			-			10
Consumers
Available for sale
DB SERP
Mutual funds		$	96		$	-		$	-		$	96		$	83		$	2		$	-		$	85
CMS Energy
common stock			5			25			-			30			6			26			-			32

Consumers Energy Company [Member]

Schedule Of Carrying Amounts And Fair Values Of Financial Instruments

In Millions
	June 30, 2013															December 31, 2012
				Fair Value															Fair Value
	Carrying						Level									Carrying						Level
	Amount			Total			1			2			3			Amount			Total			1			2			3
CMS Energy, including Consumers
Securities held    to maturity		$	10		$	10		$	-		$	10		$	-		$	9		$	10		$	-		$	10		$	-
Notes    receivable1			543			582			-			-			582			544			581			-			-			581
Long-term    debt2			7,432			8,278			-			7,295			983			7,229			8,347			-			7,321			1,026
Consumers
Long-term    debt3		$	4,318		$	4,731		$	-		$	3,748		$	983		$	4,338		$	5,015		$	-		$	3,989		$	1,026

¹ Includes current portion of notes receivable of $50 million at June 30, 2013 and $40 million at December 31, 2012.

² Includes current portion of long-term debt of $737 million at June 30, 2013 and $519 million at December 31, 2012.

³ Includes current portion of long-term debt of $42 million at June 30, 2013 and $41 million at December 31, 2012.

Schedule Of Investment Securities

In Millions
	June 30, 2013												December 31, 2012
				Unrealized			Unrealized			Fair						Unrealized			Unrealized			Fair
	Cost			Gains			Losses			Value			Cost			Gains			Losses			Value
CMS Energy, including Consumers
Available for sale
DB SERP
Mutual funds		$	138		$	-		$	1		$	137		$	123		$	3		$	-		$	126
Held to maturity
Debt securities			10			-			-			10			9			1			-			10
Consumers
Available for sale
DB SERP
Mutual funds		$	96		$	-		$	-		$	96		$	83		$	2		$	-		$	85
CMS Energy
common stock			5			25			-			30			6			26			-			32

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Earnings Per Share - CMS Energy (Basic And Diluted EPS Computations) (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Earnings Per Share - CMS Energy [Abstract]
Income From continuing operations	$ 81	$ 101	$ 225	$ 161
Income attributable to noncontrolling interests	1	1	1	1
Income from Continuing operations available to common stockholders basic and diluted	$ 80	$ 100	$ 224	$ 160
Weighted average shares - basic	264.5	261.2	264.1	258.4
Add dilutive contingently convertible securities	6.4	5.9	6.2	8.3
Add dilutive non-vested awards	1.3	1.1	1.2	1.0
Weighted average shares - diluted	272.2	268.2	271.5	267.7
Basic	$ 0.30	$ 0.38	$ 0.85	$ 0.61
Diluted	$ 0.29	$ 0.37	$ 0.83	$ 0.59

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Financial Instruments (Schedule Of Carrying Amounts And Fair Values Of Financial Instruments) (Details) (USD $) In Millions, unless otherwise specified	Jun. 30, 2013		Dec. 31, 2012
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities held to maturity, Carrying Amount	$ 10		$ 9
Securities held to maturity - Fair Value	10		10
Long-term debt, Carrying Amount	7,432	[1]	7,229	[1]
Long-term debt, Fair Value	8,278	[1]	8,347	[1]
Notes receivable	76		41
Current portion of long-term debt	737		519
Consumers Energy Company [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt, Carrying Amount	4,318	[2]	4,338	[2]
Long-term debt, Fair Value	4,731	[2]	5,015	[2]
Notes receivable	25
Current portion of long-term debt	42		41
EnerBank [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Notes receivable, Carrying Amount	543	[3]	544	[3]
Notes receivable, Fair Value	582	[3]	581	[3]
Notes receivable	50		40
Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities held to maturity - Fair Value
Long-term debt, Fair Value		[1]		[1]
Fair Value, Inputs, Level 1 [Member] | Consumers Energy Company [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt, Fair Value		[2]		[2]
Fair Value, Inputs, Level 1 [Member] | EnerBank [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Notes receivable, Fair Value		[3]		[3]
Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities held to maturity - Fair Value	10		10
Long-term debt, Fair Value	7,295	[1]	7,321	[1]
Fair Value, Inputs, Level 2 [Member] | Consumers Energy Company [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt, Fair Value	3,748	[2]	3,989	[2]
Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt, Fair Value	983	[1]	1,026	[1]
Fair Value, Inputs, Level 3 [Member] | Consumers Energy Company [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt, Fair Value	983	[2]	1,026	[2]
Fair Value, Inputs, Level 3 [Member] | EnerBank [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Notes receivable, Fair Value	$ 582	[3]	$ 581	[3]

[1] Includes current portion of long-term debt of $737 million at June 30, 2013 and $519 million at December 31, 2012.

[2] Includes current portion of long-term debt of $42 million at June 30, 2013 and $41 million at December 31, 2012.

[3] Includes current portion of notes receivable of $50 million at June 30, 2013 and $40 million at December 31, 2012.

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Financings And Capitalization (Contingently Convertible Securities) (Details) (Senior Notes 5.5% Due June 2029 [Member], USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended
	Jun. 30, 2013
Senior Notes 5.5% Due June 2029 [Member]
Maturity Date	2029
Outstanding	$ 172
Adjusted Conversion Price	$ 13.74
Adjusted Trigger Price	$ 17.86
Interest rate	5.50%

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Financings And Capitalization (Issuance Of Common Stock) (Details) (CMS Energy [Member], USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended			27 Months Ended
	Mar. 31, 2013	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2013
CMS Energy [Member]
Number of Shares Issued	735,873	650,235	762,925	2,149,033
Average Price Per Share	$ 27.18	$ 23.07	$ 19.66	$ 23.27
Proceeds	$ 20	$ 15	$ 15	$ 50

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Fair Value Measurements

6 Months Ended

Jun. 30, 2013

Fair Value Measurements

4: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, 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, recorded at fair value on a recurring basis:

In Millions
	June 30, 2013												December 31, 2012
				Level												Level
	Total			1			2			3			Total			1			2			3
CMS Energy, including Consumers
Assets
Cash equivalents		$	339		$	339		$	-		$	-		$	53		$	53		$	-		$	-
Restricted cash equivalents			13			13			-			-			14			14			-			-
Nonqualified deferred    compensation plan assets			5			5			-			-			5			5			-			-
DB SERP
Cash equivalents			1			1			-			-			2			2			-			-
Mutual funds			137			137			-			-			126			126			-			-
Derivative instruments
Commodity contracts			12			-			2			10			3			-			-			3
Total		$	507		$	495		$	2		$	10		$	203		$	200		$	-		$	3
Liabilities
Nonqualified deferred    compensation plan liabilities		$	5		$	5		$	-		$	-		$	5		$	5		$	-		$	-
Derivative instruments
Commodity contracts			4			-			2			2			4			-			3			1
Total		$	9		$	5		$	2		$	2		$	9		$	5		$	3		$	1
Consumers
Assets
Cash equivalents		$	186		$	186		$	-		$	-		$	-		$	-		$	-		$	-
Restricted cash equivalents			13			13			-			-			13			13			-			-
CMS Energy common stock			30			30			-			-			32			32			-			-
Nonqualified deferred    compensation plan assets			4			4			-			-			4			4			-			-
DB SERP
Cash equivalents			1			1			-			-			1			1			-			-
Mutual funds			96			96			-			-			85			85			-			-
Derivative instruments
Commodity contracts			10			-			-			10			2			-			-			2
Total		$	340		$	330		$	-		$	10		$	137		$	135		$	-		$	2
Liabilities
Nonqualified deferred    compensation plan liabilities		$	4		$	4		$	-		$	-		$	4		$	4		$	-		$	-
Total		$	4		$	4		$	-		$	-		$	4		$	4		$	-		$	-

Cash Equivalents:  Cash equivalents and restricted cash equivalents consist of money market funds with daily liquidity.  Short-term debt instruments classified as cash equivalents or restricted cash equivalents on the consolidated balance sheets are not included since they are recorded at amortized cost.

Nonqualified Deferred Compensation Plan Assets and Liabilities:  The nonqualified deferred compensation plan assets consist of mutual funds, which are valued using the daily quoted NAVs that are publicly available and are the basis for transactions to buy or sell shares in each fund.  CMS Energy and Consumers value their nonqualified 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 the assets in other non‑current assets and the liabilities in other non‑current liabilities on their consolidated balance sheets.

DB SERP Assets:  CMS Energy and Consumers value their DB SERP assets using a market approach that incorporates quoted market prices.  The DB SERP cash equivalents consist of a money market fund with daily liquidity.  The DB SERP invests in mutual funds that hold primarily fixed-income instruments of varying maturities.  In order to meet their investment objectives, the funds hold investment-grade debt securities, and may invest a portion of their assets in high-yield securities, foreign debt, and derivative instruments.  CMS Energy and Consumers value these funds using the daily quoted NAVs that are publicly available and are the basis for transactions to buy or sell shares in each fund.  CMS Energy and Consumers report their DB SERP assets in other non‑current assets on their consolidated balance sheets.  For additional details about DB SERP securities, see Note 5, Financial Instruments.

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.  CMS Energy values its exchange-traded derivative contracts based on Level 1 quoted prices and values other derivatives using Level 2 inputs, including commodity forward prices and credit risk factors.  CMS Energy and Consumers have classified certain derivatives as Level 3 since the fair value measurements incorporate assumptions that cannot be observed or confirmed through market transactions.

The most significant derivatives classified as Level 3 are FTRs held by Consumers.  Consumers 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 FTRs are deferred as regulatory assets or liabilities until the instruments are settled.  Due to the lack of quoted pricing information, Consumers determines the fair value of its FTRs based on Consumers’ average historical settlements.

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

The largest change in the fair values of Level3 assets and liabilities at CMS Energy and Consumers during the three and six months ended June 30, 2013 and 2012 was attributable to the FTRs.

Consumers Energy Company [Member]

Fair Value Measurements

4: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, 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, recorded at fair value on a recurring basis:

In Millions
	June 30, 2013												December 31, 2012
				Level												Level
	Total			1			2			3			Total			1			2			3
CMS Energy, including Consumers
Assets
Cash equivalents		$	339		$	339		$	-		$	-		$	53		$	53		$	-		$	-
Restricted cash equivalents			13			13			-			-			14			14			-			-
Nonqualified deferred    compensation plan assets			5			5			-			-			5			5			-			-
DB SERP
Cash equivalents			1			1			-			-			2			2			-			-
Mutual funds			137			137			-			-			126			126			-			-
Derivative instruments
Commodity contracts			12			-			2			10			3			-			-			3
Total		$	507		$	495		$	2		$	10		$	203		$	200		$	-		$	3
Liabilities
Nonqualified deferred    compensation plan liabilities		$	5		$	5		$	-		$	-		$	5		$	5		$	-		$	-
Derivative instruments
Commodity contracts			4			-			2			2			4			-			3			1
Total		$	9		$	5		$	2		$	2		$	9		$	5		$	3		$	1
Consumers
Assets
Cash equivalents		$	186		$	186		$	-		$	-		$	-		$	-		$	-		$	-
Restricted cash equivalents			13			13			-			-			13			13			-			-
CMS Energy common stock			30			30			-			-			32			32			-			-
Nonqualified deferred    compensation plan assets			4			4			-			-			4			4			-			-
DB SERP
Cash equivalents			1			1			-			-			1			1			-			-
Mutual funds			96			96			-			-			85			85			-			-
Derivative instruments
Commodity contracts			10			-			-			10			2			-			-			2
Total		$	340		$	330		$	-		$	10		$	137		$	135		$	-		$	2
Liabilities
Nonqualified deferred    compensation plan liabilities		$	4		$	4		$	-		$	-		$	4		$	4		$	-		$	-
Total		$	4		$	4		$	-		$	-		$	4		$	4		$	-		$	-

Cash Equivalents:  Cash equivalents and restricted cash equivalents consist of money market funds with daily liquidity.  Short-term debt instruments classified as cash equivalents or restricted cash equivalents on the consolidated balance sheets are not included since they are recorded at amortized cost.

Nonqualified Deferred Compensation Plan Assets and Liabilities:  The nonqualified deferred compensation plan assets consist of mutual funds, which are valued using the daily quoted NAVs that are publicly available and are the basis for transactions to buy or sell shares in each fund.  CMS Energy and Consumers value their nonqualified 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 the assets in other non‑current assets and the liabilities in other non‑current liabilities on their consolidated balance sheets.

DB SERP Assets:  CMS Energy and Consumers value their DB SERP assets using a market approach that incorporates quoted market prices.  The DB SERP cash equivalents consist of a money market fund with daily liquidity.  The DB SERP invests in mutual funds that hold primarily fixed-income instruments of varying maturities.  In order to meet their investment objectives, the funds hold investment-grade debt securities, and may invest a portion of their assets in high-yield securities, foreign debt, and derivative instruments.  CMS Energy and Consumers value these funds using the daily quoted NAVs that are publicly available and are the basis for transactions to buy or sell shares in each fund.  CMS Energy and Consumers report their DB SERP assets in other non‑current assets on their consolidated balance sheets.  For additional details about DB SERP securities, see Note 5, Financial Instruments.

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.  CMS Energy values its exchange-traded derivative contracts based on Level 1 quoted prices and values other derivatives using Level 2 inputs, including commodity forward prices and credit risk factors.  CMS Energy and Consumers have classified certain derivatives as Level 3 since the fair value measurements incorporate assumptions that cannot be observed or confirmed through market transactions.

The most significant derivatives classified as Level 3 are FTRs held by Consumers.  Consumers 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 FTRs are deferred as regulatory assets or liabilities until the instruments are settled.  Due to the lack of quoted pricing information, Consumers determines the fair value of its FTRs based on Consumers’ average historical settlements.

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

The largest change in the fair values of Level3 assets and liabilities at CMS Energy and Consumers during the three and six months ended June 30, 2013 and 2012 was attributable to the FTRs.

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Contingencies And Commitments (Expected Remediation Cost By Year) (Details) (USD $) In Millions, unless otherwise specified	Jun. 30, 2013
Site Contingency [Line Items]
Undiscounted amount due in next fiscal year	$ 12
Undiscounted amount due within two year	4
Undiscounted amount due within third year	4
Undiscounted amount due within fourth year	4
Undiscounted amount due within five year	4
Manufactured Gas Plant [Member] | Consumers Energy Company [Member]
Site Contingency [Line Items]
Undiscounted amount due within one year	9
Undiscounted amount due within two year	9
Undiscounted amount due within third year	16
Undiscounted amount due within fourth year	10
Undiscounted amount due within five year	$ 9

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Notes Receivable (Schedule Of Allowance For Loan Losses) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013 EnerBank [Member]	Dec. 31, 2012 EnerBank [Member]
Allowance for loan losses, at beginning of period	$ 5	$ 5	$ 5	$ 5
Charge-offs	(2)	(1)	(3)	(2)
Recoveries	1		1
Provision for loan losses	1	1	2	2
Allowance for loan losses, at end of period	5	5	5	5
Delinquent loans					2	3
Loans modified as troubled debt restructurings					$ 1	$ 1

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Retirement Benefits

6 Months Ended

Jun. 30, 2013

Retirement Benefits

7:RETIREMENT BENEFITS

CMS Energy and Consumers provide pension, OPEB, and other retirement benefits to employees under a number of different plans.

Presented in the following tables are the costs incurred in CMS Energy’s and Consumers’ retirement benefits plans:

In Millions
	Pension
	Three Months Ended						Six Months Ended
June 30	2013			2012			2013			2012
CMS Energy, including Consumers
Net periodic pension cost
Service cost		$	14		$	12		$	27		$	24
Interest expense			23			25			47			50
Expected return on plan assets			(32)			(32)			(64)			(63)
Amortization of:
Net loss			24			19			48			38
Prior service cost			1			2			2			3
Net periodic pension cost		$	30		$	26		$	60		$	52
Consumers
Net periodic pension cost
Service cost		$	13		$	11		$	26		$	23
Interest expense			23			24			46			48
Expected return on plan assets			(32)			(31)			(63)			(61)
Amortization of:
Net loss			24			19			47			37
Prior service cost			1			2			2			3
Net periodic pension cost		$	29		$	25		$	58		$	50

In Millions
	OPEB
	Three Months Ended						Six Months Ended
June 30	2013			2012			2013			2012
CMS Energy, including Consumers
Net periodic OPEB cost
Service cost		$	9		$	8		$	18		$	16
Interest expense			19			20			38			41
Expected return on plan assets			(19)			(16)			(38)			(33)
Amortization of:
Net loss			10			12			21			23
Prior service credit			(5)			(5)			(10)			(10)
Net periodic OPEB cost		$	14		$	19		$	29		$	37
Consumers
Net periodic OPEB cost
Service cost		$	9		$	8		$	18		$	16
Interest expense			18			20			36			40
Expected return on plan assets			(17)			(16)			(35)			(31)
Amortization of:
Net loss			10			12			21			23
Prior service credit			(5)			(5)			(10)			(10)
Net periodic OPEB cost		$	15		$	19		$	30		$	38

Effective July 1, 2013, CMS Energy and Consumers changed the Medicare drug program provided through their OPEB Plan from an employer-sponsored prescription drug plan with a retiree drug subsidy to an EGWP to begin on January 1, 2015.  Also effective July 1, 2013, the OPEB Plan incorporated certain benefit changes to begin on January 1, 2016.  Accordingly, CMS Energy and Consumers performed a remeasurement of the OPEB Plan as of July 1, 2013.  In addition, with the plan remeasurement, the discount rate used to measure the liability was increased from 4.4percent at December 31, 2012 to 5.1percent at July 1, 2013.  Assumptions regarding the expected long-term rate of return on plan assets and the health-care cost trend rate did not change from December 31, 2012 levels.

Consumers Energy Company [Member]

Retirement Benefits

7:RETIREMENT BENEFITS

CMS Energy and Consumers provide pension, OPEB, and other retirement benefits to employees under a number of different plans.

Presented in the following tables are the costs incurred in CMS Energy’s and Consumers’ retirement benefits plans:

In Millions
	Pension
	Three Months Ended						Six Months Ended
June 30	2013			2012			2013			2012
CMS Energy, including Consumers
Net periodic pension cost
Service cost		$	14		$	12		$	27		$	24
Interest expense			23			25			47			50
Expected return on plan assets			(32)			(32)			(64)			(63)
Amortization of:
Net loss			24			19			48			38
Prior service cost			1			2			2			3
Net periodic pension cost		$	30		$	26		$	60		$	52
Consumers
Net periodic pension cost
Service cost		$	13		$	11		$	26		$	23
Interest expense			23			24			46			48
Expected return on plan assets			(32)			(31)			(63)			(61)
Amortization of:
Net loss			24			19			47			37
Prior service cost			1			2			2			3
Net periodic pension cost		$	29		$	25		$	58		$	50

In Millions
	OPEB
	Three Months Ended						Six Months Ended
June 30	2013			2012			2013			2012
CMS Energy, including Consumers
Net periodic OPEB cost
Service cost		$	9		$	8		$	18		$	16
Interest expense			19			20			38			41
Expected return on plan assets			(19)			(16)			(38)			(33)
Amortization of:
Net loss			10			12			21			23
Prior service credit			(5)			(5)			(10)			(10)
Net periodic OPEB cost		$	14		$	19		$	29		$	37
Consumers
Net periodic OPEB cost
Service cost		$	9		$	8		$	18		$	16
Interest expense			18			20			36			40
Expected return on plan assets			(17)			(16)			(35)			(31)
Amortization of:
Net loss			10			12			21			23
Prior service credit			(5)			(5)			(10)			(10)
Net periodic OPEB cost		$	15		$	19		$	30		$	38

Effective July 1, 2013, CMS Energy and Consumers changed the Medicare drug program provided through their OPEB Plan from an employer-sponsored prescription drug plan with a retiree drug subsidy to an EGWP to begin on January 1, 2015.  Also effective July 1, 2013, the OPEB Plan incorporated certain benefit changes to begin on January 1, 2016.  Accordingly, CMS Energy and Consumers performed a remeasurement of the OPEB Plan as of July 1, 2013.  In addition, with the plan remeasurement, the discount rate used to measure the liability was increased from 4.4percent at December 31, 2012 to 5.1percent at July 1, 2013.  Assumptions regarding the expected long-term rate of return on plan assets and the health-care cost trend rate did not change from December 31, 2012 levels.

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Financings And Capitalization

6 Months Ended

Jun. 30, 2013

Financings And Capitalization

3:FINANCINGS AND CAPITALIZATION

Presented in the following table is a summary of major long-term debt transactions during the six months ended June 30, 2013:

	Principal					Issue/Retirement
	(In Millions)			Interest Rate		Date	Maturity Date
Debt issuances
CMS Energy
Senior notes1		$	250	4.70	%	March 2013	March 2043
Total CMS Energy parent		$	250
Consumers
FMB		$	425	3.95	%	May 2013	May 2043
Total Consumers		$	425
Total debt issuances		$	675
Debt retirements
Consumers
FMB		$	200	6.00	%	June 2013	February 2014
FMB			225	5.00		June 2013	March 2015
Total Consumers		$	425
Total debt retirements		$	425

¹ CMS Energy plans to use these proceeds to retire all $250 million of CMS Energy’s 2.75 percent senior notes due May 2014.

Revolving Credit Facilities:  The following secured revolving credit facilities with banks were available at June 30, 2013:

In Millions
							Letters of Credit
Expiration Date	Amount of Facility			Amount Borrowed			Outstanding			Amount Available
CMS Energy
December 21, 20171		$	550		$	-		$	2		$	548
Consumers
December 21, 20172		$	500		$	-		$	2		$	498
April 18, 20172			150			-			-			150
September 9, 20142			30			-			30			-

¹ Obligations under this facility are secured by Consumers common stock.

² Obligations under this facility are secured by FMBs of Consumers.

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, 2013, $250 million of accounts receivable were eligible for transfer.  During the six months ended June 30, 2013, Consumers’ average short-term borrowings totaled $10 million, with a weighted-average annual interest rate of 0.94 percent.

Contingently Convertible Securities:  Presented in the following table are the significant terms of CMS Energy’s contingently convertible securities at June 30, 2013:

		Outstanding			Adjusted			Adjusted
Security	Maturity	(In Millions)			Conversion Price			Trigger Price
5.50% senior notes	2029		$	172		$	13.74		$	17.86

During 20 of the last 30 trading days ended June 30, 2013, the adjusted trigger-price contingencies were met for the contingently convertible senior notes, and as a result, the senior notes are convertible at the option of the note holders for the three months ending September 30, 2013.  The senior notes, if converted, require CMS Energy to pay cash up to the principal amount of the securities.  Any conversion value in excess of the principal amount can be paid in cash or in shares of CMS Energy’s common stock, at the election of CMS Energy.

Dividend Restrictions:  Under provisions of the Michigan Business Corporation Act, at June 30, 2013, payment of common stock dividends by CMS Energy was limited to $3.3 billion.

Under the provisions of its articles of incorporation, at June 30, 2013, Consumers had $603 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, 2013, CMS Energy received $194 million of common stock dividends from Consumers.

Issuance of Common Stock:  CMS Energy has entered into two continuous equity offering programs permitting it to sell, from time to time in “at the market” offerings, common stock having an aggregate sales price of up to $50 million per program.  

Presented in the following table are the transactions that CMS Energy entered into under the first program:

	Number of	Average			Proceeds
	Shares Issued	Price per Share			(In Millions)
June 2011	762,925		$	19.66		$	15
June 2012	650,235			23.07			15
March 2013	735,873			27.18			20
Total	2,149,033		$	23.27		$	50

In April 2013, CMS Energy entered into thesecond continuous equity offering program, but has not yet issued any equity under this program.

Preferred Stock:  In May 2013, Consumers gave notice of the mandatory redemption of all of its $4.16 preferred stock.  Holders of record as of June 3, 2013 received a redemption price of $103.25 per share, payable July 1, 2013, which represented an aggregate redemption price of $7 million paid to redeem the 68,451 outstanding shares.

Consumers Energy Company [Member]

Financings And Capitalization

3:FINANCINGS AND CAPITALIZATION

Presented in the following table is a summary of major long-term debt transactions during the six months ended June 30, 2013:

	Principal					Issue/Retirement
	(In Millions)			Interest Rate		Date	Maturity Date
Debt issuances
CMS Energy
Senior notes1		$	250	4.70	%	March 2013	March 2043
Total CMS Energy parent		$	250
Consumers
FMB		$	425	3.95	%	May 2013	May 2043
Total Consumers		$	425
Total debt issuances		$	675
Debt retirements
Consumers
FMB		$	200	6.00	%	June 2013	February 2014
FMB			225	5.00		June 2013	March 2015
Total Consumers		$	425
Total debt retirements		$	425

¹ CMS Energy plans to use these proceeds to retire all $250 million of CMS Energy’s 2.75 percent senior notes due May 2014.

Revolving Credit Facilities:  The following secured revolving credit facilities with banks were available at June 30, 2013:

In Millions
							Letters of Credit
Expiration Date	Amount of Facility			Amount Borrowed			Outstanding			Amount Available
CMS Energy
December 21, 20171		$	550		$	-		$	2		$	548
Consumers
December 21, 20172		$	500		$	-		$	2		$	498
April 18, 20172			150			-			-			150
September 9, 20142			30			-			30			-

¹ Obligations under this facility are secured by Consumers common stock.

² Obligations under this facility are secured by FMBs of Consumers.

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, 2013, $250 million of accounts receivable were eligible for transfer.  During the six months ended June 30, 2013, Consumers’ average short-term borrowings totaled $10 million, with a weighted-average annual interest rate of 0.94 percent.

Contingently Convertible Securities:  Presented in the following table are the significant terms of CMS Energy’s contingently convertible securities at June 30, 2013:

		Outstanding			Adjusted			Adjusted
Security	Maturity	(In Millions)			Conversion Price			Trigger Price
5.50% senior notes	2029		$	172		$	13.74		$	17.86

During 20 of the last 30 trading days ended June 30, 2013, the adjusted trigger-price contingencies were met for the contingently convertible senior notes, and as a result, the senior notes are convertible at the option of the note holders for the three months ending September 30, 2013.  The senior notes, if converted, require CMS Energy to pay cash up to the principal amount of the securities.  Any conversion value in excess of the principal amount can be paid in cash or in shares of CMS Energy’s common stock, at the election of CMS Energy.

Dividend Restrictions:  Under provisions of the Michigan Business Corporation Act, at June 30, 2013, payment of common stock dividends by CMS Energy was limited to $3.3 billion.

Under the provisions of its articles of incorporation, at June 30, 2013, Consumers had $603 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, 2013, CMS Energy received $194 million of common stock dividends from Consumers.

Issuance of Common Stock:  CMS Energy has entered into two continuous equity offering programs permitting it to sell, from time to time in “at the market” offerings, common stock having an aggregate sales price of up to $50 million per program.  

Presented in the following table are the transactions that CMS Energy entered into under the first program:

	Number of	Average			Proceeds
	Shares Issued	Price per Share			(In Millions)
June 2011	762,925		$	19.66		$	15
June 2012	650,235			23.07			15
March 2013	735,873			27.18			20
Total	2,149,033		$	23.27		$	50

In April 2013, CMS Energy entered into thesecond continuous equity offering program, but has not yet issued any equity under this program.

Preferred Stock:  In May 2013, Consumers gave notice of the mandatory redemption of all of its $4.16 preferred stock.  Holders of record as of June 3, 2013 received a redemption price of $103.25 per share, payable July 1, 2013, which represented an aggregate redemption price of $7 million paid to redeem the 68,451 outstanding shares.

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Consolidated Balance Sheets (USD $) In Millions, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Current Assets
Cash and cash equivalents	$ 537	$ 93
Restricted cash and cash equivalents	29	29
Accounts receivable and accrued revenue, less allowances	728	855
Notes receivable	76	41
Accounts receivable - related parties	10	10
Accrued power supply and gas revenue	20	32
Inventories at average cost
Gas in underground storage	568	820
Materials and supplies	103	96
Generating plant fuel stock	159	168
Deferred property taxes	140	190
Regulatory assets	36	35
Prepayments and other current assets	79	53
Total current assets	2,485	2,422
Plant, Property, and Equipment
Plant, property, and equipment, gross	16,086	15,592
Less accumulated depreciation and amortization	5,278	5,121
Plant, property, and equipment, net	10,808	10,471
Construction work in progress	1,108	1,080
Total plant, property, and equipment	11,916	11,551
Other Non-current Assets
Regulatory assets, noncurrent	2,202	2,287
Accounts and notes receivable, less allowances	504	521
Investments	63	57
Other	259	293
Total other non-current assets	3,028	3,158
Total Assets	17,429	17,131
Current Liabilities
Current portion of long-term debt, capital and finance lease obligations	758	541
Notes payable		110
Accounts payable	512	512
Accounts payable - related parties	9	9
Accrued rate refunds		6
Accrued interest	93	95
Accrued taxes	206	279
Deferred income taxes	77	68
Regulatory liabilities, current	8	25
Other current liabilities	139	152
Total current liabilities	1,802	1,797
Non-current Liabilities
Long-term debt	6,695	6,710
Non-current portion of capital and finance lease obligations	144	153
Regulatory liabilities	2,243	2,101
Postretirement benefits	1,393	1,451
Asset retirement obligations	319	312
Deferred investment tax credit	41	43
Deferred income taxes	1,116	1,015
Other non-current liabilities	316	311
Total non-current liabilities	12,267	12,096
Commitments and Contingencies (Notes 1 and 2)
Equity
Common stock	3	3
Other paid-in capital	4,710	4,669
Accumulated other comprehensive loss	(56)	(55)
Retained earnings (Accumulated deficit)	(1,334)	(1,423)
Total common stockholders equity	3,323	3,194
Noncontrolling interests	37	44
Total equity	3,360	3,238
Total Liabilities and Equity	17,429	17,131
Consumers Energy Company [Member]
Current Assets
Cash and cash equivalents	286	5
Restricted cash and cash equivalents	28	28
Accounts receivable and accrued revenue, less allowances	719	844
Notes receivable	25
Accounts receivable - related parties	1	1
Accrued power supply and gas revenue	20	32
Inventories at average cost
Gas in underground storage	568	816
Materials and supplies	99	92
Generating plant fuel stock	159	167
Deferred property taxes	140	190
Regulatory assets	36	35
Prepayments and other current assets	72	45
Total current assets	2,153	2,255
Plant, Property, and Equipment
Plant, property, and equipment, gross	15,951	15,456
Less accumulated depreciation and amortization	5,216	5,061
Plant, property, and equipment, net	10,735	10,395
Construction work in progress	1,106	1,080
Total plant, property, and equipment	11,841	11,475
Other Non-current Assets
Regulatory assets, noncurrent	2,202	2,287
Accounts and notes receivable, less allowances	11	17
Investments	30	32
Other	172	209
Total other non-current assets	2,415	2,545
Total Assets	16,409	16,275
Current Liabilities
Current portion of long-term debt, capital and finance lease obligations	63	63
Notes payable		110
Accounts payable	502	501
Accounts payable - related parties	13	11
Accrued rate refunds		6
Accrued interest	59	65
Accrued taxes	316	376
Deferred income taxes	127	144
Regulatory liabilities, current	8	25
Other current liabilities	100	109
Total current liabilities	1,188	1,410
Non-current Liabilities
Long-term debt	4,276	4,297
Non-current portion of capital and finance lease obligations	144	153
Regulatory liabilities	2,243	2,101
Postretirement benefits	1,329	1,385
Asset retirement obligations	318	311
Deferred investment tax credit	41	43
Deferred income taxes	1,820	1,741
Other non-current liabilities	259	252
Total non-current liabilities	10,430	10,283
Commitments and Contingencies (Notes 1 and 2)
Equity
Common stock	841	841
Other paid-in capital	3,257	3,107
Accumulated other comprehensive loss	(9)	(8)
Retained earnings (Accumulated deficit)	665	598
Total common stockholders equity	4,754	4,538
Preferred stock	37	44
Total equity	4,791	4,582
Total Liabilities and Equity	$ 16,409	$ 16,275

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Financings And Capitalization (Major Long-Term Debt Transactions) (Details) (USD $)	6 Months Ended
	Jun. 30, 2013
Senior Notes 2.75% Due May 2014 [Member] | CMS Energy [Member]
Debt issuance, principal	$ 250,000,000
Interest rate	2.75%
Maturity date	May 2014
Debt Issuance [Member]
Debt issuance, principal	675,000,000
Debt Issuance [Member] | CMS Energy [Member]
Debt issuance, principal	250,000,000
Debt Issuance [Member] | Consumers Energy Company [Member]
Debt issuance, principal	425,000,000
Debt Issuance [Member] | Senior Notes 4.70% Due March 2043 [Member] | CMS Energy [Member]
Debt issuance, principal	250,000,000	[1]
Interest rate	4.70%	[1]
Debt issuance date	March 2013	[1]
Maturity date	March 2043	[1]
Debt Issuance [Member] | First Mortgage Bonds 3.95% Due May 2043 [Member] | Consumers Energy Company [Member]
Debt issuance, principal	425,000,000
Interest rate	3.95%
Debt issuance date	May 2013
Maturity date	May 2043
Debt Retirements [Member]
Debt issuance, principal	425,000,000
Debt Retirements [Member] | Consumers Energy Company [Member]
Debt issuance, principal	425,000,000
Debt Retirements [Member] | First Mortgage Bonds 6% Due February 2014 [Member] | Consumers Energy Company [Member]
Debt issuance, principal	200,000,000
Interest rate	6.00%
Debt issuance date	June 2013
Maturity date	February 2014
Debt Retirements [Member] | First Mortgage Bonds 5% Due March 2015 [Member] | Consumers Energy Company [Member]
Debt issuance, principal	$ 225,000,000
Interest rate	5.00%
Debt issuance date	June 2013
Maturity date	March 2015

[1] CMS Energy plans to use these proceeds to retire all $250 million of CMS Energy’s 2.75 percent senior notes due May 2014.

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Notes Receivable (Policy)

6 Months Ended

Jun. 30, 2013

Notes Receivable [Abstract]

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.  Loan 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.

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Notes Receivable

6 Months Ended

Jun. 30, 2013

Notes Receivable

6:NOTES RECEIVABLE

Presented in the following table are details of CMS Energy’s and Consumers’ current and non‑current notes receivable:

In Millions
	June 30, 2013			December 31, 2012
CMS Energy, including Consumers
Current
EnerBank notes receivable, net of allowance for loan losses		$	50		$	40
Other			26			1
Non-current
EnerBank notes receivable, net of allowance for loan losses			493			504
Other			-			16
Total notes receivable		$	569		$	561
Consumers
Current
Other		$	25		$	-
Non-current
Other			-			16
Total notes receivable		$	25		$	16

EnerBank notes receivable are unsecured consumer installment loans for financing home improvements.

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.  Loan 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 Ended						Six Months Ended
June 30	2013			2012			2013			2012
Balance at beginning of period		$	5		$	5		$	5		$	5
Charge-offs			(2)			(1)			(3)			(2)
Recoveries			1			-			1			-
Provision for loan losses			1			1			2			2
Balance at end of period		$	5		$	5		$	5		$	5

Loans that are 30 days or more past due are considered delinquent.  The balance of EnerBank’s delinquent consumer loans was $2 million at June 30, 2013 and $3 million at December 31, 2012.

At June 30, 2013 and December 31, 2012, $1 million of EnerBank’s loans had been modified as troubled debt restructurings.

Consumers Energy Company [Member]

Notes Receivable

6:NOTES RECEIVABLE

Presented in the following table are details of CMS Energy’s and Consumers’ current and non‑current notes receivable:

In Millions
	June 30, 2013			December 31, 2012
CMS Energy, including Consumers
Current
EnerBank notes receivable, net of allowance for loan losses		$	50		$	40
Other			26			1
Non-current
EnerBank notes receivable, net of allowance for loan losses			493			504
Other			-			16
Total notes receivable		$	569		$	561
Consumers
Current
Other		$	25		$	-
Non-current
Other			-			16
Total notes receivable		$	25		$	16

EnerBank notes receivable are unsecured consumer installment loans for financing home improvements.

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.  Loan 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 Ended						Six Months Ended
June 30	2013			2012			2013			2012
Balance at beginning of period		$	5		$	5		$	5		$	5
Charge-offs			(2)			(1)			(3)			(2)
Recoveries			1			-			1			-
Provision for loan losses			1			1			2			2
Balance at end of period		$	5		$	5		$	5		$	5

Loans that are 30 days or more past due are considered delinquent.  The balance of EnerBank’s delinquent consumer loans was $2 million at June 30, 2013 and $3 million at December 31, 2012.

At June 30, 2013 and December 31, 2012, $1 million of EnerBank’s loans had been modified as troubled debt restructurings.

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2013

Assets And Liabilities Measured At Fair Value On A Recurring Basis

In Millions
	June 30, 2013												December 31, 2012
				Level												Level
	Total			1			2			3			Total			1			2			3
CMS Energy, including Consumers
Assets
Cash equivalents		$	339		$	339		$	-		$	-		$	53		$	53		$	-		$	-
Restricted cash equivalents			13			13			-			-			14			14			-			-
Nonqualified deferred    compensation plan assets			5			5			-			-			5			5			-			-
DB SERP
Cash equivalents			1			1			-			-			2			2			-			-
Mutual funds			137			137			-			-			126			126			-			-
Derivative instruments
Commodity contracts			12			-			2			10			3			-			-			3
Total		$	507		$	495		$	2		$	10		$	203		$	200		$	-		$	3
Liabilities
Nonqualified deferred    compensation plan liabilities		$	5		$	5		$	-		$	-		$	5		$	5		$	-		$	-
Derivative instruments
Commodity contracts			4			-			2			2			4			-			3			1
Total		$	9		$	5		$	2		$	2		$	9		$	5		$	3		$	1
Consumers
Assets
Cash equivalents		$	186		$	186		$	-		$	-		$	-		$	-		$	-		$	-
Restricted cash equivalents			13			13			-			-			13			13			-			-
CMS Energy common stock			30			30			-			-			32			32			-			-
Nonqualified deferred    compensation plan assets			4			4			-			-			4			4			-			-
DB SERP
Cash equivalents			1			1			-			-			1			1			-			-
Mutual funds			96			96			-			-			85			85			-			-
Derivative instruments
Commodity contracts			10			-			-			10			2			-			-			2
Total		$	340		$	330		$	-		$	10		$	137		$	135		$	-		$	2
Liabilities
Nonqualified deferred    compensation plan liabilities		$	4		$	4		$	-		$	-		$	4		$	4		$	-		$	-
Total		$	4		$	4		$	-		$	-		$	4		$	4		$	-		$	-

Consumers Energy Company [Member]

Assets And Liabilities Measured At Fair Value On A Recurring Basis

In Millions
	June 30, 2013												December 31, 2012
				Level												Level
	Total			1			2			3			Total			1			2			3
CMS Energy, including Consumers
Assets
Cash equivalents		$	339		$	339		$	-		$	-		$	53		$	53		$	-		$	-
Restricted cash equivalents			13			13			-			-			14			14			-			-
Nonqualified deferred    compensation plan assets			5			5			-			-			5			5			-			-
DB SERP
Cash equivalents			1			1			-			-			2			2			-			-
Mutual funds			137			137			-			-			126			126			-			-
Derivative instruments
Commodity contracts			12			-			2			10			3			-			-			3
Total		$	507		$	495		$	2		$	10		$	203		$	200		$	-		$	3
Liabilities
Nonqualified deferred    compensation plan liabilities		$	5		$	5		$	-		$	-		$	5		$	5		$	-		$	-
Derivative instruments
Commodity contracts			4			-			2			2			4			-			3			1
Total		$	9		$	5		$	2		$	2		$	9		$	5		$	3		$	1
Consumers
Assets
Cash equivalents		$	186		$	186		$	-		$	-		$	-		$	-		$	-		$	-
Restricted cash equivalents			13			13			-			-			13			13			-			-
CMS Energy common stock			30			30			-			-			32			32			-			-
Nonqualified deferred    compensation plan assets			4			4			-			-			4			4			-			-
DB SERP
Cash equivalents			1			1			-			-			1			1			-			-
Mutual funds			96			96			-			-			85			85			-			-
Derivative instruments
Commodity contracts			10			-			-			10			2			-			-			2
Total		$	340		$	330		$	-		$	10		$	137		$	135		$	-		$	2
Liabilities
Nonqualified deferred    compensation plan liabilities		$	4		$	4		$	-		$	-		$	4		$	4		$	-		$	-
Total		$	4		$	4		$	-		$	-		$	4		$	4		$	-		$	-

XML

Contingencies And Commitments (Tables)

6 Months Ended

Jun. 30, 2013

Expected Remediation Cost By Year

In Millions
	2013			2014			2015			2016			2017
Consumers
Remediation and other response activity costs		$	9		$	9		$	16		$	10		$	9

Guarantees

In Millions
			Maximum				Carrying
Guarantee Description	Issue Date	Expiration Date	Obligation				Amount
CMS Energy, including Consumers
Indemnity obligations from asset sales    and other agreements	Various	Various through September 2029		$	482	1		$	15
Guarantees	Various	Various through March 2021			57				1
Consumers
Indemnity obligations and other guarantees	Various	Various through September 2029		$	30			$	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 power purchase agreements, 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.

Consumers Energy Company [Member]

Expected Remediation Cost By Year

In Millions
	2013			2014			2015			2016			2017
Consumers
Remediation and other response activity costs		$	9		$	9		$	16		$	10		$	9

Guarantees

In Millions
			Maximum				Carrying
Guarantee Description	Issue Date	Expiration Date	Obligation				Amount
CMS Energy, including Consumers
Indemnity obligations from asset sales    and other agreements	Various	Various through September 2029		$	482	1		$	15
Guarantees	Various	Various through March 2021			57				1
Consumers
Indemnity obligations and other guarantees	Various	Various through September 2029		$	30			$	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 power purchase agreements, 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.

XML

Document And Entity Information	6 Months Ended
	Jun. 30, 2013	Jul. 05, 2013
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2013
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2013
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 [Member]
Entity Common Stock, Shares Outstanding		266,959,461
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

Financings And Capitalization (Tables)

6 Months Ended

Jun. 30, 2013

Summary Of Major Long-Term Debt Transactions

	Principal					Issue/Retirement
	(In Millions)			Interest Rate		Date	Maturity Date
Debt issuances
CMS Energy
Senior notes1		$	250	4.70	%	March 2013	March 2043
Total CMS Energy parent		$	250
Consumers
FMB		$	425	3.95	%	May 2013	May 2043
Total Consumers		$	425
Total debt issuances		$	675
Debt retirements
Consumers
FMB		$	200	6.00	%	June 2013	February 2014
FMB			225	5.00		June 2013	March 2015
Total Consumers		$	425
Total debt retirements		$	425

¹ CMS Energy plans to use these proceeds to retire all $250 million of CMS Energy’s 2.75 percent senior notes due May 2014.

Revolving Credit Facilities

In Millions
							Letters of Credit
Expiration Date	Amount of Facility			Amount Borrowed			Outstanding			Amount Available
CMS Energy
December 21, 20171		$	550		$	-		$	2		$	548
Consumers
December 21, 20172		$	500		$	-		$	2		$	498
April 18, 20172			150			-			-			150
September 9, 20142			30			-			30			-

¹ Obligations under this facility are secured by Consumers common stock.

² Obligations under this facility are secured by FMBs of Consumers.

Contingently Convertible Securities

		Outstanding			Adjusted			Adjusted
Security	Maturity	(In Millions)			Conversion Price			Trigger Price
5.50% senior notes	2029		$	172		$	13.74		$	17.86

Issuance Of Common Stock

	Number of	Average			Proceeds
	Shares Issued	Price per Share			(In Millions)
June 2011	762,925		$	19.66		$	15
June 2012	650,235			23.07			15
March 2013	735,873			27.18			20
Total	2,149,033		$	23.27		$	50

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 notes1		$	250	4.70	%	March 2013	March 2043
Total CMS Energy parent		$	250
Consumers
FMB		$	425	3.95	%	May 2013	May 2043
Total Consumers		$	425
Total debt issuances		$	675
Debt retirements
Consumers
FMB		$	200	6.00	%	June 2013	February 2014
FMB			225	5.00		June 2013	March 2015
Total Consumers		$	425
Total debt retirements		$	425

¹ CMS Energy plans to use these proceeds to retire all $250 million of CMS Energy’s 2.75 percent senior notes due May 2014.

Revolving Credit Facilities

In Millions
							Letters of Credit
Expiration Date	Amount of Facility			Amount Borrowed			Outstanding			Amount Available
CMS Energy
December 21, 20171		$	550		$	-		$	2		$	548
Consumers
December 21, 20172		$	500		$	-		$	2		$	498
April 18, 20172			150			-			-			150
September 9, 20142			30			-			30			-

¹ Obligations under this facility are secured by Consumers common stock.

² Obligations under this facility are secured by FMBs of Consumers.