ML20002C958

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Annual Financial Rept 1963
ML20002C958
Person / Time
Site: Big Rock Point File:Consumers Energy icon.png
Issue date: 02/14/1964
From: Campbell J
CONSUMERS ENERGY CO. (FORMERLY CONSUMERS POWER CO.)
To:
Shared Package
ML20002C957 List:
References
NUDOCS 8101150373
Download: ML20002C958 (33)
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x hd.r[% h / Consumers Power Company-1963 Annual Report 212 West M.chigan Avenue, Jackson, Michigan Contents page 2 Two-Year Comparison, 1963-1962 3 Letter of the Chairman of the Board and the President 5 Key Facts about the Investor-Owned Utility llusiness 7 Growth and Progress in 1963 16 Electric System hiap 17 Gas System N1ap 20 Financial Review 1963 23 Statement of Income 24 Balance Sheet 26 Statement of Retained Eamings 26 Notes to Financial Statements 27 Auditors' Opinion 28 Financial Summary 1963-53 30 Electric and Gas Operating Comparison 1963 53 32 Divisions and hianagers Notice of Annual Meeting The annual meeting of stockholders of the Company will take place Tuesday, April 14,1964, at 2 p.m. in the Company's Pamell Office lluilding. 1945 West Pamell Road, Jackson, hiichigan. A notice of meeting, proxy statement and proxy will be mailed to stockholders on or about h! arch 11,1964. Prompt signing and retum of your prosy or proxies will be appreciated by the Company management.

M ~ g y _ D $, Y 1 RA w g -,q M f-x E s h AQg J AhtES II CA)f MEM. A. II. AVAroxo President Chairman of the Board To the Share Owners: The Company's growth and progress continued at a gratifyin Comparisons with 1962 on the opposite page tell only in 1963. hile gas story. Electric revenue has almost doubled in ten years w revenue has more than tripled. In 1963 there was an increase of SS,000 customers who homes with gas, bringing the ten-year increase to 29S,00 dd total of gas home-heating customers to 43S,000. We expect to a another 33,000 in 1964. Sales of both electricity and gas were well above 1962 l Com-operating revenue in 1963 passed $350,000,000 for the firs pany sales of electric and gas appliances totaled $6,100 k record. Earnings continued their upward trend, and the commo dividerd was increased in 5f ay. System Expansion Continues Expansion and improvement of the Company's elect gas facilities to meet the increasing requirements of our cu Expend-continued during the year but at a somew $100,092,000 in 1962. In contrast to 1962, no additional e d ti erating facility was under construction in 1963 and no gas pro properties were purchased. In the ten-yea $900,000,000 1964 the estimated figure is $6S,000,000. Gas Supply to increase Increased supplies of natural gas to meet expected gro T k provided through a new contract with 3 v.S ', ' 4 i'cI4" h,n,}ji{diOU$nL

i-r-g F Key Facts About the Investor-Owned Utility Business r >l i e The United States leads the world in electric power supply, with almost three times as I much electric generating capacity as Russia.

  • The electric utility industry is the nation's biggest taxpayer.

e It spends more on new plant and equipment annually than any other industry. i e There is wide interconnection of investor-owned electric transmission networks.

  • All electric facilities needed in the future can be financed by investor-owned utilities.

e There is no need for government to spend taxpayers' money on public power projects, no need for a Federal transmission grid, no need for Federal operation of atomic power generating facilities. e Covernment-sponsored electric power suppliers get preferential access to power from government projects as compared with business-managed, investor-owned power suppliers. e Government-sponsored electric power suppliers pay much less than their fair share of taxes. e Government-sponsored electric power suppliers are also subsidized through lower interest rates on borrowed money.

  • Rural Electrification Administration (REA) cooperatives in Michigan and throughout the nation are seeking to expand their activities beyond the farm by making power supply arrangements involving municipalities and industrial companies.

e REA cooperatives are being used to advance goveniment electric power, eYou can help make these facts more widely known. ... and Consumers Power Company e Consumers Power Company is an investor-owned, business-managed electric and natural gas utility company. It pays its full share of Federal, State and local taxes. e It has abundant electric generating capacity and natural gas supplies with which to meet the needs of its customers. e it is interconnected with The Detroit Edison Company and other electric suppliers in the Michigan Power Pool.

  • It provides good service at fair rates which are regulated by the Michigan Public Service Commission.

o Consumers Power Company employees are courteous, skillful and experienced. e The Company is a leader in nuclear power research and in other research and develop-ment work. i 5 l

c , c .r Growth and Progress in 1963 The year 1963 was another busy and prosperous year in the Outstate hiichigan area served by Consumers Power Company. hianufacturing activity was at a high level. It was a boom year for automobile production, and about a third of all the automobiles and trucks produced in the United States were made in hiichigan. A large share came from plants served by Consumers in Flint, Pontiac, Lansing, Warren, Wayne, Wixom and Kalamazoo. Energy supplied by the Com-pany also helped to produce huge amounts of automotive parts and equipment in those cities and in Bay City, Battle Creek, Center Line, Grand Rapids, IIastings, Ionia, Jackson, hiuskegon, Owosso, Saginaw and other hiichigan cities. It was likewise a good year for the many nonautomotive industries served by the Company, classified in the broad fields of primary metal industries, chemicals, fabricated metal products, cereals and other processed food, machinery, paper, lumber, wood products, furniture, fixtures, electrical equipment, rubber products, cement and other stone, clay and glass products. hiichigan's tourist and resort business, a four-season activity pro-ducing annual sales of goods and services estimated at $730,000,000, continued to grow. Agricultural production, estimated at $800,000,000, was exceeded by less than a third of the states. hiuch of hiichigan's tourist and resort business and much of its agricultural production are in areas served by the Company, which operates in 72% of the Lower Peninsula or 51% of the whole state. hiichigan has many colleges and universities, including three of the largest universities in the nation. Afore than 30 of these institutions-hiichigan State University, Central hiichigan University, Western hiichigan University and others-are in communities served by Con-sumers. With their large enrollments and substantial payrolls, they exercise a stabilizing influence on the economy of the area, and their research activities are an important aid to industry, business and farming. 7

c... .,c..,..r capacity of the Big Rock Point Nuclear Plant which currently is being used in research and development work. Gas System Was Strengthened The Company's gas system successfully met the demands of the winter of 1962-63, which was the most severe in recent history. Since then it has been further strengthened and improved to meet increasing demands. The Salem gas field northwest of Kalamazoo was converted into a storage field, bringing the number of storage fields operated by Con-sumers and its subsidiary, hiichigan Cas Storage Company, to six. Compressor capacity at the 51uskegon River Compressor Station was increased 50% through installation of a 10.500-horsepower jet engine compressor. At the Overisel Compressor Station a new 2,500-horsepower jet engine and a new 2,700-horsepower reciprocating engine boosted compressor capacity 50%. A new compressor station was built at White Pigeon near the hiichigan-Indiana border to speed the move-ment of natural gas delivered to Consumers by Trunkiine Gas Company. At the Company's Parnell Road Office Building at Jackson, a new gas controi center was placed in operation where round-the-clock operators coordinate meterir.g, compression, production and pipeline operations for the entire Consumers gas system. It adjoins a similar control center for the Company's electric system which has been in operation at this location since 1959. Natural gas sersice in the Flint area was given additional strength and flexibility through the construction of 41 miles of 26-inch pipeline by hiichigan Cas Storage Company, a Consumers subsidiary. Developmental drilhng of gas wells was begun during 1963 in the St. Clair fields and other areas involved in 1962 purchases of various gas properties in the Lower Peninsula of hiichigan. The existence of additional gas reserver in St. Clair fields has been proved by such i drilling. The Company distributed more than 8 billion cubic feet of gas pm-duced from St. Clair fields in 1963 and realized more than $1,000,000 through the sale of oil, propane and butane produced in the same area. Steam Service to Expand Steam service to downtown business districts in Battle Creek, Grand Rapids, Kalamazoo and Saginaw, while a minor part of Company opera-tions, involved revenue of $944,000 in 1963. The Company will invest about $550,000 in 1964 in expansion and improvement of its steam 9

, c p. c plant and system in Grand Rapids. An extensive downtown renewal program is under way in that city and a City-County Building and a Justice Building now under construction will use the Company's central steam service for both heating and cooling. Service Centers Were Added In late 1963 several hundred Jackson Division employ ees moved into two new service centerr. Electric, gas, accounting and miscellaneous operations for most of the division are now housed ad,iacent to the Company's Parnell Road OfEce Building at Jackson. A smaller building was opened in Temperance, hiichigan, to serve the southeastern part of the division. Construction of a service center was begun at Owosso in the Flint Division and sites were acquired in Kalamazoo and in the fast-growing Warren area near Detroit. Construction of service centers at these loca-tions will begin.1964 with completion scheduled for 1965. These facilities are designed to improve the efficiency with which the Company handles its rismg volume of business. Nuclear Power Progress Research and development work at the Company's Big Rock Point Nuclear Plant, first operating source of nuclear electric energy in c l Alichigan, achieved a major goal. Thermal efficiency of the plant fre-quently has been as high as 34% the highest rate attained to date by l l any central station nuclear plant. In 1963 the plant was advanced gradually to new conditions of flow, pressure and power level. Four major changes in plant operating pres-sure were made, corresponding to 800,1050, lo.50 and 1500 pounds per l square inch. It was the first 'ime that a boiling water reactor had been operated over this high-pressure range. Performance results agreed well with design expectations. Operations in 1963 were carried on under i an 18-menth provisional license. Part II of the testing program contemplates a 50% increase in the t initial 50,000-kilowatt generating capacity of the plant. An application to the Atomic Energy Commission for a permanent license for the Big Rock Point Plant and authorization to proceed with Part II is pending. The Commission has announced it will issue the license. The basic objective of the research and development nrogram, which l is sponsored by the United States Atomic Energy Commission and carried on jointly by Consumers and General Electric Company, is to develop means of generating more electricity'without increasing the 11

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.,c.. a, a. Regulatory Matters The Federal Power Commission has claimed jurisdiction over Con-sumeis Power Company and a number of other electric utility companies on the ground that they own or operate facilities for the transmission of electric energy in interstate commerce or for the sale at wholesale of electric energy in interstate commerce. Presumably the claim is based on the fact ilmt Consumers Power Company is intercon-nected with The Detroit Edison Company, which has electric lines that connect with the system of The livdro-Electric Power Commission of Ontario. The CanaElian system is interconnected with the Niagara Afohawk Power Corporation and the Power Authority of the State of New York. The claim of jurisdiction by the Federal Power Commission is under study by the Company. Licenses from the Federal Power Commission are required for hydro-electric plants on navigable streams. In !95S, the Federal Power Com-mission adopted a policy which did not require an application for a license until the navigability of the stream had been determined. In 1962, a new policy was adopa 4 and the Commission called upon the Company and a number of other owners and operators of hydroelectrie ,duts to advise it regarding their plans to apply for licenses for their (, electric installations.

1.. Company has decided to apply for licenses for some of its hydro-electric developments which have long-range economic attraction.

Only about 3% of the Company's electric energy is generated at hydroelectric developments. An application covering the Foote Ilydro-electric Plant was filed in 1963 and other applications are being prepared. Federal Power Commission licenses are not granted for more than 50 years. For existing plants, they usually date back to 1943, the year in which, according to the Commission, the present concept of navi-gability bec'ime settled. Upon expiration of the license, the Commission j has authority to issue a new license to the original licensee or to another applicant, or the Federal government may take over the plant, paying the licensee severance damages and the amount of net investment. The Alichigan Public Service Commission in June 1963 reafFrmed its order allowing tax deferrals arising from accelerated depreciation methods under the Internal Revenue Code. The Commission oraer said: "It has been shown' that our present method carries out the intent of Congress to stimulate economic growth and employment, v hich is the pre.>t objective of all governmental agencies in this State. We can find no wisdom in any other policy." (Continued on page W 15 y

The Electric System Consumers Power Company supplies electric service in a 27,000-square-mile area in 61 counties in the Lower Peninsula of Michigan. Estimated population of the electric service area is 2,800,000. (The Company's electric and natural gas service areas overlap to some extent. In all, Consumers serves an area of 29,000 square miles with a population of more than 4,200,000.) Electric service is supplied in 263 cities and villages, 747 townships and 516 unincorporated communities. Consumers electric generatiag plants have a com-bined capacity of 2,792,000 kilowatts of which 95% is in coal-burning steam-electric plants and 5% in hydroelectric developments. The initial 50,000 kilo-watt capac tv of the Big Rock Point Nuclear Plant, which will be engaged in research and development work until 1967, is not included in these figures. Major steam-electric plant capacities are as follows: John C. Weadock 614,500 kw Dan E. Karn 530,000 kw B. C. Cobb 510,500 kw Justin R. Whiting 325,000 kw James II. Campbell 265,000 kw Bryce E. Morrow 186,000 kw Saginaw River 140,000 kw Ilighest one-hour electric demand on the Company system in 1963 was 2,217,000 k'.owatt-hours on De-cember 19. The Company has more than 6,000 structure miles of electric transmission lines and more than 38,000 struc-ture miles of electric distribution lines. h Nuclear Plant S steam-Electric Genereune Plant h Hydroelectric Generating Plant d Primary Subetetion 138 Kv Transminolon Line 46 Kw Trenomisolon Line ~4 Interconnection with Other Electric Distributor O olvision Headquartere city e Community Served by Consumere Power Cw. Electric Service Are.

c.a. p c.. ny Regulatory Matters The Federal Power Commission has claimed jurisdiction over Con-sumers Power Company and a number of other electric utility companies on the ground that they own or operate facilities for the transmission of electric energy in interstate commerce or for the sale at wholesale of electric energy in interstate commerce. Presumably the claim is based on the fact that Consumers Power Company is intercon-nected with The Detroit Edison Company, which has electric lines that connect with the system of The Ilydro-Electric Power Commission of Ontario. The Canadian system is interconnected with the Niagara hiohawk Power Corporation and the Power Authority of the State of New York. The claim of jurisdiction by the Federal Power Commission is under study by the Company. Licenses from the Federal Power Commission are required for hydro-electric plants on navigable streams. In 195S, the Federal Power Com-mission adopted a policy which did not require an application for a license until the navigability of the stream had been determined. Ir. 1962, a new policy was adopted and the Commission called upon the Company and a number of other owners and operators of hydroelectric plants to advise it regarding their plans to apply for licenses for their hydroelectric installations. The Company has decided to apply for licenses for some of its hydro-electric developments which have long-range economic attraction. Only about 3% of the Company's electric energy is generated at-hydroelectric developments. An application covering the Foote IIydro-electric Plant was filed in 1963 and other applications are being prepared. Federal Power Commission licenses are not granted for more than 50 years. For existing plants, they usually date back to 1943, the year in which, according to the Commission, the present concept of navi-gability became settled. Upon expiration of the license, the Commission has authority to issue a new license to the originallicensee or to another applicant, or the Federal government may take over the plant, paying the licensee severance damages and the amount of net investment. The Alichigan Public Service Commission in June 1903 reaffirmed its order allowing tax deferrals arising from accelerated depreciation methods under the Internal Revenue Code. The Comm.ssion order said: "It has been shown that our present method carries out the intent of Congress to stimulate economic growth and employment, which is the present otfective of all governmental agencies in this State. We can find no wisdom in any other policy. (Continued on pope iM l 15

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f-Gas Customers Represent Many Types of Manufacturing These are representative of the many outsto". ding com-f panics scho use Consumers natural ge service in } rnanufacturing a diversity of products. SomT of them use Consumers electric service, too. AEHOQUIP IIoOVEH BALL k bEAHING AnuuENv LvDLUna STEEL J ACEsoN Daor Fonct ALUnnNns ExTnUsroNs JONES & bAUCHWN STEa A>:ERICAN VITRIFIED PRODUCTS KELsEY-II AsEs A$soCIATED SPatNC KVP SVTHERLAND PAPEH ATLAS DROP FoncE LANs Nc DaoP FonCE BALDwtN.EHnET Ilia bANsING IIEAT TREATING Baiocs M ANUFACTURINC bEONARD REriNEa:Es Baooms & Ph. REINS bOBDELL-Ex:EnY BnUNswics hlACEuN CohlPANY CARI.ING MICIUCAN CitEhllCAL " " " ' * * " " ^ ^ "

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y ) ,) 2. N b[ g- $ @ E 8@?$f5$ $N C s$c"$ ^d, i, er } f. sm \\ w Top; Inspecting ietords in a pharmacology department laboratory of The l'pinhn Company in Kalam.mu 1.ower Air Redu(tion Sales Company m 19M Iwgan pnuluttion of ongen and nitrogen in this new pl.mt at Alloon. lef t: lower nght: Beserl> Stark, ratho and TV spokeswom m for the elettrie industry, in a Consumers demonstration Litthtn in the hluskegon Dnision Senice Center. 19

Consumers Power Company Payroll Up, Taxes Also Increases in wages and other employee benefits became effective March 1,1963. Payroll for the year totaled $71,400,000, about $2,300,000 more than in 1962. At December 31 the Company had 9,734 employees, 8 fewer than a year earlier. Federal, State and local taxes rose to $68,165,000 and represented 19p of every dollar received from our customers -about 23c of every dollar of electric revenue and about 'jr 'f every dollar of gas revenue. These were taxes charged against the Company, not including sales tax amounting to $9,400,000 which the Company collected from its cus-tomers and turned over to the State of Michigan. Earnings and Dividends Net income was $47,6S4,000 as compared with $45,265,000 in 1962. After payment of $3,656,000 in dividends on preferred stock, earnings available to common stock were $44,028,000. This was equal to $2.19 per share on the average number of shares outstanding during the year, as compared with 52.12 in 1962. On shares outstanding at the year-end, earnings were $2.18 per share in 1%3, 52.11 in 1962. Electric Revenue 19531963 Gas Revenue 1953-1963 MILLIONS OF DOLLARS MILLIONS OF DOLLARS 250 250 200 200 Other Sources $209 MILLION Other sources IN 1963 lacustrial and a r Commerc,al (, Commercial E-- $142 MILLION 200 W ladastrial - 200 E**'""

  • Y E for H'dential Oslos Gas h
  1. 55 150 150 E Residential orne Heating ISO 150

$109 MILLION .s z 1 100 - 100 .M b N $45 MILLION .s. fygQ.$tU [- q --- 100 IN 1953 ?00 l j t s, } k,I (V . g.~,.g, hlkI ,, Q2[ mg_z, u.n ;$+., ,v/d$h7EIi7 L 50 50 - s m.9,x. xy, u nn u & w. M; & :':xy. m;yiQR;f , 3 p% g;;y; 9 9 Q IM ig!;;* a T w, M G Pfi @: & m a n a,+ a .u: w qmmpq ,~ lu N S .s WW,,EM,6umtm ,,.,,,,,0 0 e, ci 1953 '54 '55 '56 '57 '58 '59 '60 '61 '62 1963 1953 '54 '55 '56 '57 '58 '59 '60 '61 '62 1963 l i Electric revenue almost doubled in the ten-year period Gas resenue more than tripled in the ten-year peri <>d l ended December 31.1963, rising from $109,258,514 ended Daember 31,1963, rising from M4.129,632 in 1933 to $209,000,89S in 1963. in 1953 to 5142.115,564 in 1963. 21 k

r C:ncumcra Pow:r Comp:ny f Statement of income For the Years Ended December 31,1963 and 1962 Year Erded December 31 99t13 1962 operating nevenue: $209,202,898 $19S,857,361 Electric... 142,115,564 131,395,59S Cas................... 944,005 976,696 Steam beating....................... $352,262,467 $331,229,655 TOTAL OPERATING REVENUE. i Operating Expenses and Taxes: Operation - $ 4,819,329 $ 4,603,094 Purchased and interchanged power. Fuel mnsumed in electric and steam heating operations..... 35,470,043 32,971,830 g Cost of gas sold..................... 63,313,335 58,370,769 63,864,851 60,822,834 1 Other. $167,467,558 $156,968,527 Toru. oaERAnoN. 17,180,490 10,629,835 Maintenms 35,423,138 32,901,455 Deprwiatn erd amortization.......... 19,566,033 17,343,455 i General taxes. 39,016,596 37,953,679 Federal incom< taxes...... 7,105,571 6,999,982 Provision "or deferred Federal income taxes. Charge equivalent to Federal income tax investment credit i 2,174,310 1,966,029 (sec Note 4W.. t $288,235,696 $270,762,962 TOTAI. OPERAUNC EXPENSES AND TAKES,. $ 64,026,771 8 60,466,693 NET OPERATING INCOME.... i Other Snoomet Dividends from Michigan Cas Storage Company......... 956,250 956,250 937,761 532,627 Other. $ 65,920,782 $ 61,955,570 CROSS INCOME income Deductions: $ 17,313,200 4 18,079,9S0 Interest on long-term debt.... 949,947 237,779 Interest on notes payable 332,660' 1,990,245' Interest charged to mnstruction -credt*.. 306.771 363,392 Other........................... $ 18,237,258 $ 16,690,906 l TOTAI. INCOME DmUCDONs.............. $ 47,683,524 $ 45,264,6M r NET INCOME. 3,655,M8 3,665,595 Dividende on Preferred Stock. NET tNcOME AFTER DIVIDENDS ON FREFERRED SE)CE. $ 44,027.876 4 41,599.069 sernings Per share of Common Stock Sesed [ en shores outetending: $2.19 $2.12 Average during year..................... $2.18 $2.11 At end of year....................... i The accompanying notes are on integral part of this statement. {. i L' 23 t t y i, I '2 ^ 2.*w.',wn N[ I.de 49 3 d

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C:nsum:ra Pow:r Company December 31 Liabilities ,,o Capitalisation : Capital stock (without par value) and retained earnings - Common stock-authorized 25,000,000 shares - outstanding 20,238,040 shares and 19,761,496 shares, respectiva! - f 336,836 shares reserved for conversion of deben;ures... $ 307,241,190 $ 292,878,016 Itetained camings, of which $6,115,035 (equal to $7.50 per share of preferred stock) is not available for payment of cash dividends on common stock............. 117,221,191 104,299,8S4 $ 424,462,381 $ 397,177.900 Preferred stock, cumulative-authorized 1,500,000 shares, entitled in involuntary liquidation to $100 per share (see Note 5 )...................... 81,565,619 81,966,379 TOTAL CAPITAL sTOCE AND HETAINED EARN 1Ncs $ 500,028,000 $ 479,144.279 Long-term debt (see Note 6)............... 457,187,082 493,062,773 TOTAL CAPITALIZATION $ 963,211082 $ 972,207,052 Current t.lableities: Current sinking fund requirement on first mortgage bonds... d,838,000 4,838,000 Notes payable..................... i.s,975,000 19,600,000 28,634,9S7 25,120,197 Accounts payable. Dividends declared on capital stock............ 8,49S,883 7,830 662 Accrued taxes..................... 46,860,004 43,945,70S Accrued interest. 6,152,140 5,704,598 Other.. 6,803,051 10,152,M6 $ 129,762,065 $ 117,194,15[ Deferred Credits: Premium less expenses on outstanding long-term debt, in process of amortization.. 1 12,907 117,703 Investment credit (see Note 4).............. 4,140,339 1,966,029 Customers' advances for co struction and other. 705,415 734,042 4,998,661 2,817,774 se...rvee: $ 56,583,535 $ 49,477,964 Deferred Federal income taxes.. Othe r......................... 1,826,747 1,828,733 $ 58,410,282 $ 51,306,697 Contributione in Aid of Construction. 8,638,189 7,898,787 41,165,024,279 $1,151,424,421 The accompanying notes are an integral part of tMs statement. 25 _m__._-

(5)' Preferred stock is represented by: Deccmber 31 Sees toes $4.50 - 547,788 shares outstanding............ $ 54,778,800 $ 54,778,600 $4.52 - 171.550 shares outstanding, less 4,000 shares purchased in 1963 for retirement. 16,755,000 17.155,000 $4.16 - 100,000 shares outstanding...... 10,000,000 10,000,000 Premium on preferred stock........ 31,819 32,579 Total preferred stock.............. S 81,565,619 $ 81,966.379 ' '###her si (6) Long-term debt is represented by: sees tes2 First hfortgage Bonds-2%% Series due 1975 $109,024,000 $109,024,000 2%% Series due 1977 24,775,000 24,775,000 3%% Series due 1981 39,700,000 39,700,000 3% Series due 1984 24,750,000 24,750,000 4% Series due 19S6 40,000,000 4G,000,000 3%% Series due 19S7 25,000,000 25,000,000 4%% Series due 19S7 9,669,000 14,6S0,000 4%% Series due 1958 40,000,000 40,000,000 4%% Series due 1959. 35,000,000 35,000.000 3%% Series due 1990 30,000,000 30,000,000 4%% Series due 1990 35,000,000 35,000,000 4%% Series due 1991 40,000,000 40,000,000 $453,118,000 $457,929,000 Deduct - Current sin %g fund requirement included in current liabil: ties............. 4,838,000 4,838,000 Total First Afortgage Bonds........... $448,280,000 $453,091,000 Convertible Debentures, 4%%, due 1975-convertible until maturity at the conversion price of $30 per share, payable by surrender of $100 of Debentures and $20 in cash in exchange for each four shares of common stock, subject to adjustments in certain events 8.420,900 20,334,500 Purchase obligations, due 1964... 18,90S,000 Notes, 4%, due 19651966,......... 486,182 729,273 $457,187,082 $493,062,773 Total long-term debt. ARTIIUR ANDERSEN & CO. Pznonnetrr nesunno DErTROrr 26 ^ To the Board of Directors, Consumers Potver Commny: We have examined the bdance sheet of CONSUh1ERS POWER COh1PANY (a Ataine corporation) as of December 31,1963, and the related statements of income and retained earnings for the year then ended. Our examination was made in accordance with generally accepted aucliting standards, and accordMgly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. In our opinion, the accompanying balance sheet and statements of income and retained earnings present fairly the financial position of Consumers Power Company as of December 31.1963, and the results of its operations for the year then ended, in con-formity with generally accepted accounting principles applied on a basis consistent with that of the preceding year. Detroit, hiichigan. ~~'-su at January 29,19M. 27 I

s L Consumers Power Company is .. 3 J ( 257J15,425 $227,631,181 $22L461,837 5208,393,7M $189,374,955 $167,941,793 $154,400,759 l 1%,097355 142,469,775 137,051,251 129,500,638 117,213,966 106,783,528 96,545,434 30,752,042 24,789,982 27,477,319 27,888,605 25,656,391 20,506,090 21,061,968 6,599,959 6,236,371 5,572,383 4,208,808 3,216,335 1,746,751 1,037,747 7 12,944,658 11,893,682 10,593,205 9,223,420 7,947,163 7,207,235 6,250,466 I 49,132,211 42,241,371 40,767,679 37,572,283 35,281,100 31,698,189 29,505,144 1,747,700 1,565,710 1,491,462 1,131,545 1,517,492 1,324,062 1,581,479 14,901,737 13,174,944 10,137,856 8,432,298 8,275,175 7,536,180 7,145,145 2,448,132 1,894,850 1,594,947 1,731,490 1,341,384 1,185,710 948,527 h 38,426,366 32,526,987 33,716,232 32,003,020 29,864,801 26,6tl,781 24,890,005 3,543,937 3,367,141 3,367,E87 I 3,717,765 3,742,243 3,756,570 3,778,551 t 22,618,626 21,132,82S 21,094,044 18,539,687 17,069,219 16,442,355 15,321,256 12,089,975 7,651,916 8,865,618 9,684,782 9,251,645 0,' 62,285 6,201,032 8,885,147 8,800,455 8,697,631 8,239,861 7,662,200 7,473,798 B,742,890 3 3.91 3.27 3.44 3.43 3.44 3.12 3.19 B 2.45 2.40 2.40 2.20 2.20 2.20 2.15 17,770,294 17,000,910 17,395,262 16,479,722 16,021,954 15,694,976 14,160,070 1 1.95 1.M 1.72 1.71 1.64 1.49 1.52 ) .14 .11 .09 .11 .08 .08 .07 $1,032,574,699 $931,873,349 $853,414,043 $758,360,576 $679,228,020 $613,581,239 $559,476,346 5 173,118,255 150,069,325 132,')72,735 120,390,331 109,328,075 99,079,559 92,601,0S0 102,897 91,477 81,355 72,363 66,919 62,388 59,639 { 316,685,466 $294,700,245 $285,583,480 .$253,234,262 $243,549,480 $217,388,408 $185,555,783 83,168,658 83,569,418 83,970,177 84,371,148 84,771,696 i4,771,696 74,771,696 I 415,935,000 394,862,700 360,067,700 293,249,000 256,237,000 228,825,000 230,175,000 9 ll 815,789,124 $773,132,363 4729,621,357 $630,354,410 $584,558,176 $520,985,104 $490,502,479 'f 38.8 38.1 39.1 40.1 41.7 41.7 37.8 10.2 10.8 11.5 13.4 14.5 14.4 15.3 -{ 51.0 51.1 49.4 46.5 43.8 43.9 46.9 I lIi( (1) In Decem%r 1953, the Company issued to its common stockholders a dividend of 5% in common stock. In secordmg this transaction on its books, the Company assigned a value of $45.25 per share (l to the 392.374 total shares issued as a dividend, a total of $17,754,924. The amount of this dividend (g is not reflected in the above 6gures. f 2) Figures for years prior to 1963 have been restated where applicable to reRect refunds received of the cost of purchami pas and interest income related to such refunds and other miscellaneous 29 adjustments, including tne effed of applicable income taxes.

Consumers Power Company seso sees tesa sea 7 tese seas set.4 toss 76,207,206 $ 70,%*/,316 $ 64,314,868 ' $ 61,540,221 $ 57,2&f,960 $ 52,427,172 $ 48,313,852 $ 44,291,959 40,338,087 37,904,248 33,722,613 32,017,441 29,796,312 27,629,690 25,103,644 21 647,139 55,054,612 52,423,154 45,785,860 48,343,983 46,352,068 44,213,748 37,281,138 37,:,54,130 5,886,913 5,254,757 4,582,742 4,150,513 3.309,399 2,940,547 2,768,043 2.791292 177,456,618 4166,539,775 $148,406,113 $146,052,155 $ N 6,722,739 $127,211,157 $113,466,677 $105,065,520 2,081,611 1,945,647 1,756,798 1,735,556 1,707,543 1,457,848 ~179,568,429 $166,465,422 $150,162,911 $147,787,714 $13$,430,F2 $i2576Ei9,005 ~ 1,475,291 1,202,991 $114,941,66S $109,268,511 3 ",05,406 3,094,393 2,890,249 2,729,873 2,501,144 2,244,271 2,033,078 1,816,104 i,690,660 1,599,315 1,409,658 1,238,406 1,139,903 1,047,657 929,997 861,775 c,279,984 4,012,905 3,373,978 3,803,532 3,749,452 3,783,935 2,976,137 2,992,279 377,452 325,647 274,189 246.730 192,381 109,283 155,766 160,416 9,553.502 9,032.260 7,946,074 8,016,541 7,582,6h0 7,245,146 6,094,078 5,830,574 T87iSUU 1,79T555 1,73T,755 1,63 [005 7 5703 26 1,458,070 1,28C376 1,1f0,415 ~ ~ 2,270,962 2,270,962 2,004,938 1,848,6SS 1,712,858 1,558,118 1,402,168 1,404,618 9,857 9,912 9,896 10,423 10,799 10,90S 10,882 11,185 873,834 856,457 843,276 827,8SS 810,875 787,662 761,530 736,936 4,162 4,096 3,905 3,761 3,536 3,282 3,079 2,846 2.38e 2.29e 2.23e 2.25e 2.20e 2.34e 2.3Se 2.44c $9S.94 $93.92 $86.91 $84,79 $S0.96 $76.60 $73.17 $69.41 52,200,274 $ 45,805,934 $ 33,830,746 $ 36,262,193 $ 35,596,876 $ 29,134,750 $ 25,530,837 $ 20,816,690 )),054,279 12,020,807 12,516,960 12,074,857 11,232,443 10,778,608 10,363,553 9,482,173 32,962,377 28,509,026 23,650,121 23,030,8S4 20,990,057 18,9S9,775 15,454,374 13,296,774 3,031,254 231,627 190,852 151,543 144,672 129,418 110,290 116,452 99,22! 164 $ 66,570,394 $ 75,188,685 $ 71,519,477 $ 67,964,048 $ 59,032,551 $ 51,459,054 6 43,712,059 1,541,.S5 1,366,601 1,200,350 1.074,923 950,250 715,587 553,421 417,743 X),769,449 $ 87,936,995 $ 76.359.065 3 72,594,400 $ 6S,914,29S $ 59,74S,13S $ 52,012.475 $ 44,129,832 53,760,032 47,827,215 40,131,587 37,638,842 36,869.414 29,9S0,627 26,513,803 21,730,535 8,!87,652 8,713,106 8,990,599 8,54S,906 7,993,181 7,593,440 7,169,030 6,486,509 58,853,317 41,690,243 34,446,400 34,324,931 31,123,993 28,948,655 22,971,537 20,175,900 7,494,854 304.449 244.638 193,380 184,0S1 164,424 130,072 144,208 18,295,855 98,535,013 83,813,230 60,706 059 76,170,669 66,687,146 56,784,442 48,537 i52 ~ l0,2S3,514 3 855,227 815,262 3,728,363 1,800,161 766.055 2.757,293 2,072,651 2,405,702 45,434,596 99,350,275 87,541,593 82.500.220 76,936,724 69,444,439 58,857,093 50,942,854 821,362 602,123 574,989 505,462 400,942 440,054 356,110 310,036 P 539,474 509,462 483,682 462,922 443,730 426,714 395,509 373,458 321,909 265,073 234,184 205,884 192,754 183,491 158,104 140,590 184 196 187 193 194 180 183 166 97.10e 95,77c 96.76e 96.34 e 96.55e 97.18e 96 29e 95.79e $178.45 $187.78 $181,01 $186.30 $187.00 $174.46 $176.20 $158.92 g i Note: Cas revenues for the years 1953 through 1955, and for the year 1961, have Im n restated to scEcet refunds to the Company's custorners ordered by the Michigan Public Senice Commission as a sesult of refunds of the cost of gas purchased during those years.

E %= Put Your ---m i- ' l!$i'li ,;;m;g ~1 g.:=F 4 % NOW Pian't In ?,: 1Fi s ,e,.. ,1 the center of w g the Greatest l t hh h Already one of the outstanding industrial regions of the world, the Great Lakes region, in the opinion of an eminent scientist, is destined to be the greatest. R Prof. Sverre Petterssen, chairman of the Department of Geophysical Sciences, The University of Chicago, pointed out in a recent speech that "certain parts E thgu of the United States have become overloaded with consumers of water." "It is not difficult to foresee," he said, "that the Great Lakes region.. is destined to become the greatest industrial region on earth." Outstate Michigan is the center of the Great Lakes region. No nart of Outstate Michigan is more than 85 miles from one of the Great Lakes. Living conditions are the best. Outdoor recreatior: of all kinds is plentiful. Research help is available at great u'i ersities and laboratories. f For profitable industrial production and distribution.. now and in the future... this is the place to put your new plant. Our Area Development Department will help you fmd the plant site you are looking for. Call Jackson, Michigan,788-0500 (Area Code 517). Or drop a note to 11. I. Brewer, Director of Area Development,212 W. Michigan Avenue, Jnkson, Michigan. This service is free 6 nd confidential. CONSUMERS POWER COMP 4NY Electric and Natural Gas Service in Outstate Michigon o d oei..., J.a e. . caw.i.a on,ses, Alm., 5. He Cr.eh, Boy Cey, f..e D.oroa, Phnt, Ge.pd e.,4., J a.on, re tea.-o, u . w. , r n.c. a.'y.i ook, s.. . o 4 t,..... Ca, e..a. r The Company has been advertising the industrial advantages of its wnicr area in national publications since 1950. This is one of a series of adsertiwments that appeared in Business Week, The Wall Street Joumal, Dun's Review, and Ilanard Business Review, _}}

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