ML20030A518

Annual Rept 1962

ML20030A518
Person / Time
Site:	Big Rock Point File:Consumers Energy icon.png
Issue date:	12/31/1962
From:	CONSUMERS ENERGY CO. (FORMERLY CONSUMERS POWER CO.)
To:
References
NUDOCS 8101090844
Download: ML20030A518 (36)

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The Electric System

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CONSUMERS c '

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POWER

.i uce.s oreo of 26,945 square m 'es m 61 Michigan

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The Company suppiks electric service in on OMPANY ll p

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About 2,800,000 people I.ve in this electric 212 West Michigan Avenue ',

Jackson Michigan fof s

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Igg The Company provides elecric service.m 261 cities and villages,748 townsh:os and 517 unincorporated communities.

It also sells electric power to three electric CONTENTS utility compon;es (one in the Upper Peninsuto),

eleven municipal electric systems and three Two-Year Comparison, 1962-1961 2

rural cooperatives.

Power is interchanged with ihe Detroit Ed.

1962 Revenue Dollar.

....2 ison Company of three major interconnections.

Consumers-o.ned electric plants have o total 1.etter of the Chairman of the Board generating capacity of 2,792,664 kilowatts, and the President 3

95% in steam. electric and 5% in hydro electric stations. This does not include the Big Rock IIcalthy Growth in 1962 and a llead Point Nuclear Plant, which is currently engaged 7

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in research and development work.

The Company operates 6,152 structure miles Balance Sheet

.. 20-21 of electric transmission hnes and 38,071 struc-ture miles of electric distribution lines.

Statement of.IqCome.

22 Statement of Retained Earnings 23 23-24 Notes to Financial Statements...

KEY TO MAP Auditors' Opinion.

25 26-27 Financial Summary, 1062-52

, Nuclear Plan, g steam flectric Generating Plant Electric and Gas Operating

$ Hydroelectric Generating Plant Comparison, 1962-1952

. 28-29 A Primary substation Directors and Oflicers.

. 30 138 Kw Transmission Line 46 Kw Transmission Line Transfer Agents.

11

-u+ 1nterconnection with other electric distributor Reg. trars of Stock 31 is O Division Headquarters City 9

Annual Meeting Notice.

31 pf1 :!

Community served by e

Consumers Power Co.

Electric System Map. Inside Front Cover

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0-Gas System Map

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PIR CENr TWO-YE AR COM PARISON 1962 1961 iNcuasion (DECRE Alf)

Electric revenue.

$198,857,000 5186,399,000 6.7 Gas revenue.

131,396,000 114,655,000 14.6 Total operating resenue.

331,230,000 302.056.000 9.7 Fuel consumed in electric and steam heating operations 32,972,(MN) 30,614.000 7.7 Cost of natural as sold.

58,371,000 50,829,000 14.8 F

Total payroll including construction.

69,100,000 67,500.000 2.4 64,263,000 57,903,000 10.9 Taxes Earnings available to common stock.

41,432,000 36,558,000 13.3 Earnings per share of common stock-average 2.11 1.91 10.5 Earnings per share of common stock-end of year.

2.10 1.89 I 1.1 Dividends paid per share on common stock 1.40 1.30 7.7 Cost of plant additions and improvements.

100,092,000 92,159,000 8.6 21,630,000 410,000

$175.6 Gas fields All other 78,462,000 91,749,000 (14.5)

Funds generated internally (depreciation, amortization, deferred Federalincome ta and retained earnings).

53,751,000 48,313,000 11.3 Note: Where applicable, figures have been restated to reflect gas refunds and split-up of common stock.

Kilowatt. hour sales 10,847,892,000 9,810,763,000 10.6 Gas sales (thousands of cubic feet) 145,610,0(K) 130,953,000 11.2 Electric generating capacity, December 31 (Lilowatts).

2,793,000 2,535.000 10.2 4D62 9tEVENtlEDOI.illLR ' *

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Electricity for llomes and Farms.. 5 82.884 24.9 Wages including Pensions.

. 5 55.528 16.7 Taxes.

64,263 19.3 Electric Power for Industry 60,683 18.3 Cost of Natural Gas Sold 58,371 17.6 Fuel Consumed, Electric 32,448 9.8 Commercial and Other Electricity Purchased 4,803 1.4 Electric Revenue 55,290 16.6 M aterials. Supplies, etc.

20,675 6.2 Residential Customers Using Depreciation and Amortization 32,862 9.9 Gas for liome lleating 75,065 22.6 Use of Borrowed Money 18,318 5.5 Davidends to Preferred Residential Customers, Other 10,172 3.1 Stockholders 3.666 1.1 Dividends to Common Industrial, Commercial and Stockholders 27,542 8.3 Other Gas Revenue 46,159 13.9 Earrings on Common Stock Retained and Invested in the Other Sources 2,113

.6 Business.

13,890 4.2 Total.

. 5332.366 100.0 Total.

5332,366 100.0 P00R ORIGINAL

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A. H. AYMoso JAMrs H. CAurattt Chairman of the Board President To the Share Owners:

1962 was a good year for Consumers Power Company.

Sales and earnings increased. Gross operating revenue of

$331,230,000 was about 10'lE above the 1961 figure. Net earnings on common stock totaled 541,432,000, a 13Gc increase. Capital expendi-tures brought total plant account to 51,285,000,000.

Earnings $2.11 Earnings per share on the average number of common shares out-standing during the year were 52.11 as compared with 51.91 per share per Common Share in 1961, adjusted for the common stock split.

Much of the increase in sales of electricity and natural gas resuited from greater manufacturing activity in the Company's service area.

Customers grew in number. There was an increase of 39,000 in cus-tomers who heat their homes with natural gas. In addition, average use per customer of natural gas and electricity was larger.

Gas Rates The improvement in earnings was influenced by more adequate gas Were Adjusted rates. As reported last year, the Company obtained authority from the Michigan Public Service Commission to increase its gas rates, effective May 11,1961. The increase was based in part on higher gas costs. During 1962, two gas rate cases of the Company's principal gas suppliers were settled on a basis which reduced the annual cost of gas purchased by the Company. This not only ofTset certain mereases in operating ex-penses hu 60 made it possible to reduce gas rates to our customers about $2,000,000 a year. Settlement of these rate cases also involved refunds to the Company of $11,261,000, including interest.

During 1962 the Company invested more than $100,000,000 in ex-

$100,000,000 for Expansion pansion and improvement of elettric and natural gas facilities to meet and improvement the needs of its customers. This brought the ten-year total of such expen-P00R ORIGINAL

ditures to $886,000,000. The Company's sales have more than doubled i

in the same period.

In 1963 expenditures cf 559,000,000 for expansion and improvement are planned. No expenditure for further expansion of electric generating capacity is scheduled for 1963.

New Plants Went The James H. Campbell Plant on Lake Michigan west of Grand into operation Rapids went into commercial operation in October. Its generating ca-pacity of 265,000 kilowatts brought the Company's system capacity close to 2,800,000 kilowatts.

The construction schedule for the Big Rock Point Nuclear Plant called for completion in 30 months. This was accomplished. A con-trolled chain reaction was sustained on schedule in September and the plant produced its first electricity in December as planned. Construction cost of approximately $27,000,000 was within original estimates.

Big Rock Point personnel are now engaged in their initial operating assignment, which is to get a " head start on tomorrow" through a re-search and development program aimed at lowering the cost of generat-ing electricity with nuclear fuel. This program is scheduled to last four and a half years. We believe it will make a substantial contribution to the advancement of the electric industry.

i Gas Properties Consumers acquired extensive Michigan gas production properties were Acquired from Panhandle Eastern Pipe Line Company, included are a gas condi-tioning plant, small compressor stations, miscellaneous Fathering facil-ities, the Ira storage ficid, and substantial contractual and property interests in eight productive fields. All these properties are in the St. Clair area north and east of Mt. Clemens, Michigan, close to the Detroit sub-urban area in which much of the Company's gas business is located.

Consumers assumed Panhandle's contract to supply at wholesale a por-tion of the natural gas needs of Southeastern Michigan Gas Company of Port Huron, Michigan.

The purchase also included the working interest in a producing field in Missaukee County near the underground storage fields of Michigan Gas Storage Company (a subsidiary of Consumers), and over 650,000 acres of undeveloped leaseholds in more than 40 Michigan counties.

The S18,000,000 purchase from Panhandle involved a small down payment with the balance due in 1964.

Consumers purchased from McClure, Inc., interests in the Pu'.?ygut producing field in the St. Clair area, paying $1,000,000 in 1962.The remainder of about $2,233,000 will be paid in 1963 and 1964, the exact amount depending on a more precisedetermination of the gas reserves in the field.

i The two purchases strengthen the Company's ability to meet the present and future gas needs ofits customers. Large volumes of addi-tional gas reserves were acquired in fields which also have an attractive 3.., r f

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potential for conversion to storage fields. The properties acquired are so located as to contribute greatly to the flexibility and efficiency of the gas system.

Power Pooling Fully coordinated operation of the Consumers and The Detroit with Edison Company electric systems is assured under a new contract made Detroit Edison in December. While the two companies will maintain their completely separate identities, the operation of their electric generating and trans-mission facilities will be coordinated to efTect operating econonfes for both. Future expansion of the two systems will be planned cooperatively to reduce construction and operating costs.

Taxes were Consumers Power Company's provision for Federal, state and local

$ 64,300,000 taxes charged to operations in 1962 amounted to $64,300,000, of which

$47,000,000 was Federal income tax. The annual provision for taxes (which does not include sales tax collected from Consumers customers for the State of Michigan) was more than 90'l'c of the amount the Com-pany paid in wages and salaries, and about twice as much as it paid to stockholders in common and preferred dividends.

In contrast, government-operated and rural cooperative electric sys-tems pay no Federal income tax at all and usually their state and local taxes,if any, or payments in lieu of taxes, are at a much lower rate than those paid by investor-owned companies. Thus, customers of investor-owned companies are discriminated against, and customers of govern-ment-operated and cooperative systems enjoy an unfair tax advantage.

This situation calls for correction. All users of electricity should share the tax burden in the sanie manner.

Company's We expect the forward progress of the Company's service area to Progress continue during 1963. Leaders of the automobile industry, the dominant Should Continue factor in the Michigan economy, have predicted that 1963 will be another fine year for automobile sales. The outlook for most of the many other types ofindustry in the service area also is favorable. Michigan's farms and orchards serve thriving markets, and the important tourist and resort trade contimtA :c grow. The year 1963 should be another good year for Consumers Power Company.

14d)

JAMES H. CAMPBELL A.H.AYMOND President Chairman of the Board February 15,1963

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ELECTRIC REVENUE, 1952 1962 Mrtticws or DottAns s199 MILLICW IN 1962 P

C al$1DENTIAL

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tiectric Revenue Dovbled INDU$TalAL E OTHER SOURCES in Ten Years Since 1952 iso s99 MittioN Electric revenue increased from $99,084,135 to w 1952

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$198,857,361, or 101%, during the ten-year pe.

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And a Head Start on Tomorrow

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cEIIIIII In 1962 Consumers Power Company sold more frw of them are enemicals, pharmaceuticals. pack-electricity and more natural as than eser before. It aged food, machinery, paper, furniture, and metal, F

improsed its carnings. It got a head start on tomor-stone, clay and glass products.

row by expanding its nat ural gas and electric systems to meet future growth and by pressing ahead with Service Area is Diversified research and cevelopment.

The Company's service area ranks high as a farm-ing and dairy region, too. Consumers Power Com-Business Conditions Were Good pany at one time served more than 100.000 farms.

Business conditions were generally good during Now it serves about 87,000, although the size of the 1962 in the Outstate Michigan area served by the service area has not decreased. Some farms hase Company. This service area includes 29,000 square been divided into city lots. In other cases, two farms miles of thc Lower Peninsula of Michigan, extending have become one. Despite this changing pattern, from the Ohio and Indiana lines to the Straits of few if any electric utility companies of the United Mackinac and from Lake lluron and Lake Erie on States serve as many farms as Consumers.

the east to Lake Michigan on the west.

The large area served by the Company-larger liasically it is an industrial area. Automobiles and than Massachusetts, Connecticut, Rhode Island, autonative equipment rank first among manufac-New Jersey and Delaware combined-is also a tured products but Outstate Michigan also manu-land of outdoor recreation and water sports. Ilun-factures many other products in large quantities. A dreds of miles of Great Lakes shore line, thousar.ds GA5 REVENUS, 1952 1962 unuONs OF DOLLARS INDUSTRIAL AND O Rfs1DENTIAL UslNG gas POa HOut HEATING COMMERCIAL E OTHER RfsIDENTIAL E OTHER soutCts Gas Revenue Went Up 253'.

in Ten Years Sinto 1952 iso IN 1962 Gas revenue increased from $37,217,182 to

$131,395.598, or 253%, during the ten-year pe-riod ended December 31, 1962. Revenue from resid:ntial customers using gas for home heating increased 315%. Revenue from industrial and M'i,3," "

commercial customers increased 310%.

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x Delta College is among the excellent community colleges that supplement outstanding universities and senior colleges in Outstate Michigan. Delta serves Midland. Bay and Saginaw counties.

ofinland lakes and thousands of miles of streams, Company's Sales Went Up together with hardwood and evergreen forests and pleasant summer temperatures, make Outstate Favorable industrial conditions brought a sharp Michigan a favored place for summer vacations.

increase in sales of electricity and natural gas to in-In winter its ski reso,ts attract winter sports enthu.

dustrial customers. Commercial use of the two forms siasts from many states.

of energy by stores, hotels, motels, restaurants and Outstate Michigan is a major producer of petro.

other establishments went up also.

I leum, salt, limestone, gravel and forest products.

llouseholders other than home-heating custom-Industry, agriculture, and the tourist and resort ers, on the average, used more electricity and more I

business combine to give the Company's service natural gas in 1962 than in any other year. This re-l area a diversified and growing economy.

flects a rise in the number and types of appliances in use.

Residential electric customers used an average of Automobile Output Was High 3 i dW M b M %-

Michigan produced about a third of the Paid an average price of 2.35 cents per kwh. Average 6,935,000 automobiles produced in the United use was higher and average price lower than the States in 1962.The home plants of Buick, Chevrolet, national average.

Pontiac and Oldsmobile are served by Consumers.

The Company also serves plants of Ford Motor More customers were served Company and Chrysler Corporation m areas close to Detroit, an American Motors plant in Grand During the year there wee net ablitions of 13,000 Rapids and numerous plants making automotive electric customers and 28,000 gas customers, which equipment in many Michigan cities.

contributed to the increase in total sales ofelectricity i

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l and gas. Gas sersice was extended to 11 additional A new record send-out of electricity in a single cities and villages and 30 additional townships. The day was set December 13,1962. The send-out was number of electric customers rose to 898,862, the 41,815,000 kilowatt-bours.

number of gas customers to 590,633. Since only one A record one-day send-out of gas, 982,000,000 customer in five receives both electric and gas serv-cubic feet, occurred in January 1962. This record ice from Consumers, the total :. umber of undupli-was broken in January 1963 when more than a bil-cated customers served is about 1,200,000, lion cubic feet were sent out on each of three con-There was an increase of 39,333 in the number of secutise days, customers who heat their homes with gas. Nearly About two thirds of the Fas distributed to meet three fourths of all the Company's residential gas these wir.ter peaks came from the storage fields customers are home-heating customers, and they owned and operated by the Company and its sub-use about half of all the gas the Company distrib.

sidiary, Michigan Gas Storage Company.

utes. The average amount of gas sold to each of these customers increased slightly in 1962.

Revenue and Expenses Up Increased sales of electricity and natural gas pro-New Records Were Set duced increased revenue. Gross operating revenue Peak demand on the Company's electric system of $331,230,000 was about 107c above 1961.

for a one-hour period passed 2,000,000 kilowatt-Increased business also resulted in the purchase hours for the first time December 10,1962, reaching of more natural gas and coal. Payments for natural 2,031,000 kilowatt-hours. Ten days later it went to gas purchased were up 57,500,000 and payments for 2,038,000 kilowatt-hours. This 1962 record was coalup 52,400,000. Strict attention to cost control broken in January 1963. It was in December 1951 and a reduction in the price of purchased gas helped that one-hour peak demand passed a million kilo-slow the upward trend of operating expenses, watt-hours for the first time.

Increases in wages and other employee benefits Magni 6 cent beaches like this one on Lake Michigan north of Frankfort contribute to the charm of Outstate Michigan, where industry, agriculture and the tourist and resort trade provide o strong and diversi6ed economy.

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were made effective March I,1962. Ilased on the 9

number of employees at that time, the annual cost

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51,800,000, of which 51,300,000 would have been e

j chargeable to operating expense and the remainder j

to construction and other activities. The efTect of the increase was partly ofTset by a reduction in the num-

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ber of employees. At the year-end the Company had 9,742 employees,163 less than at the end of 1961.

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system again ranked among the leaders m the

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g United States. About 95% of the electric generating capacity of the Company is in coal-burning steam-Food processing is big Outstate Michigan. Kellogg Com.

electric plants, most of it in the John C. Weadock, pony, sott!. creek, o leading breakfoit food moher, odded II. C. Cobb, Justin R. Whiting and Dan E. Karn import-. new plant f acilities during 1962.

plants, which combine large capacity with an efli-cient ratio of power produced to coal consumed.

N Taxes increased Federal, state and k> cal taxes amounted to ap-j

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proximately 564,300,000. This was about 19 cents of a

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revenue. Not included is the 49E Michigan sales tax l

Consumers collects from its customers and remits g-I h

to the state, which in 1962 amounted to more than fa p,

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Earnings and Dividends Net income was $45,097,000. After payment of 53,665,000 in dividends to preferred stockholders, 4

the balance available for common stock was ij.;

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$41,432,000.

h' Dividends on common stock were paid in Feb-t uary, May, August and November at rates ceual to in this Grand Rapids plant Kelvinator Division of American 35 cents per share on the number of shares outstand-Motors Corporation produces refrigerators, other oppliances and Rombler ports. tote in 1962 Kelvinator announced plans for o $2 miti on-plus empor.sion of the porti operot.on tho, year, dividends on common stock amounted to l

will create 500 new bbs.

51.40 per shan; on the increased number of shares.

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Total amount of dividends on common stock de-refunds on natural gas purchased, and bank loans clared during the year was $27,542,000, fmanced the 1962 operations except for $2,026,000 provided by the conversion of debentures. As of Financing December 31,1962, outstanding bank loans totaled in 1962, $10,129,000 of 4%7C concertible deben-

$19,600,000.

tures were converted into 405,168 additional shares Rate Cases Were Settled of presently outstanding common stock. No new long-term financing was undertaken by the Com-Natural gas case settlements approved by the pany during the year. Internally generated funds, Federal Power Commission and involving Panhan-GA5 HOME HEATING CUSTOMERS AT DEC. 31,19521962 THOUSANDS OF CU$7oef B5 401.T0 CU5tosEas Gas Home-Heating Customers N19e2g Increased 2289. In Ten Years Customers using gas to heat their homes increased by 39,333 during 1962. Over the ten-yeer period ended December 31, 1962, the numbe of gas hUS oMER$

home4 eating customers rose from 122,223 to N 1952 g

400,668, on increase of 228%.

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19$2 IVM 19 54 19 55 1950 1957 1958 1959 1900 1901 IVol 50VRCE5 0F NATURAL GA5 0N YEARLY PEAK DAYS 1952 1962

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"dar 66% of Gas to Meet 1962 Peak 3 einuNE IN 1962 i,

Came from Underground 5torage michigan reoouctioN eq A secord 24-hour g:s ser. deut of 982 million cubic 7

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crease of 322% over the sendeut or. the peak day 600

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g in 1952. The value of underground storage to the 23,c Company is indicated by the fact that gas from N I'52

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storage fields provided about two-thirds of the gas m

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the Ccmmission's gas rate increase order of May J

1961 which permitted an increase in gas rates which t

the Company considered inadequate under the con-l 3

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Manufacturer Suits Pending l

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Suits filed by the Company in 1961 and 1962

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against manufacturers of electrical equipment, ask.

M' ing treble damages for osercharges for 16 types of electrical equipment, are pending against 28 defend-g[7 d

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g against 11 other defendants, r.iost of them small j

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' g:p quate an ofter of compromise settlement by General Yx Electric Company, defendant in 15 of the 16 suits.

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The investor-owned electric industry is seeking to learn how to use nuclear energy more efTectisely in a

WiMC chg.jg the Feneration of electric power. Consumers Power Completion of the new Oldimobile Engineering Center in Company is financially supporting two projects in toniing in 1962 furiher strengthened reieorch oad devel P this program, the Big Rock Point Nuclear Plant, ment facil. ties in outstate Achison.

which it owns and operates, and tne Enrico Fermi Atomic Power Plant near Monroe, Michigan. At l

the Fermi Plant the electric and steam Fenerating die Eastern Pipe Line Company t id Trunkline Gas equipment is owned by Detroit Edison and the nu-Company resulted in refunds to the Company cov-clear reactor by the Power Reactor Development ering gas purchased over a four-year period. Includ-Company, a non-profit organization formed by ing interest, the refunds amounted to $11,261,000.

Consumers, Detroit Edison and 19 other utility and With the approvai of the Michigan Public Service non-utility companies. First operation at Fermi is Commission, 53,966,000 was returned to the Com-planned for 1963.

pany's customers.The amount retained by the Com-The Big Rock Point Nuclear Plant was completed l

pany is subject to Federal income tax. This retained on schedule in September. First electricity was pro-portion of the refund represented increases in the duced in December.

cost of purchased gas which were not charged to our For four and a half years the Big Ihck Point Plant customers in the form of higher rates, will be the site of research and development work The settlements also resulted in a lower rate on sponsored by the U.S. Atomic Energy Commission gas currently purchased by the Company.This made and carried on jointly by Consumers vid General possible a reduction er32,000,000 a year in the rates Electric Company. One goal will be to step up quan-paid by the Company's gas customers besides offset-tities of heat and steam produced by the reactor ting certain increases in operating costs. The Mich-without increasing its site. The researchers will also igan Public Service Commission approved the ad-strive to make the nuclear fuel last lonFer and seek justment and the Company withdrew its appeal from ways of cutting the cost of fabricating the fuel.

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Within the research and development period it is A test program was initiated in Owosso to deter-expected that plant capacity will be increased from mine the feasibility of fully automated meter read-50,000 kilowatts to 75,000 kilowatts, the maximum ing. The Company and a number of its customers for which the plant was designed.

are cooperating in this test with Transitel Interna.

While the plant will not be called upon to meet tional Corporation of Paramus, New Jersey, which j

any electric production schedule during the research developed the meter reading equipment, and Gen-and deselopment period, it is expected to produce eral Telephone Company of hf uskegon, Michigan, substantial amounts of electric power. This output which serves Owosso. The test will be completed in will be pooled with that of other Consumers gener-1963. Under the sptem being studied, a customer's ating plants in the Company's interconnected sys-meter would be read automatically through elec-tem. In 1967 Dig Rock Point is scheduled to go into tronic equipment utilizing his telephone line. Meter regular commercial sersice, reinforcing power sup-readings would be transmitted to a billing machine ply in the northern part of the Lower Peninsula of which would prepare, issue and mail an appropriate Michigan where the demand for electricity is ex.

bill for service.

pected to grow.

Automated meter reading involves economic as well as technical problems. The Owosso test relates to f rhnical aspects only. In view of economic con-Other Research Activity siderations it seems unlikely that Consumers or The Company explored many paths in 1962 look-other utility companies will make widespread use of ing for more effectise and less expensive ways of automated meter reading in the immediate future.

doing its work.

During the year, centralized customer billing for A 1962 Tempest body nears completion at the Fisher Body Plant in Pontioc. This is one of aine Fisher Body plants served by Consumers, The other, are in Flint, Grand Blanc, Grand Rapids, Lansing. Livonia and Warren.

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11 of the Company's Divisions was transferred to electric customers along these rural lines now re-the large-scale IBM 7070 ciectronic computer in-ceive senice from Consumers.

stalled in 1961. The four other Divisions were Early in June, the Company terminated its un.

switched over earlier. The 7070 employs a magnetic profitable steam heating senice in downtown Adri-tape system and provides greater speed and flexibil.

an. Consumers now prosides central steam heating ity than the punch card system which was developed senice only in Battle Creek, Grand Rapids, Kala-when electronic computers were first used for cen.

mazoo and Saginaw, and only in the downtown tralized customer billing.

business districts of these cities.

The Company also uses the electronic computer in engineering and operating studies of various Service Centers were Built kinds.

New headquarters space was created for the

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" by remodeling and enlarging a service Area Changed Slightly Company buildmg m. Muskegon Ileights. A public The Company in 1962 contracted to sell certain open house at this senice center drew about 20,000 electric senice facilities to the City of Lansing for visitors in October. In Jonesville, a new area service slightly more than 5400,000, based on appraised center was completed to house operations formerly value. These facilities serve over 1,600 customers conducted in several communities. Construction of and are in a four and one-half square mile area that a new divisional senice center was begun in Jack-was annexed by Lansing in 1960. Lansing is served son. It will be completed in 1963.

by a municipal electric system. The city has aFreed to buy power from Consumers with which to serve Area Development Was Promoted this area for at least 10 years.

At a special election in January, the people of The growth and progress of a company such as Lowell, Michigan, voted 401 to 71 to accept a Com-Consumers are bound up with those of the area it pany ofter to purchase the northern rural power serves. The Company promotes the economic devel-lines of the Lowelllight and power system. The pur-opment of Outstate M;chigan in many ways. It co-chase was later completed and the more than 500 operates with state agencies, chambers orcommerce i

COST OF PLANT ADDITIONS AND IMPROVEMENTS, 1952 1962

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unuoNs OF DouAa5 Program Hos Averaged $243,000 y

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so Cost of pfont odditions and improvements amounted to $57 million in 1932, reached a peak N2 of $111 mill.on in 1959 and were $100 million in 6o F

J P 1962. Ovec the post ten years. these costs totaled W I'

$886 million. on overage of oppromirnstely $89 t,_

million per year. This is equivoient to $241.000 overy day of the year for the post ten years.

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and other community betterment agencies. It main-program promoting increased use of electricity"in tains an aggressive Area Development Department the commercial and farm fields.

which, among other activities, promotes industrial The Company develops new business by working expansion in Outstate Michigan. Tours of potential with groups and individuals interested in new plants, plant sites are arranged for interested representatives new stores and offices, new hc.using and other de-of leading industrial concerns. The Company for velopments within the service area. It also carries on many years has carried or. a national advertising sales programs to encourage improved lighting, j

program to attract industrial and commercial enter-modern space heating and increased use of the Com-prises to locations in the Consumers service area.

pany's sen' ices in air conditioning, water heating During 1962 a number of new plants were built in and other activities.

the Company's service area and many more were expanded. Increased demand for Consumers electric Employee Skills Were Sharpened and natural gas service resulted.

The Company continued to refine and expand its eff rts to train employees in their work and to de-Sales Awards Were won velop their supervisory and executive abilities. This During the year Consumers received two first-is a basic management responsibility which is ful-place awards in the annual sales award competition filled through in-company programs, supplementary sponsored by the Edison Electric Institute. They outside studies and individual guidance.

were in recognition of the Company's " outstanding As a sequel to the series held in 1961, a second

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~ Exporis;on)of the DuPont chemical complex of Montague, Michigon, involved forge expenditures for produc'ng Io'cilities'. Consuiners' Power built a new transmission line from Muskegon to bring more electric power.

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round of discussion meetings on the American eco-educators attended a two-day Company-sponsored nomic system was held in 1962 with nearly all em-nuclear power seminar in Charlevois which included ployees participating. Particular attention was given special tours of the Big Rock Point Nuclear Plant.

to the relationship between the American economic And in October, the Company sent seven top high system and Consumers Power Company. Qualified school students and six teachers to Chicago for the discussion leaders conducted two two-hour sessions three-day National Youth Conference on the Atom.

for each of more than 400 discussion groups.

Continuing its prometion of self-development by Safety Records Were Achieved employees, the Company paid part of the cost of outside study relating to Company work for 370 Accidents are costly as reflected on the human emplo)ces.

ledger as well as in the financial records. The effec-Since the Company employs more than 500 engi-tiveness of the Company's safety program over the neers in its electric and gas operations, advancement years is demonstrated by the many national awards of the engineering profession is an established Com-for outstanding safety achievements earned by vari-pany objective. In 1962 Consumers scholarships and ous operating units.

fellowship grants were made to four universities to in 1962, Company units earned 13 national promote interest in the teaching of engineerinF sub-awards from Edison Electric Institute and Ameri-jects. Scholarships were granted to 21 colleges and can Gas Association and 14 Consumers Power universities to encourage promising students.

Company safety awards, symbolizing seme 20 Two other activities were typical of the constant million man-hours without a lost time accident.

f cooperation afTorded theschools in Consumers' serv-Consumers' 1962 safety record, the best in the

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ice area. In August, about 50 prominent Michigan Company's history, exemplifies the fine spirit and P00R ORIGINAL Dwarfed by the big Allis-Cholmers turbine-generator, on operator toties a reading at the new James H.

Campbell Plant. The turbine-generator is a cron-compound unit with a capacity of 265.000 kilowatts.

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Ea&dBB%2ss2EhiesseE Completion of the James H. Campbell Plant in 1962 reinforced the western Michigan portion of the Company's electric system.

High voltage lines from the plant connect with tt e Consumers networir at Grand Rapids and Muskegon. t HEAT UNITS PER KILOWATT-HOUR, 1930-1962 - TNousANDs or avu or Futt usto Pf t Nff KROwATY-MOU# GENEe4TFD 15.90s afu or tutt usto Pf t Nf7 MWAUW Company Electric System GENERATED IN 1930 Hos ExceIIent Heat Rote p as in 1962 the Consumers Power system used on L 9.631 sTu or Furt usto E PfR NET KILOWATT HOUR overage of 9,631 British thermal un.ts of heat per ceNtaATED IN 1962 i net kilowotwhour of electricity generated. In 1930 'O the rate was 15,908 Bru. Lorger, more efficient ~- generating units accomplished the 39% reduction. There was on upward trend during World War 11 becowse normal replacement of cider generohng 3 equipment was interrupted. The Consumers system p ranks among the most efikient in the notion. E. O 1930 1934 1938 1942 1940 1950 1954 1958 1%2 l P00R ORIGINAL r-s em. Head Start en Temetrow 17

skill with which the Company's employees per-authorized sharea of Consumers common stock formed their work. from 14 million to 25 million. Adoption by the Company of an Employees' Savings Plan was also approved at the Annual New Member Joined Board hiceting as was the retirement oT4,000 shares of the Lyle C. Roll was elected to the Company's Board 54.52 preferred stock, which reduced the capitaliza-of Directors in October. hir. Roll is chairman of tion of the Company by $400,000. the board and president of Kellogg Company, a The common stock split-up became effective at leading breakfast food manufacturer with general the close of business April 20,1962. One of the ob-offices in Battle Creek, hiichigan. Kellogg is one of jectives of the split was to promote public interest in the many well-known firms the Company serves and the stock of the Company and increase the number has long been nationally identified with the growth of shareholders. This already has been achieved in and progress of Outstate hiichigan. some measure. Common Stock Was Spill Consumers Stock Widely Held A two-for-one split-up of common stock was ap-At the year end Consumers Power Company proved by the stxkholders at the Annual hiecting common stock was registered in 69,000 names,3,000 in April, together with an increase in the number of mor th n end o 9 Th r r d stock Chevrolet Saginow Grey Iron Foundry is a maior producer in the busy industrial corridor that entends through Pontioc, Fl.nt, Saginow and Boy City. Extensive modernizing of operations by Saginaw Grey Iron resulted in substantialinvestment in new plant and facilities in 1962. w, m,_^e e,' _M S.. .. A'!".. , i, W y, [s. . I" ' $3

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B ALANCE SHEET AT DECEMBER St.1982 AND 1959 ASSETS 1962 1961 UTILITY PLANT: At original cost-E!ectric. 5 906,327,997 5 872,798,102 Gas 350,008,351 303,264,587 Steam heating. 3,652,704 3,701,008 Common to all departments. 24.800,044 26,977.512 51,284,789,096 51,206.741,209 Less-Provision for accrued depreciatien. 245,582,910 218,979.574 51,039,206,186 5 987,761,635 Cost in addition to original cost, in process of amortization 117,3(4 178,020 51.039,323,546 5 987.939.655 INVESTMENTS: Insestment in common stock of Michigan Gas Storage Company, at cost (757' stock interest) 5 11,250.000 5 11,250,000 c 1,890,037 532,320 Other physical property, at cost or less........ i Other, at cost or less. 715.730 494,255 _5 13,855.767 5 12,276.575 CURRENT ASSETS: 5 7,277.831 5 6,722,066 Cash Accounts receivable-Customers, less reserves 23,763,623 24,940,496 Other. 2,019,961 1,71I,984 Materials and supplies, at average cost - 22,4'..,204 20,855,640 Gas in underground storage, at average cost 10,710,389 7,884.747 Refunds receivable from pipeline suppliers 9,214,4'I 7,476,684 7.151.122 Other. 5 73,722,692 5 78.480,466 DEFERRED DEBITS: 5 2,779,032 5 2,648,683 l Capital stock expense l Portion of cost of nuclear plant in process of amortization 9,188,043 (see Note 7) Debt premium and expense (net), applicable to a refunded 102.471 170.785 issue,in process of amortization 429.527 632.946 Other. 5 12.499.073 5 3,452,414 i 51.139,401,078 51,082.149,110 l 1 r # / $ 6

;i

.)iI j j,h l( { @4 **!"P""?!"K "0!,es ar'e an integralpart of this statement. 20

Consumers Power Company LI AB I LITIE S 1962 1961 CAPITALIZATION: Capital stock (without par value) and retained earnings-Common stock-authorized 25,000,000 shares-outstanding 19,761,496 shares and 19,356,328 shares, respectively-813,380 shares reserved for conversion of debentures. 5 292,i 78,016

5. 280.654,668 Retained earnings, of which 56,145,035 (equal to 57.50 per share of preferred stock)is not available for payment of cash dividends on common stock 100,088,989 86.199,309 5 392,967,005 5 366,853,977 Preferred stock, cumulative-authorized 1,500,000 shares, entitled in involuntary liquidation to $100 per share (see 81,966.379 82.367,138 Note 8).

TOTAL CAPITAL STOCK AND RETAINED EARNINGS $ 474,933,384 5 449,221,115 Long-term debt (see Note 9) 493,062,773 489,337,064 TOTAL CAPITALIZAllON......... 5 967,996,157 5 938,558,179 CURRENT LIABILITIES: Current sinking fund requirement on first mortgage bonds. 5 4,838,000 5 4,838,000 19,600,000 4,400,000 Notes payable to banks. 25,120,197 22,857,581 Accounts payable. 7,830,662 7,693,374 Dividends declared on capital stock. 38,482,615 36,004,820 Accrued taxes 5,704,598 5,861,265 Accrued interest.......... Other. 7,805,591 8.504,549 5 109,381,663 5 90,159.589 DEFERRED CREDITS: Premium less expenses on outstanding long. term debt,in process of amortization 5 117,703 5 80,700 Insestment credit (see Note 5) 1,966,029 Customers' advances for construction and other. 734,042 1,001.138 5 2,817,774 5 1,081.838 RESERVES: 5 49,477,964 5 43,189,862 Defcired Federalincome taxes Other. 1.828,733 1,843.576 5 51,306,697 5 45,033.438 CONTRIBUTIONS IN AlD OF CONSTRUCTION. 5 7,898,787 5 7.316,066 51,139,401.078 51.082,149,110 i The accompanying notes are an integralpart of this statement. 21 w n

STATEMENT OF INCOME FOR THE YEARS ENDED DECEMBER 31,1962 AN D 1961 Year Ended December 31 1962 1961 OPERATING REVENUE: Electric $198,857,361 $186,399,427 Gas. 131,395,598 114,655,299 Steam heating 976,696 1,001,675 TOTAL OPERATING REVENUE $331,229,655 $302.056.401 OPERATING EXPENSES AND TAXES: Operation-Purchased and interchanged power. $ 4,803,094 5 4,177,546 Fuel consumed in electric and steam heating operations. 32,971,830 30,613,966 Cost of gas sold 58,370,769 50,829,111 Other. 60,822,834 58,149,212 TOTAL OPERATION $156,968,527 $143,769,835 Maintenance. 16,629,835 15,362,967 Depreciation and amortization. 32,861,752 29,928,132 General taxes 17,343,455 16,922,249 Federal income : 37,953,679 33,732,041 r deralincome taxes. 6,999,982 7,248,992 Provision for de. e Charge equivalen, tal income tax investment credit (see Note 5). 1,966.029 TOTAL OPERATli 1.XPENSES AND TAXES $270,723,259 $246,964,216 NET OPERATINO INCOME $ 60,506,396 5 55,092,185 OTHER INCOME: Dividends from Michigan Gas Storage Company 956,250 961,875 Other 180,057 275,630 GROSS INCOME $ 61,642,703 $ 56.329,69C INCOME DEDUCrlONS: Interest on long. term debt $ 18,079,980 $ 17,622,922 Interest on notes payable 237,779 128,674 Interest charged to construction-credit

• 1,990,245*

1,879,517* Other 217,805 216,389 TOTAL INCOME DEDUCTIONS $ 16,545,319 5 16,088,468 NET INCOME $ 45,097,384 $ 40,241,222 DIVIDENDS ON PREFERRED STOCK 3,665,595 3,683,453 NET INCOME AFTER DIVIDENDS ON PREFERRED STOCK $ 41,431,789 5 36,557,769 EARNINGS PER SHARE OF COMMON STOCK BASED ON SHARES OUTSTANDING: Average during year. $2.11 $1.91 l At end of year. $2.10 $1.89 The accompanying notes are an integralpart of this statement. 22

STATE M E NT OF R ETAIN ED E AR NIN GS FOR THE YEARS ENDED DECEMBER 31,1962 AN D 19 61 Consumers Power Company Year Ended December 31 1962 1961 RETAINED EARNINGS-December 31,1960, as previously reported 5 72,487,621 ADD-Refund of purchased gas cost and applicable interest income, net of Federal income taxes (see Note 3). 2,575,575 RETAINED EARNINGS-Beginning of year, as restated 5 86,199,309 5 75,063,196 41,431,789 5 36,557,769 ADD-Net income after dividends on preferred stock. 5127,631,098 5111,6M,965 DEDUCT-Cash dividends on common stock declared at quarterly rate of 5.325 per share in the first three quarters in 1961, and at quarterly rate of 5.35 per share thereafter (paid $1.40 per share 27,542,109 25,421,656 in 1962 and 51.30 per share in 1961) 5100,088,989 5 86,199,309 RETAINED EARNINGS-End of year (see balance sheet).... The accompanying notes are an integralpart of this statement. Notes to the Financial Statements (1) In April 1962, the common stock of the Company was split on a 2 for 1 basis, and the number of shares author-ized was increased to 25,000,000. Shares outstanding at December 31,1961, and per share data for periods prior to the split have been retroactively adjusted in these financial statements. (2) The Company contemplates making capital expenditures for property additions during 1963 in a presently estimated amount of $59,000,000. (3) During 1%2, the Company received refunds totaling $11,261,316 from its natural gas suppliers applicable to the period September I,1958, to April 30,1962, including interest thereon. Pursuant to an order of the Michigan Public Service Commission, the Company made refunds of 53,965,894 to its customers. De amount retained by the Compa.'y is subject to Federal income taxes. The 1961 Snancial statements have been restated to give effect to these transactions. Rates of Panhand:e Eastern Pipe Line Company, under which the Company's subsidiary, Michigan Gas Storage Company, purchases gas for resale to the Company under a cost-of-service tariff have not yet been finally settled for the period Feb.uary 20,1952, to September 1,1958. De amount of any refunds, plus interest thereon, which the Company might retain upon final settlement of Panhandle's rates for this period cannot be determined at this time (4) Suits filed by the Company are pending against certain manufacturers of electrical equipment for damages allegedly sustained b; the Company because of the violation by the defendants of Federal anti-trust laws. i Treble damages are sought for overcharges for 16 types of electrical equipment. Purchases of this equipment have totaled millions of dollars during the period involved in the cases. However, no specific arnoants of danu;,es were alleged in the suits. It is expected that this litigation will not be concluded for some time. j l (5) During 1%2, the Internal Revenue Code was amended by the Revenue Act of 1%2 which provides, among l other things, for a credit against Federal income taxes equal to 37o of the qualified investment in public utility property. The Act also provides that the investment credit reduces the basis of the property available for de-l preciation for Federal income tax purposes. 23 --a--- - --- ---

Pursuant to preliminary instructions of the Michigan Public Ser ice Commission, an amount equisalent to the reduction in Federal income taxes currently payable resulting from the investment credit has been in-cluded in operating expenses and the contra credit has been included in deferred credits in the accompanying financial statements. (6) The Michigan Public Service Commission has undertaken an investigation as to a possible change in the treat. ment, prescribed by the Commission for public utilities subject to its jurisdictior., of tax deferrals arising from accelerated depreciation methods under &ction 167 of the Internal Resenue Code. Hearings pursuant to this investigation were concluded on Januarv 17,1963, and briefs are to be filed by March I,1063. Of the Company's 1962 provision for deferred Federal income taxes,56,933,193 is applicable to accelerated depreciation, (7) In accordance with authorization by the Michigan Public Service Commission, the Company has transferred to deferred debits the portion of the cost of the Big Rock Poir.t Nuclear Plant in excess of the cost of equisalent cor ventional generating facilities. Charges to operating expenses fm nuclear research and deselopment hase been authorized by the Commissio-in an annual amount of $1,500,000 for a period beginning in 1960 to pro $ide for the amortization of this deferred debit and other nuclear research. (8) Preferred stock is represented by: December 31 1962 1961 5 54,778,800 5 54,778,800 54.50 - 547,788 shares outstanding. 54.52-175,550 shares outstanding, less 4,000 sha:es purchased in 1962 17,155,000 17,555,000 for retirement.... 10,000,000 10,000,000 54.16-100,000 shares outstanding 32,579 33.33_8 Premium on preferred stock TOTAL PREFERRED STOCK. 5 81.966,379 5 82.367,138 (9) Long-term debt is represented by: December 31 1962 1961 First Mortgage Bonds-5109,024,000 5109,024.000 2%7o Series due 1975.... 24,775,000 24,775,000 2%7o Series due 1977. 3%7e Series due 1981. 39,700,000 39,700,000 24,750,000 24,750,000 37o Series due 1984. 40,000,000 40,000,000 4To Series due 1986. 3%7o Series due 1987................ 25,000,000 25,000.000 14,680,000 19,490.000 4%7o Series due 1987. 4%% Serics due 1988........ 40,000,000 40.000.000 35,000,000 35.000.000 4%% Series due 1989. 30,000,000 30,000.000 3%% Series due 1990. 35,000,000 35,000.000 4%7o Series due 1990. 4%7c Series due 1991. 40,000,000 40,000.000 5457,929,000 5462,739,000 Deduct-Current sinking fund requirement included in current 4,838,000 4.838,000 liabilities 5453,091,000 5457,901,000 TOTAL FIRsT MORTGAGE BONDS. Convertible Debentures,4%7c, 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 (adjusted for April 1962,2 for I stock split), subject 20,334,500 30,463,700 to adjustments in certain events Purchase obligations, due 1964 18,908,000 Notes,47c, due 1964-1966. 729,273 972.364 TOTAt. LoNo-TERu OEsT. 5493,062,773 5489.337,064 24

ARTHUR A.NDERSEN & CO. Pzwonscor Dextonwo DETHOIT 20 To the Board of Directors, Consumers Powcr Company: l We have examined the balance sheet of CONSUMERS PO?iER COMPANY (a Maine corporation) as of December 31, 1962, and the re-lated statements of income <ad retained earnings for the year then ended. Our examination was cade in accordance with generally ac-cepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we con-sidered necessary in the circumstances. In our opinion, the accompanying balance sheet and state-ments of income and retained earnings present fairly the financial position of Consumers Power Company as of December 31, 1962, and the results of its operations for the year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year. W' Detroit, Michigan, February 1, 1963. ^ * ~ _~ %gt. N, y _ f r 1 _s , v: .I A A ] s k li '. j 6 .NE b ].K y . i ll $ e, $ % $ ? & *- E ? 5 & & j r - mNh% r% \\ v=..eN~.M.mmmum ( ev-w ~4 m _n - n This new 6ervice center in Muskegon Heights, built around the nucleus of a smaller building, is a focal point of Company operations in the Muskegon Dhis.on. 300R.0 RIG'NAL ,s

FIN ANCI AL FUMM ARY 1962-1952 STATEM E NT O F IN COM E D ATA Operating Revenue 5331,229,655 5302,056,401 5281,395,933 5257,525,425 Operating Revenue Deductions, Except Taxes 206,460,114 189,060,934 179,928,221 158,497,111 Taxes FederalIncome Tax, See Footnote (A) 39,919,708 33,732,041 28,647,373 30,523,471 Deferred Federalincome Tax. 6,999,982 7,248,992 7,059,399 6,599,259 17,343,455 16,922,249 15,433,274 14944,658 Other. Net Operating Income 60,506,396 55,092,185 50,327,c,66 48.960,926 I,136,307 1,237,505 1,236,279 1,553,392 Other income income Deductions 18,535,564 17,967,985 15,972,952 14,756.150 Interest Charged to Construction-Credit 1,990,245 1,879,517 2,376,994 2,448,132 Net income. 45,097,384 40,241,222 37,967,987 38,206,300 Dividends On Preferred Stock 3,665,595 3,683,453 3,698,259 3,717,765 On Common Stock 27,542,109 25,421,656 24,767,968 22,618,6X Earnings Retained 13,889,680 11,136,113 9,501,760 11,869.909 Common Stock, Unadjusted, See Footnote (B) Average Shares Outstanding 19,608,383 9,568.115 9,525,665 8,885,147 Earnings per Share 5 2.11 5 3.82 5 3.60 5 3.88 - Dividends Paid per Share. 5 1.40 5 2.60 5 2.60 5 2.45 Common Stock, Adjusted, See Footnote (B) Average Shares Outstanding. 19,608,383 19,136,230 19,051,330 17,770.294 5 2.11 5 1.91 5 1.80 5 I.94 Earnings per Share Interest Charged to Construction per Share. 5 .10 5 .10 5 .12 5 .I4 B A LAN C E SHEET D ATA 51,284,906,456 51,206,919,229 51,123,460,322 51,032,604,543 Utility Plant. Accrued Depreciation 245,582,910 218,979,574 193,025,185 172,870,164 131,893 121,849 111,876 102,900 Plant insestment per Employee Capitalization Common Stock and Retained Earnings 5392,967,005 5366,853,977 5346,612,561 5313,091,745 Preferred Stock 81,966,379 82,367,138 82,767,898 83,168,658 Long. Term Debt. 493,062,773 489,337,064 461,924,254 415,935,000 Total Capitalization. 5967,996,157 5938,558,179 5891,304,713 5812,195,403 Capitalization Ratios-7c ) i Common Stock and Retained Earnings 40.6 39.1 38.9 38.( Preferred Stock 8.5 88 9.3 10.2 Long. Term Debt. .( 50.9 52.1 51.8 51.2 i Federal Income Tax in year 1962 includes a charge in the amount of $1,966,029 equivalent to the reduction in (A) such taxes resulting from application of the 37c Investment Credit provided by the Revenue Act of 1962. (B) Common Stock, Unadjusted, figures do not reflect any adjustments to previously reported figures for the SG stock dividend of December 1955, or for the 2 for i stock split in April 1962. The Common Stock, Adjusted figures reflect these adjustments. l R I 7 p" p(> 4 j ri, " t/; /. 26 J. -

c Consumers Power Company sees ses7 sees sees ses4 sess essa $227,63!,181 5221,461,837 5208,393,754 5189,431,360 $168,728,450 5155,034,360 $137,318,012 143;B29,048 138,773,917 131,042,253 118,602,276 107,570,185 97,179,035 88,896,159 24,072,837 26,581,533 27,086,% 5 24,995,000 20,506,090 21,061,968 17,924,279 6,236,371 5,572,383 4,208,808 3,216,335 1,746,751 1,037,747 263,817 11,893,682 10,593,205 9,223,420 7,947,163 7,207,235 6,250,466 5,846,217 41,599,243 39,940,799 36,832,308 34,670,586 31,698,189 29,505,144 24,387,540 1,389,545 1,365,125 1,055,782 1,462,791 1,324,062 1,581,479 1,465,422 13,102,150 10,137,856 8,432,298 8,273,175 7,536,180 7,145,145 6,440,231 1,894,850 1,594,947 I,731,490 1,341,384 1,185,710 '348,527 1,267,642 31,781,488 32,763,015 31,187,282 29,199,586 26,671,781 24,890,005 20,680,373 3,742,243 3,756,570 3,778,551 3,543,937 3,367,141 3,367,687 3,368,231 21,132,828 21,094,044 18,539,687 17,069,219 16,442,355 15,321,286 13,750,567 - 6,906,417 7,912,401 8,869,044 8,586,430 6,862,285 6,201,032 1,561,575 8,800,455 8,697,631 8,239,861 7,662,200 7,473,798 6,742,890 6,176,o93 5 3.19 5 3.33 5 3.33 5 3.35 5 3.12 5 3.19 5 2.80 .- 5 2.40 5 2.40 5 2.20 5 2.20 5 2.20 5 2.15 5 2.00 17,600,910 17,395,262 16,479,722 16,021,954 15,694,976 14,160,070 12,971,056 5 1.59 5 1.67 5 1.66 5 1.60 1.48 5 1.52 5 1.33 5 .;l 5 .09 5 .11 5 .08 5 .08 5 .07 5 .10 9 5931,717,903 5853,414,043 5758,360,576 5679,228,020 5613,581,239 5559,476,346 5510,035,765 149,821,234 132,972,735 120,390,331 109,328,075 99,079,559 92,601,080 84,590,843 91,461 81,355 72,363 66,919 62,388 59,639 56,898 5291,326,590 52R2,955,324 5251,559,323 5242,690,279 5217,194,422 5185,361,797 5157,529,889 83,569,418 83,970,177 84,371,148 84,771,696 74,771,696 74,771,696 74,795,742 394,862,700 360,067,700 293,249,000 256,237,000 228,825,000 230,175,000 206,650,000 5769,758,708 E6,993,201 5629,179,471 5583,698,975 5520,791,118 5490,308,493 5438,975,631 37.8 38.9 40.0 41.6 41.7 37.8 35.9 10.9 11.6 13.4 14.5 14.4 15.3 17.0 $1.3 49.5 46.6 43.9 43.9 46.9 47.1 ompany issued to its common stockholders a dividend of 59'c in common stock. (1) In December 1955, the c In recording this transaction on its books, the Company assigned a value of $45.25 per share to the 392,374 total shares issued as a dividend, a total of $17,754,924. The amount of this dividend is not reflected in the above figures. (2) Figures have been restated where applicable to reflect the refunds received in 1962 and 1956 of purchased gas cost for the years 19581961, and 1952-1955, and related interest. I 27

ELECTRIC AND G AS OPER ATING COM PARISO N 1962-1952 PE R CENT INCRE AsE OR (DECRE AsEl 1962 1982 COMPARI D wi1H 1961 1960 ELECTRIC s9et 1952 Electric Resenue 5 82,884,470 4.0 101.7 5 79,727,171 5 76,207.20 Residential Commercial 46,237.915 6.8 110.1 43,291,862 40,338,0S 60,682,708 10.9 88.4 54,718,983 55,054,61 Industrial Interdepartmental and Other. 7,084,401 9.9 162.3 6,444.469 5,886.91 $196,889,494 6.9 100.9 5184,182,4S5 5177,4 s6.b l Total Electric Sales Revenue... bliscellaneous Electric Revenue. 1,967,867 (11.2) 82.5 2.216.942 2,081.61 Total Electric Revenue 5198,857,361 6.7 100.7 5186,399,427 5179,568.42 Electric Sales (1,000 Kilowatt. Hours) Residential. 3,530,776 4.6 114.3 3,376,511 3,205,40 2,000,412 8.8 152.7 1,838,741 1,690,66-Commercial 4,846,180 15.9 92.1 4,150,726 4,279,95-Industrial Interdepartmental and Other. 470,524 13.4 204.4 414.785 377,45. Total Electric Sales 10,847,892 10.6 112.0 9,810,763 9,553,50. 2,038,155 4.6 81.3 I,948,350 1,876,39t Peak Load-Kilowatts......... Generating Capacit3-Kilowatts. 2,792,664 10.2 117.8 2,534,992 2,270,96. Ileat Rate-Btu of Fuel per Net 9,631 (.5) (17.4) 9,675 9,85' Kilowatt.Ilour Generated. 898,862 1.5 25.9 885,832 873,83-Electric Customers-End of Period Electric Residential Customer Aserages 4,443 3.0 67.I 4,315 4,16. Annual Kilowatt.Ilours Used Resenue per Kilowatt. Hour Used. 2.35e (.4) (5.6) 2.36e 2.38 5104.31 2.4 57.3 5101.89 598.9-Annual Resenue. GAS Gas Resenue Residential Using Gas for Home 11 eating 5 75,065,216 18.0 315.3 5 63,601,515 5 52,200,27 10,171,957 (2.1) 24.4 10,387,623 11,054.27' Other 43,225,914 18.1 309.7 36,595,988 32,962,37' Industrial and Commercial 1,704,f,55 (26.3) 2158.5 2,314.246 3,011,25 !ndepartmemal and Other (A) 5130,167,742 15.3 253.0 5112,899,372 5 99,228,18 Total Gas Sales Revenue Aliscellaneous Gas Resenue. 1,227,856 (30.1) 261.0 1,755.927 1,541.26-Total Gas Resenue 5131,395.598 14.6 253.1 5114,655,299 5100.769.44' Gas Statistics (1,000 Cubic Feet) Gas Sales Residential 72,941',582 13.4 260.4 64,303.774 53,760,03: Using Gas for Home Heating. 6,845,467 (5.5) 8.3 7,241,954 8,187,65: Other Industrial and Commercial. 62,013,406 17.5 295.0 52,797,012 48,853,31" Interdertrtmental and Other (A). 3,809,981 (42.4) 3683.9 6,611,019 7,494.85-145,610,436 11.2 243.7 130,953,759 118,295,85: Total Gas Sales Net to Storage 7,305,514 24.4 5,872,391 10 "'83.51 Unbilled, Lost and Company Use. 3.857,019 M.9 152.9 2,338.105 _y 0,22' Total Gas Purchased and Produced. 156,772.969 12.7 257.2 139,1 M,555 135,434.59( Masimum 24-Hour Gas Send.Out 982,434 16.5 322.5 843,543 821,36: (1,000) Cubic Feet 590,633 4.9 68.1 562,897 539,47c Gas Customers-End of Period. Residential Customers Using Gas for llorr.e Heating Number-End of Period. 400,668 10.9 227.8 361,335 321,90' 193 2.1 8.4 189 IN Average Annual Nicf Used...... Average Revenue per Mcf Used 102.91c 4.0 15.2 98.91c 97.10, Average Annual Revenue. 5198.73 6.3 25.0 5187.01 5178.4f (A) Includes intracompany sales of gas to the electric department for use in generating electricity in years 1962,1961,ani 1960, and substantial sales to another public utility, in 1962 and 1960. 2S

Consumers Power Company tese toss tes7 seas toss tes4 toss smaa 5 70,957,616 5 M,314,868 5 61,540,221 5 57,264,960 5 52,427,172 5 48,313,852 5 44,291,959 5 41,091,553 37,904,248 33,722,M3 32,017,441 29,796,312 27,629,690 25,103,644 23,M7,139 22,007,859 52,423,154 45,785,860 48,343,983 46,352,068 44,213,748 37,281,138 37,354,130 32,205,227 5,254,757 4,582,742 4,150,513 3,309,399 2,940,547 2,768,N3 2,792,292 2,700,938 5166,539,775 5148,406,113 5146,052,158 5136,722,739 5127,211,157 5113,466,677 5108,085,520 5 98,005,577 1,945,647 1,756,798 1,735,556 1,707,543 1,457,848 1,475,291 1,202,994 1,078,558 5168,485,422 5150,162,911 5147,787,714 5138,430,282 5128,669,005 5114,941,968 5109,288,514 5 99,084,135 3,094,393 2,890,249 2,729,873 2,501,144 2,244,271 2,033,078 1,816,1N 1,M7,921 1,599,315 1,409,658 1,238,406 1,139,903 1,N7,657 929,997 861,775 791,717 4,012,905 3,373,978 3,803,532, 3,749,452 3,783,935 2,976,137 2,992,279 2,522,270 325,647 274,189 246,730 192,381 169,283 155,766 160316 154,557 9,032,260 7,948,074 8,018,541 7,582,880 7,245,146 6,094,978 5,830,574 5,116,465 1,794,650 1,738,785 1,632,005 1,570,820 1,458,070 1,288,370 1,170,415 1,124,465 2,270,962 2,0N,938 I,848,688 1,712,888 1,558,118 1,402,168 1,404,618 1,282,N8 9,912 9,896 10,423 10,799 10,908 10,882 11,185 11,665 858,457 843,276 827,888 810,875 787,662 761,530 736,936 714,225 4,096 3,905 3,761 3,536 3,282 3,079 2,846 2,659 2.29c 2.236 2,256 2.29p 2.34d 2,38d 2.44d 2.496 593.92 586.91 584.79 580.96 576.66 573.17 569.41 !66.32 5 45,805,934 5 38,830,746 5 36,262,193 5 35,596,876 5 29,167,905 5 25,993,234 5 21,189,121 5 18,076,869 12,020,807 12,516,966 12,074,857 11,232,443 10,782,624 10,419,563 9,527,285 8,174,066 28,509,026 23,650,121 23,030,884 20,990,057 19,009,009 15,722,624 13,512,832 10,550,659 234,627 190,852 151,543 144,672 129,418 110,290 116,452 75,478 $ 86,570,394 5 75,188,685 5 71,519,477 5 67,964,048 5 59,088,956 5 52,245,711 5 44,345,690 5 36,877,072 1,366,601 1,200,380 1,074,923 950,250 715,587 553,421 417,743 340,110 5 87,936,995 5 76,389,065 5 72,594,400 5 68,914,298 5 59,8N,543 5 52,799,132 5 44,763.433 5 37,217,182 47,827,215 40,131,587 37,638,842 36,869,414 29,980,627 26,513,803 21,730,535 20,240,028 8,713,106 8,990,599 8,548,906 7,993,181 7,593,440 7,169,030 6,486,509 6,323,388 41,690,243 34,446,406 34,324,931 31,123,993 28,948,655 22,971,537 20,175,900 15,699,402 3M,449 244,638 193,380 184,081 164,424 130,072 144,208 100,690 98,535,013 83,813,230 80,706,059 76,170,669 66,687,146 56,784,442 48,537,152 42,363,508 815,262 3,728,363 1,800,161 766,055 2,757,293 2,072,651 2,405,702 1,525,198 99,350,275 87,541,593 82,506,220 76,936,724 69,444,439 58,857,093 50,942,854 43,888,706 602,123 574,989 505,462 400,942 440,054 356,110 310,036 232,547 509,462 483,682 462,922 443,730 426,714 395,509 373,458 351,315 e 265,073 234,184 205,884 192,754 18~,?91 158,1N 140,590 122,223 1% 187 193 194 180 183 166 178 95,77d 96 766 96 34d 96.55d 97.296 98.Md 97,51d 89.31d 5187.78 5181.01 5186.30 5187.00 5174.65 5179,39 5161.77 5158.95 Non: Gas revenues for the years 1952 through 1954, and for the year 1%I, have been restated to reflect the refund to the Company's customers ordered by the Michigan Public Service Commission as a result of a refund of purchased gas cost for those years, 29

THE BO ARD OF DIRECTORS A.1i. AYMoso, Jackson, Michigan Chairman of the Board of the Company ROBERT P. BRicos, Jackson, Michigan Executive l' ice President of the Company JAMES II. CAMPBELL, Jackson, Michigan President of the Company LEE D. FERDEN, Chesaning, Michigan farmer FRANK llAMILToN, New York, N. Y. First l' ice President of Bankers Trust Company DAN E. KARN, Jackson, Michigan Consultant to the Company DON T. McKost, Jackson, Michigan Partner of the lawfirm of McKone, Badgley, Domke & Kline RALPsn C. MoRLLY, JR., Saginaw, Michigan President ofMorley Brothers Wholesale liardware Distributors DONALD J. PORTER, Grand Rapids, Michigan President ofPorter-Hadley Company Wholesale Building Materials LYLE C. ROLL, Battle Creek, Michigan Chairman of the Board and President of Kellogg Company Cereal Manufacturers ARTi UR 11. SARvis, Flint, Michigan l' ice President and Chairman of Executive Committee of Citi: ens Commercial & Savings Bank EownN TsioRNE, New York, N. Y. Senior l' ice President of first National City Bank JUsTIN R. WillTING, Jackson, Michigan Chairman of Executive Committee of the Company COMPANY OFFICERS A.11. AYMoND, Chairman of the Board Chief Executive Officer JAMES II. CAMPBELL, President Chief Operating Officer ROBERT P. BRicos, Executive l' ice President Corporate Affairs, Finance and Buildings

11. STANLEY RicalMoso, l' ice President Personnel CLAvoE A. MULucAN, l' ice President Divisions, Rates and Customers' Services liARRY R. WALL, l' ice President Electric Operations JottN B. SIMPSoN, l' ice President Gas Operations BIRUM G. CAMPBELL, l' ice President Marketing WALTER C. SCIIMIDT, l' ice President Electric and General Engineering, Construction, Land and Right-of-Way, Purchasing Joi N W. KLUBERc, Controller WALTER R. Bonts, Secretary Gr,oRot E. OLMsTED, Treasurer HARoto P. GRAvts, General Counsel DAvio 11. GERilARD, Assistant l' ice President RoBtni D. ALLEN, Assistant to the President 30

DIVISIONS AND M AN AGERS Battle Creek Division (Battle Creek)...............................GORDON W. HOWARD Bay City Division (Bay City)....................................... Louis A. VAUPRE Cen tral Division (Alma)..................................... HERDERT L. ZIEGENBEIN ARTituR L. CRAWLEY Flint Division (Flint). GoRDos L. CARSON Grand Rapids Division (Grand Rapids)...... Jackson Division (.lockson).................................... FR AN A B. ADAus ARTIICR H. LEE Kalamazoo Division (Kalama:oo)......................... WiturM R. CARLYON Lansing Division (Lansing)................................... GEORGE L. MAYllEW Macomb Division (East Detroit). LIONEL L. BOOTil Muskegon Division (Muskegon).. ........................ Bon D. HILTY Northwest Division (Traverse City). CHARLES F. BROWN Pontiac Division (Pontiac). W. ANSON HEDGICOCK Saginaw Division (Saginaw)............. .........................WILFRED L. WillmELD South Oakland Division (Royal Oak). ............ JAMES P. TriOMAs, JR. West Wayne Division (Livonia).................. TR ANSFER AGENTS Common and Preferred Stock Consumers Power Company, Jackson, Michigan Agents of the Company.. 300 Park Avenue, New York 22, New York Consumers Power Company common stock is listed for trading on the New York, Midwest and Detroit Stock exchanges; preferred stock on the New York and Detroit exchanges; certain series of mortgage bonds and the convertible debentures on the New York Stock Exchange. REGISTR ARS OF STOCK Preferred Stock City Bank and Trust Company Jackson, Michigan First National City Bank New York 15, New York Common Stock The National Bank of Jackson Jackson, Michigan First National City Bank New York 15, New York A N N U A L M E ETI N O The annual meeting of stockholders of the Company will take place Tuesday, \\pril 9,1963, at 2 p.m. in the Company's Parnel; Office Building. 1945 West Parnell Road, Jackson, Michigan. A notice of meeting, proxy statement and proxy will be mailed to stockholders on or about March 12, 1963. Prompt signing and return of your proxy or proxies will be appreciated by the Company management. .t; ate cecn "I',~kjQ}n ,n f:

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[ s t M:CH Adair I G^5 m 6. i SS b 1 l h ( *-- l The Company supplies natural gas service in 3 I on area of about 8,000 square miles in 32 l $ s /:p' p,, Michigan counties. I $,,,h China i L'a*8 _Y-Ns'_ \\ Q Maryw - I About 2,800.000 people live in this naturot l l gas service oreo. l / Boyd c4 l 1 (There is some duplication between oreos l (( h 88*""\\lra $torage Reid E*"I served with natural gas and those served w;th gj,y g i 10 CONsOMEPs POntR CO l gM *I H8" ,1,c,,; cit y. In total, the Company serves on l I l gas DrstR.BUTLON sYsitM dd7'%.Q ; I creo of 29,000 square miles with a population ... $N M' of 4,200,000.) e 1 e se.o. age 'd@ g.$ dg~M E M ,1 The Company provides natural gas service .s. r3 y I A* fo'ce Base 7 Q Ns% N N a,e7 I in 154 cities and villages, 228 townships and i l v4 [3hN" CNTAli10,' 32 unincorporated communities. I 1 Most of the gas distributed by Consumer is NPk :e.> I Met Clemeas p-sca<a n.uns e d d1 JLe( cA m brought to Michigan frem the South and South-j A"f.s i f ____________ g ___.----~~- - ' I west by Ponbondle Eastern Pipe Line Company 6.__________ and Trunkline Gas Company. Much of it is Detail from map on opposite page delivered in the warmer months and held in i underground storage to supply the demands of winter. Storage fields are owned and oper. t d by wchigan Gas storage Ccmpany, in Operation of the fields shown on the map which Consumers has 75% ownership, and by above, with one exception, was taken over by Consurners itsen. P Consumers Power Company on January 1, The Company's natural gas system has de-1963, under a purchase contract made in De-livered mere than 1.1 billion cubic feet of gas cember 1962 with Panhandle Eastern Pipe in a 24-hour period. 6 Co" Sum"' P""'es 296 miles of gas trans. Line Company.

• i's; n I;nes nd 9,885 miles of goi distribution The exception is the Puttygut Field. Con-lines. Michigan Gas Storage Ccmpany operates sumers took over the operation of Puttygut 496 miles of gas transmission 1;r.es.

in December 1962 after acquiring the interests of McClure, Inc. The transmission line from she gas plant in KEY TO MAP the Boyd Field, connecting with the Consum-Gas Lines -Consumers Power Co. ers gas system near Mt. Clemens, was built by Gas Lines - Michigan Gas Storage Co. e Consumers several years ago to receive gas from Panhandle. The other lines on the map --- Gas Lines -. Ponhandle Eastern Pipe line Co. w ere taken over from Panhandle on January 1 1963, together with the gas plant. O Compressor Station - Michigan Gas 5'a' age Co. The gas plant extracts propane and butane gases from natural gas produced in the area A Compressor Storion - Consumers Power Co. and makes it suitable for marketing to Con. sumers customers. O Division Headquarters City Through an interconnection shown at upper Community served by e center, Consumers now supplies a portion of Consumers Power Co. the gas requirements of Southeastern Michi-e gan Gas Company of Port lluron, Michigan. Eff ; P00R.0RIGINAL 32 o Electrfc systern Map o 4 inside front cover. sees v => vs a ( Ik-.-.__-

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