ML20058L872

1992 Annual Rept,Cpc

ML20058L872
Person / Time
Site:	Palisades, Big Rock Point, Midland  File:Consumers Energy icon.png
Issue date:	12/31/1992
From:	Mcnish T CONSUMERS ENERGY CO. (FORMERLY CONSUMERS POWER CO.)
To:	Harold Denton Office of Nuclear Reactor Regulation
References
NUDOCS 9305130058
Download: ML20058L872 (41)

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MKHoGAN5 PROGRESS General Offees: 212 West Mctugan Avenue, Jackson, MI 49201. (317) 788-1030 lb May 3, 1993 4

Dockets No. 50-155, 50-255 50-329, 50-330 s

4 Nuclear Regulatory Commission Att:

Mr. Harold R. Denton

-M Director of the Office of Nuclear Reactor Regulation Washington, DC 20555 i

1992 ANNUAL REPORTS 4

Gentlemen:

p In conformity with the requirements of Paragraph Y

50.71(b) of 10 CFR Part 50, enclosed are 10 copies of the f

Consumers Power Company 1992 annual financial report, f

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1 99 2 AN N t A 1 RI I' o H I l

CONSUMERS POWER COMPANY

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1 Management's Discussion and Analpis 1

Consolidated Financial Statements..

10 Notes to Consolidated Financial Statements.

16 Reixen ofIndependent l'ublic Accountants...

32 Selected Financial Information 33 Quanerly Financial Information.

33 Glossary.

31 ShareholderInformation....

36 Iloard of Directors and Omcers.

37

. MANAGEMENT'S DISCUSSION AND ANAmtS' ~ l

.a Corporate Structure,

""" "c "4"i ~ "" *""r '" -c" r - " '" c"" ""-" der Quas,-Reorgam,:ation, and fedrial law aml terulation ti.e. Pt llPh arnl:n re-olution of i

eComia wpna-e,ac, m a rcmanacat.,d a m,C Revised Settlement

" "" i" ""es ' " """ e e d"" ""'~ "4" 6 " '" ' h e "" "

purcha cd by Corrmner-from the MCV Panimr-hip. Partie-on-umers r a combirulion electric aml ga-utilay opp'Une the 5cttlenwnt Order may scck a rehearing of the (1dil[Mr!) -t'n (ny Int >-t isf tim 1/#w er l'cFlin-t1}a (el (8tt b'r (4 b a coud Hll[Wa!. [lic hettlt'!ncilt ibdct rt%Uktet] irl

% higan and i-tlm prin ipal-uhdihan of cms Con mner-recogni7ing an af ter-tas h, - of $313 milhon in Encrey. an enrrry hohhng i ompany Con-umerJ notomer In ba-c irn Imic-a mis ofiesnieraiah commercial and diser-i.

n ember PN2 for the pre ent salue of eaimaini f uture fini indu trial eu-tomer. the n.o-t impinant of wbh h i the uralcrrerm cric of pourt n.-t-under the PP \\. Eu ept for automoln e indu-f r3 adjuament-to reflect the af ter-ias time s alue of money. run additional lo"c-are espn ted unles-actual future esperi-b ot Dreember 31. PrC, L.n..umcr-cHerred a qua-i-rrwe materially diffes hom mamigementi current c timatc*

reorgamzation in whh h Con-u crJ m s umiated deficit of S571 imlhon wa- <diminated again t other paid-in capital. \\

see -Power Purcluse from the MC\\ l'acility" and bic 3b qua-i-in. ream /ation i an cln tise,nTounting pmenlure that permis. company dut lu-emerged from brurrial diffmult)

Comparative Results to re-tate it accouns to fair s alue ami c-tabh-h a he h -tart inom an accountme per-ps tnc.I.hr Lir ialuc of of Onerations r

k A*f runrr[ ib4't-arbl 1 allliitits at tbc tlJte 8 #1 the' yM-i-f c'er-ganization were ilctennined b management to apprmimate 3

their carr3 ne sala ~ arn! no malcriai adju-tnmnt-to the his-OVERVIEW i

torical ba-e-were made see hic lot Thi action aa' In Pre and UNI. Corromer reconled net lo-c after apprmed bs Lon-unwri 16 ant of threcoa-and did not dn and on preferred god of STi3 million and S2f>0 icquire -harch hict appim al. The qua-i-rcorganization wa' iniHion. re-pediudt The Pre imt h.- rc0cch the recogni-ches !cti cormurrent uib (5orrunmf*.H Tf] tance ob lb' to.n of an ahcraas lo-of $313 miHion in December PW2 for Sctdement i hdcr addic--me it co-: recm cr3 a--riarnt with g g.g g g g qf ghp pqjmgged fylgre gggderTecos cric-bbr t

MG power pmelure-related to the MP C-appn. sed power purcha e-hom the MCV I aedity t-cc %te 3L % nh the accumulated deficit chminated. Con-omer-beliew it 5Hdement Order. Tiu n suls for FFe were aLo impacted win be able to re-ume paying duidend-on a-comrnon -tm k bs a fun war of lower ha c cln tric rate a-ordered bs the in PN3 -nbjn i to re-inction in Consumeri inicic and MPK in Mas and Juls PW1. rnluction in electric sales Iir-l Wngage llond Indentur" udume-andinneecIl electric di tribution maintenance un Wn b 31. PN3. the MPK apprm cd. uith modifi' nn b be ersme cledric s 4rm reliabihti. The Un2 net lo -

. ation. the Hcs hed Sctricment Prop,-al u hi< h had been co-e pniaHy on-d by inipou d ga deliwric and dern en!

pon-owd by Con-umer. the MPR taff and 10

• mall power imnN < luur, mon ting reduced leu L of lons.acnn debt and coceneration dewloper. I nder the term-of the uni-cd and Wn imnN ran s The Pol na l<,- rcDecs non+eh ctdement Propo-ah em h settlement Party ha-20 day-fmmAr-m uisk rr nitaling 63% million related to Wrch 31. Un3 to ohjn t to the mmhfication and -eek to CorrumnJ abandoned WHand nm leur irnc4 ment.

wi:hdrau the f(ni-cd Settlement Propo-al. The MC\\

Partner-hip ahn re-nes the right to object in the ewnt that a modifmation of the Hni-cd Sctilement Prop +al affect-the ELEcuuc UnuTY OPERATloNs MCY Partner-hipi righb Consumer-doc not npn t that Electric Li Ogwrating locome: In Prc. electric any objection-by other *ctilement Partie-or the MCV nct operating income denea-ed $11 rmilion from the PH1 Panner-hip to the modified setdement prop > a! that may he inel The reduced net operating income rc0ccb increa-ed made undrr thi-pnn smn w di a0cci the co-rn m en of pur-empha-i-un 3 4cm reliabihty impnnemens. irnpact of

< lu-e-from the MC\\ Panner-hip. The ~< opr of the mihler wcather on air conditioning demand. dn rea cd Setdement Order ira lude three maior componens: 1i treat-electric rate.-ic-uhing frorn the full rar impact of a rnid-3 omount Con-unms woubl reem er from it-cu--

PM) dn rea c and inneased income law reflecting lower ment of the tomes for the co-t of power pun ha-cd by it frorn the MC\\

intne-t deduction-Partially on-etting the-c umicrrun wne Partneship 2t selection among independent pmcr genera-reduced lo-e-a-ociated with MCV power pun ha c. In Un],,lectric net operatinc income decrea-cd from the I ho l

I 1992 ANNUAL REPORT GAS UTILITY OPERATIONS leiel as a result of increa-ed muer purchases from the MCV I

Pannership that were not reemerable from electric retail cu'-

Ga,, Net Operating Income: In 1992. ga= net oper-somers, decrea-cd electne rates an ! decrea-ed transnuwon i-w i reased $11 million imm the 1991 lesel. The service res enue, junially off-et by incica,ed ss-tem sales.

i cased net operating income reflects higher gas deliseries r

The following table quantifies ilm impact of the major rea-on' droth ales and transponaion u,lumea reflecting colder for the change in net operating inconw:

weather than experienced in 1991 and nmre fas orable antici-pated regnlatory reemery of ps co-ts. Partiall) ofb.etting In Mdlu.in-this impmsement we increa-ed income tax due to lower 1992 1991 Over i Oser interest dedvetions In 1991, ps net oierating income dern ased in,m the 1990 lesel due to the lo-, contingencies (Under)

Wndro 1991 1990 reconled related to ps pun ha-es panially offset by a return i

to normal winter temperatures. The following table quantifies 8

7-S 5 Sales growth tlw impact of ibe major rea-ons for the change in net operat-Westher (11) la t

10 (141) ing income:

In uah..n,.

Heg dation Sptem reliabiht3 mprmements (33)

(21) ;

1991 i

1992!

income las - (reduced) increa.ed

. ' Over?

Oser s

interest deduction a-reflected c(Under Jnder) in Interest Charges (14) 10 1991 1990 Totai chang S (41) Sil36) sales growth , $ 10 l $ (2) 4L 8 % eather Electric Sale *: D ctric sptem ales in PN2 totah d Herulation 19l (251 30.5 billion LWh. approximately a 1 percent decrea-r from Sptem reliability imprm ements (15). (6) PNIlesels in 1992. residential and commercial L% h sale-Income tax - (reduced) increa cd interest deduction a-reflected decreased 2.6 percent and.5 gercent. respectisely while (4) 4 industrial LWh sales increased 13 percent. Dectrie -ptem in Interest Charges sales in P"1 increa-ed 3A pen ent mer PP % a-commer-Tel cimnge .$ 14 - S(21) cial LWh sales increased 5 percent. residential -ales increased 6.1 percent and indu-trial sale decrea ed.7 percent. In mldition to electric sptem sales. Con umer al'" Gas Sales: In 1992. pas sales and ps tran-ported for has intersystem sale. These inter-ptem sales me exchange

• end-users totaled 361 bef, a 7 percent increase from 1991 of power with other utilities through joint dispatching for th" delis cries. Included in the e solumes i-ga-transported for economic benefit of cu-iomers and are not traditional the MCV Partnership, w hich totaled 61 bef in Un2 compared requirement sale. Inter-ptem sale, solunm-during the with 55 bei during 1991. The remaining gas sales and gas 1992 and 1991 geriml-each totaled 1.1 billion LWh.

transported for end-users increased 5.8 percent. In lWl, p-Power Co-t*: Power co-t h.r 1992 totaled S877 deliscries, which included gas solumes tran-ported for the MCV Panner-hip,increa-ed 1.8 percent from Phu lesel. million, a $17 million decrea-c a-compared to 1991. The merage cost of fuel per LWh generated decreased to 137 Gas mies and ps tran-poned for end-u.ers, excluding tran - cents from 1.1 cents The as crage co t per L% h purcha-ed ponation for the MCV, increased 2.8 percent in Pol primar-ily due to colder temperatures than caperienced in 1990. for e.ptem ale

• requirements increa-cd to 5.1 cents from 4.89 cents due to the increa-e in long-term power contracts Cost of Gas Sold: The co-t of p eld for 1992 which auiid the need to buihl new powe r generation plants.

decreased $1 million fn m the 1991 leu l. The merage co-t Condiined the userage co-t of power per ku h for -ptem of p sold for 1992 jer nwf wu B2m and cuentiaH 3 sales requirenmnts w a-2.58 cents, e-sentialh unchanged unchanged from the UNI amour. The FN1 increase in the coa of p sold mer 1990 reflee wd an anticipated unfusor-fmm 1991. Power cost-for PWI totaled S891 million. an increa'"

able replatory reemers of ras co-ts. The userage co-t of p+

of $58 million mer PHO due to increa-ed ciectric sales and ' sold per mcf decreased to 82.f 3 for Unl compared to $2.91 i an increase in the co.t of purcha-ed pow cr. The auvage cost for P r n of power 3rr LWh for sptem sales requirement-for 1991 increased to 2.56 cents from 2.14 cent

• in PF% reflecting the increased u-e of long-term power contracts to Icwen the need to bukid new power feneration capac 13 R

E

CONSUMERS POWER DEPRECJATION, DEPLETION AND Liquidity and Capital Resources AMORTIZATION The increa~e in depreciation. depletion and amortiza-OVERVIEW tion in Un2 primaril rc0ert-increased depreciation rates a-3 authoriwd by the \\1P C and increa-ed amortiration ey.ense C""'""'" "'tiniate that capital cyWnditure of $14 con i-tent with the electric rate onler i -unt on \\1a3 7.PNL hilli"n. including ap;nodmately S150 million for capital nhich prmided partial recmcry icon-umeri abandoned icd'"* d*I "PP"^i*"lCI) EIIU ""IIi"n for demarul-side man- \\lidland nuclear im estment. Thi-increa-c al-o rc0cet, agonent pn.grarns will lu nWe in.m UN3 thn. ugh 1(N5. inerra-cd depreciation expen-e a,sociaird with nt. clear plant Funber, for the sann gatiod. Con-unien is inguin,! to decoromi ~ioning n,-t-w his b are being renacred thniugh "dCC"' or retire appnnimately SNN millien oflong-tenn debt. Ca-h generaini b Con-urner< futun o;wtation-is higher rate-fn,m cu-tomer-as authorized in the \\115C in 3 %nember Unl. "4"sted to satisfy a substantial portion of the-e debt retire-rnent-and rapital r\\pcinlitures. Cash from operations is rhj u'Oted t(I IW su}8[dCrnertteil !7) (*orD eritittna! briam'ing OTHER INCOME soun e, incimling first mongage honds, i--uance of preferred in Un2. other income reDect-larger \\lidland-related or preference stm L. hank loans. reu.hing line-of credit and lo-r- than Unl. The Un2 lo-s reflects S313 million related -ales of accounts recch able. Also, in late 1993. Consumers to the ettlement onlcr. The Uni lo-included $291 plan-to sell it-n maining S322 million irnestment in \\1CV million related to the \\1a3 7. PNI \\115C 1:lectric lbte llornl-and u-e the ea-h pmceeds for debt retirement and Onler that allowed Con-urners to reemer onl 5760 million of capital miditions. In April PN2 Con-umer-increa-ed the 3 It* S 1.3 liillion of rernaining abaruloried \\lidlatul irn estinent. innount Iserrowed urnlev it-lorip-tenn hant credit agreement ami a S92 million af ter-tas lo-related to the cancellation of to $500 million fnem S110 nallion. In Un2. Con-umer ' the C415 Debenture. Other im ome in Un2 and Uni al-o agreement permitting the -ale-of Certain accounts recchalde reflect-decrea-cd accretion income resulting f rom reduced was increa rd to $250 million from S2(10 nullion arnl a-of reemerable abandoned ^1idland nuc! car pniject a--et-and 1)ce ember 31.1992. recchable -old umler tir agreement dc< rea ed interest menme a--ociated with the reduced totaled S225 milhon. In i ehruan 1993. Con-umers ime tment in \\1C\\ iland<. In PNI other incomr increa-ed increa-ed the Irwl of recchabl - -old to $250 million. e fmm Pno as a re-uli of -maller write-down-related to in Un2. most of Con-unn ti cash indow wa* derned Con-Urner abandoned \\lidland nuclear irne-trnent. frorti it-trildltiona! ulklit3 opemtions, includkng tbc %3!c and tran-portation of natural pa-and the sale and transmi-sion of """"P""""'"""" INTEREST CHARGES l'n2 a-compared wiih Unl primarily due to reduced The -igni6 cant decrea-c in intere-t co+t in Un2 pri-inten 4 charge rederting significantly lower lewl-of debt. marily re0cet* Con-umeri pnigram aimed at igniHeantl) partially oUset b higher other operati..n and inaintenance 3 I reduring it-debt. im lading fin t mortgage bond redemption. eq,cinlitures and the effert of a f ull car of the reduced 3 reductions in hank debt and the refinancing of debt at lower eketric rate onh red b the \\115C during Pol. Addition-inten+t rates The l'nl increa-c mer the Pnu icwl ic0cet-all. Con umcr-continued to experience ca-h shortfall dae 3 the discontinuance of capitalized intere-t on the con-trm tion to its purcha,es of y,wer (nan the \\1CV Partner-hip for of the \\1CV Facility. amounts greater than it had hem allowed to collect fnun its electric customers for the.e pun bases. In 1992 and UNI. EXTRAORDINARY ITEM - 1991 C""'"""*' had ""! '"'h -h"" fall' "I 6113 milli"" a"d 8133 million for the-c power purcha e, re-pecthel. Compared 3 in UNl. Con umer-renuned S500 million of Gi t wlib future LWiiril6attd eil-b siloftfa!!s simiIan to }$n2 arid mortgage honds inun it-halance shee t by depo-iting qualif - ab-ent the 5ettlement Onlcr. the \\115C% appnaal of the 3 irlf *eruritkes in arl ITre4(Wable tru-t w bi( b wLt-u-ed to redectn or retire the hond-during Un2. Thi, re uited in an C.on-umers. cash flow a4ailable to pay the 51C\\. Partner in.p extrannlinary af ter-tax lo-of F11 million related to call udo b PPA 6 mimim*h $90 millim in Un1 M h premium and accrun! intere-t ey.cn-e ihniuch the Pol 1MS90mdiimhm UNI 16,4 Uni a retirement dates. }rl lYII. Con-Ornerw perlerated c t-b prirnaril) from it% Usn-ididaled kin e-tirly arul o[Writting itcliVilles.1)uririg 3 WI, \\1DC sold a significant portion of the \\1CV iland-to thini partie-arul realized NG9 million net of underwriting I n pen-e. All>C tran-fened the rash pn.cced, and remaining \\1CV 1;ond to Consumer- )

IW2 ANNUAL REPORT (h er the la-t three 3 cars. Con umer. ha used its ca-h Tbc settlernent I trder detennined the co-t of pone r primarily to make rapital im e-tment-in it utihty 3-tem. to pun ha-cd from the \\1C\\ Partin r-hip that Con-unirr can n tire portion-of it-long-tenn -ecuritics arni to pay ra-h dis i-n cmcr from it-electric retail ru-tomer-aml eill signifi-derld-ort it cofnrnon arHI jareIerTed stock. canth reduce l}m amount of [uture urn lrnccowrie for linwe power ro-t. Effectiw January 1, l'r13. the citlement (inter OPERATING ACTIVITIES allow-Con urner-to reemer pay ment for the pun Inse of Ola \\1%. of.capanty hom the \\1C\\ l,artimr-hip. I ruler ilm ConsumerJ authorized regulaton return in PFC wa-3eulement t inier. any rc< men of rap <n sty aml fnni energy j 8ff) percent for electrir utility operation-arnj H.93 }n n ent co-t-paid by Con-umer for pun lu-es from the \\lCV for ga-utility operation. In Pt#2. Con-unwrJ actual merall Partner-hip abmc the 915 \\1%' icwl ran ir competitiwly i return on rhw tric, evluding the \\1CV-related lo - for future bid into Con-umerJ next -olicitation for powei or. d rmee-- estinuted undcncom crie. was 1.11 pen ent. The decrea-c san, utili7eil for turn nt power nerd-with a prmicory resicw I wa-pnmanly due to the cunent year impart of undenenner-in annual P5Cli ra-es l ic of a portion of the < mt-of mwer pun ha-nl from tlm \\1CV The l'P \\ betwecn Con-umers an.1 the \\1C\\ i Panner-hip. In addition, elertne earnings suffered due to the Partner-hip require Consumer-to pay a minimum Icu liecd effect of rinder weatimr dming the air comlitioning sea-on. awrage apacity < harge of 3.77 i eni ju kWhandntiwil Con-umerJ actual owrall return on ga for the -ame irriod encrp charge. The PP \\ al-o pr.ni.hs for a sariahic em rgy totaled 7 7 percent. In addition, the -ettlement of the \\1C\\ charge based primarily on ConsumerJ awrage co-t of cual power purcha-c i--ms cau-ni total company earnine aml con-umed. Thr setilcment order prm nicd Con-uumr Iwo return to be negatne m P?s2. Ilowcwr. in Pr#3 and Imyom!. options for the reemery that couhl be u-ed for capacity I as a re-uh of the -ettlement, Con umerJ elcrtric arul total chargc paid to the \\1CV Partner-hip. Undcr the option i returm are expected to nuprme. selected. Con-umcr u dl -thedule deliwric of ener gy from I Electrie 5ptem Upgrades: In Ps92, inrica cd the \\1CV Partnership wheneu r it lw encrp asailable up to cyrnditure for ime ricaring amilightning protection a< thi-hourly as adability limit, or rap-f for the 415 \\1% of tie-arni ein tric tran-mi--ion and di-inbution sptem reha-rapacity autinirized for reemer3 in the settlement Onlcr. bilitation should irnprme the quaht3 of en h e-Con-unwr-can term er an aurage lf >2 cent-per k h h { Future Power llequirement-: To maintain a capacity charge and the pre-cribed envrp i harge-a--oriated nunimum 20 percent resene margin. management runentl) with the -cheduled deliwries. wbrther or not those deliwrics belicw-that Con-umer-will need to contract for aihhtional had been scheduled on an economic ba-i. The cap-applied purcha-cd power in the near future. To maintain competitia to Con umeri reem en for the fir-t four year-me at ddlerent e 'n tric rate-and -come adequate generating capant> for it-Irwis for on-and of f-peak hour. Through Dn ember 31. ru-t#prncr. bin-urner-l1!arl-to Edklain 2Db bIiona! p*>wer ]tr)7 glp.gp j* no ca[I alplief f during on-peak kHHll-lo re ources thmugh a compctitiw bhhiing -olicitation proce-- Con-umcrJ rermcry for ihe purcha c of capacity made aunl-u ing the framework c-tabli-hed by the \\1P3C in Pr#2. able within the 915 \\1% authorierd. Ib emen for pun ha-e-l Capacity from the \\1CV l'acihty abmc the Icw! authorized donng of f-peak hours i-rapped at 80 porent in UFM. by the \\1P-C. as di-ru -cd below, may be bid by Con-mner-ramping to 33.7 percent in Priu and thocaher at w hich time in the -olicitation. The biddihg pn<c-- will im ohe resicw of the rap i-applicable during all hom s The option al-o allow-the minimum tr-ene margin critcria. The demand-ide man-con,unmr-to 1crm er 1/2 ceni Imr kWh capac in ch.uge acement program i-a component of Con-umerJ Integrated alone with the a-ociated enrrn r harce for all economir l lic-ource Plan and i-espected to defer -ome of the additvenal encrp deliwric-abow the cap, to 915 \\1%. rapacits necd depen.hng on the resuh-of the runent initial The seulement Onto re-uhed in Con-umer-recognie-program. ing an after-tm lo - of 8313 million in Derend.er Urs2 for Power Purrba-e* from the \\1CV Facility: the pusent salue of estimated future undenn merie-of Con-umer i-obligated to pun ha-e the following amount-of pown est-under the PP N. Thi-lo-- include-managementi contract capacity from the 11CV Partner hip under the PP \\: bc t estimate-reganhng the m ailabihty of the 41CV I anh:3, Urb _ and and the future whohsale power mmletJ cffect on the i l P/M. Pr91 thneaher amount. tinung and prire at w hich s ariou-increment-of the T. ear Pr 80 Pril _.'r e_ raparin abow the \\1PSC-authorized in el rould be tr ohl \\1u um um 915 1.023 1.132 1.21" lhept for udptment-to n fin t the af ter-in time salue of umnc3, no additional lo--c-air nperted onle-ac* al f uture nperience materially dif fn hom management', o.cnt e-ti-j mate. The ahei-in npense for the trme s alue of money for 4 !t____ J

CONSUMERS POWI R the $343 million lo,- is estimated to be appretimately $21 In Pr)2. a-onicied by the MI5C in the PNo P.<lt million. $22 million and S 19 milli <.n in l'ra thmugh UFM. rco.m iliation r a-c. Gin-umer-ref unded appmdmately F2's respectiwly, and s ariou lower lewl-thereafter. Ahhough million. int Inding interest. for 1%n enennene-primanly the settlement low.es were ren.nled in IW2. the awriated herau-c the MI5C lad authorized recown of MC\\ power after-tas ca-h undentemenes are nperted to be $52 million pun ha-e imt-on ihe lu-i-of deliwrni energy rather than in lW3. S57 nullion in IW1, $t>6 nullion in l'rG. St.3 as ailable r. qui it3. l'or the lir)1 15Lll reconnhation, an million in lW6 and $62 million in twt and signincantly AlJ lu-renanmended a d~lh wance of Dh nollion. plu-reduced lewl thereaf ter. Con umers beliew-there i-and interc-i. In p.ut. Ilut rn ommernlati..n i-ha-ed on rntrwiing will be an actiw market for the capacity ahow the MI5C-co-t recowry for jumer purcha-ed from tin MG l'anlity to authorized lewl. Ilowcwr, if Con-umers i-unable to -cll any energy deliwred rather tiun asailable capacit3. Con-umers capacity ahme the current MI5C-authorized lewl. future .worned amount-in Pril and Pr>2 ufficient for thi-poten-additional after-tas lo.es and aher-tas ca-h undencemerie-tial refumi. \\- a n-nh of the settlement Order. G n-mncr-couhl increase by an estimain! $ 11 million in lW1. F20 plan-to refum! m the -crond quarter of Fri t it-c-tinute of million in 1995.$21 million in PNo. S22 million in PN7 the owrnvoury ami niu rts the MI5C to onier a final drier- $74 million in Ima a.a! s arious lower lewl-thereaf ter. mination of the ref und in late PN.h in PN2. co-t-reemern! The PPA. while requiring payment of a fixnl energy for power supphnl in the MG Par 1nci-hip ucre ha-ni on charge, provides a regularon out' pnni-ion whic h pennit-deliwrni energ3. In January PN3. Con-umer-began reem-Consumers to reduce the fiwd encre charges payable to the enng sm h pourr ha-ni on the term-of the liesi~ni MCV Partnership thmughout the entire n.ntract tenn if rulement Propo-al and plan-to adju-t it PKli factor to s tticment Onler in late 1pril PrG. Con umers is not able to recour the-e amounts from it, ru-- reflect the tenn of the e tomer. In connection with the MP. C's apprmal of the Clectric I~tility Hate-: Con umer-rm rentl p!an-to 3 Resised Settlement Pn posal. Con umer-ami the MCV fde a requc-t in the second quarter of PPG with the MPSC to Partnership haw recogniini that arbitration proi enling-im rea-c it-riertr;c raic-beginning in PN1. tlc rn;uest under the PPA may be neces-ary to detennine whether would include co-t-for po-tretirement benefit n.mputnl Con umers is entitini to ewn i-c it-regulaton out reganhng undn 4 Y loh. limp /mers' b r ormimgfor I'mirrtirement fhed energ3 charpo on the ;w.rtion of MCV rapacity ahow /?crufin Oilwr t/om l'emium. Con-umer-plan-to funil the the current MI5C-authorized lewh if Con-umer rannot hcnefit-u-ing ntenul b Nntan 1;mplo3cc lienefd nerci-e it-regulaton out. it would be required to make A--m ution. payments related to thi i-sue to the MCV Panner-hip. In May and.lul3 PNI. the MI5C i--ned onicr-related Although Con-ur; ers beliews it-po-ition on arbitration is to Con-umco ' icem ery of the abandoned Midlan.1 nm lear sound and intend in aggre-iwl pur-uc it right to cwrri-c im e-tment. a general cln tric raic ra-c. an ciertne depteria-3 the regulatorV out, inanagement rumut prrdier the outrome of lion rate case and the fourn ial stahili/ation iornpliance rase. the arbitration pmceniings. The MP3Ci order re-uhed in a m i enha tion of Con-umerJ Prior to the Settlement Order, the MISC only allowed ictail electric rate by an annual amount of appun.imately Consumers to reemer co-t, of power purcha-cd from the $73 malion. Thi-annual redm tion ron-i-ted of redueni MCV Partner hip ha-ed on delivred energy at llackloade J ha-c rate-of S112 million per year. partially offset by the rates for MO MW in PN2 and PM MW in PNI and Pru authoriecd reemen of Con-umerJ abandonni Midland Under the PPA Con-umers wa-required to pay the MCV nudcar ime-tment of Nti million per year mer lo 3 can, Partner. hip lewlized rates ha-cd on asadaMe capacit3 or up rermcry of $23 milhon pri 3rar for new electric depwriation f to915 MW in lW2 and PA MW in Iml and Prn A-a rate. and an allowance of f 1 I milhon per year mer 10 years result. Con umers reconled af ter-tas his-e-of $PA million in to pay for elm irie demand--ide managenn nt propam. 1992.8124 million in PNI and $52 million in PNo. Of the \\- a re-uh of -citlement di ru -ion-reganhng 1991 amount f P8 million and S10 million related to PNO demand--ide nunagement and an MISC onter in July PNI. J and 1992, respectiwly. Con umers agiecd in spend 565 nulhon mn iwo year on In addition, under the PPA. for the year Pfil and denumleide management propam-A ponion of the 511 IW2.approdmately $13 million was ew rowed bs Con-umers mdlion annual rewnue bring collerini hom ein tric cu - with respect to fiwd energy charges. Prior to April PNI. tomer-for the-c program rouhl he ohjert to refund if the approdmatel $6 million of potentially refundable fiwd M5 malion i, not -pent. Ita-ni on it-effectiwnc - m imple-3 energy charpes wa-paid directly to the MCV Partner-hip. menting these propams Consumers' luture rate of return on The arbitration proceeding-di ru--ed alme will al-o drin-common equity could be ad u-ted either upwani h up to I i 3 mine whether Consumers or the MCV Partner-hip i-entitled pentni or downwanl by up to 2 penrnt. Thi-adju tment. if to these fiwd energy amount-a--oriated with the year-prior unplementnl. woubl be apphed to Con-umeri retail electric to settlement. tariff rate-and be in cffcet for one year following reconcilia-tion hearing-with ihr MP{. whi< h am npersed to be initi-ated in the first quarter of Unl. The r-tunated rewnne l 5

1992 ANNUAL REPORT effects of the potential adju-tment range from an $11 million -ubject to minor unedifications. Consumer-does not Irlies e increase to a $22 million decrease. Con-umer is aggre -iicly that -m h restructuring will has e a significant impact on its promoting these programs therefore, it beliese the potential financial po-ition or re* ult of operations. for decrea~es of return on common equity is remote and no Other: In Januar IW3. Consumers made a ca h refund will be required. pay ment to hareholders of $21 million out of presiously The MPSC reopened the 14% ami 1937 PSCli recon-c-en wed Iund-in sati-faction of a settlement of htigation. ciliation cases to recon ider the Palisades capacity factor Con-umer-accrued a low for this pa3 ment prior to IW2. used to compute the refund ma le in the c cases. On Apnl 1. 1942, the MP5C ordered Con ~umers to refund appnnimately INVESTING AND FINANCING ACTIVITIES e9 million. including interest, w hit h Con-umer-ref unded during August 1992. Consumers had accruml for thi~ refund Capital Fagw nditure*: Consumers expects ca h from prior to 1992. its operation, along with nonnal financing artisities. to em er Gas Utility Itales: Con-umer-and the MP5C -taff it-futme capital expemhlures. Consumer ' e timated capital agreed not to seek change-in Con-unwr? pa-ba-e rate, npen.htures for IW3 through l!rG are detailed below: during 1992. Con-umers spent appnnimately S200 million in mun,n on gas operation and maintenance actisitie* in lW2. \\.et-u,. Emt,.a p,.n.nme, a i ]W3 Iwt 19 % tlement agreement appnned by the MI5C provided for Con-umers refunds to gas retail cu tomer-in the ment Con-umers failed Con-t ruct mrr" Mm. $116 $143 to spend this amount m lW2 or in the ment lW2 rarning-Nm lear fuel 31 13 4 on Consumers, pas bu-ine-- neceded renain predeternuned L.apital lease other than lesels. The agreement estabb-hed an incentiw scale for lw2 nuclear fuel ,,a. ~b 3 under which Con-umer* ruay retain pas caming-up to a ~.4 (..apitalized m.terest a 4 3 13.2a. percent return on common equity and share with cu-- y 33 g g tomers any earnings in neew of that amount. The Attorney Michigan Ga* 5torage ~O 4 h, General and AIMTE. has e appealmi thr M psC order appnn-ing the settlernent agreement to the Court of Appeah.. bD Consumers does not npect that any refund, will be required. in connection with its lW. l b.Lil reconciliation ca-c.

• Thme ami.und pommh refic41 F.on-umere planned ry.equhtars for miem unprmern.w. and generating pLni mnLinhm Consumers refunded $36 milhon, inclothng intere t. to it-firm sales and transpirtation rate cu-tomer-in April IW2.

p,g;,ade Nuclear Plant: Since 19M, a transfer w as Consumers accrued the full amount for this refund in IW1. pending of the Palisades nu< lear plant to a new company. In February 1W3. the MPSC ordered comract' PGC. in dich Con umer would own a 11 percent equity between intrastate ga pnnlucers and Con-umer-he amended inn.rea Ciming u dependent on obtaining regidatorv tolower the cost to Con-umers pro-pectiwly. Consumer' appnn al-and other conditions. many of which were out-ide anticipates a GCIt di allowance of prior co-t that Con-umer' G.n-umeri contnd. In December IW2. Consumers con-sought to recover of approximately SI1 million through < luded thm die conditions precedent to closing would not be February 8.1993. with no di-allowance thereaf ter unl"" met. and accontingly let the transfer agreement npire. appeals filed by the intra tale pn.ducer-are -uccc-ful.1" Con-umer plan-to continue to own the plant and regulatorv 1991, Consumer accrued a lo-s snfficient for thi amount. pmweding relmed to the pending transfer base been tenni-In 1992. the FEltC i--ued Order 636 w hich makes a nmed. Afwr reple ement of the steam generators in lWl, number of significant changes to the structure of the sersice' the plant ha-been opercting at hi-torically high levels. provided by inter-tate natural ga, pipelines. T he onier call' The p nding tran~fer was pan of an anangement with for the commencement of individual inter tate pipeline ca'"' Ilec htel that would haic also *cttled claims arising from leading to implementation of re-tructuring by the IW3 41 Ilechwl's work on tlw fonner Midland nuclear project. In winter heating season. Con-umers i-a significant pun ha-cr pycy,nber IW1 Con-umers agreed to a ca h settlement of of gas from an interstate pipeline and - a major tian-pirta-the Midland-related claim. Consumers collected $ 11 tion customer of a number of pipelines. Management million plus 5 >0 million e crowed by Bechtel in 14M follow-belieses that Consumers is po-itioned well and that an3 ra"- t inc a wtde ment agreement between the companies, plu $21 sition costs it may incur will be recowrable. Michigan Ga-million of ina re-t on dw e-cmwed anniunt plus $5 million Storage as an interstate pipeline has commenced re-tructu" pai.Iin induce Con umers to settle rather than litigate the ing proceedings to comply with the rule. On October 1. claim. The e,cmwed amount had 1.cen borrowed by CMS 1992. Michigan Gas Storage made a filing w ith the FI:liC I:nergy a the pmvailing prime intem t rate. CMS Energy has calling for a restru< turing of it, natural ga-bu-ines-which paid in. oNigemn ni die e cniw account. The Pabsades set-will be effectise in IW3. On i ebruarv i1.1993 the FEI!C denmnt nwln d in no meerial gains. and mductions of SHO issued its onler apprming Michigan Gas Storage's fdi"F milhon of uhandoned Midland project assets; $71 million of

CONSUMERS POWER current asset-recrisalile in,m affihate: 520 million of other in 1(nl. folhming the sale of a majority ofirnestments cunent liabilitic-; S31 mdlion of deferred tax liabihtic< in the \\1CV llond. \\1DC C\\15 \\bdlarn! anel C\\14 lloidings l and a net c' ash increa-c to Con-umers of Si17 million. transferred to Con-mner-t}m net prm ced-of the sale and i Consumers used the ca-h pn.cced-to reduce short-tenn debt. srrtain other arct-together with the remaining \\1CV Ilonds The on--ite -torage p,*,1 for Pali-ade? pent nuclear The-e a -et-and cash notaled approximately $1 billion. fuel i-nearing capacity. The DOE will not base long-tenn Con-umers used a portion of the ca-h to prmide for the storage facilitie-completed in time to house the nuclear retirement of $500 million of fir-t mortgage bonds. In waste. As a re-ult. Con-umer-plans to espamt the on-wite a.bbtion, in licecmber l'NI. Con-umers amended its long-l storage by temporarily u-ing dn ca Ls of concrete and rein-term bank crecht agreement and u-ed a portion of the cash to forced steel. '\\itC apprmal of the cask design. which is permanently reduce the amount out tanding to S500 million subject to judicial rnira, wa rei cised April 2. PN3 and i-from 8750 million. L'rulci the tenn-of it amended creda expected to allow the wheduh.d refueling outage to begin in agreement. Con umci-will pay off the remaining balance in June Un3. If Consumer-i- unable to u-c the ca-L-as 11 quanerh principal pay ments 1.cginning in bember planned. significant co-t, m< ludmg replacement power co t-PN3. To tale ads antage of the dc< line in interest rates, on during any re-uhing plani shutdown. could be incuned. January 11. l'N3. Con-umer-entered into an interest rate \\tanagement beline-that Consumer-would be permitted to wap ogreement. eu hanging s ariable-rate interest for fixed-l reem er the-c co-t-from it-electne mtail cu-tomer under rate intere-t on 5250 million of the remaining 5500 million j tra.htional regulaton policies. obligation urnier it-long-tenn en dit agreement. short-Term Financing-: Consumer-ha -n eral in Jul3 PN2 Con-umers wccised a $10 milhon prin-i as allabit" -tHIrres f d dH)Tt-tenn emdt! ($ ort-uitter[ irttrnt aliate cll sal pay rnellt, ubicb redluccd it-truc-tment in tbc SlCV l source-am un-ecured. committed line-of credit totaling Senior liond-to $322 millben. Con urners currently plans to l $215 million arnt a 5355 milhon worLing capital facility. sell the remaining \\1CV liond-in late PM3 and behnes that Consumer ha-recrised I EltC authorization to is-ue or guar-their present marLet salue i-at lea t equal to the cunent antee up to $900 million in short-tenu debt for the period reconied cost. llecau-e the remaining \\1CV !!ond-were from Jannan 1. Un3 through licccmber 31. Unt. Ths is retained by Con-umer-bey ond 1092, C\\15 liolding-will be i the same amount of short-tenn debt authorized for UNI and mquimd to make a tax indemnity pay ment to the non-affili-Pn2. Con-umer u-e-it- -hort-tenn homming capabditie, ated partners in the 1311 P. Ahhough the amount of payment principally to finance ii-wm king i apital and sea onal fuel has not been finaH determined. it i-not expected to exceed 3 inwntory requirement-and to pay for capital npenditure- $12 million aruming the remaining \\1CV llond-are sohlin hetween long-tenn financings. To prmide for other wmling PN3. Consumer-npect-that it will sub-tantially regain capital requirement ~. Con-urner ha-an agreement pennit-mer time the tax indrinnity arnount paid to the other 1311mP ting the aie-of f edain account-receis able for up to $250 panner-after the remaining \\lCV llond-are sold. million outstanding at any one time. As of 11ecember 31. Con-umer plans to use the pnet ced, from the sale of the PN2 and UNI. the inel of receisable-sold totaled 8225 remaining \\1CV liond-to furthm impnne Consumeri capital million and S200 milhon. w-pectiwly. In February PW3 structure by wiiring out-f amhng debt and to further upgrade Con-umers increased the in el of wcen able- -old to $250 it-electric 33-tem. Addnional reductmn, in Con umeri million. debt couhl iru lude. but am not limited io. redemption-1,ong-Term Financing-: Con umn-plan-to mquc-t acconhng to their tenn-or purcha es in the open market at \\1P5C authorization to i-sue approsimately S300 million of s aning price-of some of Con-umerJ first mortgage bond-or long-tenn dcht in Un3 to refinance ni-ting long-tenn debt. reduction-of borrowing-under the long-tenn bank agree-Con-umers has filed a regi-tration tatement for S300 million m ent. of first mortgage bond w ah the.-EC. A-of 11cccmber 31. In further edort-to imprm e it-capital structum, PW2. Con-um+ rs could haw i-ued S 179 million of first Consumer-plan-to i--ue pwfcrmd or preference stm L. in mortgage bond-according to the mo t wstrictiw tenn-of it-late Ph? or in 1991. subject to pnnision-of it-Trticles and first \\lortgage Ilond Indenture. In January 1093. Con-umer-aptirm al of the \\lP5C. financial test-required by j requested \\1P5C apprmal to i*ue up to 800 million of Con-umerJ Artie les ennently prelude the iruance of new refunding PCilH-and to i-ue $20 mdlion of additional long-preferred sim L. tenn tax-nempt debt. On fchruary 10. Un3. Con-umer-redeemed i t par $35 million of it-4 pen ent first inongage bonds due in 20f m under the term-of the firsi %1odgage i Bond Indenture in sati-faction of Consumeri FN3 impnne-ment fund requirement and with pnn ced-of relea-ed property. Con-umer plan-to reque-t \\1P3C authorization to i i-sue up to $300 million of new fir-t moncage bond-in 101. l \\ l e l

1992 ANNUAL RI PORT f ' ""'" ' " " -" ' "" r""' " "" "" m" ~ " o > "P~l i " F "i """ = Outlook thc sulfur dimide emi-ion limit-which willim cifcetiw in 20iHL licpinning in pre a criain niablucic.I cermrating NEW ACCOUNTING STANDARD unit a di n ccis e emi--ion-aHow am c-taH of Con-unmri r"al units will ren ne allowanns luyinning in 2000t lla ni in h u mim 14N2. the i \\ Sit i-ued si \\' 112. Empl.oni in oummc./hr /%tempho nent Itenclits a hich "" P'"j"1"I r"""i""' I'""' duse u nits Con-unn,s n;#rt s " Iu" C"r" "U"" ""w w hich sna3 im sold or au d for Con-unwr plan-to ailopt in PNL Thi -tandant nu3 future u-c. inpiire Con-umcr-to i hange it-accounting foi < criain Tin Clem Air Act's pros i-ion al-o n quire Consnin,- po-tcruploy ment bcrmfit -u< h a-worker-compen-ation and 1" '""kr C"P l"I r\\l"'"htine-c-tiinalnl lo f m $ 10 nuibon for i -ncrarme pay pnnided aher nnploy nmnt 1.nt before retire. i"'t"E li"" "I ""'tinuou-cini-ion inonitoring *3-inn-at ment. The -tandant uill not ilunge the oscrall n -t of the henc6t liut nu3 n~uh m carhn recogmiinn of obligations. afin1nt unit. and apprminuicl 510 inillion to install a low 3 Con-umns i- -tu lying th. e fin t-of dm -iandani but doc, nitrogen mide hunmr -rtem at one coal-fued unit. It is not mit expc. t a material impa. t on it financial po.itnin or l*'"ihic to c-timate the ni-t of n,priini modification-at "d'cr coahfin,I tunt-nntil hnal rntrogen mi.lc regulation. re-uh-of ope,atiore. are i-uni in the EP L \\lanagement he line-that Con umcri annual uiu,ating co-t-will m t he materially ENVIRONNIENTAL MATTERS dccted. I Con-umer-i- a -o-callnl "I'otentially lbspon-ihic in Nurmher PN2. Con-onmr. tim \\ttorney General. Parti at -neral -iic-bring a.lmini-inni umler superfuent the IWH and other -tate and inleral official-signnt a settle- \\long uith Con-umn s. thne are nunwrou -oh ent poten-Inent agreement to reticen-e 11 of Con-unwr

• 13 hydnelec-tially re-pon dele partic mith -uh-tantial a-et-n. operating tric generating facihtic. whi. h pnidore apprmimately I with n~p.rt to the inda niual ste. Con-mucr-helicu - dut percent of Con-umnJ owned gomrating capacity. The uperfund agiccment. il appnnni by I l.l(C. will wheen-e tim general-it i-unlikely that it-habiht3 at any of the know n i

s ute. nulkidualh or in totah w dl hau a material mh er-c mg f ailitic-tinough licccmher 202:L The runnit licenses cfhrt on it-finannal position ni result-of operation. are scimdulnl to espin in Ibremhcr PNL l'he agreement l In Pr% the ' tate of \\li< higan pa-cd amemhnent, to require-Con-unwr-to make pay nwnt-and inw inmnt, the Era stomnental He-pon-c \\ct. I fin tisc July l'NI. thi-which conhl total MO inillion mer the lice n-e perind for sut h law c-tabli-hed a tate program -imilar to the inicral thing-a cmironmental-afeguani-and fe.hcr3 habitat uperiumi law, though unn h broader in u op.. I'nder thi-imprm enmnt. \\lanarenmni hehnc that Consumer. would law. Con-umer-npcet-that it w dl ultunatch incui i o-t-at a he permitted to collect the co-t-n lated to the -ctilement numher of ite s irn ludmg some of the 23 -ite-that foiincrh agreement horn its cln tiic cu-torners onder traihtional regu-hon-cd manuf actured ca-plant le ihtie. nen tho-e in whh h latory pohcies. it ha-a partial or no cunent onner-hip imcrc i. h i npreted that in ino-t t a-e. part m-other than (;on-umci-with cument PUBLic UTILITY HOlIMNG COhiPANY ACT or former ou ner-hip interest, will al-o he con-idried hahic EXEhiPT. ION under the law and m.n im rnpured to share.in the cost-of. any site ime-ogation and remcdial action. Thne i-limited Cil'I ""F) i-nonpt hom nptration under knowledge of manufactured ga-plant n.ntamination at the-e PI llc L II"uner. the Attorney General and the \\1\\1CG -ite-at thi-time. Ilown er. Con-mners i-initiating ime-t;. h.nc adnl the 5l C to reu.kr 01S Enngi- -tatu-a- an pations at three of the-c -iles azul ha-c-tahli-hnl an intnna] nenipt luhhng cornpany and to in]uire it to regi-tm nnder ITilC L Cil5 Enng3 s oppo-ing thi request and befine-i ta-L forcc that i-monitoring this i--oc. 1he timing aml nient of any f urther -ite.m c-tigatmn and remedial a< tions il "dl nuintain it-current nempinin from regi-tration under bI l will deperul among other thind. on f uture -ite u. age hy Con-umn-or other ow nn. I herefore, the co-t-of -pecific remedial action-h Lon-umers for tho-c -ite-are noi COMPETITION 3 c timable at thi-time. Con-umer-behrw-mpenditme-for hole

• ale Wheeling: In (letoher PN2. compwhen.

both ime tigation und an3 requacd nonedial action-would 'i"' I"I""d ""'F) I"E 'I"'i"" ""' enacinL The Energy Act. j i he a legit 3nate i o-t of doing bu-ine-, arnt w dl sect to waner "hn h innong odna thing. refonn-ITilC 1 and open-accc-s them ihmugh utiliis rate-and are not hLeh to materialh ' " A " "" " ""'" 'i "" '"" i"' I' " P"" 8 "I I" i"" ""'" C"*- affcet it Gnancial po-itinn or in of t-of op ration. I "E "" I" d "' ^" " " F""""' i"E h"'i""'* I" N """d er j Im ludnl in the UNO amendment-to the Icdcr al Clean E"I C""'"*" filed u ith the I'l IIC an open-acer - inter-Air A, t are pon rion-that limit nni-ion-of -ulfm dnnid - "'"""*"" 'en in whnlule mnler w hich utihtics woubl he and nitrogen midc~ aml requirr enhanrni emi-ion-nninitoi- "M" '"-ch do ir pown to Con-unn,- for n~ ale to other utili-ing. All of Con-nmerJ coal-fueled electric generating unit-i f f M

CONSUMERS POWER tie interconnected with Con-urner.113 it-onler i--ued on DECOMMISSIONING June 23. PFt2. thel EHC apprmed the senice.chedule with C n-unn r-cainun, it uill via S P*n rnillion and modification. In i e bnun 1 F#2. Con-unicr-also filnl a 83 0 ilhom iri Pr/2 douars b, dn erni-ion a-tw<> separate but coniplementary open-4cces, tran mi -ion tariff ng,,. Aum Hig Hod Point and Paliwd, s m th, end <if that wouhl make both finu and non-finn tran-im-ion -enice dwir lins p rid in 2M ml 2m C n Min hsch. asailable to cligible utihtics, including Quabf ing Facihti"' 3 G, mer-livlieu - the \\1PSC-authoriini annual reem en of c.in-tructed under Pl. HPA. independent power produi ers 81~> mdlion dut i being niih ried f rom elecinc recul cu-- munir ipal and cmperatne utilitic. The \\1\\1CG and 1)ctroit nim and pised in e sternal trust fund-will be adequate to Edison filed inten entions in an order i-sued on April 3f h me d du-mnend c4iman-J nia. 3 Pr.72, the i EHC accepted the filing. effectise \\ lay 2. Prt2. Ih Em-AH iqi., a obliptim on the utdif y -ubject to refun.L and onlcred a hearing 1.cfore an Al) indu-try including Con-umer. to decomini -ion lH d' related primarily to the lesel of the rate in the tariff. urmim miric hm m hihtic. G.n-unicrs mriends cai-llearings < oncluded in l'ebruan liF#3 and a deci-ion i- ,na,c, ;,, j i-s car habihts for decommi%ioning thoic facdi-pcmbng. Effectiu Angu-t 1. Pri2. \\11'PA and Woherine tie-hi bc $2.1 rnillion p[r pr. w hirh it l>clic;e-i- ~ began operating a public power pool which utihic' niserable inim its cu-o.mcr-under traditional n gulabiry Con-umer ' open an e-- tariff rate. \\1PP G arn! Lh erineN ihi hadglu a 536 nnUnin liabihn and n gulaviry enember, include municipal utilities and rural distribution hm 6 e n rmirdd n.operatisc. Hetail Wheeling: On september 1. Pr#2. the \\1PSC scheduled hir hearinc a pniposal by AH VIE to create an ELECTRIC AND MAGNETIC FIELDS experimental retail whcchng tariff for certain indu-trial co - In light of considerabic dis u--ion in the snentific tomer in \\lichigan. L'nder the propo-al. these customer' conununit3. the 1:Pt ha-staicd that there are runently in-uf-would be permitted to contract a limited amount of their ficient data ni dro innne whether a can c-and-ef feet rchdion-energy demand from other ettergy provider-and pay die hip exist

• between I \\1f and errlain heahh ri-ks Cu n entI).

interconnecting unlity to delher that energy mer it-tran - there i-no \\1ichigan or frih ral n gu!ation of tran-mi-ion mi--ion and di-tribution -ptern'. licaring-began on \\pril 5. Imcs widi regani b ET1F. Consumer-ha-c-tabli-hed an UF33 and a \\1P3L onlcr i expected in late PFR internal ta-L fon c that i-monin, ring thi-i-nc.

1992 ANNUAL REPORT Consolidated Statements of Income s, u..., ( han, I mi..a D.wena-r 31 1992-1991 PrM) l Operating Itcs enne Electric $1.863' $ 1.819 $ l.'M N. Gas 1.126 - IJ kil 1.062 j b^I ' perating res enue _ _ _2.'fl 0 _ _,_ 2.989 2.9t41 ()perating Esin n c. ( >peration 4 fuel for electric generation 30a .4 18 397 Purcha.ed pmer - related parties 460 11' 331 j Purcha.ed and interchange pmer 112 til 195 I Cost of gas.ohl .673 - 677 611 Other 192 171 417 Total operation 2.04 '" ".012 1.921 \\laintenant e 201-169 152 Depreciation depletion and arnortization 30~ 442 2tNs General taxes 179 171 174 l Total operating esien es 2,729 2.627 4b6 \\ Pretas Operating income 260 283 512 ( Income Tasc 51 18 121 Nc Operating Income Electric 131 175 311 Ga-43 ~ 59 80 Other 2 1 i Total net operating incoine 209 23a 391 l Other Income in-on %1CV pmer purcha-e-- settlement tLtc 3) -(520). (Deduction-) %1CV liond incorne 31-45 Dhidends from affiliates 16 - 13 11 Accretion income (Lie 5) 15 21 85 Write-down of abandoned 51idland project co-is iLie 5) (39m (716) Income fnim contractual arrangements (Lte 16p 129 166 In-- on exchange ofirlated pany deln ntures tLtc 16) (125) Other income taxes, net 178 123 (69) { Other. net (12) 31 13 Total other deductions (289)- (158) (510) Intere*t Charge = Intere-t on long-term debt 150. 219 2(J1 Other internt 15 61 31 Capitalized interest (1) {l) (36) Net intere-t charecs 164 31* "63 Nel le. - liefore Estraordinary item (241)'~ (235) (382) Estraordinary item. Net (Note 8) ( 1 -1) Net Ia ** (241) (2 19; (382) Preferred Stock Disidend. 11 11 11 Net le.** After Disidend-on Preferred 5tork 8 (255) $ 1260) S (393) T)se FCWHpHHhHg N'*D% H& MH mhyTn! pad Of NWht' Mab nteM9. I i lC

CONSUMERS POWER Consolidated Statements of Cash Flows In ELin, ) ear 1.n.bl I neremi,cr 31 1992 Pi'll l'f M) Cn-h I' low-I' rom Netlo-- $ (244) f (2491 8 (382) (>perating Artisities Adju tment lo f eroncile net lo - to nel rush prosided h operating at tisities 3 in-on \\lCV power punb-es - settlement (Note 36 520 Depreciation, depletmo and amortiration 298 275 233 Nuricar decornmissioning 50 15 12 Deferred income tase* (172) (1736 39 lieferred inse-twent tas credit (7) 33 1t> \\handoned Midlaml pn, ject - accretion (15) (21) (83) Write-down of abarnloned \\lidLmd p uject co-! 393 716 income irom contractual arrangements (129) (1f 6, lo-, on exchange of related ur 3 debent ures 125 J MCV Hond income (126 1inancial stalnlization resenue 21 Changes in other a -et and liabilities 24 121 04 other 3~ 26 1 Net ca-b on.dded h operating activitie-457 376 176 3 Ca h I' low

• l' rom Capital expenditure- (im luding capitaliicd interest Inu-ting tetidtie-of $1 in 1992. Si in 1991 and 836 in PrM4 (413).

12 7'4 (339) Ime-tments in nuclear decommi-sioning tru-t fun <ls (50) - (15; (12) Co-t to retire pniperty, net (14) (114 i106 Other (1) 42; (l) Proceed-from loan to affiliate t Note 1) 50 - Pn cced-hom llechtel settlernent (Note 41 46 Pn.eced from Midland related a -et-10 1.021 Pnereed, f rorn sale of pro ln rty M 5 8 Net ca-h prodded by (u-ed in)intesting artisities (358) 715 1381) Ca-h I' low

• l' rom IIctirement of hot.d-(12)

H 06) (153) l'inancing Artisitic. Increa-e (decrea-ciin notes guy ah!c. net (79) (106 129 Pa) ment of capital lea-c obligation-(35) (3Hi (32) Pa3 rnent of preferred tori disidends (11) (Ij) (1l) liepa3 ment of hant loan-(310) Pa3 rnent of common stm L diddends G5) lietirement of preferred stock (4) (17) Pn cc,1% from bank loan

• 60.

l'roceed-inan i-nance of luind, 5 -. - Nel ca-h u-ed in financing aciidties (77).. _. (1 J R11) (79 Net increa-c in Cash ami Temporary Ca-h linestruent* 22 7 13 Ca-h und ternporar3 cash imestments Nt*pirinirip ol ) ear 40 l1 28 End of year $ 70 S 48 S 11 Th.rcompong,,,,ac-o,e an namut pan s the e an..,ne,a. )i

1992 ANNUAL REPORT Consolidated Balance Sheets ASSETS in Malmn om.cna.cr a i 1(02 1(01 l*lant ( At original co-t) 1:lectrie

$5,076 -

51.823 Ga-1,728 - 1,u h Other l 228 191 7,032 6.N13 ler accumulated depreciation, depletion and arnortization tNote 2i 3,343 ; 3.107 3,684 3.576 Construction work-in-progre-s 252 192 3.936_ 3,7N1 Im e,truent. St (L of affiliates tLtc Im 291L 293 l'ir-t \\1idland Limited Partnership t_Ltes 3 arnl 17) r 208 201 Tlidland Cogeneration \\ enture Lirnited Partner. hip (Lies 3 and 17) 68 35 Other i 6 6 573 588 Current As et-Cu-h and ternporan cash ime-.tments at cost. whi< h approximate. market 70j 48 Account receis able and accrued reienue, Icw allowance-of 55 in l'n2 arid S5 in l'Ol (Lie 7; 146-276 Ileceisables from affiliate. (Lie 41 7 73 Imestment in \\1CV liond-tLie 3) 322 333 1mentorie-at m crage co-t Ga-in underground storage 201 225 \\1aterial-and supphes .0-71 Generating plant fuel stock ' 37 38 Piepay ment. and other 217 152 . 1.073 1.216 C 4/o Non-current A*-ets Po-tretirement benefit-(Ltc lon \\handoned \\lidland Project (Lte 56 175 287 Trunkline settlement (Lte 5) ll6r Leicar decommi--ioning trust fund-(Lie 2) ~ l11 62 Other 152' 65 LO14 114 Total beta ! $6,596 $5.986 l l ~

CONSUMERS POWER STOChilOI.DElts' INVESTMENT A.TD LI AltiLITil:8 In sts.,n* necem1,rr at 1992 1991 Capitalizatiim (Note 8) Cornrunn stoc Lhohler's eiguity i $1.232 : 5 1.4117 hefened stoi L 163 163 1mg-term debt 2,079 1Jil6 Non-current portion of capitallea es fMi 57 3,562-3.553 Current Liabilitic* Current portion of long-tenn debt and capital lea-e - 123 290 Noter, pay able 215 291 Acerued tases 232 167 Accounts payable 174-167 Accounts payable - related partie-47 11 MCV power purchases --ettlement (Note 3) 81 Accrued refund- '77 221 Accrued interest 43 61 Ileferred incorne taxe-24 63 Other 184 184 1.205 1,491 a Non-current Liabilitie* Po-tretirement benefitqNote 10) 494 32 MCV power purcha-e* - settlernent ible 3) -439 Deferred income taxes 329 131 lieferred imestment tas credit 199. 206 TnmLline settlement iLie 5) 116 llegulaton liabilities, net 62 90 Other 190-1110 1J129 412 Commitments and Contingencies (%!c3 3. 5.11 and 12) Total Stockholders' line-tment and Liabilities -$6,5% E5.986 w acconq,anyng n,ir, are an intreal pan of the e,iairn.cnt~. l4

1992 ANNUAL REPORT Consolidated Statements of Long-Term Debt b, wicon-p.,,,nh., a i 1992 l'r>1 l'ir-t Mortgage llorul. N ric* t'7< l Due 13 % l'r)3 4 S 1 5% 1(r k, 36 36 6 l<r)7 50 50 11 % 18717 11 11 f1 % l'FMI 250 250 6% l< rill 45 45 6% lir>H 43 13 9% 1(1 68 ft 8 7 /a 187 8) 48 4 11 8% 1*ry) 55 55 f: % l<rr) 200 2(M) 1; % 2(NM) 50 50 7% 2(Kit 57 57 8% 2001 57-57 7% 2(N12 62 62 7% 2(N12 43 13 8 '/s 2003 ' 7a .a 9 2(xWi 60 60 2(Hi7 85 115 8% 2007 100 100 4 2(k ul M1 75 1,407 1,111 tone-term llank Del,i 500 110 l'ollution Control itesenne llorul- ,133 136 Nuclear l'uel Di-po-al 88 !!5 1 /a '< Del.cnture,- 26 26 5 r Otlwr 12 2 l'rincipal Anusunt Out-taruling 2,166 2.103 Current Amount-(85). (253) Nel l'namurtire.1 Di count C) i 1) Total long-Term Del. S2.079 S1.816 The tab!c 1.clow shows maturities anil improsement funti obligation, for long-tenn <lebt: 1 ONG-TI:IOl DEIIT MATI'HITII;8 AND Olit.lGiTIONS bi nihon. l'ir t Mongage Impnn ement l ong-Tenn !!os 41-l'und llank Debt other Total l'r>3 S31 Sl5 S 31 S5 S 115 1(f)I 15 l!!!! 30 233 1(715 15 11' 1 10 213 J l<r>6 36 15 93 71 218 P r>. ao 11 7 71 The wrony.anyiry: note

• are an intepul ;, art of the-e *taienne tit *.

14

CONSt'MERS POWER Consolidated Statements of Preferred Stock in v.1h,,n. I se.pt Numl of Sharn Optional I!cdemption Numin r of Slmres Decenil.cr 3i Series Price 1992-1941 1992-1991 Preferred Stock Cumulatis e. S IOo par s alue. uut horized l T.5(Kuko hares. 54.16 $ 103.25 68,451? 68.451 7-S 7 v,ith r,o mandatory 4.50 110.00 2373,148-373.148 .- 37 37 reilempt mn . 45 10] J M1 379.549' 379.519 '38 38 748 101.00 L 207,565, 207,565 .21 21 7.72 101.00 [289,642 ~ 289.612 29 29 7.76 102.21

303,072

308.072 ? 31 31 Total Preferred 5:ock

• $163 Sl63 m a.u ny angnr m,n, on,,n onov.,1 po, of 8.

,.uwmei,s Consolidated Statements of Common Shareholder's Equity in vilhons. I serpt %mber of %ans (Ither lietairied Number Connnon Paid-in Earnings of Shares St < n-L Capital (lleficio Total Italance at January 1,1990 81.10iLT89 S811 Sput S 412 S2.116 Net lo+ (382) (382) l' referred stock disidends declared (11) (11) Net 1+- on deferred emplo ec compen-ation (3) (3) Net gain on retired sto< L 1 1 Italance at December 31,1990 81.108.789 811 861 16 1,721 Net low (2 19) (219) Ca-h dit idend-declared: g Common stock (75) (75) Preferred stock (11) (11) increase in preferred stock of affiliate (Note 16) 100 100 Net gain on retired stot L 1 1 Italance at Deecmher 31,1991 84,108,789 811 905 (319) 1,487 . 244):, '(244)' Net loss ' ( Preferred stock dividends declared (11) ~(11) Quasi-reorganization (Note li.( ;e (574). 574 .-4 llalance at Decendwr 31,1992 - .81.108,789 - SM1 .$391 '$1.232t w accompum mg n.,n, um an inurwl pun or 9,~ wrm. i

NOTb To CONsoi mAu n Fis Asu Ai mi t msi s anmunts of Consumeri ca h. sluert-term imestrnent-aml E Corporate Structure and cuneni babibd~ppnmimair dmiaair miue auc te d,e

• h""-'"""""'""""h"'"i"'"""""""-'i""'"""ir Quasi-Reoroanization 6

s alue of long-term im e tments is ha nl on quoted marLet prices where asailable. When specific ma Let prices do not C onsumers i a combination electric and gas utility company -ening nu, t of the I;>wer Peninsula of exist for an in-trument, the fair salue i, ha cd on quoted Michigan. and i-the principal -ubsidian of CMg marLet priers of similar imestment or other saluation tech-Energ3 an energy hohhng com;un3. Con-umer ? customer niques. As of December 31, PN2 the carrving amount and ha e include-a mis of n~ idential. commen ial and dis ersi. the fair s alue for im estments in stock of affiliate-was $291 fied imlastrial co-hanns, tin mo-t ing,ortant of which is the milbon and $303 million, respectisely. All oiber imestments autonnitis e indu-trt. in financial in-tnnnent-appnaimate fair s alue. Consumers A-of I)cccmher 31. lW2. Con-umers elTected a qua.i. generally finance its con-truction artisities with long-tenn reorganization in which Con-umerJ accumulated deficit of debt at the then-prevailing market interest rates. Altlniugh 5574 million wa-eliminated again t other paid-in capital. A the current fair s alue of the long-tenu debt, whi< h i-based on calculations made by debt pricing speciali-ts, may be qua-i-rn,rganization i. an electiu accounting pnu edme that ; permits a conyun3 that ha-emerged fnim financial difficulty greater than the current carrying amount. settlement of the to restate its account-to f air salue ami e-tablish a fresh start reported debt is generally not npected until maturity. fn.m an accounting per-pectise. The fair salues of Con umers refinances long-tenn debt v. hen the n onomic. of Con-umerJ a -et-and liabihtie-at the date of the qua-i-rcor- "' financing are fas orabic. As of December 31. PN2, the carning amount and the fair salue for hing-tenn debt was ganization wcre detennined by management to approsimate their carrying salues and no material adjustmenh to the hi,- ', S2.079 billion and S2.123 billion, respectisely. The fair salue of Consumers' off-balance sheet financial in-innnent.. torical hne-were made see Note 10L Thi-action wa-apprmed by Con-umerJ lloard of Directors and did not which includes interest rate swap agreement and !ctier+ of require -han hohler apprmal. The qua-i-rcorgani7ation wa-credit,i. ha-ed on the amouni estimated to tenninate or settle effected concurrent uith ConsumerJ acceptam e of the the obligation at the reported date and i inanaterial Settlement Onler addre -ing it-co-t termen a-ociated with power purcha e from the MCY Facility ( ee Note 3L GAS INVENTORY Con-umers u-es the weighted merage co-t methm! for ' "'" i"" '" " "^ i "r """""'"'"+ '"'h i"" r"' " h ' h i' s"' 2 Summary of Significant stored to maintain re-enoir pre-.ure for n cmery of woding Accounting Policies and gm. is receraea in dn,ppmprieic ga-phmi tm esimeni '"""" r""""* '"o ' " "" d"v~""d Other Matrers ""'"""' '".":"""~d h Consumer-or a suh-idiary. storage fanhnes owne 3 BASIS OF PRESENTATION MAINTENANCE, DEPRECIATION AND DEPLETION The con-olidated financial -tatement include the i accounts of Con-umers and it* wholly owned subsidiaries. Property repairs and minor property replacements are Con umer-eliminates all material tran-actions hetwern it-con-olidated companie3. Con-umer* u-es the equity methix] ^ charged to maintenance expense. liepreciable properts ~ retired or sold plus cost of rennnal(net of any sahage of accounting for im estruent in its i ompanies and partner-credits)is charged to accumulated depreciation. Con-umer*.

• h.ip-where it ha-more than a 20 percent hut le-than a ha-es its depreciation prosi ions for utihty plant on straight-mapont3 ouner-hip mtere t. and merci-e* significant but not line and units-of-production rates apprmed by the MP.~iC. In

~ controlh.ng mfluence mer these ime tments May lwl, the MPSC, appnned an increase of approximately S15 million annually in Con-umers' electric and ronunon FINANCI AL INSTRUMENTS utility plant depreciation rates. The e inyx, ite depieriation '"'" I"' "I"'"i" "'iIi') Pr"peny w a-L.1 percent for lW2, 3.3 In l'W2. Con-unne implemented ' l' AS 107. j pen ent for M and pen cut for M Th~ conqu sdte lkrimures about Fair I alue of Financialintruments. I or rate for g utibt3 plant wa 4.3 percent J,r P 92. Pol and financial reporting. the sandanf requires diu losure of the O. The conipo ite rate foi other plant ano pn.perty was 5.8 fair salue of financial in-trumens for whir h it s practicable I"'"'""' I"' I W2' 3'7 "'"""' I"r IWI and 2.9 percent for P to estimate a well a+ the method ami major a--umptions u ed in descloping the estimated fair value. The reconfed _B

CONSUMERS POWEll NEW ACCOUNTING STANDARD C"n-unnn would im irrmioni to in owr dm-c co-ts finni is cle tric retail on-iomer-under tra.htional regulator 3 pohcie. In %n ember l'N2 Ilm F Wit i--uni I. b. i 12. Emploseri % rurmting)hr 1%templo> ment Hew: lits. w his h Con-umer-plan-to adopt in Pn 1. Thi-stainlant mas NUCLEAlt PLANT DECOMMISSIONING COSTS require Con-umer-to chance it-ai counting her certai" Con-umer currend c timans eleconni-si..nine r.ish 3 po* tern}do3 rnrnt benefib wuch a-worker e om[mu-ation and oi $ P kiinidion arni F37f s niillion, in PN2 dillars, for the flip snerance pay pnnided aficr employ nmnt but leiore reti"~ lb.d Point and Palisade nuclear plank, n~pertiscip \\t ment. The -tarn!ard will not r hance dm morall n.-t of dm g >,.rendier 31. I'"2. C.n-umer-luni ren.nled $ 1 If > million benefits but inay result in carher recognith.n of obbgati"'N i.f & cornmi--ioning n,-s arnl clawfied dm o! ligation a-Con-unwrs i-stwh ing tlm clicct-of ilm -iarnlard but d""' munnilan d ilei n cimion. In Javia.uy PCT, Con-unwr-not nimet a material impa t on is fiaarn i.d ;w.-ition or l,ggan n,((yy,;ng eg;n,an.d n.-b h. deconuni -ion ib Iwo result-of ojeration. nm lear plant-through a Inonthl -up harge to eln trir cu-- 3 tomers. In bemlmr Ital the \\1P3C irmica-ni the ur-NUCLEAlt FUEE COST AND STOltAGE tharpe to approdmatel> $ 13 inillion fnun W indlion annualh. Tim \\1PSC rninin. updaint decommi--ioning Con-unwrs amortize-nu. Ivar fuel co-t to Iurl npen-c e-timates to lm filed ner3 three years A nn.uns collertnl ba-nl on the quantity of I,cai pn.durni for ciertric genera-fn.m cicritic retail ru-iomcis arc depo-ited in tru-t and will tion. Intere-t on lea-cd nm lear fuel i-npen-nl a incunnl. he asailable for d<vommi-ioning lbg h,ock Point and Under federal law. the l>OE i-re-in.n-ihlc for pennanent Pah. ade-at the cini of their re-perrn r licen-c geri.ul.m di-po-al of. gent nuclear fuel at co-b to be pabl by alfn ini 21H N) and 2m. Con-umer-bclin e-the arnount-bring o.1-utihtic-umici sanou-paymcia optiors I.or f ort burnni after hvted an adequate to nmet it-cunend c-timatnl decom-3 April 6. PEL Con-unwr-charge-di-po-al co-t-to mm! car mnuomne roa-aml rurrent \\l(C rniuirement. fuel npen-c. nr.n rr a through electne rate-aml renu.sa to dm IM)E quar 1ctly. Con-unwr-ha-ein Inl to defer payment for diq.o-al of speni nuricar fm I bunmd Imlore REcLAMIFICATION5 Aprd 7.1W until the -pent fuel i-dcInerni to the Dol. C.m-umen. and dm \\lG Patnership see N,ic 1D b of Dn ember 31. l'n2. Con-omer ha-reropied a habiht' hm e ierla--ifh d i criain prior y ear amounk for comparatis e to the DOE of Mm milhon inclueng interea. to diq -c of TW u-dwifirmi.im dnl nu af 6 t dic M Im-e-p spent nuclear f uel burnni before \\pril 7. lW. Con-umer' for du par-p wred lla-1.cen TtTin erirtp duougb elcetr5c rate-NW anDvint oil!li-g g JyQ() ,y g,g, habdity. niluding a portion of interc-t. under \\1PsC auth"~ dine-d power iden be tunos n-widiodwr mdoic on rization. Interest charge-on the liabdity 6.r nuclear lucl a go.- L-i in am.nlac widi dm RHC \\m umig diquesal acenm ba-cd on the 13-week Trea-un 1011 raie. I "' Ikl -c %.. I L Pmr i.crie.d n mning of n.ordiurd em m' the quarter ended Dn ember 31. PC2. Con-umcr-an run! pmdwe-ed sdn on a net bei-hac been n aaci interest at an intere-t rate of 3.17 pcreent. Con-umerJ haba-kly lo tbr IN k lacronm-duc a ben Nm i N k take-po--cs-ion of Con-umerJ -prnt nuclear fuch w hii h wa-originally s. hed_ REVENUE AND FUEL COSTS uled to occur in Una Con-nnmr-an ruc-rnenne for dn tdrity and ga-The DOE ha-annourn ed tha it will becm to ao cpt u-cd b is < uaomer-but not biHnl at the end of an accouns 3 only a s en smaH pnevntacc of the rountr3'- total -pent ing pcm.d Con-umer-also accrue-or n dun - rn enue for nuricar fuelin PN3 Con-unmr-npret-to u-c dry i a-k. an> umb nn mery or menecmcry of cln tric power supply w hirh are -tcel and concrete s anh. for temporary -torage of co-b and natmal ga-ru-h by c-tabli hing a cornsponding high-Incl nu< lear wa-te at Pah-ade. leginning in June a--ct or liability until Con-umer lidl-ihe-c unrenn erni IW3. The ra-k-wiU be usnl bn au-c Pali-adri on-ste co-s or n funds the ner-icnneries to cuaomers The final -torage pool i-near madmum oapacity. -imdar ca-L-arc adminiamiise detennination of the amount of rennery for rurrently in u-c at other utilitie-around the countn arnl power -upph co-b arnl natural ga-co-N i-the -ubject of Con-umers plan-to u-c ra-k -torage until the DOE tak e-annual PRH and GCH reconcihation hearing-conducted po--ession of Con-umere -pent nuclear f ocl. The N HCi befo,e ihr \\lP C. April 2. lW3 rertifh ation of the use of the -pent fuel storage ca-k-In Con-umer. which i -nbiert to judicial in iew, i-UTIUTY REGULATION ~ %'3 I,n., If con-unen. i-ey.ected to be effectise in cad 3 unable to n-e the ra-L-a- planned. ignihrant co-k. im lud-Con-umer-accouns for tim effcch of regulation umb r ing replacement power nrt-during any re-uhing plant 5l b 7 L 4rn.untmclor Ilm Q/cris 9/ Certmn Tipn 9/ shutdown, could im im uned Wnagement beliese that Regulation. b a re-uli. the action-of mgolators af feet when in enuc. npen-c. a--es and lialulities are irrognized 17 I ~

1992 ANNUAL REPORT OTiiER i POWER PURCHASES FROM TiiE MCV FACIUTY MP8C Approsal of the Itesired Settlement For significant accounting in licies reganhng ra h L equivalents, see Lie 14; for income tau, see %te 6: aml Progne-al: On March 31. lw3. the MISC appnned, with for pension-and otimr gui-tretirement benefits. -ee hic 10 nnidifications. the lies i-ed Settlement Prop > sal which had

been co-~pon ored by Consumers the MPSC staff and 10

• mall p<mer and cogeneration desclolw-rs. Under the tenns of 3

The Midland Cogeneration, 20 day in.m March 31, IW3 io object to the nn.dification-dr il+d scuume"i P"rei -h Senumeni Pam has yOUDO I and -eek to withdraw the Itnised Settlement Proposal. The m P nnership al-o re.cn e-the right to object in ilm escut The MCV Partner hip. whirh operates the MCV i diat a nuuWanon of du Reused s ulenmnt Pn,;nsal aficcis e Faciht3, contracted to supply electricits and steam to the MG Pannen hip's rights. Consumers does not expect llow and to sell electricity to Consumers for resale to dat any ohjernons l>> odnv kulonent Panics or dm MCV its customers and other utilities for a 35-y ear ;mriod begin-E"""""MP '" d* ""'E"d ""I""*"' P"'I"al that n a3 he ning in March F"O. Sumnuriicd financial statements of the ""ule un n pnnMon w di ab1 dm cost nrou n of pui-MCV Partnership are pnaided in Liv l~ At liecember 31. "'es fnnn dm MCY Partnership. The scope of the 1992. Con unwrs and it suhdharie-imhl the following a% cts related to the MCV: O CMS Midland <mned a 49 l &nlement Unin im udes three major component-: 1) treat-nmnt o nist reemen iwues reganling the PPA,26 resolution percent general partnership interest in the MCV Partnership "I D I"ues ra6cd by cenain denlo;mn of Qualif ing 3 with an ime-tment carrying s alue of 568 million: 26 CMS Faedses dat had no nintra+ with Con unus and 3 nso-Iloiding held thmugh the 1 MI.P a 33 percent lewor interest I"U"" "I N* "'"d*I '" du MP' C oniend by the Coun of in the MCV Faciht3. acquired through the MCV Pannership's SP3"-als in de Capacity Charge Onler. The Settlement Order sale and lea chack of the MCV Facility, with an ime-tment i does not nvjuke that the PPA he motlifmd and indicates that carning salue of $208 million; and 3 Consunmis ImlJ NCY du capanty <tarper an to im inipinnentni for ratenmLing Senior llonds totahng S322 nullion. has ing -old 5813 million P"'l""". beginning in IW3 and thereaf ter, esen though it in 1991. The MCV liond-were receis ed in Iwo in exchange did not grant Act M appnnah Panies oppo-ing the for $1.5 billion of Midland plant as-ets that were ahaged 'setdenmnt Onin niay sn k a rehearing of the order or file a after abandoning con-truction of a nuclear plant bec hie 5L """" "PP""I-Consumers plans to sell the remaining MCV liond in late U" S""I""""' ""I" "'uhed in Con-unmn, recognii. IW3. Con +umers ha-committed to the MI5C that it will use ing an afto-tax low of $313 nidhon in Ilecemlmr IW2 for proceed-from the MCV-related a--et-to reduce debt or make the pnsent value of e-timated future undernemeries of capitalimpnnement. P""" ""'ts under the PPA. Thi-low includes managementi CMS Omrgy, certain other affiliates and the other I""'dinates regarding the asailability of the MCY I acihty, partners in the MCV Partner-hip made certain contingent and the futun w holesale power markets' effect on the undenakings related to the MCV Partnership', ale and '""""" '"ning and price at w hich sannu~ incn nwnt d the leaseback transaction. The-c included. but wcre not limited capacity ahm e the MPSC-authorized in el could be resold. to, indemnification related to tax matters. imlemnification, b"P' I"r adju tnn nts to nocci the af ter-tax time s alue of in the esent the MCV I acilits loses its status as a Guahfsing "'"""}' "" additional lo-.es an expected unless actual future Facility under PrilPA a a resuh of ongoing uppe al-of the "l"'rience materially thfien. fnim managenenti current e ti-orden. granting this cenification, and a commitment to extend niat es. The aftn-tax n;mn e for du tinn talue of money for a $10 million standby working capital facilits to the MCV Partnership. In addition _ CMS Energy and itA affiliate-under-Om W mMon lo% i-eenuded to 6 appmumatch $24 took certain indemnification, related to em ironmental "'dhon, S22 rudhon and $10 million in 1993 through IW3, i I "'peenuly, and uniou lower inels thereafter. matters. Ilecause the remaining MCV liond-were retained A M"'"Fh d* """I""" nt lo--es were reconfed in IW2. by Con umers imu.nd 1992. CMS Ilohling-will be required On awaiard afin-tax cash undennouties an npected to to male a tax indemnit3 pay nmnt to the non-affiliated ! I" #32 '"Uh"" i" I"3' E37 *iIIi"n m twl 506 million in partners in the I MLP. Although the amount of pu3 m,nt ha-not imen finally determined. it is not npected to eu eed S12 fM $63 million in P% and $62 million in lW7 and signif- "'"% n uent leuds Omn ahn. Con-unnT* Imlines there is million a%uming the n maining MCV liond hehlin Consumers are sold in lW3. Con-unwrs npect< th'at it will and w W be an actiu rnarket for the capacit3 alme the MI5C-authorized incl. Ilowner. if Consumos is unable to self any substantialh regain mm time the tax indemnity amount paid capant3 aLne du runent MP C-authorized inel, future to the other FMI.P pannen aber the remaining MCV liond, additional af ter-tax lo+cs and after-tax ca b underreemeries are 3 old enuhlincrease b an estimated $14 milhon in 1991,$20 3 milbon in l'% S21 million in Phn, $22 million in lW7, S71 million in lW8 am! s arious low er leu Is thereafier. - - - - - - - ~ - - - - -

CONSUMERS POWER The irn!isidual component-of the 5313 million after-the 5ctelement Onler on 415 \\1% of < apacity is 3.62 cents tax low ar,e di cuacd below under " Capacity Anniuntf per L% h. As a re-ult of the Settlement Order. Consumer has ~llate-." and % adability Cap." renirded a-part of it-di-n.unted af ter-tax h.-- in Pr92. $32 Capacity Amount: Con-umer-i- obligated to million for the c~timatnl future effect-of underreemeries purcha-c the following anu unts of contract < apacity fn m the related to cap.n-ity rates. MCV Partner-hip urnier the PPA: The PP4 also prmide-for a s ariable energ3 charge ba-nl prirnanl on Con-umeri as crage cost of coal PrG arnt 3 Year lWu IW1 l'r 12 Pr93 PNI thricaf ter con-umni, whh h i-nperted to be reemerable. In it-PMCit I an for the ic-inthe 3 car. Consunavs estiniated the total d MW uiw la k, 415 1.023 1.132 1.210 fhed and s ariah!c cneres n-t to as erage 2.13 cent-per LWh As part of the n.mpromi-c formine the ba-h of the for 1W2 and 2.30 cent-per LW h for lW1 Settlement unier, the incremental ha-e les el of < apacity Asallability Cap : The Settlement Onler prmided detennined to be needed by Con-umcr, wa-merca-cd to Con-umer-two option-for the reem en that couhl be u-ed for 1.1W MW: 415 MW wa-allocainl to purcha-c-f n.m the capant3 < harges paid to the MCV Pannership. l~mier the MCV Partner-hip; 42 MW w a-pres iou-1 contra ( tually com-option wlerted. Con-urner-will schniule deliseries of encrry 3 mitted; and the Indelmndent Coyncratm-hase alb.cated the fnim the MCV Partner hip whenner it has energy mailable up to hourl mailabiht3 limit or " raps." for the 415 MW of remainine 142 MW of una igned 4 apant3 annine them-rhes 3 to re-ohe PI'llP A i--uc. Contrart-h.n c been -ironi for , capacity authorized for reemen in the dettlement Order. that anmunt by Con-unmre. The ettlement Ordri pnnide-Con umer can recmcr an merace 3.62 cent-per LWh for Con-umer-to reemer the co-t for purcha-mp 415 M W of capa< ity charge and the prewnhn! energy a harpes a-woriated capacity from the MCV Partner hip beginning Januar) 1. with the scheduled deliseries. w hether or ruit tho-c delheries 1993. I'mler the $cttlement order. any rennery of capacity lud been scheduled on an economic ba-i. The ral-applini ami fhed energ3 < o~t-paid by t on-umer-for purchase-from to Con-umerJ rennen for the fir-t four 3 cars are at different the VCV Partner-hip abme the 415 Mu inel ran be com-In el for on-and off-pcal Imurs. Through itecember 31, petitisely bid into Con-ornerJ nnt -oli< itation for power or. 1997 there i-no cap applini during on-peak Imurs to if nn eran. utili<cd for < unent pmcr nccd-uith a prudency Con umcri reemery for the pun ha-e of capanty in.nle asaib = rn iew irl dntlua! PN ll ( a*c. abje withirl {lte Ulb Mk autborkled, l$cemen for purrbase-The PP A. while requiring payment of a fhed encig3 during off-peak hour

• i-cappnl at 114 penrnt in 1993.

charge, prmide-a "regulaton out" prm i-ion u hic h pennit-ramping to Gl.! percent in PFC and thereaf ter at which time Consumer-to reduce the fhed energy < harges payabic to the the rap i-applicable during all hours. The option also allows MCV Partnership thn.ughout the entire contract term if Con-umer-to reemer 1/2 cent per Lu h capacity charge Con-umers n not able to reemer the c annunt-from it-ru-- along with the aworiated energy charge-for all econonne tomer. In connection mith the MP3C4 apprmal of the energy deliseric. abme the cap to H 5 MW. Ila-ni on man-Rni-cd settlenn.nt Proposal. Con-umer and the MC\\ agrmenti estimate of the future mailabihty of the MCY Partner ^ bip llMe rehigtli/cd tilitI ar!)itrathor! }lnHPedktlP" bardit). bon-nincr* ba5 ren8prik7ed H* Part 4'I kls dl* Counted under the PPA nu3 br nece--an to detennine w hethm af ter-tax lo+. 573 million in 1W2 for the estimated future Con umers i-entiilnl to nen i-e it-regulatory out resanling ellert-of the mailabihty cap. fhed energy i harges on the portion of MCV < apacity abm e PPA 1.o-ses Prior to pettlement: Prior to the the cunent MI5C-authorierd Inch 11 Con-umers cannot settirment Order, the MP C only allowed Con-umers to e nerrise its regulaton out it wouhl be required to make reemer co-t-of power pun ha-cd from the MCV Partner hip payment related to thi-i--uc to the MCY Partner-hip. ba nl on delhcrni energy at llat Lloaded rates for filo MW Ahhough Consumer-belin e its po-ition on arbitration i-in Iw2 and fuw MW in lW1 and Pm. l nder the PPA. sound and mtend-to aggre--hely pnt-uc it-right to ncin-c Con umers wa. required to pay the MCV Partnership in-the regulaton out, management cannot prnbet the outcome of cliini rates ba-cd on mailable capacity for up to 415 MW in the arbitration pn.reedings. Arronhnch. Con-umer-ha-1o92 and nW. MW in 1991 and PreL As a re-ult, reconled a-part of it-di-counted af ter-tax lo-- in lW2. 5 IW! Con-umer, acronled the folk wing h--es preceding the rnillion whic h reflect-the e-timated capacit3 ores and a 5ettlement Onler: l low a-oriated with fhed energ3 charge. In determining the Pretax A fter-tat amount of thi-lo. manacement a+umed that the capacity t, u, m i n-- Im-being purcha-ed from the MCV Par 1ncr-hip abme the 91a pg g -g g 33 MW authorized in el woubl be re-ohl a-long-tenn power

99 p.o jg; jg beginning in Prc and in the -hort-to intennediate-tenn PN2 130 power market in the year-prior to 19%

' '%2 0 5 '7 H ' Itates: The PP% requires Con-urncr> to pay a minimum inelized merage capacity < harge of 177 cent per o%,n,mo,,,m,a,.a y, pm,%, ,m,,u. ni g p, n,m n,n,ma s io LWh. The mcrage capacit3 rate appnaed for reemcr> under umi on,eca m imo na em.,--p.wm, L -E

IW2 ANNUAL REPORT in addnion, undri !!r PP \\. for the year-Pr81 aml 4 The Pah,sades Nuclear 1rr82. appnnimately 61:1 mdhon wa-e-crownl by Con-umer-u iih r,mperi io fiw I encrp charge. Prior to Aprd l'rsi. pjant approsirnatel Eri nnliion of potentially ref undahic hwd 3 enetys ( harges w a-paid diin fly to the \\lCV Partner-hip. Enre 190L a transfer was Ju inhng of the Pah ade-The arl.iiration provenhngs di ro-rd alun r will al-o drier-nuclear plant to a new nimpans. PGC. in wlocli snine w hrt}rr Con-umer-or the MCV Partner-hip i. entitlnl Con-unwr-wouhl ow n a il [rtrent nimt3 interest. to llHwe fiten! rurrp arnourit-a--oriated with the 3 rar-prior (;lo-ing wa-dependent on obtaining te gulalon appnnala arul to -ettlernent. Other rondition. trian) of which urre out ide Con urner/ 1501( Weter*: In l'r12. a-onicrn! h the MISC in nintn.l. In i t.rrn,br: Prs 2. Con-umer-noncimh d that the 3 the PFMI l%Cli reconnhation i a,e. Cori-urners refuniin! nephtiort pin nlent to < lo-ing would rhet ler enet, and approsarnalcly $29 rnilhon, im huhng intere-l. for l'Ni mrt-arronlmgly Irt the tran-fer agreement expire. Con-unwr-reemerir prirnarily herau-r the MP5C had authon/rd plan-to contiriur to own the plant aml regulatory proceeding-reemen of MCV power pun ha-r costs on the basi-of delis-relatn! to the peru-hng tran-fri has e herra tevnuti:stol. cred encrp rather than as ailable rapacity. \\ltlusugh the The pending transfer was part of an arrangernent with onier i- -uhjert to a petition for MISC tchearing, Con-urner-llechtel that would Intw also wrtiled claim ari-ing Initu unticipatr~ that the MI5C will not aber thi-rc< men ha-ni lin hiel'- work on the former Mullarni nuclear project. on it-3ettlement i nrder. lin hirl had agrent to pay Con umer-Sini milhon to settle \\t the < lose of P8'il Con-urner-r-tirriated that it had the Midland-trlatnl claim *. to he offset hy a $9 rnil! ion merten6cred approsirnately 532 rnillion, p!us interr-t urpler payment to lin hte I to ettle (h-puted Midiamhrrlainl run-it-1%I( < lause for timt 3 rar. including amount-relating to -truction hilhnb. for a net ~rttlerm-nt arnount to Consumer-pun ha-r-frorn the MCV i av thf 3 collertnl on the ha-i-of of s9] rnilhon. In llerenderr ]4GL lin htri plarni $30 as adable capacity rather than enerp deinered. The \\ Ll milhon of the -etticinerit arnount ivi an e-crow accourit subject i--ped a Pl'il in the Pril l%ll reconrihation rer verom-to repayinent in orrlain ein um-tance- ()n Dnrnihrt Ofh inrnd:ng a sh-allowance for l'891 totaling 536 rnilhort, pins Prt2, (;on-umers apren! to arrept an whhtional 53 ruilhort mterr-i. im Imhng a.U-allowam e of verm. n of pay ment-f rom liechtel ahm e the 5100 mdb..n -ettlernent amount. to made to the MCV Partner-hip for m ailalde capanr3 in 1991. settle ami n leme it-Ellawl claim-again t iterhiel. terrh-Con-umer-a. crunt amount-m Pr!I am! Pr!2 uf firient for ing hom lirrhtri that amount plu-the M1 nallion halance of thi-potential refund. %- a tv-ult of the Settlernent ( >rder. the net settlement amount and obtaining the nlea-r lo Con-urner-plans to refund m the -econd (piarti r of PP 83 it-Con-umer of the NO mdlion r-v rowed in 14WL ( on-urm rs e-timate of the owrrn mer) and r\\pn S the MI5C to onier a al-o terrh ed F21 rndhon from the e-crow fun.1 for inleve-t final delennination of the refund in late PPil earned *mre 100L The e-crowed amount, includmg iritere i. In Con umer/ Pr>215Cli plan ra-r. the MI5C had been horrowed by CM 1:ncrp at ihr presaihng prime ordered a Pril l'M ll Im toi that allowed trem ery h) interc~l rare. (In licremher 2il PN2. (.31' linerp paid it-Con-mner-of {l10 MW of power pun ha-cd from the MCV ohhgation lo the e-crow arrount. The Pah-ade settlement I arility ha-rd on drh s cred encrp. Con-umer-f drd for re-uhni in no mate iial gains. and redm tion-of $ 100 million rebranng of that onirr with the MINC. In Pr82. rewnne-of abandoned Midland pn. ject a--et< M1 milhon of current were rolle< ted on the bei-of drhwird encre. a-et-Irreisahle from affdiate; $20 milhon of other runent ln %eptemher Pfl2,(lon-umer-f dvd with the MPSC m h3hihtic< 531 inilhou of alrlennllas hahihtirs aml a nel the PrLi 1%I1 plan. a-e it IRii projection-for Pril in . a-h ini rea-r to (:on-umri-of F 117 milhon. Con-umer-January 1493. tion urners im rea-nl it 15Cl( Im for to trOr< 1 u-d the ca-h prorced-to rnlm r hor 1-term drht. theIrrms of the l!cs i-ed Settlement Propo-al, arnl plari-to adjust it-P'*Cll fai lor to reflect the tenn-of the Settlement (bder in late \\pnl Perl 5 hehhan \\rrordir;g to the term-of the Nrilernent ( bder. Con-umer* ha agreed to withdraw it-periding appeal-of tia Pr!2.1991 arni Pa t P3CI: ra-e-and he agreed not to EucTnle RAH; CASES appeal any MC\\ -reLin! i--ur-rai-cd for the three plan m en icm in Ma3 aml July Pr>l, the MIX i--urd ra-e and related verom ihahon-to ihr estent tho-r i-u"- order-relaird to Con-umerJ reemen of the abandonnl are re-ohed h the N ttlement Order. 3 Wilami nm Ivar im e-tment. a rencial ciertric ra'r ra-c. an ein tric depin iaiion rate i a-e and the hnancial tahilization complian e < a-c. The MISCi onler-re-nhed m a net rnlue-tion of Cov-umer ? retad cln tric ratr~ h an annual amount 3 of approximately F3 mdhon. Thi-annual redm tion corr tefl e d 4 Jduf rd laa-e tale % of b 112 W !billi pel y ear. par-c

CONSUMERS POWER e tiall) oil-et It3 the auth sri 7ed renavn of Cori-urnerJ aban-percent. This adju-turnt. if irnpl. mentnl. would be applied doned \\1idlan,1 noilear ime tment of $35 milhon per 3 car to Consumeri retail electric tariff rate-and be in effeet for mer 10 year. recos f*T) oI h23 rnilli8'n ;*t r car f(.r new one year f.p!!owing recorH 51 ation lWaring-witki the klPNC. whi h are n;riini to be imtiated in the first quaner of PW1. electric depn ciatn.n rates and an allowance of Si1 million t per 3rar mer 10 sear-to pay for electric demarnLide man. The estimated rnrnur effect of the potential adjustment agement pn. grams. range fnnn an $1I milln.n increa c to a $22 million decrease. Abamfuned Midlami Project: In July 1981, Con-unrr-i- aggrc snely pnemoting tir e pn. gram - there-Con-umer-abandoned constructi<,n of it-unfinishn! nuclear fore, it bclin es the potential for decrea-e of return on power plant located in \\lidland. \\lichigan. At December 31. j comnnen equity is rena.te and no refund will be required. P831. Con-umer ' im e-tment in the plant totaled 51.2 Consumers i-deferring prograni co-s and amorti7ing the bilhon. During lengthy regulaton anil legal pn.cceding-ni-t-m er the peri..d the-e n -t are being reemcred from it reganling rennerability of a portion of it-irne tment innn cu-toner in acn,nlance with an accounting order i,.ued by electric co-tomer. Con umers took a -eric, of w rite-dow n-as the \\1Psc in September IW2. The unamortient balance of dnelopmens in the proceeding indn ated that full rennen deferred co ts at Dn ember 31. PN2 was $25 million. while wa-not pmhable. The-c w rite-dow n-im imini af ter-tas Si million wa-annirtirni during IW2. amount-of Sinn million in Pr% ha-ni on an 11,1% rennn-Other: In December IW1. the \\1P3C appnned an nrndation and S241 nullion in UNI ha-cd on the \\1P-Cs agreement that prmided Con-unrrs' electric rate-would not % 7.1W1 Electric liaic Onlcr. lla-cd on the 41NCi be reduced a-a result of a IW1 n>-t reduction plan imple-3 mentnl b Con-umer. Consumer-acknowledged that onier in %> Im1. Consumer-began collecting 835 million 3 refund would be made if Consumers pent Icw than the pretax annually for tlw next 10 years to reemer remaining ' agreed upon anniunt in PN2 for electric pnulurtion. trans-as-et-of $223 million dim million pre ent salue in %> IW1 L Con-umers is anx.rtuing the a-es again t current mi-ion ami di-tribution operation aml maintenance. On income mer the recmcry period using an interr-t rnetfuul. I'rbruary ]6. PN3. (;onsumer filed is report with the MPSC Ann rtization for IW2 ami FN1 wa- $23 milhon and S18 detailing total PN2 exlrmliture-for electric pnu!uction. nullion. re-;methely. Additionally, in lW2 Con-urner-tran-mi sion and di tnhution. Con-umers doe, not beline reemcred SIm million of the abandonni \\lidlan.1 a-sets any n. fund-u di be required. thmugh the -ettienrnt with flechtel whi.- h had been antici-pated see hie 1L PSC,R ISSUES- 'I.hr % _.. UN I U.cetric Itate Onlet did not alh.a 3 Con-umer-to earn a return on the portion of the abandoned Since 19'% recmcring capacity and fixed enerp ro t-Midlaml ime tment for which the MP C wa-allowing for inmer purchased from the MCV Pannership has been a reem ery. Therefore. under ' ID %. Regulated Enterpriscs-significant P3Cli i-uc see Lie 3L Accountingjar %donmenu and Dirallmvances gl%nt The MPSC reopened the 1%6 and lon: PSCil recon-Cmn. the reconled io-es desenhed abme included amouns ciliation ca-es to reconsider the Pali ade capacity factor that rnlaced the reem crable a%rt to the present salue of u-ed to compute the refund made in the c cases. On April 1, future reemeries. During the remaining reemen period. part PN2. the MP3C ordered Consumen to refund appn>ximately of the prior lo-e-will be inersed to adju-t the umecmered S4 milhon. including interest w hk h Con-umers refunde d a-et to its pre-ent i alue. The adju-tment i-reflected a-daring Augu-t PN2. Con-umers had accrued for this refund annual accretion income. A total of approximately 5;3 prior to IW2. million of the prior lo--e remain-to be inc!wled in income m er the 10-y ear reemen penod en. ling \\pnl 2ml. gas RATE SETTLEMENT 5meral partic to the MP C proceedine, incimling the I" U""'"'ber IW1. the M P&C apprmed a settlement Attorney General, base filed claim-of appeal with the Coud "E"""""I I" "cen Con-umers and the MP C staff. w hich of Appeal-regarding the %v ami Juh i N1 MP5C onlers specif ing the tremen of abandoned n'ne-tment. "*1"i" d Con-unuvs to spend at lea t $2m rudlion on gas "P""li"" and rnaintenann arthities in PN2. The -ettlement ' Demand +ide Management: b a re-ult of settle-ment di-cu+ ions regarding demand--ide management and an "E"'""u nt also pnnided for refund-to ga retail customers in MP C order in Juh PNI. Consumer agren! to s;rnd S65 the n ent Con-unuT-f ailni to sin nd this amount in Un2 or in du nent PN2 carninp on Consumers' pa bu inew million m er two y ears on demand--ide inanagement cu eeded n nain ;nnletenninn! In cl. The agreement estab-program. A podion of the el1 million annual rnenue being b-hnl an inn ntnr scale for UN2 under which Con-umers collected in.m electric cu-tomer-for the-c programs could be subject to refund if the S65 mdlion i not spent. Ila-cd on is "'"F "i^i" F"' """U"p up to a 13.25 ;n'in nt return on efferth enc + in implementing these program. Con-umers, ninanon njuit3 and sharc with co-torner-any candnp in ewe-s of that aniount IKonsunu1J gas cannne for IW2 future rate of return on conanon equits could be adiu-ted b OI NM """ clNWr tipward by Up to 1 pert ent or demrtward ley up to 2

1992 ANNUAL REPORT equity and if Corsumers pent le than $200 million on ga-OTHER operation and maintenance artis ities for IW2. ainl a refund 1,he Energs Act imimes an obligation on the utility of suc h under*pending wouhl be requin d. then Consurners indu-tn. meluding Con umers, to decommiwion IMll would reduce the arnount due to it-gas cu tomers bs an urantum ennehment far. ities. Con-mners currently e-ti-d amount nece%ary to achiese a 13.2a. percent retunt, mates it-1:,>-s car liability for decommis-ioning tlni-c facih.- Consumers and the MPSC, staff agreed not to seek chance m. Iles to le f 2.4 stullion per 3 car. w}dt 14 It Irb.es es i3 C.onsumer pa-ba-e rates during IW2. The Attorney reem erable from it-cu-tomers under trada.mnal regulaton-General and All ATI. hase appealed the MPSC, onler uppnn - poh..cies. Acconh.ngiv. a S36 nu.llion liabih.ts and regulaton ing the settlement agreement to the Court of. Appeal. On a--et has e been recorded. February 16.1W3. Con-umers filed it-repon with the MPSC, In Januan IW3. Con-umers made a ca-h pay ment to detading total pa other operation and maintenance expen-es handmhler of $21 nu.llion oe: if presiou-1 escrowed funds 3 for IW2 and its IW2. return on ga-common eqmts. m sati-faction of a settlement of litigation. C,on umers Consumer. doe-not espect that an3 refuml-w d. l be requitnl. accrued a low for thi-pa3 ment prior to 1992. Estimated kr.se-for eenain contingencie di-ru+ni in GCR ISSUES this rmte base been accrunl. !!csolution of these contingen-In connection with it IW1 GCII reconciliation ca-c. Ci"" I' not nin*d to bas e a inaterial inipact on the financial "'"'""*"I'- Con-umers refunded S36 million, including intere-t. to it-finn sales and transportation rate customer-in April IW2. Consumers accrued the full amount for this refund in PNI. b Income Taxes In hember Im L Consumers filed an application uith the MPSC seekir-order estahlishing the price pay able according to a. s purchase contract with certain NEW ACCOUNTING STANDARD intrastate producers of natural gas The intra-tate producers intenened in thi-prweeding, and took the po-ition that the In December IW2. Consuners ingdemental 5fAS MPSC lac Ls the authority to grant the relief.ought by 104. An ountingfor locome 7ines. effectis e January 1.1092. Con-umers. and that Consunrrs houhl pay a - we higher whk h requires the liability nethod of accounting for income than that for which Consumers i-seeking appnnal. On taxes Under the liability method. Consumers adju-ts February IL IW3. the MISC i-oed it-final order which deferred tax liabilitie-for enacted tax rate changes and establi hed a price of $210 per MMiltu from I ebruary IL n'C"rd-deferred tax a-ets and liabihtie for all temporan lW3 forward, but let -tand the 1989 ettlement price of differences llepulatory as ets and liabilitie-are reconled in S3.5511;rr mcf for the period be tween December I. lW1 and connection with temporar> differences for which defened Februarv IL 1993. Consumers anticipates a GCil disal-tases base not been recognized through the income state-lowance of approximately SI1 million thmugh Februan It ment. The e regulnton a-ets or liabilitie are ba-ed upon exIrrted icemer> fnnn or payment to the utility cu-tomer 1993, with no disalh>wance thereafter, unles. appeal-filed b3 the intra tate pmducer are sucer-ful. Consumers a< crued when the teng.oran differences reserse. Con-omers had amounts sufficient for thi-di allowance as a lo+ in IW1. Iren using the liability method under SF TS 9. Accounting 0 Tnmkline. a ub-idiar3 of Panhandle, i, a upplier of for Income 7ines, and had been able to record its deferred tax Accordingl, this accounting change did not base a natural ga in Consumers. In the early 1930. Consumer wa-a*cis 3 a major purcha-cr of ga-sold by Tnmkline. ince 1913 material effect on Con.umers. Iloweser. Inr financial icport-numen>us claim-and proceeding had been gending con-ing. the standard require clarif ing any deferred tax liabil-3 cerning Trunkline liquifini natural ga co-ts. In 1W2. a set. it3 or a-et a-current or non-current ha-ed on the tlement related to these claims and pnreeding. in which cla-ification of the related awet or liability and expand-the Consumers was a party, wa-apprmed by FEllC. The settle-di-clo-ure requirement-to include the significant item-and ment resob ed all of these i-.ue-and adju-ted the rates of amounts of defened tax a% cts and liabilities. 'InmLline. Under the settlement. Con-umers has agreed to pay Trunkline S151 million mer a fise-year period that began in hember lW2 and ha*. recorded a liability and regulatory a-et for the total settlement amount. The ettlement repre-sent* significant pas co-t asing-for Con-umers and its cu - tomers in future 3 ears Con umer i-currently reemerinp the settlement co ts through it-GCR clau-c customers and management beliese that Consumer-will he pennitted to continue tu collect the co-t of the settlement from its cus-tomers under traditional regulatory policies

CON 5UMERS POWTR The prin< ipal < omponent-of Con-umeri deferini tas 'l he -ignificant coinponent-of inn.mc tax cy.cn-e con-as-et-dia!sliiic-i recogniini in il ba!ance sheet acic a- -i-icd oh follow-: I" E U'""- i.e i nde.1 liccend.cr ill lW2 l(ril* l'r MI In %lImn. Cunent inirral income lase-S 52 8 58 8 55 li..crmh., a t

1992, Dcfer ni income ine.

(172). t 16f a H' 8 Pr opert3 $ (458) Dcferrnt inse-tment tas Postictirement benefit a--et-(165) crnlit net (7) 33 16 o I m on-olidated im c-tment-(129) $(127) d a.as S l'U Abandonni \\1idland po, ject (60) Fmpin3ec bem fit obligation-Operating $ 51 5 18 5121 tim lade-p..-tretirement benefit-of S 165 186 Other (178) (1231 u8 \\1C\\ power pun ha-e- - -culcment l $12D

1. C'n vPM

\\\\11 carryforwani 51 ITC carr3 oru anl icspirc~ 2t Hi5i 49 Th I'"I Po n ion ("r mn'me ter

• a-b h an
• anan "-m f

(hher that ha i iclaini det, rred ninime law-of apprema:ch M udhon s,er %av & e S (353) NEw REGULATORY ORDER Go,-- dcf errni tas halnhnc~ $(1,228) Co,-- defcnni tas a--et-g73 On Februars H. Pr83. the \\1P3C issun! an order that b " "" "" F""'" "" ""'" ""'" S (3536 ~ practice full deferred tas accounting for all temporary <hf fci-ences ari ing afim either January 1. I'r82 or January 1, lW3 The actu;d im ome tas exprn-e ihfiernl fo,m the at the utility's option. Consumer ha, electml to implernent amount thal wa-compured by applying the statuton federal the unter a-of January 1. IW3. Ti.c onlcr rniucc-the in raic to mcome before mcome lase-a- f dh.w-: amount of regulator) in a--et-and habihtic-that otherni-c couhl ari-c in f uture perio.1-g i..ay; i na..J t i., ca.<, a i 1992 lir!! larm INCOME tax RETURN bt lo-- before Con-urner-and n. su b-n h.anc~ file a con chdaini estrannhnar3 ncm 8 244) Si235i Si3H2) I. teral income tas return with C.\\1 1:ncrgy. In* ome late-n Pim i-ion f or mt omc inc-(127). C5 PMI me generally alh catnl to each company ha,nl on ca< h (371) (3 H b i1921 < ompanyi -epande taxable ira umc. statntory inicial income in rate s 317c s 3 P+ x 3 F4 ALTERNATIVE MINIMUM TAN Especte.1 income te benefit (126) iloa) .65 The A\\1T creatnl b the 193o Tas lieform t t 3 im rea-c hlcoca-ci m requhes taspayers to perform a -cromi separate inleral tas tec-f rom. calculation ha nl on a flat rate apphn! to a bniado in ba-c. Capitahint m n hcad-prr-01T it the amount by whit h thi -bniader-h#cd" in dou 1 flowed through 5 35 186 cxi ced-regalar in. Any DIT paid rencrally herome-a in 3 DJinence, in bo..k ami credit that can be carried forwarJ indefinitely to reduce in depreciation not regular tax liabditie-in future period-when regular tasc-prninu-Is dcferred 9 8 (2p paid execed the tas tah ulated for MIT. H C amortiestion and utilization ' (10) t,i 16) INVESTMENT TAX CREDIT % riie-. low n of a--et' Con-umer+ mi - ITC to redm c tum nt inn >me inc-uniler contra < taal pag},le and dcfer-und annirtize-D C m er the hic of the d " " " F"" '"" I ' HU relatnl propert3 \\ffihated companieJ dh idend-(5) tai t1) Other, net (1) 1 ,7 Short-t'erm F*inancings $(127) S C5) 8 P80 Consumer., ha authorization from the I i IIC to i-uc of guarantec Up to h'llN'l rinllitert of sineri-lerm debt for (be , period from Januarv 1. PW3 thneugh Decend.cr 31.1991. k _B

$992 ANNUAL REPORT Thi-i-the same amount of shon-tenn debt authorimi for remainder from general fund of Consumers in satisfaction of PWI and PN2. G.a-umers ha. a $335 nullion uorLing Consumer ? IW3 impna ement fund requirement. capital facility, expiring on July 16, lW3. that i u-ed to in December IW1. Con-omers n mmed S500 million Gnance seasonal working capital rntuuements. As of of its fust inortgage bonds from its balance sheet in acna-December 31 lW2. S149 million was ontstanding at a dance with FAS 76. Stinguishment qfhebt, by depositing weighted rage intere*t rate of 4.2 percent. Consurners qualifying securi!is in an irreuseable tru-t sufficient to eq>ect-to extend this facility prior to or upon its cunent ter-redeem or retire the bond. This debt extingui-hment was mination date. Con-umen al o ha-un eeured. commitled accounted for as an extraonlinar3 tem. w hi( h resuhed in a i lines of credit aggregating $215 million. A of December 31. pretas lo+ of S21 million in IW1. related to call premiums IW2 Con.umers had borrowed 565 million under these lines and accruni interest expen e. During IW2. all of these of credit at a weighted userage intere-t rate of 4.6 pen ent. bonds were redeemed. Further. Con-umer-has an establisici F250 million trade i receisables purchase and sale program which cyiir"'"" LONG-TERM BANK DEUT P tober 18.1993. A* of December 31.1W2 and lW1. receiuble, old under the agreement tGaled S225 million in December IW1. Con uiners amended it. long-tenu ami S200 miHinn. respertheh. In Februan lW3. en dit apeement and permanentl reduced the amount out-3 I Con umers increa-ed the leu 1 of recris abb s sold to $250 'tanding in SMO miUion fnan A rniHion. Tluqenns of the miHion. ciedit vreement require Con umers to make 11 quarterly principal payments beginning in Nncmber lW3. As of December 31 lW2. the out tanding debt totaled $500 8' Capitalization i ".""i"" " i " " ds"" "' ""r" i"'"" '".'trat es, on lo take ativantage of the decline in intere- ! January 11. lW3. Con-umers entered into an interest rate CAPITAL STOCK ap agn cment exchanging variabh-raie interest for fixed-Consumers was prohibited from pasing dhidends on rate intenst on S22 niiHion of the nanaining SW miHion its common sto< L a-of December 31.1902. because of obli at;ou under it-long-tent credit agreement. g restrictions in its Articles and First Mortgage Bond Inden-ture. As a resuh of the qua,i-reorganhation. Consumers OTIIER belies es it will re-ume paving common disidends in lW3 Consumers classifies Sa. md. h.on and S68 milb.on of and under its Arn. les. C. -onsumer-had $1.4 billion of capital e PL,H B* a-long-tenn becau e it can refinam e these an.ounts asailable to pay dm..dend-on it-prefened stm L as of through irreu. cable letters of eredit expiring in lW..a and December 31. lW2. P%. respeethcly. Consumers has $133 nn.Hion of PC,HBs In further effons to imprm e its cap;tal tn.cture. outstanding with a we. hted merage interest rate of 4.a. ig Consumer, plans to irue pr< kned or preference stm k m. ( late 1993 or m. 1W1. subject to pnn i-inns of..its Articles and i. percent as of Decend.cr 31, IW2. In Januar) IW3. Con umers requested MPSC, approval appnaal of the MPSC.. 1,m. annal te-tc required by

to o. sue up to S60 milh.on of ref.unding PCHH. and $20 Consumers, Articles cunentl preclude the issu.mer of new

' mlNioll of additiona} long-term tas-exempt debt. 3 i pre [CITeti stock. FIRST MORTGAGE BONDS 9 {XCCUtiVC IDCCDtiVC consumns secures it, first mongage lumd-by a Compensation mortgage and lien on sub-tantially all of it propeny. i Con-umer ' abilit3 to issue and sell securities is restricted by onsumers participates in CMS Energy's Peifonnance cenain pnaisions in its First Mortgage Bond Indenture and incentise Sim L Plan for Lc3 employees. Under the Articles, state and interal law and the ne ed for regulatory I plan, restneted shares of conunon *tock of CMS approvals. Consumers plans to request MPsC authorization Energy. stm L options and stock appreciation rights covering to is-ue apprmimately S300 million of long-tenn debt in ! 4 ces of CMS Energy common stock may be granted to Lc3 1993 to refinance existing debt. Consumers has filed a regi-- ( employ ees based on their contributiom : ~cessful 4 tration statement for S300 million of first mortgage lumds i numagement of CMS Energy and its sui; c vea. The plan with the SEC.

resenes for awan! not more than 2 percent.. CMS Energn On Februarv 10,1993. Consumer redeemed at par conanon stock outstanding on Januan 1 each year,less the S35 million of its 9 percent first mongage bonds due in 2008. ! number of share.of nstricted conunon stock awanled and of Apprmimateiy S20 million of the funds for redemptmn were i conanon stock subject to options granted under the plan obtained with proceed-from the sale of properties released l during the immediately preceding four calendar years. Any under the terms of the first Mongage Bond indenture and the !

forfeitures are subject to award under the plan. As of

CONSUMERS POWER 1)erember 31. l'N2. uwanl-of up to 351.f 4;9 -harc-of 10 Retirement Benefits n.nanon 4 L noyici--unt ihmt'rii tni -han of comnn n sto L arc oustanding -hans with f ull u. ting and diside rul right-The Organif atn.n POST RETIREMENT BENLFIT PLANS and Cornpen-ation Commince of L.\\ls 1.ncrg3 - b,oani of OTHER TllAN PENsloNs Directoi d-tenninc-the re-trn tion. In 1,No. tim Committer addni to the plan perfonnanec i riteria becd on I.il. In licccmber l'No the l'A511 i-uni l' \\5 lik. 1.ncryi, total return to -harcin.lder. 5 hare-of icstricini Ernpleeri lcrountingfor Ibirrturment ncnqin Ot/s r 7km conunon stork cannot 1,c dninhuted ontd ihey are w-ini and l'ermn t Tim new statniani injuins Con-umer to, hange the perfonnance ol.jn tise-e-tabh-hni by tim Organuation it-accounting for the n-t of Imalth care and life in-urance and Compen-ati-n Conunittee are met. The n~trivied stock is benefit-that are pnn ided to retirers from a pa3-a--3 ou-go subject to foricitute if employinent terrninate-before sestmg kaM nmdual to a full aconnsl rnellvul. Con-unmt adoptnl or if pafonnance obyttiw-are not met. If Ley employec- 'ID D N' on incermber 31. PN2. efhrtiw a of the 1.cgin-ning of Pr82. \\rnin!mpl. Con umers renirdnl a habihty nn ed perbnnam e ohjn-tne the plan nill allow adda;onal 3 awan!. Ihstri, ted -harc. mi fully if contn l of CTI Energ3 of S 166 rnillion for the accumulatni tran-nion obligation and change. as ilefined by the plan. \\- of !>ccend.cr 31.1002. a corre-luchng regulatory a-set for anticipaint recown in 27T111 -hare-of tlm 323.266 re-nirted -harc ontstanding utility rate. are subject to perfonnance ohycern e.. Iloth tlm \\1PSC and i I ItC haw generally adoptml ConsunmrJ Ewrutiw stock i >ption and Shu L SI' \\S 100 co-t computation-for ratemaking purpo~e-Apprn iat;on liight-Plan. an earlier plan apprm ni by -hare-prmidnl n.-t, in owred tinough rahw are placnl in ntenial holder-in April Plan. remain-in etin t until all authorv a fund-until they are nentnl to pa3 benefit. The \\lP C-options an grantnl. ami af ter that until tlm remaining oun generic order allows utilities threc 3 cars to -n L renner3 of -tarnhng awanl-are rwrri-nl mpiie or tenninate. k of n-t-and pun ides for recown from cu-tomer-of any llecemher 31. PN2. option-for 13J p00 harc-remainni to deferrn! co-t-incuned prior to the beginning of rate ren.wn be granted. of -uc'a c+t. Cons.mer-antit ipate renn ering its regula-l'nder both pl.n. for -t.n L aption-and -toi k appicci. tory #-et within 20 y ear. Con-umer-plan. to f und the ation right. the norri-c price on ca. h grant date niual-the benefits using nternal \\ oluntan Employer ! ene fit clo-ing market pri< e on the grant date. ( 6ption-are nnci-- b ociat ions. \\ portion of the hfe insurance benefit-haw piniou-1 been fun led I unding woubl begin when able upon grant an I npire up to 10 3 car-and one month 3 from date of grant. The statu-of the re-tric tcd stock grantnl Con-umnJ rate ienncry ba-nl on slN 100 begin-under the Perfhnnance incentiw ' to< L Plan and option. The l'N2 co-t-were d& loped ba-nl on the -ub-tan-granted under both plan-full-I hr number of -harc-pw-tiw heahh care plan in effer' at Januan 1. PN2. Plan -entnl al o include- -hare fo nph+y ec-of C\\ls Energy anil < hange-of fcctiw Jannan 1. UN3. wcn in;plenmnin! to non-utihty affihates manage the e-ca!ating co-t to pnnide the benefit. The !!c-t ricted amount of retiree co-pay rnent-and deducubics increecd. Not L t Ipiion- !!crau-e of the <pu-i-rcorgani7ation, at 1)ccendmr 31. PN2. "" """FI"! "' """'" "I Ih" "ff""' "I the new plan w a-nude Numimr N und,rr Price and rnlueni the anannulatnl obhgation and nyulaton as-et of sharc-of hans per -hare in a net N, nullion. Out-tanding at ~ .lo e-timate the h"nefit, the m tuan a--umed that Januan 1.19'#0 137750 1.052.!!6 S T.13-53 L25 retiree health rare co-t-inen ased 13 percent m PN2.12 G, ranted 97 750 195.500 531.25 831.25 pcreent in 1,N3 then det reased era lually to 6 pen cut in Ewrci-ni or I -ued i10.50s h (66J,00, S T.13 S20.50 Jo K30 rnd thercafter..Ihe health care co-t trend rate Canceled < 3.50m (20.wkn $31.25-83333 a--ump. ion significantly effert-the amount-repoued. I or Outstanding at nample, a 1 percentare po;nt innea-e in cach wr wuld December 31. PHO 212.500 1.162.216 5 7. I 3 531.2a merede the areumulated po-tretirement benclit obligation as Granted 97D00 191.000 521.13-821.13 of flecember 31. PN2 by STO ruilhon and the aggregate of Ewrci-nl or I-urd 131.11g t61125) S 7.13-S16 00 the en ice and intenst co t o.mponent-of net perio hc Out-tanding at P"stretirenwnt benchi cost-for PN2 by S3 million. Dn endu r 31,1 " ' i 275J w.3 1.201 Dol 8 7.13-Sat 25 w 1n.WI 0.o u., m.

199,

.r Grantnl 10lJKK) 215fkKi $17.13-81R00 % nghted a[erage <li-n.unt ialc ROW ~ Exercised or 1*ued (37,422) (21JKK4 813JK)-S16.00 l(ate of corr [rn-ation i'mrcase Canceled (15.375) (50JXK4 S20.50-S33.83 Espn te.d long-tenn rate of re turn on plan awet* E5'/r - Outstanding at E-timated tag rate on return December 31,1992 323,266 1,435291 $ 7.13-83L25 ^

1992 ANNUAL REPORT Net ju.-tretirement benefit co-t-for the health car - not di-tingui-hable in.m nor are they -ignificant when lenciii-arni life irmurance Imnefit-con-i-int of: compan d with the plani total amount. 3 " " ' U '""' h.m.Indedt.+emt.crat 1902 l'r81 1940 T ear l minl ikeend.cr 31 1992 , L%,. 1)i-count rate 4q.5c/r IL%., Sen ice cost $10 Itate of compen-ation increa-c 159 3.% a.aG Interest co-t 39 lipectnl long-tenn rate of Net periodic po-tretircrnent lenefit co-t $49 n tuni on a-et-fL759 8.7 % 9.0G Net Pension Plan and SEllP co-t-con-i ted of: The funded statu-of the po-tretirement benefit plan. i, 3""""' reconcilmi aith the liability ren.nled at December 31 a-follow-: wo,luu iucena, at 1992 PnI i no l in u,,n, Senice co-t S 19 S 18 8 17 Intere t co-t 47 18 49 l -1992 , Actual (retund lo on plan Actuarial pre-ent salue of e-timated benefit-awet-(36) m8) 11 Iletirec~ $264 i Net amortization and deferral (20) 28 (72) Eligible for retirement 50 Net periodic pen-ion co-l $ 10 $ 6 s a Artisc tupon retirementi 173 Accumulated postretirement benefit obligation 489 f Plan a--et- (premium depo-it fun,h at fair value 4 l The funded status of the Pen-ion Plan and 5EllP ree- ' oncilnl to the pension liability reconled at December 31 wa : Pn jected po-tretirement benefit ohh.gatmn m cxce-s of pian a-set

• which equals the I

la M dimns reconled liability and regulaton a-et $485 Pension Plan SLIIP 1 712 Pol -1992 IWI A C'""i"I "'""' ' "I"" "I P ConsumerJ postretirement health care plan i- "'ninated Imncfits unfunded; the accumulated po-tretirement benefit obligation Yestnl ~$349 S301 $ 10 S8 for that plan i- $178 m;llion. Non-s csted 49 31 I Accumulated benefit SUPPLEMENTAL obligation

1. . 13 3;8 10 0

EXECUTIVE RETIREMENT PLAN Prou..smn for future pay Certain manacement emplo3ns quahfy under the increa e-177 170 5 4 dEllP. llenefit are ha-ed on the emplo3 cei service and . Projected benefit obligation 57a a28 1 a. 11 carnings a defined.m the FL.itP. In 1488 a tru t from Plan a--et Iprimarily stot L. which SEllP henefit-are paid wa established and fundnt l and bond. m. eluding Sr.1 Recau-c the SEllP i-not a qualified plan under the Internal m 1992 and $4. m. 1991 Itesenue Cale, carnings of the tru t are taxable and im-t in cononon stock of CM3 a-ets are included m. C.on-umer-consolidated a-ets. A of Energ3 ) at f.airsalue 631 M2 December 31.1992 and 1991. trust a-ets at cost (w hich appnaimates markeo were SI 1 million and S15 million. l Projected benefit obligation I"" than 6n exec-of) n spectis ely, and w cre clawified a* other non-current a-ets. t plan as-et-56 lit (15) - 113)

Unrecognized net igain) low DEFINED BENEFIT PENSION PLAN fmm q.crience different A trustenl. non-contributon, defined benefit Per:sion fnan that a%umnl

66) t1036 2

2 Plan cosers sub-tantiall all employee. The benefits are Unrecognized prior senice 3 1 ha-ed on an employeci 3rar of acernlited senice and co-t 49 29 1 1 Enrecognized net tran ition earnings, a-defined in the plan. during an employee % fis e highe-t years of earnings. llecause the plan i full funded, j tawen obligation (49)]5p 1 2 3 no contribution-were made for plan years PNO through Hen.rded p, n-ion }I.b2. $!IHiunt, pre Piltnl for the Pt'nskori Niall incimle {}jgij )

g

~ g }g '] ] ' amount-for CMS Energy and non-utilit3 affiliates. which are

CONSUMERS POWER lieginning Januan 1.19,"A the amortization period for in M dh""' the Pen-ion Plan',* unrero.:nized net tran-ition a-set is lo Capital Operating 3 car-and'l 1 y ear-for the '-l:1W unnrognimi net tran-ition Ira'e E _ Ira'"> obligation. Prior -en ice co-t-are amortifed on a -traicht-linc p ria $ 15 8 t, ba-is ener the aserage renuining enire period of artise Pral 12 5 employ ees. l<r)3 18 5 in l'r>l. certain clicible employer-m repted car h p r (, 15 1 retirement incentiw. The inevntiw consi ted of lump--um pre; 12 1 cash pavment-and increa cd pen ion p;nment. The pretax prn; ami thereaf ter 25 10 co-of the incentiw-wa- $25 nullion. Al-o in Pril, portion- ~ I m-~ ~ ~9 JiT T h, tal minimum lem r n ment-of the projected Irnefit obligation were settled which re-ulted in a pretas gain of $25 million that off-ct the early retirement le-- imputed interea 33 C"- Prc-ent salue of nei minimum lea-c pa3 ment-121 OTllER 1es-runent portion _ ]> Con umer ' con.olidamd p.n roll wa $120 million. %"n-runent portion Sm S 10" million and $3"5 million in Pr12. Pr81 an I l'rHL re-pre tiwly. m m dme charges from ru tomers and m accordingly i harge-pay rnents for its capital and operating lea-c, to operating exlmn-c. Operating lea-e charges, inchuling charge-to clearing and other accounts as of II leases licceniber at Un2. I "I and PrNL were 512 million. $12 million aml 511 million. re-pectiwly. Co unwr-lea-c sariou-a -et. im luding wlurics. Q,ml lee fm die n n ended ,e n mreralt. con-tmetion equipment. computer equipment. D emlier 31 wcre: nuticar fuel and building. Con-umeri nuclear fuel 3" % W""' capital lea-ine arrangement. w hich wa, extended an wkli-Pol P"o iional car durine Un2. i now scheduled to expire in 1992 3 Nn ember UNI. The lea-c pnnide-for an additional one-A mortization $35 S33 S32 yeai exten-ion upon mutual agreement by the parti,~. The Intews: 9 to 9 lea e is subjn t to earlier tennination upon the nerurrence of h.tal capital lea-c espense $44 blo $11 .o certain ewnt. l'pon termination of the lea-c the h~sor wouhl be entide l to a ca-h pa3 rnent equal to it-remaining inne-tment. which we e39 million as of Drcend.er 31. l'N1 im juded in the-c amount-for the y ear-cnded PN2. Con-umer-i, re-pon-ible for pay ment of taw. maintenance. PW1 and 1 FML are nuricar fuellea-e expenses of $17 operating co-t, ri-Ls of lo-- and in-mance. million. S21 million aml $17 million. respectiwly. Con-umeri capaal leases for wo of it-general offire budding-expire in 20:13. uith three fne-year renewal options. At the expiration of the lea-es. Con-umer, has the option to purcha-c the huihiing-at the then fair-ma:Let 12 COH1HlitinentS and salue. The annual rental-are subjeri io e-calation ewn four year-and cunentl total 53 million. Con unwr-par the Contingencies 3 taws. maintenaner. m-urance and other operating co-t-on the-c buildin~~~ LUDINGTON PUMPED STORAGE Minin:um rental commitments un.ler L.on-umers. non-I3LANT LITIGATION cancelable lea e-at Decemlmr 31.1992.were: in September 19Pii. the Attorney General fded a law uit on trbalf <d the State of Michigan in the Circuit Court, seeking damage

• from Con-umer-and Detroit Edison for alleged injuries to fi-hen resource, because of the opera-l tion of the 1.udington Pumped "torage Plant. The plant is jaind owncd by Con-umers t51 percenn and Detroit Edison 3

149 percentL in it complaint, the state ought $118 million tincluding Sif> million of interesy for pa t injuries aml T u o L._.

l 1992 ANNUAL REPORT l S84JM per day for future injurie~.. with the latter amount to leith imestigation and any required remedial action would be adjusted upon in-tallation of adequate fi-h barriers and I,e a legitimate co-t of doing bu-iness and uill scel to reemer other changed conditions them thmugh utihty rates and are not likely to materially in Nmember PC the Attorney General filed a affect it-financial u.-ition or results of o;eration. l second lawsuit alleging that Consumer-und Detroit Edi-on includni in the Poo amendments to the fnleral Clean base breached a bottomlands lease agn enent with the state Air Act are pnni-ion that limit emi -ion of sulfur dimide by unreasonably interfering with public u-c of adjacent and nitrogen <nide-and require enhanced emi-sion-monitor-waters and by siolating certain laws and regulations and ing All of Con-umeri coabfueled electric generating units terms of the planti FDIC license. The complaint a-Led the burn low-ulfur cual and are pre ently operating at or ocar Circuit Court to declare the lease breached and soid. The the -ulfur dioxide emirion limits w hich will be effectise in companies answered the complaint which was con-olidated 2too. lleginning in PrG, certain coal-fueled generating with the suit described in the preenling paragraph. In units will recrise emis ion allowances (all of Con-umer ? November Pro, the Circuit Court di mis-ed leth of the ceul units will recch e allowances beginning in 20%. Ila-ed lawsuits on the ba-is of federal preemption. The State of on pn,jected emi--ion-from these unit. Con-umers expect-Michigan appealed this di-missal to the Court of Appeals to base exec - allowances which may be sold or sased for where the appeal i pending. future u e. Each year since 1989. Con umers and I)etruit Edi-on The Clear Air Act's pnni ion, abo require Consumers base complied with FEllC order by in.talling a seasonal to male capital expenditure-estimated to im S10 million for barrier net imm April to October at the Imlington plant -ite. in-tallation of continuou-emission monitonng sptems at The IIItC i-now considering whether the barrier net (along , affected units, and appnaimatel S10 inillion to in-tall a low 3 with other actmn-b Consumer. including contribution to ! nitrogen oxide bumer sptem at one coal-fired unit. It i not 3 state fish-stocking pn.grama wonld le a satisfactors germa-po+ible to e timate the cost of required m<xlifications at nent solution. other coabfired unit-until final nitmgen exide regulation. are i--ued by the EPA. Management befine-that ENVIRONMENTAL MATTERS Consumeri annual oimrating cost, will not le materially affected. Consumers i-a so-called -Potentially lic-pon-ible in Nm ember IW2. Con-umers. the Attor my General. Party" at sn eral sites Iring administered under Superfund. the INL and other state and federal officiab, signed a ettle-Along with Con-umer, there are nunrn u-soh ent poten-ment agreement to relicen-e 11 of Con-umer ' 13 h dn.elec-3 tially respon ible partm, with sub-tantial assets cooperatinF tric generating facilitics, which pmduce appnnimatel I 3 with regret to the indhidual sites. Con-umers Irlines that percem of Consumeri owned generating capacity. The it is unlikely that its liabihty at an3 of the known Superfund agreement. if apprmed by FEllC. will relicen-e the generat-sites,indisidually or in total, will hm e a material a<hcrse ing facilities thn. ugh December 2023. The current licen es effect on its financial po-ition or re-ults of eperations. are scheduled to expire in December PrG. The agwement in PPAL the 5 tate of Michigan pa,cd amendme nt to requires Consumen to make pay ment-and imestments, the Emironmentallle-pon-e Act. EffectheJuly lwl. thi* w hich could total S30 inillion mer the licen-e period for such law estahlished a state program similar to the federal thing-a- emironmental safeguanb and fi hers habitat Superfund law, though much broader in -cojr. Ender thi' imprmement. Management belin es that Con umer-would law, Consumers expect-that it will ultimately incur co-ts at a be pennitted to collect the co-ts related to the settlement number of. ites, irH luding some of the 23 site-that formerly agreement from it electric cu-tomer-under traditional regu-hou ed manufactured gas plant facilitie, nen tho-e m whic h lators policies. it ha a partial or no current ownership interest. It i3 egrcled that in most ca es. parties other than Con umers with cunent t CAPITAL EXPENDITURES or fonner owner-hip interest aill al-o be considered liable under the law and may be requin d to share in the costs of Con umer-currentl plans for capital expenditures. 3 any site imestigation-and n=nedial actions. There i, limited i including lease commitments hee Note 111. of $522 million knowledge of manufactured gas plant contamination at these j for lW3. SMO million for IW1 aml $5M million for 1995, sites at this tirne. Howner, Con-umers is initiating im e-ti-gations at three of these sites and ha established an internal PUBLic UTluTY task force that i-monitoring th..m assue. Ihe timing and HOLDING COMPANY ACT EXEMPTION extent of any further site imestigation and remedial actmns + CM5 Enerp i-mernpt from registration under will depend, among other things, on future site U age b3 Consumers or other ow ners. Therefore, the co-t-of specifie PEIICA. Ilowner.the Attorney General and the MMCG remedial action. by Consumer-for those site-are not hme asked the SEC to inole CM5 Energ6 status as an estimable at this time. Consumer-beline-npenditures for nerupt holding company and to require it to regi-ter under

CONSUMERS POWER 1*t ilCA. On April 13. lW2. the \\ll5C filed a -taternent with the 5EC reconunendmg that C\\l5 Energ3's t urrent Supplemental Cash Flow nemption be remted and a new nenq. tion he i--ued cornli-InfOrmat On tioned upon ornain reparting and operating respiirement. C\\ls Energy la-liese-it qualific-fear ari nerniiti<in. If it were ,,r i uria.~e-i f tlw Staten.cnt i.f (24 Eli ws allliiridy to lo-e it-current esemptiott. it wouhl heroine Inore heasily liquid inse-truent-with an original maturity of threr regulated by the 5EC: Con umers could ultimalt ly he forced month-or Irw are run-iderrd ra-h equis alrnt. Other to dne t either it-electric or ga-utihty hu-inew; arn! C\\ls ca-h [ low artisities and non-rash finauring artisitics for the Energy would he re-tricted from conducting hu-ine--c-that p ars ended I)ct ember 31 were: j are not functionally related to the conduct of its uldity I n M'"D' L hu-ine a-determined by the 5EC. C\\lp Energy t-oppodng }ggg ]<n g ]wg j thi reque-t and heliesr-it will Inaintairs it curre nt exemp-L.a*In trail art,on-s tion from registration under I l 11(.1. Intere-I paid inet of. ( amount rapiiahzedi sl76 $30" s2:2 Omen income iase paia a6 L u 2 In addition to the matter di-clo-ed in the-c note. Non-ca h tran-action-Con-umer und certain of it-sub-id:arie-are panie to Additional rapital certain law uits and admini-tratise pn.rceding hefore equipment lea cd 69 27 11 s ariou-coun-ami posermnental acencin ari ing from the A--umption of da ht 15 ordinan cour-e of hu-inn-inwh ing personal injun and IIcturn of \\lidland related a--et- (-ce %te IN W2p propeny damage. contractual matters ensinenmental i--or,. federal and -late ta\\n. rate. hern-ing arul other matters. Inrica-ed s alue of irne-t-The ultimate effect of the pn ceeding-discuwed in thi-ment in Enterprise ' note is not nperted to hase a material impact on the finan, prefened toi L rial statements. (-ee h te 16) 100 onsolitlated 5tatement of C: ash flow-at Ilcorndier d U Jointly Owned Utility C. Facilities a ~ rd.cabeh,m la Liimn-on urner rhare of operating espen-e-in jointly owned i rIri tric f acilitie-i included in the Con-olidated [ platernent-of Incorne. Con-umer-i- re-pon-dele for NI" "I F"' tis aleln. rn't $ b- ? --

6. S-prosiding it,-hare of financing for the joindy owned faedi.

Account-irreis able 30 64 (IN tic. Con-umer/ undisided owner-hip interest i 31 pen cut Arrrued res enue 91 7 01) I and 43.3 percent for the I.udington and Camphell l not 3 Insentone-M TIN plants, respectisely. Consumer al-o ha-s an ing om nerdop Account payable 21 (G 39 intere-ts in i ertain tran-mi--ion Ime. The follow ing table \\ccrued niund-M IN 3 indicate

• the nient of Consumer ' ins e-Iment in joindy Tat liefonn Art owned utility facilitin:

n fund re-ene b.) 23, (Ither current awet-and liabilities, nel 38 (IM Ih mnber 31 1992 UNI kn-current deferred Nr1 inse tinent ""'""""C' d'2) U" 9 ) Eudington $112 Sil2 $ 24 $121 8 (9) l Campbell l' nit 3 360 363 Tran-mis ion lines 33 36 L Accurunlatc<l elepreciation [ ladington 8 71 5 63 CampbcIl l' nit 3 199-INi Tran-mi.-ion lines 10 10 1 1 k..

1992 ANNUAL REPORT 15 Reportable Segments 16 Related-Party Transactions Tsegment information follows: he Con-olidated Statements of Income simw operating on-umer lu an ime-tment of $250 million in 10 resenue and net operating income h -cyment. Odwr -harc-of the paferred stin L of Enterpri-e an affdiate 3 company of Con-umer. Prior to a IW1 amemhnent to E.nterpri-t"-' kdIrles, it was to lias e redeciflf d on )UI) l, in st a ...n-IWI aml in rach of the nest fom years. Iwo shares of its pre-w r iwiniIm<nnbre31 1992; IW1 PrM fe rn d -to L held in Con-umers at a redemption price equal Depreciation depletion to $25 million per share. Becau-e of the amemhnent. the disiderni rate increa-ed and the first maalator3 redemption and amortization S 172 S 139 date became Augu-t 1. lW7 The a-set salue and other paid-Electric 'S 230 : (,a. .6 To e,7 in capital of Con-umers were incica-ed $100 million as a Other l rc~ ult of the amendment. In ad<htion. Con-umer ha an """"'""' '" "PPI"*""'"I) 3 "'iIIi"n shares of C \\1s Energ3 $ 307 $ 242 S 20t > conunon sto< L totaling S12 million at December 31. lW2. (Iperatirlg income tase-h a lesult of Ibe*t two ifH e-tment, btin,umer5 !ccriVed Elcrtric -S 20 S 43 S 89 dis idend-on affiliatcJ conunon and prefern,I stm L totaling Ga-36 a 32 S16 nullion in lW2. S13 million in IW1 and $11 milhon in Other (5) (2) l W o. $ 51 S 48 S 121 in %rch Pro. Con-umer 'sub idiary, SIGl. and Con umeri parent. C\\ls Energy. entered into an agreement identifiable a--et-where \\1Gl. rschanged its im e-tment in -rseral sub.idiarie-Electric ' ~ $3.812 $3.3 W S3.180 that behl \\1idland-related a-sets for C\\1S Debentures i--ued Ga-1,387' l.180 1.169 by C\\ls Energ3. Con-umer-recorded the ca>6ng on he s Independent p,wer CT15 Debenture a-income fnim contractual arrangements. pnuluctmn 235' 239 1.373 In t h-cend.cr IW1. the -ub-idiarie-were irturned to Abandoned \\lidland Con-umer and the CT15 Debenture were cancelled to im est ment 1JN1 comply with sarious regulator ami court order.. On July 27. Other ' 1,112 l.112 687 1441. Con-umers stopped reconhng income on the CN15 $6.596 S3.430 ST 700 Debentures when it became prohable the return wouhl be required. The return re-uited in a net after-tas lo-- of Capital npenditure

• appn,simate! 892 minion becau-c the lini,L udue of the sub-3 Electric

-S 327 S 213 $ 2D idiaries was lew than the C\\ls lichenturev hook salue. ba-bb b! b3 (;on-urner5 pun bd-e-a p artion o[its gd-frorn all af[di-Other 67 32 37 ate. NO\\lECO. The amounts of purebes for the 3rars '$ 480 $ 306 S an3 ended lW2. lWI and two were S3 milbon. S20 milhon and $22 million respectisel. In IW2 lW1 and IWO' 3 .- 1 oh..nong the stas _.. Unt un ine trate oran. s i_., nam.n ana Sx hn 6 dlb ud S12 mdhun for PP)2 arid IW1. n ;.crtiieln were ui, laded m ederon ar-e-

• W M+ W R

,,re %c h million, re-pertisely.of viertric generating capacity and

• Included capaal tem. 4of Pionnh.o I,o P"1 sr man..n f.o Pmt ond energy fnim affiliate-of Enterpri-c. Con-umers and its sub-Fil ndthon for Prat sidinies -old, stored an.] tran-ported natural pa-and

" ' included < apitalued um-rest n1 $ 1 melhon for P"1 Ei mdhon f ir l'n] pnnided other sersice to the \\1C\\ Partner-tup totaling and $3t> ndthon for Pm approsimately $11 rnilhon. S l 1 million and S 13 million for 1992.1991 and PNo, re-pectisely, l'or additional di-cus-sion of related-part3 tran-actions with the \\1CV Pannership 3 and the IT11.P. -cr Ltes 3 and 17. Other related-party tran-action am inunatenal. m,,

CONSUMERS POWER

• nnenue Inan G.n unier, total.,1 nii nnbn. $ mi noun.n und D22 U

buInnlarized Financial ra... r~ r~i -n . r.,-,n.u n i.-+, a i. e e r r. Uni ana Uno. ns nobn. su ndun.n aroi s uin...... n p..en..a3-lnfOrInation OI Sioniin ant o wnoee.maa, in.,n o.n an,n,. ~ Related Enero Sunnlier ' " " - - ' " " - " " - " " " - ' - + " " + " " b rr an.ei raiance 1. a-c nh the ie--ee. Ma runner 4, rob in.idmv. '"dd'""'1"'"'""""""d"P'""'""""""'*"'"3' b C%1 \\1alland ha-a 49 percent intere-! in the NICV Den nd.cr 31. Un2 and P"1. lea-e ohnganon-of S 171.dhon wen owe.1 ip, wlu. h was formed to con-truet and operate the

b. Ac ow ner trust of w hich i Ml.r i-th.- ~.le bene 6 man. E.M-th.hhnc '

Partner-h. c %1CV facility (*ce Note 3). Unde r tlic PP-\\ with the %1CV share of ihe naen.g ana pnne.pai r,nn,n to, ih, vn2 iea-, pa,,neni, Partner-hip. Con-umeri purcha-es of electricity from the wa-9a indhon and 512 ndbn. res,2nel. and for the r"1 ka-. 3 \\1CV facility execeded 10 percent of Con-umers' ptem Pd"""d* **' b4" ""U'on and $ ; noun.n. n-geon eh. The leu,. P">"'""" "' 8 3 3 ' " U '"" """'"~ "" '"" d"h' """ "d '"' "' "' capability in PN2. P.N1 and l'NO. Summari7ed fmancial De< end=-r 31, IW2 and l'NI. re-;-, in cly. of Ac ow n, r-ira-t wbo-e heri-mformation of the 51C.\\. Partnerrlu.p is show n below: ,n,. ian > FMu'. FMu"s 44 i n. ~%na h, me Mu r.iroin%.- h-ochpation. a et. and operaung nwnnes. I n l'"2 an<l ePR the c.nn-tru-t whose in ne6eian i 1 M1.P nni le d. Li paunent-of S Itet, nullu.n an ) $159 inilhon. re pe, incl. whn h ini laded $8 nolln n and 3 S1I ndlb..n pnni ipal and $20 nuih..n und f 97 nnUn.n intne-i. re pee-inely.on the MO Ilond h41 h MDC dunny pan of P"1 and la 3 STATEMENTS OF INCOME n.n unin then after. "'ab unnan.r, n.conied in,n.in. cia in the Ma ranno h,e in, lu.i-- g, y g j,,,,, i apaahied unen t. whic h e- != ing uniornml to eyw n, o,er the hic of 3 i enn. I ne.d Decend.n 31 1992 l'N] l'NO n irnegn,eni in the Mu ranner-her Operating retenue* !$ 488 S425 S356 Operating expen.es 315. _ _278 _ 231 Operating income 173: 117 12i Ot her expen-e. net (190) (1861 a 131li i Net lo-. S (17)' S 43 % $ 15) BALANCE SHEETS in M dhon-Dreend.n 31 1992 PN1 Aw* eta Current a -et "

$ 165 S 167 Proper 13, plant and equipment. net 2 124; 2.161 Other a -ets 147

141

$2,436 > S2.475 Liabilitie* and Partner ' Equity Current liabilities iS 189i S 177 fong-term debt and other non-eunent liabilitie *

2,189 2.223 Partneri equity" '

58 .a ? $2.436? $ ~ '_75 e m l ~

5 Rttut1 or INiwPtNDENI Pt m it A(( ot N1AN'is To Consumers Power Company: We base auditni the accompanying mn olidaini halance shee tenn debt and preferrni stock of CONSl' Melts l' owl:It CO\\1PANY (a Michigan corp ration and wholly on ned sub idian of C\\l

• Energy Corp. ration) and subsidiaries as of I)ecember 31,1992 and l<r>1, and the related con,olidaird statements of income, common siorkholderi equity, and cash Dows for each of the three scar-in ihr perhal ended l>ccendier 31.1992. These con-olidatnl financial statements are the respin ihility of the Companyi management. Our responsibility is to expn* an opinion on these

'ted binanckal %tatement* ba%ed upon oui andkl'. ('ortio i We conducted our audits in accordance with generally accepinl auditing standards. Tho,e standanl> require that we plan and pnform the audit to obtain rea onable a-surance about whether the consolidated financial statements are free of material mi,tatement. An audit include, examining. on a test basis, esidence supporting the amount. and di rlo ure in the con %olidated financial tatements. An audit also im ludes a c--ing the accounting principles u-ni and significant estimates made by management, as well as n aluating the merall con olidated financial statement pre entation. We beliese that our audit provide a reasonable ha is for our opinion. In our opinion, the consolidatni financial statements referred to alune present fairly, in all material re-pwt.. the financial position of Consumers Power Company and subsidiarie-as of Ilecember 31,1992 and l<r>l, and the re olt, of their operation-and their cash flows for each of the three 3 ears in the period endnl 1)cccmher 31. l<ri2 in confonnity with pencrally accepted accounting principles. As di-cu--ed in Ltc 6 to the con.olidaini financi d statements. effectisc January 1,1(712. the Company changnlit rnethod of accounting for incon.c taxes. A ili cussed in Lte 10 to the consdidated financial statements. effeelis c Januan 1. PP!2. the Company changed its melluml of accounting for potretire-ment benefil-other than pension- \\dilitionally, a-discu ed in hic 1 to the consolidated financial state-ments, the Company curetnl a qua-i-rcorganization on 1)cccmher 31.1992. Arthur Andersen & Co. 1)ctruit. Michigan. April 5. I'713.

CONSUMI'RS POWER Selected Financial Information in wbn. N cpi w Lied 18)')2 p #91 1900 [434 193", ()[w rating rewnur

• S2.989 92.910 S2ful

$2/ son S2.933 Net income do-4 * $(211) St2191 Si3!!2) 8332 S311 ht income do- > aber disidem!- on preferred stock $(255) Si20(h S(3931 8331 S239 Ca-h hom ojw rati.in- $157 $370 $176 8839 SUTO Capital espcnihtmes, eu inding capitali/cd interest and capital lea-es $410 S278 S303 8231 8199 Total a,-et-S6,5 % S3.986 97.700 SIL212 87.973 f ong-term drht. nrindinp rortent noturni~ $2.079 S t.316 S2.911 $3.036 S2.934 Non-current ponion of capital Ica-e-Sil8 $37 $56 $79 $62 Total preferred -tock S163 $103 $163 S187 S330 Preferred sim L with mandaron redemption $10 S15 Number of preferred shareholder-at 3 car-rnd 7.376 7.616 7.991 8.712 12.132 llook salue per common share at year-end iS) S14.64 S17.67 S20.46 S25.16 $20380 Heturn on awrage common equity (18.8)% ( l b.2 p% (20.519 17.2% 17.9% licturn on a-set-(0.2)% (0.6f4 (2.319 7.1 % 7.19 Number of emplo3ce, at year-end 9,679 9.006 9.3 16 9.717 OfA13 Electrie -tati-tie-Sales I'million-of kW h P' 31.601 31.813 31,713 31.3 m .50.611 Cn-tomer-ti M ini 1,500 1.192 1.175 1.-153 1.131 Awrage sah-rate 4c/ku lo " 5.82 5.73 5.89 a.aa a.19 Ga- -tat i-ties Sales and tran-portation dehwries theff 361 339 333 303 287 Customer i(WH4 }.402 : 1.382 1,362 1.338 1.313 h erage sale-rate (S!mefl S t.55 S t.38 S t.61 S1.75 $5.11 < t...n.nn poor p..mx1 an o.,nt-cn n.-na,nor n,mparath e pay.-.

• \\nniuni m 1*81 na lubl an ntraonlinan lo,- of 5 l-1 millh.n. edier tat Quarterly Financial Information in Elliom-Quarter-Ended lW2 (Unauditn!)

1991 <Enamlite& ' brch 31 June 30 SepL 30 ' Dec. 31 March 31 June 30 Sept. 30 llee. 31 Operating rewnue $918 $613 S577' :S821 8961 $629 $606 S711 Net operatine income $93 $13 $36 .$37: $85 872 $63 S10 Net income (loss) before ntraordinary item - $63 S23 $8 $(338) _ Si181) S58 Sil S(150) Extraordinan item, net c 5(14) Net income flo -) S63 $23 $8 S(338)) $(181: 558 S11 S(161) Disidends on preferred stock S3 $3 S3 - S2. $3 S3 $3 $2 Net income ilos-) after dis idends on preferred stock S60 S20 S5. S(3W)' Sil87) $35 S33 Sil66) 4*"nr fir:i. dant and f=,unh <paner, of Pni nort mAmanlan a ouwdo n.

• Arrmum-in PWI wce n+taica Lo nimpamihr purp..ws.

ut omm i i Certain serin, useil in the text anel financial statement

• are elefineel in low.

.418 4 TE Clea n.tir.1ct

El'.1 A--m iation of ilu ine--es Ach ocating Federal Clean Air A< t a-amended on l Emironnmntal Protection Agency Tariff Equit3 Nosenda r 15, lWO

,7g, Act til C11N Dehentures Financial Accounting 't ndoids floaid A statute which prohiluts MI5C resicw l CMS Energy debenture

• in tle princi-

' FEllC for 171/2 year-of apprmed capacity pai amount of $1.1 lyillion i+ued F Ew' thde charges paid to Qualihing I acilitie-l on March 12. lW m exchange for i the outstanding capital stwL of , Commirion i AU CMS Midland. MDC and MGL ! 131LP Admini-trathe 1.aw Judg" I l First Midland Limited Partnership ' CSIS Enerss 43II ! CMS Energ~[ Coq oration

GCil Alternathe Minimum Tax

! Ga Cost licemen 1 CSIS Iloidings Articles CMS Midland Itolding Company. a ! independent Cogenerators Anicles of Incoqw.ratior subsidian of MGL Ten small power and cogeneration dew ope s who igned Im Settit ment Attorney General C31$ Slidland The Michigan Attorney General CMS Midland, Inc., a sub idiarv of '"I * '""' "" " September 19'12 ~ l Ilucidoad

• M G,I A ramping method of computing Consumers n cmen of purchased power co-ts from i Con umers Power Company i " ' " * " " " '," ' "

electrie cu-tomers with lower reemen i g in earlier years and higher reemen in Court ofAppeals I l Kilowatt-hour later years, re-ulting in a present salue ; Michigan Coun of Appeals of en ts reemered equal to a con-tant I SIny 7. I991 Electric flate Order Detroit L,dison i price at a phen di-count rate MI5L. onler issued m. L,a-c No.1,.830 The Detrmt Edi on L,ompant on May 1941 hef D'Y11 llillion cubic feet l mcf Michigan Department of Natural 1 .Ibousand cub. feet ic Ilechtel itesourtes He< htel Power Cor;nration j 3ICr

DOL, Capacity Charge Order l IL 5. Department of Energy Midland Cogeneration \\.enture A May 7,1091. Michigan Coun of l

! 3ICU Ilonds Appeals order dealing with irues in Colleethel, senior secured lease oldi-3 The Dow t.hemical Company i MPSC L,a-e N.o.1,-PJi71, and other,

gation bond < and subordinated secured concerning among other things, the DS3I l lea-e obligation honds issued in con-amount of additional capacity needed Demand-side management l nection with the levraged-lease by Consumers, the applicable asoided i financing of the MCV i acility, and tax-1 capacitv charges and the allocation of EIII ewmpt PCRHs capacit3 n Consumers' ciertne miem ; Electric and inagnetic fields i

l SICTiacilitr Circuit Court E""rFY A A natural ga -fueled. combined cwle Ingham Count 3, Michigan. Circuit Enng3 Policy Act of IW2 ~ cogeneration facility operated by the Court Enterprises MCV Partnership CMS Enterpri-es Compan3, a sub-sidiary of CMS Energy

r-- Gl ow Am L SIC 1 Partnership Panhandle bfC Midland Cogeneration Venture 1.imited Panhandle Eastern Pipeline Company securities and Euhange Commis-ion l'artneohip PCRll SERP 3fCF Se,Jorlionds Piollutiori Control lles enue Bond 5upplememal Eweutise Itetirement Senior eemed lea-c obligation bond-Plan

1. 1. "*I"" U""

i-~ued in connection with the leser-The tru-teed, non-contributon, defined Settlernent Order aged-lea-e fino icing of the ML.\\

j;;;,

benefit pension plan of Con-umers M P3C onler issued March 31. l'N3 in MPSC Case No. l'-10127. L'-!M71 and PFH 31DC i others MEC Deselopment Corp., a sub-idian-E'"P"*"I I"' U""i * '"" Settlement Parties of MGL pcr' i The proponents of the llevised 3fgg Palisades Cenerating Company N t& mmt Pqi%d Cone m the Midland Group.1.id.. a sub-idian of pp,1 l MPSC staff and the Independent Consumer

• The Power Purcha e Agreement Copencrators between Consumers and the MCV Michigan Cas Storace 37g3 Panne dp with a Escar tenn cone i

Michigan Gas Storage Comnant, a sub-Statement of Financial Accounting 4dian of Con-umers rneneing in March IW dads PSC^R I SISTRtu ' Superfinnd I"n er upply Cost Herosen Million Briti-h thermal unit Comprehensh e Em ironmental P F h C.t Ile'P"n-e. Compensation and 1.iability y3fcg Michigan Municipal Cooperalise Group Public l tility llolding Company Act of Act P)35 i Trunkline SIPP.t PURP.4

1runkline b,a-Compant Michigan I,ublic i,ower Agenes 1

~ Public l tility Hegulaton Policies Act

MPSC, ofl978

i. Voluntary L.mploree Renefit

.4 uocintson Michigan Public Senice Commis ion Gunlifying facihty l A legal entity, established under guide-lines of the Internal Hewnue Code. MW A facility that pnduces electriciis or Megaw at t-steam and electric ity and ineets the through which the cornpany can l ownership and tet hnical requirements provide certain benefits for its employ-1 'NO~11EC'O of PL'HPA. Electrie utilitic. are ces and retirees NOMECO Oil & Ga-Co. a sub-idian i required to purcha-e the electric Wolrerine of Enterpri-es - capacits and energs made asailable by % oh erine I,ow er Supply Cooperath e NRC a Qualifying F,aed. ity at the pun-ha-ing Nuclear Hegulaton Commis-ion utility's amided co-t. Order 63(o { Revised Settlement Proposal Onters affecting interstate ga-l The request for apprmal of settlement ! proposal to rewoh c MCV co,1 reem en pipelines. including Orders 6364 and 63611 i-sued by the l'EHC in Un2. issues. PI'HPA issues and court remand as filed with the MPSC on known also a the Hestructuring Hule i July T. PM2 and amended on Polisades g,p,emy,7 g, png Palisades nuelcar plant. owned ley Consumers 6

Y SH AREHot DLR INFORM ATION L 1993 ANNUAL MEETING TRANSFER AGENT AND IlEGISTRAR, PREITRRED STOCK C onsumer* Power Compan3 % annual meeting will lu-i hehl at 1(h30 a.m. Easten: Da3light Sas ing* Time on l Consumers Power Company Friday May 21L lW3, at the Grand Manor at l'airlanc, 212 West Michigan Asenue l'Mxk)linbhard Drise,

Dearborn Mich. A notice of meeting,

l Jackson. Mich. 49201 proxy statement and proxy willIn mailed to sharehohlers in April lw3. The pn,mpt return of signed pnnies will he appreciated. ! TRUSTEE, FIRST MORTGAGE BONDS Chemical llank 150 West 33n! Street GENERAL OFFICES New Yod, N.Y. l'KNil 212 West Michigan Asenue Jaelson. Mich. 49201 l Telephone (517171:! -0550 TRUSTEE, SINKING FUND DEBENTURES l'nited States Trust Company of New York 15 Wall Street TIIE COMPANY y,,, ygg, y,y, p g g,3 Con-umers i, the principal sub-idian of CMS Energy Corporation. Consumers is Michigani largest public utility, Americai 13th-largest ime tor-imned electric company and TRANSFER AGENT AND PAYING AGENT, ses enth-largest US. gas distribution company. Consumers REGISTERED FIRST MORTGAGE BONDS prmides electricity and/or natural gas senice in 67 of the t41 j counties in Mit higani Imer Penin-ula and senes 6 million ~ Consumers Power Cornpany people, aluiut two-third-of Michigani residents. 212 % est Michigan Asenne Jackson. Mich 49201 1, STOCK LISTING i Con,umers' prefened stock iw listed on the New York Stock Exchange under the symbol CMS A, IL D,11 G ami 11. 1 i

Board of Directors William T. McCormick Jr.

18. Chainnan of the it. uni of Con-umci-and Chainnan of the lioan! and Chi. I Executig e Officer of CMS I nergy S. Kinnie Nnith Jr.

62. \\ ice Chainnan of the linani of Con-umer-and \\ ice Chairman of the lloani and General Coun ci of CMS Energy I rederiel W. !!uckman.

47, l're-ident and Chief Executisc Officer of Consumers John M. Deutrh*.

51. Institute Professor. Ma.-a hu-ett-In-titute of Technology. Cambridge, M a-s.

Victor J. En ling.

45. Vice Chainnan of the lioan! of Con umers ami l're-ident of CMS Encryy l

Ilichard M. Gillett.

69. lictin d Chainnan of the lloant. Old Kent I inancial Corp., Grand itapids.

Mich. Ead D. llolton 59 Pre.ident mni Chief Operating Officer, Meijer Inc., Grand Itapids, Mich. loi* A. l_und. Ph.D.

63. Pn,fe-sor, College of Iluman Ecolog3. Michigan State Unisersity, Ea-t I.anwing. Mich.

Frank 11. Merlotti.

66. Chainnan of the Eweentisc Committee. Sicelca-c Inc.. Grand Itapid,

j Mich. William U. Parfet.

46. Pnsident. The l'pjohn Company. Kalamami. Mich.

Percy A. Pierre.

51. Vice President for lie-carch and Graduate Nudies and Pnife sor of Electrical Enpincering, Michigan State I nis ersity. Ea-t I.ansing. Mich.

Thomas F. Itu-sell 6l1. Chainnan of the l'inance Conunittee. Federal-Mogul Corp., Detn.it, Mich. Ilohert D. Tuttle 67, Itetin J Chainnan of the floani. SPN Corp., Mu-Lepon. Mich. l Kenneth Whipple 511. Executne Vice President, Fon! Motor Company and Pre-ident, Ford l Financ ial Senice Group.

Dearhorn,

Mie h. I Officers i William T. McConnick Jr. t!!. Chairman of the lloani Frederic L W. liu< kman.

47. President and Chief Executise Officer S. Kinnie Smith Jr.

62. Vice Chainnan of the Itoard Victor J. Fry ling.

13. Vice Chainnan of the floani Mic hael G. Morris.

16. Executise \\ ice President and Chief Operating Officer Alan M. Wright.

47. Senior \\ ice Picsident. Chief Financial Officer and Trea-urer j

John W. Clark -

48. Senior Vice Pnsident, Connuunications

} Paul A. Elbert. 13, Senior \\ ice President.1:ncrgy Distribution David A. Mikeloni

11. Senior \\ ice President and General Coun-ci Kenneth C. Bottonari 41, \\ ice Per-ident. Infonnation Senices and Technology I

Dennis DaPra 50, Vice President and Contndler Carl L English

46. Vice Pre-ident.1:ncrgy 1)i-tribution Sen ices David P. Iloffman

18. Vice Pre-ident. Nut lear Operations David W. J<m.

40 Vice President Marketing f Thomas A. McNish 55, Secretan and A-si-tant Treasurer Roben J. Nicholson

53. Vice President. Fu -il and I1 dn> Operation

• 3 Hohert J. Odlevak,

59, Vice Pnsident. Gas Supply and Transmission llamilton M. Ih,hichami

56. Vice Pre-ident, llaman liesources ll.B.W. Sc hroeder.

46. Vice President, Gm enunental Affairs l

} David V. Voigt.. 57, Vice Pre ident,1:lectric Transmission l

• ltesignedfrom Inmrd in 1943 after hh s unfirmathm no I nderws retary of the t '.S. thejmrument ofIkfenw.

I b

@ POWERING Ilulk llate Consumers U.S. Postare Power PAID Consumers Power Company l l l l l l i Con urner* l'ower Company,212 West Michigan Au nue, Jackson Michigan 49201 ..}}