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ELECTRIC RATE CASE U-15645*

On November 14, 2008, Consumers Energy filed an application with the Michigan Public Service Commission seeking an increase in its electric generation and distribution rates based on a 2009 test year. The request seeks authority to recover new investment in system reliability, environmental compliance and technology enhancements. These investments are part of the Company’s Growing Forward strategy which calls for investing more than $6 billion in utility operations over the next five years. The filing also requests sales and uncollectibles tracker mechanisms. The proposed overall rate of return is based on an 11.0% authorized return on equity. This is the first Consumers Energy rate case to be filed under the regulatory framework established in new energy laws, which allows for self-implementation 6 months after filing. If approved, the request would increase customer rates by an average of 6%. The $214 million request is detailed below.


Item	$ Millions		Explanation
1. O&M	$	50	General inflation: $21 System reliability, uncollectibles, environmental compliance and technology: $29

2. Rate of Return		17	Higher return on equity (11.00% vs. 10.70%): $11 Other capitalization/costs: $6

3. Rate Base		76	Net Plant (distribution reliability, generation reliability, environmental compliance, technology): $56 Working Capital: $20

4. Book Depreciation		14	Related to new investment

5. Property Taxes		9	Related to new investment

6. Gross Margin		43	Primarily due to customer mix and sales decline, 2009 sales forecast 36.2 GWh

7. Other		5	General Taxes, Income Taxes, AFUDC, and Other


8. Total	$	214


Ratemaking	Existing			As Filed						After-Tax
Capital Structure %	(U-15245)			Percent of Total			Annual Cost			Weighted Costs
Long Term Debt		41.55	%		44.51	%		5.85	%		2.60	%
Short Term Debt		0.81			0.77			5.99			0.05
Preferred Stock		0.50			0.47			4.46			0.02
Common Equity		41.75			40.88	⁽¹⁾		11.00			4.50
Deferred FIT		14.65			12.73			0.00			0.00
JDITC/Other		0.74			0.64						0.05

		100.00	%		100.00	%					7.22	%⁽²⁾


Rate Base and Return	Existing
Percentage	(U-15245)			As Filed
Rate Base	$5.53 billion			$6.27 billion
Return on Rate Base		6.93	%		7.22	%
Return on Equity		10.70	%		11.00	%


⁽¹⁾		Equivalent to 47.61% on a financial basis.

⁽²⁾		Equivalent to 10.12% pre-tax basis.

ELECTRIC RATE CASE SCHEDULE


Staff & Intervenors File Testimony		April 27, 2009
Rebuttal Testimony		May 18, 2009
Motions to Strike Testimony		May 29, 2009
Replies to Motions to Strike		June 4, 2009
Cross of all Witnesses		June 8-19, 2009
Initial Briefs		July 9, 2009
Reply Briefs		July 23, 2009
Proposal for Decision		September 2, 2009 (target)
Decision		By November 14, 2009


*		Electric Rate Case U-15645 can be accessed at the Michigan Public Service Commission’s website.

http://efile.mpsc.cis.state.mi.us/efile/electric.html

GAS RATE CASE U-15506

On December 23, 2008, the Michigan Public Service Commission (MPSC) approved a settlement agreement that was filed by Consumers Energy and other interested parties in Consumers gas rate case U-15506. The settlement provides for additional annual revenues of $22.4 million reflecting a return on equity of 10.55%. Consumers Energy has agreed that it will not file a new gas general rate case prior to May 1, 2009.

The MPSC also approved a partial settlement agreement regarding depreciation rates submitted in Case No. U-15629. The agreement will reduce the Company’s annual depreciation expense by $19.6 million based on account balances as of December 31, 2007. The agreed upon depreciation rates are temporary and will be in effect until the Commission issues a final order in this case.

A typical residential customer is expected to see an increase of approximately 80¢, or less than 1% in their average monthly bill.


*		Gas Rate Case U-15506 can be accessed at the Michigan Public Service Commission’s website.

http://efile.mpsc.cis.state.mi.us/efile/electric.html