<PAGE>

                                                                   EXHIBIT 10.52


Michigan Electric Transmission Company, LLC
FERC Electric Rate Schedule No. 2
EXECUTION COPY

                 Amendment and Restatement of the April 1, 2001

                               OPERATING AGREEMENT

                                 BY AND BETWEEN

                     MICHIGAN ELECTRIC TRANSMISSION COMPANY

                                       AND

                            CONSUMERS ENERGY COMPANY

Issued By: Julie A. Morrow                                Effective: May 1, 2002
           Executive Vice President &
           Chief Operating Officer
Issued On: May 13, 2002

<PAGE>

Michigan Electric Transmission Company, LLC                 Original Sheet No. 1
FERC Electric Rate Schedule No. 2
EXECUTION COPY

                 Amendment and Restatement of the April 1, 2001
                               OPERATING AGREEMENT
                                 BY AND BETWEEN
                     MICHIGAN ELECTRIC TRANSMISSION COMPANY
                                       AND
                            CONSUMERS ENERGY COMPANY

     This Amendment and Restatement of the April 1, 2001 Operating Agreement
(the "Agreement") is made and entered into as of April 29, 2002 by and between
Michigan Electric Transmission Company ("MICHIGAN TRANSCO"), a Michigan
corporation, having its principal place of business at 540 Avis Drive, Suite H,
Ann Arbor, Michigan 48108, and Consumers Energy Company ("CONSUMERS"), a
Michigan corporation, having its principal place of business at 212 W Michigan
Avenue, Jackson, Michigan 49201. (Michigan Transco and Consumers may be referred
to individually as "PARTY" or collectively as the "PARTIES"). This Agreement
amends, restates and replaces the April 1, 2001 Operating Agreement between the
Parties, effective on the date indicated above.

     WHEREAS, Michigan Transco desires to engage in the transmission of electric
energy in interstate commerce and to exercise operational authority over the
Transmission System for the purpose of providing open access, non-discriminatory
transmission service to Consumers and all other eligible customers;

     WHEREAS, Michigan Transco also desires to provide open access,
non-discriminatory transmission service over certain facilities owned and
operated by Consumers with voltage ratings below 120 kV ("DISTRIBUTION
FACILITIES") that are used to serve certain wholesale customers and credit all
charges collected therefrom to Consumers; and

     NOW THEREFORE, in consideration of the mutual agreements and commitments
contained herein, Michigan Transco and Consumers agree as follows:

                             ARTICLE 1. DEFINITIONS

     1.1 The following terms shall have the meanings set forth below. Any term
used in this Agreement that is not defined herein shall have the meaning
customarily attributed to such term within the electric utility industry.

     "AGREEMENT" means this Operating Agreement By and Between Michigan Transco
and Consumers Energy Company, as it may be amended from time to time.

     "CONTROL AREA" means an electrical system bounded by interconnection
metering and telemetry. Generation within the Control Area is directed to
operate in a manner prescribed by guidelines established by ECAR and NERC and in
accordance with Good Utility Practice to (a) maintain scheduled interchange with
other Control Areas, (b) maintain the operating frequency and (c) provide
sufficient generating capacity to maintain operating reserves.

Issued By: Julie A. Morrow                                Effective: May 1, 2002
           Executive Vice President &
           Chief Operating Officer
Issued On: May 13, 2002

<PAGE>

Michigan Electric Transmission Company, LLC                 Original Sheet No. 2
FERC Electric Rate Schedule No. 2
EXECUTION COPY

     "CONTROL AREA OPERATOR" means the person(s) and/or entity(ies) responsible
for exercising operational control over the Transmission System.

     "ECAR" means the East Central Area Reliability council, its successors and
assigns.

     "FERC" means the Federal Energy Regulatory Commission or the successor
thereto.

     "GENERATION RESOURCES" means the facilities used for the production of
electric energy, which are owned and operated by Consumers and located within
Michigan Transco's Control Area available to meet the capacity and energy needs
of Consumers.

     "GOOD UTILITY PRACTICE" means any of the practices, methods, or acts
engaged in or approved by a significant portion of the electric utility industry
with respect to similar facilities during the relevant time period which, in
each case, in the exercise of reasonable judgment in light of the facts known or
that should have been known at the time the decision was made, could have been
expected to accomplish the desired result at a reasonable cost consistent with
good business practices, reliability, safety, law, regulation, environmental
protection, and expedition. Good Utility Practice are not intended to be limited
to the optimum practices, methods, or acts to the exclusion of all others, but
rather to delineate the acceptable practices, methods, or acts generally
accepted in the region.

     "MICHIGAN TRANSCO TRANSMISSION TARIFFS" means either the Open Access
Transmission Tariff or the Joint Open Access Transmission Tariff in which
Michigan Transco provides or will provide open access, non-discriminatory
transmission service, as amended from time to time, or any successor tariff on
file, or to be filed, with the FERC, as such may be amended from time to time.

     "OASIS STANDARDS OF CONDUCT" means the rules and regulations promulgated by
the FERC, 18 C.F.R. Part 37 (1999), as amended from time to time, requiring the
implementation of Standards of Conduct governing the transfer of information and
communications between public utilities' wholesale merchant and transmission
system operation functions, and that of their affiliates.

     "REGULATORY AUTHORITY" means any federal, state, local, or other
governmental, regulatory, or administrative agency having jurisdiction over the
subject matter of this Agreement.

     "TRANSMISSION CUSTOMER" means a transmission customer taking service under
the Michigan Transco Transmission Tariffs, any entity that is a party to a
transaction under the Michigan Transco Transmission Tariffs, including
Consumers, or any entity on whose behalf Michigan Transco is providing
transmission service.

     "TRANSMISSION SYSTEM" means transmission assets owned and operated by
Michigan Transco.

Issued By: Julie A. Morrow                                Effective: May 1, 2002
           Executive Vice President &
           Chief Operating Officer
Issued On: May 13, 2002

<PAGE>

Michigan Electric Transmission Company, LLC                 Original Sheet No. 3
FERC Electric Rate Schedule No. 2
EXECUTION COPY

                         ARTICLE 2. TERM AND TERMINATION

     2.1 This Agreement shall become effective when signed by the Parties.
Parties' corresponding obligations as set forth herein shall begin at 12:01 a.m.
(EPT) on April 29, 2002 ("EFFECTIVE DATE"). The expiration date of this
Agreement shall coincide with Article 2, Term, of the Easement Agreement.

     2.2 Any obligations incurred by the Parties under this Agreement to make
payments due, remit costs, or complete construction of designated facilities, as
agreed to prior to the termination hereof, shall survive the termination of this
Agreement.

                                   ARTICLE 3.
                   OBLIGATIONS, RIGHTS AND RESPONSIBILITIES OF
                     MICHIGAN ELECTRIC TRANSMISSION COMPANY

     3.1 Operation of Transmission System. Pursuant to the terms of this
Agreement, Michigan Transco shall be responsible for operating the Transmission
System in order to provide all Transmission Customers with safe, efficient,
reliable, and non-discriminatory transmission service pursuant to terms and
conditions set forth in the Michigan Transco Transmission Tariffs. As more fully
set forth in the Operating Protocols attached hereto as Appendix 1, such
operation shall be in accordance with Good Utility Practice and shall conform to
the applicable reliability requirements of NERC, ECAR or other regional
reliability councils, or any successor organizations, and all applicable
requirements of federal or state laws or Regulatory Authorities. As further
detailed in Appendix 1, Michigan Transco shall assume the following operational
responsibilities from Consumers:

          3.1.1 Administration and Maintenance of Michigan Transco Transmission
Tariffs. Michigan Transco shall be responsible for administering the Michigan
Transco Transmission Tariffs and for providing open access, non-discriminatory
transmission service to all Transmission Customers taking service under such
tariff and for maintaining the Michigan Transco Transmission Tariffs on file
with the FERC.

          3.1.2 Review and Approval of Requests for Transmission Service Under
the Michigan Transco Transmission Tariffs. Michigan Transco shall be responsible
for reviewing and approving, as appropriate, all requests for open access,
non-discriminatory transmission service under the Michigan Transco Transmission
Tariffs.

          3.1.3 Determination of Available Transmission Capacity. Michigan
Transco shall be responsible for calculating available transmission capacity
("ATC") for the Transmission System in accordance with the terms and conditions
set forth in the Michigan Transco Transmission Tariffs.

          3.1.4 Provision of Ancillary Services. Michigan Transco shall be
responsible for offering ancillary services, as required by the rules and
regulations of the FERC, to all Transmission Customers taking service under the
Michigan Transco Transmission Tariffs.

Issued By: Julie A. Morrow                                Effective: May 1, 2002
           Executive Vice President &
           Chief Operating Officer
Issued On: May 13, 2002

<PAGE>

Michigan Electric Transmission Company, LLC                 Original Sheet No. 4
FERC Electric Rate Schedule No. 2
EXECUTION COPY

Michigan Transco shall procure ancillary services on a non-preferential and
competitive basis from Consumers and from any third-party suppliers of such
services at FERC-approved rates.

          3.1.5 Administration of Open Access Same-Time Information System.
Michigan Transco shall assume responsibility for operating the open access
same-time information system ("OASIS") for the Transmission System.

          3.1.6 Maintenance and Operation Services. Michigan Transco shall be
responsible for maintenance and operation of the Transmission System and may
employ persons and enter into agreements as necessary to perform these services.
Michigan Transco may contract with Consumers to perform these services. Pursuant
to the terms of a separate services agreement, Consumers agrees to perform
maintenance and operation services for Michigan Transco, in accordance with Good
Utility Practice.

          3.1.7 Coordination of Maintenance Schedules. Michigan Transco shall be
responsible for establishing a maintenance schedule for all Transmission Assets
making up the Transmission System. Michigan Transco shall coordinate with
Consumers, as appropriate, both the scheduling of maintenance on all Generation
Resources connected to the Transmission System and the scheduling of maintenance
on Transmission Assets that could affect the operation of any Generation
Resources.

          3.1.8 Maintenance of Transmission System Security. Michigan Transco
shall be responsible for maintaining the security of the Transmission System and
shall monitor and coordinate voltage levels with neighboring control areas.

          3.1.9 Construction of New Transmission Assets. Michigan Transco shall
be responsible for the construction of new Transmission Assets where necessary
or desirable to provide transmission service over the Transmission System, or in
response to requests for transmission service under the Michigan Transco
Transmission Tariffs. Upon request from Consumers, Michigan Transco shall
construct necessary connection facilities to permit the interconnection of the
Transmission System with new Distribution Facilities constructed by Consumers.
Michigan Transco shall be responsible for acquiring all land, licenses, or
rights-or-way necessary for such construction. At Michigan Transco's expense,
Consumers shall use its eminent domain rights to the extent it legally can and
may, within the exercise of good business practice, to assist Michigan Transco
in the acquisition of land, licenses, or rights of way necessary for the
construction of new Transmission Assets. Michigan Transco may, in its reasonable
business judgment, contract with Consumers for design, construction, and related
real estate services. Pursuant to the terms of separate design, construction,
and real estate services agreements, Consumers agrees to design and construct
all new Transmission Assets for Michigan Transco as well as provide real estate
services.

          3.1.10 Access to Transmission System. During reasonable business hours
and under reasonable conditions, Michigan Transco shall, upon request, allow a
duly-authorized representative(s) of Consumers such access to the Transmission
System as is necessary for Consumers to perform its obligations under this
Agreement or to comply with the requirements

Issued By: Julie A. Morrow                                Effective: May 1, 2002
           Executive Vice President &
           Chief Operating Officer
Issued On: May 13, 2002

<PAGE>

Michigan Electric Transmission Company, LLC                 Original Sheet No. 5
FERC Electric Rate Schedule No. 2
EXECUTION COPY

of Regulatory Authorities. Any such access provided pursuant to this Section
3.1.10 shall be subject to the relevant rules and regulations set forth in the
OASIS Standards of Conduct.

          3.1.11 Providing Information to Consumers. Michigan Transco shall
provide such information to Consumers as is necessary for Consumers to perform
the obligations set forth in Article IV of this Agreement or any Grandfathered
Agreement, or to comply with the requirements of any Regulatory Authority. All
such information provided by Michigan Transco shall be submitted in accordance
with the relevant rules and regulations set forth in the OASIS Standards of
Conduct. Information identified as "confidential" shall be treated as
confidential to the extent permitted by law. Any information provided pursuant
to this Section 3.1.11 shall be subject to the relevant rules and regulations
set forth in the OASIS Standards of Conduct.

          3.1.12 Inspection and Auditing of Records. During reasonable business
hours and under reasonable conditions, Michigan Transco shall, upon request,
grant a duly-authorized representative(s) of Consumers and/or Regulatory
Authorities such access to Michigan Transco's books and records as is necessary
to verify compliance by Michigan Transco under this Agreement, and to audit and
verify transactions under this Agreement. Michigan Transco shall also comply
with all applicable reporting requirements of Regulatory Authorities having
jurisdiction over Michigan Transco with respect to the business aspects of its
operations, and shall maintain such accounting records and metering data as is
necessary to perform its obligations under this Agreement. The inspection and
auditing of Michigan Transco's books and records pursuant to this Section 3.1.12
shall be subject to the relevant rules and regulations of the OASIS Standards of
Conduct.

     3.2 Provision of Transmission Service over Distribution Facilities by
Michigan Transco. Michigan Transco shall provide open access, non-discriminatory
transmission service to certain wholesale customers over the Distribution
Facilities, as defined herein, pursuant to the terms of the Michigan Transco
Transmission Tariffs and shall credit all charges associated with the provision
of such services over the Distribution Facilities to Consumers.

     3.3 Metering. Consumers and Michigan Transco shall provide communications,
metering, and other facilities necessary for the metering and control of the
Transmission Assets. Michigan Transco shall be responsible for any expenses it
incurs for the installation, operation, and maintenance of Transmission Assets
or the Transmission System.

     3.4 Obligations as Control Area Operator. As of April 1, 2001, Michigan
Transco shall administer and perform the duties, as defined in this Section 3.4,
of Control Area Operator for the Transmission System and, at a minimum, shall be
obligated to:

          3.4.1 match, at all times, the power supply located within the Control
Area and power purchased from or sold to entities located outside of the Control
Area with the load located within the Control Area;

          3.4.2 maintain scheduled interchange with other Control Areas directly
connected with the Transmission System within the limits of Good Utility
Practice;

Issued By: Julie A. Morrow                                Effective: May 1, 2002
           Executive Vice President &
           Chief Operating Officer
Issued On: May 13, 2002

<PAGE>

Michigan Electric Transmission Company, LLC                 Original Sheet No. 6
FERC Electric Rate Schedule No. 2
EXECUTION COPY

          3.4.3 maintain system frequency within reasonable limits in accordance
with Good Utility Practice;

          3.4.4 procure from Consumers, or from other third-party entities, a
sufficient amount of ancillary services, as necessary, to maintain the operating
reserve requirement for the Consumers portion of the Control Area in accordance
with Good Utility Practice;

          3.4.5 provide operational and transaction data as necessary through
the ECAR OASIS or other OASIS facilities performing these functions on behalf of
the Control Area Operator.

     3.5 Grandfathered Transmission Agreements. Where Consumers is obligated to
provide transmission under agreements or tariffs which were executed or
effective prior to July 9, 1996 ("GRANDFATHERED AGREEMENTS"), Michigan Transco
and Consumers will execute a Network Integration Transmission Service ("NITS")
agreement under the Michigan Transco Transmission Tariffs to ensure that
Consumers' obligation to provide transmission service under the Grandfathered
Agreements is satisfied. Consumers will continue to bill customers served
pursuant to the Grandfathered Agreements in accordance with the rates, terms and
conditions set forth therein.

     3.6 Performance of Regulatory Obligations. Michigan Transco shall comply
with transmission operation and planning obligations of Consumers imposed by
federal or state laws or Regulatory Authorities, as of the effective date of
this Agreement, which can no longer be performed solely by Consumers following
transfer of ownership and control of their Transmission Facilities to Michigan
Transco, until such time as such obligations are changed or revised to relieve
Consumers or Michigan Transco in whole or in part of such obligations.

                                   ARTICLE 4.
                    OBLIGATIONS, RIGHTS AND RESPONSIBILITIES
                           OF CONSUMERS ENERGY COMPANY

     4.1 Duty to Cooperate with Michigan Transco. Consumers shall, to the
greatest extent practicable, cooperate with Michigan Transco as Michigan Transco
performs its duties as Control Area Operator, including providing reactive
supply and voltage control from generation sources or other ancillary services
and reducing load, when reasonably requested by Michigan Transco, in accordance
with the terms and conditions of the Michigan Transco Transmission Tariffs and
Good Utility Practice. Consumers shall not operate its Generation Resources or
Distribution Facilities in a manner which unduly interferes with the provision
of transmission service by Michigan Transco.

     4.2 Construction of New Distribution Facilities. Consumers shall, at the
request of Michigan Transco, plan and construct such Distribution Facilities
necessary to provide adequate and reliable transmission service to wholesale
customers served over the Distribution Facilities.

          4.2.1 Consumers shall obtain all required authorizations, permits,
licenses, or other regulatory approvals, including without limitation, siting
and environmental requirements

Issued By: Julie A. Morrow                                Effective: May 1, 2002
           Executive Vice President &
           Chief Operating Officer
Issued On: May 13, 2002

<PAGE>

Michigan Electric Transmission Company, LLC                 Original Sheet No. 7
FERC Electric Rate Schedule No. 2
EXECUTION COPY

as may be imposed by state, local, and federal laws and regulations, for all
facilities constructed by Consumers. Construction of new facilities shall be
performed in accordance with Good Utility Practice, industry standards, and any
requirements of Regulatory Authorities.

     4.3 Access to Distribution Facilities. During reasonable business hours and
under reasonable conditions, Consumers shall, upon request, allow a
duly-authorized representative(s) of Michigan Transco access to the Distribution
Facilities as is necessary for Michigan Transco to perform its obligations under
this Agreement, the Michigan Transco Transmission Tariffs, and any service
agreements thereunder, or to comply with the requirements of Regulatory
Authorities. Any such access provided pursuant to this Section 4.3 shall be
subject to the relevant rules and regulations set forth in the OASIS Standards
of Conduct.

     4.4 Providing Information to Michigan Transco. Consumers shall provide such
information to Michigan Transco as is necessary for Michigan Transco to perform
its obligations under this Agreement, the Michigan Transco Transmission Tariffs,
and any transmission service agreements thereunder, or to comply with the
requirements of Regulatory Authorities. Any such information provided pursuant
to this Section 4.4 shall be subject to the relevant rules and regulations
established pursuant to the OASIS Standards of Conduct.

     4.5 Inspection and Auditing of Records. During reasonable business hours
and under reasonable conditions, Consumers shall, upon request, allow a
duly-authorized representative(s) of Michigan Transco such access to books and
records as is necessary for Michigan Transco to perform its obligations under
this Agreement, the Michigan Transco Transmission Tariffs, and any service
agreements thereunder, or to comply with the requirements of Regulatory
Authorities, for purposes of auditing and verifying transactions under this
Agreement. Consumers shall comply with all applicable reporting requirements of
Regulatory Authorities having jurisdiction over Consumers with respect to the
business aspects of its operations and shall maintain such accounting records
and metering data as is necessary to perform its obligations under this
Agreement. Any such inspection and auditing of Consumers' books and records
conducted by Michigan Transco pursuant to this Section 4.5 shall be subject to
the relevant rules and regulations set forth in the OASIS Standards of Conduct.

     4.6 Dispatch and Scheduling Decisions. Notwithstanding any other provision
of this Agreement, Consumers shall be solely responsible for determining and
implementing dispatch and scheduling decisions [other than redispatch under the
Tariffs and that certain "Lake Erie Emergency Redispatch Agreement", as filed
with FERC on July 28, 2000 ("LEER")] with respect to its resources to meet its
supply obligations. Consumers shall also be responsible for dispatching its
resources to self-provide Ancillary Services for its own load. Consumers shall
also be responsible for dispatching its resources to provide Ancillary Services
and other services to (a) to third parties that purchase such services from
Consumers and (b) Michigan Transco which purchases such services from Consumers
for resale to Transmission Customers.

                        ARTICLE 5. ASSIGNMENT OF REVENUES

     Transmission revenues from all Grandfathered Agreements will be billed and
collected by Consumers. Michigan Transco will bill and collect all revenues for
open access transmission

Issued By: Julie A. Morrow                                Effective: May 1, 2002
           Executive Vice President &
           Chief Operating Officer
Issued On: May 13, 2002

<PAGE>

Michigan Electric Transmission Company, LLC                 Original Sheet No. 8
FERC Electric Rate Schedule No. 2
EXECUTION COPY

service agreements assigned by Consumers to Michigan Transco. The revenues
billed, collected, and received pursuant to open access transmission service
provided pursuant to the terms and conditions of the Michigan Transco
Transmission Tariffs shall be retained by Michigan Transco. Michigan Transco
shall credit to Consumers those charges billed and collected for the use of the
Distribution Facilities by wholesale customers taking transmission service under
Michigan Transco Transmission Tariffs. Michigan Transco shall also use its best
efforts to collect (to the extent allowed by FERC policy) from wholesale
customers taking transmission service under Michigan Transco Transmission
Tariffs for costs of Distribution Facilities constructed by Consumers pursuant
to Section 4.2 hereof, and shall credit to Consumers any collections therefor.

                                   ARTICLE 6.
                    OBLIGATIONS, RIGHTS AND RESPONSIBILITIES
                         OF THE ADMINISTRATIVE COMMITTEE

     6.1 Creation of Administrative Committee. The Parties hereto shall create
an Administrative Committee which shall consist of two members designated by
each party; provided however, that any third-party transferring ownership and/or
control over its FERC-jurisdictional transmission facilities to Michigan Transco
shall be granted the opportunity to designate two representatives to the
Administrative Committee.

     6.2 Meeting Dates. The Administrative Committee shall hold such meetings at
such times designated by the Committee, but at least once per calendar year.
Meetings of the Administrative Committee may also be held at any time upon the
request of a member of the Administrative Committee. Minutes of the
Administrative Committee meeting shall be prepared and maintained.

     6.3 Decisions. All decisions of the Administrative Committee shall be made
by unanimous vote of the members present or voting by proxy at the meeting at
which the vote is taken.

     6.4 Duties. The Administrative Committee shall have the following duties,
unless such duties are otherwise assigned by a vote of the Administrative
Committee to Michigan Transco or Consumers, in which case the so-assigned party
shall perform such duties. The Administrative Committee shall:

          6.4.1 Consider any matters in connection with the administration of
this agreement as may, from time-to-time, arise.

          6.4.2 Review and recommend additional duties and responsibilities for
Michigan Transco or Consumers consistent with FERC Order Nos. 888, 889 and 2000.

          6.4.3 Establish an Operating Committee and a Planning Committee and
other committees as necessary for the purpose of carrying out the day-to-day
administration of this Agreement including, but not limited to, the coordination
of generation and maintenance schedules, operating reserve monitoring,
transmission/distribution activity coordination, and

Issued By: Julie A. Morrow                                Effective: May 1, 2002
           Executive Vice President &
           Chief Operating Officer
Issued On: May 13, 2002

<PAGE>

Michigan Electric Transmission Company, LLC                 Original Sheet No. 9
FERC Electric Rate Schedule No. 2
EXECUTION COPY

transmission/distribution systems planning coordination. The specific duties of
the committees shall be set forth in related agreements between the parties.

          6.4.4 Provide coordination of other matters not specifically provided
herein which the Parties agree are necessary to operate the Transmission System
reliably and economically.

     6.5 Committee Expenses. Each Party shall pay the expenses of its
representative to the Administrative Committee.

                            ARTICLE 7. FORCE MAJEURE

     7.1 Force Majeure. A Party shall not be considered to be in default or
breach of this Agreement, and shall be excused from performance, or liability
for damages to the other Party, to the extent it shall be delayed in or
prevented from performing or carrying out any of the obligations or
responsibilities of this Agreement because of a Force Majeure Event. "FORCE
MAJEURE EVENT" means any occurrence beyond the reasonable control of a Party
which causes such Party to be delayed in or prevented from performing or
carrying out any of its obligations under this Agreement and which by the
exercise of due diligence in accordance with Good Utility Practice, that Party
is unable to prevent, avoid, mitigate, or overcome, including any of the
following: any act of God, labor disturbance, act of the public enemy, war,
insurrection, riot, fire, storm or flood, ice, explosion, breakage or accident
to machinery or equipment, order, regulation or restriction imposed by
governmental military or lawfully established civilian authorities, provided
that a Force Majeure Event shall not include lack of finances or change in
market conditions, and provided further that any failure by Michigan Transco to
obtain services for the Transmission System due to the failure of any supplier
or subcontractor of Michigan Transco to perform any obligation to Michigan
Transco (including Consumers as maintenance supplier) shall not constitute a
Force Majeure Event hereunder unless such subcontractor or supplier is unable to
perform for reasons that would constitute a "Force Majeure Event" hereunder.

     7.2 Procedure. Any Party claiming that a Force Majeure Event has occurred
shall (i) provide prompt written notice of such Force Majeure Event to the other
Party giving a detailed written explanation of the event and an estimate of its
expected duration and probable effect on the performance of that Party's
obligations hereunder; and (ii) use commercially reasonable efforts in
accordance with Good Utility Practice to mitigate the effect of the Force
Majeure Event on the other Party, except that settlement of any labor dispute
shall be in the sole judgment of the affected Party.

                               ARTICLE 8. DEFAULT

     Unless excused by a Force Majeure Event, or the other Party's Event of
Default, each of the following events shall be deemed to be an "EVENT OF
DEFAULT" hereunder: failure of either Party, in a material respect, to comply
with, observe, or perform any covenant, warranty, or obligation under this
Agreement, without limitation, and such failure is not cured or rectified within
thirty (30) days after receipt of written notice of such failure from the other
Party or such

Issued By: Julie A. Morrow                                Effective: May 1, 2002
           Executive Vice President &
           Chief Operating Officer
Issued On: May 13, 2002

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 10
FERC Electric Rate Schedule No. 2
EXECUTION COPY

longer period as may be reasonably required, provided that the defaulting Party
diligently attempts to cure the Event of Default.

                               ARTICLE 9. DISPUTES

     Any disagreement between Michigan Transco and Consumers as to their rights
and obligations under this Agreement shall first be addressed by the Parties. If
representatives of the Parties are unable in good faith to satisfactorily
resolve their disagreement, the Parties shall refer the matter to their
respective senior management. If, after using their best efforts to try to
resolve the dispute, senior management cannot resolve the dispute in thirty (30)
days, either Party may exercise any right or remedy available pursuant to this
Agreement.

                   ARTICLE 10. REPRESENTATIONS AND WARRANTIES

     10.1 Michigan Transco. Michigan Transco represents and warrants to
Consumers as follows:

          10.1.1 Organization. Michigan Transco is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Michigan
and Michigan Transco has the requisite corporate power and authority to carry on
its business as now being conducted.

          10.1.2 Authority Relative to this Agreement. Michigan Transco has the
requisite power and authority to execute and deliver this Agreement and, subject
to the procurement of applicable regulatory approvals, to carry out the actions
required of it by this Agreement. The execution and delivery of this Agreement
and the actions it contemplates have been duly and validly authorized by all
required corporate action. The Agreement has been duly and validly executed and
delivered by Michigan Transco and constitutes a valid and binding Agreement of
Michigan Transco.

          10.1.3 Regulatory Approval. Michigan Transco has obtained or will
obtain by the Closing Date any and all approvals of, and given notice to, any
public authority that is required for it to execute and deliver this Agreement.

          10.1.4 Compliance With Law. Michigan Transco represents and warrants
that it is not in violation of any applicable law, statute, order, rule, or
regulation promulgated or judgment entered by any Federal, state, or local
governmental authority, which violation would materially affect Michigan
Transco's performance of its obligations under this Agreement. Michigan Transco
represents and warrants that it will comply in all material respects with all
applicable laws, rules, regulations, codes, and standards of all Federal, state,
and local governmental agencies having jurisdiction over this Agreement, except
to the extent that a failure to so comply would not have a material adverse
effect on Michigan Transco's obligations hereunder.

     10.2 Consumers. Consumers represents and warrants to Michigan Transco as
follows:

Issued By: Julie A. Morrow                                Effective: May 1, 2002
           Executive Vice President &
           Chief Operating Officer
Issued On: May 13, 2002

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 11
FERC Electric Rate Schedule No. 2
EXECUTION COPY

          10.2.1 Organization. Consumers is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Michigan,
and has the requisite power and authority to carry on its business as is now
being conducted.

          10.2.2 Authority Relative to this Agreement. Consumers has the
requisite power and authority to execute and deliver this Agreement and, subject
to the procurement of applicable regulatory approvals, to carry out the actions
required of it by this Agreement. The execution and delivery of this Agreement
and the actions it contemplates have been duly and validly authorized by all
required corporate action. The Agreement has been duly and validly executed and
delivered by Consumers and constitutes a valid and binding Agreement of
Consumers.

          10.2.3 Regulatory Approval. Consumers has obtained or will obtain by
the Closing Date any and all approvals of, and given notice to, any public
authority that is required for it to execute and deliver this Agreement.

          10.2.4 Compliance With Law. Consumers represents and warrants that it
is not in violation of any applicable law, statute, order, rule, or regulation
promulgated or judgment entered by any Federal, state, or local governmental
authority, which violation would materially affect its performance of its
obligations under this Agreement. Consumers represents and warrants that it will
comply in all material respects with all applicable laws, rules, regulations,
codes, and standards of all Federal, state, and local governmental agencies
having jurisdiction over this Agreement, except to the extent that a failure so
to comply would not have a material adverse effect on its obligations hereunder.

     10.3 Effectiveness. The representations and warranties in Sections 13.1 and
13.2 shall continue in full force and effect for the term of this Agreement.

                                   ARTICLE 11.
                ASSIGNMENT OR OTHER CHANGE IN CORPORATE IDENTITY

     This Agreement and all of the provisions hereof shall be binding upon, and
inure to the benefit of the Parties and their respective successors and
permitted assigns, but assignment of any right, interest, or obligation under
this Agreement may not be made without the other Party's prior written consent,
which consent shall not be unreasonably withheld. Assignments to which there is
not consent may be voided by the non-assigning Party.

                            ARTICLE 12. MISCELLANEOUS

     12.1 Waiver. Except as otherwise provided in this Agreement, any failure of
a Party to comply with any obligation, covenant, agreement, or condition herein
may be waived by the Party entitled to the benefit thereof only by a written
instrument signed by the Party granting such waiver, but such waiver shall not
operate as a waiver of, or estoppel with respect to any subsequent failure of
the first Party to comply with such obligation, covenant, agreement, or
condition.

Issued By: Julie A. Morrow                                Effective: May 1, 2002
           Executive Vice President &
           Chief Operating Officer
Issued On: May 13, 2002

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 12
FERC Electric Rate Schedule No. 2
EXECUTION COPY

     12.2 Governing Law. This Agreement, and all rights, obligations, and
performances of the Parties hereunder, are subject to all applicable Federal and
state laws, and to all duly-promulgated orders, and other duly-authorized action
of governmental authorities having jurisdiction. When not in conflict with or
preempted by Federal law, this Agreement will be governed by and construed in
accordance with the laws of the State of Michigan, without giving effect to the
conflict of law principles thereof.

     12.3 Severability. If any of the provisions of this Agreement are held to
be unenforceable or invalid by any court or Regulatory Authority of competent
jurisdiction, the Parties shall, to the extent possible, negotiate an equitable
adjustment to the provisions of this Agreement with a view toward effecting the
purpose of this Agreement, and the validity and enforceability of the remaining
provisions hereof shall not be affected thereby.

     12.4 Amendment. If the applicable provisions relating to the implementation
of this Agreement are changed materially from the policies, methods, and
procedures contemplated herein, the Parties shall endeavor in good faith to make
conforming changes to this Agreement with the intent to fulfill the purposes of
this Agreement. Any amendment to this Agreement shall be in writing and signed
by both Parties.

     12.5 Further Assurances. The Parties hereto agree to promptly execute and
deliver, at the expense of the Party requesting such action, any and all other
and further instruments and documents which may be reasonably requested in order
to effectuate the transactions contemplated hereby, and shall carry out their
obligations under this Agreement.

     12.6 Third Party Agreements. This Agreement, including the appendices to
this Agreement, the Michigan Transco Transmission Tariffs, the Service
Agreements thereunder, and other agreements referenced herein, shall not be
construed, interpreted or applied in such a manner as to cause Consumers to be
in breach, anticipatory or otherwise, of any agreement between Consumers and one
or more third parties who are not Parties to this Agreement for the joint
ownership, operation, or maintenance of any electric facilities covered by this
Agreement, or the Michigan Transco Transmission Tariffs. Consumers shall discuss
with Michigan Transco any material conflict between such third-party joint
agreement and this Agreement, or the Michigan Transco Transmission Tariffs,
raised by a third party to such joint agreement, and shall act in good faith to
resolve such conflict in accordance with Good Utility Practice.

     12.7 No Third Party Beneficiaries. Nothing in this Agreement, express or
implied, is intended to confer on any person, other than the Parties, any rights
or remedies under or by reason of this Agreement.

     12.9 Confidentiality. All information regarding a Party (the "DISCLOSING
PARTY") that is furnished directly or indirectly to the other Party (the
"RECIPIENT") pursuant to this Agreement and marked "Confidential" shall be
deemed "CONFIDENTIAL INFORMATION". Notwithstanding the foregoing, Confidential
Information does not include information that (i) is rightfully received by
Recipient from a third party having an obligation of confidence to the
Disclosing Party, (ii) is or becomes in the public domain through no action on
Recipient's part in violation of this Agreement, (iii) is already known by
Recipient as of the date hereof, or (iv) is developed by

Issued By: Julie A. Morrow                                Effective: May 1, 2002
           Executive Vice President &
           Chief Operating Officer
Issued On: May 13, 2002

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 13
FERC Electric Rate Schedule No. 2
EXECUTION COPY

Recipient independent of any Confidential Information of the Disclosing Party.
Information that is specific as to certain data shall not be deemed to be in the
public domain merely because such information is embraced by more general
disclosure in the public domain.

          12.9.1 Recipient shall keep all Confidential Information strictly
confidential and not disclose any Confidential Information to any third party
for a period of two (2) years from the date the Confidential Information was
received by Recipient, except as otherwise provided herein.

          12.9.2 Recipient may disclose the Confidential Information to its
affiliates and its affiliates' respective directors, officers, employees,
consultants, advisors, and agents who need to know the Confidential Information
for the purpose of assisting Recipient with respect to its obligations under
this Agreement. Recipient shall inform all such parties, in advance, of the
confidential nature of the Confidential Information. Recipient shall cause such
parties to comply with the requirements of this Agreement and shall be
responsible for the actions, uses, and disclosures of all such parties.

          12.9.3 If Recipient becomes legally compelled or required to disclose
any of the Confidential Information (including, without limitation, pursuant to
the policies, methods, and procedures of the FERC, including the OASIS Standards
of Conduct, or other Regulatory Authority), Recipient will provide the
Disclosing Party with prompt written notice thereof so that the Disclosing Party
may seek a protective order or other appropriate remedy. Recipient will furnish
only that portion of the Confidential Information which its counsel considers
legally required, and Recipient will cooperate, at the Disclosing Party's
expense, with the Disclosing Party's counsel to enable the Disclosing Party to
obtain a protective order or other reliable assurance that confidential
treatment will be accorded the Confidential Information. It is further agreed
that, if, in the absence of a protective order, Recipient is nonetheless
required to disclose any Confidential Information, Recipient will furnish only
that portion of the Confidential Information which its counsel considers legally
required.

     12.10 Survival. The indemnification obligations of each Party under Article
7 shall become effective upon the occurrence of the Closing Date, and, for acts
and occurrences prior to expiration, termination, completion, suspension, or
cancellation of this Agreement shall continue in full force and effect
regardless of whether this Agreement expires, terminates, or is suspended,
completed, or canceled. The provisions of Articles 8, 9, and 10 shall survive
termination, expiration, cancellation, suspension, or completion of this
Agreement.

     12.11 Notices. All notices, requests, claims, demands, and other
communications hereunder shall be in writing and shall be deemed effective upon
receipt when delivered either by hand delivery, cable, telecopy (confirmed in
writing), or telex, or by mail (registered or certified, postage prepaid) to the
respective Parties as follows:

Issued By: Julie A. Morrow                                Effective: May 1, 2002
           Executive Vice President &
           Chief Operating Officer
Issued On: May 13, 2002

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 14
FERC Electric Rate Schedule No. 2
EXECUTION COPY

          If to Michigan Transco to:

          Michigan Electric Transmission Company
          540 Avis Drive, Suite H
          Ann Arbor, Michigan 48108
          Attention: Executive Vice President and Chief Operating Officer

          If to Consumers to:

          Consumers Energy Company
          212 W. Michigan Avenue
          Jackson, MI 49201
          Attention: Mr. William E. Garrity, Vice President

     Each Party may change the name and address of its contact person by giving
the other Party written notice of the change.

     12.12 Entire Agreement. This Agreement constitutes the entire understanding
between the Parties, and supersedes any and all previous understandings, oral or
written, which pertain to the subject matter contained herein.

     12.13 Counterparts. This Agreement may be executed in counterparts, all of
which will be considered one and the same Agreement and each of which will be
deemed an original.

Issued By: Julie A. Morrow                                Effective: May 1, 2002
           Executive Vice President &
           Chief Operating Officer
Issued On: May 13, 2002

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 15
FERC Electric Rate Schedule No. 2
EXECUTION COPY

     IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed as of the date and year first above written.

                                        MICHIGAN ELECTRIC TRANSMISSION COMPANY


                                        By: /s/ Dennis DaPra
                                            ------------------------------------
                                        Name: Dennis DaPra
                                              ----------------------------------
                                        Title: Vice President
                                               ---------------------------------


                                        CONSUMERS ENERGY COMPANY


                                        By: /s/ John Russell
                                            ------------------------------------
                                        Name: John Russell
                                              ----------------------------------
                                        Title: President
                                               ---------------------------------

Issued By: Julie A. Morrow                                Effective: May 1, 2002
           Executive Vice President &
           Chief Operating Officer
Issued On: May 13, 2002

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 16
FERC Electric Rate Schedule No. 2
EXECUTION COPY

                                   Appendix 1

                               Operating Protocols

Issued By: Julie A. Morrow                                Effective: May 1, 2002
           Executive Vice President &
           Chief Operating Officer
Issued On: May 13, 2002

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 17
FERC Electric Rate Schedule No. 2
EXECUTION COPY

                               OPERATING PROTOCOLS

     Pursuant to and in accordance with the Operating Agreement between Michigan
Electric Transmission Company ("MICHIGAN TRANSCO") and Consumers Energy Company
("CONSUMERS") entered into concurrently herewith, the Parties agree to the
following Operating Protocols. The Effective Date of this agreement is the same
as that described in the Operating Agreement ("Agreement"), and all capitalized
terms used herein shall have the same meaning ascribed thereto in the Operating
Agreement, unless otherwise indicated.

                                    ARTICLE 1
                         CONTROL OF TRANSMISSION SYSTEM

     1.1 Michigan Control Area Responsibilities. Agreements have been reached
with entities responsible for Control Area Operations as defined by the NERC to
calculate and operate to a single area control error for Michigan Transco's
Transmission System.

     1.2 Michigan Transco Operational Responsibilities. Michigan Transco shall
have operational control over the Transmission Assets that comprise the
Transmission System. Michigan Transco shall function as Control Area Operator.
On April 1, 2001, Consumers transferred operational control to Michigan Transco
in a manner consistent with Good Utility Practice.

          1.2.1 Michigan Transco shall periodically review whether the
Transmission Assets under its operational control constitute all of the
facilities necessary to provide reliable, non-discriminatory transmission
service as contemplated under the Operating Agreement and the Michigan Transco
Transmission Tariffs.

          1.2.2 Michigan Transco shall, in consultation with Consumers, develop,
and revise from time-to-time as appropriate, operating procedures for its
exercise of operational control over the Transmission System (hereinafter
"Operating Procedures"). The Operating Procedures shall be provided to Consumers
and, except to the extent determined necessary for emergency or security
reasons, such procedures shall be made available to the public. Michigan Transco
shall comply with its Operating Procedures in exercising its operational control
over the facilities described above.

          1.2.3 Michigan Transco shall operate the Transmission System in such a
way as to preserve the rights of Consumers' existing open access Transmission
Customers and transmission customers taking service under Grandfathered
Agreements.

          1.2.4 Michigan Transco shall be responsible for coordinating the
operation of the Transmission System with Consumers, NERC, ECAR, and any other
applicable regional reliability councils. Michigan Transco may join such
regional reliability councils as appropriate.

          1.2.5 Michigan Transco shall comply with any transmission operating
obligations imposed by federal or state law or Regulatory Authorities which can
no longer be

Issued By: Julie A. Morrow                                Effective: May 1, 2002
           Executive Vice President &
           Chief Operating Officer
Issued On: May 13, 2002

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 18
FERC Electric Rate Schedule No. 2
EXECUTION COPY

performed solely by Consumers following transfer of ownership and operational
control of the Transmission System to Michigan Transco, until such obligations
are revised or changed.

     1.3 Operational Responsibilities of Consumers. Consumers shall own and
maintain its Distribution Facilities in accordance with Good Utility Practice,
and shall comply with the reasonable requests of Michigan Transco with respect
to such operation and maintenance issued in compliance with these Operating
Procedures.

                                    ARTICLE 2
                DETERMINATION OF AVAILABLE TRANSMISSION CAPACITY
                           AND TRANSMISSION SCHEDULING

     2.1 Determination of Available Transmission Capacity. Michigan Transco
shall determine the ATC consistent with the terms of the Michigan Transco
Transmission Tariffs.

          2.1.1 Michigan Transco shall review all data received from other
control areas, independent transmission system operators, regional reliability
councils, or other entities that impact ATC calculations.

          2.1.2 Michigan Transco shall share data with other control areas,
independent transmission system operators, regional reliability councils, or
other entities with whom data must be exchanged, as requested, in order to
determine ATC.

          2.1.3 Michigan Transco shall determine the capacity, rating, control
settings, and contingency analysis parameters for all Transmission Assets used
to calculate ATC.

     2.2 Transmission Service Requests. Michigan Transco shall receive and
process all transmission service requests in accordance with the Michigan
Transco Transmission Tariffs.

          2.2.1 Michigan Transco shall be responsible for conducting all System
Impact Studies associated with a request for transmission service. To the extent
that a request for transmission service under the Michigan Transco Transmission
Tariffs will or may have an adverse affect on Consumers' ability to safely and
reliably serve its transmission customers pursuant to the terms of the
Grandfathered Agreements, Michigan Transco shall coordinate its System Impact
Study analysis with Consumers as follows:

               2.2.1.1 Michigan Transco shall provide sufficient information to
representatives of Consumers to allow them to model load consequences of the
requested service on Distribution Facilities.

               2.2.1.2 Michigan Transco shall coordinate with Consumers
representatives when processing requests for open access, non-discriminatory
transmission service over Distribution Facilities pursuant the terms of the
Michigan Transco Transmission Tariffs.

Issued By: Julie A. Morrow                                Effective: May 1, 2002
           Executive Vice President &
           Chief Operating Officer
Issued On: May 13, 2002

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 19
FERC Electric Rate Schedule No. 2
EXECUTION COPY

               2.2.1.3 Michigan Transco shall consult with Consumers with
respect to the construction of new Transmission Assets, or the expansion of
existing Transmission Assets, which affects or may affect the Distribution
Facilities.

               2.2.1.4 Upon completion of any required System Impact Studies,
Michigan Transco shall be responsible for making the final determination as to
the amount of firm and non-firm transmission capacity that is available under
the Michigan Transco Transmission Tariffs and for resolving requests for
transmission service in accordance with the terms of the Michigan Transco
Transmission Tariffs.

          2.2.2 To the extent that there is not adequate transmission capability
to satisfy a transmission request, Michigan Transco shall relieve or facilitate
the relief of the transmission constraint consistent with Good Utility Practice
and the terms of the Michigan Transco Transmission Tariffs.

          2.2.3 Michigan Transco shall document all requests for transmission
under the Michigan Transco Transmission Tariffs, the disposition of such
requests, and any supporting data required to support the decision with respect
to such requests.

     2.3 Implementation of Transmission Service Transactions. Michigan Transco
shall process and implement all requests for transmission service made under the
Michigan Transco Transmission Tariffs, as follows:

          2.3.1 Michigan Transco shall schedule and curtail transmission service
in accordance with the terms of Michigan Transco Transmission Tariffs.

          2.3.2 Michigan Transco shall, in consultation with Consumers, develop,
and from time-to-time amend, as necessary, scheduling protocols ("Scheduling
Procedures"). The Scheduling Procedures shall not conflict with the terms of the
Michigan Transco Transmission Tariffs or requirements of any applicable
Regulatory Authorities. All scheduling shall be performed in accordance with the
Scheduling Procedures.

          2.3.3 Michigan Transco shall operate its Control Area to maintain load
and supply balance. In so doing, Michigan Transco shall comply with the
scheduling instructions issued pursuant to the Scheduling Procedures.

          2.3.4 In performing its scheduling functions, Michigan Transco shall
ensure that the Transmission System is operated in compliance with applicable
NERC, ECAR or other regional reliability council or successor organizations'
reliability requirements, and all other applicable operating reliability
criteria.

          2.3.5 Michigan Transco shall perform all inadvertent flow accounting
for its control area and shall coordinate the performance of such accounting
with other control areas.

Issued By: Julie A. Morrow                                Effective: May 1, 2002
           Executive Vice President &
           Chief Operating Officer
Issued On: May 13, 2002

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 20
FERC Electric Rate Schedule No. 2
EXECUTION COPY

                                    ARTICLE 3
             MICHIGAN TRANSCO'S OBLIGATIONS PURSUANT TO THE MICHIGAN
                          TRANSCO TRANSMISSION TARIFFS

     3.1 Michigan Transco shall be solely responsible for administering the
Michigan Transco Transmission Tariffs.

     3.2 Michigan Transco shall negotiate as appropriate to develop reciprocal
service, equitable tariff application, compensation principles, and any related
arrangements.

     3.3 Michigan Transco shall credit to Consumers those charges billed and
collected for the use of the Distribution Facilities by wholesale customers
taking transmission service under Michigan Transco Transmission Tariffs.

                                    ARTICLE 4
                       SECURITY OF THE TRANSMISSION SYSTEM

     4.1 Obligations of Michigan Transco to Maintain the Security of the
Transmission System. Michigan Transco shall be responsible for the security and
reliability of the Transmission System. In addition, Michigan Transco shall be
responsible for operating its control area in a secure and reliable manner. As
Control Area Operator, Michigan Transco, shall exercise security monitoring and
emergency response functions, as described in more detail below.

     4.2 Security Monitoring.

          4.2.1 Michigan Transco shall perform load-flow and stability studies
of the Transmission System to identify and address security problems.

          4.2.2 Michigan Transco shall monitor its control area for system
security. It shall be responsible for identifying and addressing local security
problems.

          4.2.3 Michigan Transco shall exchange necessary security information
with other control areas, independent transmission system operators, ECAR, and
any other applicable regional reliability councils consistent with NERC (or
successor organizations) and regional requirements, and the OASIS Standards of
Conduct.

          4.2.4 Consumers shall continuously provide Michigan Transco with all
data required to assess the security of the Transmission System consistent with
NERC (or successor organizations), ECAR, and any other applicable regional
requirements, and OASIS Standards of Conduct.

     4.3 Emergency Response. Michigan Transco shall work with Consumers, other
security coordinators, NERC, ECAR, and other applicable regional councils to
develop regional security plans and emergency operating procedures.

Issued By: Julie A. Morrow                                Effective: May 1, 2002
           Executive Vice President &
           Chief Operating Officer
Issued On: May 13, 2002

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 21
FERC Electric Rate Schedule No. 2
EXECUTION COPY

          4.3.1 Michigan Transco shall, in coordination with Consumers, other
security coordinators, NERC, ECAR, or other applicable regional reliability
councils, develop, and from time-to-time update, procedures for responding to
emergencies (hereinafter the "Emergency Procedures"). Such Emergency Procedures
shall include procedures for responding to specified critical contingencies.

          4.3.2 Michigan Transco shall continuously analyze issues that may
require the initiation of emergency response actions. Such analysis may be made
at Michigan Transco's initiative, or at the request of Consumers and/or other
Transmission Customers, NERC, regional reliability councils, security
coordinators, or other system operators. The Emergency Procedures shall be
amended to include any changes or additions resulting from such analysis.

          4.3.3 Michigan Transco shall direct the response to any emergency in
the Transmission System pursuant to the Emergency Procedures. Consumers and
other Transmission Customers shall carry out the required emergency procedures
as directed by Michigan Transco. Michigan Transco will alert Consumers and other
Transmission Customers to the possibility of load shedding and will provide as
much advance notice as possible of the need to shed firm load.

                                    ARTICLE 5
                               ANCILLARY SERVICES

     Pursuant to Section 3.1.4 of the Operating Agreement, Michigan Transco
shall be obligated to offer ancillary services, as required by the applicable
rules and regulations of the FERC, to all Transmission Customers taking service
under the Michigan Transco Transmission Tariffs. Michigan Transco shall procure
such ancillary services on a non-preferential and competitive basis from
Consumers and from any third-party suppliers of such services at FERC-approved
rates.

                                    ARTICLE 6
              TRANSMISSION, DISTRIBUTION AND GENERATION MAINTENANCE

     6.1 Planned Transmission Maintenance. Michigan Transco is responsible for
reviewing, establishing, and updating schedules for all planned maintenance of
the Transmission System. Michigan Transco shall establish its planned
transmission maintenance schedules for a minimum of a rolling one (1) year
period, which shall be updated monthly.

          6.1.1 Michigan Transco shall determine if, and to the extent which,
such planned transmission maintenance affects transmission service, ATC,
ancillary services, the security of the Transmission System, Consumers
distribution service and any other relevant effects. This determination shall
include appropriate analytical detail. As part of its review process, Michigan
Transco shall identify planned transmission maintenance schedules that limit
ATC, and opportunities and associated costs for rescheduling planned maintenance
to enhance ATC. If Michigan Transco reschedules maintenance at Consumers
request,

Issued By: Julie A. Morrow                                Effective: May 1, 2002
           Executive Vice President &
           Chief Operating Officer
Issued On: May 13, 2002

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 22
FERC Electric Rate Schedule No. 2
EXECUTION COPY

Michigan Transco shall be compensated for additional costs associated with
rescheduling such planned maintenance pursuant to procedures jointly agreed to
by Consumers and Michigan Transco.

          6.1.2 Michigan Transco will coordinate planned outages of the
Transmission System with Consumers. Consumers shall inform Michigan Transco of
all customer-owned equipment outages that could impact loading on the
Transmission System.

          6.1.3 In developing its transmission maintenance schedule, Michigan
Transco will comply with all applicable reliability standards, including, but
not limited to, the current maintenance practices of Consumers, will meet
Consumers' requirements for access to the Transmission System, and will endeavor
to minimize transmission congestion.

     6.2 Unplanned and Emergency Transmission Maintenance. Michigan Transco
shall coordinate unplanned transmission maintenance with Consumers to assure
that reliability of the Transmission System and Consumers distribution system is
maintained. For emergency conditions which are likely to result in significant
disruption of service or damage to Generation Resources, the Transmission System
or Distribution Facilities, or are likely to endanger life, property, or the
environment, Consumers (to the extent responsible for performing said
maintenance) shall notify Michigan Transco of such emergency maintenance. Prior
approval by Michigan Transco for such emergency transmission maintenance is not
required.

     6.3 Generation Maintenance. Consumers shall coordinate the maintenance of
Generation Resources with Michigan Transco to the extent such generation
maintenance affects the capability or reliability of the Transmission System as
follows:

          6.3.1 Consumers shall submit its planned generating unit maintenance
schedules to Michigan Transco annually for a two (2) year period, updated to
include changes.

          6.3.2 Michigan Transco shall analyze planned generating unit
maintenance schedules to determine the effect on Consumers (and other
Transmission Customers), ATC, ancillary services, the security of the
Transmission System, identification of must-run units, and any other relevant
effects. Michigan Transco shall inform Consumers if its generation maintenance
schedule is expected to have an impact on the security of the Transmission
System.

          6.3.3 As part of its review process, Michigan Transco shall identify
Generation Resource maintenance schedules that limit ATC and shall recommend
opportunities for rescheduling planned maintenance to enhance ATC. If Consumers
reschedules maintenance at Michigan Transco's request, Consumers shall be
compensated for additional costs associated with rescheduling such planned
maintenance pursuant to procedures adopted by Michigan Transco, and applied on a
non-discriminatory basis to all similarly situated generation owners located
within Michigan Transco's Control Area.

Issued By: Julie A. Morrow                                Effective: May 1, 2002
           Executive Vice President &
           Chief Operating Officer
Issued On: May 13, 2002

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 23
FERC Electric Rate Schedule No. 2
EXECUTION COPY

          6.3.4 With respect to all Generating Resources connected to the
Transmission System, Michigan Transco will enter into interconnection agreements
and, if necessary, must-run agreements which define coordinated operations and
such other operating requirements as are necessary to ensure the safe and
reliable operation of such Generation Resources with the Transmission System.

     6.4 Unplanned Generation Maintenance. Consumers shall notify Michigan
Transco promptly in the event of an unplanned outage of the Generation
Resources, including partial forced outages. Consumers will coordinate unplanned
generation maintenance with Michigan Transco to ensure that the reliability of
the Transmission System is maintained. For emergency conditions which are likely
to result in significant disruption of service or damage to Generation
Resources, the Transmission System, or Distribution Facilities, or are likely to
endanger life, property, or the environment, Consumers shall notify Michigan
Transco of the emergency generation maintenance. Prior approval for emergency
generation maintenance is not required.

Michigan Electric Transmission          Consumers Energy Company
Company


By:                                     By:
    ---------------------------------       ------------------------------------
Its:                                    Its:
     --------------------------------        -----------------------------------

Issued By: Julie A. Morrow                                Effective: May 1, 2002
           Executive Vice President &
           Chief Operating Officer
Issued On: May 13, 2002