<PAGE>  1

                             ARTHUR ANDERSEN LLP


                  Report of Independent Public Accountants





To CMS Energy Corporation:

We have audited the accompanying balance sheets of CONSUMERS GAS GROUP
(representing a business unit of Consumers Power Company ("Consumers") and
its wholly-owned subsidiary, Michigan Gas Storage Company) as of December
31, 1995 and 1994, and the related statements of income, common
stockholders' equity, and cash flows for each of the three years in the
period ended December 31, 1995.  These financial statements are the
responsibility of the management of CMS Energy Corporation, the parent of
Consumers.  Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement.  An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation.  We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Consumers Gas Group as
of December 31, 1995 and 1994, and the results of its operations and its
cash flows for each of the three years in the period ended December 31,
1995 in conformity with generally accepted accounting principles.


                                           ARTHUR ANDERSEN LLP      
        
Detroit, Michigan,
   January 26, 1996.

<PAGE>
<PAGE>  2

                             Consumers Gas Group
                    Management's Discussion and Analysis


In 1995, CMS Energy issued a total of 7.62 million shares of Class G
Common Stock.  This new class of common stock reflects the separate
performance of the gas distribution, storage and transportation businesses
conducted by Consumers and Michigan Gas Storage (collectively, Consumers
Gas Group).  Accordingly, this MD&A should be read along with the MD&A in
the 1995 Form 10-K of CMS Energy.

CMS Energy is the parent holding company of Consumers and CMS Enterprises
Company.  Consumers, a combination electric and gas utility company
serving the Lower Peninsula of Michigan, is the principal subsidiary of
CMS Energy.  For further information regarding the businesses of
CMS Energy, including the nature and issuance of the Class G Common Stock,
see the MD&A of CMS Energy included and incorporated by reference herein.


Earnings

Net income for the Consumers Gas Group for 1995 totaled $62 million,
compared with $53 million for 1994.  The increase in 1995 net income
reflects higher gas deliveries and the reversal of losses previously
recorded for gas contingencies.  Partially offsetting these increases were
higher depreciation and operation expenses.


Cash Position, Financing and Investing

Consumers Gas Group's cash requirements are met by its operating and
financing activities.  Consumers Gas Group's cash from operations is
derived mainly from Consumers' sale and transportation of natural gas. 
Cash from operations for 1995 increased $27 million from 1994 primarily
due to improved sales of gas.  Consumers Gas Group primarily uses this
operating cash to maintain its gas utility transmission and distribution
systems and retire portions of its long-term debt and pay dividends.

Financing Activities:  Cash flows from financing activities in 1995
decreased $28 million from 1994, reflecting no new stock or debt issuances
during 1995.

Investing Activities:  Net cash used in financing activities decreased $2
million from 1994.  Capital expenditures for the Consumers Gas Group,
including assets placed under capital lease (see Note 12), totaled $126
million for 1995 compared with $134 million for 1994 and $158 million for
1993.

Financing and Investing Outlook:  CMS Energy estimates that capital
expenditures for the Consumers Gas Group, including new lease commitments,
will total $339 million over the next three years.

                                                             In Millions
Years Ended December 31                        1996       1997      1998

  Gas Utility (a)                              $122       $107      $102
  Michigan Gas Storage                            2          3         3
                                               ----       ----      ----
                                               $124       $110      $105
                                               ====       ====      ====

(a) Includes a portion of anticipated capital expenditures common to both
utility businesses.

The Consumers Gas Group expects that cash from operations and the ability
to access debt markets will provide necessary working capital and
liquidity to fund future capital expenditures, required debt payments and
other cash needs in the foreseeable future.  

Consumers has an agreement permitting the sales of certain accounts
receivable for up to $500 million.  At December 31, 1995, receivables sold
totaled $295 million.  Consumers Gas Group's attributed portion of such
receivables sold totaled $137 million.

For further information, see CMS Energy's MD&A included and incorporated
by reference herein.


Results of Operations

For Consumers Gas Group's results of operations, see "Gas Utility Results
of Operations" in CMS Energy's MD&A included and incorporated by reference
herein.


Gas Issues

For Consumers Gas Group's discussion of Gas Rates, GCR Matters and
Environmental Matters, see "Gas Utility Issues" in CMS Energy's MD&A
included and incorporated by reference herein.


Outlook

For Consumers Gas Group's outlook discussion, see "Gas Utility Outlook" in
CMS Energy's MD&A included and incorporated by reference herein.


Other

For information regarding the effect of new accounting standards, see
"Other" in CMS Energy's MD&A included and incorporated by reference
herein.

<PAGE>
<PAGE>  4

<TABLE>

Statements of Income                                                                        Consumers Gas Group

<CAPTION>

                                                                                                   In Millions,
                                                                                       Except Per Share Amounts

Years Ended December 31                                                         1995         1994         1993 
<S>                                                                           <C>          <C>          <C>

Operating Revenue                                                             $1,195       $1,151       $1,160 
                                                                              -------      -------      -------
Operating Expenses     Operation
                          Cost of gas sold                                       671          662          678 
                          Other                                                  197          185          171 
                                                                              -------      -------      -------
                            Total operation                                      868          847          849 
                       Maintenance                                                39           39           38 
                       Depreciation, depletion and amortization                   83           76           73 
                       General taxes                                              54           54           54 
                                                                              -------      -------      -------
                            Total operating expenses                           1,044        1,016        1,014 
                                                                              -------      -------      -------
Pretax Operating Income                                                          151          135          146 

Income Taxes                                                                      48           41           39 
                                                                              -------      -------      -------
Net Operating Income                                                             103           94          107 
                                                                              -------      -------      -------

Other Income           Other income taxes, net                                     -            -            1 
(Deductions)           Other, net                                                  -           (2)          (3)
                                                                              -------      -------      -------
                            Total other deductions                                 -           (2)          (2) 
                                                                              -------      -------      -------

Fixed Charges          Interest on long-term debt                                 30           29           32 
                       Other interest                                              6            5            6 
                       Capitalized interest                                       (1)           -           (1)
                       Preferred dividends                                         6            5            2 
                                                                              -------      -------      -------
                            Net fixed charges                                     41           39           39 
                                                                              -------      -------      -------
Net Income                                                                    $   62       $   53       $   66 
                                                                              =======      =======      =======

Net Income Attributable to CMS Energy Shareholders
 through Retained Interest                                                    $   59       $   53       $   66 
                                                                              =======      =======      =======

Net Income Attributable to Class G Shareholders                               $    3            -            - 
                                                                              =======      =======      =======

Average Class G Common Shares Outstanding                                          8            -            - 
                                                                              =======      =======      =======         
                                                                                                    
Earnings Per Average Class G Common Share                                     $  .38            -            - 
                                                                              =======      =======      =======

Dividends Declared Per Class G Common Share                                   $  .56            -            - 
                                                                              =======      =======      =======

<FN>

The accompanying notes are an integral part of these statements.

</TABLE>
<PAGE>
<PAGE>  5

<TABLE>

Statements of Cash Flows                                                                   Consumers Gas Group

<CAPTION>

                                                                                                   In Millions

Years Ended December 31                                                              1995      1994      1993 
<S>                                                                                 <C>       <C>       <C>   

Cash Flows From        Net income                                                   $  62     $  53     $  66 
Operating Activities     Adjustments to reconcile net income to net cash
                           provided by operating activities
                             Depreciation, depletion and amortization                  83        76        73 
                             Capital lease and other amortization                       5         4         5 
                             Deferred income taxes and investment tax credit           13         4         4 
                             Other                                                      1         1         2 
                             Changes in other assets and liabilities (Note 12)         16        15       (67)
                                                                                    ------    ------    ------
                               Net cash provided by operating activities              180       153        83 
                                                                                    ------    ------    ------

Cash Flows From        Capital expenditures (excludes assets placed 
Investing Activities     capital lease) (Note 12)                                    (124)     (129)     (153)
                       Cost to retire property, net                                   (10)       (8)       (6)
                       Other                                                            2         3         - 
                                                                                    ------    ------    ------
                               Net cash used in investing activities                 (132)     (134)     (159)
                                                                                    ------    ------    ------

Cash Flows From        Payment of common stock dividends                              (58)      (46)      (47)
Financing Activities   Retirement of bonds and other long-term debt                    (6)      (31)     (125)
                       Payment of capital lease obligations                            (5)       (4)       (5)
                       Repayment of bank loans                                         (2)     (106)        - 
                       Contribution from CMS Energy stockholders                       18        22         - 
                       Increase in notes payable, net                                   6        16        83 
                       Proceeds from bank loans                                         -        88         3 
                       Proceeds from preferred stock                                    -        42         - 
                       Proceeds from bonds and other long-term debt                     -         -       158 
                                                                                    ------    ------    ------
                               Net cash provided by (used in)
                                 financing activities                                 (47)      (19)       67 
                                                                                    ------    ------    ------

Net Increase (Decrease) in Cash and Temporary Cash Investments                          1         -        (9)

                       Cash and temporary cash investments
                               Beginning of year                                        4         4        13 
                                                                                    ------    ------    ------
                               End of year                                          $   5     $   4     $   4 
                                                                                    ======    ======    ======

<FN>

The accompanying notes are an integral part of these statements.

</TABLE>
<PAGE>
<PAGE>  6

<TABLE>

Balance Sheets                                                                          Consumers Gas Group 

<CAPTION>

ASSETS                                                                                          In Millions 

December 31                                                                                  1995      1994 
<S>                                                                                        <C>       <C>

Plant (At Cost)         Plant                                                              $2,169    $2,064 
                        Less accumulated depreciation, depletion and amortization           1,179     1,117 
                                                                                           ------    ------ 
                                                                                              990       947 
                        Construction work-in-progress                                          55        47 
                                                                                           ------    ------ 
                                                                                            1,045       994 
                                                                                           ------    ------ 




Current Assets          Cash and temporary cash investments at cost,
                          which approximates market                                             5         4 
                        Accounts receivable and accrued revenue, less allowances
                          of $2 in 1995 and 1994 (Note 5)                                      99        51 
                        Inventories at average cost
                          Gas in underground storage                                          184       235 
                          Materials and supplies                                               10         9 
                        Trunkline settlement                                                   30        30 
                        Deferred income taxes (Note 4)                                          9        16 
                        Prepayments and other                                                  49        48 
                                                                                           ------    ------ 
                                                                                              386       393
                                                                                           ------    ------




Non-current Assets      Postretirement benefits (Note 9)                                      161       158
                        Trunkline settlement                                                   25        55
                        Deferred income taxes (Note 4)                                         14         3
                        Other                                                                  59        70
                                                                                           ------    ------
                                                                                              259       286
                                                                                           ------    ------

Total Assets                                                                               $1,690    $1,673
                                                                                           ======    ======


</TABLE>
<PAGE>
<PAGE>  7

<TABLE>

                                                                                        Consumers Gas Group 

<CAPTION>

STOCKHOLDERS' INVESTMENT AND LIABILITIES                                                        In Millions 

December 31                                                                                  1995      1994 
<S>                                                                                        <C>       <C>

Capitalization          Common stockholders' equity
(Note 6)                  Common stock                                                     $  184    $  184 
                          Paid-in-capital                                                     125       107 
                          Retained earnings since December 31, 1992                            30        26 
                                                                                           ------    ------

                                                                                              339       317 
                        Preferred stock                                                        78        78 
                        Long-term debt                                                        411       426 
                        Non-current portion of capital leases                                  20        18 
                                                                                           ------    ------
                                                                                              848       839 
                                                                                           ------    ------

Current Liabilities     Current portion of long-term debt and capital leases                   23        13 
                        Notes payable                                                         105        99 
                        Accounts payable                                                       79        68 
                        Accrued taxes                                                          66        55 
                        Trunkline settlement                                                   30        30 
                        Accrued refunds                                                        20        20 
                        Accrued interest                                                        7         8 
                        Other                                                                  52        68 
                                                                                           ------    ------ 
                                                                                              382       361
                                                                                           ------    ------

Non-current             Postretirement benefits (Note 9)                                      175       172 
Liabilities             Regulatory liabilities for income taxes, net (Notes 4 and 13)         162       144 
                        Deferred investment tax credit                                         28        30 
                        Trunkline settlement                                                   25        55 
                        Other                                                                  70        72 
                                                                                           ------    ------ 
                                                                                              460       473
                                                                                           ------    ------

                        Commitments and Contingencies (Notes 3, 10 and 11)

Total Stockholders' Investment and Liabilities                                             $1,690    $1,673
                                                                                           ======    ======

<FN>

The accompanying notes are an integral part of these statements.

</TABLE>
<PAGE>
<PAGE>  8

<TABLE>

Statements of Common Stockholders' Equity                                                   Consumers Gas Group

<CAPTION>

                                                                                                    In Millions

                                                                       Other                  
                                                     Common          Paid-in          Retained                 
                                                      Stock          Capital          Earnings           Total 
<S>                                                    <C>              <C>               <C>             <C>  

Balance at January 1, 1993 (a)                         $184             $ 85              $  -            $269 

     Net income                                                                             66              66 
     Common stock dividends declared                                                       (47)            (47)
                                                       ----             ----              ----            ---- 
Balance at December 31, 1993 (a)                        184               85                19             288 

     Net income                                                                             53              53 
     Common stock dividends declared                                                       (46)            (46)
     CMS Energy stockholders' contribution                                22                                22 
                                                       ----             ----              ----            ---- 
Balance at December 31, 1994 (a)                        184              107                26             317 

     Net income                                                                             62              62 
     Common stock dividends declared                                                       (58)            (58)
     CMS Energy stockholders' contribution                                18                                18 
                                                       ----             ----              ----            ---- 
Balance at December 31, 1995 (a)                       $184             $125              $ 30            $339 
                                                       ====             ====              ====            ==== 

<FN>

(a) Number of shares of Consumers' common stock outstanding was 84,108,789.  Common stock allocated to the
    Consumers Gas Group is consistent with the allocation method discussed in Note 6.

The accompanying notes are an integral part of these statements.

</TABLE>
<PAGE>
<PAGE>  9

                             Consumers Gas Group
                        Notes to Financial Statements


1:   Corporate Structure

CMS Energy is the parent holding company of Consumers and Enterprises. 
Consumers, a combination electric and gas utility company serving the
Lower Peninsula of Michigan, is the principal subsidiary of CMS Energy. 
For further information regarding the business of CMS Energy, see the
Notes to the Consolidated Financial Statements of CMS Energy included and
incorporated by reference herein.

In 1995, CMS Energy issued a total of 7.62 million shares of Class G
Common Stock.  This new class of common stock reflects the separate
performance of the gas distribution, storage and transportation businesses
conducted by Consumers and Michigan Gas Storage (collectively, Consumers
Gas Group).  For further information regarding the nature and issuance of
the Class G Common Stock, see Note 8 to the Consolidated Financial
Statements of CMS Energy included and incorporated by reference herein.

These financial statements and their related notes should be read along
with the financial statements and notes contained in the 1995 Form 10-K of
CMS Energy that includes the Report of Independent Public Accountants,
included and incorporated by reference herein.


2:   Summary of Significant Accounting Policies and Other Matters

Basis of Presentation:  Consumers is a regulated utility. Accordingly, the
majority of the accounting allocation policies described within these
notes have a long-standing basis and have historically been used in
proceedings conducted before the MPSC.  The financial statements for the
Consumers Gas Group have been prepared based upon consistent methods that
management believes are reasonable and appropriate to reflect its
financial position, results of operations and cash flows. Where
appropriate, the financial statements reflect the assets, liabilities,
revenues and expenses directly related to the Consumers Gas Group.
However, in instances where common accounts (containing both electric and
gas activities) were not readily attributable to a single business
segment, management allocated to the Consumers Gas Group's financial
statements based on certain measures of business activities, such as gas
revenues, salaries, other operation and maintenance expenditures, number
of gas customers in relationship to total utility customers and/or
functional use surveys. Management believes the attributions are
reasonable.

Although the financial statements of Consumers Gas Group separately report
the assets, liabilities and stockholders' equity, legal title to such
assets and the responsibility for such liabilities are not separately
identifiable to a specific class of common stock.  Therefore, the
creditors of CMS Energy are unaffected by the implementation of the
Consumers Gas Group, because all assets of the corporation remain
available to satisfy all liabilities. The holders of CMS Energy Common
Stock and the Class G Common Stock will be subject to all risks associated
with investments in CMS Energy. Holders of Class G Common Stock have no
direct rights in the equity or assets of Consumers Gas Group, but rather
have rights in the equity and assets of CMS Energy.

The financial statements of the Consumers Gas Group incorporate Consumers'
natural gas utility business and the related business of Michigan Gas
Storage.  The Consumers Gas Group and the remaining business segments of
CMS Energy comprise all of the accounts included in the Consolidated
Financial Statements of CMS Energy.

The financial statements of Consumers Gas Group were prepared in
accordance with generally accepted accounting principles on a consistent
basis and include the use of management's estimates.  Any future changes
in accounting policy not mandated by appropriate authorities must be, in
management's opinion, preferable to the policy in place and must be
disclosed in accordance with generally accepted accounting principles.

For presentation purposes, all material transactions between companies
within the Consumers Gas Group have been eliminated.

Earnings Per Share and Dividends:  Earnings per share, for year ended
December 31, 1995, reflect the performance of the Consumers Gas Group
since the initial issuance of the Class G Common Stock during the third
quarter of 1995.  The Class G Common Stock participates in earnings and
dividends from the issue date.  The earnings (loss) attributable to such
common stock and the related amounts per share are computed by considering
the weighted average number of common shares outstanding. 

The earnings (loss) attributable to outstanding Class G Common Stock are
equal to Consumers Gas Group's net income (loss) multiplied by a fraction,
the numerator is the weighted average number of Outstanding Shares during
the period and the denominator represents the weighted average number of
Outstanding Shares and Retained Interest Shares during the period.  The
earnings attributable to Class G Common Stock on a per share basis, for
the year ended December 31, 1995, are based on 23.45 percent of the
earnings of the Consumers Gas Group since the initial issuance.

Earnings per share are omitted from the statements of income, for the
years ended December 31, 1994 and 1993, since the Class G Common Stock was
not part of the equity structure of CMS Energy.  For purpose of analysis,
following are pro forma data for the years ended December 31, 1995 and
1994 which give effect to the issuance and sale of 7.52 million shares of
Class G Common Stock (representing 23.50 percent of the equity
attributable to the Consumers Gas Group) on January 1, 1994.

                                  In Millions, Except Per Share Amounts
                                               Pro Forma      Pro Forma
Years Ended December 31                             1995           1994
-----------------------                            -----          -----
Consumers Gas Group Net Income                     $  62          $  53

Net Income attributable to CMS Energy
 Common Stock through Retained Interest            $  47          $  41

Net Income attributable to outstanding 
 Class G Common Stock                              $  15          $  12

Average shares outstanding
 of Class G Common Stock                           7.536          7.520

Earnings per share attributable to 
 outstanding Class G Common Stock                  $1.93          $1.66

Holders of Class G Common Stock have no direct rights in the equity or
assets of the Consumers Gas Group, but rather have rights in the equity
and assets of CMS Energy as a whole.  In the sole discretion of the Board
of Directors, dividends may be paid exclusively to the holders of Class G
Common Stock, exclusively to the holders of CMS Energy Common Stock, or to
the holders of both classes in equal or unequal amounts.  Dividends on the
Class G Common Stock are paid at the discretion of the Board of Directors
based primarily upon the earnings and financial condition of the Consumers
Gas Group, and to a lesser extent, CMS Energy as a whole.  It is the Board
of Directors' current intention that the declaration or payment of
dividends with respect to the Class G Common Stock will not be reduced,
suspended or eliminated as a result of factors arising out of or relating
to the electric utility business or the non-utility businesses of
CMS Energy unless such factors also require, in the Board of Directors'
sole discretion, the omission of the declaration or reduction in payment
of dividends on both the CMS Energy Common Stock and the Class G Common
Stock.

The portion of Consumers' common dividends attributed to the Consumers Gas
Group, for periods prior to the July 1995 issuance of the Class G Common
Stock, have been reflected in the financial statements.  These dividend
amounts were allocated based on the ratio of the Consumers Gas Group's net
income to Consumers' consolidated net income after dividends on preferred
stock.  This ratio was then applied to Consumers' total dividend payments
for these periods.  Dividends declared on the Class G Common Stock
following the issuance are also reflected in the financial statements.  In
July and October 1995, the Board of Directors declared quarterly dividends
of $.28 per share ($1.12 per share on an annual basis) on Class G Common
Stock.

Related Party Transactions:  The Consumers Gas Group sold, stored and
transported natural gas and provided other services to the MCV Partnership
totaling approximately $13 million for 1995, $13 million for 1994 and $14
million for 1993.  Consumers Gas Group purchases a portion of its gas from
an affiliate, CMS NOMECO.  The amounts of purchases for the years ended
December 31, 1995, 1994 and 1993 totaled $19 million, $1 million and $3
million, respectively.

Other:  For significant accounting policies regarding Consumers Gas
Group's gas inventory, maintenance, depreciation and depletion, revenue
and fuel costs, and utility regulation, as well as the effect of new
accounting standards, see Note 2 to the Consolidated Financial Statements
of CMS Energy included and incorporated by reference herein.

For significant accounting policies regarding income taxes, see Note 4;
for pensions and other postretirement benefits, see Note 9; and for cash
equivalents, see Note 12.


3:   Rate Matters

For information regarding rate matters directly affecting the Consumers
Gas Group, see the "Gas Rates" and "GCR Matters" discussions in Note 4 to
the Consolidated Financial Statements of CMS Energy included and
incorporated by reference herein.


4:   Income Taxes

The Consumers Gas Group is included in the consolidated federal income tax
return filed by CMS Energy (see Note 5 to the Consolidated Financial
Statements of CMS Energy).  The financial statement provision and actual
cash tax payments have been reflected in the Consumers Gas Group's
financial statements in accordance with CMS Energy's tax allocation
policy. The financial statement amounts reflect management's estimate of
the separate taxable income of the segment, the effect of deferred tax
accounting for temporary differences that arise, the amortization of ITC
over the life of the related property included within the Consumers Gas
Group and any AMT credit carryforwards that can be carried forward
indefinitely to reduce regular tax liabilities in future periods related
to the Consumers Gas Group. Tax settlements at Consumers Gas Group are
consistent with settlements of CMS Energy's consolidated returns and are
generally settled in the year, or in the year following the year in which
such amounts are accrued.

The significant components of income tax expense (benefit) for the
Consumers Gas Group consisted of:

                                                            In Millions
Years Ended December 31               1995          1994           1993
                                                                       
Current federal income taxes           $34           $37            $34
Deferred income taxes                   16             6              6
Deferred ITC, net                       (2)           (2)            (2)
                                      ----          ----           ----
                                       $48           $41            $38
                                      ====          ====           ====

Operating                              $48           $41            $39  
Other                                    -             -             (1)
                                      ----          ----           ----
                                       $48           $41            $38
                                      ====          ====           ====

The principal components of deferred tax assets (liabilities) recognized
in the balance sheet for the Consumers Gas Group are as follows:  

                                                            In Millions
December 31                                         1995           1994

Property                                            $(54)          $(54)
Postretirement benefits (Note 9)                     (59)           (58)
Employee benefit obligations (includes 
 postretirement benefits of $59
 and $56) (Note 9)                                    70             68
Regulatory liability for income taxes                 57             50
Other                                                  9             13
                                                   -----          -----
                                                    $ 23           $ 19
                                                   =====          =====

Gross deferred tax liabilities                     $(227)         $(235)
Gross deferred tax assets                            250            254
                                                   -----          -----
                                                    $ 23           $ 19
                                                   =====          =====

The actual income tax expense for Consumers Gas Group differs from the
amount computed by applying the statutory federal tax rate to income
before income taxes as follows:

                                                            In Millions
Years Ended December 31                     1995       1994        1993

Net income before preferred dividends       $ 68       $ 58        $ 68
Income tax expense                            48         41          38
                                           -----      -----       -----
                                             116         99         106
Statutory federal income tax rate          X 35%      X 35%       X 35%
                                           -----      -----       -----
Expected income tax expense                   41         35          37
Increase (decrease) in taxes from:
 Differences in book and tax
  depreciation not previously deferred         9          8           7
 ITC amortization                             (2)        (2)         (2)
Other, net                                     -          -          (4)
                                           -----      -----       -----
                                             $48        $41         $38
                                           =====      =====       =====

5:   Short-Term Financings

Consumers' short-term financings are discussed in Note 6 to the
Consolidated Financial Statements of CMS Energy included and incorporated
by reference herein.

Consumers generally manages its short-term financings on a centralized
consolidated basis. The portion of receivables sold attributable to the
Consumers Gas Group at December 31, 1995 and 1994, is estimated by
management to be $137 million and $111 million, respectively.  Accounts
receivable and accrued revenue in the balance sheets have been reduced to
reflect receivables sold.  The portions of short-term debt and receivables
sold attributed to Consumers Gas Group reflect the high utilization of
short-term borrowing to finance the purchase of gas for storage in the
summer and fall periods.  The allocation of short-term financings and
related interest charges to Consumers Gas Group generally follows the
ratio of gas utility assets to total Consumers' assets.  Additionally, the
carrying costs for Consumers' sales of certain of its accounts receivable
under its trade receivable purchase and sale agreement generally are
allocated to the Consumers Gas Group based on the ratio of customer
revenues contributed by Consumers' gas customers to total Consumers'
revenue.  However, as a result of the centralized management of short-term
financing, the amounts allocated to the Consumers Gas Group are further
adjusted in both the seasonal gas inventory build-up period (second and
third quarters) and the high seasonal gas sales periods (first and fourth
quarters) to more closely reflect the higher short-term financing
requirements of the inventory build-up period and conversely the lower
financing requirements during the higher sales periods.  Management
believes these allocations to be reasonable.


6:   Capitalization

Capital Stock and Long-Term Debt:   Consumers Gas Group's capital stock
and long-term debt have been allocated based on the ratio of gas utility
assets (including common assets attributed to the gas utility segment) to
total Consumers' assets.  Management believes these measurements are
reasonable.  For information regarding the capital stock and long-term
debt of CMS Energy and Consumers, see Notes 7 and 8 to the Consolidated
Financial Statements of CMS Energy included and incorporated by reference
herein.


7:   Financial Instruments

The carrying amount of Consumers Gas Group's long-term debt was $411
million and $426 million and the fair value was $417 million and $403
million as of December 31, 1995 and 1994, respectively.  For additional
information regarding financial instruments, see Note 10 to the
Consolidated Financial Statements of CMS Energy included and incorporated
by reference herein.


8:   Executive Incentive Compensation

For information regarding CMS Energy's Performance Incentive Stock Plan,
restricted shares of common stock, stock options and stock appreciation
rights, see Note 11 to the Consolidated Financial Statements of CMS Energy
included and incorporated by reference herein.  This plan was amended
during 1995 to provide for awards of Class G Common Stock, to establish
criteria for certain plan awards and to increase the number of shares
reserved for award.


9:   Retirement Benefits

Postretirement Benefit Plans Other Than Pensions:  The Consumers Gas
Group's attributed portion of CMS Energy's net periodic cost for health
and life insurance benefits totaled $15 million, $17 million and $16
million in 1995, 1994 and 1993, respectively.  These allocations were
based on the ratio of salaries and wages related to Consumers' gas
operations to Consumers' total salaries and wages.  Management believes
these allocations are reasonable.

Consumers Gas Group's attributed portion of CMS Energy's total recorded
liability for postretirement benefit plans is estimated to be $169 million
and $166 million at December 31, 1995 and 1994, respectively.  These
amounts were allocated based on policies Consumers has historically used
in proceedings conducted before the MPSC.  For further information
regarding CMS Energy's postretirement benefit plans other than pensions,
see Note 12 to the Consolidated Financial Statements of CMS Energy
included and incorporated by reference herein.

Supplemental Executive Retirement Plan:  The attributed trust assets of
Consumers Gas Group at cost (which approximates market) were $6 million
and $4 million, at December 31, 1995 and 1994 respectively, and were
classified as other non-current assets.  These allocations were based on a
ratio of salaries and wages related to Consumers' gas operations to
Consumers' total salaries and wages.  Management believes these
allocations are reasonable.  For further information, see Note 12 to the
Consolidated Financial Statements of CMS Energy included and incorporated
by reference herein.

Defined Benefit Pension Plan:  A trusteed, non-contributory, defined
benefit Pension Plan covers substantially all employees.  Consumers Gas
Group's attributed portion of CMS Energy's net periodic pension cost
totaled $3 million in 1995, 1994 and 1993.  These allocations were based
on the ratio of salaries and wages related to Consumers' gas operations to
Consumers' total salaries and wages. Management believes these allocations
are reasonable.
 
Consumers Gas Group's attributed portion of CMS Energy's total recorded
liability for the Pension Plan totaled $10 million at December 31, 1995
and 1994 and was allocated to the Consumers Gas Group based on the ratio
of salaries and wages related to Consumers' gas operations to Consumers'
total salaries and wages.  Consumers Gas Group's estimated portion of
CMS Energy's recorded liability for the SERP totaled $5 million at
December 31, 1995 and $4 million at December 31, 1994 and was allocated to
the Consumers Gas Group based on the ratio of salaries and wages related
to Consumers' gas operations to Consumers' total salaries and wages. 
Management believes these allocations are reasonable.  For further
information, see Note 12 to the Consolidated Financial Statements of
CMS Energy included and incorporated by reference herein.


10:   Leases

CMS Energy and its subsidiaries lease various assets, including vehicles,
aircraft, construction equipment, computer equipment and buildings. 
Consumers Gas Group's attributed portion of CMS Energy's minimum rental
commitments under non-cancelable leases at December 31, 1995, were:

                                                            In Millions
                                                    Capital   Operating
                                                     Leases      Leases

1996                                                   $  6        $  1
1997                                                      6           -
1998                                                      5           -
1999                                                      4           -
2000                                                      3           -
2001 and thereafter                                       7           -
                                                       ----        ----
Total minimum lease payments                             31        $  1
Less imputed interest                                     6        ====
                                                       ----
Present value of net minimum lease payments              25
Less current portion                                      5
                                                       ----
Non-current portion                                    $ 20            
                                                       ====

Consumers recovers these charges from customers and accordingly charges
payments for its capital and operating leases to operating expense. 
Operating lease charges for the Consumers Gas Group, including charges to
clearing and other accounts as of December 31, 1995, 1994 and 1993, were
$1 million, $1 million and $1 million, respectively.  Capital lease
expenses for the Consumers Gas Group for the years ended December 31,
1995, 1994 and 1993 were $7 million, $6 million and $6 million,
respectively.
 
Consumers Gas Group's minimum rental commitments and lease expenses are
generally allocated based on the specific use of the leased item.  Common
leases are allocated to Consumers Gas Group through functional use
surveys, which management believes to be reasonable.
 
 
11:   Commitments and Contingencies

Capital Expenditures:  The Consumers Gas Group estimates capital
expenditures, including new lease commitments, will be $124 million for
1996, $110 million for 1997 and $105 million for 1998.  These estimates
include an attributed portion of Consumers' anticipated capital
expenditures for common plant and equipment.

For further information regarding commitments and contingencies directly
affecting the Consumers Gas Group (including those involving former
manufactured gas plant sites), see the "Environmental Matters,"
"Commitments for Gas Supplies" and "Other" discussions in Note 14 to the
Consolidated Financial Statements of CMS Energy included and incorporated
by reference herein.


12:   Supplemental Cash Flow Information

For purposes of the Statement of Cash Flows, all highly liquid investments
with an original maturity of three months or less are considered cash
equivalents.  Consumers Gas Group's other cash flow activities and
non-cash investing and financing activities for the years ended December
31 were:

                                                            In Millions
                                            1995       1994        1993

Cash transactions
  Interest paid (net of amounts
    capitalized)                            $ 35       $ 33        $ 37
  Income taxes paid (net of refunds)          25         31          42

Non-cash transactions
  Assets placed under
    capital lease                           $  2       $  5        $  5
  Capital leases refinanced                    9          -          12

Changes in other assets and liabilities as shown on the Statements of Cash
Flows at December 31 are described below:

                                                            In Millions
                                            1995       1994        1993 

Sale of receivables, net                   $  26      $ (13)      $  72
Accounts receivable                          (39)        11         (35)
Accrued revenue                              (35)        30         (31)
Inventories                                   50         (6)        (24) 
Accounts payable                              11          1          (7)
Accrued refunds                                -          -         (10)
Other current assets and liabilities, net     (8)        (1)        (17)
Non-current deferred amounts, net             11         (7)        (15)
                                           -----      -----       -----
                                           $  16      $  15        $(67)
                                           =====      =====       =====

13:   Effects of the Ratemaking Process

The following regulatory assets (liabilities) which include both current
and non-current amounts, are reflected in Consumers Gas Group's Balance
Sheets.  These assets represent probable future revenue to Consumers
associated with certain incurred costs as these costs are recovered
through the ratemaking process.  

                                                            In Millions
December 31                                            1995        1994

Postretirement benefits (Note 9)                      $ 169       $ 166
Trunkline settlement                                     55          85
Manufactured gas plant sites                             47          47
Other                                                     5          14
                                                      -----       -----
Total regulatory assets                               $ 276       $ 312
                                                      =====       =====

Regulatory liabilities for income taxes               $(162)      $(144) 
                                                      =====       =====

At December 31, 1995, $55 million of Consumers Gas Group's regulatory
assets are being recovered through rates being charged to customers over 2
years.  Consumers anticipates MPSC approval for recovery of the remaining
amounts.

<PAGE>
<PAGE>  18

<TABLE>

Quarterly Financial and Common Stock Information                                             Consumers Gas Group

<CAPTION>

                                                                                                  In Millions, 
                                                                                      Except Per Share Amounts 
                                                                      
                                        1995 (Unaudited)                           1994 (Unaudited)

Quarters Ended              March 31   June 30  Sept. 30    Dec. 31    March 31   June 30   Sept. 30   Dec. 31
<S>                             <C>       <C>    <C>        <C>            <C>       <C>        <C>       <C> 

Operating revenue               $482      $197      $122       $394        $528      $183       $126      $314 

Pretax operating income          $91       $17        $2        $41         $84       $18         $4       $29 

Net income (loss)                $49        $3       $(8)       $18         $46        $4        $(5)       $8 

Earnings (loss) per average
 common share                      -         -     $(.17)      $.55           -         -          -         -

Dividends declared per
 common share                      -         -      $.28       $.28           -         -          -         -

Common stock prices (a)
  High                             -         -   $18-3/4    $18-7/8           -         -          -         -
  Low                              -         -   $16-1/8    $17-5/8           -         -          -         -

<FN>

(a)  Based on New York Stock Exchange - Composite transactions.

</TABLE>
<PAGE>