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UNITED
    STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, DC
    20549
  FORM 10-K
  [X]
 ANNUAL REPORT
    PURSUANT TO SECTION 13 OR 15(d) OF
 THE SECURITIES
    EXCHANGE ACT OF 1934
 For
    the fiscal year ended December 31, 2009
 OR
 o
 TRANSITION REPORT
    PURSUANT TO SECTION 13 OR 15(d) OF
 THE SECURITIES
    EXCHANGE ACT OF 1934
 For
    the transition period from ___ to ___
  Commission

Registrant; State
    of Incorporation;

IRS EmployerFile
    Number

Address; and
    Telephone Number

Identification
    No.1-9513

CMS ENERGY CORPORATION
    (A Michigan Corporation)
    One Energy Plaza, Jackson, Michigan 49201(517) 788-0550

38-27264311-5611

CONSUMERS ENERGY COMPANY
    (A Michigan Corporation)
    One Energy Plaza, Jackson, Michigan 49201(517) 788-0550

38-0442310   Securities
    registered pursuant to Section 12(b) of the Act:
 Name of Each
    ExchangeRegistrant

Title of
    Class

on Which
    RegisteredCMS Energy Corporation

Common Stock, $.01 par value

New York Stock ExchangeConsumers Energy Company

Preferred Stocks, $100 par value: $4.16 Series, $4.50 Series

New York Stock Exchange  Securities
    registered pursuant to Section 12(g) of the
    Act: None
  Indicate
    by check mark if the Registrant is a well-known seasoned issuer,
    as defined in Rule 405 of the Securities Act.
  CMS
    Energy
    Corporation: Yes [X] No oConsumers
    Energy
    Company: Yes [X] No o
  Indicate
    by check mark if the Registrant is not required to file reports
    pursuant to Section 13 or Section 15(d) of the Act.
  CMS
    Energy
    Corporation: Yes o No [X] Consumers
    Energy
    Company: Yes o No [X]
  Indicate
    by check mark whether the Registrants (1) have filed all
    reports required to be filed by Section 13 or 15(d) of the
    Securities Exchange Act of 1934 during the preceding
    12 months (or for such shorter period that the Registrants
    were required to file such reports), and (2) have been
    subject to such filing requirements for the past 90 days.
  CMS
    Energy
    Corporation : Yes [X] No oConsumers
    Energy
    Company: Yes [X] No o
  Indicate
    by check mark whether the Registrants have submitted
    electronically and posted on their corporate Web sites, if any,
    every Interactive Data File required to be submitted and posted
    pursuant to Rule 405 of
    Regulation S-T
    (§ 232.405 of this chapter) during the preceding
    12 months (or for such shorter period that the Registrants
    were required to submit and post such files).
  CMS
    Energy
    Corporation: Yes [X] No oConsumers
    Energy
    Company: Yes [X] No o
  Indicate
    by check mark if disclosure of delinquent filers pursuant to
    Item 405 of
    Regulation S-K
    is not contained herein, and will not be contained, to the best
    of Registrants knowledge, in definitive proxy or
    information statements incorporated by reference in
    Part III of this
    Form 10-K
    or any amendment to this
    Form 10-K.o
  Indicate
    by check mark whether the Registrant is a large accelerated
    filer, an accelerated filer, a non-accelerated filer, or a
    smaller reporting company. See the definitions of large
    accelerated filer, accelerated filer and
    smaller reporting company in
    Rule 12b-2
    of the Exchange Act.
  CMS
    Energy
    Corporation: Large
    accelerated filer  [X]Accelerated
    filer  o     Non-Accelerated
    filer  o
    Smaller reporting company
    o
  Consumers
    Energy
    Company: Large
    accelerated
    filer  o     Accelerated
    filer  o     Non-Accelerated
    filer [X] Smaller reporting company
    o
  Indicate
    by check mark whether the Registrant is a shell company (as
    defined in
    Rule 12b-2
    of the Exchange Act).
  CMS
    Energy
    Corporation: Yes [X] No
    [X]   Consumers Energy Company:
    Yes [X] No [X]
  The
    aggregate market value of CMS Energy voting and non-voting
    common equity held by non-affiliates was $2.728 billion for
    the 225,799,094 CMS Energy Common Stock shares outstanding on
    June 30, 2009 based on the closing sale price of $12.08 for
    CMS Energy Common Stock, as reported by the New York Stock
    Exchange on such date.
  There
    were 229,772,845 shares of CMS Energy Common Stock outstanding
    on February 25, 2010. On February 25, 2010, CMS Energy
    held all voting and non-voting common equity of Consumers.
    Documents incorporated by reference in Part III: CMS
    Energys proxy statement and Consumers information
    statement relating to the 2010 annual meeting of stockholders to
    be held May 21, 2010.




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##### 





CMS Energy
    Corporation
 Consumers Energy
    Company
  Annual Reports on
    Form 10-K
    to the Securities and Exchange Commission for the Year Ended
 December 31,
    2009
  TABLE OF CONTENTS
  
  PageGlossary

3Filing Format

9Forward-Looking Statements and Information

9PART I:Item 1.

Business

14Item 1A.

Risk Factors

31Item 1B.

Unresolved Staff Comments

39Item 2.

Properties

39Item 3.

Legal Proceedings

39Item 4.

Omitted

39PART II:Item 5.

Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities

40Item 6.

Selected Financial Data

41Item 7.

Managements Discussion and Analysis of
    Financial Condition and Results of Operations

41Item 7A.

Quantitative and Qualitative Disclosures About
    Market Risk

41Item 8.

Financial Statements and Supplementary Data

42Item 9.

Changes in and Disagreements With Accountants on
    Accounting and Financial Disclosure

175Item 9A.

CMS Energys Controls and Procedures

175Item 9A(T).

Consumers Controls and Procedures

176Item 9B.

Other Information

176PART III:Item 10.

Directors, Executive Officers and Corporate
    Governance

177Item 11.

Executive Compensation

178Item 12.

Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters

178Item 13.

Certain Relationships and Related Transactions,
    and Director Independence

179Item 14.

Principal Accountant Fees and Services

179PART IV:Item 15.

Exhibits and Financial Statement Schedules

179EX-10.P.PEX-10.R.REX-10.S.SEX-12.AEX-12.BEX-21EX-23.AEX-23.BEX-24.AEX-24.BEX-31.AEX-31.BEX-31.CEX-31.DEX-32.AEX-32.B   2




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GLOSSARY
     2008 Energy Legislation

Comprehensive energy reform package enacted in October 2008 with
    the approval of Michigan Senate Bill 213 and Michigan House Bill
    5524ABATE

Association of Businesses Advocating Tariff EquityABO

Accumulated Benefit Obligation. The liabilities of a pension
    plan based on service and pay to date. This differs from the PBO
    that is typically disclosed in that it does not reflect expected
    future salary increases.AEI

Ashmore Energy International, a non-affiliated companyAFUDC

Allowance for borrowed and equity funds used during constructionALJ

Administrative Law JudgeAMT

Alternative minimum taxAOC

Administrative Order on ConsentAOCL

Accumulated Other Comprehensive LossAPB

Accounting Principles BoardARB

Accounting Research BulletinARO

Asset retirement obligationASC

FASB Accounting Standards CodificationASU

FASB Accounting Standards UpdateBay Harbor

A residential/commercial real estate area located near Petoskey,
    Michigan.  In 2002, CMSEnergy sold its interest in Bay Harbor.bcf

Billion cubic feet of gasBeeland

Beeland Group LLC, a wholly owned subsidiary of CMS LandBig Rock

Big Rock Point nuclear power plant, formerly owned by ConsumersBoard of Directors

Board of Directors of CMS EnergyBtu

British thermal unit; one Btu equals the amount of energy
    required to raise the temperature of one pound of water by one
    degree FahrenheitCAIR

The Clean Air Interstate RuleCAMR

The Clean Air Mercury RuleCantera Gas Company

Cantera Gas Company LLC, a non-affiliated companyCantera Natural Gas, Inc.

Cantera Natural Gas, Inc., a non-affiliated company that
    purchased CMS Field ServicesCAO

Chief Accounting OfficerCEO

Chief Executive OfficerCFO

Chief Financial OfficerC&HR Committees

The Compensation and Human Resources Committees of the Boards of
    Directors of CMS Energy and ConsumersChrysler

Chrysler LLC, a non-affiliated companyCity-gate arrangement

The arrangement made for the point at which a local distribution
    company physically receives gas from a supplier or pipelineCKD

Cement kiln dustClean Air Act

Federal Clean Air Act, as amendedCMS Capital

CMS Capital, L.L.C., a wholly owned subsidiary of CMS EnergyCMS Electric & Gas

CMS Electric & Gas, L.L.C., a wholly owned subsidiary of
    CMS International VenturesCMS Energy

CMS Energy Corporation, the parent of Consumers and CMS
    Enterprises 3




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CMS Energy Brasil S.A.

CMS Energy Brasil S.A., a former wholly owned subsidiary of CMS
    Electric & GasCMS Energy Common Stock or common stock

Common stock of CMS Energy, par value $0.01 per shareCMS Enterprises

CMS Enterprises Company, a wholly owned subsidiary of CMS EnergyCMS ERM

CMS Energy Resource Management Company, formerly CMS MST, a
    wholly owned subsidiary of CMS EnterprisesCMS Field Services

CMS Field Services, Inc., a former wholly owned subsidiary of
    CMS Gas TransmissionCMS Gas Transmission

CMS Gas Transmission Company, a wholly owned subsidiary of CMS
    EnterprisesCMS Generation

CMS Generation Co., a former wholly owned subsidiary of CMS
    EnterprisesCMS Generation San Nicolas Company

CMS Generation San Nicolas Company, a company in which CMS
    Enterprises owns a 0.1 percent interestCMS International Ventures

CMS International Ventures LLC, a subsidiary of CMS Enterprises
    in which CMS Enterprises owns a 61.49 percent interestCMS Land

CMS Land Company, a wholly owned subsidiary of CMS CapitalCMS MST

CMS Marketing, Services and Trading Company, a wholly owned
    subsidiary of CMS Enterprises, whose name was changed to CMS ERM
    effective January 2004CMS Oil and Gas

CMS Oil and Gas Company, a former wholly owned subsidiary of CMS
    EnterprisesCMS Viron

CMS Viron Corporation, a wholly owned subsidiary of CMS ERMConsumers

Consumers Energy Company, a wholly owned subsidiary of CMS EnergyConsumers Funding

Consumers Funding LLC, a wholly owned consolidated
    bankruptcy-remote subsidiary of Consumers and special- purpose
    entity organized for the sole purpose of purchasing and owning
    Securitization property, assuming Securitization bonds, and
    pledging its interest in Securitization property to a trustee to
    collateralize the Securitization bondsCustomer Choice Act

Customer Choice and Electricity Reliability Act, a Michigan
    statuteD.C.

District of ColumbiaDCCP

Defined Company Contribution PlanDC SERP

Defined Contribution SERPDetroit Edison

The Detroit Edison Company, a non-affiliated companyDIE

Dearborn Industrial Energy, L.L.C., a wholly owned subsidiary of
    CMS EnergyDIG

Dearborn Industrial Generation, L.L.C., a wholly owned
    subsidiary of DIEDOE

U.S. Department of EnergyDOJ

U.S. Department of JusticeDow

The Dow Chemical Company, a non-affiliated companyDSSP

Deferred Salary Savings PlanEBITDA

Earnings Before Interest, Taxes, Depreciation, and AmortizationEISP

Executive Incentive Separation PlanEITF

Emerging Issues Task ForceEl Chocon

A 1,200 MW hydro power plant located in Argentina, in which
    CMS Generation formerly held a 17.2 percent ownership
    interestEnerBank

EnerBank USA, a wholly owned subsidiary of CMS Capital 4




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Entergy

Entergy Corporation, a non-affiliated companyEPA

U.S. Environmental Protection AgencyEPS

Earnings per shareExchange Act

Securities Exchange Act of 1934, as amendedExeter

Exeter Energy Limited Partnership, a limited partnership owned
    directly and indirectly by HYDRA-COFASB

Financial Accounting Standards BoardFDIC

Federal Deposit Insurance CorporationFERC

Federal Energy Regulatory CommissionFirst Mortgage Bond Indenture

The indenture dated as of September 1, 1945 between Consumers
    and The Bank of New York Mellon, as Trustee, as amended and
    supplementedFitch

Fitch Ratings, Ltd.FMB

First mortgage bondFOV

Finding of ViolationFSP

FASB Staff PositionGAAP

U.S. Generally Accepted Accounting PrinciplesGasAtacama

GasAtacama Holding Limited, a limited liability partnership that
    manages GasAtacama S.A., which includes Atacama Finance Company,
    an integrated natural gas pipeline and electric generating plant
    in Argentina and Chile, in which CMS International Ventures
    formerly owned a 50 percent interestGCC

Gas Customer Choice, which allows gas customers to purchase gas
    from alternative suppliersGCR

Gas cost recoveryGenesee

Genesee Power Station Limited Partnership, a consolidated
    variable interest entity in which HYDRA-CO has a 50 percent
    interestGM

General Motors Corporation, a non-affiliated companyGrayling

Grayling Generating Station Limited Partnership, a consolidated
    variable interest entityin which HYDRA-CO has a 50 percent interestGWh

Gigawatt-hour (a unit of energy equal to one million
    kilowatt-hours)HYDRA-CO

HYDRA-CO Enterprises, Inc., a wholly owned subsidiary of CMS
    EnterprisesICSID

International Centre for the Settlement of Investment DisputesIPP

Independent power producer or independent power productionIRS

Internal Revenue ServiceISFSI

Independent spent fuel storage installationITC

Income tax creditJamaica Power

Jamaica Private Power Company, Limited, a 63 MW
    diesel-fueled power plant in Jamaica, in which CMS Generation
    formerly owned a 42 percent interestJorf Lasfar

A 1,356 MW coal-fueled power plant in Morocco, in which CMS
    Generation formerly owned a 50 percent interestkilovolts

Thousand volts (unit used to measure the difference in
    electrical pressure along a current)kVA

Thousand volt-amperes (unit used to measure the flow rate of
    electrical current that is available for an electrical service)kWh

Kilowatt-hour (a unit of energy equal to one thousand watt-hours)LIBOR

London Interbank Offered RateLucid Energy

Lucid Energy LLC, a non-affiliated company 5




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Ludington

Ludington pumped storage plant, jointly owned by Consumers and
    Detroit EdisonMarathon

Marathon Oil Company, Marathon E.G. Holding, Marathon E.G. Alba,
    Marathon E.G. LPG, Marathon Production LTD, and Alba Associates,
    LLC, each a non-affiliated companyMBT

Michigan Business TaxMCV Facility

A 1,500 MW natural gas-fueled, combined-cycle cogeneration
    facility operated by the MCV PartnershipMCV Partnership

Midland Cogeneration Venture Limited PartnershipMCV PPA

The PPA between Consumers and the MCV Partnership, with a
    35-year term commencing in March 1990, as amended and restated
    in an agreement dated as of June 9, 2008 between Consumers and
    the MCV PartnershipMD&A

Managements Discussion and AnalysisMDL

A pending multi-district litigation case in NevadaMDNRE

Michigan Department of Natural Resources and Environment, which,
    effective January 17, 2010 as a result of department
    reorganizations, is the successor to the Michigan Department of
    Environmental Quality and the Michigan Department of Natural
    ResourcesMEI

Michigan Energy Investments LLC, an affiliate of Lucid Energy
    and a non-affiliated companyMETC

Michigan Electric Transmission Company, LLC, a non-affiliated
    company owned by ITC Holdings Corporation and a member of MISOMGP

Manufactured gas plantMidwest Energy Market

An energy market developed by the MISO to provide day-ahead and
    real-time market information and centralized dispatch for market
    participantsMISO

Midwest Independent Transmission System Operator, Inc.Moodys

Moodys Investor Services, Inc.MPSC

Michigan Public Service CommissionMRV

Market-Related Value of Plan assetsMW

Megawatt (a unit of power equal to one million watts)MWh

Megawatt-hour (a unit of energy equal to one million watt- hours)NAV

Net asset valueNERC

North American Electric Reliability Corporation, a
    non-affiliated companyNMC

Nuclear Management Company, LLC, a non-affiliated companyNOV

Notice of ViolationNPDES

National Pollutant Discharge Elimination SystemNREPA

Part 201 of Michigan Natural Resources and Environmental
    Protection Act, a statute thatcovers environmental activities including remediationNSR

New Source ReviewNYMEX

New York Mercantile ExchangeOPEB

Postretirement benefit plans other than pensionsPalisades

Palisades nuclear power plant, formerly owned by ConsumersPanhandle

Panhandle Eastern Pipe Line Company, including its wholly owned
    subsidiaries Trunkline, Pan Gas Storage, Panhandle Storage, and
    Panhandle Holdings, a former wholly owned subsidiary of CMS Gas
    TransmissionPBO

Pension benefit obligation 6




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PCB

Polychlorinated biphenylPDVSA

Petroleos de Venezuela S.A., a non-affiliated companyPeabody Energy

Peabody Energy Corporation, a non-affiliated companyPension Plan

The trustee, non-contributory, defined benefit pension plan of
    Panhandle, Consumers, and CMS EnergyPension Protection Act

The Pension Protection Act of 2006, signed into law on August
    17, 2006PISP

Performance Incentive Stock PlanPowerSmith

A 124 MW natural gas power plant located in Oklahoma, in
    which CMS Generation formerly held a 6.25 percent limited
    partner ownership interestPPA

Power purchase agreementPrairie State

Prairie State Energy Campus, a planned 1,600 MW power plant
    and coal mine in southern IllinoisPSCR

Power supply cost recoveryPSD

Prevention of Significant DeteriorationPURPA

Public Utility Regulatory Policies Act of 1978Quicksilver

Quicksilver Resources, Inc., a non-affiliated companyQSPE

Qualifying special-purpose entityRCP

Resource Conservation PlanREC

Renewable energy credit established under the 2008 Energy
    LegislationRMRR

Routine maintenance, repair, and replacementROA

Retail Open Access, which allows electric generation customers
    to choose alternative electric suppliers pursuant to the
    Customer Choice ActS&P

Standard and Poors Financial Services LLC, which includes
    Standard and Poors Ratings ServicesSEC

U.S. Securities and Exchange CommissionSecuritization

A financing method authorized by statute and approved by the
    MPSC which allows a utility to sell its right to receive a
    portion of the rate payments received from its customers for the
    repayment of securitization bonds issued by a special-purpose
    entity affiliated with such utilitySENECA

Sistema Electrico del Estado Nueva Esparta C.A., a former wholly
    owned subsidiary of CMS International VenturesSERP

Supplemental Executive Retirement PlanSFAS

Statement of Financial Accounting StandardsStranded Costs

Costs incurred by utilities in order to serve their customers in
    a regulated monopoly environment, which may not be recoverable
    in a competitive environment because of customers leaving their
    systems and ceasing to pay for their costs.  These costs could
    include owned and purchased generation and regulatory assets.Superfund

Comprehensive Environmental Response, Compensation and Liability
    ActSupplemental Environmental Programs

Environmentally beneficial projects which a party agrees to
    undertake as part of the settlement of an enforcement action,
    but which the party is not otherwise legally required to performTAQA

Abu Dhabi National Energy Company, a subsidiary of Abu Dhabi
    Water and Electricity Authority, a non-affiliated companyT.E.S. Filer City

T.E.S. Filer City Station Limited Partnership, a consolidated
    variable interest entity in which HYDRA-CO has a 50 percent
    interest 7




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TGN

A natural gas transportation and pipeline business located in
    Argentina, in which CMS Gas Transmission formerly owned a
    23.54 percent interestTRAC

Terminal Rental Adjustment Clause, a provision of a leasing
    agreement which permits or requires the rental price to be
    adjusted upward or downward by reference to the amount realized
    by the lessor under the agreement upon sale or other disposition
    of formerly leased propertyTrunkline

Trunkline Gas Company, LLC, a former wholly owned subsidiary of
    CMS Panhandle Holdings, LLCTrust Preferred Securities

Securities representing an undivided beneficial interest in the
    assets of statutory business trusts, the interests of which have
    a preference with respect to certain trust distributions over
    the interests of either CMS Energy or Consumers, as applicable,
    as owner of the common beneficial interests of the trustsTSR

Total shareholder returnTSU

Texas Southern University, a non-affiliated entityUnion

Utility Workers Union of America, AFL-CIOU.S.

United StatesVEBA

Voluntary employees beneficiary association trusts
    accounts established specifically to set aside
    employer-contributed assets to pay for future expenses of the
    OPEB planVIE

Variable interest entityWolverine

Wolverine Power Supply Cooperative, Inc., a non-affiliated
    companyZeeland

A 935 MW gas-fueled power plant located in Zeeland,
    Michigan  8




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FILING
    FORMAT  Form 10-K Form 10-K
 FORWARD-LOOKING
    STATEMENTS AND INFORMATION  Form 10-K
  
    the price of CMS Energy Common Stock, capital and financial
    market conditions, and the effect of these market conditions on
    CMS Energys and Consumers postretirement benefit
    plans, interest costs, and access to the capital markets,
    including availability of financing (including Consumers
    accounts receivable sales program and CMS Energys and
    Consumers revolving credit facilities) to CMS Energy,
    Consumers, or any of their affiliates, and the energy industry;
    the impact of the continued downturn in the economy and the
    sharp downturn and extreme volatility in the financial and
    credit markets on CMS Energy, Consumers, or any of their
    affiliates, including their:  
    revenues;
    capital expenditure programs and related earnings growth;
    ability to collect accounts receivable from customers;
    cost of capital and availability of capital; and
    Pension Plan and postretirement benefit plans assets and
    required contributions;  
    changes in the economic and financial viability of CMS
    Energys and Consumers suppliers, customers, and
    other counterparties and the continued ability of these third
    parties, including third parties in bankruptcy, to meet their
    obligations to CMS Energy and Consumers;
    population growth or decline in the geographic areas where CMS
    Energy and Consumers conduct business;
    changes in applicable laws, rules, regulations, principles or
    practices, or in their interpretation, including those related
    to taxes, the environment, and accounting matters, that could
    have an impact on CMS Energys 9




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and Consumers businesses or financial results, including
    the impact of any future regulations or laws regarding:  
    carbon dioxide and other greenhouse gas emissions, including
    potential future legislation to establish a cap and trade system;
    criteria pollutants, such as nitrogen oxide, sulfur dioxide, and
    particulate, and hazardous air pollutants;
    coal ash;
    limitations on the use or construction of coal-fueled electric
    power plants; and
    renewable portfolio standards and energy efficiency mandates;  
    national, regional, and local economic, competitive, and
    regulatory policies, conditions, and developments;
    adverse regulatory or legal interpretations or decisions,
    including those related to environmental laws and regulations,
    and potential environmental remediation costs associated with
    these interpretations or decisions, including but not limited to
    those that may affect Bay Harbor or Consumers RMRR
    classification under NSR regulations;
    potentially adverse regulatory treatment or failure to receive
    timely regulatory orders concerning a number of significant
    matters affecting Consumers that are presently or potentially
    before the MPSC, including:  
    sufficient and timely recovery of:  
    environmental and safety-related expenditures;
    power supply and natural gas supply costs;
    operating and maintenance expenses;
    additional utility rate-based investments;
    proposed retirement and decommissioning of facilities;
    increased MISO energy and transmission costs; and
    costs associated with energy efficiency investments and state or
    federally mandated renewable resource standards;  
    actions of regulators with respect to expenditures subject to
    tracking mechanisms;
    actions of regulators to prevent or curtail shutoffs for
    non-paying customers;
    actions of regulators with respect to the implementation of the
    pilot decoupling mechanism and an uncollectible
    expense tracking mechanism described in the November 2009 MPSC
    electric rate case order;
    regulatory orders preventing or curtailing rights to
    self-implement rate requests;
    regulatory orders potentially requiring a refund of previously
    self-implemented rates;
    authorization of a new coal-fueled plant; and
    implementation of new energy legislation or revisions of
    existing regulations;  
    potentially adverse regulatory treatment resulting from pressure
    on regulators to oppose annual rate increases or to lessen rate
    impacts upon customers, particularly in difficult economic times;
    potential legislative changes to the ten-percent ROA limit;
    potentially adverse regulatory treatment concerning a number of
    significant matters affecting Consumers that are presently
    before the MDNRE;
    the ability of Consumers to recover its regulatory assets in
    full and in a timely manner; 10




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
    the ability of Consumers to recover nuclear fuel storage costs
    incurred as a result of the DOEs failure to accept spent
    nuclear fuel on schedule, and the outcome of pending litigation
    with the DOE;
    loss of customer load to alternative energy suppliers;
    the impact of expanded enforcement powers and investigation
    activities at the FERC;
    federal regulation of electric sales and transmission of
    electricity, including periodic re-examination by federal
    regulators of CMS Energys and Consumers market-based
    sales authorizations in wholesale power markets without price
    restrictions;
    effects of weather conditions, such as warm weather during the
    winter, on sales;
    the market perception of the energy industry or of CMS Energy,
    Consumers, or any of their affiliates;
    the credit ratings of CMS Energy or Consumers;
    the impact of credit markets, economic conditions, and new
    banking regulations on EnerBank;
    disruptions in the normal commercial insurance and surety bond
    markets that may increase costs or reduce traditional insurance
    coverage, particularly terrorism and sabotage insurance,
    performance bonds, and tax-exempt debt insurance, and stability
    of insurance providers;
    energy markets, including availability of capacity and the
    timing and extent of changes in commodity prices for oil, coal,
    natural gas, natural gas liquids, electricity, and certain
    related products due to lower or higher demand, shortages,
    transportation problems, or other developments, and their impact
    on CMS Energys and Consumers cash flows and working
    capital;
    changes in construction material prices and the availability of
    qualified construction personnel to implement Consumers
    construction program;
    factors affecting operations, such as unusual weather
    conditions, catastrophic weather-related damage, unscheduled
    generation outages, maintenance or repairs, environmental
    incidents, or electric transmission or gas pipeline system
    constraints;
    potential disruption or interruption of facilities or operations
    due to accidents, war, or terrorism, and the ability to obtain
    or maintain insurance coverage for these events;
    technological developments in energy production, delivery,
    usage, and storage;
    achievement of capital expenditure and operating expense goals,
    including the 2010 capital expenditures forecast;
    the impact of CMS Energys and Consumers integrated
    business software system on their operations, including utility
    customer billing and collections;
    the effectiveness of CMS Energys and Consumers risk
    management policies and procedures;
    CMS Energys and Consumers ability to achieve
    generation planning goals and the occurrence and duration of
    planned or unplanned generation outages;
    adverse outcomes regarding tax positions;
    adverse consequences resulting from any past or future assertion
    of indemnity or warranty claims associated with assets and
    businesses previously owned by CMS Energy or Consumers,
    including the F.T. Barr matter and claims resulting from
    attempts by foreign or domestic governments to assess taxes on
    past operations or transactions;
    the outcome, cost, and other effects of legal or administrative
    proceedings, settlements, investigations, or claims;
    earnings volatility resulting from the application of fair value
    accounting to certain energy commodity contracts, such as
    electricity sales agreements and interest rate and foreign
    currency contracts; 11




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
    changes in financial or regulatory accounting principles or
    policies, including possible changes to rules involving fair
    value accounting;
    new or revised interpretations of GAAP by regulators, which
    could affect how accounting principles are applied, and could
    impact future periods financial statements or previously
    filed financial statements;
    a possible future requirement to comply with International
    Financial Reporting Standards, which differ from GAAP in various
    ways, including the present lack of special accounting treatment
    for regulated activities; and
    other business or investment matters that may be disclosed from
    time to time in CMS Energys and Consumers SEC
    filings, or in other publicly issued documents.   12




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    intentionally left blank)
  13




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PART I ITEM 1. BUSINESS  GENERAL
  CMS
    Energy
        Consumers
  and/or
     14




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15




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BUSINESS
    SEGMENTS
  Consumers
    Electric Utility
  Electric Utility Operations:
  
     16




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2008-09
 17




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Electric Utility Properties:
  2009Summer NetNumber of Units and Year

Demonstrated


2009 NetName and Location (Michigan)

Entering Service

Capability (MW)


Generation (GWh)Coal GenerationJ H Campbell 1 & 2  West Olive

2 Units, 1962-1967


615



3,303J H Campbell 3  West Olive(a)

1 Unit, 1980


770



5,893B C Cobb  Muskegon

2 Units, 1956-1957


312



1,733D E Karn  Essexville

2 Units, 1959-1961


515



2,743J C Weadock  Essexville

2 Units, 1955-1958


310



1,869J R Whiting  Erie

3 Units, 1952-1953


328



1,714Total coal generation




2,850



17,255Oil/Gas GenerationB C Cobb  Muskegon

3 Units, 1999-2000(b)






D E Karn  Essexville

2 Units, 1975-1977


1,276



26Zeeland  Zeeland

1 Unit, 2002


538



388Total oil/gas generation




1,814



414HydroelectricConventional hydro generation

13 Plants, 1906-1949


74



466Ludington  Ludington

6 Units, 1973


955
(c)


(303
)(d)Total hydroelectric




1,029



163Gas/Oil Combustion TurbineVarious plants

7 Plants, 1966-1971


331



37Zeeland  Zeeland

2 Units, 2001


330



128Total gas/oil combustion turbine




661



165Total owned generation




6,354



17,997Purchased and Interchange Power(e)




2,600
(f)


18,463
(g)Total




8,954



36,460     (a)
    
    Represents Consumers share of the capacity of the J H
    Campbell 3 unit, net of the 6.69 percent ownership
    interest of the Michigan Public Power Agency and Wolverine.(b)
    
    B C Cobb 1-3 are retired coal-fueled units that were converted
    to gas-fueled. Units were placed back into service in the years
    indicated. B C Cobb 1-3 were placed
    out-of-service
    beginning in April 2009. Consumers plans to return B C Cobb 1-3
    to service in April 2012.(c)
    
    Represents Consumers 51 percent share of the capacity
    of Ludington. Detroit Edison owns the remaining 49 percent.(d)
    
    Represents Consumers share of net pumped storage
    generation. This facility electrically pumps water during
    off-peak hours for storage to generate electricity later during
    peak-demand hours.(e)
    
    Includes purchases from the Midwest Energy Market, long-term
    purchase contracts, options, spot market, and other seasonal
    purchases.(f)
    
    Includes 1,240 MW of purchased contract capacity from the
    MCV Facility and 778 MW of purchased contract capacity from
    Palisades.(g)
    
    Includes 2,232 GWh of purchased energy from the MCV Facility and
    6,119 GWh of purchased energy from Palisades. 18




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##### Table of Contents




    409 miles of high-voltage distribution radial lines
    operating at 120 kilovolts or above;
    4,244 miles of high-voltage distribution overhead lines
    operating at 23 kilovolts and 46 kilovolts;
    17 subsurface miles of high-voltage distribution underground
    lines operating at 23 kilovolts and 46 kilovolts;
    55,816 miles of electric distribution overhead lines;
    9,976 miles of underground distribution lines; and
    substations having an aggregate transformer capacity of
    24 million kVA.    Fuel Supply:
  
 19




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##### Table of Contents



GWhPower Generated

2009


2008


2007


2006


2005Coal


17,255



17,701



17,903



17,744



19,711Gas


565



804



129



161



356Hydro


466



454



416



485



387Oil


14



41



112



48



225Nuclear










1,781



5,904



6,636Net pumped storage


(303
)


(382
)


(478
)


(426
)


(516
)Total owned generation


17,997



18,618



19,863



23,916



26,799Non-utility generation


11,538



13,643



12,502



8,594



8,999Net interchange power


6,925



6,653



8,009



7,244



1,772Net purchased and interchange power


18,463



20,296



20,511



15,838



10,771Total Net Power Supply


36,460



38,914



40,374



39,754



37,570     Cost per Million BtuFuel Consumed

2009


2008


2007


2006


2005Coal

$
2.37


$
2.01


$
2.04


$
2.09


$
1.78Gas


6.57



10.94



10.29



8.92



9.76Oil


9.59



11.54



8.21



8.68



5.98Nuclear










0.42



0.24



0.34All Fuels(a)

$
2.56


$
2.47


$
2.07


$
1.72


$
1.64     (a)
    
    Weighted average fuel costs    47-day
       20




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##### Table of Contents



Consumers
    Gas Utility
  Gas
    Utility Operations:
    
     21




---



##### Table of Contents



Gas Utility Properties:
  
    26,526 miles of distribution mains;
    1,652 miles of transmission lines;
    7 compressor stations with a total of 136,180 installed and
    available horsepower; and
    15 gas storage fields with an aggregate storage capacity of 307
    bcf and a working storage capacity of 142 bcf.  Gas Supply:
 22




---



##### Table of Contents



Enterprises 
    Non-Utility Operations and Investments
     23




---



##### Table of Contents



IPP:
    IPP Properties:
    Percentage ofGross CapacityUnder Long-TermPrimary

Ownership Interest


Gross Capacity


ContractLocation

Fuel Type

(%)


(MW)


(%)California

Biomass


37.8



36



100Connecticut(a)

Scrap tire


100



31



Michigan

Natural gas


100



710



92Michigan

Natural gas


100



224



Michigan

Coal


50



73



100Michigan

Biomass


50



40



100Michigan

Biomass


50



38



100North Carolina

Biomass


50



50



Total








1,202     (a)
    
    Represents Exeter, whose assets and liabilities were
    reclassified as held for sale in 2009.  Energy Resource Management:
    Natural Gas Transmission:
    International Energy Distribution:
 24




---



##### Table of Contents



CMS ENERGY AND
    CONSUMERS REGULATION
    MPSC
      Rate Proceedings:
  Michigan Energy
    Legislation
      FERC
   25




---



##### Table of Contents



Other
    Regulation
        CMS ENERGY AND
    CONSUMERS ENVIRONMENTAL COMPLIANCE
      Air: state-of-the-art
  Solid Waste Disposal:
  Water:
  CMS ENERGY AND
    CONSUMERS COMPETITION
  Electric
    Competition
     26




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##### Table of Contents




    industrial customers relocating all or a portion of their
    production capacity outside Consumers service territory
    for economic reasons;
    municipalities owning or operating competing electric delivery
    systems;
    customer self-generation; and
    adjacent utilities that extend lines to customers in contiguous
    service territories.        Gas
    Competition
    INSURANCE
      EMPLOYEES
  CMS
    Energy
   27




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##### Table of Contents



Consumers
    CMS ENERGY
    EXECUTIVE OFFICERS (as of February 1, 2010)
  Name

Age

Position

PeriodDavid W. Joos

56

President and CEO of CMS Energy

2004-PresentCEO of Consumers

2004-PresentChairman of the Board, President, CEO of CMS Enterprises

5/2008-PresentDirector of CMS Energy

2001-PresentDirector of Consumers

2001-PresentDirector of CMS Enterprises

2000-PresentChairman of the Board, CEO of  CMS Enterprises

2003-5/2008Thomas J. Webb

57

Executive Vice President, CFO of CMS Energy

2002-PresentExecutive Vice President, CFO of Consumers

2002-PresentExecutive Vice President, CFO of CMS Enterprises

2002-PresentDirector of CMS Enterprises

2002-PresentJames E. Brunner

57

Senior Vice President and General Counsel of CMS Energy

11/2006-PresentSenior Vice President and General Counsel of Consumers

11/2006-PresentSenior Vice President and General Counsel of  CMS Enterprises

11/2007-PresentDirector of CMS Enterprises

2006-PresentSenior Vice President of CMS Enterprises

2006-11/2007Senior Vice President, General Counsel and Chief Compliance
    Officer of CMS Energy

5/2006-11/2006Senior Vice President, General Counsel and Chief Compliance
    Officer of Consumers

5/2006-11/2006Senior Vice President, General Counsel and Interim Chief
    Compliance Officer of Consumers

2/2006-5/2006Senior Vice President and General Counsel of CMS Energy

2/2006-5/2006Vice President and General Counsel of Consumers

7/2004-2/2006John M. Butler*

45

Senior Vice President of CMS Energy

2006-PresentSenior Vice President of Consumers

2006-PresentSenior Vice President of CMS Enterprises

2006-PresentDavid G. Mengebier

52

Senior Vice President and Chief Compliance Officer of CMS Energy

11/2006-PresentSenior Vice President and Chief Compliance Officer of Consumers

11/2006-PresentSenior Vice President of CMS Enterprises

2003-PresentSenior Vice President of CMS Energy

2001-11/2006Senior Vice President of Consumers

2001-11/2006 28




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##### Table of Contents



Name

Age

Position

PeriodJohn G. Russell

52

President and Chief Operating Officer of Consumers

2004-PresentGlenn P. Barba

44

Vice President, Controller and Chief Accounting Officer of CMS
    Energy

2003-PresentVice President, Controller and Chief Accounting Officer of
    Consumers

2003-PresentVice President, Chief Accounting Officer and Controller of CMS
    Enterprises

11/2007-PresentVice President and Chief Accounting Officer of CMS Enterprises

2003-11/2007     *
    
    From 2004 until June 2006, Mr. Butler was Human Resources
    Director, Manufacturing and Engineering at Dow.      CONSUMERS EXECUTIVE OFFICERS (as of February 1, 2010)
  Name

Age

Position

PeriodDavid W. Joos

56

President and CEO of CMS Energy

2004-PresentCEO of Consumers

2004-PresentChairman of the Board, President, CEO of CMS Enterprises

5/2008-PresentDirector of CMS Energy

2001-PresentDirector of Consumers

2001-PresentDirector of CMS Enterprises

2000-PresentChairman of the Board, CEO of CMS Enterprises

2003-5/2008Thomas J. Webb

57

Executive Vice President, CFO of CMS Energy

2002-PresentExecutive Vice President, CFO of Consumers

2002-PresentExecutive Vice President, CFO of CMS Enterprises

2002-PresentDirector of CMS Enterprises

2002-PresentJames E. Brunner

57

Senior Vice President and General Counsel of CMS Energy

11/2006-PresentSenior Vice President and General Counsel of Consumers

11/2006-PresentSenior Vice President and General Counsel of CMS Enterprises

11/2007-PresentDirector of CMS Enterprises

2006-PresentSenior Vice President of CMS Enterprises

2006-11/2007Senior Vice President, General Counsel and Chief Compliance
    Officer of CMS Energy

5/2006-11/2006Senior Vice President, General Counsel and Chief Compliance
    Officer of Consumers

5/2006-11/2006Senior Vice President, General Counsel and Interim Chief
    Compliance Officer of Consumers

2/2006-5/2006Senior Vice President and General Counsel of CMS Energy

2/2006-5/2006Vice President and General Counsel of Consumers

7/2004-2/2006 29




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##### Table of Contents



Name

Age

Position

PeriodJohn M. Butler*

45

Senior Vice President of CMS Energy

2006-PresentSenior Vice President of Consumers

2006-PresentSenior Vice President of CMS Enterprises

2006-PresentDavid G. Mengebier

52

Senior Vice President and Chief Compliance Officer of CMS Energy

11/2006-PresentSenior Vice President and Chief Compliance Officer of Consumers

11/2006-PresentSenior Vice President of CMS Enterprises

2003-PresentSenior Vice President of CMS Energy

2001-11/2006Senior Vice President of Consumers

2001-11/2006John G. Russell

52

President and Chief Operating Officer of Consumers

2004-PresentWilliam E. Garrity

61

Senior Vice President of Consumers

2005-PresentVice President of Consumers

1999-2005Frank Johnson

61

Senior Vice President of Consumers

2001-PresentGlenn P. Barba

44

Vice President, Controller and Chief Accounting Officer of CMS
    Energy

2003-PresentVice President, Controller and Chief Accounting Officer of
    Consumers

2003-PresentVice President, Chief Accounting Officer and Controller of CMS
    Enterprises

11/2007-PresentVice President and Chief Accounting Officer of CMS Enterprises

2003-11/2007     *
    
    From 2004 until June 2006, Mr. Butler was Human Resources
    Director, Manufacturing and Engineering at Dow.      AVAILABLE
    INFORMATION
  Form 10-K, Form 10-Q, Form 8-K,
  
    Corporate Governance Principles;
    Codes of Conduct (Code of Conduct and Guide to Ethical Business
    Behavior 2010);
    Board committee charters (including the Audit Committee, the
    Compensation and Human Resources Committee, the Finance
    Committee, and the Governance and Public Responsibility
    Committee); and
    Articles of Incorporation (and amendments) and Bylaws.    1-800-SEC-0330. http://www.sec.gov.
 30




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##### Table of Contents



ITEM 1A. RISK
    FACTORS    CMS
    Energy depends on dividends from its subsidiaries to meet its
    debt service obligations.
    CMS
    Energy has substantial indebtedness that could limit its
    financial flexibility and hence its ability to meet its debt
    service obligations.
      
    a significant portion of its cash flow from operations will be
    dedicated to the payment of principal and interest on its
    indebtedness and will not be available for other purposes;
    covenants contained in its existing debt arrangements require it
    to meet certain financial tests, which may affect its
    flexibility in planning for, and reacting to, changes in its
    business;
    its ability to obtain additional financing for working capital,
    capital expenditures, acquisitions, and general corporate and
    other purposes may be limited;
    it may be at a competitive disadvantage to its competitors that
    are less leveraged;
    its vulnerability to adverse economic and industry conditions
    may increase; and
    its future credit ratings may fluctuate.   31




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##### Table of Contents



CMS
    Energy cannot predict the outcome of regulatory reviews and
    claims regarding its participation in the development of Bay
    Harbor.
    
    options for the disposal of leachate;
    the capping and excavation of CKD;
    the location and design of collection lines and upstream
    diversion of water;
    potential flow of leachate below the collection system;
    applicable criteria for various substances such as
    mercury; and
    other matters that are likely to affect the scope of remedial
    work that CMS Land and CMS Capital may be obligated to undertake.    CMS
    Energy may be affected adversely by a regulatory investigation
    and civil lawsuits regarding pricing information that CMS MST
    and CMS Field Services provided to market
    publications.
      CMS
    Energy and Consumers retain contingent liabilities in connection
    with their asset sales.
    
    retain specified preexisting liabilities, such as for taxes,
    pensions, or environmental conditions;
    indemnify the buyers against specified risks, including the
    inaccuracy of representations and warranties they make; and
    make payments to the buyers depending on the outcome of
    post-closing adjustments, litigation, audits, or other reviews. 32




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##### Table of Contents



CMS
    Energy and Consumers have financing needs and could be unable to
    obtain bank financing or access the capital markets. Potential
    disruption in the capital and credit markets could have an
    adverse effect on CMS Energys and Consumers
    businesses, including the availability and cost of short-term
    funds for liquidity requirements and their ability to meet
    long-term commitments. These consequences could have an adverse
    effect on CMS Energys and Consumers liquidity,
    financial condition, and results of operations.
        and/or and/or
    CMS
    Energy and Consumers could incur significant costs to comply
    with environmental requirements.
   33




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##### Table of Contents




    litigation originated by third parties against CMS Energy,
    Consumers, or their subsidiaries due to CMS Energys or
    Consumers greenhouse gas emissions;
    impairment of CMS Energys or Consumers reputation
    due to their greenhouse gas emissions and public perception of
    their response to potential greenhouse gas regulations, rules,
    and legislation;
    extreme weather conditions, such as severe storms, that may
    affect customer demand, company operations, or assets.        Market
    performance and other changes may decrease the value of benefit
    plan assets, which then could require significant
    funding.
   34




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##### Table of Contents



Periodic
    reviews of the values of CMS Energys and Consumers
    assets could result in accounting charges.
    CMS
    Energys and Consumers businesses have safety
    risks.
    CMS
    Energys and Consumers revenues and results of
    operations are subject to risks that are beyond their control,
    including but not limited to natural disasters, terrorist
    attacks or related acts of war, hostile cyber intrusions, or
    other catastrophic events.
    CMS
    Energy and Consumers are exposed to significant reputational
    risks.
    Energy
    risk management strategies may not be effective in managing fuel
    and electricity pricing risks, which could result in
    unanticipated liabilities to Consumers and CMS Energy or
    increased volatility of their earnings.
   35




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##### Table of Contents



Changes
    in taxation as well as the inherent difficulty in quantifying
    potential tax effects of business decisions could negatively
    impact CMS Energys and Consumers results of
    operations.
  and/or
    Consumers
    is exposed to risks related to general economic conditions in
    its service territories.
    CMS
    Energys and Consumers energy sales and operations
    are affected by seasonal factors and varying weather conditions
    from year to year.
   36




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##### Table of Contents



Unplanned
    power plant outages may be costly for Consumers.
    Consumers
    may not be able to obtain an adequate supply of coal or natural
    gas, which could limit its ability to operate its electric
    generation facilities or serve its natural gas
    customers.
      Electric
    industry regulation could have an adverse effect on CMS
    Energys and Consumers businesses.
         37




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##### Table of Contents



CMS
    Energy and Consumers are subject to rate
    regulation.
            CMS
    Energy and Consumers are exposed to credit risk of those with
    whom they do business.
      CMS
    Energy could be required to pay cash to certain security holders
    in connection with the optional conversion of their convertible
    securities.
   38




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##### Table of Contents



Consumers
    has a significant capital investment program planned for the
    next five years.
   ITEM 1B.
    UNRESOLVED STAFF COMMENTS   ITEM 2.
    PROPERTIES    
    Business, Business Segments, Consumers Electric Utility,
    Electric Utility Properties;
    Business, Business Segments, Consumers Gas Utility, Gas Utility
    Properties; and
    Business, Business Segments, IPP, IPP Properties. ITEM 3. LEGAL
    PROCEEDINGS     ITEM 4.
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS  CMS
    Energy
    Consumers
   39




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##### Table of Contents



PART II ITEM 5. MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER
    MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES  CMS
    Energy
      Consumers
    In millionsFebruary


May


August


November2009

$
72


$
58


$
103


$
522008


113



55



70



59
     Issuer
    Repurchases of Equity Securities
    Unregistered
    Sales of Equity Securities
   40




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##### Table of Contents



ITEM 6.
    SELECTED FINANCIAL DATA  CMS
    Energy
    Consumers
   ITEM 7.MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS  CMS
    Energy
    Consumers
   ITEM 7A.
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  CMS
    Energy
    Consumers
   41




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##### Table of Contents



ITEM 8.
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA  PageIndex to Financial Statements:Selected Financial InformationCMS Energy Corporation


44Consumers Energy Company


45Managements Discussion and Analysis


47Consolidated Financial StatementsCMS Energy Corporation


76Consumers Energy Company


84Notes to Consolidated Financial Statements


93Reports of Independent Registered Public
    Accounting Firms


172  42




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##### Table of Contents



2009 Consolidated
    Financial Statements
  and
  
   2009 Consolidated
    Financial Statements
  43




---



##### Table of Contents



Selected
    Financial Information
    CMS Energy Corporation  2009


2008


2007


2006


2005Operating revenue (in millions)


($)



6,205



6,807



6,451



6,117



5,869Income (loss) from equity method investees (in millions)


($)



(2
)


5



40



89



125Income (loss) from continuing operations (in millions)(c)(d)


($)



220



301



(120
)


(244
)


(590
)Income (loss) from discontinued operations (in millions)


($)



20



1



(110
)


60



61Net income (loss) available to common stockholders (in
    millions)(c)


($)



218



284



(234
)


(96
)


(99
)Average common shares outstanding (in thousands)






227,169



225,671



224,473



221,618



213,335Net income (loss) from continuing operations per average common
    shareCMS Energy  Basic(c)


($)



0.87



1.25



(0.65
)


(0.67
)


(0.73
)- Diluted(c)


($)



0.83



1.20



(0.65
)


(0.67
)


(0.73
)Net income (loss) per average common shareCMS Energy  Basic(c)


($)



0.96



1.25



(1.04
)


(0.43
)


(0.47
)- Diluted(c)


($)



0.91



1.20



(1.04
)


(0.43
)


(0.47
)Cash provided by operations (in millions)


($)



848



557



23



688



599Capital expenditures, excluding assets placed under capital
    lease (in millions)


($)



818



792



1,263



670



593Total assets (in millions)(a)(c)


($)



15,256



14,901



14,180



15,324



15,974Long-term debt, excluding current portion (in millions)(a)(c)


($)



5,861



5,837



5,355



6,160



6,728Long-term debt-related parties, excluding current portion (in
    millions)


($)



34



178



178



178



178Non-current portion of capital and finance lease obligations (in
    millions)


($)



197



206



225



42



308Total preferred stock (in millions)


($)



283



287



294



305



305Cash dividends declared per common share


($)



0.50



0.36



0.20







Market price of common stock at year-end


($)



15.66



10.11



17.38



16.70



14.51Book value per common share at year-end


($)



11.42



10.93



9.54



10.14



10.67Number of employees at year-end (full-time equivalents)






8,039



7,970



7,898



8,640



8,713Electric Utility StatisticsSales (billions of kWh)






36



37



39



38



39Customers (in thousands)






1,796



1,814



1,799



1,797



1,789Average sales rate per kWh


(¢)



9.81



9.48



8.65



8.46



6.73Gas Utility StatisticsSales and transportation deliveries (bcf)






319



338



340



309



350Customers (in thousands)(b)






1,708



1,713



1,710



1,714



1,708Average sales rate per mcf


($)



10.73



11.25



10.66



10.44



9.61    (a)
    
    Until their sale in November 2006 , CMS Energy was the primary
    beneficiary of both the MCV Partnership and the First Midland
    Limited Partnership. As a result, CMS Energy consolidated their
    assets, liabilities and activities into its consolidated
    financial statements as of and for the year ended
    December 31, 2005. These partnerships had third-party
    obligations totaling $482 million at December 31,
    2005. Property, plant and equipment serving as collateral for
    these obligations had a carrying value of $224 million at
    December 31, 2005.(b)
    
    Excludes off-system transportation customers.(c)
    
    Prior year data has been updated to reflect the impacts of FSP
    APB 14-1.
    For additional information, see Note 4, New Accounting
    Standards, Implementation of New Accounting
    Standards.(d)
    
    Income (loss) from continuing operations includes income (loss)
    attributable to noncontrolling interests of $11 million at
    December 31, 2009, $7 million at December 31,
    2008, $(8) million at December 31, 2007,
    $(97) million at December 31, 2006, and
    $(438) million at December 31, 2005. 44




---



##### Table of Contents



Selected
    Financial Information
    Consumers Energy Company  2009


2008


2007


2006


2005Operating revenue (in millions)


($)



5,963



6,421



6,064



5,721



5,232Income from equity method investees (inmillions)


($)















1



1Net income (loss) (in millions)


($)



293



364



312



186



(96
)Net income (loss) available to commonstockholder (in millions)


($)



291



362



310



184



(98
)Cash provided by operations (in millions)


($)



922



873



440



474



639Capital expenditures, excluding assetsplaced under capital lease (in millions)


($)



811



789



1,258



646



572Total assets (in millions)(a)


($)



14,622



14,246



13,401



12,845



13,178Long-term debt, excluding currentportion (in millions)(a)


($)



4,063



3,908



3,692



4,127



4,303Non-current portion of capital and financelease obligations (in millions)


($)



197



206



225



42



308Total preferred stock (in millions)


($)



44



44



44



44



44Number of preferred stockholders at year-end






1,531



1,584



1,641



1,728



1,823Number of employees at year-end(full-time equivalents)






7,755



7,697



7,614



8,026



8,114Electric Utility StatisticsSales (billions of kWh)






36



37



39



38



39Customers (in thousands)






1,796



1,814



1,799



1,797



1,789Average sales rate per kWh


(¢)



9.81



9.48



8.65



8.46



6.73Gas Utility StatisticsSales and transportation deliveries (bcf)






319



338



340



309



350Customers (in thousands)(b)






1,708



1,713



1,710



1,714



1,708Average sales rate per mcf


($)



10.73



11.25



10.66



10.44



9.61     (a)
    
    Until their sale in November 2006, Consumers was the primary
    beneficiary of the MCV Partnership and the First Midland Limited
    Partnership. As a result, Consumers consolidated their assets,
    liabilities and activities into its consolidated financial
    statements as of and for the year ended December 31, 2005.
    These partnerships had third-party obligations totaling
    $482 million at December 31, 2005. Property, plant and
    equipment serving as collateral for these obligations had a
    carrying value of $224 million at December 31, 2005.(b)
    
    Excludes off-system transportation customers. 45




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    intentionally left blank)
  46




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##### Table of Contents



CMS Energy
    Corporation
  Consumers Energy
    Company
  MANAGEMENTS
    DISCUSSION AND ANALYSIS
    EXECUTIVE
    OVERVIEW
        
    regulation and regulatory matters;
    economic conditions;
    weather, especially during the heating season;
    energy commodity prices;
    interest rates; and
    CMS Energys and Consumers securities credit ratings.      needs-and-alternatives
   47




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##### Table of Contents




    investing in Consumers utility system;
    growing earnings and operating cash flow while controlling
    operating and fuel costs; and
    maintaining principles of safe, efficient operations, customer
    value, fair and timely regulation, and consistent financial
    performance.   48




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##### Table of Contents



RESULTS OF
    OPERATIONS
  CMS
    Energys Consolidated Results of Operations
  Years Ended December 31

2009


2008


2007In Millions (except for Per Share Amounts)Net Income (Loss) Available to Common Stockholders

$
218


$
284


$
(234
)Basic Earnings (Loss) Per Share

$
0.96


$
1.25


$
(1.04
)Diluted Earnings (Loss) Per Share

$
0.91


$
1.20


$
(1.04
)   Years Ended December 31

2009


2008


Change


2008


2007


ChangeIn MillionsElectric Utility

$
194


$
271


$
(77
)

$
271


$
196


$
75Gas Utility


96



89



7



89



87



2Enterprises


(7
)


13



(20
)


13



(412
)


425Corporate Interest and Other


(85
)


(90
)


5



(90
)


(16
)


(74
)Discontinued Operations


20



1



19



1



(89
)


90Net Income (Loss) Available to Common Stockholders

$
218


$
284


$
(66
)

$
284


$
(234
)

$
518    49




---



##### Table of Contents



2009 Over/(Under) 2008(In Millions)

increase in electric and gas revenues at Consumers due primarily
    to rate orders

$
139

increase from discontinued operations due primarily to a benefit
    from the expiration of an indemnity obligation, offset partially
    by operating losses from assets held for sale


19

absence of an impairment charge on SERP investments recorded in
    2008


15

change in corporate interest and other due primarily to impacts
    from early retirement of debt


10

decrease in other net expenses at enterprises due primarily to
    reduced maintenance expense


5

decrease at Consumers electric utility due to the Big Rock
    nuclear decommissioning refund


(79
)

decrease in electric and gas revenues due to unfavorable weather


(34
)

increase in other net expenses at Consumers related primarily to
    higher interest and higher forestry and tree-trimming costs


(31
)

increase in projected Bay Harbor remediation costs


(22
)

increase in plant maintenance expense at Consumers


(20
)

increase in pension and OPEB expenses at Consumers


(19
)

decrease in electric and gas revenues at Consumers due to
    unfavorable economic conditions, offset partially by a favorable
    sales mix


(14
)

absence of gains from the sale of sulfur dioxide credits
    recognized at Consumers in 2008


(12
)

other net decrease at enterprises and corporate and other due
    primarily to lower gains on asset sales and the absence of
    benefits related to the reduction of certain tax valuation
    allowances


(12
)

absence of RCP savings recorded in 2008 at Consumers related to
    the MCV PPA


(11
)Total change

$
(66
)    50




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##### Table of Contents



2008 Over/(Under) 2007(In Millions)

absence of costs incurred by CMS ERM due to the termination of
    certain electricity sales agreements and the rescission of a
    contract with Quicksilver

$
217

absence of impairment charges related to international
    businesses sold in 2007


133

increase in electric and gas revenues at Consumers due primarily
    to favorable rate orders


129

absence of a net loss on the disposal of discontinued operations
    in 2007


90

other net increase at enterprises and corporate and other due
    primarily to reduced interest and operating and maintenance
    expense, and the absence of early debt retirement premiums paid
    in 2007


38

elimination of certain costs at Consumers from the MCV PPA


29

absence of an increase in the provision for environmental
    remediation costs at Bay Harbor


29

absence of a 2007 net tax benefit, associated with the sale
    of assets, recorded at enterprises and corporate and other


(53
)

decreased electric deliveries at Consumers


(51
)

decrease due to a charge that recognized an
    other-than-temporary
    decline in the fair value of SERP investments in 2008 which
    replaced a gain on the sale of SERP assets in 2007


(30
)

other combined net decrease at Consumers due primarily to higher
    depreciation expense offset by a reduction in nuclear operating
    and maintenance costs


(13
)Total change

$
518   Consumers
    Electric Utility Results of Operations
  Years Ended December 31

2009


2008


Change


2008


2007


ChangeIn MillionsNet Income Available to Common Stockholders

$
194


$
271


$
(77
)

$
271


$
196


$
75Reasons for the change:Electric deliveries and rate increase









$
(6
)









$
90Power supply costs and related revenue










(1
)










18Other income, net of expenses










14











(46
)Maintenance and other operating expenses










(77
)










78Depreciation and amortization










(2
)










(38
)General taxes










(10
)










15Interest charges










(42
)










11Income taxes










47











(53
)Total change









$
(77
)









$
75   Electric deliveries and rate increase:
 51




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##### Table of Contents



Power supply costs and related revenue:
    Other income, net of expenses: other-than-temporary
  other-than-temporary
  Maintenance and other operating expenses:
 52




---



##### Table of Contents



Depreciation and amortization:
    General taxes:
    Interest charges:
    Income taxes:
   53




---



##### Table of Contents



Consumers
    Gas Utility Results of Operations
  Years Ended December 31

2009


2008


Change


2008


2007


ChangeIn MillionsNet Income Available to Common Stockholders

$
96


$
89


$
7


$
89


$
87


$
2Reasons for the change:Gas deliveries and rate increase









$
29










$
44Other income, net of expenses










13











(28
)Maintenance and other operating expenses










(32
)










(24
)Depreciation and amortization










18











(8
)General taxes










(4
)










7Interest charges










(5
)










9Income taxes










(12
)










2Total change









$
7










$
2   Gas deliveries and rate increase:
    Other income, net of expenses: other-than-temporary
  other-than-temporary
  Maintenance and other operating expenses:
    Depreciation and amortization:
   54




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##### Table of Contents



General taxes:
    Interest charges:
    Income taxes:
    Enterprises
    Results of Operations
  Years Ended December 31

2009


2008


Change


2008


2007


ChangeIn MillionsNet Income (Loss) Available to Common Stockholders

$
(7
)

$
13


$
(20
)

$
13


$
(412
)

$
425   other-than-temporary
  mark-to-market other-than-temporary
  Corporate
    Interest and Other Results of Operations
  Years Ended December 31

2009


2008


Change


2008


2007


ChangeIn MillionsNet Income (Loss) Available to Common Stockholders

$
(85
)

$
(90
)

$
5


$
(90
)

$
(16
)

$
(74
)    55




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##### Table of Contents



Discontinued
    Operations
      CAPITAL
    RESOURCES AND LIQUIDITY
    
    In February 2009, Consumers retired $200 million of FMBs at
    maturity;
    In March 2009, Consumers issued $500 million in FMBs;
    In June 2009, CMS Energy issued $173 million in convertible
    senior notes and $300 million in senior notes, and early
    retired $144 million of its $178 million of long-term
    debt to related parties;
    In July 2009, CMS Energy repurchased and early retired
    $233 million principal amount of the senior notes due 2010
    and $87 million principal amount of the senior notes due
    2011;
    In August 2009, Consumers retired $150 million of FMBs at
    maturity;
    In December 2009, CMS Energys $239 million preferred
    stock and $139 million 3.375 percent senior notes
    became convertible at the holders option for the first
    quarter of 2010; and
    In January 2010, CMS Energy issued $300 million of
    6.25 percent senior notes due 2020.    
    Consumers renewed its accounts receivable sales program in
    February 2010 through February 2011;
    Consumers renewed its $150 million
    364-day
    revolving credit facility in August 2009;
    Consumers renewed its letter of credit facility in the amount of
    $30 million in September 2009;
    Consumers $500 million revolving credit facility is
    planned for renewal in 2012;
    Consumers FMBs maturities are $250 million in 2010
    and $300 million in 2012;
    Consumers tax-exempt pollution control revenue bond
    maturities are $58 million in 2010;
    CMS Energys senior notes maturities are $67 million
    in 2010, $214 million in 2011, and $150 million in
    2012; and
    CMS Energys $550 million revolving credit facility is
    planned for renewal in 2012. 56




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##### Table of Contents



Cash
    Position, Investing, and Financing
      Operating Activities:
  Years Ended December 31

2009


2008


ChangeIn MillionsCMS Energy, including
    Consumers   Net income

$
240


$
302


$
(62
)   Non-cash transactions(a)


865



907



(42
)$
1,105


$
1,209


$
(104
)   Sale of gas purchased in prior year


845



915



(70
)   Purchase of gas in current year


(718
)


(963
)


245   Electric sales contract termination
    payment






(275
)


275   Accounts receivable sales, net


(120
)


170



(290
)   Postretirement benefits contribution


(262
)


(51
)


(211
)   Change in other core working capital(b)


(62
)


(278
)


216   Other changes in assets and liabilities,
    net


60



(170
)


230Net cash provided by operating activities

$
848


$
557


$
291Consumers   Net income

$
293


$
364


$
(71
)   Non-cash transactions(a)


841



956



(115
)$
1,134


$
1,320


$
(186
)   Sale of gas purchased in prior year


845



915



(70
)   Purchase of gas in current year


(718
)


(963
)


245   Accounts receivable sales, net


(120
)


170



(290
)   Postretirement benefits contribution


(254
)


(50
)


(204
)   Change in other core working capital(b)


(58
)


(289
)


231   Other changes in assets and liabilities,
    net


93



(230
)


323Net cash provided by operating activities

$
922


$
873


$
49     (a)
    
    Non-cash transactions comprise depreciation and amortization,
    changes in deferred income taxes, postretirement benefits
    expense, and other non-cash items.(b)
    
    Other core working capital comprises other changes in accounts
    receivable and accrued revenues, inventories, and accounts
    payable.   57




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##### Table of Contents



Years Ended December 31

2008


2007


ChangeIn MillionsCMS Energy, including
    Consumers   Net income (loss)

$
302


$
(230
)

$
532   Non-cash transactions(a)


907



1,078



(171
)$
1,209


$
848


$
361   Sale of gas purchased in prior year


915



823



92   Purchase of gas in current year


(963
)


(818
)


(145
)   Electric sales contract termination
    payment


(275
)






(275
)   Accounts receivable sales


170







170   Postretirement benefits contribution


(51
)


(184
)


133   Change in other core working capital(b)


(278
)


(511
)


233   Shareholder class action settlement
    payment






(125
)


125   Other changes in assets and liabilities,
    net


(170
)


(10
)


(160
)Net cash provided by operating activities

$
557


$
23


$
534Consumers   Net income

$
364


$
312


$
52   Non-cash transactions(a)


956



747



209$
1,320


$
1,059


$
261   Sale of gas purchased in prior year


915



823



92   Purchase of gas in current year


(963
)


(818
)


(145
)   Accounts receivable sales


170







170   Postretirement benefits contribution


(50
)


(173
)


123   Change in other core working capital(b)


(289
)


(475
)


186   Other changes in assets and liabilities,
    net


(230
)


24



(254
)Net cash provided by operating activities

$
873


$
440


$
433     (a)
    
    Non-cash transactions comprise depreciation and amortization,
    changes in deferred income taxes, postretirement benefits
    expense, electric contract sales termination, and other non-cash
    items.(b)
    
    Other core working capital comprises other changes in accounts
    receivable and accrued revenues, inventories, and accounts
    payable.     58




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##### Table of Contents



Investing Activities:
  Years Ended December 31

2009


2008


ChangeIn MillionsCMS Energy, including
    Consumers   Capital expenditures

$
(818
)

$
(792
)

$
(26
)   Increase in non-current notes receivable


(83
)


(19
)


(64
)   Proceeds from the sale of assets


7



3



4   Costs to retire property and other


(41
)


(31
)


(10
)Net cash used in investing activities

$
(935
)

$
(839
)

$
(96
)Consumers   Capital expenditures

$
(811
)

$
(789
)

$
(22
)   Proceeds from sale of assets


7







7   Costs to retire property and other


(46
)


(34
)


(12
)Net cash used in investing activities

$
(850
)

$
(823
)

$
(27
)       Years Ended December 31

2008


2007


ChangeIn MillionsCMS Energy, including
    Consumers   Capital expenditures

$
(792
)

$
(1,263
)

$
471   Proceeds from nuclear decommissioning
    funds, net






332



(332
)   Proceeds from the sale of assets


3



1,717



(1,714
)   Cash relinquished from the sale of assets






(113
)


113   Increase in non-current notes receivable


(19
)


(32
)


13   Costs to retire property and other


(31
)


21



(52
)Net cash provided by (used in) investing activities

$
(839
)

$
662


$
(1,501
)Consumers   Capital expenditures

$
(789
)

$
(1,258
)

$
469   Proceeds from nuclear decommissioning
    funds, net






332



(332
)   Proceeds from sale of assets






337



(337
)   Costs to retire property and other


(34
)


6



(40
)Net cash used in investing activities

$
(823
)

$
(583
)

$
(240
)    59




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##### Table of Contents



Financing Activities:
  Years Ended December 31

2009


2008


ChangeIn MillionsCMS Energy, including
    Consumers   Issuance of FMBs, convertible senior
    notes,senior notes, and other debt

$
1,129


$
796


$
333   Borrowings on revolving credit facility


245



600



(355
)   Retirement of debt and other debtmaturity payments


(946
)


(570
)


(376
)   Payments on revolving credit facility


(325
)


(560
)


235   Payments of common and preferred stock
    dividends


(125
)


(93
)


(32
)   Other financing activities


(13
)


(26
)


13Net cash provided by (used in) financing activities

$
(35
)

$
147


$
(182
)Consumers   Issuance of FMBs

$
500


$
600


$
(100
)   Retirement of debt and other debtmaturity payments


(387
)


(444
)


57   Payments of common and preferred stock
    dividends


(287
)


(299
)


12   Stockholders contribution from CMS
    Energy


100







100   Other financing activities


(28
)


(33
)


5Net cash used in financing activities

$
(102
)

$
(176
)

$
74       Years Ended December 31

2008


2007


ChangeIn MillionsCMS Energy, including
    Consumers   Issuance of FMBs, convertible senior
    notes,senior notes and other debt

$
796


$
515


$
281   Borrowings on revolving credit facility


600







600   Retirement of debt and other debtmaturity payments


(570
)


(1,095
)


525   Payments on revolving credit facility


(560
)






(560
)   Payments of common and preferred stock
    dividends


(93
)


(56
)


(37
)   Other financing activities


(26
)


(54
)


28Net cash provided by (used in) financing activities

$
147


$
(690
)

$
837Consumers   Issuance of FMBs

$
600


$



$
600   Retirement of debt and other debtmaturity payments


(444
)


(34
)


(410
)   Payments of common and preferred stock
    dividends


(299
)


(252
)


(47
)   Stockholders contribution from CMS
    Energy






650



(650
)   Other financing activities


(33
)


(63
)


30Net cash provided by (used in) financing activities

$
(176
)

$
301


$
(477
)    60




---



##### Table of Contents



Restrictive Covenants:
  (1) Minimum


Result at(2)Maximum


December 31,Credit agreement or facility

Ratio

Requirement


2009CMS Energys senior notes indenture

Interest Coverage


(1)1.7 to 1.0



3.10 to 1.0CMS Energys revolving credit agreement

Debt to EBITDA


(2)7.0 to 1.0



5.43 to 1.0CMS Energys revolving credit agreement

Interest Coverage


(1)1.2 to 1.0



3.05 to 1.0Consumers credit agreements

Debt to Capital


(2)0.7 to 1.0



0.52 to 1.0   Credit Ratings:
  Issuer

Securities

S&P

Moodys

FitchCMS Energy

Senior unsecured debt

BB+

Ba1

BB+CMS Energy

Secured bank credit facilities

−

Baa3

BBB-CMS Energy

Trust preferred securities

BB

Ba2

BB-(Long-term debt - related parties)CMS Energy

Preferred stock

BB

Ba2

BB-Consumers

Senior secured debt (FMBs)

BBB

A3

BBB+Consumers

Senior unsecured debt

BBB-

Baa2

BBBConsumers

Preferred stock

BB

Baa3

BB+Consumers

Securitization bonds

AAA

Aaa

AAAConsumers

Tax exempt bonds

BBB

A3

−Consumers

Tax exempt bonds, letter of credit backed

AA

Aa2

AA     Obligations
    And Commitments
  Contractual Obligations:
 61




---



##### Table of Contents



Payments DueLess Than


One to


Three to


More ThanContractual Obligations at December 31, 2009

Total


One Year


Three Years


Five Years


Five YearsIn MillionsCMS Energy, including
    ConsumersLong-term debt(a)

$
6,609


$
533


$
840


$
845


$
4,391Interest payments on long-term debt(b)


2,873



346



618



519



1,390Capital and finance leases(c)


219



22



49



40



108Interest payments on capital and finance leases(d)


128



17



28



23



60Operating leases(e)


250



28



56



47



119Purchase obligations(f)


14,217



1,978



2,853



1,534



7,852Total contractual obligations

$
24,296


$
2,924


$
4,444


$
3,008


$
13,920ConsumersLong-term debt(a)

$
4,411


$
343


$
376


$
659


$
3,033Interest payments on long-term debt(b)


1,923



226



427



359



911Capital and finance leases(c)


219



22



49



40



108Interest payments on capital and finance leases(d)


128



17



28



23



60Operating leases(e)


250



28



56



47



119Purchase obligations(f)


14,217



1,978



2,853



1,534



7,852Purchase obligations  related parties(f)


1,737



79



169



186



1,303Total contractual obligations

$
22,885


$
2,693


$
3,958


$
2,848


$
13,386     (a)
    
    Principal amounts due on outstanding debt obligations, current
    and long-term, at December 31, 2009. For additional details
    on long-term debt, see Note 8, Financings and
    Capitalization.(b)
    
    Scheduled interest payments on both variable-rate and fixed-rate
    long-term debt, current and long-term. Variable interest
    payments are based on contractual rates in effect at
    December 31, 2009.(c)
    
    Principal portion of lease payments under capital and finance
    leases, comprising mainly leased service vehicles and certain
    PPAs.(d)
    
    Imputed interest on capital and finance leases.(e)
    
    Minimum noncancelable lease payments under leases of railroad
    cars and miscellaneous office buildings and equipment, which are
    accounted for as operating leases.(f)
    
    Long-term contracts for purchase of commodities and services.
    These obligations include operating contracts used to ensure
    adequate supply from generating facilities that meet PURPA
    requirements.        Revolving Credit Facilities:
 62




---



##### Table of Contents



Dividend Restrictions:
  Capital Expenditures:
  ThreeYears Ending December 31

2010


2011


2012


Years TotalIn MillionsCMS Energy, including
    ConsumersConsumers

$
1,090


$
1,020


$
1,560


$
3,670Enterprises


2



1



1



4Total

$
1,092


$
1,021


$
1,561


$
3,674ConsumersElectric utility operations(a)(b)

$
790


$
760


$
1,330


$
2,880Gas utility operations(b)


300



260



230



790Total Consumers

$
1,090


$
1,020


$
1,560


$
3,670     (a)
    
    These amounts include estimates for capital expenditures that
    may be required by current environmental laws, regulations, or
    potential consent decrees.(b)
    
    These amounts include estimates for capital expenditures related
    to information technology projects, facility improvements, and
    vehicle leasing. 63




---



##### Table of Contents



Off-Balance-Sheet
    Arrangements
  Off-Balance-Sheet Arrangements:
  Sale of Accounts Receivable:
  CRITICAL
    ACCOUNTING POLICIES
    Use
    of Estimates and Assumptions
   64




---



##### Table of Contents



Fair Value Measurements:
    Income Taxes:
  Long-Lived Assets and Equity Method Investments:
  
    the nature of the assets;
    projected future economic benefits;
    regulatory and political environments;
    historical and future cash flow and profitability
    measurements; and
    other external market conditions and factors.    Unbilled Revenues:
  Accounting
    for the Effects of Industry Regulation
     65




---



##### Table of Contents



Financial
    and Derivative Instruments and Market Risk Information
  Financial Instruments: available-for-sale available-for-sale
  Derivative Instruments:
        
    they do not have a notional amount (that is, a number of units
    specified in a derivative instrument, such as MWh of electricity
    or bcf of natural gas);
    they qualify for the normal purchases and sales
    exception; or
    there is not an active market for the commodity.  mark-to-market mark-to-market
 66




---



##### Table of Contents



Market Risk Information:
      Interest Rate Risk:
    December 31

2009


2008In MillionsCMS Energy, including
    ConsumersVariable-rate financing  before-tax annual earnings
    exposure

$



$
1Fixed-rate financing  potential reductionin
    fair value(a)


183



208ConsumersVariable-rate financing  before-tax annual earnings
    exposure

$



$
1Fixed-rate financing  potential reductionin
    fair value(a)


122



136     (a)
    
    Fair value reduction could be realized only if CMS Energy and
    Consumers transferred all of their fixed-rate financing to other
    creditors.  Commodity Price Risk:
    December 31

2009


2008In MillionsPotential reductionin fair value:Fixed price fuel contracts

$



$
1Electricity swaps and futures


1



Natural gas swaps and futures


1



1   Investment Securities Price Risk:
 67




---



##### Table of Contents



available-for-sale
    December 31

2009


2008In MillionsCMS Energy, including
    ConsumersPotential reductionin fair value of
    available-for-sale:Mutual funds

$



$
4Municipal bonds


1



1(Primarily SERP investments)ConsumersPotential reductionin fair value of
    available-for-sale
    equity securities (SERP investments and investment in CMS Energy
    common stock)

$
3


$
4     Retirement
    Benefits
  Pension:
  401(k):
  OPEB:
    
    life expectancies;
    discount rates;
    expected long-term rate of return on plan assets;
    rate of compensation increases; and
    anticipated health care costs.   68




---



##### Table of Contents



Expected

Pension Cost


OPEB Cost


Pension Contribution


OPEB ContributionIn MillionsCMS Energy, including
    Consumers2010

$
112


$
74


$
19


$
712011


112



71



179



712012


105



67



142



71Consumers2010

$
109


$
75


$
18


$
702011


108



73



173



702012


102



69



137



70         Asset
    Retirement Obligations
      OUTLOOK
    Consumers
    Electric Utility Business Outlook and Uncertainties
  Balanced Energy Initiative:
  
    energy efficiency; 69




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##### Table of Contents




    demand management;
    expanded use of renewable energy;
    development of new power plants and pursuit of additional PPAs
    to complement existing generating sources; and
    retirement of older, less efficient generating units.        Renewable Energy Plan:
    Energy Optimization Plan:
  Electric Customer Deliveries and
    Revenue:
   70




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##### Table of Contents




    energy conservation measures and results of energy efficiency
    programs;
    fluctuations in weather; and
    changes in economic conditions, including utilization and
    expansion or contraction of manufacturing facilities, population
    trends, and housing activity.    Electric ROA:
  Electric Environmental Estimates:
  Clean Air Act:
  Clean Air Interstate Rule: state-of-the-art
  State and Federal Mercury Air Rules:
    Greenhouse Gases:
 71




---



##### Table of Contents



Water:
    Electric Rate Matters:
  Consumers
    Gas Utility Business Outlook and Uncertainties
  Gas Deliveries:
 72




---



##### Table of Contents




    fluctuations in weather;
    use by IPP;
    availability and development of renewable energy sources;
    changes in gas prices;
    Michigan economic conditions including population trends and
    housing activity;
    the price of competing energy sources or fuels; and
    energy efficiency and conservation.  Gas Environmental Estimates:
    Gas Rate Matters:
  Enterprises
    Outlook and Uncertainties
      
    the impact of indemnity and environmental remediation
    obligations at Bay Harbor;
    the outcome of certain legal proceedings;
    the impact of lower electricity prices, caused primarily by
    lower natural gas prices, unseasonably cool weather in the
    summer, and decreased industrial production, on the
    profitability of enterprises generating units;
    the impact of representations, warranties, and indemnities
    provided by CMS Energy or its subsidiaries in connection with
    the sales of assets;
    the impact of changes in commodity prices and interest rates on
    certain derivative contracts that do not qualify for hedge
    accounting and must be marked to market through
    earnings; and
    the impact of economic conditions in Michigan, including
    population trends and housing activity.    Other
    Outlook and Uncertainties
  Smart Grid:
 73




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##### Table of Contents



Employee Separation Program:
  Litigation:
  EnerBank:
  NEW ACCOUNTING
    STANDARDS
   74




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  75




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##### Table of Contents



CMS Energy
    Corporation



CONSOLIDATED
    STATEMENTS OF INCOME (LOSS)  Years Ended December 312009


2008


2007In MillionsOperating Revenue

$
6,205


$
6,807


$
6,451Income (Loss) from Equity Method Investees


(2
)


5



40Operating ExpensesFuel for electric generation


541



600



523Purchased and interchange power


1,163



1,335



1,407Cost of gas sold


1,866



2,277



2,172Electric sales contract termination










279Other operating expenses


943



827



966Maintenance


220



192



199Depreciation and amortization


570



588



539General taxes


217



203



222Asset impairment charges










204Gain on asset sales, net


(13
)


(9
)


(21
)5,507



6,013



6,490Operating Income


696



799



1Other Income (Expense)Interest and dividends


24



30



96Allowance for equity funds used during construction


26



33



31Other income


54



15



41Other expense


(30
)


(37
)


(39
)74



41



129Interest ChargesInterest on long-term debt


383



371



405Other interest


56



33



48Allowance for borrowed funds used during construction


(4
)


(4
)


(6
)435



400



447Income (Loss) Before Income Taxes


335



440



(317
)Income Tax Expense (Benefit)


115



139



(197
)Income (Loss) From Continuing Operations


220



301



(120
)Income (Loss) From Discontinued Operations, Net of TaxExpense (Benefit) of $13, $1, and $(1)


20



1



(110
)Net Income (Loss)


240



302



(230
)Income (Loss) Attributable to Noncontrolling Interests


11



7



(8
)Net Income (Loss) Attributable to CMS Energy


229



295



(222
)Preferred Stock Dividends


11



11



11Redemption Premium on Preferred Stock










1Net Income (Loss) Available to Common Stockholders

$
218


$
284


$
(234
)  76




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##### Table of Contents



Years Ended December 312009


2008


2007In Millions, Except PerShare AmountsAmounts Attributable to Common StockholdersIncome (Loss) from Continuing Operations

$
198


$
283


$
(145
)Income (Loss) from Discontinued Operations


20



1



(89
)Net Income (Loss) Available to Common Stockholders

$
218


$
284


$
(234
)Amounts Attributable to Noncontrolling InterestsIncome from Continuing Operations

$
11


$
7


$
13Loss from Discontinued Operations










(21
)Income (Loss) Attributable to Noncontrolling Interests

$
11


$
7


$
(8
)Basic Earnings (Loss) Per Average Common ShareIncome (Loss) from Continuing Operations

$
0.87


$
1.25


$
(0.65
)Income (Loss) from Discontinued Operations


0.09







(0.39
)Net Income (Loss) Attributable to Common Stock

$
0.96


$
1.25


$
(1.04
)Diluted Earnings (Loss) Per Average Common ShareIncome (Loss) from Continuing Operations

$
0.83


$
1.20


$
(0.65
)Income (Loss) from Discontinued Operations


0.08







(0.39
)Net Income (Loss) Attributable to Common Stock

$
0.91


$
1.20


$
(1.04
)Dividends Declared Per Common Share

$
0.50


$
0.36


$
0.20    77




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##### Table of Contents



CMS Energy
    Corporation
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Years Ended December 312009


2008


2007In MillionsCash Flows from Operating ActivitiesNet income (loss)

$
240


$
302


$
(230
)Adjustments to reconcile net income (loss) to net cash provided
    by operating activitiesDepreciation and amortization


570



589



545Deferred income taxes and investment tax credit


122



126



(226
)Postretirement benefits expense


181



144



131Electric sales contract termination










279Asset impairment charges










204Allowance for equity funds used during construction


(26
)


(33
)


(31
)Capital lease and other amortization


42



44



67Bad debt expense


54



51



37Gain due to expiration of indemnification


(50
)






(Loss) Gain on sale of assets, net


(8
)


(9
)


112Gain on extinguishment of long-term debt


(10
)






Loss (income) from equity method investees


2



(5
)


(40
)Cash distributions from equity method investees






4



18Postretirement benefits contributions


(262
)


(51
)


(184
)Electric sales contract termination payment






(275
)


Shareholder class action settlement payment










(125
)Changes in other assets and liabilities:Increase in accounts receivable and accrued revenues


(91
)


(80
)


(451
)Decrease (increase) in accrued power supply and gas revenue


(41
)


35



99Decrease (increase) in inventories


86



(71
)


(10
)Decrease in accounts payable


(50
)


(5
)


(45
)Decrease in accrued expenses


(6
)


(31
)


(31
)Decrease in other current and non-current assets


59



12



37Increase (decrease) in current and non-current regulatory
    liabilities


102



(178
)


(114
)Decrease in other current and non-current liabilities


(66
)


(12
)


(19
)Net cash provided by operating activities


848



557



23Cash Flows from Investing ActivitiesCapital expenditures (excludes assets placed under capital lease)


(818
)


(792
)


(1,263
)Cost to retire property


(49
)


(34
)


(28
)Proceeds from nuclear decommissioning trust funds, net










332Proceeds from sale of assets


7



3



1,717Cash relinquished from sale of assets










(113
)Decrease in restricted cash and cash equivalents


4



1



49Increase in non-current notes receivable


(83
)


(19
)


(32
)Other investing activities


4



2



Net cash provided by (used in) investing activities


(935
)


(839
)


662 78




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##### Table of Contents



Years Ended December 312009


2008


2007In MillionsCash Flows from Financing ActivitiesProceeds from issuance of notes, bonds, and other long-term debt


1,218



1,265



400Proceeds from EnerBank notes, net


39



23



28Issuance of common stock


9



9



15Retirement of bonds and other long-term debt, including related
    parties


(1,120
)


(990
)


(977
)Payments on securitization bonds


(34
)


(32
)


(31
)Redemption of preferred stock


(4
)


(1
)


(32
)Payment of common stock dividends


(114
)


(82
)


(45
)Payment of preferred stock dividends


(11
)


(11
)


(11
)Increase in notes payable


40







Payment of capital lease and finance lease obligations


(23
)


(26
)


(20
)Debt issuance costs, financing fees, and other


(35
)


(8
)


(17
)Net cash provided by (used in) financing activities


(35
)


147



(690
)Effect of Exchange Rates on Cash










2Changes in Cash and Cash Equivalents included in Assets Held
    for Sale


5



(2
)


100Net Decrease in Cash and Cash Equivalents


(122
)


(135
)


(3
)Cash and Cash Equivalents, Beginning of Period


207



344



247Cash and Cash Equivalents, End of Period

$
90


$
207


$
344Other cash flow activities and non-cash investing and
    financing activities were:Cash transactionsInterest paid (net of amounts capitalized)

$
422


$
372


$
441Income taxes paid (net of refunds of $-, $2, and $-)


17



3



14Non-cash transactionsOther assets placed under capital lease

$
16


$
5


$
229    79




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##### Table of Contents



CMS Energy
    Corporation
  CONSOLIDATED BALANCE
    SHEETS
  December 312009


2008In MillionsASSETSCurrent AssetsCash and cash equivalents

$
90


$
207Restricted cash and cash equivalents


32



35Accounts receivable and accrued revenue,less allowances of $23 in 2009 and $26 in 2008


948



850Notes receivable


81



95Accrued power supply and gas revenue


48



7Inventories at average costGas in underground storage


1,043



1,168Materials and supplies


118



110Generating plant fuel stock


158



127Deferred property taxes


172



165Regulatory assets


19



19Assets held for sale


2



7Prepayments and other


31



372,742



2,827Plant, Property & Equipment (at cost)Plant, property & equipment, gross


13,716



12,960Less accumulated depreciation, depletion and amortization


4,540



4,387Plant, property & equipment, net


9,176



8,573Construction work in progress


506



6089,682



9,181Non-current AssetsRegulatory assets


2,291



2,419Notes receivable, less allowances of $6 in 2009 and $34 in 2008


269



186Investments


9



11Assets held for sale


9



10Other


254



2672,832



2,893Total Assets

$
15,256


$
14,901 80




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##### Table of Contents



December 312009


2008In MillionsSTOCKHOLDERS INVESTMENT AND LIABILITIESCurrent LiabilitiesCurrent portion of long-term debt, capital and finance lease
    obligations

$
694


$
514Notes payable


40



Accounts payable


509



516Accrued rate refunds


21



7Accrued interest


96



107Accrued taxes


283



289Deferred income taxes


43



100Regulatory liabilities


145



120Other


123



2101,954



1,863Non-current LiabilitiesRegulatory liabilities


1,991



1,868Postretirement benefits


1,460



1,502Asset retirement obligation


229



206Deferred investment tax credit


51



54Deferred income taxes


231



55Other


310



3174,272



4,002Commitments and Contingencies (Notes 6, 7, 8, 10 and 11)CapitalizationLong-term debt


5,895



6,015Non-current portion of capital and finance lease obligations


197



206Common stockholders equityCommon stock, authorized 350.0 shares; outstanding
    227.9 shares in 2009and 226.4 shares in 2008


2



2Other paid-in capital


4,560



4,533Accumulated other comprehensive loss


(33
)


(28
)Accumulated deficit


(1,927
)


(2,031
)Total common stockholders equity


2,602



2,476Preferred stock


239



243Noncontrolling interests


97



96Total equity


2,938



2,8159,030



9,036Total Stockholders Investment and Liabilities

$
15,256


$
14,901    81




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##### Table of Contents



CMS Energy
    Corporation
  CONSOLIDATED
    STATEMENTS OF CHANGES IN EQUITY
   Years Ended December 312009


2008


2007


2009


2008


2007Number of Shares in Thousands


In MillionsCommon StockAt beginning and end of period













$
2


$
2


$
2Other Paid-in CapitalAt beginning of period


226,414



225,146



222,783



4,533



4,517



4,505Common stock issued


1,793



1,751



2,339



17



17



30Common stock repurchased


(78
)


(38
)


(318
)


(1
)


(1
)


(5
)Common stock reacquired


(238
)


(445
)


(19
)










Common stock reissued










361











6Conversion option on convertible debt














11







Redemption of preferred stock






















(19
)At end of period


227,891



226,414



225,146



4,560



4,533



4,517Accumulated Other Comprehensive LossRetirement benefits liabilityAt beginning of period














(27
)


(15
)


(23
)Net gain (loss) arising during the period(a)














(6
)


(12
)


7Amortization of net actuarial loss(a)














1







1At end of period














(32
)


(27
)


(15
)InvestmentsAt beginning of period






















14Unrealized gain (loss) on investments(a)














5



(15
)


1Reclassification adjustments included in net income (loss)(a)














(5
)


15



(15
)At end of period






















Derivative instrumentsAt beginning of period














(1
)


(1
)


(12
)Unrealized loss on derivative instruments(a)






















(3
)Reclassification adjustments included in net income (loss)(a)






















14At end of period














(1
)


(1
)


(1
)Foreign currency translationAt beginning of period


















(128
)


(297
)Sale of interests in TGN(a)


















128



Sale of Argentine assets(a)






















128Sale of Brazilian assets(a)






















36Other foreign currency translations(a)






















5At end of period






















(128
)At end of period














(33
)


(28
)


(144
)Accumulated DeficitAt beginning of period














(2,031
)


(2,227
)


(1,930
)Effects of changing the retirement plans measurement dateService cost, interest cost, and expected return on plan assets
    for December 1 through December 31, 2007, net of tax


















(4
)


Additional loss from December 1 through December 31, 2007,
    net of tax


















(2
)


Adjustment to initially apply accounting for uncertain tax
    positions






















(18
)Net income (loss) attributable to CMS Energy(a)














229



295



(222
)Preferred stock dividends declared














(11
)


(11
)


(11
)Common stock dividends declared














(114
)


(82
)


(45
)Redemption of preferred stock(a)






















(1
)At end of period














(1,927
)


(2,031
)


(2,227
)Preferred StockAt beginning of period














243



250



261Conversion of preferred stock














(4
)


(7
)


(11
)At end of period














239



243



250Noncontrolling InterestsAt beginning of period














96



97



95Income (loss) attributable to noncontrolling interests














11



7



(8
)Distributions and other changes in noncontrolling interests














(10
)


(8
)


10At end of period














97



96



97Total Equity













$
2,938


$
2,815


$
2,495  82




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##### Table of Contents



Years Ended December 312009


2008


2007In Millions(a) Disclosure of Comprehensive Income (Loss):Net income (loss)

$
240


$
302


$
(230
)Income (loss) attributable to noncontrolling interests


11



7



(8
)Net income (loss) attributable to CMS Energy


229



295



(222
)Retirement benefits liability:Net gain (loss) arising during the period, net of tax (tax
    benefit) of ($3) in 2009, ($6) in 2008 and $5 in 2007


(6
)


(12
)


7Amortization of net actuarial loss, net of tax of $- in 2009 and
    2007


1







1Investments:Unrealized gain (loss) on investments, net of tax (tax benefit)
    of $3 in 2009, ($9) in 2008, and $- in 2007


5



(15
)


1Reclassification adjustments included in net income (loss), net
    of tax (tax benefit) of ($3) in 2009, $9 in 2008 and ($7) in 2007


(5
)


15



(15
)Derivative instruments:Unrealized loss on derivative instruments, net of tax of $- in
    2009, $- in 2008, and $2 in 2007










(3
)Reclassification adjustments included in net income (loss), net
    of tax of $- in 2009, $- in 2008, and $7 in 2007










14Foreign currency translation:Sale of interests in TGN, net of tax of $69






128



Sale of Argentine assets, net of tax of $68










128Sale of Brazilian assets, net of tax of $20










36Other foreign currency translations, net of tax of $- in 2009,
    $- in 2008, and $2 in 2007










5Total Comprehensive Income (Loss)

$
224


$
411


$
(48
)    83




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##### Table of Contents



Consumers Energy
    Company
  CONSOLIDATED STATEMENTS OF INCOME
  Years Ended December 312009


2008


2007In MillionsOperating Revenue

$
5,963


$
6,421


$
6,064Operating ExpensesFuel for electric generation


460



483



385Purchased and interchange power


1,151



1,313



1,370Purchased power  related parties


81



75



79Cost of gas sold


1,778



2,079



1,918Other operating expenses


839



766



808Maintenance


206



169



183Depreciation and amortization


559



574



524General taxes


209



195



217Loss (gain) on asset sales, net


(9
)


1



(2
)5,274



5,655



5,482Operating Income


689



766



582Other Income (Expense)Interest and dividends


23



26



70Allowance for equity funds used during construction


26



33



31Other income


21



12



32Other expense


(11
)


(28
)


(14
)59



43



119Interest ChargesInterest on long-term debt


250



229



236Other interest


46



22



34Allowance for borrowed funds used during construction


(4
)


(4
)


(6
)292



247



264Income Before Income Taxes


456



562



437Income Tax Expense


163



198



125Net Income


293



364



312Preferred Stock Dividends


2



2



2Net Income Available to Common Stockholder

$
291


$
362


$
310    84




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##### Table of Contents



Consumers Energy
    Company
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Years Ended December 312009


2008


2007In MillionsCash Flows from Operating ActivitiesNet income

$
293


$
364


$
312Adjustments to reconcile net income to net cash provided by
    operating activitiesDepreciation and amortization (includes nuclear decommissioning
    of $-, $-, and $4)


559



574



524Deferred income taxes and investment tax credit


67



196



55Allowance for equity funds used during construction


(26
)


(33
)


(31
)Postretirement benefits expense


177



141



124Capital lease and other amortization


26



30



44Bad debt expense


47



47



33Loss (gain) on sale of assets, net


(9
)


1



(2
)Postretirement benefits contributions


(254
)


(50
)


(173
)Changes in assets and liabilities:Increase in accounts receivable, notes receivable and accrued
    revenue


(92
)


(79
)


(442
)Decrease (increase) in accrued power supply and gas revenue


(41
)


35



99Decrease (increase) in inventories


91



(89
)


(5
)Increase (decrease) in accounts payable


(50
)


1



(23
)Increase (decrease) in accrued expenses


14



(15
)


(15
)Increase (decrease) in accrued taxes


(12
)


(64
)


80Decrease (increase) in other current and non-current assets


60



14



(7
)Increase (decrease) in other current and non-current regulatory
    liabilities


101



(178
)


(114
)Decrease in other current and non-current liabilities


(29
)


(22
)


(19
)Net cash provided by operating activities


922



873



440Cash Flows from Investing ActivitiesCapital expenditures (excludes assets placed under capital lease)


(811
)


(789
)


(1,258
)Cost to retire property


(49
)


(34
)


(28
)Decrease in restricted cash and cash equivalents


3







32Proceeds from nuclear decommissioning trust funds, net










332Proceeds from sale of assets


7







337Other investing










2Net cash used in investing activities


(850
)


(823
)


(583
) 86




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##### Table of Contents



Years Ended December 312009


2008


2007In MillionsCash Flows from Financing ActivitiesProceeds from issuance of long-term debt


500



600



Retirement of long-term debt


(353
)


(412
)


(3
)Payments on securitization bonds


(34
)


(32
)


(31
)Payment of common stock dividends


(285
)


(297
)


(251
)Payment of capital and finance lease obligations


(23
)


(26
)


(20
)Stockholders contribution


100







650Payment of preferred stock dividends


(2
)


(2
)


(1
)Decrease in notes payable










(42
)Debt issuance and financing costs


(5
)


(7
)


(1
)Net cash provided by (used in) financing activities


(102
)


(176
)


301Net Increase (Decrease) in Cash and Cash Equivalents


(30
)


(126
)


158Cash and Cash Equivalents, Beginning of Period


69



195



37Cash and Cash Equivalents, End of Period

$
39


$
69


$
195Other cash flow activities and non-cash investing and
    financing activities were:Cash transactionsInterest paid (net of amounts capitalized)

$
276


$
223


$
242Income taxes paid (net of refunds, $-, $-, and $98)


104



84



Non-cash transactionsOther assets placed under capital lease

$
16


$
5


$
229    87




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##### Table of Contents



Consumers Energy
    Company
  CONSOLIDATED
    BALANCE SHEETS
  December 312009


2008In MillionsASSETSCurrent AssetsCash and cash equivalents

$
39


$
69Restricted cash and cash equivalents


22



25Accounts receivable and accrued revenue,less allowances of $21 in 2009 and $24 in 2008


935



829Notes receivable


79



93Accrued power supply and gas revenue


48



7Accounts receivable  related parties


2



2Inventories at average costGas in underground storage


1,038



1,168Materials and supplies


111



103Generating plant fuel stock


148



118Deferred property taxes


172



165Regulatory assets


19



19Prepayments and other


23



302,636



2,628Plant, Property & Equipment (at cost)Plant, property & equipment, gross


13,352



12,602Less accumulated depreciation, depletion, and amortization


4,386



4,242Plant, property & equipment, net


8,966



8,360Construction work in progress


505



6079,471



8,967Non-current AssetsRegulatory assets


2,291



2,419Investments


29



19Other


195



2132,515



2,651Total Assets

$
14,622


$
14,246  88




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##### Table of Contents



December 312009


2008In MillionsSTOCKHOLDERS INVESTMENT AND LIABILITIESCurrent LiabilitiesCurrent portion of long-term debt, capital and finance lease
    obligations

$
365


$
408Accounts payable


490



494Accrued rate refunds


21



7Accounts payable  related parties


11



14Accrued interest


70



69Accrued taxes


277



289Deferred income taxes


206



277Regulatory liabilities


145



120Other


86



1011,671



1,779Non-current LiabilitiesRegulatory liabilities


1,991



1,868Postretirement benefits


1,396



1,436Asset retirement obligations


228



205Deferred investment tax credit


51



54Deferred income taxes


926



792Other


241



2494,833



4,604Commitments and Contingencies (Notes 6, 7, 8, 10 and 11)CapitalizationLong-term debt


4,063



3,908Non-current portion of capital and finance lease obligations


197



206Common stockholders equityCommon stock, authorized 125.0 shares; outstanding
    84.1 shares for both periods


841



841Other paid-in capital


2,582



2,482Accumulated other comprehensive income (loss)


2



(1
)Retained earnings


389



383Total common stockholders equity


3,814



3,705Preferred stock


44



44Total equity


3,858



3,7498,118



7,863Total Stockholders Investment and Liabilities

$
14,622


$
14,246    89




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##### Table of Contents



Consumers Energy
    Company
  CONSOLIDATED
    STATEMENTS OF CHANGES IN EQUITY
  Years Ended December 312009


2008


2007In MillionsCommon StockAt beginning and end of period(a)

$
841


$
841


$
841Other Paid-in CapitalAt beginning of period


2,482



2,482



1,832Stockholders contribution


100







650At end of period


2,582



2,482



2,482Accumulated Other Comprehensive Income (Loss)Retirement benefits liabilityAt beginning of period


(7
)


(15
)


(8
)Retirement benefits liability adjustments(b)






6



Net gain (loss) arising during the period(b)


(4
)


2



(7
)At end of period


(11
)


(7
)


(15
)InvestmentsAt beginning of period


6



15



23Unrealized gain (loss) on investments(b)


10



(19
)


(1
)Reclassification adjustments included in net income(b)


(3
)


10



(7
)At end of period


13



6



15At end of period


2



(1
)


Retained EarningsAt beginning of period


383



324



270Effects of changing the retirement plans measurement dateService cost, interest cost, and expected return on plan assets
    for December 1 through December 31, 2007, net of tax






(4
)


Additional loss from December 1 through December 31, 2007,
    net of tax






(2
)


Adjustment to initially apply accounting for uncertain tax
    positions










(5
)Net income(b)


293



364



312Common stock dividends declared


(285
)


(297
)


(251
)Preferred stock dividends declared


(2
)


(2
)


(2
)At end of period


389



383



324Preferred StockAt beginning and end of period


44



44



44Total Equity

$
3,858


$
3,749


$
3,691 90




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##### Table of Contents



Years Ended December 312009


2008


2007In Millions(a) Number of shares of common stock outstanding was
    84,108,789 for all periods presented(b) Disclosure of Comprehensive Income:Net income

$
293


$
364


$
312Retirement benefits liabilityRetirement benefits liability adjustments, net of tax of $2 in
    2008






6



Net gain (loss) arising during the period, net of tax (tax
    benefit) of $(2) in 2009, $1 in 2008 and $(4) in 2007


(4
)


2



(7
)InvestmentsUnrealized gain (loss) on investments, net of tax (tax benefit)
    of $6 in 2009, $(10) in 2008, and $(1) in 2007


10



(19
)


(1
)Reclassification adjustments included in net income, net of tax
    (tax benefit) of $(2) in 2009, $6 in 2008 and $(3) in 2007


(3
)


10



(7
)Total Comprehensive Income

$
296


$
363


$
297    91




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    intentionally left blank)
  92




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##### Table of Contents



CMS ENERGY
    CORPORATION
    CONSUMERS ENERGY COMPANY
  NOTES
    TO CONSOLIDATED FINANCIAL STATEMENTS
  1: SIGNIFICANT
    ACCOUNTING POLICIES
  Corporate Structure:
  Principles of Consolidation:
  Use of Estimates:
    Revenue Recognition Policy:
  Alternative-Revenue Program:
  Self-Implemented Rates:
  Accounting for Legal Fees:
  Accounting for MISO Transactions:
 93




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    Cash and Cash Equivalents:
  Determination of Pension and OPEB MRV of Plan
    Assets:
  Derivative Instruments:
  Earnings Per Share:
  Financial Instruments: available-for-sale
  Impairment of Long-Lived Assets and Equity Method
    Investments:
     94




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
      International Operations and Foreign Currency:
    Inventory:
      Maintenance and Depreciation:
    Years Ended December 31

2009


2008


2007Electric utility property


3.0
%


3.0
%


3.0
%Gas utility property


2.9
%


3.6
%


3.6
%Other property


7.6
%


8.5
%


8.7
%   Property, Plant, and Equipment:
     95




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    Years Ended December 31

2009


2008


2007AFUDC capitalization rate


7.6
%


7.7
%


7.4
%       Property Taxes:
  Reclassifications:
  Restricted Cash:
  Trade Receivables and Notes Receivable:
    Unamortized Debt Premium, Discount, and Expense:
 96




---



##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
   2: OTHER
    INCOME AND OTHER EXPENSE
    Years Ended December 31

2009


2008


2007In MillionsCMS Energy, including
    ConsumersOther income:Gain on early retirement of long-term debt

$
28


$



$
Gain on SERP investment


8







22Gain on investment










7Return on stranded and security costs


5



5



6Electric restructuring return






1



2Foreign currency gain






2



1All other


13



7



3Total other income

$
54


$
15


$
41Other expense:Loss on reacquired and extinguished debt

$
(18
)

$



$
(22
)Unrealized investment loss






(24
)


Abandoned project










(8
)Derivative loss on debt tender offer










(3
)Civic and political expenditures


(3
)


(5
)


(2
)All other


(9
)


(8
)


(4
)Total other expense

$
(30
)

$
(37
)

$
(39
)ConsumersOther income:Gain on SERP investment

$
5


$



$
10Gain on investment










7Return on stranded and security costs


5



5



6Gain on CMS Energy common stock










4Electric restructuring return






1



2All other


11



6



3Total other income

$
21


$
12


$
32Other expense:Unrealized investment loss

$



$
(16
)

$
Abandoned project










(8
)Civic and political expenditures


(3
)


(5
)


(2
)All other


(8
)


(7
)


(4
)Total other expense

$
(11
)

$
(28
)

$
(14
)   3: UTILITY
    REGULATION
   97




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
      December 31

End of recovery or refund period

2009


2008In MillionsAssets Earning a Return(a):Stranded Costs

2013

$
67


$
71Customer Choice Act

2013


42



90MGP sites (Note 6)

2020


28



31Energy optimization plan(b)(c)

various


10



Uncollectible expense tracker (Note 7)

n/a


6



Decoupling mechanism (Note 7)

n/a


5



Electric restructuring implementation plan

2009






3Other(d)

various


37



44Assets Not Earning a Return:Postretirement benefits (Note 12)

various


1,464



1,450Securitized costs (Note 8)

2015


364



416Big Rock nuclear decommissioning and related costs (Note 7)

n/a


85



129ARO (Note 17)

various


100



92Unamortized debt costs

n/a


56



66MGP sites (Note 6)

n/a


35



38Other(d)

various


11



8Total regulatory assets(e)



$
2,310


$
2,438Cost of removal (Note 17)

n/a

$
1,247


$
1,203Income taxes, net (Note 13)

n/a


529



519ARO (Note 17)

various


130



137Big Rock nuclear decommissioning and related costs (Note 7)

2011


86



Palisades refund (Note 7)(f)

2010


85



120Renewable energy plan(g)

n/a


25



Self-implemented electric rate refund (Note 7)

2010


17



Energy optimization plan(b)

n/a


6



Other(d)

various


11



9Total regulatory liabilities(e)



$
2,136


$
1,988     (a)
    
    The MPSC has authorized Consumers to recover a 10.7 percent
    return on equity for regulatory assets specific to
    Consumers electric business in its electric rates and a
    10.6 percent return on equity for regulatory assets
    specific to Consumers gas business in its gas rates.(b)
    
    In order to achieve annual sales reduction targets mandated by
    the 2008 Energy Legislation, Consumers launched an energy
    optimization plan, which is funded through a customer surcharge
    authorized by the MPSC. At December 31, 2009, for certain
    customer classes, Consumers spending exceeded surcharges
    collected; accordingly, Consumers recorded a regulatory asset of
    $4 million for these amounts. For other customer classes,
    total surcharges collected exceeded Consumers spending;
    this excess amount of $6 million is reported 98




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  as a regulatory liability. These amounts are reported in
    non-current regulatory assets and liabilities, because the
    period in which Consumers will collect and spend the surcharges
    is beyond one year.(c)
    
    The MPSC has approved an energy optimization incentive mechanism
    that provides a financial incentive if Consumers energy
    savings exceed annual targets established by the MPSC. Consumers
    will request $6 million, the maximum incentive, from the
    MPSC through the energy optimization reconciliation case to be
    filed in March 2010. Consumers reported the incentive in
    non-current regulatory assets.(d)
    
    At December 31, 2009 and 2008, other regulatory assets
    included a gas inventory regulatory asset and OPEB and pension
    expense incurred in excess of the MPSC-approved amount.
    Consumers will recover the OPEB and pension regulatory assets
    from its customers by 2011. Other regulatory liabilities
    included AFUDC collected in excess of the MPSC-approved amount
    and a provision for revenue subject to refund related to
    Consumers self-implemented gas rates.(e)
    
    At December 31, 2009, Consumers classified $19 million
    of regulatory assets as current regulatory assets and
    $145 million of regulatory liabilities as current
    regulatory liabilities. At December 31, 2008, Consumers
    classified $19 million of regulatory assets as current
    regulatory assets and $120 million of regulatory
    liabilities as current regulatory liabilities.(f)
    
    The Palisades and Big Rock ISFSI sale transaction resulted in
    $390 million of excess sales proceeds and decommissioning
    amounts. The 2007 MPSC order approving the sale transaction
    required that Consumers credit $255 million of that amount
    to its retail customers by December 2008. In 2008, the MPSC
    instructed Consumers to offset the remaining $135 million
    of excess sales proceeds and decommissioning fund balances with
    $26 million of transaction costs from the sale. In May
    2009, the MPSC required Consumers to distribute to customers
    $36 million of proceeds from the sale. In Consumers
    2009 electric rate order, the MPSC ordered Consumers to refund
    the remaining $73 million of excess sales proceeds and
    decommissioning fund balances to customers. At December 31,
    2009, the Palisades regulatory liability of $85 million
    comprised $73 million of excess sales proceeds and the
    remaining unpaid balance of the $36 million of proceeds,
    and it was reported in current regulatory liabilities, as the
    proceeds will be credited to customers within one year.(g)
    
    The 2008 Energy Legislation requires that at least ten percent
    of Consumers electric sales volume come from renewable
    energy sources by 2015, and includes requirements for specific
    renewable capacity additions. Under Consumers renewable
    energy plan, it will meet this requirement by entering into
    long-term agreements to purchase power from third parties and by
    building its own renewable energy generating facilities. The
    MPSC authorized Consumers to implement a customer surcharge to
    fund its renewable energy plan. At December 31, 2009, total
    surcharges collected from gas and electric customers exceeded
    Consumers spending. This excess amount is reported in the
    non-current portion of regulatory liabilities as the period
    Consumers will spend the surcharges collected is beyond one year.      Years Ended December 31

2009


2008In MillionsRegulatory assets for PSCR and GCR underrecoveries

$
48


$
7Regulatory liabilities for PSCR and GCR overrecoveries

$
21


$
7  99




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
   4: NEW
    ACCOUNTING STANDARDS
  Implementation
    of New Accounting Standards
  SFAS No. 168, The FASB Accounting Standards
    Codification and the Hierarchy of Generally Accepted Accounting
    Principles, ASC
    105-10,
    Generally Accepted Accounting Principles:
  SFAS No. 160, Noncontrolling Interests in
    Consolidated Financial Statements  an amendment to
    ARB No. 51, ASC
    810-10,
    Consolidation:
  SFAS No. 161, Disclosures about Derivative
    Instruments and Hedging Activities, an amendment of FASB
    Statement No. 133, ASC
    815-10,
    Derivatives and Hedging:
  FSP APB
    14-1,
    Accounting for Convertible Debt Instruments That May Be Settled
    In Cash Upon Conversion (Including Partial Cash Settlement), ASC
    470-20, Debt
    with Conversion and Other Options:
  In Millions, Except Per Share AmountsIncreases (decreases)

2009


2008


2007Twelve Months Ended December 31Interest on long-term debt

$
8


$
8


$
9Income tax expense


(3
)


(3
)


(2
)Net income

$
(5
)

$
(5
)

$
(7
)Earnings Per Average Common ShareBasic

$
(0.02
)

$
(0.02
)

$
(0.03
)Diluted

$
(0.02
)

$
(0.02
)

$
(0.03
)   100




---



##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  December 31,


January 1,Increases (decreases)

2008


2008AssetsNon-current deferred income tax assets

$



$
(12
)LiabilitiesLong-term debt

$
(22
)

$
(30
)Non-current deferred income tax liabilities


9



Total

$
(13
)

$
(30
)Common Stockholders EquityOther paid-in capital

$
37


$
37Accumulated deficit


24



19Total

$
13


$
18     FSP
    EITF 03-6-1,
    Determining Whether Instruments Granted in Share-Based Payment
    Transactions Are Participating Securities, ASC
    260-10,
    Earnings per Share:
  FSP
    FAS 157-4,
    Determining Fair Value When the Volume and Level of Activity for
    the Asset or Liability Have Significantly Decreased and
    Identifying Transactions That Are Not Orderly, ASC
    820-10, Fair
    Value Measurements and Disclosures:
  FSP
    FAS 115-2
    and
    FAS 124-2,
    Recognition and Presentation of
    Other-Than-Temporary
    Impairments, ASC
    320-10,
    Investments  Debt and Equity Securities: other-than-temporary other-than-temporary other-than-temporary
 101




---



##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  FSP FAS 132(R)-1, Employers Disclosures about
    Postretirement Benefit Plan Assets, ASC
    715-20,
    Compensation  Retirement Benefits  Defined
    Benefit Plans  General:
  EITF Issue
    07-5,
    Determining Whether an Instrument (or Embedded Feature) Is
    Indexed to an Entitys Own Stock, ASC
    815-40,
    Derivatives and Hedging  Contracts in Entitys
    Own Equity:
  EITF Issue
    08-5,
    Issuers Accounting for Liabilities Measured at Fair Value
    with a Third-Party Credit Enhancement, ASC
    820-10, Fair
    Value Measurements and Disclosures:
  New
    Accounting Standards Not Yet Effective
  SFAS No. 166, Accounting for Transfers of Financial
    Assets, an amendment of FASB Statement No. 140, ASU
    No. 2009-16,
    Transfers and Servicing (Topic 860): Accounting for Transfers of
    Financial Assets:
  SFAS No. 167, Amendments to FASB Interpretation
    No. 46(R), ASU
    No. 2009-17,
    Consolidations (Topic 810): Improvements to Financial Reporting
    by Enterprises Involved with Variable Interest Entities:
 102




---



##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  ASU
    No. 2010-06,
    Improving Disclosures about Fair Value Measurements:
  5: FAIR
    VALUE MEASUREMENTS
    
    Level 1 inputs are unadjusted quoted prices in active
    markets for identical assets or liabilities.
    Level 2 inputs are observable, market-based inputs, other
    than Level 1 prices. Level 2 inputs may include quoted
    prices for similar assets or liabilities in active markets,
    quoted prices in inactive markets, interest rates and yield
    curves observable at commonly quoted intervals, credit risks,
    default rates, and inputs derived from or corroborated by
    observable market data.
    Level 3 inputs are unobservable inputs that reflect CMS
    Energys or Consumers own assumptions about how
    market participants would value their assets and liabilities.   103




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  Assets
    and Liabilities Measured at Fair Value on a Recurring
    Basis
    Total


Level 1


Level 2


Level 3In MillionsCMS Energy, including
    ConsumersAssets:Cash equivalents

$
57


$
57


$



$
Restricted cash equivalents


12



12







Nonqualified deferred compensation plan assets


5



5







SERP:Cash equivalents


49



49







State and municipal bonds


27







27



Derivative instruments(a)


1







1



Total

$
151


$
123


$
28


$
Liabilities:Nonqualified deferred compensation plan liabilities

$
5


$
5


$



$
Derivative instruments(b)


10



1



1



8Total(c)

$
15


$
6


$
1


$
8ConsumersAssets:Cash equivalents

$
31


$
31


$



$
Restricted cash equivalents


5



5







CMS Energy Common Stock


29



29







Nonqualified deferred compensation plan assets


4



4







SERP:Cash equivalents


30



30







State and municipal bonds


16







16



Total

$
115


$
99


$
16


$
Liabilities:Nonqualified deferred compensation plan liabilities

$
4


$
4


$



$
Total(c)

$
4


$
4


$



$
     (a)
    
    This amount is gross and excludes the $1 million impact of
    offsetting derivative assets and liabilities under master
    netting arrangements.(b)
    
    This amount is gross and excludes the $1 million impact of
    offsetting derivative assets and liabilities under master
    netting arrangements and the $1 million impact of
    offsetting cash margin deposits paid by CMS ERM to other parties.(c)
    
    At December 31, 2009, CMS Energys liabilities
    classified as Level 3 represented 53 percent of CMS
    Energys total liabilities measured at fair value.
    Consumers did not have any assets or liabilities classified as
    Level 3. 104




---



##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
     Total


Level 1


Level 2


Level 3In MillionsCMS Energy, including
    ConsumersAssets:Cash equivalents

$
176


$
176


$



$
Restricted cash equivalents


5



5







Nonqualified deferred compensation plan assets


5



5







SERP:Mutual fund


39



39







State and municipal bonds


29







29



Derivative instruments(a)


1







1



Total

$
255


$
225


$
30


$
Liabilities:Nonqualified deferred compensation plan liabilities

$
5


$
5


$



$
Derivative instruments(b)


20



2



2



16Total(c)

$
25


$
7


$
2


$
16ConsumersAssets:Cash equivalents

$
56


$
56


$



$
Restricted cash equivalents


5



5







CMS Energy Common Stock


19



19







Nonqualified deferred compensation plan assets


3



3







SERP:Mutual fund


25



25







State and municipal bonds


19







19



Total

$
127


$
108


$
19


$
Liabilities:Nonqualified deferred compensation plan liabilities

$
3


$
3


$



$
Derivative instruments


1







1



Total(c)

$
4


$
3


$
1


$
     (a)
    
    This amount is gross and excludes the immaterial impact of
    offsetting derivative assets and liabilities under master
    netting arrangements.(b)
    
    This amount is gross and excludes the immaterial impact of
    offsetting derivative assets and liabilities under master
    netting arrangements and the $2 million impact of
    offsetting cash margin deposits paid by CMS ERM to other parties.(c)
    
    At December 31, 2008, CMS Energys liabilities
    classified as Level 3 represented 64 percent of CMS
    Energys total liabilities measured at fair value.
    Consumers did not have any assets or liabilities classified as
    Level 3. 105




---



##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
   Cash Equivalents:
  Nonqualified Deferred Compensation Plan Assets:
  SERP Assets:
      Nonqualified Deferred Compensation Plan
    Liabilities:
  Derivative Instruments:
   106




---



##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    Assets
    and Liabilities Measured at Fair Value on a Recurring Basis
    using Significant Level 3 Inputs
    Twelve Months Ended December 31

2009


2008In MillionsBalance at January 1

$
(16
)

$
(19
)Total gains included in earnings(a)


17



2Purchases, sales, issuance, and settlements (net)


(9
)


1Balance at December 31


(8
)


(16
)Unrealized gains included in earnings for the twelve months
    ended December 31 relating to assets and liabilities still held
    at December 31(a)

$
6


$
3     (a)
    
    CMS Energy records realized and unrealized gains and losses for
    Level 3 recurring fair values in earnings as a component of
    Operating Revenue or Other operating expenses on its
    Consolidated Statements of Income (Loss).  6: CONTINGENCIES
    AND COMMITMENTS
  CMS
    Energy Contingencies
  Gas Index Price Reporting Investigation:
  Gas Index Price Reporting Litigation:
 107




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    
    In 2005, CMS MST was served with a summons and complaint that
    named CMS Energy, CMS MST, and CMS Field Services as defendants
    in a putative class action filed in Kansas state court, Learjet,
    Inc., et al. v. Oneok, Inc., et al. The complaint alleges
    that during the putative class period, January 1, 2000
    through October 31, 2002, the defendants engaged in a
    scheme to violate the Kansas Restraint of Trade Act. The
    plaintiffs, who allege they purchased natural gas from the
    defendants and others for their facilities, are seeking
    statutory full consideration damages consisting of the full
    consideration paid by plaintiffs for natural gas.
    In 2007, a class action complaint, Heartland Regional Medical
    Center, et al. v. Oneok, Inc. et al., was filed in Missouri
    state court alleging violations of Missouri antitrust laws.
    Defendants, including CMS Energy, CMS Field Services, and CMS
    MST, are alleged to have violated the Missouri antitrust law in
    connection with their natural gas price reporting activities.
    A class action complaint, Arandell Corp., et al. v. XCEL
    Energy Inc., et al., was filed in 2006 in Wisconsin state court
    on behalf of Wisconsin commercial entities that purchased
    natural gas between January 1, 2000 and October 31,
    2002. The defendants, including CMS Energy, CMS ERM, and Cantera
    Gas Company, are alleged to have violated Wisconsins
    antitrust statute. The plaintiffs are seeking full consideration
    damages, plus exemplary damages, and attorneys fees. After
    dismissal on jurisdictional grounds in February 2009, plaintiffs
    filed a new Arandell case in Michigan. The CMS Energy defendants
    filed a motion to dismiss the new case on
    statute-of-limitations
    grounds and that motion remains pending. Also pending before the
    court is plaintiffs motion for reconsideration of the
    dismissal of the Wisconsin case.
    Another class action complaint, Newpage Wisconsin System v.
    CMS ERM, CMS Energy, and Cantera Gas Company, was filed in March
    2009 in circuit court in Wood County, Wisconsin, against CMS
    Energy defendants and 19 other non-CMS Energy companies. The
    plaintiff is seeking consideration damages, treble damages,
    costs, interest, and attorneys fees. After removal to
    federal court in Wisconsin, the case was transferred to the MDL
    case. CMS Energy defendants have filed motions to dismiss for
    lack of jurisdiction and based on the statute of limitations and
    that motion remains pending.
    In 2005, J.P. Morgan Trust Company, in its capacity as
    Trustee of the FLI Liquidating Trust, filed an action in Kansas
    state court against a number of energy companies, including CMS
    Energy, CMS MST, and CMS Field Services. The complaint alleges
    various claims under the Kansas Restraint of Trade Act. The
    plaintiff is seeking statutory full consideration damages for
    its purchases of natural gas between January 1, 2000 and
    December 31, 2001. This case is part of the MDL proceeding,
    but is not a class action.    
    In 2005, Samuel D. Leggett, et al. v. Duke Energy Corporation,
    et al., a class action complaint brought on behalf of retail and
    business purchasers of natural gas in Tennessee, was filed in
    the Chancery Court of Fayette County, Tennessee. The defendants
    include CMS Energy, CMS MST, and CMS Field Services. The
    complaint contains claims for violations of the Tennessee Trade
    Practices Act. The complaint seeks statutory full consideration
    damages and attorneys fees and injunctive relief
    regulating defendants future conduct. In 2007, the state
    court in Tennessee granted the motion to dismiss filed by the
    CMS Energy defendants. In 2008, the Tennessee Court of Appeals
    reversed the trial court and remanded the case for trial. The
    Tennessee 108




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CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  Supreme Court granted the defendants application for leave
    to appeal and all further proceedings in the trial court have
    been stayed until that appeal is resolved. Oral argument on the
    appeal took place in Tennessee Supreme Court in November 2009.
    This issue is not yet decided.  
    In 2006, CMS Energy and CMS MST were each served with a summons
    and complaint which named CMS Energy, CMS MST, and CMS Field
    Services as defendants in an action filed in Missouri state
    court, titled Missouri Public Service Commission v. Oneok,
    Inc. alleging violation of the Missouri antitrust law, fraud,
    and unjust enrichment. In January 2009, all defendants were
    dismissed for lack of standing. In December 2009, the Missouri
    Court of Appeals affirmed the dismissal.    Bay Harbor:
        
    the disposal of leachate;
    the capping and excavation of CKD;
    the location and design of collection lines and upstream
    diversion of water;
    potential flow of leachate below the collection system;
    applicable criteria for various substances such as
    mercury; and
    other matters that are likely to affect the scope of remedial
    work that CMS Land and CMS Capital may be obligated to undertake.   109




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    30-year
    
    inability to secure a suitable long-term water disposal option
    at a reasonable cost;
    further increases in water disposal costs under existing options;
    delays in developing a long-term water disposal option;
    an increase in the number of contamination areas;
    different remediation techniques;
    the nature and extent of contamination;
    continued inability to reach agreement with the MDNRE or the EPA
    over required remedial actions;
    delays in the receipt of requested permits;
    delays following the receipt of any requested permits due to
    legal appeals of third parties;
    additional or new legal or regulatory requirements; or
    new or different landowner claims.    State Street Bank and TSU Litigation:
 110




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  Equatorial Guinea Tax Claim:
  Moroccan Tax Claim:
  Marathon Indemnity Claim regarding F.T. Barr Claim:
    Consumers
    Electric Utility Contingencies
  Electric Environmental Matters:
  Cleanup and Solid Waste:
     111




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CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    Ludington PCB:
  Electric Utility Plant Air Permit Issues and Notices of
    Violation:
  and/or and/or
  Nuclear
    Matters:
  DOE Litigation:
    Nuclear Fuel Disposal Cost:
 112




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  Consumers
    Gas Utility Contingencies
  Gas Environmental Matters:
    FERC Investigation:
  Guarantees
    Maximum


CarryingGuarantee Description

Issue Date

Expiration Date

Obligation


AmountIn MillionsIndemnity obligations from asset sales and other agreements

Various

Various through
    June 2022

$
856
(a)

$
16Surety bonds and other indemnity obligations(b)

Various

Various through
    May 2022


12



Guarantees and put options(c)

Various

Various through
    September 2023


3



1     (a)
    
    The majority of this amount arises from stock and asset sales
    agreements under which CMS Energy indemnified the purchaser for
    losses resulting from various matters, including claims related
    to tax disputes, claims related to PPAs, and defects in title to
    the assets or stock sold to the purchaser by CMS Energy
    subsidiaries. Except for items described elsewhere in this Note,
    CMS Energy believes the likelihood of loss to be remote for the
    indemnity obligations not recorded as liabilities.(b)
    
    In the normal course of business, CMS Energy issues surety bonds
    and indemnifications to counterparties to facilitate commercial
    transactions. CMS Energy would be required to pay a counterparty
    if the counterparty incurred losses due to a breach of contract
    terms or nonperformance under the contract. 113




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CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
   (c)
    
    At December 31, 2009, the carrying amount of CMS
    Energys put option agreements with certain Bay Harbor
    property owners was $1 million. If CMS Energy is required
    to purchase a Bay Harbor property under a put option agreement,
    it may sell the property to recover the amount paid under the
    put option agreement.      Guarantee Description

How Guarantee Arose

Events That Would Require PerformanceIndemnity obligations from asset sales and other agreements

Stock and asset sales agreements

Findings of misrepresentation, breach of warranties, tax claims,
    and other specific events or circumstancesSurety bonds and other indemnity obligations

Normal operating activity, permits and licenses

NonperformanceGuarantees and put options

Normal operating activity

Nonperformance or non-payment by a subsidiary under a related
    contractBay Harbor remediation efforts

Owners exercising put options requiring CMS Land and CMS Capital
    to purchase property     Other
    Contingencies
   114




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  Contractual
    Commitments
  Purchase Obligations:
  At December 31, 2009Payments DueLess Than


One to


Three to


More ThanTotal


One Year


Three Years


Five Years


Five YearsIn MillionsCMS Energy, including
    ConsumersPurchase obligations

$
14,217


$
1,978


$
2,853


$
1,534


$
7,852ConsumersPurchase obligations

$
14,217


$
1,978


$
2,853


$
1,534


$
7,852Purchase obligations  related parties


1,737



79



169



186



1,303     The MCV PPA: 35-year
  
    a capacity charge of $10.14 per MWh of available capacity;
    a fixed energy charge based on Consumers annual average
    base load coal generating plant operating and maintenance cost;
    a variable energy charge for all delivered energy that reflects
    the MCV Partnerships cost of production;
    a $5 million annual contribution by the MCV Partnership to
    a renewable resources program; and
    an option for Consumers to extend the MCV PPA for five years or
    purchase the MCV Facility at the conclusion of the MCV
    PPAs term in March 2025.    The Palisades PPA:
  7: UTILITY
    RATE MATTERS
  Consumers
    Electric Utility Rate Matters
  Power Supply Cost Recovery:
 115




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
      Net Over/

PSCR Cost ofPSCR Year


Date Filed


(Under) recovery

Power Sold2007



March 2008


$(42) million(a)

$
1.6 billion2008



March 2009


$2 million(b)

$
1.7 billion     (a)
    
    In the 2007 PSCR Plan, Consumers expected to offset power supply
    costs by including a $44 million credit for proceeds due to
    customers from the Palisades sale; however, the MPSC directed
    that those proceeds be refunded outside of the PSCR process. For
    additional details on the refunding of the Palisades sale
    proceeds, see Note 3, Utility Regulation. In May 2009, the
    ALJs proposal for decision recommended no PSCR recovery
    for economic development discounts of $3 million and
    disallowance of $4 million of net replacement power costs
    associated with a crane incident at Consumers Campbell
    Plant.(b)
    
    In February 2010, the ALJs proposal for decision
    recommended no PSCR recovery for $3 million of economic
    development discounts.  PSCR Plans:
      Electric Rate Cases and Self-Implemented Rates:
   116




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
            Components of the increase in revenue

In MillionsInvestment in rate base

$
106Operating and maintenance


49Cost of capital


18Gross margin


5Total

$
178   Electric Operation and Maintenance Expenditures Show-Cause
    Order:
   117




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    Big Rock Decommissioning:
      Electric Depreciation: cost-of-removal
    Consumers
    Gas Utility Rate Matters
  Gas Cost Recovery:
    GCR Cost ofGCR Year


Date Filed


Net Underrecovery

Gas Sold2008-2009



June 2009


$15 million

$
1.8 billion  118




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  GCR Reconciliation for
    2007-2008: 2007-2008 2008-2009
  GCR Plans: 2009-2010 2009-2010
  2010-2011
  Gas Depreciation:
  Gas Rate Case:
  Components of the increase in revenue

In MillionsImpact of sales declines

$
41Investment in rate base


40Recovery of operating and maintenance costs


25Return on equity


8Total

$
114    119




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
   8: FINANCINGS
    AND CAPITALIZATION
    Interest Rate (%)


Maturity

2009


2008In MillionsCMS EnergySenior notes


7.750


2010

$
67


$
3008.500


2011


214



3006.300


2012


150



150Variable
(a)

2013


150



1506.875


2015


125



1256.550


2017


250



2508.750


2019


300



3.375
(b)

2023


139



1402.875
(b)

2024


288



2885.500
(b)

2029


173



$
1,856


$
1,703Revolving credit facility








25



105Total  CMS Energy







$
1,881


$
1,808Consumers







$
4,411


$
4,297Other CMS Energy
    SubsidiariesEnerBank brokered certificates of deposit


2.727
(c)

2010-2018


214



176Genesee tax exempt bonds


7.500


2010-2021


54



57Grayling tax exempt bonds


Variable
(d)

2010-2012


15



19Total  other CMS Energy subsidiaries







$
283


$
252Long-term debt  related parties







$
34


$
178Total CMS Energy principal amount outstanding







$
6,609


$
6,535Current amounts








(672
)


(489
)Net unamortized discount








(42
)


(31
)Total CMS Energy Long-term debt







$
5,895


$
6,015  120




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    Interest Rate (%)


Maturity

2009


2008In MillionsConsumersFMBs(e)


4.800


2009

$



$
2004.400


2009






1504.000


2010


250



2505.000


2012


300



3005.375


2013


375



3756.000


2014


200



2005.000


2015


225



2255.500


2016


350



3505.150


2017


250



2505.650


2018


250



2506.125


2019


350



3506.700


2019


500



5.650


2020


300



3005.650


2035


139



1425.800


2035


175



175$
3,664


$
3,517Senior notes


6.875


2018


180



180Securitization bonds


5.566
(f)

2010-2015


243



277Nuclear fuel disposal liability





(g)


163



162Tax-exempt pollution control revenue bonds


Various


2010-2035


161



161Total Consumers principal amount outstanding







$
4,411


$
4,297Current amounts








(343
)


(383
)Net unamortized discount








(5
)


(6
)Total Consumers Long-term debt







$
4,063


$
3,908     (a)
    
    CMS Energys variable rate senior notes bear interest at
    three-month LIBOR plus 95 basis points (1.234 percent
    at December 31, 2009 and 5.703 percent at
    December 31, 2008).(b)
    
    CMS Energys contingently convertible notes. See the
    Contingently Convertible Securities section in this
    Note for further discussion of the conversion features.(c)
    
    The weighted average interest rate for EnerBanks brokered
    certificates of deposit was 2.727 percent at
    December 31, 2009 and 4.374 percent at
    December 31, 2008. EnerBank sells these deposits through
    investment brokers in large pools, with each certificate within
    the pool having a face value of $1,000. They cannot be withdrawn
    until maturity, except in the case of death or incompetence of
    the holder.(d)
    
    The interest rate for Graylings variable-rate tax-exempt
    bonds was 0.270 percent at December 31, 2009 and
    0.910 percent at December 31, 2008.(e)
    
    The weighted-average interest rate for Consumers FMBs was
    5.583 percent at December 31, 2009 and
    5.329 percent at December 31, 2008.(f)
    
    The weighted-average interest rate for Consumers
    Securitization bonds was 5.566 percent at December 31,
    2009 and 5.495 percent at December 31, 2008.(g)
    
    The maturity date of the nuclear fuel disposal liability is
    uncertain. 121




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
   Financings:
  Principal


Interest Rate (%)


Issue/Retirement Date


Maturity Date(In Millions)Debt Issuances:CMS EnergyConvertible senior notes

$
173



5.50
%


June 2009



June 2029Senior notes


300



8.75
%


June 2009



June 2019ConsumersFMBs


500



6.70
%


March 2009



September 2019Debt Retirements:CMS EnergyLong-term debt  related parties(a)

$
144



7.75
%


June 2009



July 2027Senior notes(b)


233



7.75
%


July 2009



August 2010Senior notes(b)


87



8.50
%


July 2009



April 2011ConsumersFMBs


200



4.80
%


February 2009



February 2009FMBs


150



4.40
%


August 2009



August 2009     (a)
    
    CMS Energy retired this debt at a discount, and recorded a gain
    on extinguishment of debt of $28 million in Other income on
    its Consolidated Statements of Income (Loss).(b)
    
    CMS Energy retired this debt at a premium, and recorded a loss
    on extinguishment of debt of $18 million in Other expense
    on its Consolidated Statements of Income (Loss).    FMBs:
  Regulatory Authorization for Financings:
  Securitization Bonds:
  Long-Term Debt  Related Parties:
 122




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  No. 2009-17, No. 2009-17,
    Debenture and related party

Interest Rate (%)


Maturity


2009


2008In MillionsConvertible subordinated debentures,CMS Energy Trust I


7.75



2027


$
34


$
178       Debt Maturities:
  Payments Due2010


2011


2012


2013


2014In MillionsCMS Energy, including
    ConsumersLong-term debt

$
533


$
297


$
543


$
587


$
258ConsumersLong-term debt

$
343


$
37


$
339


$
416


$
243   Revolving Credit Facilities:
  Letters ofAmount of


Amount


Credit


AmountCompany

Expiration Date

Facility


Borrowed


Outstanding


AvailableIn MillionsCMS Energy(a)

April 2, 2012

$
550


$
25


$
3


$
522Consumers

March 30, 2012


500







335



165Consumers(b)

November 30, 2010


30







30



Consumers

August 17, 2010


150











150     (a)
    
    CMS Energys average borrowings during the year ended
    December 31, 2009, totaled $61 million, with a
    weighted average annual interest rate of 1.2 percent, at
    LIBOR plus 0.75 percent.(b)
    
    Secured revolving letter of credit facility 123




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
   Sale of Accounts Receivable:
      Years Ended December 31

2009


2008In MillionsAdministrative fees

$
3


$
1Net cash flow as a result of accounts receivable sales


(120
)


170Collections from customers


6,024



6,060   Contingently Convertible Securities:
  Adjusted


AdjustedSecurity

Maturity


Outstanding


Conversion Price


Trigger Price(In Millions)4.50% preferred stock





$
239


$
9.14


$
10.963.375% senior notes


2023



139



9.86



11.832.875% senior notes


2024



288



13.62



16.355.50% senior notes


2029



173



14.46



18.80        124




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
      Dividend Restrictions:
      Capitalization:
  
    350 million shares of CMS Energy Common Stock, par value
    $0.01 per share, and
    10 million shares of CMS Energy Preferred Stock, par value
    $0.01 per share.  Preferred Stock:
  Number of SharesDecember 31

2009


2008


2009


2008In Millions4.50% convertible, authorized 10,000,000 shares


4,769,000



4,978,000


$
239


$
249   Preferred Stock of Subsidiary:
  OptionalRedemption


Number of SharesDecember 31

Series


Price


2009


2008


2009


2008In MillionsCumulative $100 par value,Authorized 7,500,000 shares,with no mandatory redemption

$
4.16


$
103.25



68,451



68,451


$
7


$
7$
4.50


$
110.00



373,148



373,148



37



37Total Preferred stock of subsidiary

















$
44


$
44  125




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
   9: EARNINGS
    PER SHARE  CMS ENERGY
    Years Ended December 31

2009


2008


2007In Millions, Except Per Share AmountsIncome (Loss) Available to Common StockholdersIncome (Loss) from Continuing Operations

$
220


$
301


$
(120
)Less Income (Loss) Attributable to Noncontrolling Interests


(11
)


(7
)


(13
)Less Preferred Dividends and Redemption Premiums


(11
)


(11
)


(12
)Income (Loss) from Continuing Operations Available to Common
    Stockholders Basic and Diluted

$
198


$
283


$
(145
)Average Common Shares OutstandingWeighted Average Shares  Basic


227.2



225.7



224.5Add dilutive impact of Contingently Convertible Securities


10.6



10.3



Add dilutive Options and Warrants


0.1



0.2



Weighted Average Shares  Diluted


237.9



236.2



224.5Income (Loss) from Continuing Operations Per AverageCommon Share Available to Common StockholdersBasic

$
0.87


$
1.25


$
(0.65
)Diluted

$
0.83


$
1.20


$
(0.65
)   Contingently Convertible Securities:
  Stock Options and Warrants:
  Unvested Restricted Stock Awards:
  Convertible Debentures:
  
    increased the numerator of diluted EPS by $5 million for
    the year ended December 31, 2009 and by $9 million for
    each of the years ended December 31, 2008 and 2007, from an
    assumed reduction of interest expense, net of tax; and 126




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
   
    increased the denominator of diluted EPS by 2.3 million
    shares for the year ended December 31, 2009 and by
    4.2 million shares for each of the years ended
    December 31, 2008 and 2007.    10: FINANCIAL
    INSTRUMENTS
      2009


2008Cost or





Cost orCarrying





CarryingDecember 31

Amount


Fair Value


Amount


Fair ValueIn MillionsCMS Energy, including
    ConsumersSecurities held to maturity

$
4


$
4


$
3


$
3Securities available for sale


26



27



68



68Notes receivable, net


269



279



186



201Long-term debt(a)


6,567



7,013



6,504



6,069ConsumersSecurities available for sale

$
24


$
45


$
52


$
63Long-term debt(b)


4,406



4,635



4,291



4,073     (a)
    
    Includes current portion of long-term debt of $672 million
    at December 31, 2009 and $489 million at
    December 31, 2008.(b)
    
    Includes current portion of long-term debt of $343 million
    at December 31, 2009 and $383 million at
    December 31, 2008.     127




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    2009


2008Unrealized


Unrealized


Fair





Unrealized


Unrealized


FairDecember 31

Cost


Gains


Losses


Value


Cost


Gains


Losses


ValueIn MillionsCMS Energy, including
    ConsumersAvailable for sale:SERP:Mutual fund

$



$



$



$



$
39


$



$



$
39Municipal bonds


26



1







27



29











29Held to maturity:Debt securities


4











4



3











3ConsumersAvailable for sale:SERP:Mutual fund

$



$



$



$



$
25


$



$



$
25Municipal bonds


16











16



19











19Common stock of CMS Energy


8



21







29



8



11







19            128




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
      CMS Energy,includingConsumers


ConsumersIn MillionsDue one year or less

$
1


$
1Due after one year through five years


11



7Due after five years through ten years


11



6Due after ten years


4



2Total

$
27


$
16   11: DERIVATIVE
    INSTRUMENTS
      Commodity Price Risk:
  
    they do not have a notional amount (that is, a number of units
    specified in a derivative instrument, such as MWh of electricity
    or bcf of natural gas);
    they qualify for the normal purchases and sales
    exception; or
    there is not an active market for the commodity.     129




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    Interest rate risk:
    Derivative Assets


Derivative LiabilitiesBalance Sheet





Balance SheetDecember 31, 2009

Location


Fair Value


Location


Fair ValueIn MillionsCMS EnergyDerivatives not designated as hedging instruments:Commodity contracts(a)


Other assets


$
1



Other liabilities


$
9Interest rate contracts


Other assets







Other liabilities



1Total CMS Energy Derivatives





$
1






$
10     (a)
    
    Assets and liabilities are presented gross and exclude the
    $1 million impact of offsetting derivative assets and
    liabilities under master netting arrangements. The liability
    also excludes the $1 million impact of offsetting cash
    margin deposits paid by CMS ERM to other parties. CMS Energy
    presents these assets and liabilities net of these impacts on
    its Consolidated Balance Sheets. 130




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
     Location of Gain (Loss)


Amount of Gain (Loss)Recognized in Income on


Recognized in IncomeTwelve Months Ended December 31, 2009

Derivatives


on DerivativesIn MillionsCMS Energy, including
    ConsumersDerivatives not designated as hedging instruments:Commodity contracts


Operating Revenue


$
7Fuel for electric generation



(3
)Cost of gas sold



(2
)Other income



9Interest rate contracts


Other expense



(1
)Foreign exchange contracts(a)


Other expense



(1
)Total CMS Energy





$
9ConsumersDerivatives not designated as hedging instruments:Commodity contracts


Other income


$
9     (a)
    
    This derivative loss relates to a foreign-exchange forward
    contract CMS Energy held at December 31, 2008. CMS Energy
    settled this obligation and the related derivative in January
    2009.    Credit Risk:
      12: RETIREMENT
    BENEFITS
    
    a non-contributory, qualified defined benefit Pension Plan
    (closed to new non-union participants as of July 1, 2003
    and closed to new union participants as of September 1,
    2005); 131




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
   
    a qualified cash balance Pension Plan for certain employees
    hired between July 1, 2003 and August 31, 2005;
    a non-contributory, qualified DCCP for employees hired on or
    after September 1, 2005;
    benefits to certain management employees under a
    non-contributory, nonqualified defined benefit SERP (closed to
    new participants as of March 31, 2006);
    benefits to certain management employees under a
    non-contributory, nonqualified DC SERP hired on or after
    April 1, 2006;
    health care and life insurance benefits under an OPEB plan;
    benefits to a selected group of management under a
    non-contributory, nonqualified EISP; and
    a contributory, qualified defined contribution 401(k) plan.  Pension Plan:
    SERP:
  SERPYears Ended December 31

2009


2008


2007In MillionsCMS Energy, including
    ConsumersTrust assets(a)

$
77


$
69


$
95ABO


93



80



83Contributions


2







25ConsumersTrust assets(a)

$
50


$
45


$
53ABO


54



47



48Contributions


1







21     (a)
    
    The assets are classified as Other non-current assets on the
    Consolidated Balance Sheets.   132




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    401(k):
  EISP:
  OPEB:
    One Percentage


One PercentagePoint Increase


Point DecreaseIn MillionsCMS Energy, including
    ConsumersEffect on total service and interest cost component

$
18


$
(15
)Effect on postretirement benefit obligation

$
199


$
(174
)ConsumersEffect on total service and interest cost component

$
17


$
(15
)Effect on postretirement benefit obligation

$
193


$
(169
)     Employers Accounting for Defined Benefit Pension and
    Other Postretirement Plans Amendments:
 133




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  net-of-tax
    Assumptions:
  Weighted
    Average for Benefit Obligations:
  Pension and SERP


OPEBYears Ended December 31

2009


2008


2007


2009


2008


2007CMS Energy, including
    ConsumersDiscount rate(a)


5.85
%


6.50
%


6.40
%


6.00
%


6.50
%


6.50
%Expected long-term rate of return on plan assets(b)


8.00
%


8.25
%


8.25
%


7.50
%


7.75
%


7.75
%Mortality table(c)


2000



2000



2000



2000



2000



2000Rate of compensation increase:Pension


4.00
%


4.00
%


4.00
%SERP


5.50
%


5.50
%


5.50
%   Weighted
    Average for Net Periodic Benefit Cost:
  Pension and SERP


OPEBYears Ended December 31

2009


2008


2007


2009


2008


2007CMS Energy, including
    ConsumersDiscount rate(a)


6.50
%


6.40
%


5.65
%


6.50
%


6.50
%


5.65
%Expected long-term rate of return on plan assets(b)


8.25
%


8.25
%


8.25
%


7.75
%


7.75
%


7.75
%Mortality table(c)


2000



2000



2000



2000



2000



2000Rate of compensation increase:Pension


4.00
%


4.00
%


4.00
%SERP


5.50
%


5.50
%


5.50
%     (a)
    
    The discount rate is set to reflect the rates at which benefits
    could be effectively settled. It is set equal to the equivalent
    single rate that results from a yield curve analysis
    incorporating projected benefit payments specific to CMS
    Energys and Consumers pension and other
    postretirement benefit plans and the yields on high quality
    corporate bonds rated Aa or better.(b)
    
    CMS Energy and Consumers determine their long-term rate of
    return by considering historical market returns, the current and
    expected future economic environment, the capital market
    principles of risk and return, and the expert opinions of
    individuals and firms with financial market knowledge. CMS
    Energy and Consumers consider the asset allocation of the
    portfolio in forecasting the future expected total return of the
    portfolio. The goal is to determine a long-term rate of return
    that can be incorporated into the planning of future cash flow
    requirements in conjunction with the change in the liability.
    Annually, CMS Energy and Consumers review for 134




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  reasonableness and appropriateness the forecasted returns for
    various classes of assets used to construct an expected return
    model. CMS Energys and Consumers expected long-term
    rate of return on Pension Plan assets was 8.25 percent in
    2009. The 2009 actual return on Pension Plan assets was
    21 percent, and for 2008 the actual return was a negative
    23 percent.(c)
    
    The mortality assumption is based on the RP-2000 mortality
    tables with projection of future mortality improvements using
    Scale AA, which aligns with the IRS prescriptions for cash
    funding valuations under the Pension Protection Act.  Costs:
  Pension and SERPYears Ended December 31

2009


2008


2007In MillionsCMS Energy, including
    ConsumersNet periodic pension costService cost

$
41


$
43


$
50Interest expense


102



101



91Expected return on plan assets


(86
)


(81
)


(79
)Amortization of:Net loss


41



41



46Prior service cost


6



6



7Net periodic pension cost


104



110



115Regulatory adjustment(a)






4



(22
)Net periodic pension cost after regulatory adjustment

$
104


$
114


$
93ConsumersNet periodic pension costService cost

$
40


$
41


$
47Interest expense


97



96



84Expected return on plan assets


(83
)


(78
)


(75
)Amortization of:Net loss


40



40



44Prior service cost


5



6



7Net periodic pension cost


99



105



107Regulatory adjustment(a)






4



(22
)Net periodic pension cost after regulatory adjustment

$
99


$
109


$
85   135




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  OPEBYears Ended December 31

2009


2008


2007In MillionsCMS Energy, including
    ConsumersNet periodic OPEB costService cost

$
24


$
22


$
25Interest expense


80



72



69Expected return on plan assets


(50
)


(66
)


(62
)Amortization of:Net loss


33



9



22Prior service credit


(10
)


(10
)


(10
)Net periodic OPEB cost


77



27



44Regulatory adjustment(a)






3



(6
)Net periodic OPEB cost after regulatory adjustment

$
77


$
30


$
38ConsumersNet periodic OPEB costService cost

$
24


$
21


$
24Interest expense


77



69



65Expected return on plan assets


(46
)


(61
)


(57
)Amortization of:Net loss


33



10



23Prior service credit


(10
)


(10
)


(10
)Net periodic OPEB cost


78



29



45Regulatory adjustment(a)






3



(6
)Net periodic OPEB cost after regulatory adjustment

$
78


$
32


$
39     (a)
    
    Regulatory adjustments are the differences between amounts
    included in rates and the periodic benefit cost calculated. The
    pension regulatory asset had a balance of $29 million at
    December 31, 2009 and 2008. The OPEB regulatory asset had a
    balance of $5 million at December 31, 2009 and 2008.     136




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    Reconciliations:
  Pension PlanYears Ended December 31

2009


2008In MillionsBenefit obligation at beginning of period

$
1,524


$
1,565Service cost


40



45Interest cost


96



103Actuarial loss (gain)


145



(66
)Benefits paid


(88
)


(123
)Benefit obligation at end of period(a)


1,717



1,524Plan assets at fair value at beginning of period


724



1,078Actual return on plan assets


165



(231
)Company contribution


206



Actual benefits paid(b)


(88
)


(123
)Plan assets at fair value at end of period


1,007



724Funded status at December 31(c)(d)

$
(710
)

$
(800
)   137




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  SERP


OPEBYears Ended December 31

2009


2008


2009


2008In MillionsCMS Energy, including
    ConsumersBenefit obligation at beginning of period

$
95


$
95


$
1,266


$
1,136Service cost


1



1



24



24Interest cost


6



7



80



78Actuarial loss (gain)


9



(3
)


106



81Benefits paid


(5
)


(5
)


(53
)


(53
)Benefit obligation at end of period(a)


106



95



1,423



1,266Plan assets at fair value at beginning of period










662



852Actual return on plan assets










117



(201
)Company contribution


5



5



56



64Actual benefits paid(b)


(5
)


(5
)


(53
)


(53
)Plan assets at fair value at end of period










782



662Funded status at December 31(c)

$
(106
)

$
(95
)

$
(641
)

$
(604
)ConsumersBenefit obligation at beginning of period

$
62


$
61


$
1,219


$
1,082Service cost


1



1



24



23Interest cost


4



4



77



74Actuarial loss (gain)


6



(2
)


104



91Transfer


(4
)










Benefits paid


(2
)


(2
)


(51
)


(51
)Benefit obligation at end of period(a)


67



62



1,373



1,219Plan assets at fair value at beginning of period










612



785Actual return on plan assets










108



(185
)Company contribution


2



2



55



62Actual benefits paid(b)


(2
)


(2
)


(50
)


(50
)Plan assets at fair value at end of period










725



612Funded status at December 31(c)

$
(67
)

$
(62
)

$
(648
)

$
(607
)     (a)
    
    The Medicare Prescription Drug, Improvement and Modernization
    Act of 2003 establishes a prescription drug benefit under
    Medicare (Medicare Part D) and a federal subsidy,
    which is tax-exempt, to sponsors of retiree health care benefit
    plans that provide a benefit that is actuarially equivalent to
    Medicare Part D. The Medicare Part D annualized
    reduction in net OPEB cost for CMS Energy was $19 million
    for 2009 and $25 million for 2008 and for Consumers was
    $18 million for 2009 and $24 million for 2008. The
    reduction for CMS Energy and Consumers includes $6 million
    for 2009 and $7 million for 2008 in capitalized OPEB costs.(b)
    
    CMS Energy received payments of $4 million in 2009 and
    $6 million in 2008 for the Medicare Part D subsidies.
    Consumers received payments of $4 million in 2009 and
    $5 million in 2008 for the Medicare Part D subsidies. 138




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CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
   (c)
    
    CMS Energys liabilities for retirement benefits comprised
    $1.5 billion classified as non-current and $6 million
    classified as current for the year ended December 31, 2009,
    and $1.5 billion classified as non-current and
    $5 million classified as current for the year ended
    December 31, 2008. Consumers liabilities for
    retirement benefits comprised $1.4 billion classified as
    non-current and $3 million classified as current for the
    year ended December 31, 2009, and $1.4 billion
    classified as non-current and $2 million classified as
    current for the year ended December 31, 2008.(d)
    
    Of the $710 million unfunded status of the Pension Plan at
    December 31, 2009, $675 million was attributable to
    Consumers based on allocation of expenses. Of the
    $800 million unfunded status of the Pension Plan at
    December 31, 2008, $762 million was attributable to
    Consumers.    Years Ended December 31

2009


2008In MillionsCMS Energy, including
    ConsumersPension PBO

$
1,717


$
1,524Pension ABO


1,393



1,240Fair value of Pension Plan assets


1,007



724   Items Not Yet Recognized as a Component of Net Periodic
    Benefit Cost:
  Pension and SERP


OPEBYears Ended December 31

2009


2008


2009


2008In MillionsCMS Energy, including
    ConsumersRegulatory assetsNet loss

$
860


$
835


$
604


$
595Prior service cost (credit)


27



33



(68
)


(78
)AOCLNet loss (gain)


58



50



(11
)


(9
)Prior service cost (credit)


3



3



(3
)


(3
)Total amounts recognized in regulatory assets and AOCL

$
948


$
921


$
522


$
505ConsumersRegulatory assetsNet loss

$
860


$
835


$
604


$
595Prior service cost (credit)


27



33



(68
)


(78
)AOCLNet loss


14



8







Prior service cost


1



1







Total amounts recognized in regulatory assets and AOCL

$
902


$
877


$
536


$
517  139




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  Plan Assets:
  Pension PlanTotal


Level 1


Level 2In MillionsCMS Energy, including
    ConsumersAsset Category:Cash and short-term investments(a)

$
65


$
65


$
U.S. government and agencies securities(b)


40







40Corporate debt(c)


145







145State and municipal bonds(e)


4







4Foreign corporate debt(f)


17







17Mutual funds(h)


117



117



Pooled funds(i)


619







619Total

$
1,007


$
182


$
825   OPEB PlanTotal


Level 1


Level 2In MillionsCMS Energy, including
    ConsumersAsset Category:Cash and short-term investments(a)

$
29


$
29


$
U.S. government and agencies securities(b)


157







157Corporate debt(d)


21







21State and municipal bonds(e)


51







51Foreign corporate debt(f)


2







2Common stocks(g)


134



134



Mutual funds(h)


17



17



Pooled funds(j)


371







371Total

$
782


$
180


$
602     (a)
    
    Cash and short-term investments consist of money market funds
    with daily liquidity.(b)
    
    U.S. government and agencies securities consist of U.S. Treasury
    notes and other debt securities backed by the U.S. government
    and related agencies. These securities are valued based on
    quoted market prices.(c)
    
    Corporate debt investments in the Pension Plan represent both
    investment grade bonds (63 percent) and non-investment
    grade, high yield bonds (37 percent) of U.S. issuers from
    diverse industries. These securities are valued based on quoted
    market prices, when available, or yields presently available on
    comparable securities of issuers with similar credit ratings.(d)
    
    Corporate debt investments in the OPEB plan represent investment
    grade bonds (62 percent) and non-investment grade,
    high-yield bonds (38 percent) of U.S. issuers from diverse
    industries. These securities are valued based on quoted market
    prices, when available, or yields presently available on
    comparable securities of issuers with similar credit ratings. 140




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
   (e)
    
    State and municipal bonds are valued using a matrix pricing
    model that incorporates Level 2 market-based information.
    The fair value of the bonds is derived from various observable
    inputs, including benchmark yields, reported securities trades,
    broker/dealer quotes, bond ratings, and general information on
    market movements for investment grade state and municipal
    securities normally considered by market participants when
    pricing such debt securities.(f)
    
    Foreign corporate debt securities are valued based on quoted
    market prices, when available, or on yields presently available
    on comparable securities of issuers with similar credit ratings.(g)
    
    Common stocks in the OPEB plan consist of equity securities with
    low transaction costs that are actively managed and that track
    the S&P 500 Index. These securities are valued at their
    quoted closing prices.(h)
    
    Mutual funds represent shares in registered investment companies
    that are priced based on the quoted NAV that is the basis for
    transactions to buy or sell shares in the funds.(i)
    
    Pooled funds in the Pension Plan include both common and
    collective trust funds as well as special funds that contain
    only employee benefit plan assets from two or more unrelated
    benefit plans. These funds include investments in U.S. equity
    securities (56 percent), foreign equity securities
    (22 percent), foreign fixed-income securities
    (16 percent), U.S. fixed-income securities
    (3 percent), and alternative investments (3 percent).
    These investments are valued at the quoted NAV provided by the
    fund managers that is the basis for transactions to buy or sell
    shares in the funds.(j)
    
    Pooled funds in the OPEB plan include both common and collective
    trust funds as well as special funds that contain only employee
    benefit plan assets from two or more unrelated benefit plans.
    These funds include investments in U.S. equity securities
    (89 percent), foreign equity securities (5 percent),
    foreign fixed-income securities (4 percent), U.S.
    fixed-income securities (1 percent) and alternative
    investments (1 percent). These investments are valued at
    the quoted NAV provided by the fund managers that is the basis
    for transactions to buy or sell shares in the funds.      Years Ended December 31

2009


2008In MillionsCMS Energy, including
    ConsumersOPEB:(a)VEBA trust

$
40


$
41401(h) component


16



10$
56


$
51Pension(b)

$
206


$
ConsumersOPEB:(a)VEBA trust

$
39


$
40401(h) component


16



10$
55


$
50Pension(b)

$
199


$
     (a)
    
    CMS Energy plans to contribute $71 million to its OPEB plan
    in 2010 and Consumers plans to contribute $70 million to
    its OPEB plan in 2010. 141




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
   (b)
    
    CMS Energy plans to contribute $19 million to its Pension
    Plan in 2010 and Consumers plans to contribute $18 million
    to its Pension Plan in 2010.        Benefit Payments:
  Pension


SERP


OPEB(a)In MillionsCMS Energy, including
    Consumers2010

$
78


$
6


$
622011


86



6



652012


96



6



682013


106



6



712014


114



6



752015-2019


715



40



439Consumers2010

$
76


$
2


$
592011


83



2



622012


92



2



652013


101



2



682014


111



2



722015-2019


691



12



419  142




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    (a)
    
    CMS Energys and Consumers OPEB benefit payments are
    net of employee contributions and expected Medicare Part D
    prescription drug subsidy payments. For CMS Energy, subsidies to
    be received are estimated to be $6 million for each of 2010
    and 2011, $7 million for 2012, $8 million for each of
    2013 and 2014, and $50 million combined for 2015 through
    2019. For Consumers, subsidies to be received are estimated to
    be $5 million for 2010, $6 million for 2011,
    $7 million for each of 2012 and 2013, $8 million for
    2014, and $48 million combined for 2015 through 2019.  13: INCOME
    TAXES
             143




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    Years Ended December 31

2009


2008


2007In MillionsCMS Energy, including
    ConsumersCurrent income taxes:Federal

$
11


$
4


$
229State and local


17



9



1Income tax benefit of operating loss carryforwards


(23
)






(209
)5



13



21Deferred income taxes:Federal


86



134



(216
)State and local


28



(4
)


2114



130



(214
)Deferred ITC, net


(4
)


(4
)


(4
)Tax expense (benefit)

$
115


$
139


$
(197
)ConsumersCurrent income taxes:Federal

$
72


$
(10
)

$
114State and local


24



12



Income tax benefit of operating loss carryforwards










(44
)96



2



70Deferred income taxes:Federal


66



200



59State and local


5







71



200



59Deferred ITC, net


(4
)


(4
)


(4
)Tax expense (benefit)

$
163


$
198


$
125      144




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    December 31

2009


2008In MillionsCMS Energy, including
    ConsumersCurrent assets (liabilities):Employee benefits

$
(31
)

$
(96
)Gas inventory


(201
)


(219
)Nuclear decommissioning (including unrecovered costs)


15



Reserves and accruals


33



20Tax loss and credit carryforwards


153



148Other


(12
)


47Net current liability


(43
)


(100
)Noncurrent assets (liabilities):Employee benefits


96



101Foreign investments inflation indexing


30



30Nuclear decommissioning (including unrecovered costs)


17



(20
)Property


(1,145
)


(968
)Reserves and accruals


50



43Securitized costs


(141
)


(161
)Regulatory tax liability


209



205Tax loss and credit carryforwards


766



775Valuation allowance


(34
)


(32
)Other


(79
)


(28
)Net non-current liability

$
(231
)

$
(55
)Total deferred income tax liability

$
(274
)

$
(155
)   145




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  December 31

2009


2008In MillionsConsumersCurrent assets (liabilities):Employee benefits

$
(33
)

$
(100
)Gas inventory


(201
)


(219
)Nuclear decommissioning (including unrecovered costs)


15



Reserves and accruals


18



Tax loss and credit carryforwards


9



8Other


(14
)


34Net current liability


(206
)


(277
)Noncurrent assets (liabilities):Employee benefits


61



80Nuclear decommissioning (including unrecovered costs)


17



(20
)Property


(1,237
)


(1,056
)Reserves and accruals


11



Securitized costs


(141
)


(161
)Regulatory tax liability


209



205Tax loss and credit carryforwards


223



213Other


(69
)


(53
)Net non-current liability

$
(926
)

$
(792
)Total deferred income tax liability

$
(1,132
)

$
(1,069
)  146




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    Years Ended December 31

2009


2008


2007In MillionsCMS Energy, including
    ConsumersNet income (loss) available to common stockholders

$
218


$
284


$
(234
)Discontinued operations, net of tax


(20
)


(1
)


89Net income (loss) from continuing operations


198



283



(145
)Preferred stock dividends


11



11



11Redemption premium on preferred stock










1Income tax expense (benefit) on continuing operations


115



139



(197
)Income (loss) from continuing operations before income taxes


324



433



(330
)Expected income tax expense (benefit) at statutory federal rate


114



152



(116
)Increase (decrease) in income taxes from:Income tax effect of foreign investments










46ITC amortization


(4
)


(4
)


(4
)Medicare Part D exempt income


(6
)


(9
)


(10
)Property differences


1



3



9Research and development credit, net


(9
)






State and local income taxes, net of federal benefit


21



3



Valuation allowance


2



(6
)


(121
)Other, net


(4
)






(1
)Income tax expense (benefit)

$
115


$
139


$
(197
)Effective tax rate


35.5
%


32.1
%


59.7
%ConsumersIncome from continuing operations before income taxes

$
456


$
562


$
437Expected income tax expense (benefit) at statutory federal rate


160



197



153Increase (decrease) in taxes from:ITC amortization


(4
)


(4
)


(4
)Medicare Part D exempt income


(6
)


(8
)


(9
)Property differences


1



3



9Research and development credit, net


(7
)






State and local income taxes, net of federal benefit


19



8



Valuation allowance










(23
)Other, net






2



(1
)Income tax expense

$
163


$
198


$
125Effective tax rate


35.7
%


35.2
%


28.6
%    147




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
      Years Ended December 31

2009


2008


2007In MillionsCMS Energy, including
    ConsumersBalance at beginning of period

$
65


$
51


$
151Reductions for prior year tax positions


(6
)






(101
)Additions for prior year tax positions


2



12



1Additions for current year tax positions


1



2



Balance at end of period

$
62


$
65


$
51ConsumersBalance at beginning of period

$
55


$
41


$
51Reductions for prior year tax positions


(1
)






(11
)Additions for prior year tax positions


2



12



1Additions for current year tax positions


1



2



Balance at end of period

$
57


$
55


$
41       14: STOCK-BASED
    COMPENSATION
   148




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
      
    retirement;
    disability; or
    change of control of CMS Energy, as defined by the individual
    award or, in the absence of such definition, as defined by the
    PISP.     149




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    Weighted-Average GrantRestricted Stock

Number of Shares


Date Fair Value per ShareCMS Energy, including
    ConsumersNonvested at December 31, 2008


1,804,300


$
12.10Granted(a)


799,007



13.49Vested


(345,530
)


12.73Forfeited(b)


(238,000
)


12.27Nonvested at December 31, 2009


2,019,777


$
12.52ConsumersNonvested at December 31, 2008


1,567,920


$
12.03Granted(a)


711,147



13.44Vested


(281,305
)


12.60Forfeited(b)


(187,775
)


12.00Nonvested at December 31, 2009


1,809,987


$
12.50     (a)
    
    During 2009, CMS Energy granted 407,000 TSR shares and 392,007
    time-lapse shares of restricted stock. During 2009, Consumers
    granted 351,800 TSR shares and 359,347 time-lapse shares of
    restricted stock.(b)
    
    During 2009, 224,000 TSR shares granted by CMS Energy in 2006
    were forfeited due to the failure to meet the specific market
    conditions. During 2009, 173,775 TSR shares granted by Consumers
    in 2006 were forfeited due to the failure to meet the specific
    market conditions.      2009


2008


2007Expected volatility


29.79
%


19.70
%


19.11
%Expected dividend yield


1.96
%


2.67
%


1.20
%Risk-free rate


1.75
%


2.83
%


4.59
%  150




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    2009


2008


2007In MillionsCMS Energy, including
    ConsumersFair value of shares vested

$
4


$
2


$
15Compensation expense recognized


9



8



10Income tax benefit recognized


3



3



3ConsumersFair value of shares vested

$
4


$
2


$
10Compensation expense recognized


8



7



7Income tax benefit recognized


3



2



2       Options


Weighted-


Weighted-Outstanding,


Average


Average


AggregateFully Vested,


Exercise


Remaining


Intrinsicand


Price per


Contractual


ValueStock Options

Exercisable


Share


Term


(In millions)CMS Energy, including
    ConsumersOutstanding at December 31, 2008


807,540


$
21.58



2.8 years


$
(9
)Granted






Exercised


(58,500
)


6.71Cancelled or Expired


(168,000
)


32.94Outstanding at December 31, 2009


581,040



19.79



2.0 years


$
(2
)ConsumersOutstanding at December 31, 2008


497,786


$
19.81



2.9 years


$
(1
)Granted






Exercised


(33,000
)

$
6.99Cancelled or Expired


(86,000
)


33.89Outstanding at December 31, 2009


378,786



17.74



2.3 years


$
(1
)      151




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    Years Ended December 31

2009


2008


2007CMS Energy, including
    ConsumersWeighted average grant date fair value per shareRestricted stock granted

$
13.49


$
10.38


$
14.18Stock options granted(a)










ConsumersWeighted average grant date fair value per shareRestricted stock granted

$
13.44


$
10.43


$
14.12Stock options granted(a)










     (a)
    
    No stock options were granted in 2009, 2008, or 2007.  15:
    LEASES    end-of-life
      Years Ended December 31

2009


2008


2007In MillionsCMS Energy, including
    ConsumersCapital lease expense

$
38


$
46


$
34Operating lease expense


34



28



25Income from subleases






(1
)


(2
)ConsumersCapital lease expense

$
38


$
46


$
34Operating lease expense


34



27



23  152




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    Capital


Finance


OperatingLeases


Lease(a)


LeasesIn MillionsCMS Energy, including
    Consumers2010

$
18


$
22


$
282011


17



21



282012


20



20



282013


12



20



242014


10



19



232015 and thereafter


54



114



119Total minimum lease payments


131



216


$
250Less imputed interest


73



55Present value of net minimum lease payments


58



161Less current portion


9



13Non-current portion

$
49


$
148Consumers2010

$
18


$
22


$
282011


17



21



282012


20



20



282013


12



20



242014


10



19



232015 and thereafter


54



114



119Total minimum lease payments


131



216


$
250Less imputed interest


73



55Present value of net minimum lease payments


58



161Less current portion


9



13Non-current portion

$
49


$
148     (a)
    
    In April 2007, Consumers sold Palisades to Entergy and entered
    into a
    15-year PPA
    to buy all of the capacity and energy produced by Palisades.
    Consumers has continuing involvement with Palisades through
    security provided to Entergy for Consumers PPA obligation,
    Consumers DOE liability, and other forms of involvement.
    Because of these ongoing arrangements, Consumers accounted for
    the transaction as a financing of Palisades and not a sale.
    Accordingly, no gain on the sale of Palisades was recognized on
    the Consolidated Statements of Income. Consumers accounted for
    the remaining non-real-estate assets and liabilities associated
    with the transaction as a sale.   153




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
   16:
    PROPERTY, PLANT,
    AND EQUIPMENT    EstimatedDepreciableYears Ended December 31

Life in Years


2009


2008In MillionsCMS Energy, including
    ConsumersElectric:Generation


18-85


$
3,671


$
3,357Distribution


12-75



4,991



4,766Other


7-40



574



551Capital and finance leases(a)






289



291Gas:Underground storage facilities(b)


30-65



299



270Transmission


13-75



573



473Distribution


30-80



2,557



2,460Other


5-50



366



398Capital leases(a)






17



21Enterprises:IPP


3-45



329



329Other


3-40



16



11Other:


2-71



34



33Construction work in progress






506



608Less accumulated depreciation, depletion, and amortization(c)






4,540



4,387Net property, plant, and equipment(d)





$
9,682


$
9,181ConsumersElectric:Generation


18-85


$
3,671


$
3,357Distribution


12-75



4,991



4,766Other


7-40



574



551Capital and finance leases(e)






289



291Gas:Underground storage facilities(b)


30-65



299



270Transmission


13-75



573



473Distribution


30-80



2,557



2,460Other


5-50



366



398Capital leases(e)






17



21Other non-utility property


7-71



15



15Construction work in progress






505



607Less accumulated depreciation, depletion, and amortization(f)






4,386



4,242Net property, plant, and equipment(d)





$
9,471


$
8,967     (a)
    
    Capital and finance leases presented in this table are gross
    amounts. Accumulated amortization of capital and finance leases
    was $84 million at December 31, 2009 and
    $79 million at December 31, 2008. Additions were
    $16 million and net retirements and adjustments were
    $22 million during 2009. Additions were $6 million and
    net retirements and adjustments were $3 million during 2008. 154




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
   (b)
    
    Included base natural gas in underground storage of
    $26 million at December 31, 2009 and 2008, which is
    not subject to depreciation.(c)
    
    At December 31, 2009, accumulated depreciation, depletion,
    and amortization included $4.4 billion from Consumers
    utility plant assets and $155 million from other plant
    assets. At December 31, 2008, accumulated depreciation,
    depletion, and amortization included $4.2 billion from
    Consumers utility plant assets and $187 million from
    other plant assets.(d)
    
    At December 31, 2009, utility plant additions were
    $928 million and utility plant retirements, including other
    plant adjustments, were $171 million. At December 31,
    2008, utility plant additions were $629 million and utility
    plant retirements, including other plant adjustments, were
    $60 million.(e)
    
    Capital and finance leases presented in this table are gross
    amounts. Accumulated amortization of capital and finance leases
    was $84 million at December 31, 2009 and
    $79 million at December 31, 2008. Additions were
    $16 million and net retirements and adjustments were
    $22 million during 2009. Additions were $5 million and
    net retirements and adjustments were $3 million during 2008.(f)
    
    At December 31, 2009, accumulated depreciation, depletion,
    and amortization included $4.4 billion from Consumers
    utility plant assets and $1 million from non-utility plant
    assets. At December 31, 2008, accumulated depreciation,
    depletion, and amortization included $4.2 billion from
    Consumers utility plant assets and $1 million from
    non-utility plant assets.  Intangible Assets:
  Amortization


2009


2008Years Ended December 31

Life





Accumulated





AccumulatedDescription

in years


Gross Cost(a)


Amortization


Gross Cost(a)


AmortizationIn MillionsCMS Energy, including
    ConsumersSoftware development


7-15


$
303


$
105


$
370


$
192Plant acquisition adjustments


40



214



11



214



6Rights of way


50-75



134



35



118



33Leasehold improvements


various



13



9



11



9Franchises and consents


n/a



15



6



14



6Other intangibles


various



28



21



28



17Total





$
707


$
187


$
755


$
263ConsumersSoftware development


7-15


$
303


$
105


$
370


$
192Plant acquisition adjustments


40



214



11



214



6Rights of way


50-75



134



35



118



33Leasehold improvements


various



13



9



11



9Franchises and consents


n/a



15



6



14



6Other intangibles


n/a



18



13



18



13Total





$
697


$
179


$
745


$
259     (a)
    
    Intangible asset additions for Consumers utility plant
    were $62 million during 2009. Intangible asset additions
    for Consumers utility plant were $163 million during
    2008, which included $161 million related to the
    installation and operation of a new integrated business software
    system. Retirements were $110 million during 2009. There
    were no intangible asset retirements during 2008. 155




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
     17:
    ASSET RETIREMENT
    OBLIGATIONS  Accounting for Asset Retirement Obligations:
      In-ServiceCompany and ARO Description

Date

Long-Lived AssetsCMS Energy, Including
    ConsumersClose gas treating plant and gas wells

Various

Gas transmission and storageClosure of coal ash disposal areas

Various

Generating plants coal ash areasClosure of wells at gas storage fields

Various

Gas storage fieldsIndoor gas services equipment relocations

Various

Gas meters located inside structuresAsbestos abatement

1973

Electric and gas utility plantGas distribution cut, purge and cap

Various

Gas distribution mains and servicesConsumersClosure of coal ash disposal areas

Various

Generating plants coal ash areasClosure of wells at gas storage fields

Various

Gas storage fieldsIndoor gas services equipment relocations

Various

Gas meters located inside structuresAsbestos abatement

1973

Electric and gas utility plantGas distribution cut, purge and cap

Various

Gas distribution mains and services    156




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    ARO














AROLiability











Cash flow


LiabilityCompany and ARO Description

12/31/08


Incurred


Settled(a)


Accretion


Revisions


12/31/09In MillionsCMS Energy, Including
    ConsumersClose gas treating plant and gas wells

$
1


$



$



$



$



$
1Consumers


205



15



(8
)


16







228Total CMS Energy

$
206


$
15


$
(8
)

$
16


$



$
229ConsumersCoal ash disposal areas

$
62


$



$
(4
)

$
6


$



$
64Wells at gas storage fields


1



















1Indoor gas services relocations


1



















1Asbestos abatement


36







(1
)


3







38Gas distribution cut, purge, cap


105



15



(3
)


7







124Total Consumers

$
205


$
15


$
(8
)

$
16


$



$
228   ARO














AROLiability











Cash flow


LiabilityCompany and ARO Description

12/31/07


Incurred


Settled(a)


Accretion


Revisions


12/31/08In MillionsCMS Energy, Including
    ConsumersClose gas treating plant and gas wells

$



$



$



$
1


$



$
1Consumers


198



(1
)


(7
)


15







205Total CMS Energy

$
198


$
(1
)

$
(7
)

$
16


$



$
206ConsumersCoal ash disposal areas

$
59


$



$
(3
)

$
6


$



$
62Wells at gas storage fields


1



















1Indoor gas services relocations


1



















1Asbestos abatement


36







(2
)


2







36Gas distribution cut, purge, cap


101



(1
)


(2
)


7







105Total Consumers

$
198


$
(1
)

$
(7
)

$
15


$



$
205     (a)
    
    Cash payments of $8 million in 2009 and $7 million in
    2008 were included in the Other current and non-current
    liabilities line in Net cash provided by operating activities on
    CMS Energys and Consumers Consolidated Statements of
    Cash Flows. 157




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
   18:
    JOINTLY OWNED
    REGULATED UTILITY FACILITIES    Ownership








Accumulated


ConstructionShare


Net Investment(a)


Depreciation


Work in ProgressDecember 31

(%)


2009


2008


2009


2008


2009


2008In MillionsCampbell Unit 3


93.3


$
662


$
675


$
387


$
360


$
14


$
19Ludington


51.0



62



61



111



107



5



7Distribution


Various



105



96



43



41



7



3     (a)
    
    Net investment is the amount of utility plant in service less
    accumulated depreciation.    19:
    EQUITY METHOD
    INVESTMENTS        Year Ended December 31, 2007In MillionsOperating revenue

$
598Operating expenses


448Operating income


150Other expense, net


69Net income

$
81
(a)     (a)
    
    Amounts include financial data from equity method investments
    through the date of sale. 158




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
   20:
    CONSOLIDATION OF
    VARIABLE INTEREST ENTITIES    
    related party agreements such as operating and maintenance
    agreements, power purchase agreements, and leases;
    ownership interest; and
    allocation of expected losses and return based on discounted
    cash flows at a weighted-average cost of capital.    TotalNature of



GeneratingName (Ownership Interest)

the Entity

Financing of Partnership

CapacityT.E.S. Filer City (50)%

Coal-fueled 
    power generator

Non-recourse long-term debt that matured in December 2007.

73 MWGrayling (50)%

Wood waste- fueled
    power generator

Sale of revenue bonds that mature in November 2012 and bear
    interest at variable rates.  The debt is recourse to the
    partnership, but not the individual partners, and secured by a
    letter of credit equal to the outstanding balance.

40 MWGenesee (50)%

Wood waste- fueled
    power generator

Sale of revenue bonds that mature in 2021 and bear interest at
    fixed rates.  The debt is non-recourse to the partnership and
    secured by a CMS Energy guarantee capped at $3 million annually.

38 MWTotal





151 MW        159




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
      21:
    RELATED PARTY
    TRANSACTIONS  CONSUMERS    
    purchase and sale of electricity from and to CMS Enterprises;
    payment of parent company overhead costs to CMS Energy; and
    investment in CMS Energy Common Stock.    Description

Related Party

2009


2008


2007In MillionsDividend income

CMS Energy

$
1


$
1


$
1Type of Expense:Electric generating capacity and energy

Affiliates of CMS Enterprises
    CMS Energy and Consumers affiliated


(81
)


(75
)


(79
)Interest expense on note payable

Trust Preferred Securities Companies










(2
)Gas Transportation(a)

CMS Bay Area Pipeline L.L.C.










(1
)     (a)
    
    CMS Bay Area Pipeline, L.L.C. was sold to Lucid Energy in March
    2007.      22:
    ASSET SALES,
    DISCONTINUED OPERATIONS, AND IMPAIRMENT CHARGES  Asset
    Sales
   160




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    Disposal ofContinuing


DiscontinuedOperations


OperationsCash


Pretax


PretaxMonth Sold

Business

Proceeds


Gain (Loss)


Gain (Loss)In MillionsCMS Energy, including
    ConsumersMarch

El Chocon(a)

$
50


$
34


$
March

Argentine/Michigan businesses(b)


130



(5
)


(278
)April

Palisades(c)


333







April

SENECA(d)


106







46May

Middle East, Africa and India businesses(e)


792



(15
)


96June

CMS Energy Brasil S.A.(f)


201







3August

GasAtacama(g)


80







October

Jamaica(h)


14



1



Various

Other


11



6



Total CMS Energy

$
1,717


$
21


$
(133
)ConsumersApril

Palisades(c)

$
333


$
Various

Other


4



2Total Consumers

$
337


$
2     (a)
    
    CMS Energy sold its interest in El Chocon to Endesa, S.A.(b)
    
    CMS Energy sold a portfolio of its businesses in Argentina and
    northern Michigan non-utility natural gas assets to Lucid
    Energy. Due to the settlement of certain legal proceedings, CMS
    Energy recognized a $17 million gain in 2007.(c)
    
    Consumers sold Palisades to Entergy for $380 million and,
    as of December 31, 2007, received $363 million after
    various closing adjustments. Consumers also paid Entergy
    $30 million to assume ownership and responsibility for the
    Big Rock ISFSI. Because of the sale of Palisades, Consumers paid
    the NMC, the former operator of Palisades, $7 million in
    exit fees and forfeited its $5 million investment in the
    NMC. Entergy assumed responsibility for the future
    decommissioning of Palisades and for storage and disposal of
    spent nuclear fuel located at Palisades and the Big Rock ISFSI
    sites.Consumers accounted for the disposal of Palisades as a financing
    and thus recognized no gain on the Consolidated Statements of
    Income. Consumers accounted for the remaining non-real estate
    assets and liabilities associated with the transaction as a sale.(d)
    
    CMS Energy sold its ownership interest in SENECA and certain
    associated generating equipment to PDVSA.(e)
    
    CMS Energy sold its ownership interest in businesses in the
    Middle East, Africa, and India to TAQA.(f)
    
    CMS Energy sold CMS Energy Brasil S.A. to CPFL Energia S.A., a
    Brazilian utility.(g)
    
    CMS Energy sold its investment in GasAtacama to Endesa S.A.(h)
    
    CMS Energy sold its investment in Jamaica Power to AEI. 161




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
         Discontinued
    Operations
    Years Ended December 31

2009


2008


2007In MillionsRevenues

$
7


$
14


$
248Discontinued operations:Pretax income (loss) from discontinued operations

$
33


$
2


$
(111
)Income tax expense (benefit)


13



1



(1
)Income (Loss) From Discontinued Operations, Net of Tax Expense
    (Benefit)

$
20
(a)

$
1


$
(110
)(b)     (a)
    
    Includes an operating loss of $11 million ($7 million
    after tax) at Exeter, whose assets and liabilities were
    reclassified as held for sale in 2009, and a loss of
    $3 million ($2 million after tax) related to the State
    Street Bank and TSU litigation at CMS Viron. For additional
    details on CMS Viron, see Note 6, Contingencies and
    Commitments.Also includes a gain for the expiration of an indemnity
    obligation related to a 2007 asset sale. CMS Energy provided an
    indemnity to TAQA in connection with the sale of its ownership
    interests in businesses in the Middle East, Africa, and India,
    and recorded a $50 million provision for the contingent
    liability. This indemnity expired in 2009 and CMS Energy
    eliminated the liability from its balance sheet, recognizing a
    $45 million benefit ($28 million after tax) to Income
    (Loss) from Discontinued Operations, Net of Tax Expense
    (Benefit) and a $5 million benefit to Gain on asset sales,
    net.(b)
    
    Includes operating income of $22 million (operating loss of
    $9 million after tax). Also includes $133 million
    ($101 million after tax) net loss on disposal of assets.
    For details on gains and losses recognized on the disposal of
    discontinued operations, see Asset Sales within this
    Note. 162




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
     Pending Asset Sales:
  Years Ended December 31

2009In MillionsAssets:Current AssetsCash

$
1Accounts receivable, net


1Non-Current AssetsProperty, plant, and equipment, net


8Other


1Total assets

$
11Liabilities:Current Liabilities

$
Non-Current Liabilities


Total liabilities

$
     Impairment
    Charges
    Years Ended December 31

2007In MillionsCMS EnergyTGN(a)

$
140GasAtacama(b)


35Jamaica(c)


22PowerSmith(d)


5Prairie State(e)


2Total CMS Energy asset impairments

$
204     (a)
    
    CMS Energy recorded a $215 million impairment charge to
    recognize the reduction in fair value of its investment in TGN,
    a natural gas business in Argentina. The impairment included a
    cumulative net foreign 163




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  currency translation loss of $197 million. In 2007, CMS
    Energy recognized a $75 million deferred credit in Asset
    impairment charges on its Consolidated Statements of Income
    (Loss).(b)
    
    In 2007, CMS Energy recorded an impairment charge to reflect the
    fair value of its investment in GasAtacama as determined in sale
    negotiations.(c)
    
    CMS Energy recorded an impairment charge to reflect the fair
    value of its investment in an electric generating plant in
    Jamaica by discounting a set of probability-weighted streams of
    future operating cash flows.(d)
    
    CMS Energy recorded an impairment charge to reflect the fair
    value of its investment in PowerSmith as determined in sale
    negotiations.(e)
    
    CMS Energy recorded an impairment charge to reflect its
    withdrawal from the co-development of Prairie State with Peabody
    Energy because the project did not meet CMS Energys
    investment criteria.  23:
    REPORTABLE
    SEGMENTS      
    electric utility, consisting of regulated activities associated
    with the generation and distribution of electricity in Michigan;
    gas utility, consisting of regulated activities associated with
    the transportation, storage, and distribution of natural gas in
    Michigan;
    enterprises, consisting of various subsidiaries engaging
    primarily in domestic independent power production; and
    other, including corporate interest and other expenses and
    discontinued operations.    
    electric utility, consisting of regulated activities associated
    with the generation and distribution of electricity in Michigan;
    gas utility, consisting of regulated activities associated with
    the transportation, storage, and distribution of natural gas in
    Michigan; and
    other, including a consolidated special-purpose entity for the
    sale of accounts receivable.     164




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
     Years Ended December 31

2009


2008


2007In MillionsCMS Energy, including
    ConsumersOperating Revenue:Electric utility

$
3,407


$
3,594


$
3,443Gas utility


2,556



2,827



2,621Enterprises


216



365



370Other


26



21



17Total Operating Revenue  CMS Energy

$
6,205


$
6,807


$
6,451ConsumersOperating Revenue:Electric utility

$
3,407


$
3,594


$
3,443Gas utility


2,556



2,827



2,621Total Operating Revenue  Consumers

$
5,963


$
6,421


$
6,064CMS Energy, including
    ConsumersIncome (Loss) from Equity Method Investees(a)Enterprises

$
(2
)

$
5


$
39Other










1Total Income (Loss) from Equity Method Investees  CMS
    Energy

$
(2
)

$
5


$
40CMS Energy, including
    ConsumersDepreciation and Amortization:Electric utility

$
441


$
438


$
397Gas utility


118



136



127Enterprises


10



10



11Other


1



4



4Total Depreciation and Amortization  CMS Energy

$
570


$
588


$
539ConsumersDepreciation and Amortization:Electric utility

$
441


$
438


$
397Gas utility


118



136



127Total Depreciation and Amortization  Consumers

$
559


$
574


$
524 165




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  Years Ended December 31

2009


2008


2007In MillionsCMS Energy, including
    ConsumersInterest Charges:Electric utility

$
225


$
185


$
192Gas utility


66



60



69Enterprises


5



6



9Other


139



149



177Total Interest Charges  CMS Energy

$
435


$
400


$
447ConsumersInterest Charges:Electric utility

$
225


$
185


$
193Gas utility


66



60



70Other


1



2



1Total Interest Charges  Consumers

$
292


$
247


$
264CMS Energy, including
    ConsumersIncome Tax Expense (Benefit):Electric utility

$
107


$
153


$
100Gas utility


56



45



47Enterprises


4



(10
)


(183
)Other


(52
)


(49
)


(161
)Total Income Tax Expense (Benefit)  CMS Energy

$
115


$
139


$
(197
)ConsumersIncome Tax Expense (Benefit):Electric utility

$
107


$
153


$
100Gas utility


56



45



47Other










(22
)Total Income Tax Expense (Benefit)  Consumers

$
163


$
198


$
125CMS Energy, including
    ConsumersNet Income (Loss) Available to Common Stockholders:Electric utility

$
194


$
271


$
196Gas utility


96



89



87Enterprises


(7
)


13



(412
)Discontinued operations


20



1



(89
)Other


(85
)


(90
)


(16
)Total Net Income (Loss) Available to Common Stockholders
     CMS Energy

$
218


$
284


$
(234
) 166




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  Years Ended December 31

2009


2008


2007In MillionsConsumersNet Income Available to Common Stockholder:Electric utility

$
194


$
271


$
196Gas utility


96



89



87Other


1



2



27Total Net Income (Loss) Available to Common
    Stockholder  Consumers

$
291


$
362


$
310CMS Energy, including
    ConsumersInvestments in Equity Method Investees:(a)Enterprises

$
3


$
5


$
6Other


6



6



5Total Investments in Equity Method Investees  CMS
    Energy

$
9


$
11


$
11CMS Energy, including
    ConsumersProperty, Plant and Equipment, GrossElectric utility

$
9,525


$
8,965


$
8,555Gas utility


3,812



3,622



3,467Enterprises


345



340



341Other


34



33



34Total Property, Plant and Equipment  CMS Energy

$
13,716


$
12,960


$
12,397ConsumersProperty, Plant and Equipment, GrossElectric utility

$
9,525


$
8,965


$
8,555Gas utility


3,812



3,622



3,467Other


15



15



15Total Property, Plant and Equipment  Consumers

$
13,352


$
12,602


$
12,037CMS Energy, including
    ConsumersTotal Assets:Electric utility(b)

$
9,157


$
8,904


$
8,492Gas utility(b)


4,594



4,565



4,102Enterprises


303



313



982Other


1,202



1,119



604Total Assets  CMS Energy

$
15,256


$
14,901


$
14,180 167




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  Years Ended December 31

2009


2008


2007In MillionsConsumersTotal Assets:Electric utility(b)

$
9,157


$
8,904


$
8,492Gas utility(b)


4,594



4,565



4,102Other


871



777



807Total Assets  Consumers Energy

$
14,622


$
14,246


$
13,401CMS Energy, including
    ConsumersCapital Expenditures:(c)Electric utility

$
557


$
553


$
1,319Gas utility


270



241



168Enterprises


7



3



5Total Capital Expenditures  CMS Energy

$
834


$
797


$
1,492ConsumersCapital Expenditures:(c)Electric utility

$
557


$
553


$
1,319Gas utility


270



241



168Total Capital Expenditures  Consumers

$
827


$
794


$
1,487   Geographic
    Areas:
  2009


2008


2007In MillionsCMS Energy, including
    Consumers(d)United StatesOperating revenue(e)

$
6,205


$
6,807


$
6,449Operating income

$
696


$
798


$
151Total Assets

$
15,253


$
14,898


$
14,175InternationalOperating revenue(e)

$



$



$
2Operating income (loss)

$



$
1


$
(150
)Total Assets

$
3


$
3


$
5     (a)
    
    Consumers has no material equity method investments.(b)
    
    Amounts include a portion of Consumers other common assets
    attributable to both the electric and gas utility businesses.(c)
    
    Amounts include purchase of nuclear fuel and capital lease
    additions. Amounts also include a portion of Consumers
    capital expenditures for plant and equipment attributable to
    both the electric and gas utility businesses.(d)
    
    Consumers has no international assets, international operating
    revenues, or international operating income.(e)
    
    Revenues are based on the country location of customers. 168




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CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
   Collective Bargaining Agreements:
  24:
    QUARTERLY
    FINANCIAL AND COMMON STOCK INFORMATION (UNAUDITED)  2009Quarters Ended

March 31


June 30


Sept. 30


Dec. 31In Millions, Except Per Share AmountsCMS Energy, including
    ConsumersOperating revenue

$
2,104


$
1,225


$
1,263


$
1,613Operating income


209



150



229



108Income from continuing operations


75



55



76



14Income (loss) from discontinued operations(a)


(1
)


25



(1
)


(3
)Net income


74



80



75



11Income attributable to noncontrolling interests


1



2



6



2Net income attributable to CMS Energy


73



78



69



9Preferred dividends


3



3



2



3Net income available to common stockholders


70



75



67



6Income from continuing operations per average common
    share  basic


0.32



0.22



0.30



0.04Income from continuing operations per average common
    share  diluted


0.31



0.21



0.29



0.03Basic earnings per average common share(b)


0.31



0.33



0.29



0.03Diluted earnings per average common share(b)


0.30



0.32



0.28



0.02Common stock prices(c)High


12.20



12.30



13.64



16.04Low


10.09



10.98



11.78



13.05ConsumersOperating revenue

$
2,034


$
1,182


$
1,204


$
1,543Operating income


203



174



218



94Net income


99



72



101



21Preferred dividends


1







1



Net income available to common stockholder


98



72



100



21   169




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CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  2008Quarters Ended

March 31


June 30


Sept. 30


Dec. 31CMS Energy, including
    ConsumersOperating revenue

$
2,180


$
1,361


$
1,425


$
1,841Operating income


252



154



212



181Income from continuing operations


107



49



81



64Income (loss) from discontinued operations(a)


1



(1
)


1



Net income


108



48



82



64Income attributable to noncontrolling interests


3



1



2



1Net income attributable to CMS Energy


105



47



80



63Preferred dividends


3



3



2



3Net income available to common stockholders


102



44



78



60Income from continuing operations per average common
    share  basic


0.45



0.20



0.34



0.26Income from continuing operations per average common
    share  diluted


0.43



0.18



0.32



0.26Basic earnings per average common share(b)


0.45



0.20



0.35



0.26Diluted earnings per average common share(b)


0.43



0.18



0.33



0.26Common stock prices(c)High


17.16



15.83



14.91



12.58Low


13.35



13.78



12.09



8.81ConsumersOperating revenue

$
2,091


$
1,263


$
1,307


$
1,760Operating income


250



139



199



178Net income


130



60



91



83Preferred dividends


1







1



Net income available to common stockholder


129



60



90



83     (a)
    
    Net of tax.(b)
    
    Sum of the quarters may not equal the annual earnings per share
    due to changes in shares outstanding.(c)
    
    Based on New York Stock Exchange composite transactions.   170




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##### Table of Contents



CMS
    ENERGY CORPORATION
 CONSUMERS ENERGY
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    2009Quarters Ended

March 31


June 30


Sept. 30In Millions, Except Per Share AmountsCMS Energy, including
    ConsumersOperating revenue

$



$
(2
)

$
(9
)Operating income


2



2



(11
)Net income (loss) available to common stockholders


1



1



(6
)Basic earnings per average common share


0.01







(0.03
)Diluted earnings per average common share










(0.03
)ConsumersOperating revenue

$



$
(2
)

$
(9
)Operating income


2



2



(11
)Net income available to common stockholder


1



1



(6
)     2009Quarters Ended

March 31


June 30


Sept. 30


Dec. 31In MillionsCMS Energy, including
    ConsumersOperating revenue

$
(2
)

$
(1
)

$
(2
)

$
Operating income


2



6



2



   2008Quarters Ended

March 31


June 30


Sept. 30


Dec. 31In MillionsCMS Energy, including
    ConsumersOperating revenue

$
(4
)

$
(4
)

$
(3
)

$
(3
)Operating income


(1
)


(1
)






1  171




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##### Table of Contents



Report of
    Independent Registered Public Accounting Firm  To the Board of Directors and Stockholders of
 CMS Energy Corporation
  Internal Control  Integrated
    Framework
          172




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##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
  To the Board of Directors and Stockholder of
   Internal Control  Integrated
    Framework
          173




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##### Table of Contents



(This page
    intentionally left blank)
  174




---



##### Table of Contents



ITEM 9. CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS
    ON ACCOUNTING AND FINANCIAL DISCLOSURE  CMS
    Energy
    Consumers
   ITEM 9A. CMS
    ENERGYS CONTROLS AND PROCEDURES  Conclusion Regarding the Effectiveness of Disclosure Controls
    and Procedures Rules 13a-15(e) 15d-15(e)
  Managements Annual Report on Internal Control Over
    Financial Reporting Rule 13a-15(f).
  
    pertain to the maintenance of records that, in reasonable
    detail, accurately and fairly reflect the transactions and
    dispositions of the assets of CMS Energy;
    provide reasonable assurance that transactions are recorded as
    necessary to permit preparation of financial statements in
    accordance with GAAP, and that receipts and expenditures of CMS
    Energy are being made only in accordance with authorizations of
    management and directors of CMS Energy; and
    provide reasonable assurance regarding prevention or timely
    detection of unauthorized acquisition, use or disposition of CMS
    Energys assets that could have a material effect on its
    financial statements.      Changes in Internal Control over Financial
    Reporting:
 175




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##### Table of Contents



ITEM 9A(T).
    CONSUMERS CONTROLS AND PROCEDURES  Conclusion Regarding the Effectiveness of Disclosure Controls
    and Procedures: Rules 13a-15(e) 15d-15(e)
  Managements Annual Report on Internal Control Over
    Financial Reporting: Rule 13a-15(f).
  
    pertain to the maintenance of records that, in reasonable
    detail, accurately and fairly reflect the transactions and
    dispositions of the assets of Consumers;
    provide reasonable assurance that transactions are recorded as
    necessary to permit preparation of financial statements in
    accordance with GAAP, and that receipts and expenditures of
    Consumers are being made only in accordance with authorizations
    of management and directors of Consumers; and
    provide reasonable assurance regarding prevention or timely
    detection of unauthorized acquisition, use or disposition of
    Consumers assets that could have a material effect on its
    financial statements.      Changes in Internal Control over Financial
    Reporting:
 ITEM 9B. OTHER
    INFORMATION  CMS
    Energy
    Consumers
   176




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##### Table of Contents



PART III ITEM 10.
    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE  CMS
    Energy
      CODE OF
    ETHICS
      Consumers
      CODE OF
    ETHICS
     177




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##### Table of Contents



ITEM 11.
    EXECUTIVE COMPENSATION    OFFICER INCENTIVE
    COMPENSATION PLAN
      Corporate Performance:
  Annual Award Formula:
  Payment of Annual Awards:
 ITEM 12.
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
    MANAGEMENT AND RELATED STOCKHOLDER MATTERS  CMS
    Energy
   178




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##### Table of Contents



Consumers
   ITEM 13.
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,
    AND DIRECTOR INDEPENDENCE  CMS
    Energy
    Consumers
   ITEM 14.
    PRINCIPAL ACCOUNTANT FEES AND SERVICES  CMS
    Energy
    Consumers
   PART IV  ITEM 15.
    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
  (a)(1)
    Financial Statements and Reports of Independent Public
    Accountants for CMS Energy and Consumers are included in each
    companys Item 8. Financial Statements and
    Supplementary Data and are incorporated by reference herein.(a)(2)
    Index to Financial Statement Schedules.  PageSchedule I

Condensed Financial Information of Registrant CMS Energy-Parent
    CompanyCondensed
    Statements of Income (Loss)


185Statements of Cash
    Flows


186Condensed Balance
    Sheets


187Notes to Condensed
    Financial Statements


190Schedule II

Valuation and Qualifying Accounts and ReservesCMS Energy
    Corporation


191Consumers Energy
    Company


191Report of Independent Registered Public Accounting FirmCMS Energy
    Corporation


172Consumers Energy
    Company


173  179




---



##### Table of Contents



CMS ENERGYS
    AND CONSUMERS EXHIBITS
  Form 10-K
  http://www.sec.gov.
  Previously FiledWith File

As ExhibitExhibits

Number

Number



Description(3)(a)

1-9513

(3)(a)



Restated Articles of Incorporation of CMS Energy, effective
    June 1, 2004, as amended May 22, 2009 (2nd qtr. 2009
    Form 10-Q)(3)(b)

1-9513

3.01



CMS Energy Corporation Bylaws, amended and restated as of
    August 14, 2009
    (Form 8-K
    filed August 18, 2009)(3)(c)

1-5611

3(c)



Restated Articles of Incorporation of Consumers effective
    June 7, 2000 (2000
    Form 10-K)(3)(d)

1-5611

3.02



Consumers Energy Company Bylaws, amended and restated as of
    August 14, 2009
    (Form 8-K
    filed August 18, 2009)(4)(a)

2-65973

(b)(1)-4



Indenture dated as of September 1, 1945, between Consumers
    and Chemical Bank (successor to Manufacturers Hanover
    Trust Company), as Trustee, including therein indentures
    supplemental thereto through the Forty-third Supplemental
    Indenture dated as of May 1, 1979
    (Form S-16
    filed November 13, 1979)Indentures Supplemental thereto:(4)(a)(i)

1-5611

(4)(a)



71st dated as of 3/06/98 (1997
    Form 10-K)(4)(a)(ii)

1-5611

(4)(d)



90th dated as of 4/30/03 (1st qtr. 2003
    Form 10-Q)(4)(a)(iii)

1-5611

(4)(a)



91st dated as of 5/23/03 (3rd qtr. 2003
    Form 10-Q)(4)(a)(iv)

1-5611

(4)(b)



92nd dated as of 8/26/03 (3rd qtr. 2003
    Form 10-Q)(4)(a)(v)

1-5611

(4)(a)



96th dated as of 8/17/04
    (Form 8-K
    filed August 20, 2004)(4)(a)(vi)

333-120611

(4)(e)(xv)



97th dated as of 9/1/04 (Consumers
    Form S-3
    dated November 18, 2004)(4)(a)(vii)

1-5611

4.4



98th dated as of 12/13/04
    (Form 8-K
    filed December 13, 2004)(4)(a)(viii)

1-5611

(4)(a)(i)



99th dated as of 1/20/05 (2004
    Form 10-K)(4)(a)(ix)

1-5611

4.2



100th dated as of 3/24/05
    (Form 8-K
    filed March 30, 2005)(4)(a)(x)

1-5611

4.2



102nd dated as of 4/13/05
    (Form 8-K
    filed April 13, 2005)(4)(a)(xi)

1-5611

4.2



104th dated as of 8/11/05
    (Form 8-K
    filed August 11, 2005) 180




---



##### Table of Contents



Previously FiledWith File

As ExhibitExhibits

Number

Number



Description(4)(a)(xii)

1-5611

4(b)



105th dated as of 3/30/07 (2007
    Form 10-K)(4)(a)(xiii)

1-5611

4(a)



106th dated as of 11/30/07 (2007
    Form 10-K)(4)(a)(xiv)

1-5611

(4)(a)



107th dated as of 3/1/08 (1st qtr. 2008
    Form 10-Q)(4)(a)(xv)

1-5611

4.1



108th dated as of 3/14/08
    (Form 8-K
    filed March 14, 2008)(4)(a)(xvi)

1-5611

4.1



109th dated as of 9/11/08
    (Form 8-K
    filed September 16, 2008)(4)(a)(xvii)

1-5611

4.1



110th dated as of 9/12/08
    (Form 8-K
    filed September 12, 2008)(4)(a)(xviii)

1-5611

4.1



111th dated as of 3/6/09
    (Form 8-K
    filed March 6, 2009)(4)(b)

1-5611

(4)(b)



Indenture dated as of January 1, 1996 between Consumers and
    The Bank of New York Mellon, as Trustee (1995
    Form 10-K)(4)(c)

1-5611

(4)(c)



Indenture dated as of February 1, 1998 between Consumers
    and The Bank of New York Mellon (formerly The Chase Manhattan
    Bank), as Trustee (1997
    Form 10-K)(4)(d)

33-47629

(4)(a)*



Indenture dated as of September 15, 1992 between CMS Energy
    and NBD Bank, as Trustee
    (Form S-3
    filed May 1, 1992)Indentures Supplemental thereto:(4)(d)(i)

333-58686

(4)(a)*



11th dated as of 3/29/01
    (Form S-8
    filed April 11, 2001)(4)(d)(ii)

1-9513

(4)(d)(i)*



15th dated as of 9/29/04 (2004
    Form 10-K)(4)(d)(iii)

1-9513

(4)(d)(ii)*



16th dated as of 12/16/04 (2004
    Form 10-K)(4)(d)(iv)

1-9513

4.2*



17th dated as of 12/13/04
    (Form 8-K
    filed December 13, 2004)(4)(d)(v)

1-9513

4.2*



18th dated as of 1/19/05
    (Form 8-K
    filed January 20, 2005)(4)(d)(vi)

1-9513

4.2*



19th dated as of 12/13/05
    (Form 8-K
    filed December 15, 2005)(4)(d)(vii)

1-9513

4.2*



20th dated as of 7/3/07
    (Form 8-K
    filed July 5, 2007)(4)(d)(viii)

1-9513

4.3*



21st dated as of 7/3/07
    (Form 8-K
    filed July 5, 2007)(4)(d)(ix)

1-9513

4.1*



22nd dated as of 6/15/09
    (Form 8-K
    filed June 15, 2009)(4)(d)(x)

1-9513

4.3*



23rd dated as of 6/15/09
    (Form 8-K
    filed June 15, 2009)(4)(d)(xi)

1-9513

4.1*



24th dated as of 1/14/10
    (Form 8-K
    filed January 14, 2010)(4)(e)

1-9513

(4a)*



Indenture dated as of June 1, 1997, between CMS Energy and
    The Bank of New York Mellon, as trustee
    (Form 8-K
    filed July 1, 1997)Indentures Supplemental thereto:(4)(e)(i)

1-9513

(4)(b)*



1st dated as of 6/20/97
    (Form 8-K
    filed July 1, 1997)(10)(a)

1-9513

(10)(d)*



$300 million Seventh Amended and Restated Credit Agreement
    dated as of April 2, 2007 among CMS Energy Corporation, the
    Banks, the Administrative Agent, Collateral Agent, Syndication
    Agent and Documentation Agents all defined therein and Amendment
    No. 1 dated as of December 19, 2007 (3rd qtr. 2009
    Form 10-Q)(10)(b)

1-9513

(10)(b)*



Amendment No. 2 to the $300 million Seventh Amended
    and Restated Credit Agreement dated as of January 23, 2009
    (2008
    Form 10-K)(10)(c)

1-9513

(10)(e)*



Assumption and Acceptance to the $300 million Seventh
    Amended and Restated Credit Agreement dated January 8, 2008
    (3rd qtr. 2009
    Form 10-Q)(10)(d)

1-9513

10(b)*



Fourth Amended and Restated Pledge and Security Agreement dated
    as of April 2, 2007 among CMS Energy and Collateral Agent,
    as defined therein (2007
    Form 10-K)(10)(e)

1-9513

10(c)*



Amended and Restated Cash Collateral Agreement dated as of
    April 2, 2007, made by CMS Energy to the Administrative
    Agent for the lenders and Collateral Agent, as defined therein
    (2007
    Form 10-K) 181




---



##### Table of Contents



Previously FiledWith File

As ExhibitExhibits

Number

Number



Description(10)(f)

1-5611

(10)(f)



$500 million Fourth Amended and Restated Credit Agreement
    dated as of March 30, 2007 among Consumers Energy Company,
    the Banks, the Administrative Agent, the Collateral Agent, the
    Syndication Agent and the Documentation Agents all as defined
    therein (3rd qtr. 2009
    Form 10-Q)(10)(g)

1-9513

(10)(g)



2004 Form of Executive Severance Agreement (3rd qtr. 2009
    Form 10-Q)(10)(h)

1-9513

(10)(h)



2004 Form of Officer Severance Agreement (3rd qtr. 2009
    Form 10-Q)(10)(i)

1-9513

(10)(g)



2004 Form of
    Change-in-Control
    Agreement (2007
    Form 10-K)(10)(j)

1-9513

10.1



CMS Energys Performance Incentive Stock Plan effective
    February 3, 1988, amended and restated effective
    June 1, 2009
    (Form 8-K
    filed May 27, 2009)(10)(k)

1-9513

(10)(i)



CMS Deferred Salary Savings Plan effective December 1, 1989
    and as further amended effective December 1, 2007 (2007
    Form 10-K)(10)(l)

1-9513

(10)(l)



Amendment to the Deferred Salary Savings Plan dated
    December 21, 2008 (2008
    Form 10-K)(10)(m)

1-9513

(10)(m)



Annual Officer Incentive Compensation Plan for CMS Energy
    Corporation and its Subsidiaries effective January 1, 2004,
    amended and restated effective as of January 1, 2008 (2008
    Form 10-K)(10)(n)

1-9513

(10)(n)



Amendment to the Officers Incentive Compensation Plan
    dated December 21, 2008 (2008
    Form 10-K)(10)(o)

1-9513

(10)(k)



Supplemental Executive Retirement Plan for Employees of CMS
    Energy/Consumers Energy Company effective January 1, 1982,
    as further amended December 1, 2007 (2007
    Form 10-K)(10)(p)

1-9513

(10)(p)



Amendment to the Defined Benefit Supplemental Executive
    Retirement Plan dated December 21, 2008 (2008
    Form 10-K)(10)(q)

1-9513

(10)(l)



Defined Contribution Supplemental Executive Retirement Plan
    effective April 1, 2006 and as further amended effective
    December 1, 2007 (2007
    Form 10-K)(10)(r)

1-9513

(10)(r)



Amendment to the Defined Contribution Supplemental Executive
    Retirement Plan dated December 21, 2008 (2008
    Form 10-K)(10)(s)

1-9513

(10)(s)



2009 Form of Change in Control Agreement (2008
    Form 10-K)(10)(t)

1-9513

(10)(t)



2009 Form of Officer Separation Agreement (2008
    Form 10-K)(10)(u)

1-9513

(10)(v)



Amended and Restated Investor Partner Tax Indemnification
    Agreement dated as of June 1, 1990 among Investor Partners,
    CMS Midland as Indemnitor and CMS Energy as Guarantor (1990
    Form 10-K)(10)(v)

1-9513

(10)(y)*



Environmental Agreement dated as of June 1, 1990 made by
    CMS Energy to The Connecticut National Bank and Others (1990
    Form 10-K)(10)(w)

1-5611

(10)(y)



Unwind Agreement dated as of December 10, 1991 by and among
    CMS Energy, Midland Group, Ltd., Consumers, CMS Midland, Inc.,
    MEC Development Corp. and CMS Midland Holdings Company (1991
    Form 10-K)(10)(x)

1-5611

(10)(aa)*



Parent Guaranty dated as of June 14, 1990 from CMS Energy
    to MCV, each of the Owner Trustees, the Indenture Trustees, the
    Owner Participants and the Initial Purchasers of Senior Bonds in
    the MCV Sale Leaseback transaction, and MEC Development (1991
    Form 10-K) 182




---



##### Table of Contents



Previously FiledWith File

As ExhibitExhibits

Number

Number



Description(10)(y)

1-5611

(10)(i)



Asset Sale Agreement dated as of July 11, 2006 by and among
    Consumers Energy Company as Seller and Entergy Nuclear
    Palisades, LLC as Buyer (3rd qtr. 2009
    Form 10-Q)(10)(z)

1-5611

(10)(j)



Palisades Nuclear Power Plant Power Purchase Agreement dated as
    of July 11, 2006 between Entergy Nuclear Palisades, LLC and
    Consumers Energy Company (3rd qtr. 2009
    Form 10-Q)(10)(aa)

1-9513

(10)(k)*



Agreement of Purchase and Sale, by and between CMS Enterprises
    Company and Abu Dhabi National Energy Company PJSC dated as of
    February 3, 2007 (3rd qtr. 2009
    Form 10-Q)(10)(bb)

1-9513

10.1*



Common Agreement dated March 12, 2007 between CMS
    Enterprises Company and Lucid Energy, LLC
    (Form 8-K
    filed March 14, 2007)(10)(cc)

1-9513

(10)(l)*



Agreement of Purchase and Sale dated March 12, 2007 by and
    among CMS Enterprises Company, CMS Energy Investment, LLC, and
    Lucid Energy, LLC and Michigan Pipeline and Processing, LLC (3rd
    qtr. 2009
    Form 10-Q)(10)(dd)

1-9513

(10)(m)*



Agreement of Purchase and Sale dated March 12, 2007 by and
    among CMS Enterprises Company, CMS Generation Holdings Company,
    CMS International Ventures, LLC, and Lucid Energy, LLC and New
    Argentine Generation Company, LLC (3rd qtr. 2009
    Form 10-Q)(10)(ee)

1-5611

(10)(p)



Purchase and Sale Agreement by and between Broadway Gen Funding,
    LLC as Seller and Consumers Energy Company as Buyer dated as of
    May 24, 2007 (3rd qtr. 2009
    Form 10-Q)(10)(ff)

1-9513

(10)(a)*



Form of Indemnification Agreement between CMS Energy Corporation
    and its Directors, effective as of November 1, 2007 (3rd
    qtr. 2007
    Form 10-Q)(10)(gg)

1-5611

(10)(b)



Form of Indemnification Agreement between Consumers Energy
    Company and its Directors, effective as of November 1, 2007
    (3rd qtr. 2007
    Form 10-Q)(10)(hh)

1-5611

10.1



$200 million Letter of Credit Reimbursement Agreement dated
    as of November 30, 2007 between Consumers Energy Company
    and the Bank of Nova Scotia
    (Form 8-K
    filed December 6, 2007)(10)(ii)

1-5611

(10)(tt)



First Amendment to Reimbursement Agreement dated as of
    September 25, 2008 (2008
    Form 10-K)(10)(jj)

1-5611

(10)(c)



Second Amendment to Reimbursement Agreement dated as of
    September 25, 2009 (3rd qtr. 2009
    Form 10-Q)(10)(kk)

1-5611

10.1



$150 million Amended and Restated Revolving Credit
    Agreement dated as of August 18, 2009 among Consumers
    Energy Company, the Banks, Agent, Co-Syndication Agents, and
    Documentation Agent all as defined therein
    (Form 8-K
    filed August 21, 2009)(10)(ll)

1-5611

(10)(t)



Settlement Agreement and Amended and Restated Power Purchase
    Agreement between Consumers Energy Company and Midland
    Cogeneration Venture Limited Partnership dated as of
    June 9, 2008 (3rd qtr. 2009
    Form 10-Q)(10)(mm)

1-5611

(10)(u)



Receivables Purchase Agreement dated as of May 22, 2003 (as
    modified by Amendments 1-15) among Consumers Receivables Funding
    II, LLC, Consumers Energy Company, Falcon Asset Securitization
    Corporation, The Financial Institutions from time to time
    parties hereto, as Financial Institutions, and Bank One, NA, as
    Administrative Agent (3rd qtr. 2009
    Form 10-Q) 183




---



##### Table of Contents



Previously FiledWith File

As ExhibitExhibits

Number

Number



Description(10)(nn)

1-5611

(10)(b)



Amendment No. 16 to the Receivables Purchase Agreement
    dated as of April 29, 2009 (1st qtr. 2009
    Form 10-Q)(10)(oo)

1-5611

(10)(b)



Amendment No. 17 to the Receivables Purchase Agreement
    dated as of September 3, 2009 (3rd qtr. 2009
    Form 10-Q)(10)(pp)







Amendment No. 18 to the Receivables Purchase Agreement
    dated as of February 12, 2010(10)(qq)

1-5611

(10)(v)



Receivables Sale Agreement, dated as of May 22, 2003,
    between Consumers Energy Company, as Originator and Consumers
    Receivables Funding II, LLC, as Buyer, as amended by Amendment
    No. 1 dated as of May 20, 2004 and as amended by
    Amendment No. 2 dated as of August 15, 2006 (3rd qtr.
    2009
    Form 10-Q)(10)(rr)







Amendment No. 3 to the Receivables Sale Agreement dated as
    of September 3, 2009(10)(ss)







Amendment No. 4 to the Receivables Sale Agreement dated as
    of February 12, 2010(10)(tt)

1-9513

(10)(a)



CMS Incentive Compensation Plan for CMS Energy and its
    Subsidiaries, effective January 1, 2004, amended and
    restated, effective as of January 1, 2009 (1st qtr. 2009
    Form 10-Q)(12)(a)







Statement regarding computation of CMS Energys Ratios of
    Earnings to Fixed Charges and Combined Fixed Charges and
    Preferred Dividends(12)(b)







Statement regarding computation of Consumers Ratios of
    Earnings to Fixed Charges and Combined Fixed Charges and
    Preferred Dividends(21)







Subsidiaries of CMS Energy and Consumers(23)(a)







Consent of PricewaterhouseCoopers LLP for CMS Energy(23)(b)







Consent of PricewaterhouseCoopers LLP for Consumers(24)(a)







Power of Attorney for CMS Energy(24)(b)







Power of Attorney for Consumers(31)(a)







CMS Energys certification of the CEO pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002(31)(b)







CMS Energys certification of the CFO pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002(31)(c)







Consumers certification of the CEO pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002(31)(d)







Consumers certification of the CFO pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002(32)(a)







CMS Energys certifications pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002(32)(b)







Consumers certifications pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002     *
    
    Obligations of CMS Energy or its subsidiaries, but not of
    Consumers.   184




---



##### Table of Contents



CMS ENERGY
    CORPORATION
  SCHEDULE I 
    CONDENSED FINANCIAL INFORMATION OF REGISTRANT
  CMS
    Energy  Parent Company
  Condensed
    Statements of Income (Loss)
  Years Ended December 31

2009


2008


2007In MillionsOperating ExpensesDepreciation and amortization

$



$
(3
)

$
(3
)Gain on asset sales, net










81Other operating expense


(10
)


(5
)


(10
)(10
)


(8
)


68Operating Income (Loss)


(10
)


(8
)


68Other Income (Expense)Equity earnings (losses) of subsidiaries


310



433



(142
)Interest income






1



3Other income (expense)


12



(4
)


(24
)322



430



(163
)Interest ChargesInterest on long-term debt


124



127



153Interest on preferred securities


8



14



14Intercompany interest expense and other


8



48



70140



189



237Income (Loss) Before Income Taxes


172



233



(332
)Income Tax Benefit


(57
)


(62
)


(140
)Income (Loss) From Continuing Operations


229



295



(192
)Loss From Discontinued Operations










(30
)Net Income (Loss)


229



295



(222
)Preferred Dividends


11



11



11Redemption Premium on Preferred Stock










1Net Income (Loss) Available to Common Stockholders

$
218


$
284


$
(234
)    185




---



##### Table of Contents



CMS ENERGY
    CORPORATION
  SCHEDULE I 
    CONDENSED FINANCIAL INFORMATION OF REGISTRANT
  CMS
    Energy  Parent Company
  Statements
    of Cash Flows
  Years Ended December 31

2009


2008


2007In MillionsCash Flows From Operating ActivitiesNet income (loss)

$
229


$
295


$
(222
)Adjustments to reconcile net income (loss) tonet cash provided by (used in) operating activities:Equity (earnings) losses of subsidiaries


(310
)


(433
)


142Dividends received from subsidiaries


340



1,247



251Depreciation and amortization






3



3Gain on sale of assets










(81
)Decrease (increase) in accounts receivable


(2
)






11Increase (decrease) in accounts payable


16



(2
)


(3
)Decrease in legal settlement liability










(125
)Change in other assets and liabilities


7



(55
)


(51
)Net cash provided by (used in) operating activities


730



1,055



(75
)Cash Flows From Investing ActivitiesInvestment in subsidiaries


(100
)


(22
)


(660
)Changes in notes receivable, net










42Net cash used in investing activities


(100
)


(22
)


(618
)Cash Flows From Financing ActivitiesProceeds from bank loans and notes


718



665



400Proceeds from issuance of common stock


9



9



15Retirement of bank loans and notes


(788
)


(570
)


(958
)Payment of common stock dividends


(114
)


(82
)


(45
)Payment of preferred stock dividends


(11
)


(11
)


(11
)Redemption of preferred stock


(4
)


(1
)


(1
)Debt issuance costs and financing fees


(5
)






(1
)Changes in notes payable, net


(15
)


(1,043
)


1,294Net cash provided by (used in) financing activities


(180
)


(1,033
)


693Net Change in Cash and Temporary Cash Investments

$



$



$
Cash and Temporary Cash Investments, Beginning of Period

$



$



$
Cash and Temporary Cash Investments, End of Period

$



$



$
    186




---



##### Table of Contents



CMS ENERGY
    CORPORATION
  SCHEDULE I 
    CONDENSED FINANCIAL INFORMATION OF REGISTRANT
  CMS
    Energy  Parent Company
  Condensed
    Balance Sheets
  December 31

2009


2008In MillionsAssetsCurrent AssetsCash and temporary cash investments

$



$
Notes and accrued interest receivable


1



1Accrued taxes receivable






41Accounts receivable, including intercompany and related parties


6



4Deferred income taxes


7



514



51Property, Plant and Equipment, at cost


16



16Less accumulated depreciation


(15
)


(15
)1



1Non-current AssetsDeferred income taxes


371



340Investment in Subsidiaries


4,591



4,913Other investment  SERP


17



16Other


46



405,025



5,309Total Assets

$
5,040


$
5,361    187




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##### Table of Contents



CMS ENERGY
    CORPORATION
  SCHEDULE I 
    CONDENSED FINANCIAL INFORMATION OF REGISTRANT
  CMS
    ENERGY  PARENT COMPANY
  Condensed Balance
    Sheets
  December 31 2009
    2008
 In Millions
  2009


2008In MillionsStockholders Investment and LiabilitiesCurrent LiabilitiesCurrent portion of long-term debt

$
207


$
Accounts and notes payable, including intercompany and related
    parties


258



615Accrued interest, including intercompany


24



35Accrued taxes


13



Other


5



11507



661Non-Current LiabilitiesPostretirement benefits


22



21CapitalizationLong-term debtSenior Notes


1,673



1,808Related Party


34



178Unamortized Discount


(37
)


(26
)Common stockholders equity


2,602



2,476Nonredeemable preferred stock


239



2434,511



4,679Total Stockholders Investment and Liabilities

$
5,040


$
5,361    188




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    intentionally left blank)
  189




---



##### Table of Contents



CMS ENERGY
    CORPORATION
  SCHEDULE I 
    CONDENSED FINANCIAL INFORMATION OF REGISTRANT
  CMS
    Energy  Parent Company
  Notes
    to Condensed Financial Statements
  1:
    Guaranty   190




---



##### Table of Contents



CMS
    ENERGY CORPORATION
  SCHEDULE II 
    VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
  Years Ended
    December 31, 2009, 2008, and 2007
  Balance at


Charged


Charged/Accrued





BalanceBeginning


to


to Other





at EndDescription

of Period


Expense


Accounts


Deductions


of Period(In Millions)Accumulated provision for uncollectible accounts:2009

$
26


$
54


$



$
57


$
232008

$
21


$
51


$



$
46


$
262007

$
25


$
37


$
7


$
34


$
21Deferred tax valuationallowance:2009

$
32


$



$
2


$



$
342008

$
32


$



$
7


$
7


$
322007

$
72


$



$
81


$
121


$
32Allowance for notes receivable, including related parties:2009

$
34


$



$
2


$
30


$
62008

$
33


$



$
1


$



$
342007

$
101


$



$
1


$
69


$
33   CONSUMERS ENERGY
    COMPANY
  SCHEDULE II 
    VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
 Years Ended
    December 31, 2009, 2008, and 2007
  Balance at


Charged


Charged/Accrued





BalanceBeginning


to


to Other





at EndDescription

of Period


Expense


Accounts


Deductions


of Period(In Millions)Accumulated provision for uncollectible accounts:2009

$
24


$
47


$



$
50


$
212008

$
16


$
47


$



$
39


$
242007

$
14


$
33


$



$
31


$
16Deferred tax valuation allowance:2009

$



$



$



$



$
2008

$



$



$



$



$
2007

$
15


$



$
8


$
23


$
  191




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##### Table of Contents



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    intentionally left blank)
  192




---



##### Table of Contents



(This page
    intentionally left blank)
  193




---



##### Table of Contents



SIGNATURES
      By
    /s/  David W. Joos       Signature

Title(i)

Principal executive officer:/s/  David
    W. JoosDavid
    W. Joos

President and Chief Executive Officer(ii)

Principal financial officer:/s/  Thomas
    J. WebbThomas
    J. Webb

Executive Vice President and Chief Financial Officer(iii)

Controller or principal accounting officer:/s/  Glenn
    P. BarbaGlenn
    P. Barba

Vice President, Controller and Chief Accounting Officer(iv)

A majority of the Directors:*Merribel
    S. Ayres

Director*Jon
    E. Barfield

Director*Stephen
    E.  Ewing

Director*Richard
    M. Gabrys

Director*David
    W. Joos

Director*Philip
    R. Lochner, Jr.

Director 194




---



##### Table of Contents



Signature

Title*Michael
    T. Monahan

Director*Joseph
    F. Paquette. Jr.

Director*Percy
    A. Pierre

Director*Kenneth
    L. Way

Director*Kenneth
    Whipple

Director*John
    B. Yasinsky

Director*By

/s/  Thomas
    J. WebbThomas
    J. Webb,
    Attorney-in-Fact  195




---



##### Table of Contents



SIGNATURES
      By
    /s/  David
    W. Joos       Signature

Title(i)

Principal executive officer:/s/  David
    W. JoosDavid
    W. Joos

Chief Executive Officer(ii)

Principal financial officer:/s/  Thomas
    J. WebbThomas
    J. Webb

Executive Vice President and Chief Financial Officer(iii)

Controller or principal accounting officer:/s/  Glenn
    P. BarbaGlenn
    P. Barba

Vice President, Controller
    and Chief Accounting Officer(iv)

A majority of the Directors:*Merribel
    S. Ayres

Director*Jon
    E. Barfield

Director*Stephen
    E.  Ewing

Director*Richard
    M. Gabrys

Director*David
    W. Joos

Director*Philip
    R. Lochner, Jr.

Director*Michael
    T. Monahan

Director 196




---



##### Table of Contents



Signature

Title*Joseph
    F. Paquette. Jr.

Director*Percy
    A. Pierre

Director*Kenneth
    L. Way

Director*Kenneth
    Whipple

Director*John
    B. Yasinsky

Director*By

/s/  Thomas
    J. WebbThomas
    J. Webb,
    Attorney-in-Fact  197




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##### Table of Contents



(This page
    intentionally left blank)
  198




---



##### Table of Contents



(This page
    intentionally left blank)
  199




---



##### Table of Contents



EXHIBITS
  200




---



##### Table of Contents



CMS
    ENERGYS AND CONSUMERS EXHIBIT INDEX
  Exhibits



Description(10)(pp)




Amendment No. 18 to the Receivables Purchase Agreement
    dated as of February 12, 2010(10)(rr)




Amendment No. 3 to the Receivables Sale Agreement dated as
    of September 3, 2009(10)(ss)




Amendment No. 4 to the Receivables Sale Agreement dated as
    of February 12, 2010(12)(a)




Statement regarding computation of CMS Energys Ratios of
    Earnings to Fixed Charges and Combined Fixed Charges and
    Preferred Dividends(12)(b)




Statement regarding computation of Consumers Ratios of
    Earnings to Fixed Charges and Combined Fixed Charges and
    Preferred Dividends(21)




Subsidiaries of CMS Energy and Consumers(23)(a)




Consent of PricewaterhouseCoopers LLP for CMS Energy(23)(b)




Consent of PricewaterhouseCoopers LLP for Consumers(24)(a)


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Power of Attorney for CMS Energy(24)(b)


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Power of Attorney for Consumers(31)(a)


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CMS Energys certification of the CEO pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002(31)(b)


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CMS Energys certification of the CFO pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002(31)(c)


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Consumers certification of the CEO pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002(31)(d)


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Consumers certification of the CFO pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002(32)(a)


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CMS Energys certifications pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002(32)(b)


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Consumers certifications pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002  201