Document:

<PAGE>

                                                                   EXHIBIT 10.54

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

                        Amendment and Restatement of the

                                  April 1, 2001

                            DISTRIBUTION-TRANSMISSION
                            INTERCONNECTION AGREEMENT

                                 by and between

                     Michigan Electric Transmission Company

                            as Transmission Provider

                                       and

                            Consumers Energy Company

                          as Local Distribution Company

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

<PAGE>

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

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                          <C>
ARTICLE 1.    Definitions

ARTICLE 2.    Operational Requirements

ARTICLE 3:    Operation and Maintenance

ARTICLE 4.    Supervisory Control and Data Acquisition, SCADA

ARTICLE 5.    Revenue Metering

ARTICLE 6.    Protective Relaying and Control

ARTICLE 7.    Planning and Obligation to Serve

ARTICLE 8.    Transmission Service Level

ARTICLE 9.    New Construction and Modification

ARTICLE 10.   Access to Facilities

ARTICLE 11.   Notifications and Reporting

ARTICLE 12.   Safety

ARTICLE 13.   Environmental Compliance and Procedures

ARTICLE 14.   Billings and Payment

ARTICLE 15.   Applicable Regulations and Interpretation

ARTICLE 16.   Force Majeure

ARTICLE 17.   Indemnification

ARTICLE 18.   Insurance

ARTICLE 19.   Several Obligations

ARTICLE 20.   Confidentiality
</TABLE>

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

<PAGE>

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

<TABLE>
<S>                                                                          <C>
ARTICLE 21.   Breach, Default and Remedies

ARTICLE 22.   Term

ARTICLE 23.   Assignment/Change in Corporate Identity

ARTICLE 24.   Subcontractors

ARTICLE 25.   Dispute Resolution

ARTICLE 26.   Miscellaneous Provisions

EXHIBIT 1.    Interconnection Points (Substations) As of April 29, 2002

EXHIBIT 2.    Contact Information for Local Distribution Company's
              Representatives and Transmission Provider's Representatives
              as of April 29, 2002

EXHIBIT 3.    Special Manufacturing Contracts Influenced by Transmission
              System

EXHIBIT 4.    Metering Specifications

EXHIBIT 5.    Respective Ownership of Substation Facilities As of
              April 29, 2002

EXHIBIT 6.    Jointly Owned Assets - Ownership by Percent of Major
              Equipment As of April 21, 2001
</TABLE>

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

<PAGE>

Michigan Electric Transmission Company, LLC                 Original Sheet No. 3
FERC Electric Rate Schedule No. 1
EXECUTION COPY

                        Amendment and Restatement of the
               DISTRIBUTION TRANSMISSION INTERCONNECTION AGREEMENT

     This Amendment and Restatement of the April 1, 2001 Distribution
Transmission Interconnection Agreement ("Agreement") is entered into April 29,
2002, by and between the Michigan Electric Transmission Company, a Michigan
corporation ("Transmission Provider"), having a place of business at 212 W.
Michigan Avenue, Jackson, Michigan 49201, and Consumers Energy Company ("Local
Distribution Company"), a Michigan company, doing business in Michigan and
having a place of business at 212 West Michigan Avenue, Jackson, Michigan,
49201. Transmission Provider and Local Distribution Company are individually
referred to herein as a "Party" and collectively as "Parties." This Agreement
amends, restates and completely replaces the April 1, 2001 Distribution
Transmission Interconnection Agreement between the Parties, effective on the
date indicated above.

     WHEREAS, Transmission Provider requires access to parts of Local
Distribution Company's assets, and Local Distribution Company requires access to
parts of Transmission Provider's assets; and

     WHEREAS, the Parties have agreed to execute this mutually acceptable
Interconnection Agreement in order to provide interconnection of the Local
Distribution Company with the Transmission Provider and to define the continuing
rights, responsibilities, and obligations of the Parties with respect to the use
of certain of their own and the other Party's property, assets, and facilities.

NOW, THEREFORE, in consideration of their respective commitments set forth
herein, and intending to be legally bound hereby, the Parties covenant and agree
as follows:

ARTICLE 1. DEFINITIONS

     Wherever used in this Agreement with initial capitalization, the following
terms shall have the meanings specified or referred to in this Article 1.

1.1  Administrative Committee means the committee established pursuant to
     Article 6 of the Operating Agreement dated April 1, 2001, as amended and
     restated, between Local Distribution Company and Transmission Provider.

1.2  Agreement means this Interconnection Agreement between Local Distribution
     Company and Transmission Provider, including all attachments hereto, as the
     same may be amended, supplemented, or modified in accordance with its
     terms.

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

<PAGE>

Michigan Electric Transmission Company, LLC                 Original Sheet No. 4
FERC Electric Rate Schedule No. 1
EXECUTION COPY

1.3  Black Start Capability shall mean a generating unit that is capable of
     starting without an outside electrical supply.

1.4  Black Start Plan shall mean a plan utilizing Black Start Capability
     designed and implemented by the Transmission Provider in conjunction with
     its interconnected generation and distribution customers, Distribution
     System Control, other electric systems, its Security Coordinator and ECAR,
     to energize portions of the Transmission System which are de-energized as a
     result of a widespread system disturbance.

1.5  Commission shall mean the Michigan Public Service Commission (MPSC), or its
     successor.

1.6  Confidential Information shall have the meaning set forth in Section 20.1
     hereof.

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

1.8  Distribution System shall mean the equipment and facilities and the
     Interconnection Equipment owned by the Local Distribution Company and used
     to deliver power and energy to end users including transformers, switches,
     and feeders rated at Nominal Voltage of 138 kilovolts (kV) or less.

1.9  Distribution System Control shall mean the entity that has the ability and
     the obligation to operate the Distribution System Control Area to ensure
     that the aggregate electrical demand and energy requirements of the load is
     met at all times, taking into account scheduled and reasonably expected
     unscheduled outages of system elements.

1.10 Distribution System Control Area shall mean a Control Area whose load and
     generation, and other bulk power supply points are integrated by the
     Transmission System.

1.11 Distribution System Control Center shall mean the electric Distribution
     System Control Center(s) that is/are responsible for monitoring and
     controlling the Distribution System in real time.

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

<PAGE>

Michigan Electric Transmission Company, LLC                 Original Sheet No. 5
FERC Electric Rate Schedule No. 1
EXECUTION COPY

1.12 Distribution Transformer shall mean an electrical transformer which,
     generally, has its secondary low-side windings rated at Nominal Voltage of
     less than 138 kV.

1.13 Due Diligence shall mean the exercise of good faith efforts to perform a
     required act on a timely basis and in accordance with Good Utility Practice
     using the necessary technical and personnel resources.

1.14 ECAR is an acronym, which stands for the East Central Area Reliability
     coordination agreement. This is the Agreement under which Transmission
     Providers, who are signatories of the agreement, establish regional
     coordination practices and guides to govern the electric coordinated
     operation and reliability of the East Central Region of North America.

1.15 Effective Date shall mean the closing date as defined in the Membership
     Interests Purchase Agreement between the Parties.

1.16 Eligible Customer shall have the same meaning as that term is defined under
     the Transmission Provider's OATT on file with the FERC.

1.17 Emergency means a condition or situation that in the reasonable good faith
     determination of the affected Party in accordance with Good Utility
     Practice contributes to an existing or imminent physical threat of danger
     to life or a significant threat to health, property or the environment.

1.18 Extended Outage shall mean an Unplanned Outage, in which facilities are
     automatically removed from service (typically by relay-action operating
     circuit breakers), with a duration of more than two (2) minutes.

1.19 FERC shall mean the Federal Energy Regulatory Commission or its successor
     federal agency.

1.20 Force Majeure shall have the meaning set forth under Article 16 hereof.

1.21 Forced Outage shall mean an Unplanned Outage, in which facilities are
     removed from service by operator intervention and not automatically such as
     by relay-action operating circuit breakers.

1.22 Good Utility Practice shall mean any of the practices, methods and acts
     engaged in or approved by a significant portion of the electric utility
     industry during the relevant time period, or any of the practices, methods
     and acts which, in the exercise of reasonable judgment in light of the
     facts known at the time the decision was made, could have been expected to
     accomplish the desired result at a reasonable cost consistent with good
     business practices, reliability, safety and expedition. Good Utility
     Practice is not intended to be limited to the optimum practice, method, or
     act to the

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

<PAGE>

Michigan Electric Transmission Company, LLC                 Original Sheet No. 6
FERC Electric Rate Schedule No. 1
EXECUTION COPY

     exclusion of all others, but rather includes all acceptable practices,
     methods, or acts generally accepted in the region.

1.23 Governmental Authority shall mean any foreign, federal, state, local or
     other governmental regulatory or administrative agency, court, commission,
     department, board, or other governmental subdivision, legislature,
     rulemaking board, tribunal, arbitrating body, or other governmental
     authority; provided such entity possesses valid jurisdictional authority to
     regulate the Parties and the terms and conditions of this Agreement.

1.24 ISO means Independent System Operator.

1.25 Interconnection Equipment shall mean all the equipment that is necessary
     for the interconnection of the Distribution System to the Transmission
     System which is located at the substations listed in Exhibit 1 hereto as it
     may be revised from time to time.

1.26 Interconnection Point(s) shall mean the point(s) at which the Distribution
     System is connected to the Transmission System, as set forth in Exhibit 1
     hereto as it may be revised from time to time.

1.27 Interconnection Service shall mean the services provided by the
     Transmission Provider for the interconnection of the Distribution System
     with the Transmission System. Interconnection Service does not include the
     right to transmission service on the Transmission System, which service
     shall be obtained in accordance with the provisions of the Transmission
     Provider's OATT.

1.28 Interconnection Standards shall be those standards provided by the
     Transmission Provider to the Local Distribution Company to establish and
     maintain interconnection operation in compliance with standards of NERC,
     ECAR, applicable state or federal regulations or by mutual agreement of the
     Parties.

1.29 Interest Rate shall mean an annual percentage rate of interest equal to the
     lesser of (a) the prime rate published by the Wall Street Journal (which
     represents the base rate on corporate loans posted by at least 75% of the
     nation's banks) on the date due, plus 2%, or (b) the highest rate permitted
     by law.

1.30 Jointly Owned Assets shall mean those assets in which the Transmission
     Provider and Local Distribution Company have undivided ownership interests.
     Due to the nature of substation designs, many of the supporting substation
     assets (e.g., station batteries, fence, control houses, ground grid, yard
     stone, steel structures, and some protective relay equipment)

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

<PAGE>

Michigan Electric Transmission Company, LLC                 Original Sheet No. 7
FERC Electric Rate Schedule No. 1
EXECUTION COPY

     cannot be separated by ownership and the Parties share in the ownership of
     such assets. The respective ownership of such assets by substation is shown
     in Exhibit 6.

1.31 Knowledge shall mean actual knowledge of the corporate officers or managers
     of the specified Person charged with responsibility for the particular
     function as of the Effective Date of this Agreement, or, with respect to
     any certificate delivered pursuant to the Agreement, the date of delivery
     of the certificate.

1.32 Least-Cost shall mean the lowest Transmission System and Distribution
     System facility costs, over the life of the facility, to accommodate an
     improvement need while adequately providing for reliability, operating, and
     maintenance requirements.

1.33 Local Distribution Company shall mean Consumers Energy Company and its
     successors and assigns.

1.34 Local Distribution Company Provided Services shall mean those services
     provided by the Local Distribution Company for the Transmission Provider by
     mutual agreement or contract.

1.35 Local Distribution Company's Representative shall be that person(s)
     identified as the point of contact for day-to-day operations of the
     Distribution System, identified in Section 2.3.

1.36 Momentary Outage shall mean a Distribution or Transmission System (in whole
     or in part) interruption in service with a duration of two (2) minutes or
     less.

1.37 Momentary Outage Event shall mean one or more Momentary Outages within any
     60-minute period that are attributable to the same root cause.

1.38 NERC shall mean the North American Electric Reliability Council or its
     successor.

1.39 Network Security shall mean the ability of the Transmission System to
     withstand sudden disturbances such as unforeseen conditions, electric short
     circuits or unanticipated loss of system elements consistent with
     reliability principles used to design, plan, operate, and assess the actual
     or projected reliability of an electric system that are established by any
     Governmental Authority, NERC or ECAR and which are implemented by
     Transmission Provider or required of Transmission Provider in compliance
     with Security Coordinator directives.

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

<PAGE>

Michigan Electric Transmission Company, LLC                 Original Sheet No. 8
FERC Electric Rate Schedule No. 1
EXECUTION COPY

1.40 Network Security Condition shall mean a condition or situation in which, in
     the reasonable good faith determination of Transmission Provider, Network
     Security is not satisfied or is threatened.

1.41 Nominal Voltage shall mean an accepted standard voltage level offered by
     the Transmission Provider, at various points on the Transmission System,
     including but not limited to 120 kV, 138 kV and 345 kV.

1.42 Normal System Condition shall mean any operating conditions of the
     Transmission System other than an Emergency or Network Security Condition.

1.43 Open Access Transmission Tariff or OATT shall mean the Open Access
     Transmission Tariff of the Transmission Provider on file with the FERC.

1.44 Operating Committee means the committee established pursuant to Section
     6.4.3 of the Operating Agreement dated April 1, 2001, as amended and
     restated, between Local Distribution Company and Transmission Provider.

1.45 Party or Parties shall have the meaning set forth in the introductory
     paragraph of this Agreement.

1.46 Person shall mean any individual, partnership, limited liability company,
     joint venture, corporation, trust, unincorporated organization, or
     governmental entity or any department or agency thereof.

1.47 Planned Outage shall mean action by (i) Local Distribution Company or
     Transmission Provider to take its equipment, facilities or systems out of
     service, partially or completely, to perform work on specific components
     that is scheduled in advance and has a predetermined start date and
     duration pursuant to the procedures set forth in Sections 3.9.1, 3.9.2, and
     3.9.4. Planned Outage shall not include the construction of new facilities
     or system elements, the modification of existing facilities or system
     elements addressed in Article 9, which includes, but is not limited to,
     activities associated with the construction of third party facilities or
     with the modifications required to accommodate third party facilities.

1.48 Planning Committee means the committee established pursuant to Section
     6.4.3 of the Operating Agreement dated April 1, 2001, as amended and
     restated, between Local Distribution Company and Transmission Provider.

1.49 Protective Relay is a device which detects abnormal power system conditions
     and, in response, initiates automatic control action.

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

<PAGE>

Michigan Electric Transmission Company, LLC                 Original Sheet No. 9
FERC Electric Rate Schedule No. 1
EXECUTION COPY

1.50 Protective Relay System is a group of Protective Relays and associated
     sensing devices and communications equipment that detects system
     abnormalities and performs automatic control action to mitigate or reduce
     adverse effects of such abnormalities.

1.51 Qualified Personnel shall mean individuals trained for their positions in
     accordance with Good Utility Practice.

1.52 RTO means Regional Transmission Organization.

1.53 Regulated Substance means any contaminant, hazardous waste, hazardous
     substance, hazardous constituent, or toxic substance, as defined in the
     Comprehensive Environmental Response, Compensation, and Liability Act
     (CERCLA), 42 USC 9601 et seq, Resource Conservation and Recovery Act
     (RCRA), 42 USC 6901 et seq, Toxic Substances Control Act (TSCA), 15 USC
     2601 et seq, The Michigan Natural Resources and Environmental Protection
     Act (MCLA 324.101 et seq); or any other similar statutes now or hereafter
     in effect.

1.54 Release shall mean, spill, leak, discharge, dispose of, pump, pour, emit,
     empty, inject, leach, dump, or allow to escape into or through the
     environment.

1.55 Revenue Quality Metering System shall mean a system which includes current
     and voltage instrument transformers, secondary wiring, test switches, meter
     transducer(s), meter and loss compensation as set forth in Article 5.

1.56 RTU - Remote Terminal Units shall mean a device connected by a
     communication system to one or more master computers with appropriate
     software placed at various locations to collect data and perform remote
     control. It may also perform intelligent autonomous control of electrical
     systems and report the results back to the master computer(s).

1.57 Security Coordinator shall mean a NERC-approved entity that provides the
     security assessment and emergency operations coordination for one or more
     Control Areas or transmission providers and which has operational authority
     under NERC standards over the Transmission Provider.

1.58 Steady-State Voltage shall mean the value of a voltage after all transients
     have decayed to a negligible value. The root-mean-square value in the
     steady-state does not vary with time.

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 10
FERC Electric Rate Schedule No. 1
EXECUTION COPY

1.59 Supervisory Control and Data Acquisition (SCADA) shall mean a system that
     provides data acquisition, supervisory control and alarm display and
     control from remote field locations to control centers.

1.60 Transmission Provider shall mean the Michigan Electric Transmission Company
     and its successors and assigns.

1.61 Transmission Provider's Representative(s) shall be that person(s)
     identified as the point for contact for day-to-day operations of the
     Transmission System, identified in Section 2.3.

1.62 Transmission System shall mean all the facilities of the Transmission
     Provider that perform a "Transmission" function, as defined in Section 1.1
     of the Easement Agreement between the Parties, dated April 29, 2002, as
     modified by Section 3.4 of this Agreement.

1.63 Transmission System Operations Center(s) shall mean the electric
     Transmission System control center(s) that is/are responsible for
     monitoring and controlling the Transmission System in real time.

1.64 Unplanned Outage shall mean action by Local Distribution Company or
     Transmission Provider to take its equipment, facilities or systems out of
     service, partially or completely, due to an unanticipated failure, when
     such removal from service was not scheduled in accordance with Sections
     3.9.1, 3.9.2, and 3.9.4. Such removal from service may be automatic such as
     by relay-action operating circuit breakers or by operator intervention.
     Momentary interruptions are excluded from the definition of Unplanned
     Outages. Unplanned Outages include Forced Outages as well as Extended
     Outages.

ARTICLE 2. OPERATIONAL REQUIREMENTS

2.1  Subject to the terms and conditions of this Agreement, Transmission
     Provider shall provide Local Distribution Company Interconnection Service
     for each Interconnection Point identified in Exhibit 1, from the Effective
     Date for the term of this Agreement.

2.2  The Interconnection Points between the Transmission System and Distribution
     System are listed in Exhibit 1. It shall be the Transmission Provider's
     responsibility to annually prepare an addendum to this exhibit that shows
     all new or modified interconnections. The original Exhibit 1 and all
     addendums shall be retained for future reference.

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 11
FERC Electric Rate Schedule No. 1
EXECUTION COPY

2.3  Local Distribution Company's Representatives and Transmission Provider's
     Representatives are listed in Exhibit 2, as may be modified from time to
     time by either Party, giving written notice of changes regarding its
     Representative(s) to the other Party.

2.4  Interconnection Standards

     2.4.1 The Interconnection Point(s) shall be established and maintained in
          accordance with Good Utility Practice and the applicable NERC,
          Federal, State, OATT and ECAR standards and policies for Transmission
          Provider service to Local Distribution Company.

     2.4.2 Reactive Power. Transmission Provider and Local Distribution Company
          recognize and agree that they have a mutual responsibility for
          maintaining voltage at the Interconnection Points. Transmission
          Provider is responsible for maintaining Transmission System voltage as
          listed in Sections 8.1, 8.2 and 8.3 and reasonably compensating for
          reactive power losses resulting from transmission service. The Local
          Distribution Company is responsible for controlling Distribution
          System voltage and compensating for Distribution System reactive power
          losses and reactive power consumed by retail customers. The Local
          Distribution Company may use a combination of static and dynamic
          reactive resources at various locations around the Transmission
          Provider's system. The Local Distribution Company's and the
          Transmission Provider's SCADA systems shall be used to determine the
          net exchange of reactive power on a total interconnections basis. For
          those distribution substations where there are no SCADA facilities in
          place the reactive flows shall be determined from SCADA data on the
          connecting lines in conjunction with computer load flow simulations.
          At load levels below 90% of peak the system should be designed such
          that the average power factor for the sum of all Interconnection
          Points is between 90% lagging and 90% leading ("peak" as used here
          shall refer to a current year's maximum MW load for the Local
          Distribution Company). For load levels above 90% of peak the power
          factor should be at 98% (lagging or leading), or better. If the power
          factor falls below this minimum the Planning Committee shall review
          available options and determine the best method of addressing any
          resulting system problems.

2.5(a) The Local Distribution Company shall comply with Transmission Provider's
     reasonable operating requirements or switching procedures. The Local
     Distribution Company shall verbally notify the Transmission Provider if the
     Local Distribution Company is unable to comply with this Section at any
     time during the term of the Agreement.

     (b)  The Transmission Provider shall comply with Local Distribution
          Company's reasonable operating requirements or switching procedures.
          The

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 12
FERC Electric Rate Schedule No. 1
EXECUTION COPY

     Transmission Provider shall verbally notify the Local Distribution Company
     if the Transmission Provider is unable to comply with this Section at any
     time during the term of the Agreement.

2.6  Local Distribution Company shall comply with the requests, orders,
     directives and requirements of Transmission Provider in its role of
     implementing the directives of the Security Coordinator. Any such requests,
     orders, directives or requirements of Transmission Provider must be (a)
     issued in accordance with Good Utility Practice, (b) not unduly
     discriminatory, (c) otherwise in accordance with applicable tariffs or
     applicable federal, state or local laws, (d) in conformance with NERC
     operating procedures, and (e) reasonably necessary to maintain the
     integrity of the Transmission System.

2.7  Load Shedding

     2.7.1 Local Distribution Company shall comply, as part of a Control Area
          program, with installation of automatic underfrequency load shedding
          equipment and maintain compliance with the standards set forth in NERC
          and ECAR operating standards and policies at Transmission Provider's
          expense.

     2.7.2 The Transmission Provider may direct the Local Distribution Company
          to shed load to maintain the reliability and integrity of the
          Transmission System, in accordance with the OATT. The Transmission
          Provider and the Local Distribution Company will comply with MPSC
          directives and will endeavor to minimize the impact on the Local
          Distribution Company customers.

2.8  Not a Reservation for Transmission Service

     2.8.1 Local Distribution Company, or an Eligible Customer under the OATT,
          shall be responsible for making arrangements under the OATT for
          transmission and any ancillary services associated with the delivery
          of capacity and/or energy purchased or produced by the Local
          Distribution Company, which services shall not be provided under this
          Agreement.

     2.8.2 Local Distribution Company and Transmission Provider make no
          guarantees to the other under this Agreement with respect to
          transmission service that is available under the Transmission
          Provider's OATT or any other tariff under which transmission service
          may be available in the region. Nothing in this Agreement shall
          constitute an express or implied representation or warranty with
          respect to the current or future availability of transmission service.
          Should the Parties enter into an arrangement under the

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 13
FERC Electric Rate Schedule No. 1
EXECUTION COPY

          OATT or another tariff, any terms in this Interconnection Agreement
          that may be in conflict with that tariff shall be subordinate to the
          terms of that tariff.

ARTICLE 3. OPERATION AND MAINTENANCE

3.1  The Operating Committee shall develop specific methods and procedures with
     respect to Local Distribution Company's and Transmission Provider's systems
     covering at least, but not limited to, the following areas: safety, voltage
     control, outage planning and implementation, service restoration, emergency
     operations procedures, frequency controls, environmental matters, and
     maintenance planning and execution.

3.2  The respective ownership of substation facilities as of the date of this
     contract is shown in Exhibit 5. Exhibit 5 will be updated with an addendum
     at least annually by the Transmission Provider and approved in writing by
     the Local Distribution Company to show changes in ownership. The original
     Exhibit 5 and all addendums will be retained for future reference.

3.3  All operation and maintenance activities will be the financial
     responsibility of the owning Party. All operation and maintenance
     activities on Jointly Owned Assets will be under the direction and control
     of the Party that owns the greater percentage of the major equipment at
     that location. In the case where both Parties own an equal share the Local
     Distribution Company shall have such direction and control. The Parties'
     respective share of responsibility for the costs of all operation and
     maintenance activities on Jointly Owned Assets shall be the same percentage
     as the percentage of major equipment owned by the Party in that substation
     as set forth in Exhibit 6 and its subsequent addendums. All
     generation-related assets owned by the Local Distribution Company in a
     substation will be included as a part of the Local Distribution Company's
     assets in making this calculation. Responsibilities related to third-party
     owned generation-related assets will be split according to the nominal
     operating voltage at the point of connection of the generation circuit. At
     120kV and above the third-party generation-related assets will be included
     as a part of the Transmission Provider's assets for purposes of making this
     calculation. Below 120 kV the third-party generation-related assets will be
     included as a part of the Local Distribution Company's assets for purposes
     of making this calculation. Major equipment shall be defined as main power
     transformers, 23 kV, 46 kV, 138 kV, and 345 kV circuit breakers, power
     system regulators and reclosers, and 46 kV and 138 kV capacitor banks. (Any
     three-phase installation of such equipment shall count as a single unit).
     Exhibit 6 will be updated with an addendum at least annually by the
     Transmission Provider and approved in writing by the Local Distribution
     Company to show all changes in equipment ownership in the

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 14
FERC Electric Rate Schedule No. 1
EXECUTION COPY

     joint substations. The original Exhibit 6 and all addendums will be
     retained for future reference. In those substations where each Party owns
     assets each Party shall be financially responsible for its appropriate
     share of station power energy usage.

3.4  The Parties agree that the principles upon which the initial identification
     was made of facilities as being either Transmission or Distribution (See
     the definitions of "Transmission" and "Distribution" in Section 1.1 of the
     Amended and Restated Easement Agreement dated April 29, 2002 between the
     Parties) shall continue to be applied for the future unless modification is
     agreed to by both Parties. Should future system modifications result in the
     reclassification of assets, the Parties agree to convey ownership of those
     assets to the appropriate Party. However, no such reclassification shall
     affect how the other Sections of this Agreement are applied until there is
     a change in ownership of the facilities involved and until any related
     changes are made to this Agreement and its exhibits. Upon such a change in
     ownership, the Planning Committee shall revise Exhibits 6 and/or 7 when
     needed to reflect the change in ownership. The conveyed facilities shall be
     priced at 1.18 times the seller's net plant value but in any case shall not
     be less than zero dollars (i.e. no payment from seller to purchaser will
     occur as a result of net plant value being less than zero). As used herein,
     "net plant value" shall mean the asset's original cost depreciated
     according to the seller's accepted accounting method. In addition, should
     either Party plan to abandon or otherwise take out of service any
     facilities which could be of use as part of the other Party's system, it
     shall offer to convey to the other Party such facilities before they are
     taken out of service under the same pricing formula outlined above. All
     types of conveyances discussed in this paragraph shall be subject to the
     following conditions:

     (a)  The Planning Committee shall within 12 months of the Effective Date of
          this Agreement develop appropriate timeframes and procedures for
          accomplishing such conveyances.

     (b)  At least 12 months (or as close as feasible to 12 months) before
          implementing system modifications which would result in such a
          conveyance, the Party planning to do such modifications shall notify
          the other Party of such plans. The other Party, if it wishes, shall
          then have 2 months within which to propose an alternative modification
          which is consistent with Good Utility Practice, which would reduce or
          eliminate the need for conveyances, and which would cost the Party
          seeking to do the modifications no more than the originally proposed
          modification. If such an alternative is provided in a timely manner,
          the Party proposing to do the modification shall consider the
          alternative and shall not unreasonably refuse to pursue the
          alternative instead of the original proposal.

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 15
FERC Electric Rate Schedule No. 1
EXECUTION COPY

     (c)  Possible impediments to timely conveying the property in question
          (e.g. difficulty in getting release from the conveyor's indenture)
          shall be referred to the Administrative Committee. The Administrative
          Committee is authorized to modify the requirements of this Section
          with regard to such a specific proposed modification however it deems
          appropriate in light of the possible impediment and other
          circumstances.

3.5  Each Party shall operate any equipment that might reasonably be expected to
     have impact on the operations of the other Party in a safe and efficient
     manner and in accordance with all applicable federal, state, and local
     laws, NERC operating practices, and Good Utility Practice, and otherwise in
     accordance with the terms of this Agreement. Each Party shall comply with
     the reasonable requests, orders, directives and requirements of the other
     Party, which are authorized under this Agreement.

3.6(a) Without limiting the generality of Section 3.5, Local Distribution
     Company shall own, operate and maintain its Distribution System in a manner
     in accordance with Good Utility Practice to prevent degradation of voltage
     or services of the Transmission System. The Local Distribution Company
     shall be responsible for the costs to repair or replace the Distribution
     System and Local Distribution Company's Interconnection Equipment.

3.6(b) Without limiting the generality of Section 3.5, Transmission Provider
     shall own, operate and maintain its Transmission System in a manner in
     accordance with Good Utility Practice to prevent degradation of voltage or
     services of Local Distribution Company's Distribution System. The
     Transmission Provider shall be responsible for the costs to repair or
     replace the Transmission System and Transmission Provider's Interconnection
     Equipment.

3.6(c) Without limiting the generality of Section 3.5, Local Distribution
     Company or Transmission Provider, as appropriate pursuant to Section 3.3
     hereof, shall operate and maintain Jointly Owned Assets in a manner in
     accordance with Good Utility Practice to prevent degradation of voltage or
     services to either Party.

3.7(a) Except during an Emergency, Local Distribution Company shall not, without
     prior Transmission Provider authorization, operate any Transmission
     Provider circuit, including transformer, line or bus elements. Local
     Distribution Company shall retain the right to operate Transmission
     Provider equipment during an Emergency for imminent personnel safety
     threat, to prevent damage to equipment or to maintain the integrity of the

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 16
FERC Electric Rate Schedule No. 1
EXECUTION COPY

     Distribution System. When practical, prior to operation of such equipment,
     Local Distribution Company shall provide notice to the Transmission
     Provider. The Local Distribution Company shall not operate any Transmission
     System circuit if upon notice the Transmission Provider expressly refuses
     to grant permission to the Local Distribution Company. Within five (5)
     working days of such Emergency, Local Distribution Company shall provide
     written explanation of such Emergency to Transmission Provider.

3.7(b) Except during an Emergency, Transmission Provider shall not, without
     prior Local Distribution Company authorization, operate any Local
     Distribution Company circuit, including transformer, line or bus elements.
     Transmission Provider shall retain the right to operate Local Distribution
     Company equipment, during an Emergency for imminent personnel safety
     threat, to prevent damage to equipment or to maintain the integrity of the
     Transmission System. When practical, prior to operation of such equipment,
     Transmission Provider shall provide notice to Local Distribution Company.
     Transmission Provider shall not operate any Distribution System circuit. if
     upon notice the Local Distribution Company expressly refuses to grant
     permission to the Transmission Provider. Within five (5) working days of
     such Emergency, Transmission Provider shall provide written explanation of
     such Emergency to Local Distribution Company.

3.7(c) In an Emergency, joint facilities shall be operated by the Party able to
     first respond with Qualified Personnel.

3.8  Local Distribution Company and Transmission Provider shall design, install,
     test, calibrate, set, and maintain their respective Protective Relay
     equipment in accordance with Good Utility Practice, applicable federal,
     state or local laws and this Agreement, as set forth in Article 6 hereof.
     In the case of jointly owned relaying equipment, the Party having direction
     and control pursuant to Section 3.3 hereof shall design, install,
     calibrate, set, and maintain Protective Relay equipment in accordance with
     Good Utility Practice. Without limiting the generality of Section 3.5(c)
     above, costs for such work will be split between the Companies on a
     predetermined ownership percentage basis as set forth in the then-current
     version of Exhibit 6.

3.9(a) If Transmission Provider reasonably determines that (i) any of Local
     Distribution Company's Interconnection Equipment fails to perform in a
     manner in accordance with Good Utility Practice or this Agreement, or (ii)
     Local Distribution Company has failed to perform proper testing or
     maintenance of its Interconnection Equipment in accordance with Good
     Utility Practice or this Agreement, Transmission Provider shall give Local
     Distribution Company written notice to take corrective action. Such written

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 17
FERC Electric Rate Schedule No. 1
EXECUTION COPY

     notice shall be provided by Transmission Provider to Local Distribution
     Company's Representative as soon as practicable upon such determination. If
     Local Distribution Company fails to initiate corrective action promptly,
     and in no event later than seven (7) days after the delivery of such
     notification, and if in Transmission Provider's reasonable judgment leaving
     Local Distribution Company's Distribution System connected with
     Transmission System would create an Emergency or Network Security
     Condition, Transmission Provider may, with as much prior verbal
     notification to Local Distribution Company and Distribution System Control
     as practicable, open only the Interconnection Point(s) needing corrective
     action connecting the Local Distribution Company and Transmission Provider
     until appropriate corrective actions have been completed by Local
     Distribution Company, as verified by Transmission Provider. Prior to taking
     such action, Transmission Provider shall give appropriate consideration to
     the needs of the Local Distribution Company's end-use customers.
     Transmission Provider's judgment with regard to an interruption of service
     under this paragraph shall be made in accordance with Good Utility Practice
     and subject to Section 3.1 hereto. In the case of such interruption,
     Transmission Provider shall immediately confer with Local Distribution
     Company regarding the conditions causing such interruption and its
     recommendation concerning timely correction thereof. Both Parties shall act
     promptly to correct the condition leading to such interruption and to
     restore the connection.

3.9(b) If Local Distribution Company reasonably determines that (i) any of
     Transmission Provider's Interconnection Equipment fails to perform in a
     manner in accordance with Good Utility Practice or this Agreement, or (ii)
     Transmission Provider has failed to perform proper testing or maintenance
     of its Interconnection Equipment in accordance with Good Utility Practice
     or this Agreement, Local Distribution Company shall give Transmission
     Provider written notice to take corrective action. Such written notice
     shall be provided by Local Distribution Company to Transmission Provider's
     Representative as soon as practicable upon such determination. If
     Transmission Provider fails to initiate corrective action promptly, and in
     no event later than seven (7) days after the delivery of such notification,
     and if in Local Distribution Company's reasonable judgment leaving
     Transmission System connected with Local Distribution Company's
     Distribution System would create an Emergency, Local Distribution Company
     may, with as much prior verbal notification to Transmission Provider and
     Distribution System Control as practicable, open only the Interconnection
     Point(s) needing corrective action connecting the Transmission Provider and
     Local Distribution Company until appropriate corrective actions have been
     completed by Transmission Provider, as verified by Local Distribution
     Company. Local Distribution Company's judgment with regard to an
     interruption of service under this paragraph shall be made in accordance
     with Good Utility Practice and subject to

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 18
FERC Electric Rate Schedule No. 1
EXECUTION COPY

     Section 3.1 hereto. In the case of such interruption, Local Distribution
     Company shall immediately confer with Transmission Provider regarding the
     conditions causing such interruption and its recommendation concerning
     timely correction thereof. Both Parties shall act promptly to correct the
     condition leading to such interruption and to restore the connection.

3.10 Outages

     3.10.1 Outage Authority and Coordination. In accordance with Good Utility
          Practice, each Party may, in close cooperation with the other, remove
          from service its system elements that may impact the other Party's
          system as necessary to perform maintenance or testing or to replace
          installed equipment. Absent the existence of an Emergency, the Party
          scheduling a removal of a system element from service will schedule
          such removal on a date mutually acceptable to both Parties, in
          accordance with Good Utility Practice.

     3.10.2 The Parties shall coordinate inspections, Planned Outages, and
          maintenance of their respective equipment, facilities and systems so
          as to minimize the impact on the availability, reliability and
          security of both Parties' systems and operations when the outage is
          likely to have a materially adverse impact on the other Party's system
          or the Local Distribution Company's end-use customers. Subject to the
          confidentiality provisions of Article 20, on or before October 1 of
          each year during the term hereof, the Parties shall exchange
          non-binding Planned Outage schedules for the following calendar year,
          which shall be developed and followed in accordance with Good Utility
          Practice, for the Distribution System and Transmission System. The
          Parties shall communicate the outage schedules as promptly as
          possible, provided that in no event shall such schedule be provided
          less than fifteen (15) days prior to a Planned Outage. The Parties
          shall keep each other updated regarding any changes to such schedules.

     3.10.3 Unplanned Outages

          3.10.3.1 Distribution System Unplanned Outage. In the event of an
               Unplanned Outage of a system element of the Distribution System
               adversely affecting the Transmission System, the Local
               Distribution Company will act in accordance with Good Utility
               Practice to promptly restore that system element to service
               unless the Local Distribution Company obtains concurrence from
               the Transmission Provider that some deferral is reasonable,

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 19
FERC Electric Rate Schedule No. 1
EXECUTION COPY

               and this concurrence shall not be unreasonably withheld. The
               Local Distribution Company shall plan and maintain its
               Distribution System such that the average length of distribution
               system outages having a direct impact on the Transmission System
               shall not exceed 166 minutes per event on an annual basis. For
               any year in which the average outage duration exceeds this limit,
               the Local Distribution Company shall develop a plan to improve
               the outage restoration process and reduce outages and shall
               obtain the Transmission Provider's concurrence with this plan.
               Within forty-eight hours (48) of the beginning of any Unplanned
               Outage, the Local Distribution Company shall provide the
               Transmission Provider with a restoration plan.

          3.10.3.2 Transmission System Unplanned Outage. In the event of an
               Unplanned Outage of a system element of the Transmission System
               adversely affecting the Local Distribution Company's Distribution
               System, the Transmission Provider will restore the system to
               normal as soon as possible unless the Transmission Provider
               obtains concurrence from the Local Distribution Provider that
               some deferral is reasonable, and this concurrence shall not be
               unreasonably withheld. The Transmission Provider shall plan and
               maintain its Transmission System such that the average length of
               Transmission System outages having a direct impact on customers
               of the Local Distribution Company shall not exceed 166 minutes on
               an annual basis. For any year in which the average outage
               duration exceeds this limit, the Transmission Provider shall
               develop a plan to improve the outage restoration process and
               reduce outages and shall obtain the Local Distribution Company's
               concurrence with this plan. Within forty-eight hours (48) of the
               beginning of any Unplanned Outage the Transmission Provider shall
               provide the Local Distribution Company with a restoration plan.
               For any 138 kV system outage it is expected that the system will
               be restored to its normal configuration within seven (7) days;
               for any 345 kV system outage it is expected that the system will
               be restored to its normal configuration within thirty (30) days.
               If it is expected that any Unplanned Outage will exceed these
               limits the Transmission Provider shall provide the Local
               Distribution Company with detailed information on measures being
               taken to minimize the outage time.

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 20
FERC Electric Rate Schedule No. 1
EXECUTION COPY

     3.10.4 Planned Outages

          3.10.4.1 Distribution System Planned Outage. In the event of a Planned
               Outage of a system element of the Distribution System adversely
               affecting the Transmission System, the Local Distribution Company
               will act in accordance with Good Utility Practice to promptly
               restore that system element to service in accordance with its
               schedule for the work that necessitated the Planned Outage.

          3.10.4.2 Transmission System Planned Outage. The Transmission Provider
               shall review all Transmission System Planned Outages with the
               Local Distribution Company. In the event of a Planned Outage of a
               system element of the Transmission System adversely affecting the
               Local Distribution Company's Distribution System, the
               Transmission Provider will act in accordance with Good Utility
               Practice to promptly restore that system element to service in
               accordance with its schedule for the work that necessitated the
               Planned Outage.

3.11 The Parties shall use best efforts in accordance with Good Utility Practice
     to coordinate operations in the event of any Forced or Planned Outage that
     affects the other Party's system.

3.12 Black Start Plan Participation. In accordance with Good Utility Practice,
     Local Distribution Company agrees to participate in Transmission Provider's
     Black Start Plan for the Distribution System and the Transmission System,
     as well as any verification testing.

3.13 The Parties shall notify and make available in a timely manner, electric
     system modeling information necessary for the other Party to monitor,
     analyze, and protect its facilities in a real time environment, no less
     than 30 days prior to the energization of new or reconfigured network
     facilities.

ARTICLE 4. SUPERVISORY CONTROL AND DATA ACQUISITION, SCADA

4.1  If the Transmission Provider chooses to operate its own SCADA system, or to
     make modifications or additions to the existing system, the following terms
     and conditions of this Article 4 will apply.

4.2  Interconnection Points containing SCADA and communications equipment
     installed prior to April 1, 2001, shall be considered to satisfy the terms
     and conditions of this article. For those Interconnection Points that
     existed

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 21
FERC Electric Rate Schedule No. 1
EXECUTION COPY

     prior to April 1, 2001 that did not contain SCADA and communications
     equipment, and for new Interconnection Points installed after April 1, 2001
     where SCADA and communications equipment is necessary for and requested by
     the Transmission Provider to perform monitoring, state estimation and
     contingency analysis, the Local Distribution Company shall install and
     operate such equipment at the Transmission Provider's expense. Each
     Interconnection Point or other mutually agreeable location with SCADA and
     communications equipment shall have one dedicated communications path to
     the Local Distribution Company's control center for the RTU data. The cost
     of the dedicated communications path and general use station phone shall be
     shared on an equal basis. Additional data paths and communications
     equipment requested, either emanating from the substation, the Local
     Distribution Company's control center, or the Transmission Provider's
     control center, will be at the expense of the requestor. This data and
     status information may be real time or with a time delay mutually
     acceptable to the Parties. The method of providing this data and control
     will be via an industry standard protocol such as Inter-Control Center
     Protocol (ICCP) or other method agreed to by the Parties. Such data may
     include, but not be limited to megawatts, megavars, voltage, amperes,
     device status, interchange schedule error, and communication system status.

4.3  The Transmission Provider reserves the right at its expense, to require,
     for new, or modified Local Distribution Company Interconnection Points,
     installation of a Transmission Provider's RTU or installation of a dual
     port RTU to provide data and control directly to the Transmission Provider
     within the Local Distribution Company's substation. The Local Distribution
     Company will assist in furnishing desired inputs for the Transmission
     Provider's RTU.

4.4  The operating metering system shall consist of instantaneous values of MW,
     MVAR, and voltage.

     4.4.1 Values shall be inputted to a RTU or comparable communication device
          for communication with the Party having Control Area responsibility.

     4.4.2 Transducers may utilize the voltage transformers and current
          transformer secondary circuits also utilized by the revenue metering
          equipment for a particular interconnection. In such case, the
          performance criteria listed in Exhibit 4 of the Agreement, Metering
          Specifications, for the voltage transformers and the current
          transformers, shall apply. Relaying class voltage transformers and or
          current transformers shall not be utilized unless mutually agreed
          between all the owners of the metering equipment and the Local
          Distribution Company.

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 22
FERC Electric Rate Schedule No. 1
EXECUTION COPY

     4.4.3 Transducers shall have maximum 0.3% inaccuracy. Transducers shall be
          field calibrated as necessary but at least once every ten (10) years
          and documentation shall be retained showing the calibration results
          until next calibration.

     4.4.4 Telemetry shall be maintained and calibrated such that overall
          inaccuracy of MW, MVAR, and voltage values is less than 1.0% of full
          scale.

4.5  To the extent new RTUs and associated communications equipment is to be
     installed, the Local Distribution Company shall install or facilitate
     installation of the RTU and associated communications equipment as soon as
     practicable, provided that installation shall be accomplished within a time
     period of no more than 270 days following notice by Transmission Provider
     or prior to commissioning of any new Interconnection Points.

ARTICLE 5. REVENUE METERING

5.1  Transmission Provider shall own, operate, test and maintain any metering
     equipment at the Interconnection Points, as required by this Article 5 not
     including any metering equipment owned by the Local Distribution Company
     for use in metering its end-use customers. Transmission Provider and Local
     Distribution Company agree that, as to all Interconnection Points in
     existence as of the Effective Date, no new or different metering equipment
     or arrangements shall be required. For existing Interconnection Points
     where low-side metering exists without loss compensation, the Parties will
     agree to adjust the metering data in such a manner to account for any real
     power losses between the location of the meter and the Interconnection
     Point. To the extent existing metering equipment is replaced and when new
     metering equipment is installed at Interconnection Points in existence as
     of the Effective Date, such replacements or installations shall meet the
     standards set in Section 5.2. Transmission Provider shall provide, install,
     own, operate, test and maintain the new metering equipment located at the
     Interconnection Points.

5.2  The Revenue Quality Metering System shall consist of all instrument
     transformers (current and voltage), secondary wiring, test switches, and
     meter(s) required to determine the metering values for record for any given
     metering point.

     5.2.1 Metering shall be form 9, 3-element for 4-wire systems and form 5,
          2-element for 3-wire systems.

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 23
FERC Electric Rate Schedule No. 1
EXECUTION COPY

     5.2.2 Meters shall measure, at a minimum, megawatt hours and megavar hours
          and have bi-directional capability, where applicable. All measured
          values shall have individual outputs where applicable and a minimum
          35-day interval data recording capability for each measured value.

     5.2.3 Whenever feasible, any new metering facilities shall be located at
          the same physical location as the Interconnection Point. If it is not
          reasonable to have the metering facilities and the Interconnection
          Point at the same physical location, the metering data will be
          adjusted to account for real power losses between the location of the
          meter and the Interconnection Point.

     5.2.4 Transmission Provider shall maintain records that demonstrate
          compliance with all meter tests and maintenance conducted in
          accordance with Good Utility Practice for the life of the
          Interconnection Point. Local Distribution Company shall have
          reasonable access to the records.

     5.2.5 For installations where the metering is performed using loss
          compensation, the factory certified test results of the power
          transformer, if available, including load, no-load losses and
          calculated meter loss calculations, shall be recorded in a written
          record. Local Distribution Company shall have reasonable access to the
          records.

     5.2.6 Transmission Provider shall maintain records of the factory certified
          test results, or the utility test shop test results, showing
          compliance of the meters with the applicable metering test standards.

     5.2.7 Transmission Provider's Metering equipment shall be tested by
          Transmission Provider at its own expense not less than once every
          year, unless an extension of the testing cycle is agreed upon by the
          Parties. The accuracy of such metering equipment shall be maintained
          by Transmission Provider in accordance with applicable regulatory
          standards. At the request of either Party, special tests shall be
          made. If any special meter test discloses the metering device to be
          registering within acceptable limits of accuracy as specified herein,
          then the Party requesting such special meter test shall bear the
          expense thereof. Otherwise, the expense of such test shall be borne by
          the owner. Representatives of either Party shall be afforded
          opportunity to be present at all routine or special tests and upon
          occasions when any readings for purposes of settlements hereunder are
          taken from meters not producing an automatic record.

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 24
FERC Electric Rate Schedule No. 1
EXECUTION COPY

     5.2.8 If, as a result of any test, any meter shall be found to be
          registering more than two (2) percent above or below one hundred (100)
          percent of accuracy, the account between the Parties hereto shall be
          corrected for a period equal to one-half of the elapsed time since the
          last prior test, according to the percentage of inaccuracy so found,
          except that if the meter shall have become defective or inaccurate at
          a reasonably ascertainable time since the last prior test of such
          meter, the correction shall extend back to such time. No meter shall
          be left in service if found to be more than two (2) percent above or
          below one hundred (100) percent of accuracy. Should metering equipment
          at any time fail to register, the energy delivered shall be determined
          from the best available data. All meters shall be kept under seal,
          such seals to be broken only when the meters are to be tested or
          adjusted.

     5.2.9 Test switches shall be installed to allow independent testing and/or
          replacement of each meter and transducer utilizing the secondary
          circuit so as not to interrupt the operation of other devices
          utilizing the secondary circuit.

     5.2.10 In substations where an RTU or other remote data collecting and
          telecommunication device is present, meters shall have form C, 3-wire
          outputs with programmable values determined by the Transmission
          Provider for bi-directional MWHs and MVARs.

     5.2.11 In the event an interconnection meter needs replacement or repair, a
          representative from Local Distribution Company shall be given a
          reasonable opportunity to be present during such repair or
          replacement.

ARTICLE 6. PROTECTIVE RELAYING AND CONTROL

6.1  Transmission Provider and the Local Distribution Company shall, in
     accordance with Good Utility Practice, coordinate, review and approve all
     new Protective Relaying equipment, including equipment settings, Protective
     Relay schemes, drawings, and functionality associated with each
     Interconnection Point. Protective Relaying equipment and schemes installed
     before the date of this agreement shall be considered to satisfy the terms
     and conditions of this Article 6. When existing equipment or schemes are
     replaced or when new equipment or schemes are installed per this Article 6
     or in association with new Interconnection Points, then the terms and
     conditions of Article 6 shall apply. Each Party shall incur the expense for
     the work on its system.

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 25
FERC Electric Rate Schedule No. 1
EXECUTION COPY

6.2  To the extent that there is generation on the Distribution System which, in
     the reasonable judgment of either Party, may contribute material amounts of
     current to a fault on the Transmission System, the Local Distribution
     Company shall have and enforce standards to ensure the provision,
     installation and maintenance of relays, circuit breakers, and all other
     devices necessary to promptly remove any fault contribution of such
     generation to any short circuit occurring on the Transmission System and
     not otherwise isolated by the Transmission Provider equipment. Such
     standards will be included in the Local Distribution Company's connection
     requirements for generation. Transmission Provider and Local Distribution
     Company shall not be responsible for protection of such generation.

6.3  Transmission Provider shall own, operate, maintain and test those
     Protective Relay Systems that control their breakers or equivalent
     protective devices. Local Distribution Company shall own, operate,
     maintain, and test those Protective Relay Systems that control their
     breakers or equivalent protective devices governed by this Article 6. The
     Parties shall maintain, and, as necessary, upgrade their respective
     Protective Relay Systems and shall provide the other Party with access to
     available copies of operation and maintenance manuals and test records for
     all relay equipment upon request. The Transmission Provider will provide
     protective relay settings for the relays that control breakers or
     equivalent protective devices owned by the Local Distribution Company that
     also protect Transmission Provider's equipment. The Local Distribution
     Company will review and apply the settings.

6.4  The owner (Transmission Provider or Local Distribution Company) of the line
     will provide the relay communication channel necessary for line protection
     at its expense. Owner will participate with other Party to test
     communication schemes upon request without charge.

6.5  The Parties shall test their respective relays associated with the
     Interconnection Points for correct calibration and operation. Parties shall
     coordinate design, installation, operation, and testing of Protective Relay
     schemes to insure that such relays operate in a coordinated manner so as to
     not cause adverse operating conditions on the other Party's system.

6.6  Local Distribution Company shall be responsible for Protective Relay
     maintenance, calibration and functional testing of relay systems that
     protect Local Distribution Company's equipment associated with the
     Interconnection Points and that protect Transmission Provider from Local
     Distribution Company's Interconnection Equipment to the extent such
     calibration and testing are in accordance with Good Utility Practice. All
     such maintenance and testing must be performed by Qualified Personnel
     selected by the Local Distribution Company. In addition, Local Distribution

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 26
FERC Electric Rate Schedule No. 1
EXECUTION COPY

     Company shall allow Transmission Provider to conduct visual inspection of
     all Protective Relays and associated maintenance records directly related
     to the interconnection. Related maintenance and operational records shall
     be maintained by the Local Distribution Company in accordance with Good
     Utility Practice. Upon completion of Protective Relay calibration testing
     and relay functional testing, Local Distribution Company shall make
     available copies of test reports and related records for review by
     Transmission Provider upon request. Local Distribution Company shall review
     test reports and document that Protective Relay System's tests and
     settings, as shown on such test reports, have been done in accordance with
     the equipment's specifications and Good Utility Practice.

6.7(a) As Transmission Provider's system protection requirements change,
     Transmission Provider will upgrade its Protective Relaying System in
     accordance with Good Utility Practice. If these upgrades affect the
     serviceability and acceptability of the Protective Relaying Systems on the
     Interconnection Equipment which may be installed, owned, and operated by
     Local Distribution Company, the Local Distribution Company must upgrade its
     Protective Relay Systems at its expense (unless such modifications are
     required in association with the addition of generation to the system in
     which case Section 9.8 shall apply) as necessary to bring them into
     compatibility with that installed by Transmission Provider. Transmission
     Provider shall give Local Distribution Company notice of such upgrade as
     soon as practicable prior to the anticipated date of such upgrade. Any
     proposed protective system upgrades shall be reviewed by the Planning
     Committee in accordance with Section 7.3 (vi) hereof.

6.7(b) As Local Distribution Company's system protection requirements change,
     Local Distribution Company will upgrade its Protective Relaying System in
     accordance with Good Utility Practice. If these upgrades affect the
     serviceability and acceptability of the Protective Relaying Systems on the
     Interconnection Equipment which may be installed, owned, and operated by
     Transmission Provider, Transmission Provider must upgrade its Protective
     Relaying Systems at its expense (unless such modifications are required in
     association with the addition of generation to the system in which case
     Section 9.8 shall apply) as necessary to bring them into compatibility with
     that installed by Local Distribution Company. Local Distribution Company
     shall give Transmission Provider notice of such upgrade as soon as
     practicable prior to the anticipated date of such upgrade. Any proposed
     protective system upgrades shall be reviewed by the Planning Committee in
     accordance with Section 7.3 (vi) hereof.

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 27
FERC Electric Rate Schedule No. 1
EXECUTION COPY

6.8  Local Distribution Company shall provide necessary space to install or
     expand relay panels for substation system protection if requested by
     Transmission Provider. Any incremental costs required to accommodate such
     request shall be the responsibility of the Transmission Provider.

6.9  Transmission Provider shall provide the necessary space to install or
     expand relay panels for substation system protection if requested by Local
     Distribution Company. Any incremental costs required to accommodate such
     request shall be the responsibility of the Local Distribution Company.

6.10 Each Party will provide access to the other to fault recorder, sequence of
     events and relay information such as dial up access of digital relays.

ARTICLE 7. PLANNING AND OBLIGATION TO SERVE

7.1  Adequacy Obligation. Subject to applicable regulatory approvals, including
     adherence to Least-Cost planning requirements and principles, adherence to
     applicable NERC, ECAR or other regional reliability council or successor
     organization's reliability requirements, and all other applicable operating
     reliability criteria and subject to the oversight and direction of the
     appropriate RTO or ISO, the Transmission Provider shall operate, maintain,
     plan and construct its Transmission System in accordance with Good Utility
     Practice in order to:

     (i)  deliver on a reliable basis the projected capacity and energy needs of
          all loads served by the Local Distribution Company's Distribution
          System and dependent upon the Transmission Provider's facilities for
          delivery of such energy to the Distribution System;

     (ii) provide needed support to the Local Distribution Company where a
          transmission addition is the Least-Cost electric solution to an
          improvement need, including but not limited to, the reliability needs
          of the Local Distribution Company; and

     (iii) deliver energy from both existing and new generating facilities
          connected to and dependent upon Transmission Provider's transmission
          of such energy.

7.2  With regard to planning and construction of projects which affect Local
     Distribution Company and Local Distribution Company's load-serving area,
     the Parties shall develop methods and procedures covering at least the
     following areas:

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 28
FERC Electric Rate Schedule No. 1
EXECUTION COPY

     (i)  coordination between short-term and long-term distribution and
          transmission planning;

     (ii) developing and sharing computer simulation models needed to support
          Transmission Provider and Local Distribution Company planning
          activities;

     (iii) coordination of permitting (including local and state approvals) and
          siting;

     (iv) engineering and scheduling of new projects;

     (v)  construction and inspection standards;

     (vi) information-sharing and priority-setting; and

     (vii) health and safety issues.

7.3  With respect to Local Distribution Company's load-serving area, the
     Planning Committee, shall:

     (i)  implement the methods and procedures developed pursuant to Section
          7.2;

     (ii) review planning studies and reports regarding projects needed or
          proposed for the area in the next five (5) years, or as determined by
          the Planning Committee;

     (iii) recommend additional studies or evaluation of plans;

     (iv) follow Least-Cost planning principles in recommending specific
          projects;

     (v)  at least once every year, prepare a planning report which shall
          include in priority order a list of projects proposed by either Party
          for the next year, the estimated costs of such projects, and the
          timetable for such projects, including the in-service date; and

     (vi) review proposed programmatic changes to the electric system, including
          protective system upgrades.

7.4  If the Parties agree upon the need for any such project, they shall
     cooperate and coordinate in seeking all necessary regulatory approvals for
     such project. Transmission Provider shall coordinate and cooperate with
     Local Distribution Company with respect to all communications and

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 29
FERC Electric Rate Schedule No. 1
EXECUTION COPY

     commitments to municipal, county, and state agencies involved in such
     project.

7.5  If Local Distribution Company proposes construction of a transmission
     project and Transmission Provider does not agree that such project is
     needed, Local Distribution Company shall have the right to petition an
     appropriate RTO, ISO or applicable regulatory agency for a declaratory
     ruling on whether the proposed project is needed pursuant to Transmission
     Provider's public-utility duty to plan and construct a reliable, adequate
     Transmission System.

7.6  Load Growth and Reliability Needs. Transmission Provider is obligated to
     plan and install any Transmission System components that may be necessary,
     as determined by a Least-Cost planning process in accordance with Section
     7.1 and consistent with the established and consistently applied
     reliability criteria of the Parties, to accommodate Local Distribution
     Company's planned load growth and planned reliability improvements.
     Transmission Provider will construct new interconnections to Local
     Distribution Company facilities in accordance with Transmission Provider's
     planning criteria, other agreements in effect between the Parties, and Good
     Utility Practice. Transmission Provider shall bear the responsibility for
     such planning and installing in accordance with this Article 7.
     Transmission Provider's obligations under this Section 7.6 shall include
     the planning and installation of any new Interconnection Points that may be
     necessary to accommodate Local Distribution Company's planned load growth
     and planned reliability improvements. Recovery of the cost of such
     additions shall be in accordance with the OATT or other applicable tariff.

7.7  Local Distribution Company shall be the first point of contact and the
     wire-services provider for end-use customers.

7.8  Transmission Provider shall annually submit to Local Distribution Company,
     no later than February 1 of each year:

     (i)  Transmission Provider's plans covering the next five (5) years, or as
          determined by the Planning Committee, for installing Transmission
          System components that may be necessary to accommodate Local
          Distribution Company's planned load growth and reliability
          improvements as described in Section 7.6. Transmission Provider's
          plans shall include, but not be limited to, cost estimates and
          installation schedules for Transmission System components, and shall
          provide specific detail sufficient to allow Local Distribution Company
          to compare Transmission Provider's plans with Local Distribution
          Company's in-service requirements to meet its planned load growth and
          reliability needs.

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 30
FERC Electric Rate Schedule No. 1
EXECUTION COPY

     (ii) A description of any changes to the Local Distribution Company's
          Distribution System that may be needed to accommodate Transmission
          Provider's plans set forth in Section 7.8(i) will be requested by the
          Transmission Provider.

     (iii) Projected voltage levels under Normal System Conditions and
          Transmission Provider's FERC 715 Planning criteria conditions at
          anticipated annual peak load and 80% of anticipated annual peak load
          for each Interconnection Point with planned additions for the next
          five (5) years, or as determined by the Planning Committee.

7.9  Local Distribution Company shall annually submit to Transmission Provider,

     (a)  no later than December 1 of each year, the most recent actual summer
          and winter demands in megawatts (MW) and megavars (Mvar) for all
          Interconnection Points connected to the Transmission System at the
          time of the Transmission Provider's most recent seasonal system peaks
          (Transmission Provider must provide the Local Distribution Company the
          day and hour of such peak no later than September 1); and

     (b)  no later than February 1 of each year:

          (i)  annual peak demand forecasts in MW for each Local Distribution
               Company Interconnection Point to the Transmission System for the
               next five (5) years, or as determined by the Planning Committee,
               together with corresponding projected power factors; and

          (ii) planned facility (new Interconnection Points) connections to the
               Transmission System for the next five (5) years, or as determined
               by the Planning Committee.

ARTICLE 8. TRANSMISSION SERVICE LEVEL

8.1  Subject to applicable regulatory approvals, including adherence to
     Least-Cost planning requirements and principles, adherence to applicable
     NERC, ECAR or other regional reliability council or successor
     organization's reliability requirements, and all other applicable operating
     reliability criteria and subject to the oversight and direction of the
     appropriate RTO or ISO, the Transmission Provider shall operate, maintain,
     plan and construct its Transmission System in accordance with Good Utility
     Practice to provide the following service levels:

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 31
FERC Electric Rate Schedule No. 1
EXECUTION COPY

     (i)  A minimum Steady-State Voltage of 0.97 Per Unit (PU) at all
          Interconnection Points with Local Distribution Company with all
          influential Transmission Provider facilities in service (no
          contingency conditions);

     (ii) A minimum Steady-State Voltage of 0.92 PU at all Interconnection
          Points with the Local Distribution Company influenced by one or more
          Transmission Provider facilities out of service (contingency
          conditions);

     (iii) A maximum Steady-State Voltage of 1.05 PU at all Interconnection
          Points with the Local Distribution Company during all operating
          conditions;

     (iv) An adequate Transmission System that shall not load Local Distribution
          Company facilities above normal ratings during peak load conditions
          with all influential Transmission Provider facilities in service (no
          contingency conditions);

     (v)  An adequate Transmission System that shall not load Local Distribution
          Company facilities above emergency ratings during peak load conditions
          with one or more influential Transmission Provider facilities out of
          service (contingency conditions);

     (vi) On a three-year rolling average, experience no more than 0.357
          Momentary Outage Events per 138 kV line protective zone (system
          average) and 0.743 Momentary Outage Events per 345 kV line protective
          zone (system average) per year. As used in this Article 8 the term
          "year" shall mean calendar year; and the term "line protective zone"
          is illustrated and defined as follows: Any given electrical fault on a
          transmission line will trip specific circuit breakers in a normally
          functioning system. All of the possible line fault locations that will
          trip these specific circuit breakers constitute the same line
          protective zone. Physically, a line protective zone consists of the
          conductors located between the current transformers that provide
          sensing to trip the circuit breakers for a line fault;

     (vii) Experience no more than three (3) Momentary Outage Events on any
          given 138 kV line protective zone and two (2) Momentary Outage Events
          on any given 345 kV line protective zone per year;

     (viii) On a three-year rolling average, experience no more than 0.21
          Unplanned Outages per 138 kV line protective zone (system

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 32
FERC Electric Rate Schedule No. 1
EXECUTION COPY

          average) and 0.18 Unplanned Outages per 345 kV line protective zone
          (system average) per year;

     (ix) Experience no more than four (4) Unplanned Outages on any given 138 kV
          line protective zone and three (3) Unplanned Outages on any given 345
          kV line protective zone per year;

     (x)  Should the Transmission Provider fail to meet any of the requirements
          of Section 8.1(vi) or 8.1(viii) by more than 10% two years in a row,
          the Transmission Provider shall pay, as liquidated damages and not as
          a penalty, to the Local Distribution Company, an amount equal to one
          half of one percent (0.5%) of the annual revenue paid by the Local
          Distribution Company under the applicable transmission tariff; such
          liquidated damages amount shall be based upon the revenue received in
          the second year of such failure. Such liquidated damages amount shall
          be increased by one half of a percent (0.5%) for each additional 10%
          by which the Transmission Provider fails to meet the any of the given
          outage targets, up to a maximum of 4.0% of the annual revenue. Outage
          events affecting 15% or more of transmission line protective zones
          within a 24-hour period will not be counted toward the requirements of
          Section 8.1.

     If transmission service does not meet the requirements of this Article 8,
     Transmission Provider shall present an action plan acceptable to the Local
     Distribution Company within sixty (60) days of non-compliance of this
     Article 8 to restore transmission service to the minimum standards as
     described in this Article 8 in a timely manner. Should the Transmission
     Provider fail to correct the deficiency(s) within one year of notification
     from the Local Distribution Company, the Local Distribution Company shall
     have the right to take corrective action at the Transmission Provider's
     expense. The Local Distribution Company shall defer taking such actions for
     corrective measures normally requiring longer than one year to complete,
     provided the Transmission Provider is diligently pursuing such measures.

8.2  Should the Michigan Public Service Commission (MPSC) adopt service quality
     standards that the Local Distribution Company must meet that are more
     stringent than current historical performance; and should the transmission
     service level provided by the Transmission Provider directly or indirectly
     influence the Local Distribution Company's ability to meet such standards,
     the Local Distribution Company will promptly notify the Transmission
     Provider of such proposal and the Transmission Provider shall have an
     opportunity to participate either as a party or in cooperation with the
     Distribution Company, in any related MPSC hearings or proceedings. Subject
     to the foregoing and to any required

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

Michigan Electric Transmission Company, LLC                Original Sheet No. 33
FERC Electric Rate Schedule No. 1
EXECUTION COPY

     approval by FERC, the Transmission Provider shall be responsible for
     meeting its proportional share of the adopted service quality standard and
     for any penalties that might be assessed if the standards are not met.

8.3  Transmission Provider shall be responsible for those compensable
     disruptions/interruptions caused by the Transmission Provider's
     Transmission System to those Local Distribution Company customers under
     Special Manufacturing Contracts in existence at the time of execution of
     this document as set forth in Exhibit 3, including any contractual payments
     due.

ARTICLE 9. NEW CONSTRUCTION AND MODIFICATION

9.1  Subject to this Article 9, Transmission Provider may construct additional
     Transmission System elements or modify the existing Transmission System and
     Local Distribution Company may construct additional Distribution System
     elements or modify the existing Distribution System. All such modifications
     and construction provided for herein, shall be conducted in accordance with
     Good Utility Practice and all applicable NERC and ECAR Standards. The Party
     that modifies the system elements or constructs new system elements is
     obligated to maintain the transmission, distribution and communications
     capabilities of the other Party in accordance with Good Utility Practice to
     avoid or minimize any adverse impact on the other Party. The Parties shall
     look to the operating history of the Local Distribution Company in the
     relevant geographic area prior to the Effective Date of this Agreement,
     where available, in determining what constitutes Good Utility Practice.

9.2  Notwithstanding the foregoing, no modifications to or new construction of
     facilities or access thereto, including but not limited to rights-of-way,
     fences, and gates, shall be made by either Party which might reasonably be
     expected to have a material effect upon the other Party with respect to
     operations or performance under this Agreement, without providing the other
     Party with sufficient information regarding the work prior to commencement
     to enable such Party to evaluate the impact of the proposed work on its
     operations. The information provided must be of sufficient detail to
     satisfy reasonable Transmission Provider or Local Distribution Company
     review and operational requirements. Each Party shall use reasonable
     efforts to minimize any adverse impact on the other Party.

9.3  If any Party intends to install any new facilities, equipment, systems, or
     circuits or any modifications to existing or future facilities, equipment,
     systems or circuits that could reasonably be expected to have a material

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 34
FERC Electric Rate Schedule No. 1
EXECUTION COPY

     effect upon the operation of the other Party, the Party desiring to perform
     said work shall, in addition to the requirements of Section 9.2, provide
     the other Party with drawings, plans, specifications and other necessary
     documentation for review at least 60 days prior to the start of the
     construction of any such installation. This notice period shall not apply
     to modifications or new installations made to resolve or prevent pending
     Emergency or Network Security Conditions.

9.4  The Party reviewing any drawings, plans, specifications, or other necessary
     documentation for review shall promptly review the same and provide any
     comments to the performing Party no later than 30 days prior to the start
     of the construction of any installation. Unless system modifications are
     required in association with the addition of generation to the system (in
     which case Section 9.8 hereof shall apply) all such reviews shall be
     performed at no cost to either Party. The performing Party shall
     incorporate all requested modifications to the extent required in
     accordance with Good Utility Practice and compliance with this Agreement.

9.5  Within 180 days following placing in-service of any modification or
     construction subject to this Article 9, the Party initiating the work shall
     provide "as built" drawings, plans and related technical data to the other
     Party. Approval or review of any document referenced herein shall not
     relieve the initiating Party of its responsibility for the design or
     construction of any proposed facility, nor shall it subject the other Party
     to any liability, except with respect to the confidentiality provisions of
     Article 20.

9.6  Each Party shall, at its own expense, have the right to inspect or observe
     all maintenance activities, equipment tests, installation work,
     construction work, and modification work to the facilities of the other
     Party that could have a material effect upon the facilities or operations
     of the first Party.

9.7  Construction and installation of any facility shall meet all or exceed all
     environmental permitting requirements, reviews or approvals as required by
     Federal, State or local law prior to the installation of such facilities.
     The Parties agree to coordinate environmental permitting related activities
     such as site review for regulated resources, permit application and project
     oversight (e.g. monitoring as applicable).

9.8  Whenever system modifications are required to connect generating facilities
     to either the Local Distribution Company's or the Transmission Provider's
     system it is expected that the party installing the generating facilities
     will normally be responsible for much or all of the associated

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 35
FERC Electric Rate Schedule No. 1
EXECUTION COPY

     costs. The Parties agree to cooperate in sharing information regarding such
     projects and to individually make arrangements with the party adding the
     generation to obtain payment of all related costs as appropriate.

ARTICLE 10. ACCESS TO FACILITIES

10.1 The Parties hereby agree to provide each other reasonable access to their
     respective property as may be necessary and appropriate to enable each
     Party to operate and maintain its respective facilities and equipment on
     such property. Such right of access shall be provided in a manner so as not
     to unreasonably interfere with either Party's ongoing business operations,
     rights, and obligations.

10.2 Each Party shall provide the other Party keys, access codes or other access
     methods necessary to enter the other Party's facilities to exercise rights
     under this Agreement. Access shall only be granted to Qualified Personnel.

ARTICLE 11. NOTIFICATIONS AND REPORTING

11.1 Unless otherwise provided, any notice required to be given by either Party
     to the other Party in connection with this Agreement shall be given in
     writing: (a) personally; (b) by facsimile transmission (if sender
     thereafter sends such notice to recipient by any of the other methods
     provided in this Section 11.1; (c) by registered or certified U.S. mail,
     return receipt requested, postage prepaid; or (d) by reputable overnight
     carrier, with acknowledged receipt of delivery; or (e) any other method
     mutually agreed by the Parties in writing. Notice shall be deemed given on
     the date of receipt personally. Notice sent by facsimile shall be deemed
     given on the date the transmission is confirmed by sender's facsimile
     machine, so long as the facsimile is sent on a business day during normal
     business hours of the recipient. Otherwise, the notice shall be deemed
     given on the next succeeding business day. Notice provided by mail or
     overnight courier shall be deemed given at the date of acceptance or
     refusal of acceptance shown on such receipt.

11.2 Notice to the Transmission Provider shall be to the Transmission Provider's
     Representative, at the addresses identified in Exhibit 2. Notice to the
     Local Distribution Company shall be to the Local Distribution Company's
     Representative, at the addresses identified in Exhibit 2.

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 36
FERC Electric Rate Schedule No. 1
EXECUTION COPY

11.3 Each Party shall provide prompt notice describing the nature and extent of
     the condition, the impact on operations, and all corrective action, to the
     other Party of any Emergency or Network Security Condition which may be
     reasonably anticipated to affect the other Party's equipment, facilities or
     operations. Either Party may take reasonable and necessary action, both on
     its own and the other Party's system, equipment, and facilities, to
     prevent, avoid or mitigate injury, danger, damage or loss to its own
     equipment and facilities, or to expedite restoration of service; provided
     however, that the Party taking such action shall give the other Party prior
     notice, if at all possible, before taking any action on the other Party's
     system, equipment, or facilities.

11.4 In the event of an Emergency or Network Security Condition contemplated by
     Section 11.3, each Party shall provide the other with such information,
     documents, and data necessary for operation of the Transmission System and
     Distribution System, including, without limitation, such information which
     is to be supplied to any Governmental Authority, NERC, ECAR, or
     Transmission System Operations Center or Distribution System Control
     Center.

11.5 In order to continue interconnection of the Distribution System and
     Transmission System, each Party shall promptly provide the other Party with
     all relevant information, documents, or data regarding the Distribution
     System and the Transmission System that would be expected to affect the
     Distribution System or Transmission System, and which is reasonably
     requested by NERC, ECAR, or any Governmental Authority.

11.6. For routine maintenance and inspection activities on either Parties system
     that will require major equipment or system outages, and could impact the
     other Party's system, the Party performing the same shall provide the other
     Party with not less than seventy-two (72) hours prior notice, if
     practicable; provided that the provisions of Section 3.9 remain applicable
     to the outages, and said notice is in addition to, and does not substitute
     for, the requirements of Section 3.9 (maintenance and inspection activities
     in generating plant substations require 20 working days notification).

11.7 Transmission Provider shall notify Local Distribution Company prior to
     entering Local Distribution Company's facilities for routine measurements,
     inspections and meter reads in accordance with the requirements of Section
     11.6. Local Distribution Company shall notify Transmission Provider prior
     to entering Transmission Provider's facilities, including switchyards, for
     routine maintenance, operations, measurements, inspections and meter reads,
     in accordance with the requirements of Section 11.6.

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 37
FERC Electric Rate Schedule No. 1
EXECUTION COPY

11.8 Each Party shall provide prompt verbal notice to the other Party of any
     system alarm that applies to the other Party's equipment, unless the system
     alarm is automatically sent to the other Party.

11.9 Each Party shall provide a report or a copy of the data from a system
     events recorder, SCADA system sequence of events or digital fault recorder
     that applies to the other Party's equipment.

11.10 Each Party agrees to immediately notify the other Party verbally, and then
     in writing, of any labor dispute or anticipated labor dispute of which its
     management has actual Knowledge that might reasonably be expected to affect
     the operations of the other Party with respect to this Agreement.

ARTICLE 12. SAFETY

12.1 Each Party agrees that all work performed by either Party that may
     reasonably be expected to affect the other Party shall be performed in
     accordance with Good Utility Practice and all applicable laws, regulations,
     safety standards, practices and procedures and other requirements
     pertaining to the safety of Persons or property, (including, but not
     limited to those of the Occupational Safety and Health Administration, the
     National Electrical Safety Code and those developed or accepted by
     Transmission Provider and Local Distribution Company for use on their
     respective systems) when entering or working in the other Party's property
     or facilities or switching area. A Party performing work within the
     boundaries of the other Party's facilities must abide by the safety rules
     applicable to the site.

12.2 Each Party shall be solely responsible for the safety and supervision of
     its own employees, agents, representatives, and subcontractors.

12.3 Transmission Provider shall immediately report any injuries that occur
     while working on the Local Distribution Company's property or facilities or
     switching area to appropriate agencies and the Local Distribution Company's
     Site Representative. Local Distribution Company shall immediately report
     any injuries that occur while working on the Transmission Provider's
     property or facilities or switching area to appropriate agencies and the
     Transmission Provider's Site Representative. Each Party will provide the
     other with its clearing/tagging/lockout procedures. For clearances
     requested or initiated by the Local Distribution Company on the Local
     Distribution Company's equipment that utilizes the Transmission Provider's
     equipment as an isolation device, Local Distribution Company

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 38
FERC Electric Rate Schedule No. 1
EXECUTION COPY

     procedures shall govern. For clearances requested or initiated by the
     Transmission Provider on the Transmission Provider's' equipment that
     utilizes the Local Distribution Company's equipment as an isolation device,
     Transmission Provider procedures shall govern. Under no circumstances shall
     either Party remove the other Party's protective tags without proper
     authorization.

ARTICLE 13. ENVIRONMENTAL COMPLIANCE AND PROCEDURES

13.1 Release Prevention and Response. Each Party shall notify the other Party,
     verbally within 24 hours upon discovery of any Release of any Regulated
     Substance caused by the Party's operations or equipment that impacts the
     property or facilities of the other Party, or which may migrate to, or
     adversely impact the property, facilities or operations of the other Party
     and shall promptly furnish to the other Party copies of any reports filed
     with any governmental agencies addressing such events. Such verbal
     notification shall be followed by written notification within five (5)
     days. The Party responsible for the Release of any Regulated Substance on
     the property or facilities of the other Party, or which may migrate to, or
     adversely impact the property, facilities or operations of the other Party
     shall be responsible for: (1) the cost and completion of reasonable
     remediation or abatement activity for that Release, and; (2) required
     notifications to governmental agencies and submitting of all reports or
     filings required by environmental laws for that Release. Advance written
     notification (except in Emergency situations, in which verbal, followed by
     written notification, shall be provided as soon as practicable) shall be
     provided to the other Party by the Party responsible for any remediation or
     abatement activity on the property or facilities of the other Party, or
     which may adversely impact the property, facilities, or operations of the
     other Party. Except in Emergency situations such remediation or abatement
     activity shall be performed only with the consent of the Party owning the
     affected property or facilities.

13.2 The Parties agree to coordinate, to the extent necessary, the preparation
     of site plans, reports, environmental permits, clearances and notifications
     required by federal and state law or regulation, including but not limited
     to Spill Prevention, Control and Countermeasures (SPCC), Storm Water
     Pollution Prevention Plans (SWPP), Act 451 Part 31 Part 5 Rules, CERCLA,
     EPCRA, TSCA, soil erosion and sedimentation control plans (SESC) or
     activities, wetland or other water-related permits, threatened or
     endangered species reviews or management and archeological clearances or
     notifications required by any regulatory agency or competent jurisdiction.
     Notification of permits applied for

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 39
FERC Electric Rate Schedule No. 1
EXECUTION COPY

     and/or received will occur in a timeframe manner suitable to the interests
     of both Parties.

ARTICLE 14. BILLINGS AND PAYMENT

14.1 Any invoices payable under this Agreement shall be provided to the other
     Party under this Agreement during the preceding month. Invoices shall be
     prepared within a reasonable time after the first day of each month. Each
     invoice shall delineate the month in which services were provided, shall
     fully describe the services rendered and shall be itemized to reflect the
     services performed or provided. The invoice shall be paid within twenty
     (20) days of the invoice date, or the first business day thereafter if the
     payment date falls on other than a business day. All payments shall be made
     in immediately available funds payable to the other Party, or by wire
     transfer to a bank of the Party being paid, provided that payments
     expressly required by this Agreement to be mailed shall be mailed in
     accordance with Section 14.2.

14.2 Any payments required to be made by Local Distribution Company under this
     Agreement shall be made to Transmission Provider at the following address:

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

     Any payments required to be made by Transmission Provider under this
     Agreement shall be made to Local Distribution Company at the following
     address:

          Consumers Energy Company
          212 West Michigan Avenue
          Jackson, MI 49201
          Attention: Treasurer

14.3 The rate of interest on any amount not paid when due shall be equal to the
     Interest Rate in effect at the time such amount became due. Interest on
     delinquent amounts shall be calculated from the due date of the invoice to
     the date of the payment. When payments are made by mail, invoices shall be
     considered as having been paid on the date of receipt

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 40
FERC Electric Rate Schedule No. 1
EXECUTION COPY

     by the other Party. Nothing contained in this article is intended to limit
     either Party's remedies under Article 21 of this Agreement.

14.4 Payment of an invoice shall not relieve the paying Party from any
     responsibilities or obligations it has under this Agreement, nor shall such
     payment constitute a waiver of any claims arising hereunder.

14.5 If all or part of any bill is disputed by a Party, that Party shall
     promptly pay the amount that is not disputed and provide the other Party a
     reasonably detailed written explanation of the basis for the dispute
     pursuant to Article 26. While the dispute is being resolved, the Parties
     shall continue to provide services and pay all invoiced amounts not in
     dispute. Following resolution of the dispute, the prevailing Party shall be
     entitled to receive the disputed amount, as finally determined to be
     payable, along with interest accrued at the Interest Rate through the date
     on which payment is made, within ten (10) business days of such resolution.

14.6 Subject to the Confidentiality provisions of Article 20, within two (2)
     years following a calendar year, during normal business hours, Local
     Distribution Company and Transmission Provider shall have the right to
     audit each other's accounts and records pertaining to transactions under
     this Agreement that occurred during such calendar year at the offices where
     such accounts and records are maintained; provided that the audit shall be
     limited to those portions of such accounts and records that reasonably
     relate to the services provided to the other Party under this Agreement for
     said calendar year. The Party being audited shall be entitled to review the
     audit report and any supporting materials. To the extent that audited
     information includes Confidential Information, the auditing Party shall
     keep all such information confidential pursuant to Article 20.

14.7 Neither Party shall be responsible for the other Party's costs of
     collecting amounts due under this Agreement, including attorney fees and
     expenses and the expenses of arbitration.

ARTICLE 15. APPLICABLE REGULATIONS AND INTERPRETATION

15.1 Each Party's performance under this Agreement is subject to the condition
     that all requisite governmental and regulatory approvals for such
     performance are obtained in form and substance satisfactory to the other
     Party in its reasonable judgment. Each Party shall exercise Due Diligence
     and shall act in good faith to secure all appropriate approvals in a timely
     fashion.

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 41
FERC Electric Rate Schedule No. 1
EXECUTION COPY

15.2 This Agreement and all rights, obligations, and performances of the Parties
     hereunder, are subject to present or future state or federal laws,
     regulations, or orders properly issued by state or federal bodies having
     jurisdiction. When not in conflict with or pre-empted by Federal law, this
     Agreement shall be interpreted pursuant to the laws of the State of
     Michigan, exclusive of its conflicts of law principles.

ARTICLE 16. FORCE MAJEURE

16.1 An event of Force Majeure means any act of God, labor disturbance, act of
     the public enemy, war, insurrection, riot, fire, storm or flood, explosion,
     breakage or accident to machinery or equipment, any curtailment, order,
     regulation or restriction imposed by governmental military or lawfully
     established civilian authorities, or any other cause beyond a Party's
     reasonable control. A Force Majeure event does not include an act of
     negligence or intentional wrongdoing.

16.2 If either Party is rendered unable, wholly or in part, by Force Majeure, to
     carry out its obligations under this Agreement, then, during the
     continuance of such inability, the obligation of such Party shall be
     suspended except that Transmission Provider's and Local Distribution
     Company's obligation under Section 16.3 of this Agreement to provide
     protection shall not be suspended. The Party relying on Force Majeure shall
     give written notice of Force Majeure to the other Party as soon as
     practicable after such event occurs. Upon the conclusion of Force Majeure,
     the Party heretofore relying on Force Majeure shall, with all reasonable
     dispatch, take all necessary steps to resume the obligation previously
     suspended.

16.3 Any Party's obligation to make payments already owing shall not be
     suspended by Force Majeure.

ARTICLE 17. INDEMNIFICATION AND LIMITATION ON LIABILITY

17.1 Each Party shall at all times assume all liability for, and shall indemnify
     and save the other Party harmless from any and all damages, losses, claims,
     demands, suits, recoveries, costs, legal fees, expenses for injury to or
     death of any Person or Persons whomsoever, or for any loss, destruction of
     or damage to any property of third persons, firms, corporations or other
     entities that occurs on its own system and that arises out of or results
     from, either

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 42
FERC Electric Rate Schedule No. 1
EXECUTION COPY

     directly or indirectly, its own facilities or facilities controlled by it,
     unless caused by the sole negligence, or intentional wrongdoing, of the
     other Party.

17.2 EXCEPT AS SET FORTH IN SECTION 8.3, NEITHER PARTY SHALL BE LIABLE TO THE
     OTHER FOR ANY SPECIAL, INCIDENTAL, EXEMPLARY, PUNITITIVE OR CONSEQUENTIAL
     DAMAGES SUCH AS, BUT NOT LIMITED TO, LOST PROFITS, REVENUE OR GOOD WILL,
     INTEREST, LOSS BY REASON OF SHUTDOWN OR NON-OPERATION OF EQUIPMENT OR
     MACHINERY, INCREASED EXPENSE OF OPERATION OF EQUIPMENT OR MACHINERY, COST
     OF PURCHASED OR REPLACEMENT POWER OR SERVICES OR CLAIMS BY CUSTOMERS,
     WHETHER SUCH LOSS IS BASED ON CONTRACT, WARRANTY, NEGLIGENCE, STRICT
     LIABILITY OR OTHERWISE.

ARTICLE 18. INSURANCE

18.1 The Parties agree to maintain, at their own cost and expense, the following
     insurance coverages for the life of this Agreement in the manner and
     amounts, at a minimum, as set forth below:

     (a)  Workers' Compensation Insurance in accordance with all applicable
          State, Federal, and Maritime Law.

     (b)  Employer's Liability insurance in the amount of $1,000,000 per
          accident.

     (c)  Commercial General Liability or Excess Liability Insurance in the
          amount of $25,000,000 per occurrence.

     (d)  Automobile Liability Insurance for all owned, non-owned, and hired
          vehicles in the amount of $5,000,000 each accident.

2.   A Party may, at its option, [A] be an approved self-insurer by the State of
     Michigan for the insurances required in 1.(a) and (d); and [B] maintain
     such deductibles and/or retentions under the insurance required in 1.(b)
     and (c) as is maintained by other similarly situated companies engaged in a
     similar business. The Parties agree that all amounts of self-insurance,
     retentions and/or deductibles are the responsibility of, and shall be borne
     by, the Party whom makes such an election.

3.   Within fifteen (15) days of the Effective Date and thereafter when
     requested, in writing, but not more than once every 12 months, during the
     term of this Agreement (including any extensions) each Party shall provide
     to the other Party properly executed and current certificates of insurance
     or evidence of approved self-insurance status with respect to all insurance
     required to be

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 43
FERC Electric Rate Schedule No. 1
EXECUTION COPY

     maintained by such Party under this Agreement. Certificates of insurance
     shall provide the following information:

     (a)  Name of insurance company, policy number and expiration date.

     (b)  The coverage maintained and the limits on each, including the amount
          of deductibles or retentions, which shall be for the account of the
          Party maintaining such policy.

     (c)  The insurance company shall endeavor to provide thirty (30) days prior
          written notice of cancellation to the certificate holder.

ARTICLE 19. SEVERAL OBLIGATIONS

19.  Except where specifically stated in this Agreement to be otherwise, the
     duties, obligations and liabilities of the Parties are intended to be
     several and not joint or collective. Nothing contained in this Agreement
     shall ever be construed to create an association, trust, partnership, or
     joint venture or to impose a trust or partnership duty, obligation or
     liability or agency relationship on or with regard to either Party. Each
     Party shall be individually and severally liable for its own obligations
     under this Agreement.

ARTICLE 20. CONFIDENTIALITY

20.1(a) "Confidential Information" shall mean any confidential, proprietary or
     trade secret information of a plan, specification, pattern, procedure,
     design, device, list concept, policy or compilation relating to the present
     or planned business of a Party, which is designated in good faith as
     Confidential by the Party supplying the information, whether conveyed
     orally, electronically, in writing, through inspection or otherwise.
     Confidential Information shall include, without limitation, all information
     relating to a Party's technology, research and development, business
     affairs, and pricing, customer-specific load data that constitutes a trade
     secret, and any information supplied by either of the Parties to the other
     prior to the execution of this Agreement.

     (b)  General. Each Party will hold in confidence any and all Confidential
          Information unless (1) compelled to disclose such information by
          judicial or administrative process or other provisions of law or as
          otherwise provided for in this Agreement, or (2) to meet obligations
          imposed by FERC or by a state or other federal entity or by membership
          in NERC or ECAR (including other Transmission

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 44
FERC Electric Rate Schedule No. 1
EXECUTION COPY

          Providers). Information required to be disclosed under (b)(1) or
          (b)(2) above, does not, by itself, cause any information provided by
          Local Distribution Company to Transmission Provider to lose its
          confidentiality. To the extent it is necessary for either Party to
          release or disclose such information to a third party in order to
          perform that Party's obligations herein, such Party shall advise said
          third party of the confidentiality provisions of this Agreement and
          use its best efforts to require said third party to agree in writing
          to comply with such provisions. Transmission Provider will develop and
          file with FERC standards of conduct relating to the sharing of a
          market-related Confidential Information with and by Transmission
          Provider employees.

     (c)  Term: During the term of this Agreement, and for a period of three (3)
          years after the expiration or termination of this Agreement, except as
          otherwise provided in this Article 20, each Party shall hold in
          confidence and shall not disclose to any Person Confidential
          Information.

     (a)  Standard of Care: Each Party shall use at least the same standard of
          care to protect Confidential Information it receives as that it uses
          to protect its own Confidential Information from unauthorized
          disclosure, publication or dissemination.

20.2 Scope: Confidential Information shall not include information that the
     receiving Party can demonstrate: (1) is generally available to the public
     other than as a result of disclosure by the receiving Party (2) was in the
     lawful possession of the receiving Party on a non-confidential basis prior
     to receiving it from the disclosing Party; or (3) was supplied to the
     receiving Party without restriction by a third party, who, to the Knowledge
     of the receiving Party, after due inquiry was under no obligation to the
     disclosing Party to keep such information confidential; (4) was
     independently developed by the receiving Party without reference to
     Confidential Information of the disclosing Party; (5) is, or becomes,
     publicly known, through no wrongful act or omission of the receiving Party
     or breach of this Agreement; or (6) is required, in accordance with Section
     20.1(b) of this Agreement, to be disclosed by any federal or state
     government or agency or is otherwise required to be disclosed by law or
     subpoena, or is necessary in any legal proceeding establishing rights and
     obligations under this Agreement. Information designated as Confidential
     Information will no longer be deemed confidential if the Party that
     designated the information as confidential notifies the other Party that it
     no longer is confidential.

20.3 Order of Disclosure. If a court or a government agency or entity with the
     right power, and apparent authority to do so requests or requires either

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 45
FERC Electric Rate Schedule No. 1
EXECUTION COPY

     Party, by subpoena, oral deposition, interrogatories, requests for
     production of documents, administrative order, or otherwise, to disclose
     Confidential Information, that Party shall provide the other Party with
     prompt notice of such request(s) or requirement(s) so that the other Party
     may seek an appropriate protective order or waive compliance with the terms
     of this Agreement. The notifying Party shall have no obligation to oppose
     or object to any attempt to obtain such production except to the extent
     requested to do so by the disclosing Party and at the disclosing Party's
     expense. If either Party desires to object or oppose such production, it
     must do so at its own expense. The disclosing Party may request a
     protective order to prevent any Confidential Information from being made
     public. Notwithstanding the absence of a protective order or waiver, the
     Party may disclose such Confidential Information which, in the opinion of
     its counsel, the Party is legally compelled to disclose. Each Party will
     use reasonable effort to obtain reliable assurance that confidential
     treatment will be accorded any Confidential Information so furnished.

20.4 Use of Information or Documentation. Each Party may utilize information or
     documentation furnished by the disclosing Party and subject to Section 20.1
     in any proceeding under Article 26 or in an administrative agency or court
     of competent jurisdiction addressing any dispute arising under this
     Agreement, subject to a confidentiality agreement with all participants
     (including, if applicable, any arbitrator) or a protective order.

20.5 Remedies Regarding Confidentiality. The Parties agree that monetary damages
     by themselves will be inadequate to compensate a Party for the other
     Party's breach of its obligations under this article. Each Party
     accordingly agrees that the other Party is entitled to equitable relief, by
     way of injunction or otherwise, if it breaches or threatens to breach its
     obligations under this article.

ARTICLE 21. BREACH, DEFAULT AND REMEDIES

21.1 General. A breach of this Agreement ("Breach") shall occur upon the failure
     by a Party to perform or observe a material term or condition of this
     Agreement. A default of this Agreement ("Default") shall occur upon the
     failure of a Party in Breach of this Agreement to cure such Breach in
     accordance with Section 21.4.

21.2 Events of Breach. A Breach of this Agreement shall include:

     (a)  The failure to pay any amount when due;

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 46
FERC Electric Rate Schedule No. 1
EXECUTION COPY

     (b)  The failure to comply with any material term or condition of this
          Agreement, including but not limited to any material Breach of a
          representation, warranty or covenant made in this Agreement;

     (c)  A Party's abandonment of its work or the facilities contemplated in
          this Agreement;

     (d)  If a Party: (1) becomes insolvent; (2) files a voluntary petition in
          bankruptcy under any provision of any federal or state bankruptcy law
          or shall consent to the filing of any bankruptcy or reorganization
          petition against it under any similar law; (3) makes a general
          assignment for the benefit of its creditors; or (4) consents to the
          appointment of a receiver, trustee or liquidator;

     (e)  Failure of either Party to provide information or data to the other
          Party as required under this Agreement, provided the Party entitled to
          the information or data under this Agreement requires such information
          or data to satisfy its obligations under this Agreement.

21.3 Continued Operation. Except as specifically provided in this Agreement, in
     the event of a Breach or Default by either Party, the Parties shall
     continue to operate and maintain, as applicable, facilities and
     appurtenances that are reasonably necessary for the Transmission Provider
     to operate and maintain the Transmission System, or the Local Distribution
     Company to operate and maintain the Distribution System, in a safe and
     reliable manner.

21.4 Cure and Default. Upon the occurrence of an event of Breach, the
     non-Breaching Party, when it becomes aware of the Breach, shall give
     written notice of the Breach to the Breaching Party and to any other Person
     a Party to this Agreement identifies in writing to the other Party in
     advance. Such notice shall set forth, in reasonable detail, the nature of
     the Breach, and where known and applicable, the steps necessary to cure
     such Breach. Upon receiving written notice of the Breach hereunder, the
     Breaching Party shall have thirty (30) days, to cure such Breach. If the
     breach is such that it cannot be cured within thirty (30) days, the
     Breaching Party will commence in good faith all steps as are reasonable and
     appropriate to cure the Breach within such thirty (30) day time period and
     thereafter diligently pursue such action to completion. In the event the
     Breaching Party fails to cure the Breach, or to commence reasonable and
     appropriate steps to cure the Breach, within thirty (30) days of becoming
     aware of the Breach, the Breaching Party will be in Default of the
     Agreement. In the event of a Default, the non-Defaulting Party has the
     right to take whatever action at law or

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 47
FERC Electric Rate Schedule No. 1
EXECUTION COPY

     equity as may be permitted under this Agreement.

21.5 Right to Compel Performance. Notwithstanding the foregoing, upon the
     occurrence of an event of Default, the non-Defaulting Party shall be
     entitled to Commence an action to require the Defaulting Party to remedy
     such Default and specifically perform its duties and obligations hereunder
     in accordance with the terms and conditions hereof, and exercise such other
     rights and remedies as it may have in equity or at law.

ARTICLE 22. TERM

22.1 Term. This Agreement shall become effective as of the Effective Date and
     shall continue in full force and effect so long as any Interconnection
     Point is connected to the Transmission System, except that it may be
     terminated by mutual agreement of the Parties.

22.2 Material Adverse Change.

     (a)  In the event of a material change in law or regulation that adversely
          affects, or may reasonably be expected to adversely affect, either
          Party's performance under this Agreement, including but not limited to
          the following:

          (i)  this Agreement is not accepted for filing by the FERC without
               material modification or condition;

          (ii) NERC or ECAR prevents, in whole or in part, either Party from
               performing any provision of this Agreement in accordance with its
               terms; or

          (iii) The FERC, the United States Congress, any state, or any federal
               or state regulatory agency or commission implements any change in
               any law, regulation, rule or practice which materially affects or
               is reasonably expected to materially affect either Party's
               ability to perform under this Agreement.

          The Parties will negotiate in good faith any amendment or amendments
          to the Agreement necessary to adapt the terms of this Agreement to
          such change in law or regulation, and the Transmission Provider shall
          file such amendment or amendments with FERC.

     (b)  If the Parties are unable to reach agreement on any such amendments,
          then the Parties shall continue to perform under this

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

Michigan Electric Transmission Company, LLC                Original Sheet No. 48
FERC Electric Rate Schedule No. 1
EXECUTION COPY

          Agreement to the maximum extent possible, taking all reasonable steps
          to mitigate any adverse effect on each other resulting from the Event.
          If the Parties are unable to reach agreement on any such amendments,
          Transmission Provider shall have the right to make a unilateral filing
          with FERC to modify this Agreement pursuant to Section 205 of the
          Federal Power Act and Local Distribution Company shall have the right
          to make a unilateral filing with FERC to modify this Agreement
          pursuant to Section 206 of the Federal Power Act. Each Party shall
          have the right to protest any such filing by the other Party and to
          participate fully in any proceeding before FERC.

22.3 Survival. The applicable provisions of this Agreement shall continue in
     effect after expiration, cancellation or termination hereof to the extent
     necessary to provide for final billings, billing adjustments and the
     determination and enforcement of liability and indemnification obligations
     arising from acts or events that occurred while this Agreement was in
     effect.

ARTICLE 23. ASSIGNMENT/CHANGE IN CORPORATE IDENTITY

23.1 Transmission Provider Assignment Rights. Transmission Provider may not
     assign this Agreement or any of its rights, interests, or obligations
     hereunder without the prior written consent of Local Distribution Company,
     which consent shall not be unreasonably withheld; provided however, that
     Transmission Provider may assign this Agreement or any of its rights or
     obligations hereunder without the prior consent of Local Distribution
     Company and may assign this Agreement to any entity(ies) in connection with
     a merger, consolidation, or reorganization, provided that the surviving
     entity(ies) or assignee owns the Transmission System, agrees in writing to
     be bound by all the obligations and duties of Transmission Provider
     provided for in this Agreement and the assignee's creditworthiness is equal
     to or higher than that of Transmission Provider.

23.2 Local Distribution Company Assignment Rights. Local Distribution Company
     may not assign this Agreement or any of its rights, interests or
     obligations hereunder without the prior written consent of Transmission
     Provider, which consent shall not be unreasonably withheld; provided
     however, that Local Distribution Company may, without the consent of
     Transmission Provider, and by providing prior reasonable notice under the
     circumstances to Transmission Provider, assign, this Agreement to any
     entity(ies) in connection with a merger, consolidation, or reorganization,
     provided that the surviving entity(ies) or assignee owns the Local
     Distribution Company, agrees in writing to be bound by all the obligations
     and duties of Local Distribution Company provided for in this

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 49
FERC Electric Rate Schedule No. 1
EXECUTION COPY

     Agreement and the assignee's creditworthiness is equal to or higher than
     that of Local Distribution Company.

23.3 Assigning Party to Remain Responsible. Any assignments authorized as
     provided for in this article will not operate to relieve the Party
     assigning this Agreement or any of its rights, interests or obligations
     hereunder of the responsibility of full compliance with the requirements of
     this Agreement unless (a) the other Party consents, such consent not to be
     unreasonably withheld, and (b) the assignee agrees in writing to be bound
     by all of the obligations and duties of the assigning Party provided for in
     this Agreement.

23.4 This Agreement and all of the provisions hereof are binding upon, and inure
     to the benefit of, the Parties and their respective successors and
     permitted assigns.

ARTICLE 24. SUBCONTRACTORS

24.1 Nothing in this Agreement shall prevent the Parties from utilizing the
     services of subcontractors as they deem appropriate; provided, however, the
     Parties agree that, where applicable, all said subcontractors shall comply
     with the terms and conditions of this Agreement.

24.2 Except as provided herein, the creation of any subcontract relationship
     shall not relieve the hiring Party of any of its obligations under this
     Agreement. Each Party shall be fully responsible to the other Party for the
     acts and/or omissions of any subcontractor it hires as if no subcontract
     had been made. Any obligation imposed by this Agreement upon the Parties,
     where applicable, shall be equally binding upon and shall be construed as
     having application to any subcontractor.

24.3 No subcontractor is intended to be or shall be deemed a third-party
     beneficiary of this Agreement.

24.4 The obligations under this Article 26 shall not be limited in any way by
     any limitation on subcontractor's insurance.

24.5 Each Party shall require its subcontractors to comply with all federal and
     state laws regarding insurance requirements and shall maintain standard and
     ordinary insurance coverages.

ARTICLE 25. DISPUTE RESOLUTION

Any dispute between the parties arising out of or relating to this Contract or
the breach thereof shall be brought to the Administrative Committee. If the

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 50
FERC Electric Rate Schedule No. 1
EXECUTION COPY

Administrative Committee can resolve the dispute, such resolution shall be
reported in writing to and shall be binding upon the Parties. If the
Administrative Committee cannot resolve the dispute within a reasonable time,
the senior officer of Local Distribution Company or the senior officer of
Transmission Provider may, by written notice to the senior officer of the other
Party and the members of the Administrative Committee, withdraw the matter from
consideration by the Administrative Committee and submit the same for resolution
to the senior officers of the Parties. If the senior officers of the Parties
agree to a resolution of the matter, such resolution shall be reported in
writing to, and shall be binding upon, the Parties; but if said senior officers
fail to resolve the matter within five (5) Business Days after its submission to
them, then the Parties agree to try in good faith to settle the dispute by
mediation administered by the American Arbitration Association under its
Commercial Mediation Rules before resorting to litigation.

ARTICLE 26. MISCELLANEOUS PROVISIONS

26.1 This Agreement shall constitute the entire Agreement between the Parties
     hereto relating to the subject matter hereof. In all other respects,
     special contracts or superseding rate schedules shall govern Transmission
     Provider's transmission service to Local Distribution Company.

26.2 No failure or delay on the part of Transmission Provider or Local
     Distribution Company in exercising any of its rights under this Agreement,
     no partial exercise by either Party of any of its rights under this
     Agreement, and no course of dealing between the Parties shall constitute a
     waiver of the rights of either Party under this Agreement. Any waiver shall
     be effective only by a written instrument signed by the Party granting such
     waiver, and such shall not operate as a waiver of, or estoppel with respect
     to, any subsequent failure to comply therewith.

26.3 Nothing in this Agreement, express or implied, is intended to confer on any
     other Person except the Parties hereto any rights, interests, obligations
     or remedies hereunder.

26.4 In the event that any clause or provision of this Agreement or any part
     hereof shall be held to be invalid, void, or unenforceable by any court or
     Governmental Authority of competent jurisdiction, said holding or action
     shall be strictly construed and shall not affect the validity or effect of
     any other provision hereof, and the Parties shall endeavor in good faith to
     replace such invalid or unenforceable provisions with a valid and
     enforceable provision which achieves the purposes intended by the Parties
     to the greatest extent permitted by law.

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 51
FERC Electric Rate Schedule No. 1
EXECUTION COPY

26.5 The article and section headings herein are inserted for convenience only
     and are not to be construed as part of the terms hereof or used in the
     interpretation of this Agreement.

26.6 In the event an ambiguity or question of intent or interpretation arises,
     this Agreement shall be construed as if drafted jointly by the Parties and
     no presumption or burden of proof shall arise favoring or disfavoring any
     Party by virtue of authorship of any of the provisions of this Agreement.
     Any reference to any federal, state, local, or foreign statute or law shall
     be deemed also to refer to all rules and regulations promulgated
     thereunder, unless the context requires otherwise. The word "including" in
     this Agreement shall mean including without limitation.

26.7 This Agreement may be executed in one or more counterparts, each of which
     shall be deemed an original.

26.8 Each Party shall act as an independent contractor with respect to the
     provision of services hereunder.

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 52
FERC Electric Rate Schedule No. 1
EXECUTION COPY

IN WITNESS WHEREOF, Transmission Provider and Local Distribution Company have
caused this instrument to be executed by their duly authorized representatives
as of the day and year first above written.

CONSUMERS ENERGY COMPANY

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

MICHIGAN ELECTRIC TRANSMISSION COMPANY

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

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 53
FERC Electric Rate Schedule No. 1
EXECUTION COPY

EXHIBIT 1 - INTERCONNECTION POINTS (SUBSTATIONS) AS OF APRIL 29, 2002

SUBSTATION

1.   Abbe
2.   Alcona
3.   Alder Creek
4.   Alger
5.   Algoma
6.   Alma
7.   Almeda
8.   Alpena
9.   Alpine
10.  Amber
11.  American Bumper
12.  Aubil Lake
13.  Backus
14.  Bagley
15.  Bangor
16.  Bard Road
17.  Barry
18.  Bass Creek
19.  Batavia
20.  Bay Road
21.  Beals Road
22.  Becker
23.  Beecher
24.  Begole
25.  Bell Road
26.  Bennington
27.  Beveridge
28.  Bilmar
29.  Bingham
30.  Black River
31.  Blackman
32.  Blackstone
33.  Blinton
34.  Blue Water
35.  Bluegrass
36.  Boxboard
37.  Bricker
38.  Briggs & Stratton
39.  Bronco (CWIP)
40.  Broadmoor
41.  Broughwell
42.  Buck Creek
43.  Buick Stewart
44.  Bullock
45.  Calhoun
46.  Camelot Lake
47.  Canal
48.  Cannon
49.  Carter
50.  Cedar Springs
51.  Cement City
52.  Chase
53.  Clare
54.  Claremont
55.  Clearwater
56.  Cleveland
57.  Cobb
58.  Cochran
59.  Colby Road
60.  Cole Creek
61.  Convis
62.  Cork Street
63.  Cornell
64.  Cottage Grove
65.  Cowan Lake
66.  Croton
67.  Dean Road
68.  Deja
69.  Delaney
70.  Delhi
71.  Denso Jackson
72.  Derby
73.  Dort
74.  Dow Corning
75.  Dowling
76.  Drake Road
77.  Dupont
78.  Duquite
79.  Dutton
80.  East Paris
81.  East Tawas
82.  Easton
83.  Edenville
84.  Emmet
85.  Englishville
86.  Eureka

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 54
FERC Electric Rate Schedule No. 1
EXECUTION COPY

87.  Farr Road
88.  Felch Road
89.  Filer City
90.  Foundry
91.  Four Mile
92.  Gallagher
93.  Garfield
94.  Gaylord
95.  Gleaner
96.  Grand Blanc BOC
97.  Greenwood
98.  Grey Iron
99.  Grout
100. Hackett
101. Hagadorn
102. Hager Park
103. Halsey
104. Hazelwood
105. Hemphill
106. Higgins
107. Hodenpyl
108. Holland Road
109. Hotchkiss
110. HSC
111. Hudsonville
112. Hughes Road
113. Hull Street
114. Iosco
115. Island Road
116. Jamestown
117. Kentwood
118. Keystone
119. Kipp Road
120. Kraft
121. Lafayette
122. Latimer
123. Lawndale
124. Layton
125. Leoni (CWIP)
126. Letts Road
127. Lewiston
128. Lindbergh
129. Lorin
130. Lovejoy
131. Malleable
132. Manlius
133. Marquette
134. McGulpin
135. MCV
136. Meadowbrooke
137. Mecosta
138. Michigan
139. Milham
140. Mio
141. Monitor
142. Moore Road
143. Morrow
144. Mullins
145. Muskegon Heights
146. Neff Road
147. Nineteen Mile Road
148. North Belding
149. North Corunna (CWIP)
150. Northern Fibre
151. Oakland
152. Page Avenue
153. Parr Road
154. Parshallville
155. Pasadena
156. Pavilion
157. Pigeon River
158. Piston Ring
159. Plaster Creek
160. Plywood
161. Port Calcite
162. Port Sheldon
163. Porter
164. Portsmouth
165. Progress Street
166. Race Street
167. Raisin
168. Ransom
169. Renaissance
170. Rice Creek
171. Riggsville
172. Rivertown
173. Riverview
174. Plymouth Street
175. Rockport/Presque Isle
176. Roedel Road
177. Saginaw River
178. Samaria

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 55
FERC Electric Rate Schedule No. 1
EXECUTION COPY

179. Sanderson
180. Savidge (CWIP)
181. Scott Lake
182. Seamless East
183. Spaulding
184. Spruce Road
185. Stacey
186. Stamping Plant
187. Steelcase
188. Stonegate
189. Stover
190. Stronach
191. Summerton
192. Tihart
193. Tinsman
194. Tippy
195. Trowbridge
196. Twelfth Street
197. Twilight
198. Twining
199. Upjohn
200. Vanderbilt
201. Verona
202. Vevay
203. Viking Lincoln
204. Vrooman
205. Wackerly
206. Warner
207. Warren
208. Washtenaw
209. Wayland
210. Weadock
211. Wealthy Street
212. Wexford
213. White Lake
214. White Road
215. Whiting
216. Whittemore
217. Willard
218. Zeeland

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

Michigan Electric Transmission Company, LLC                Original Sheet No. 56
FERC Electric Rate Schedule No. 1
EXECUTION COPY

EXHIBIT 2 - CONTACT INFORMATION FOR LOCAL DISTRIBUTION COMPANY'S
REPRESENTATIVES AND TRANSMISSION
PROVIDER'S REPRESENTATIVES

LOCAL DISTRIBUTION COMPANY

CONSUMERS ENERGY
4000 CLAY AVE SW, PO BOX 201
GRAND RAPIDS, MI 49501-0201

ATTN: EXECUTIVE MANAGER - ELECTRIC SYSTEM OPERATIONS

TRANSMISSION PROVIDER

MICHIGAN ELECTRIC TRANSMISSION COMPANY:
540 AVIS DRIVE, SUITE H
ANN ARBOR, MI 48108

ATTN: EXECUTIVE VICE-PRESIDENT AND CHIEF OPERATING OFFICER

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 57
FERC Electric Rate Schedule No. 1
EXECUTION COPY

EXHIBIT 3

SPECIAL MANUFACTURING CONTRACTS INFLUENCED BY TRANSMISSON SYSTEM

<TABLE>
<CAPTION>
                              PAYMENT PER DISRUPTION EVENT
                             -----------------------------
CUSTOMER      SUBSTATION     INTERRUPTION    VOLTAGE  SAG
--------   ---------------   ------------   --------------
<S>        <C>               <C>            <C>
GM         BUICK STEWART       $150,000     NOT APPLICABLE
           MALLEABLE           $150,000     NOT APPLICABLE
           FLORENCE ST.        $150,000     NOT APPLICABLE
           GRAND BLANC BOC     $100,000     NOT APPLICABLE
           GREY IRON           $150,000     NOT APPLICABLE
           STAMPING PLANT      $100,000     NOT APPLICABLE

DELPHI     HOLLAND RD.         $150,000     NOT APPLICABLE
</TABLE>

NOTES FOR GM & DELPHI:

     1.   NO PAYMENTS FOR VOLTAGE SAGS.

     2.   CUMULATIVE ANNUAL PAYMENT IS CAPPED AT $3,000,000.

     3.   INITIAL TERM OF GM AND DELPHI CONTRACTS EXPIRE IN 2005.

     4.   CONTRACTS MAY BE EXTENDED TO 2010 BY MUTUAL AGREEMENT.

<TABLE>
<CAPTION>
                                                                 EVENT #
                                                                ---------
<S>             <C>           <C>              <C>              <C>
DOW CORNING     CARTER            ($15,000)       ($15,000)     no events
                                   $15,000               0      1st/yr
                                   $15,000         $15,000      2nd/yr
                                   $55,000     NOT APPLICABLE   3rd/yr

DOW CORNING     DOW CORNING       ($25,000)       ($25,000)     no events
                                   $25,000               0      1st/yr
                                   $35,000         $25,000      2nd/yr
                                  $105,000     NOT APPLICABLE   3rd/yr

HEMLOCK         HSC               ($40,000)        ($20,000)    no events
SEMICONDUCTOR                      $40,000                0     1st/yr
                                   $60,000          $20,000     2nd/yr
                                  $150,000     NOT APPLICABLE   3rd/yr

HEMLOCK         SILICON       NOT APPLICABLE       ($15,000)    no events
SEMICONDUCTOR                 NOT APPLICABLE              0     1st/yr
                              NOT APPLICABLE              0     2nd/yr
                              NOT APPLICABLE              0     3rd/yr
                              NOT APPLICABLE        $15,000     4th/yr
</TABLE>

NOTES FOR DOW CORNING & HEMLOCK SEMICONDUCTOR:

     1.   IF NO EVENTS IN A YEAR, PAYMENT IS MADE TO CONSUMERS.

     2.   MAXIMUM # OF PAYABLE EVENTS/YR IS 3 FOR INTERRUPTIONS & 1 FOR SAGS.

     3.   WEATHER RELATED EVENTS ARE NOT PAYABLE.

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 58
FERC Electric Rate Schedule No. 1
EXECUTION COPY

EXHIBIT 4 - METERING SPECIFICATIONS

PERFORMANCE CRITERIA:

     1.   Meters shall meet or exceed the latest version of ANSI C12.16
          (Standard for Solid State Electricity Meters) specifications for solid
          state metering.

     2.   Current transformers used for metering shall meet or exceed an
          accuracy class of 0.3%. Secondary connected burdens shall not exceed
          rated burden of any current transformer. Current transformers shall
          comply with most current applicable ANSI Standards including C57.13
          (IEEE Standard Requirements for Instrument Transformers) and C12.11
          (Instrument Transformers for Revenue Metering 10 kV BIL through 350 kV
          BIL). Meter installations shall comply with manufacturer's accuracy
          and burden class information on the nameplate of each device.

     3.   Voltage transformers used for metering shall meet or exceed an
          accuracy class of 0.3%. Secondary connected burdens shall not exceed
          rated burden of any voltage transformer. Voltage transformers shall
          comply with most current applicable ANSI Standards including C57.13
          (IEEE Standard Requirements for Instrument Transformers), and C12.11
          (Instrument Transformers for Revenue Metering 10 kV BIL through 350 kV
          BIL). Meter installations shall comply with manufacturer's accuracy
          and burden class information on the nameplate of each device.

     4.   PT secondary circuits shall have a disconnect switch installed which
          provides a visible air gap for worker safety, and which allows for
          attachment of a protective safety tag.

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

<PAGE>

Michigan Electric Transmission Company, LLC                Original Sheet No. 59
FERC Electric Rate Schedule No. 1
EXECUTION COPY

EXHIBIT 5

Respective Ownership of Substation Facilities As of April 29, 2002

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

<PAGE>

Michigan Electric Transmission Company, LLC               Original Sheet No. 111
FERC Electric Rate Schedule No. 1
EXECUTION COPY

EXHIBIT 6 - Jointly Owned Assets Ownership by Percent of Major Equipment As of
April 1, 2001

                                   SUBSTATIONS
                              Jointly Owned Assets
                    Percentage Split by Major Equipment Count

<TABLE>
<CAPTION>
                                                         GENERATION OWNED
                                                             BY LOCAL
                                                           DISTRIBUTION     THIRD-PARTY OWNED
                           DISTRIBUTION   TRANSMISSION        COMPANY           GENERATION
                           ------------   ------------   ----------------   -----------------
<S>                        <C>            <C>            <C>                <C>
BARD ROAD SUBSTATION           62.50          37.50
BATAVIA SUBSTATION             70.00          30.00
BEALS RD SUBSTATION            80.95          14.29             4.76
BEECHER SUBSTATION             85.71          14.29
BLACK RIVER SUBSTATION         80.00          20.00
BLACKSTONE SUBSTATION          70.83          29.17
BULLOCK SUBSTATION             76.19          23.81
CLAREMONT SUBSTATION           68.00          32.00
COBB PLANT SUBSTATION          47.22          25.00            27.78
CORNELL SUBSTATION             66.67          33.33
CROTON SUBSTATION              56.43          27.78            15.79
DELHI SUBSTATION               65.00          35.00
DORT SUBSTATION                70.83          29.17
EMMET SUBSTATION               92.31           7.69
</TABLE>

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

<PAGE>

Michigan Electric Transmission Company, LLC               Original Sheet No. 112
FERC Electric Rate Schedule No. 1
EXECUTION COPY

<TABLE>
<S>                        <C>            <C>            <C>                <C>
FOUR MILE SUBSTATION           72.41          27.59
GALLAGHER SUBSTATION           16.67          83.33
GARFIELD SUBSTATION            75.00          25.00
GAYLORD SUBSTATION             44.45          22.22            33.33
HALSEY SUBSTATION              72.73          27.27
HEMPHILL SUBSTATION            72.73          27.27
KEYSTONE SUBSTATION             6.67          93.33
LAWNDALE SUBSTATION            82.35          17.65
MARQUETTE SUBSTATION           75.00          25.00
MCGULPIN SUBSTATION            55.56          44.44
MILHAM SUBSTATION              75.00          25.00
MIO 138 KV SUBSTATION           0.00         100.00
MOORE RD SUBSTATION            93.33           6.67
MORROW SUBSTATION              66.67          23.33             6.67              3.33*
N BELDING SUBSTATION           72.73          27.27
PLASTER CR SUBSTATION          25.00          75.00
RIGGSVILLE SUBSTATION          77.78          22.22
SAGINAW RIVER SUBSTATION       68.00          32.00                                5.0*
SPAULDING SUBSTATION           66.67          33.33
STRONACH SUBSTATION            85.71          14.29
</TABLE>

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

<PAGE>

Michigan Electric Transmission Company, LLC               Original Sheet No. 113
FERC Electric Rate Schedule No. 1
EXECUTION COPY

<TABLE>
<S>                        <C>            <C>            <C>                <C>
TIPPY 138 KV SUBSTATION        20.00          80.00
TWINING SUBSTATION             76.92          23.08
VERONA SUBSTATION              66.67          33.33
WEADOCK SUBSTATION             33.33          23.08            43.59
WEALTHY ST SUBSTATION          85.71          14.29
WHITE LK SUBSTATION            78.57          21.43
WHITING PLANT SUBSTATION       26.32          31.58            42.10
</TABLE>

*    Generation connected at 120 kV or above

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

                                                                  EXHIBIT  10.55

Execution Copy

                 Amendment and Restatement of the April 1, 2001
                       GENERATOR INTERCONNECTION AGREEMENT

                                     Between

                     MICHIGAN ELECTRIC TRANSMISSION COMPANY

                                       And

                            CONSUMERS ENERGY COMPANY

<PAGE>

Execution Copy

                 Amendment and Restatement of the April 1, 2001
                       GENERATOR INTERCONNECTION AGREEMENT
                                     Between
                     Michigan Electric Transmission Company
                                       And
                            Consumers Energy Company

<TABLE>
<S>                                                                           <C>
ARTICLE 1 - DEFINITIONS....................................................    2
ARTICLE 2 - TERM OF AGREEMENT..............................................    5
   2.1  Effective Date.....................................................    5
   2.2  Term...............................................................    6
   2.3  Termination........................................................    6
   2.4  Regulatory Filing..................................................    6
   2.5  Survival...........................................................    6
ARTICLE 3 - INTERCONNECTION SERVICE........................................    6
   3.1  Scope of Service...................................................    6
   3.2  Third-Party Actions................................................    7
ARTICLE 4 - INTERCONNECTION ASSETS.........................................    8
   4.1  Reservation of Rights to Interconnection Assets....................    8
   4.2  Modifications......................................................    8
   4.3  As-Built Drawings..................................................    8
ARTICLE 5 - OPERATIONS.....................................................    8
   5.1  General............................................................    8
   5.2  Transmission Provider Obligations..................................    9
   5.3  Consumers Obligations..............................................    9
   5.4  Jointly Owned Assets...............................................    9
   5.5  Access Rights......................................................   10
   5.6  Switching and Tagging Rules........................................   10
   5.7  Black Start Participation..........................................   10
   5.8  Reactive Power.....................................................   10
   5.9  System Security....................................................   10
   5.10 Consumers Voltage Regulation.......................................   11
   5.11 Protection and System Quality......................................   11
   5.12 Outages, Interruptions, and Disconnection..........................   12
   5.13 Operating Expenses.................................................   14
ARTICLE 6 - MAINTENANCE....................................................   14
   6.1  Transmission Provider's Obligations................................   14
   6.2  Consumers' Obligations.............................................   14
   6.3  Jointly Owned Assets...............................................   15
   6.4  Access Rights......................................................   15
   6.5  Maintenance Expenses...............................................   15
   6.6  Coordination.......................................................   15
   6.7  Inspections and Testing............................................   16
</TABLE>

                                        i

<PAGE>

Execution Copy

<TABLE>
<S>                                                                           <C>
   6.8  Right to Observe Testing...........................................   16
   6.9  Secondary Systems..................................................   16
   6.10 Observation of Deficiencies........................................   16
ARTICLE 7 - EMERGENCIES....................................................   16
   7.1  Obligations........................................................   16
   7.2  Notice.............................................................   16
   7.3  Immediate Action...................................................   17
   7.4  Transmission Provider's Authority..................................   17
   7.5  Consumers' Authority...............................................   17
   7.6  Audit Rights.......................................................   17
ARTICLE 8 - SAFETY.........................................................   18
   8.1  General............................................................   18
   8.2  Environmental Releases.............................................   18
ARTICLE 9 - METERING.......................................................   18
   9.1  General............................................................   18
   9.2  Costs of Administering Metering Assets.............................   18
   9.3  Testing of Metering Assets.........................................   19
   9.4  Metering Data......................................................   19
   9.5  Communications.....................................................   19
ARTICLE 10 - FORCE MAJEURE.................................................   20
ARTICLE 11 - INFORMATION REPORTING.........................................   20
ARTICLE 12 - PAYMENTS AND BILLING PROCEDURES...............................   20
   12.1 Invoices...........................................................   20
   12.2 Payments to Transmission Provider..................................   21
   12.3 Interest Charges...................................................   21
   12.4 Disputes...........................................................   21
ARTICLE 13 - ASSIGNMENT....................................................   22
ARTICLE 14 - INDEMNITY AND INSURANCE.......................................   22
ARTICLE 15 - LIMITATION ON LIABILITY.......................................   23
ARTICLE 16 - BREACH, CURE AND DEFAULT......................................   24
   16.1 General............................................................   24
   16.2 Events of Breach...................................................   24
   16.3 Continued Operation................................................   24
   16.4 Cure and Default...................................................   25
   16.5 Right to Compel Performance........................................   25
ARTICLE 17 - CONFIDENTIALITY...............................................   25
ARTICLE 18 - AUDIT RIGHTS..................................................   26
</TABLE>

                                       ii

<PAGE>

Execution Copy

<TABLE>
<S>                                                                           <C>
ARTICLE 19 - DISPUTES......................................................   26
ARTICLE 20 - NOTICES.......................................................   26
ARTICLE 21 - MISCELLANEOUS.................................................   27
   21.1 Amendments.........................................................   27
   21.2 Binding Effect.....................................................   27
   21.3 Counterparts.......................................................   28
   21.4 Entire Agreement...................................................   28
   21.5 Governing Law......................................................   28
   21.6 Headings Not To Affect Meaning.....................................   28
   21.7 Waivers............................................................   28
</TABLE>

                                       iii

<PAGE>

Execution Copy

                 Amendment and Restatement of the April 1, 2001
                       GENERATOR INTERCONNECTION AGREEMENT

     THIS AMENDMENT AND RESTATEMENT OF THE APRIL 1, 2001 GENERATOR
INTERCONNECTION AGREEMENT (the "Agreement") is made and entered into as of April
29, 2002 by and between Michigan Electric Transmission Company, a Michigan
corporation with offices at 212 West Michigan Avenue, Jackson, Michigan (herein
referred to as "Transmission Provider") and Consumers Energy Company, a Michigan
corporation with offices at 212 West Michigan Avenue, Jackson, Michigan (herein
referred to as ("Consumers"). Consumers and Transmission Provider each may be
referred to individually as a "Party," or collectively as the "Parties." This
Agreement amends, restates and completely replaces the April 1, 2001 Generator
Interconnection Agreement between the Parties, effective on the date indicated
above.

                                   WITNESSETH:

     WHEREAS, Transmission Provider is engaged in the transmission of electric
energy; and

     WHEREAS, Consumers owns and operates several electric generating assets
(herein referred to as a Unit when discussing one of them, or as Generation
Resources when referring to all of them) as described in Article 1. The Unit
names and generating capability ratings of the Generation Resources are set
forth in Exhibit A to this Agreement. Each Unit in the list is currently in
commercial operation; and

     WHEREAS, it is necessary for Consumers' Units to remain interconnected with
Transmission Provider's System (as defined in Article 1), in order for said
Units to continue to operate; and

     WHEREAS, the Parties have entered into an Operating Agreement, dated as of
April 1, 2001, as amended and restated, (herein referred to as the "Operating
Agreement") that defines the operating responsibilities of the Transmission
Provider with respect to the Transmission System and the obligations, rights and
responsibilities of Consumers to provide ancillary services and to operate its
Generation Resources in a manner that will not unduly interfere with the
provision of Transmission Services by the Transmission Provider; and

     WHEREAS, the Parties have entered into a Network Operating Agreement, dated
as of April 1, 2001, as amended and restated, that governs Transmission
Provider's provision of Network Integration Transmission Service to Consumers as
a Network Customer under the Tariff.

     WHEREAS, the Parties have entered into a Purchase and Sale Agreement for
Ancillary Services, dated as of April 1, 2001, as amended and restated, that
sets forth the terms and conditions under which Consumers shall use its
Generation Resources to provide ancillary services to the Transmission Provider,
and

                                       1

<PAGE>

Execution Copy

     WHEREAS, Consumers and Transmission Provider are willing to maintain the
interconnection of Consumers' Generation Resources with Transmission Provider's
Transmission System under the terms and conditions contained herein.

     NOW, THEREFORE, in consideration of and subject to the mutual covenants
contained herein, the Parties hereto agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

1.1 Whenever used in this Agreement, appendices, and attachments hereto, the
following terms shall have the following meanings:

     "Black Start Capability" shall mean a generating Unit that is capable of
starting without an outside electrical supply. Said Units are specified in
Exhibit A.

     "Black Start Plan" shall mean a plan utilizing Black Start Capability
designed and implemented by the Transmission Provider in conjunction with its
interconnected generation and distribution customers, Distribution System
Control, other electric systems, its Security Coordinator and ECAR, to energize
portions of the Transmission Provider's System which are de-energized as a
result of a widespread system disturbance.

     "Black Start Service" shall mean the provision of service needed to
energize a defined portion of the Transmission Provider's System, including the
start up of the Generation Resources and/or other generators, in accordance with
the Transmission Provider's Black Start Plan when local power from the
Transmission Provider's System is unavailable or insufficient.

     "Commission" shall mean the Federal Energy Regulatory Commission, or any
successor agency.

     "Connection Point" shall be the point where Consumers' Interconnection
Assets connect to Transmission Provider's Interconnection Assets, as described
in Exhibit B of this Agreement.

     "Consumers' Incremental Cost" shall mean Consumers' actual hourly
replacement cost of energy on Consumers' Generation Resources, whether that
energy is (a) produced by generation owned by or under contract to Consumers or
(b) purchased from a third party.

     "Consumers' Interconnection Assets" shall mean the assets identified as
belonging to Consumers in Exhibit B of this Agreement and all other assets that
are necessary or desirable to interconnect a Unit to the Transmission Provider's
System reliably and safely, including all connection, switching, transmission,
distribution, safety, and communication assets, protective assets, Telemetry and
Monitoring Assets that Consumers owns or operates and maintains.

     "Consumers' System" shall mean the assets owned, controlled and operated by
Consumers that are used to provide service to its customers.

                                       2

<PAGE>

Execution Copy

     "ECAR" is an acronym, which stands for the East Central Area Reliability
coordination agreement. This is the agreement under which Transmission Provider
and other ECAR members establish regional coordination practices and guides to
govern the electric coordinated operation and reliability of the East Central
Region of North America.

     "Emergency" shall mean any system condition that requires automatic or
immediate manual action to prevent or limit the loss of transmission assets or
generation supply that could adversely affect the reliability of Transmission
Provider's System or Consumers' System or the systems to which either Party is
directly or indirectly connected.

     "Generation Resources" shall mean the assets used for the production of
electric energy, which are owned and operated by Consumers and directly or
indirectly connected to the Transmission Provider's System.

     "Good Utility Practice" shall mean any of the practices, methods and acts
engaged in or approved by a significant proportion of the electric utility
industry during the relevant time period, or any of the practices, methods and
acts which, in the exercise of reasonable judgment in light of the facts known
at the time the decision was made, could have been expected to accomplish the
desired result at a reasonable cost consistent with good business practices,
reliability, safety and expedition. Good Utility Practice is not intended to be
limited to the optimum practice, method or act to the exclusion of all others,
but rather to be acceptable practices, methods or acts generally accepted in the
region.

     "Governmental Authority" shall mean any federal, state, local or municipal
governmental body; any governmental, regulatory or administrative agency,
commission, body or other authority exercising or entitled to exercise any
administrative, executive, judicial, legislative, policy, regulatory or taxing
authority or power; or any court or governmental tribunal.

     "Hazardous Substances" shall mean any chemicals, materials or substances
defined as or included in the definition of "hazardous substances", "hazardous
wastes", "hazardous materials", "hazardous constituents", "restricted hazardous
materials", "extremely hazardous substances", "toxic substances",
"contaminants", "pollutants", "toxic pollutants" or words of similar meaning and
regulatory effect under any applicable Environmental Law, or any other chemical,
material or substance, exposure to which is prohibited, limited or regulated by
any applicable Environmental Law. For purposes of this Agreement, the term
"Environmental Law" shall mean federal, state, and local laws, regulations,
rules, ordinances, codes, decrees, judgments, directives, or judicial or
administrative orders relating to pollution or protection of the environment,
natural resources or human health and safety.

     "IEEE" is an acronym, which stands for the Institute of Electrical and
Electronic Engineers.

     "Interconnection Assets" shall mean, collectively, Transmission Provider's
Interconnection Assets and Consumers' Interconnection Assets, or the specific
Interconnection Assets of one of the Parties, as the case may be.

     "Jointly Owned Assets" shall mean those assets in which Consumers and
Transmission Provider have undivided ownership interests. Due to the nature of
substation

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designs, many of the supporting substation assets (e.g., station batteries,
fencing, control houses, ground grid, yard stone, steel structures and some
protective relay assets) cannot be separated by ownership and the Parties share
in the ownership of such assets. The respective ownership of such assets by
substation is shown in Exhibit B hereto.

     "Metering Assets" shall mean the assets required to provide acceptably
accurate metering of the interconnection power and energy output from the Unit
and the standby power and energy usage of the Unit. Said Metering Assets
typically includes but is not limited to, metering accuracy potential and
current transformers, transducers, primary connections, secondary connections,
secondary potential and current circuits and conduit, telephone lines and access
to said Metering Assets, if necessary. The transducers used shall be capable of
providing Megawatthour and Megavarhour data.

     "Monitoring Assets" shall mean the assets required to determine (a) the
sequence of events for the operation of protective assets during an electrical
fault, (b) the location and characteristics of an electrical fault and (c) the
quality of power provided at the Point of Receipt.

     "NERC" is an acronym that stands for the North American Electric
Reliability Council, including any successor thereto or any regional reliability
council thereof. This reliability council oversees the development and
publication of operating policies, engineering planning principles and guides
and support information to provide guidance to the regional reliability councils
and to promote electric system reliability.

     "Point of Receipt" shall be the point at which capacity and energy is
provided by Consumers, as described in Exhibit B of this Agreement.

     "Reactive Design Limitations" shall mean the reactive power capability
designed into the Unit, which were consistent with reactive power capability
specifications in place when the Unit was constructed.

     "Secondary Systems" shall mean control or power circuits that operate below
600 volts, AC or DC, including, but not limited to, any hardware, control or
protective devices, cables, conductors, electric conduits and raceways,
secondary assets panels, transducers, batteries, chargers, and voltage and
current transformers.

     "Switching and Tagging Rules" shall mean the written documents describing
the switching and tagging procedures of Transmission Provider and Consumers, as
they may be amended.

     "System Operator" is a generic term used to describe the individuals
responsible for the integrity or the operational control of the Transmission
Provider's System and any successor thereto.

     "System Protection Assets" shall mean the assets required to protect (a)
Transmission Provider's System, the systems of others connected to Transmission
Provider's System, and Transmission Provider's customers from faults occurring
at the Unit, and (b) the Unit from faults occurring on Transmission Provider's
System or on the systems of others to which Transmission Provider's System is
directly or indirectly connected.

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

     "Telemetry Equipment" shall mean the assets, identified by Transmission
Provider, that are required to provide the necessary, real-time telemetry of
Unit operations and status, as required by Transmission Provider, for remote
monitoring and control purposes. This typically includes but is not limited to,
remote terminal units, distributed terminal units, telemetry signal inputs,
fiber optic communication connections, transducers, pulse multipliers, isolation
amplifiers, analog inputs, digital inputs, metering pulsed accumulator inputs,
power supply, dedicated telephone data line to remote terminal units, telephone
modem, telephone switching, interface terminal strips for landing signal
inputs/outputs. Telemetry Equipment may be located at Consumers' Unit and or at
Transmission Provider's assets.

     "Transmission Provider's Interconnection Assets" shall mean the assets
identified as belonging to Transmission Provider in Exhibit B of this Agreement
and all other assets that are necessary or desirable to interconnect the
Generation Resources to Transmission Provider's System reliably and safely,
including all connection, switching, transmission, distribution, safety, and
communication assets, protective assets, Metering, Telemetry and Monitoring
Assets and all improvements, additions or extensions to Transmission Provider's
System attributable to or necessitated by the Generation Resources that
Transmission Provider owns or operates and maintains.

     "Transmission Provider's System" shall mean the assets owned, controlled
and operated by the Transmission Provider that are used to provide transmission
service under Part II and Part III of the Tariff.

     "Transmission Service" shall include both Point-To-Point Transmission
Service provided under Part II of the Tariff and Network Integration
Transmission Service provided under Part III of the Tariff.

     "Unit" shall mean each of Consumers' electric generating assets, or group
of generating assets having common Interconnection Assets, identified generally
in the second "Whereas" clause and Exhibit A of this Agreement and more
specifically identified in the "as built" drawings provided to Transmission
Provider in accordance with Section 4.5 of this Agreement, together with the
other property, assets, and assets owned and/or controlled by Consumers on the
Consumers' side of the Connection Point.

                                    ARTICLE 2
                                TERM OF AGREEMENT

2.1 Effective Date

     This Agreement shall become effective upon the date specified by the
Commission under Section 205 of the Federal Power Act.

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2.2 Term

     This Agreement shall become effective as provided in Section 2.1 above and,
unless terminated as provided below, shall continue in full force and effect
until a mutually agreed termination date, but no later than the date on which
all of the Generation Resources cease commercial operation.

2.3 Termination

     In the event that Transmission Provider joins a Regional Transmission
Organization ("RTO") which requires use of its own FERC-approved interconnection
and operating agreement, this Agreement shall terminate on the effective date of
such new interconnection and operating agreement between Consumers and the RTO,
except to the extent necessary to resolve billing and other outstanding matters
related to service rendered under this Agreement as specified in Section 2.5.

2.4 Regulatory Filing

     Transmission Provider shall file this Agreement with the Commission as a
Service Agreement under the Tariff. Consumers agrees to cooperate with
Transmission Provider with respect to such filing and to provide any
information, including the rendering of testimony reasonably requested by
Transmission Provider, needed to comply with applicable regulatory requirements.

2.5 Survival

     The applicable provisions of this Agreement shall continue in effect after
expiration, cancellation, or termination hereof to the extent necessary to
provide for final billings, billing adjustments, and the determination and
enforcement of liability and indemnification obligations arising from acts or
events that occurred while this Agreement was in effect.

                                    ARTICLE 3
                             INTERCONNECTION SERVICE

3.1 Scope of Service

     In the event future changes in either (a) design or operation of any Unit,
(b) Consumers' requirements or (c) Transmission Provider's requirements
resulting from the Unit's parallel operation with Transmission Provider's System
later necessitate additional Interconnection Assets or modifications to the then
existing Interconnection Assets herein, the Parties shall undertake such
additions and modifications as may be necessary. Before undertaking such future
additions or modifications, the Parties shall consult, develop plans and
coordinate schedules of activities, including the making of necessary amendments
to this Agreement (including its Appendices) and/or entering into new
agreements, so as to insure continuous and reliable operation of the
Interconnection Assets. The cost of such additions or modifications to the
Interconnection Assets shall be borne by Consumers unless otherwise agreed upon
at the time. The ownership, operation and maintenance responsibilities for any

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such future additions or modifications shall be made consistent with the
responsibilities allocated in this Agreement.

     3.1.1 Except as otherwise provided under Sections 5.8 and 5.9 of this
Agreement, Transmission Provider shall have no obligation under this Agreement
to pay Consumers any wheeling or other charges for electric power and/or energy
transferred through Consumers' assets or for power or ancillary services
provided by Consumers under this Agreement for the benefit of Transmission
Provider's System.

     3.1.2 Except as otherwise provided under this Agreement, Transmission
Provider shall have no obligation under this Agreement to make arrangements or
pay under applicable tariffs for transmission and ancillary services associated
with the delivery of electricity and ancillary electrical products produced by
the Unit.

     3.1.3 Except as otherwise provided under this Agreement, Transmission
Provider shall have no obligation under this Agreement to procure electricity
and ancillary electrical products to satisfy Consumers' station power needs or
other related requirements.

     3.1.4 Except as otherwise provided under this Agreement, Transmission
Provider shall have no obligation under this Agreement to make arrangements
under applicable tariffs for transmission, losses, and ancillary services
associated with the use of Transmission Provider's System for the delivery of
electricity and ancillary electrical products to the Unit.

     3.1.5 Transmission Provider makes no representations to Consumers regarding
the availability of Transmission Service on Transmission Provider's System, and
Consumers agrees that the availability of Transmission Service on Transmission
Provider's System may not be inferred or implied from Transmission Provider's
execution of this Agreement. Consumers will obtain Transmission Service on
Transmission Provider's System under a separate agreement between the Parties
and in accordance with the provisions of the Tariff.

3.2 Third-Party Actions

     Consumers acknowledges and agrees that, from time to time during the term
of this Agreement, other persons may develop, construct and operate, or acquire
and operate generating assets in the Transmission Provider's service territory,
and construction or acquisition and operation of any such assets, and
reservations by any such persons of Transmission Service under the Tariff may
adversely affect the Unit and the availability of Transmission Service for the
Unit's electric output. Consumers acknowledges and agrees that Transmission
Provider has no obligation under this Agreement to disclose to Consumers any
information with respect to third-party developments or circumstances, including
the identity or existence of any such person or other assets, beyond what
Transmission Provider customarily provides to other similarly situated
generators, except as may be required under Article 4 of this Agreement and
elsewhere in this Agreement. Consumers and Transmission Provider make no
guarantees to the other under this Agreement with respect to Transmission
Service that is available under the Tariff or any other tariff under which
Transmission Service may be available in the region.

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                                    ARTICLE 4
                             INTERCONNECTION ASSETS

4.1 Reservation of Rights to Interconnection Assets

     Except as provided in Section 5.2 hereof, each Party reserves to itself the
ownership, operation and maintenance of its Interconnection Assets and all
improvements, additions or extensions to its Interconnection Assets under this
Agreement which are attributable to or necessitated by the interconnection of
the Unit.

4.2 Modifications

     Either Party may undertake modifications to its assets. In the event a
Party plans to undertake a modification that may be expected to impact the other
Party's assets, that Party shall provide the other Party with sufficient
information regarding such modification, including, without limitation, the
notice required in accordance with Article 11 of this Agreement so that the
other Party can evaluate the potential impact of such modification prior to
commencement of the work. The Party desiring to perform such work shall provide
the relevant drawings, plans, and specifications to the other Party at least
ninety (90) days in advance of commencement of the work or such shorter period
upon which the Parties may agree, which agreement will not unreasonably be
withheld or delayed.

4.3 As-Built Drawings

     Upon execution of this Agreement, Consumers shall provide to Transmission
Provider current interconnection drawings and system diagrams for each of its
Units, unless the Parties agree that such drawings are not necessary. Subject to
the requirements of Article 17 of this Agreement, not later than ninety (90)
days after completion of any addition to or modification of the assets of any of
said Units that may reasonably be expected to affect Transmission Provider's
System, Consumers shall issue revised "as built" drawings to Transmission
Provider.

                                    ARTICLE 5
                                   OPERATIONS

5.1 General

Transmission Provider and Consumers agree that they shall comply with the
Operating Agreement, then-existing (or amended) applicable manuals, standards,
and guidelines of Transmission Provider, NERC, ECAR, or any successor agency
assuming or charged with similar responsibilities related to the operation and
reliability of the North American electric interconnected transmission grid. To
the extent that this Agreement does not specifically address or provide the
mechanisms necessary to comply with such Operating Agreement, Transmission
Provider, NERC or ECAR manuals, standards, or guidelines, Transmission Provider
and Consumers hereby agree that both Parties shall provide to the other Party
all such information as may reasonably be required to comply with such Operating
Agreement, manuals, standards, or guidelines and shall operate, or cause to be
operated, their respective assets in accordance with such Operating Agreement,
manuals, standards, or guidelines.

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Transmission Provider and Consumers agree that specific transmission system
operating limitations required to satisfy Nuclear Regulatory Commission
Operating License and Design requirements applicable to the Palisades Nuclear
Plant are identified in a separate agreement, attached hereto as Exhibit C, and
shall be adhered to by both Parties.

5.2 Transmission Provider Obligations

     Transmission Provider shall operate and control Transmission Provider's
System and other Transmission Provider assets in a safe and reliable manner (a)
in accordance with Transmission Provider's applicable operational and/or
reliability criteria, protocols, and directives (which include those of NERC and
ECAR), (b) the Operating Agreement and (c) in accordance with the provisions of
this Agreement. From time to time, Consumers will control and operate six 345 kV
synchronizing circuit breakers (Nos. 32H9 and 32R8 in the Campbell 345 kV
Substation and Nos. 28H9, 28R8, 32F7 and 32H9 in the Hampton Substation) to
connect or disconnect the Campbell 3, Karn 3 or Karn 4 Units, as the case may
be, from the transmission system. The Parties may agree from time to time that
Consumers, under the direction of the Transmission Provider, will operate
certain other Interconnection Assets of the Transmission Provider.

5.3 Consumers Obligations

     Consumers shall operate and control its Generation Resources in a safe and
reliable manner in accordance with (a) Consumers' applicable operational and/or
reliability criteria, protocols, and directives (which shall include those of
NERC and ECAR), the Operating Agreement and (c) the provisions of this
Agreement.

5.4 Jointly Owned Assets

     Operation of Jointly Owned Assets at the electric substations where
Interconnection Facilities are located will be under the direction and control
of the Party with more than fifty percent (50%) of the major equipment at each
such location, unless otherwise agreed by the Parties hereto. Said Party shall
operate the Jointly Owned Assets in a manner consistent with Good Utility
Practice and the provisions of Sections 5.2 and 5.3 above, as appropriate. Each
Party's respective share of responsibility for the costs of operation of Jointly
Owned Assets shall be the same percentage as the percentage of major equipment
owned by such Party in that substation, as set forth in Exhibit B and its
subsequent addendum's. For purposes of this Agreement, major equipment is
defined as (a) main power transformers, (b) 23 kV, 46 kV, 138 kV and 345 kV
circuit breakers, (c) power system regulators and reclosers and (d) 46 kV and
138 kV capacitor banks (any three-phase installation of such equipment shall
count as one unit of equipment). Exhibit B shall be updated with an addendum at
least annually by the Transmission Provider, and approved in writing by
Consumers, to show all changes in equipment and the effects of such changes on
the determination of Jointly Owned Asset percentages. In the case where each
Party hereto owns exactly fifty percent (50%) of the major equipment at any
specific location, the Transmission Provider shall assume the responsibility for
direction and control of the operation activities as such location. In those
substations where each Party hereto owns assets, each Party shall be responsible
for its appropriate share, as set forth in Exhibit B hereto, of station power
energy usage and expense.

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5.5 Access Rights

     The Parties shall provide each other such access rights as may be necessary
for either Party's performance of its respective operational obligations under
this Agreement; provided that, notwithstanding anything stated herein, a Party
performing operational work within the boundaries of the other Party's assets
must abide by the rules applicable to that site.

5.6 Switching and Tagging Rules

     The Parties shall abide by their respective Switching and Tagging Rules for
obtaining clearances for work or for switching operations on assets. The Parties
will adopt mutually agreeable Switching and Tagging Rules prior to the effective
date of this Agreement.

5.7 Black Start Participation

     In accordance with Good Utility Practice, Consumers agrees to participate
in Transmission Provider's Black Start Plan, as well as any verification
testing. Nothing in this Agreement obligates a particular Unit to provide Black
Start Service. Transmission Provider's Black Start Plan shall place the highest
possible priority on energizing those portions of the Transmission Provider's
System which are required to transmit power from designated Black Start Unit or
Units to the Palisades switchyard in the event of a loss of all offsite power to
the Palisades Nuclear plant. Consumers shall identify the minimum capacity
necessary to meet Nuclear Regulatory Commission License and Design requirements
for the Palisades Nuclear plant, and the specific Unit or Units which are
designated to provide the required capability.

5.8 Reactive Power

     The supply and absorption of reactive power is dealt with in the Purchase
and Sale Agreement for Ancillary Services between the Parties hereto.

5.9 System Security

     During an Emergency on Transmission Provider's System or on an adjacent
transmission system, the System Operator has the authority to direct Consumers
to increase or decrease real power production (measured in MW) and/or reactive
power production (measured in MVAR), within the design and operational
limitations of any of Consumers' Generation Resources in service at the time, in
order to maintain security on Transmission Provider's System. In the event of
such a declaration of an Emergency, determinations: (a) that Transmission
Provider's System security is in jeopardy, and/or (b) that there is a need to
increase or decrease reactive power production, even if real power production is
adversely affected, will be made solely by the System Operator or his designated
representative. Each Unit operator will honor System Operator's orders and
directives concerning said Unit's real power and/or reactive power output within
design and operational limitations of the Unit's equipment in service at the
time, such that the security of Transmission Provider's System is maintained.
Transmission Provider shall restore Transmission Provider's System conditions to
normal to alleviate any such Emergency, in accordance with Good Utility
Practice. Consumers will be compensated by Transmission Provider for increasing
or decreasing the

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real power output of any of its Units as directed by the System Operator to
support Transmission Provider's System during an Emergency by the payment of (a)
Consumers' Incremental Cost associated with such increase or decrease in real
power output or (b) at such other rate filed by Consumers and approved by the
Commission. Similarly, if the Transmission Provider requests any of Consumers'
Units to provide or absorb reactive power that would be outside of the Unit's
Reactive Design Limitations, requiring the Unit's real power output to be
reduced to obtain the desired reactive power, Transmission Provider shall
compensate Consumers at the real power rate discussed in the preceding sentence,
to the extent that the Unit had to reduce real power output to operate within
its Reactive Design Limitations, unless otherwise provided in another agreement
or tariff on file with the Commission.

5.10 Consumers Voltage Regulation

     Consumers shall have sufficient voltage regulation at each Unit to maintain
an acceptable voltage level for the equipment at the Unit during periods of time
that the Unit's generation is off line.

5.11 Protection and System Quality

     Consumers shall, at its expense, install, maintain, and operate System
Protection Assets, including such protective and regulating devices as are
identified by order, rule or regulation of any duly constituted regulatory
authority having jurisdiction, or as are otherwise necessary to protect
personnel and assets and to minimize deleterious effects to Transmission
Provider's electric service operation arising from the Unit. Transmission
Provider shall install any such protective or regulating devices that may be
required on Transmission Provider's assets in connection with the operation of
the Unit at Consumers' expense.

     5.11.1 Requirements for Protection. In compliance with applicable NERC,
ECAR and Transmission Provider's requirements, Consumers shall provide, own, and
maintain relays, circuit breakers and all other devices necessary to promptly
remove any fault contribution of the Unit to any short circuit occurring on
Transmission Provider's System not otherwise isolated by Transmission Provider's
assets. Such protective assets shall include, without limitation, a
disconnecting device or switch with visible blade disconnect and load
interrupting capability to be located between the Unit and Transmission
Provider's System at an accessible, protected, and satisfactory site selected
upon mutual agreement of the Parties. The present integrated system provides for
fault clearing at the generation substations. Unit protection may not be able to
detect all short circuits, but the Parties agree that no other arrangements
shall be required. Consumers shall be responsible for protection of the Unit and
Consumers' other associated assets from such conditions as negative sequence
currents, over- or under-frequency, sudden load rejection, over- or
under-voltage, and generator loss-of-field. Consumers shall be solely
responsible for provisions to disconnect the Unit and Consumers' other
associated assets when any of the disturbances described above occur on
Transmission Provider's System.

     5.11.2 System Power Quality. Consumers' facilities and equipment shall not
cause excessive voltage flicker nor introduce excessive distortion to the
sinusoidal voltage or current waves. Power output from and input to the Unit
shall be in accordance with the power quality

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standards contained in IEEE Standards 141 (voltage flicker) and 519 (harmonics).
Consumers' facilities and equipment have been designed and constructed in
accordance with then-existing standards so as not to cause excessive voltage
excursions nor cause the voltage to drop below or rise above the range
maintained by Transmission Provider in the absence of Consumers' facilities and
equipment at the time the Unit first went into service.

     5.11.3 Inspection. Subject to the confidentiality provisions set forth in
Article 17, Transmission Provider shall have the right, but shall have no
obligation or responsibility to (a) observe Consumers' tests and/or inspection
of any of Consumers' protective assets directly connected to Transmission
Provider's System or interfacing with Transmission Provider's protective assets,
(b) review the settings of any of Consumers' protective assets; and (c) review
Consumers' maintenance records relative to Consumers' protective assets.
Transmission Provider may exercise the foregoing rights from time to time as
deemed necessary by Transmission Provider upon reasonable notice to Consumers.
However, the exercise or non-exercise by Transmission Provider of any of the
foregoing rights of observation, review or inspection shall be construed neither
as an endorsement or confirmation of any aspect, feature, element, or condition
of the Unit or Consumers' protective assets or the operation thereof, nor as a
warranty as to the fitness, safety, desirability, or reliability of same.

5.12 Outages, Interruptions, and Disconnection

     5.12.1 Outage Authority and Coordination. In accordance with Good Utility
Practice, each Party may, in close cooperation with the other and upon providing
notice per Section 20.2, remove from service its assets that may impact the
other Party's assets as necessary to perform maintenance or testing or to
install or replace assets. Absent the existence or imminence of an Emergency,
the Party scheduling a removal of a facility from service will schedule such
removal on a date mutually acceptable to both Parties. Further, the Transmission
Provider shall use its best efforts to coordinate the scheduling of maintenance
on its Interconnection Assets to coincide with Consumers scheduled maintenance
on its Units that may be impacted by the Transmission Provider's maintenance.

     5.12.2 Outage Restoration.

          5.12.2.1 Unplanned Outage. In the event of an unplanned outage of a
     Party's facility that adversely affects the other Party's assets, the Party
     that owns or controls the facility out of service will use commercially
     reasonable efforts to promptly restore that facility to service.

          5.12.2.2 Planned Outage. In the event of a planned outage of a Party's
     facility that adversely affects the other Party's assets, the Party that
     owns or controls the facility out of service will use commercially
     reasonable efforts to promptly restore that facility to service and in
     accordance with its schedule for the work that necessitated the planned
     outage.

     5.12.3 Interruption. If at any time, in Transmission Provider's reasonable
judgment, the continued operation of the Unit would cause an Emergency,
Transmission Provider may curtail, interrupt, or reduce energy delivered from
the Unit to Transmission Provider's System until the condition which would cause
the Emergency is corrected. Transmission Provider

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shall give Consumers as much notice as is reasonably practicable of Transmission
Provider's intention to curtail, interrupt, or reduce energy delivery from the
Unit in response to a condition that would cause an Emergency and, where
practicable, allow suitable time for the Parties to remove or remedy such
condition before any such curtailment, interruption, or reduction commences. In
the event of any curtailment, interruption, or reduction, Transmission Provider
shall promptly confer with Consumers regarding the conditions that gave rise to
the curtailment, interruption, or reduction, and Transmission Provider shall
give Consumers Transmission Provider's recommendation, if any, concerning the
timely correction of such conditions. Transmission Provider shall promptly cease
the curtailment, interruption, or reduction of energy delivery when the
condition that would cause the Emergency ceases to exist.

     5.12.4 Disconnection.

          5.12.4.1 Disconnection after Agreement Terminates. Upon termination of
     the Agreement, Transmission Provider may disconnect Consumers' Generation
     Resources from Transmission Provider's System in accordance with a plan for
     disconnection upon which the Parties agree.

          5.12.4.2 Disconnection in Event of Emergency. Subject to the
     provisions of Subsection 5.12.4.3 of this Agreement, Transmission Provider
     or Consumers shall have the right to disconnect the Unit without notice if,
     in Transmission Provider's or Consumers' sole opinion, an Emergency exists
     and immediate disconnection is necessary to protect persons or property
     from damage or interference caused by Consumers' interconnection or lack of
     proper or properly operating protective devices. For purposes of this
     Subsection 5.12.4.2, protective devices may be deemed by Transmission
     Provider to be not properly operating if Transmission Provider's review
     under Article 6 of this Agreement has disclosed irregular or otherwise
     insufficient maintenance on such devices or that maintenance records do not
     exist or are otherwise insufficient to demonstrate that adequate
     maintenance has been and is being performed.

          5.12.4.3 Disconnection after Under-frequency Load Shed Event. NERC
     Planning Criteria require the interconnected transmission system frequency
     be maintained between 59.95 Hz and 60.05 Hz. In case of an under-frequency
     system disturbance, Transmission Provider's System is designed to
     automatically activate a five-tier load shed program. The five load sheds
     occur at 59.5, 59.3, 59.1, 58.9 and 58.7 Hz, respectively. For those Units
     that are determined by Transmission Provider to be large enough to impact
     the Transmission Provider's System security, each such Unit shall be
     capable of under-frequency operation as specified in Appendix 1 "Isolation
     of Generating Units" contained in ECAR Document No. 3 - Emergency
     Operations, or a higher under-frequency set point if already in place upon
     execution of this Agreement. Upon notice from Consumers and if the
     Transmission Provider agrees, Consumers may implement a higher
     under-frequency relay set point if necessary to protect its assets for a
     particular Unit or Units.

     5.12.5 Continuity of Service. Notwithstanding any other provision of this
Agreement, Transmission Provider shall not be obligated to accept, and
Transmission Provider may

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require Consumers to curtail, interrupt or reduce deliveries of energy if such
delivery of energy impairs Transmission Provider's ability to construct,
install, repair, replace or remove any of its equipment or any part to its
system or if Transmission Provider determines that curtailment, interruption or
reduction is necessary because of Emergencies, forced outages, operating
conditions on its system, or any reason otherwise permitted by applicable rules
or regulations promulgated by a regulatory agency having jurisdiction over such
matters. The Parties shall coordinate, and if necessary negotiate in good faith,
the timing of such curtailments, interruptions, reductions or deliveries with
respect to maintenance, investigation or inspection of Transmission Provider's
assets or system. Consumers reserves all rights under the Federal Power Act and
applicable other federal and state laws and regulations to commence a complaint
proceeding or other action with the Commission or other Governmental Authority
with appropriate jurisdiction over the Parties to enforce the provisions of this
Subsection 5.12.5.

     5.12.6 Curtailment Notice. Except in case of Emergency, in order not to
interfere unreasonably with the other Party's operations, the curtailing,
interrupting or reducing Party shall give the other Party reasonable prior
notice of any curtailment, interruption or reduction, the reason for its
occurrence, and its probable duration.

5.13 Operating Expenses

     Consumers shall reimburse Transmission Provider for all direct and indirect
costs and expenses (including but not limited to telephone circuit charges,
property taxes, insurance and assets testing) incurred by Transmission Provider
in operating Transmission Provider's Interconnection Assets, to the extent that
Transmission Provider is not otherwise recovering such costs and expenses under
the Tariff. Such costs and expenses shall be determined by Transmission Provider
in accordance with the standard practices and policies followed by Transmission
Provider for the performance of work for others in effect at the time such
operation work is performed. Payment by Consumers shall be made in accordance
with the provisions of Article 12 hereof.

                                    ARTICLE 6
                                   MAINTENANCE

6.1 Transmission Provider's Obligations

     Transmission Provider shall maintain its assets, to the extent they might
reasonably be expected to have an impact on the operation of the Unit (a) in a
safe and reliable manner in accordance with applicable operational and/or
reliability criteria, protocols, and directives (which include those of NERC and
ECAR), (b) in accordance with the provisions of the Operating Agreement and (c)
in accordance with the provisions of this Agreement.

6.2 Consumers' Obligations

     Consumers shall maintain its assets, to the extent they might reasonably be
expected to have an impact on the operation of Transmission Provider's System
(a) in a safe and reliable manner in accordance with applicable operational
and/or reliability criteria, protocols, and directives (which include those of
NERC and ECAR), (b) in accordance with the

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provisions of the Operating Agreement and (c) in accordance with the provisions
of this Agreement.

6.3 Jointly Owned Assets

     Maintenance of Jointly Owned Assets at the electric substations where
Interconnection Facilities are located will be under the direction and control
of the Party with more than fifty percent (50%) of the major equipment at each
such location, unless otherwise agreed by the Parties hereto. Said Party shall
maintain the Jointly Owned Assets in a manner consistent with Good Utility
Practice and the provisions of Sections 6.1 and 6.2 above, as appropriate. Each
Party's respective share of responsibility for the costs of maintenance of
Jointly Owned Assets shall be the same percentage as the percentage of major
equipment owned by such Party in that substation, as set forth in Exhibit B and
its subsequent addendum. For purposes of this Agreement, major equipment is
defined as set forth in Section 5.4 hereto. Exhibit B shall be updated with an
addendum at least annually by the Transmission Provider, and approved in writing
by Consumers, to show all changes in equipment and the effects of such changes
on the determination of Jointly Owned Asset percentages. In the case where each
Party hereto owns exactly fifty percent (50%) of the major equipment at any
specific location, the Transmission Provider shall assume the responsibility for
direction and control of the maintenance activities at such location.

6.4 Access Rights

     The Parties shall provide each other such access rights as may be necessary
for either Party's performance of their respective maintenance and/or
construction obligations under this Agreement; provided that, notwithstanding
anything stated herein, a Party performing maintenance and/or construction work
within the boundaries of the other Party's assets must abide by the rules
applicable to that site.

6.5 Maintenance Expenses

     Consumers shall reimburse Transmission Provider for all direct and indirect
costs and expenses (including but not limited to inspection, repair and
replacement) incurred by Transmission Provider in maintaining Transmission
Provider's Interconnection Assets, to the extent that Transmission Provider is
not otherwise recovering such costs and expenses under its Tariff. Such costs
and expenses shall be determined by Transmission Provider in accordance with the
standard practices and policies followed by Transmission Provider for the
performance of work for others in effect at the time such operation work is
performed. Payment by Consumers shall be made in accordance with the provisions
of Article 12 of this Agreement.

6.6 Coordination

     The Parties agree to confer regularly to coordinate the planning and
scheduling of preventative and corrective maintenance. Each Party shall conduct
preventive and corrective maintenance activities as planned and scheduled in
accordance with this Section 6.5 and the Operating Agreement.

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6.7 Inspections and Testing

     Each Party shall perform routine inspection and testing of its assets in
accordance with Good Utility Practice as may be necessary to ensure the
continued interconnection of each Unit with Transmission Provider's System in a
safe and reliable manner.

6.8 Right to Observe Testing

     Each Party shall, at its own expense, have the right to observe the testing
of any of the other Party's assets whose performance may reasonably be expected
to affect the reliability of the observing Party's assets. Each Party shall
notify the other Party in advance of its performance of tests of its assets, and
the other Party may have a representative attend and be present during such
testing.

6.9 Secondary Systems

     Each Party agrees to cooperate with the other in the inspection,
maintenance, and testing of those Secondary Systems directly affecting the
operation of a Party's assets which may reasonably be expected to impact the
other Party. Each Party will provide advance notice to the other Party before
undertaking any work in these areas, especially in electrical circuits involving
circuit breaker trip and close contacts, current transformers, or potential
transformers.

6.10 Observation of Deficiencies

     If a Party observes any deficiencies or defects on, or becomes aware of a
lack of scheduled maintenance and testing with respect to, the other Party's
assets that might reasonably be expected to adversely affect the observing
Party's assets, the observing Party shall either (a) provide notice to the other
Party that is prompt under the circumstance or (b) deem such observation an
Emergency to life or property and immediately disconnect the Unit pursuant to
Subsection 5.12.4.2 of this Agreement, and the other Party shall make any
corrections required in accordance with Good Utility Practice.

                                    ARTICLE 7
                                   EMERGENCIES

7.1 Obligations

     Each Party agrees to comply with NERC and ECAR Emergency procedures and
Transmission Provider and Consumers Emergency procedures, as applicable, with
respect to Emergencies.

7.2 Notice

     Transmission Provider shall provide Consumers with oral notification that
is prompt under the circumstances of an Emergency that may reasonably be
expected to affect

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Consumers' operation of any or all of its Generation Resources, to the extent
Transmission Provider is aware of the Emergency. Consumers shall provide
Transmission Provider with oral notification that is prompt under the
circumstances of an Emergency that may reasonably be expected to affect
Transmission Provider's System, to the extent Consumers is aware of the
Emergency. In lieu of oral notification described in the preceding two
sentences, the Parties may agree in advance to use other electronic notification
means. To the extent the Party becoming aware of an Emergency is aware of the
facts of the Emergency, such notification shall describe the Emergency, the
extent of the damage or deficiency, its anticipated duration, and the corrective
action taken and/or to be taken. Any such notification given pursuant to this
Section 7.2 shall be followed as soon as practicable with written notice.

7.3 Immediate Action

     In case of an Emergency, the Party becoming aware of the Emergency may, in
accordance with Good Utility Practice, take such action as is reasonable and
necessary to prevent, avoid, or mitigate injury, danger, and loss, including
disconnection pursuant to Subsection 5.12.4.2 of this Agreement.

7.4 Transmission Provider's Authority

     Transmission Provider may, consistent with Good Utility Practice, take
whatever actions with regard to Transmission Provider's System as it may deem
necessary during an Emergency in order to (a) preserve public health and safety,
(b) preserve the reliability of Transmission Provider's System, (c) limit or
prevent damage and (d) expedite restoration of service. Transmission Provider
shall use reasonable efforts to minimize the effect of such actions on the Unit.

7.5 Consumers' Authority

     Consumers may, consistent with Good Utility Practice, take whatever actions
with regard to the Unit as it may deem necessary during an Emergency in order to
(a) preserve public health and safety, (b) preserve the reliability of the Unit,
(c) limit or prevent damage and (d) expedite restoration of service. Consumers
shall use reasonable efforts to minimize the effect of such actions on
Transmission Provider's System.

7.6 Audit Rights

     Each Party shall keep and maintain records of actions taken during an
Emergency that may reasonably be expected to impact the other Party's assets and
make such records available for third-party independent audit upon the request
and expense of the party affected by such action. Any such request for an audit
will be no later than twelve (12) months following the action taken.

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                                    ARTICLE 8
                                     SAFETY

8.1 General

     Transmission Provider and Consumers agree that all work performed by either
Party that may reasonably be expected to affect the other Party shall be
performed in accordance with Good Utility Practice and all applicable laws,
regulations, and other requirements pertaining to the safety of persons or
property. A Party performing work within the boundaries of the other Party's
assets must abide by the safety rules applicable to the site.

8.2 Environmental Releases

     Each Party shall notify the other Party, first orally and then in writing,
of the release of any Hazardous Substances or any type of remedial activities,
such as asbestos or lead abatement, which may reasonably be expected to affect
the other Party, as soon as possible but not later than twenty-four (24) hours
after the Party becomes aware of the occurrence, and shall promptly furnish to
the other Party copies of any reports filed with any governmental agencies
addressing such events.

                                    ARTICLE 9
                                    METERING

9.1 General

     Transmission Provider shall provide, install, own and maintain Metering
Assets necessary to meet its obligations under this Agreement. Notwithstanding
the foregoing sentence, Consumers, if mutually agreed by the Parties, may
provide and install some, or all, of said Metering Assets, as per Transmission
Provider's specifications. The Parties agree that, as to all Connection Points
in existence as of the effective date of this Agreement, no new Metering Assets
or arrangements shall be required. If necessary, Metering Assets shall be either
located or adjusted, at Transmission Provider's option, in such manner to
account for (a) any transformation or interconnection losses between the
location of the meter and the Point of Receipt and (b) any station auxiliary
power load of the generating unit. Metering quantities, in analog and/or digital
form, shall be provided to Consumers upon request. The Parties also agree that
Consumers shall continue to maintain records of the Megawatthour and Megavarhour
values collected from existing meters on the generating units and provide the
information recorded to Transmission Provider upon request.

9.2 Costs of Administering Metering Assets

     All costs associated with the administration of Metering Assets and the
provision of metering data to Consumers shall be born by Consumers. The costs of
administration and of providing metering data shall be separately itemized on
Transmission Provider's invoices to Consumers pursuant to Article 12 of this
Agreement. All costs associated with changes to Metering Assets requested by
Consumers, shall be borne by Consumers and shall be invoiced pursuant to Article
12 of this Agreement.

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9.3 Testing of Metering Assets

     Transmission Provider shall, at Consumers' expense, inspect and test all
Metering Assets not less than once every year, unless an extension of the
testing cycle is agreed upon by the Parties. If requested to do so by Consumers
and at Consumers' expense, Transmission Provider shall inspect or test Metering
Assets more frequently. Transmission Provider shall give reasonable notice of
the time when any inspection or test shall take place and Consumers may have
representatives present at the test or inspection. If Metering Assets is found
to be inaccurate or defective, it shall be adjusted, repaired or replaced at
Consumers' expense, in order to provide accurate metering. If Metering Assets
fails to register, or if the measurement made by Metering Assets during a test
varies by more than two percent (2%) from the measurement made by the standard
Metering Assets used in the test, adjustment shall be made correcting all
measurements made by the inaccurate Metering Assets for (a) the actual period
during which inaccurate measurements were made, if the period can be determined,
or (b) a period equal to one-half of the elapsed time since the last test of the
Metering Assets.

9.4 Metering Data

     9.4.1 When the Metering Assets location is not at the Point of Receipt,
Metering Assets readings shall be adjusted to account for appropriate
transformer and line losses, and when applicable, the station auxiliary power
load of the Unit.

     9.4.2 At Consumers' expense, all metered data shall be telemetered to one
or more locations designated by Transmission Provider and one or more locations
designated by Consumers.

9.5 Communications

     9.5.1 At Consumers' expense, Consumers shall maintain satisfactory
operating communications with System Operator or representative, as designated
by Transmission Provider. Consumers has provided standard voice and facsimile
communications in the control room of each of its Units through use of the
public telephone system. Consumers has also provided a 4-wire, full duplex data
circuit (or circuits) operating at a minimum of 9600 baud, or at other baud
rates as reasonably specified by Transmission Provider. The data circuit(s)
extend from each Consumers' Unit to a location, or locations, specified by
Transmission Provider. Any required maintenance of such communications assets
shall be performed at Consumers' expense, and may be performed by Consumers or
by Transmission Provider. Operational communications shall be activated and
maintained under, but not be limited to, the following events: system
paralleling or separation, scheduled and unscheduled shutdowns, equipment
clearances, and hourly and daily load data exchanges. To the extent required by
applicable rules and regulations, Consumers shall (a) request permission from
the System Operator prior to opening or closing circuit breakers that affect
Transmission Provider's System, (b) carry out switching orders from the System
Operator in a timely manner and (c) keep the System Operator advised of the
Unit's operational capabilities as required for reliable operation of the
Transmission Provider's System.

     9.5.2 For all Units 1 MW or larger, a Remote Terminal Unit ("RTU"), or
equivalent data collection and transfer equipment acceptable to both Parties,
has been installed to gather

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accumulated and instantaneous data to be telemetered to a location, or
locations, designated by Transmission Provider through use of dedicated
point-to-point data circuits as indicated in Subsection 9.5.1 of this Agreement.
Instantaneous bi-directional analog real power and reactive power flow
information, circuit breaker status information, instantaneous analog voltage
information, metering information, and disturbance monitoring information, as
determined by Transmission Provider, must be telemetered directly to the
location, or locations, specified by Transmission Provider.

                                   ARTICLE 10
                                 FORCE MAJEURE

     10.1 An event of Force Majeure means any act of God, labor disturbance, act
of the public enemy, war, insurrection, riot, fire, storm or flood, explosion,
breakage or accident to machinery or assets, any curtailment, order, regulation
or restriction imposed by governmental military or lawfully established civilian
authorities, or any other cause beyond a Party's reasonable control. A Force
Majeure event does not include an act of negligence or intentional wrongdoing.

     10.2 If either Party is rendered unable, wholly or in part, by Force
Majeure, to carry out its obligations under this Agreement, then, during the
continuance of such inability, the obligation of such Party shall be suspended
except that Consumers' obligation under Section 5.11 of this Agreement to
provide protection while operating in parallel with Transmission Provider's
System shall not be suspended. The Party relying on Force Majeure shall give
written notice of Force Majeure to the other Party as soon as practicable after
such event occurs. Upon the conclusion of Force Majeure, the Party heretofore
relying on Force Majeure shall, with all reasonable dispatch, take all necessary
steps to resume the obligation previously suspended.

     10.3 Any Party's obligation to make payments already owing shall not be
suspended by Force Majeure.

                                   ARTICLE 11
                              INFORMATION REPORTING

     Each Party shall, in accordance with Good Utility Practice, promptly
provide to the other Party all relevant information, documents, or data
regarding the Party's assets which may reasonably be expected to pertain to the
reliability of the other Party's assets and/or which has been reasonably
requested by the other Party.

                                   ARTICLE 12
                         PAYMENTS AND BILLING PROCEDURES

12.1 Invoices

     Any invoices for reimbursable services provided to the other Party under
this Agreement during the preceding month shall be prepared within a reasonable
time after the

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first day of each month. Each invoice shall delineate the month in which
services were provided, shall fully describe the services rendered and shall be
itemized to reflect the services performed or provided. The invoice shall be
paid so that the other Party will receive the funds by the 20th day following
the date of such invoice, or the first business day thereafter if the payment
date falls on other than a business day. All payments shall be made in
immediately available funds payable to the other Party, or by wire transfer to a
bank named by the Party being paid, provided that payments expressly required by
this Agreement to be mailed shall be mailed in accordance with Section 12.2.

12.2 Payments to Transmission Provider

     Any payments to be made by Consumers under this Agreement shall be made to
Transmission Provider at the following address:

          Michigan Electric Transmission Company
          540 Avis Drive, Suite H
          Ann Arbor, MI 48108
          Attn: Business Services Manager

     Any payments to be made by Transmission Provider under this Agreement shall
be made to Consumers at the following address:

          Consumers Energy Company
          212 West Michigan Avenue
          Jackson, Michigan 49201-2236
          Attention: Treasurer

     The Parties shall provide the names of appropriate contact personnel, as
are set forth in this Agreement or otherwise, to each other after this Agreement
is executed and shall keep said listing of names up to date.

12.3 Interest Charges

     Interest on any unpaid amounts shall be calculated in accordance with the
methodology specified for interest on refunds in the Commission's regulations at
18 CFR. Section 35.19 (a)(2)(iii). Interest on delinquent amounts shall be
calculated from the due date of the invoice to the date of payment. When
payments are made by mail, invoices shall be considered as having been paid on
the date of receipt by Transmission Provider or Consumers, as the case may be.

12.4 Disputes

     In the event of a billing dispute between Transmission Provider and
Consumers, each Party shall continue to provide services and pay all invoiced
amounts not in dispute. While the dispute is being resolved, the Parties shall
continue to provide services and pay all invoiced amounts not in dispute.
Following resolution of the dispute, the prevailing Party shall be entitled to
receive the disputed amount, as finally determined to be payable, along with

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interest accrued through the date on which payment is made at the interest rate
pursuant to Section 13.3. Payment shall be due within ten (10) days of
resolution.

                                   ARTICLE 13
                                   ASSIGNMENT

13.1 This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of the respective parties hereto. This Agreement shall
not be transferred or otherwise alienated by either Party without the other
Party's prior written consent, which consent shall not unreasonably be withheld,
provided that any assignee shall expressly assume assignor's obligations
hereunder and, unless expressly agreed to by the other Party, no assignment
shall relieve the assignor of its obligations hereunder in the event its
assignee fails to perform. Any attempted assignment, transfer or other
alienation without such consent shall be void and not merely voidable.

13.2 Notwithstanding the above, the Transmission Provider shall be permitted to
assign or otherwise transfer this Agreement, or its rights, duties and
obligations hereunder, in whole or in part, by operation of law or otherwise,
without the prior written consent of Consumers, to (a) any Regional Transmission
Organization or Independent Transmission Company or (b) any successor to or
transferee of the direct or indirect ownership or operation of all or part of
the transmission system to which the Generation Resources are connected. Upon
the assumption by any such permitted assignee of the assigning Transmission
Provider's rights, duties and obligations hereunder, the assigning Transmission
Provider shall be released and discharged therefrom to the extent provided in
the assignment agreement.

13.3 Notwithstanding the above, Consumers may assign this Agreement to a bank
pursuant to the terms of an Assignment and Security Agreement without the prior
written consent of Transmission Provider provided that such assignment shall not
be effective as to Transmission Provider until it receives a fully executed copy
thereof.

                                   ARTICLE 14
                             INDEMNITY AND INSURANCE

14.1 Indemnity

     Each Party shall at all times assume all liability for, and shall indemnify
and save the other Party harmless from any and all damages, losses, claims,
demands, suits, recoveries, costs, legal fees, expenses for injury to or death
of any person or persons whomsoever, or for any loss, destruction of or damage
to any property of third persons, firms, corporations or other entities that
occurs on its own system and that arises out of or results from, either directly
or indirectly, its own assets or assets controlled by it, unless caused by the
sole negligence, or intentional wrongdoing, of the other Party.

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14.2 Insurance

     14.2.1 The Parties agree to maintain, at their own cost and expense, the
following insurance coverages for the life of this Agreement in the manner and
amounts, at a minimum, as set forth below:

     (a)  Workers' Compensation Insurance in accordance with all applicable
          State, Federal, and Maritime Law.

     (b)  Employer's Liability insurance in the amount of $1,000,000 per
          accident.

     (c)  Commercial General Liability or Excess Liability Insurance in the
          amount of $25,000,000 per occurrence.

     (d)  Automobile Liability Insurance for all owned, non-owned, and hired
          vehicles in the amount of $5,000,000 each accident.

     14.2.2 A Party may, at its option, [A] be an approved self-insurer by the
State of Michigan for the insurances required in 1.(a) and (d); and [B] maintain
such deductibles and/or retentions under the insurance required in 1.(b) and (c)
as is maintained by other similarly situated companies engaged in a similar
business. The Parties agree that all amounts of self-insurance, retentions
and/or deductibles are the responsibility of, and shall be borne by, the Party
whom makes such an election.

     14.2.3 Within fifteen (15) days of the Effective Date and thereafter when
requested, in writing, but not more than once every 12 months, during the term
of this Agreement (including any extensions) each Party shall provide to the
other Party properly executed and current certificates of insurance or evidence
of approved self-insurance status with respect to all insurance required to be
maintained by such Party under this Agreement. Certificates of insurance shall
provide the following information:

     (a)  Name of insurance company, policy number and expiration date.

     (b)  The coverage maintained and the limits on each, including the amount
          of deductibles or retentions, which shall be for the account of the
          Party maintaining such policy.

     (c)  The insurance company shall endeavor to provide thirty (30) days prior
          written notice of cancellation to the certificate holder.

                                   ARTICLE 15
                             LIMITATION ON LIABILITY

     NEITHER PARTY SHALL IN ANY EVENT BE LIABLE TO THE OTHER FOR ANY SPECIAL,
INCIDENTAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES SUCH AS, BUT NOT
LIMITED TO, LOST PROFITS, REVENUE OR GOOD WILL, INTEREST, LOSS BY REASON OF
SHUTDOWN OR NON-OPERATION OF EQUIPMENT OR MACHINERY, INCREASED EXPENSE OF
OPERATION OF EQUIPMENT OR MACHINERY,

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COST OF PURCHASED OR REPLACEMENT POWER OR SERVICES OR CLAIMS BY CUSTOMERS,
WHETHER SUCH LOSS IS BASED ON CONTRACT, WARRANTY, NEGLIGENCE, STRICT LIABILITY
OR OTHERWISE.

                                   ARTICLE 16
                            BREACH, CURE AND DEFAULT

16.1 General

     A breach of this Agreement ("Breach") shall occur upon the failure by a
Party to perform or observe any material term or condition of this Agreement.
Default of this Agreement ("Default") shall occur upon the failure of a Party in
Breach of this Agreement to cure such Breach in accordance with the provisions
of Section 16.4 of this Agreement.

16.2 Events of Breach

     A Breach of this Agreement shall include:

     16.2.1 The failure to pay any amount when due;

     16.2.2 The failure to comply with any material term or condition of this
Agreement, including but not limited to any material Breach of a representation,
warranty or covenant made in this Agreement;

     16.2.3 If a Party: (a) becomes insolvent; (b) files a voluntary petition in
bankruptcy under any provision of any federal or state bankruptcy law or shall
consent to the filing of any bankruptcy or reorganization petition against it
under any similar law; (c) makes a general assignment for the benefit of its
creditors or (d) consents to the appointment of a receiver, trustee or
liquidator;

     16.2.4 Assignment of this Agreement in a manner inconsistent with the terms
of this Agreement;

     16.2.5 Failure of either Party to provide such access rights, or a Party's
attempt to revoke or terminate such access rights, as provided under this
Agreement; or

     16.2.6 Failure of either Party to provide information or data to the other
Party as required under this Agreement, provided the Party entitled to the
information or data under this Agreement requires such information or data to
satisfy its obligations under this Agreement.

16.3 Continued Operation

     In the event of a Breach or Default by either Party, the Parties shall
continue to operate and maintain, as applicable, such DC power systems,
protection and Metering Assets, Telemetering Assets, SCADA equipment,
transformers, Secondary Systems, communications assets, building assets,
software, documentation, structural components, and other assets and
appurtenances that are reasonably necessary for Transmission Provider to operate
and

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maintain Transmission Provider's System and for Consumers to operate and
maintain the Unit, in a safe and reliable manner.

16.4 Cure and Default

     Upon the occurrence of an event of Breach, the Party not in Breach
(hereinafter the "Non-Breaching Party"), when it becomes aware of the Breach,
shall give written notice of the Breach to the Breaching Party and to any other
person a Party to this Agreement identifies in writing to the other Party in
advance. Such notice shall set forth, in reasonable detail, the nature of the
Breach, and where known and applicable, the steps necessary to cure such Breach.
Upon receiving written notice of the Breach hereunder, the Breaching Party shall
have thirty (30) days to cure such Breach. If the Breach is such that it cannot
be cured within thirty (30) days, the Breaching Party will commence in good
faith all steps as are reasonable and appropriate to cure the Breach within such
thirty (30) day time period and thereafter diligently pursue such action to
completion. In the event the Breaching Party fails to cure the Breach, or to
commence reasonable and appropriate steps to cure the Breach, within thirty (30)
days of becoming aware of the Breach; the Breaching Party will be in Default of
the Agreement.

16.5 Right to Compel Performance

     Notwithstanding the foregoing, upon the occurrence of an event of Default,
the non-Defaulting Party shall be entitled to: (a) commence an action to require
the Defaulting Party to remedy such Default and specifically perform its duties
and obligations hereunder in accordance with the terms and conditions hereof and
(b) exercise such other rights and remedies as it may have in equity or at law.

                                   ARTICLE 17
                                 CONFIDENTIALITY

17.1 All information regarding a Party (the "Disclosing Party") that is
furnished directly or indirectly to the other Party (the "Recipient") pursuant
to this Agreement and marked "Confidential" shall be deemed "Confidential
Information". Notwithstanding the foregoing, Confidential Information does not
include information that (i) is rightfully received by Recipient from a third
party having an obligation of confidence to the Disclosing Party, (ii) is or
becomes in the public domain through no action on Recipient's part in violation
of this Agreement, (iii) is already known by Recipient as of the date hereof, or
(iv) is developed by Recipient independent of any Confidential Information of
the Disclosing Party. Information that is specific as to certain data shall not
be deemed to be in the public domain merely because such information is embraced
by more general disclosure in the public domain.

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

     17.1.2 Recipient may disclose the Confidential Information to its
affiliates and its affiliates' respective directors, officers, employees,
consultants, advisors, and agents who

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need to know the Confidential Information for the purpose of assisting Recipient
with respect to its obligations under this Agreement. Recipient shall inform all
such parties, in advance, of the confidential nature of the Confidential
Information. Recipient shall cause such parties to comply with the requirements
of this Agreement and shall be responsible for the actions, uses, and
disclosures of all such parties.

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

                                   ARTICLE 18
                                  AUDIT RIGHTS

     Subject to the requirements of confidentiality under Article 17 of this
Agreement, either Party shall have the right, during normal business hours, and
upon prior reasonable notice to the other Party, to audit each other's accounts
and records pertaining to either Party's performance and/or satisfaction of
obligations arising under this Agreement. Said audit shall be performed at the
offices where such accounts and records are maintained and shall be limited to
those portions of such accounts and records that relate to obligations under
this Agreement.

                                   ARTICLE 19
                                    DISPUTES

     The Dispute Resolution Procedures set forth in Section 12 of the Tariff
shall apply to all disputes arising under this Agreement. Under said Dispute
Resolution Procedures, the Transmission Provider shall be Transmission Provider,
the Transmission Customer shall be Consumers, and the Tariff shall mean this
Agreement,

                                   ARTICLE 20
                                     NOTICES

20.1 Any notice, demand or request required or permitted to be given by either
Party to the other and any instrument required or permitted to be tendered or
delivered by either Party to the other may be so given, tendered or delivered,
as the case may be, by depositing the same in any United States Post Office with
postage prepaid, for transmission by certified or

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registered mail, addressed to the Party, or personally delivered to the Party,
at the address set out below:

     To Transmission Provider:

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

     To Consumers:

     Consumers Energy Company
     212 West Michigan Avenue
     Jackson, Michigan 49201-2236
     Attention: Mr. Robert A Fenech, Senior Vice President

20.2 Transmission Provider and Consumers shall use standard telephone circuits
as the primary communication link for generation dispatch communications,
including with respect to dispatching energy in the event of an Emergency and
declaring unit capability. The Parties shall provide the names and telephone
numbers of appropriate contact personnel, as are set forth in this Agreement or
otherwise, to each other after this Agreement is executed and shall keep said
listing of names and telephone numbers up to date.

                                   ARTICLE 21
                                 MISCELLANEOUS

21.1 Amendments

     This Agreement may be amended by and only by a written instrument duly
executed by both of the Parties hereto. No change or modification as to any of
the provisions hereof shall be binding on either Party unless approved in
writing and approved by the duly authorized officers of the Parties.
Notwithstanding the foregoing, nothing contained herein shall be construed as
affecting in any way the right of Transmission Provider or Consumers to
unilaterally make application to the Commission for a change in rates, terms or
conditions of service under Sections 205 and 206 of the Federal Power Act and
pursuant to the Commission's Rules and Regulations promulgated thereunder.
Transmission Provider reserves the right to file rate schedules with the
Commission concerning any services Transmission Provider deems necessary for
reliable and orderly bulk power system management, including but not limited to
any standby or related services that may arise from a failure by Consumers to
meet its schedule of deliveries across the assets covered by this Agreement.

21.2 Binding Effect

     This Agreement and the rights and obligations hereof, shall be binding upon
and shall inure to the benefit of the successors and assigns of the Parties
hereto.

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21.3 Counterparts

     This Agreement may be executed in any number of counterparts, and each
executed counterpart shall have the same force and effect as an original
instrument.

21.4 Entire Agreement

     This Agreement constitutes the entire agreement between the Parties hereto
with reference to the subject matter hereof and its execution superseded all
previous agreements, discussions, communications and correspondence with respect
to said subject matter. The terms and conditions of this Agreement and every
Exhibit referred to herein shall be amended, as mutually agreed to by the
Parties, to comply with changes or alterations made necessary by a valid
applicable order of any governmental regulatory authority, or any court, having
jurisdiction hereof.

21.5 Governing Law

     The validity, interpretation and performance of this Agreement and each of
its provisions shall be governed by the applicable laws of the State of
Michigan, exclusive of its conflict of laws principles.

21.6 Headings Not To Affect Meaning

     The descriptive headings of the various Articles and Sections of this
Agreement have been inserted for convenience of reference only and shall in no
way modify or restrict any of the terms and provisions hereof.

21.7 Waivers

     Any waiver at any time by either Party of its rights with respect to a
default under this Agreement, or with respect to any other matters arising in
connection with this Agreement, shall not be deemed a waiver or continuing
waiver with respect to any subsequent default or other matter.

                                       28

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Execution Copy

     IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
duly executed by their duly authorized officers.

                                        MICHIGAN ELECTRIC TRANSMISSION COMPANY

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

                                        CONSUMERS ENERGY COMPANY

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

                                       29
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Execution Copy

                   EXHIBIT A - CONSUMERS GENERATION RESOURCES
<TABLE>
<CAPTION>
                        SUMMER       WINTER
                          NET          NET                                             AGC
           NAMEPLATE DEMONSTRATED DEMONSTRATED                                        RAMP  BLACK
GENERATING   RATED        MW           MW                                       AGC    MW/  START     SYNCH
UNIT        MVA (1)   CAPABILITY   CAPABILITY  KILOVOLTS  RPM      COOLING    CAPABLE  MIN CAPABLE  BREAKER(S)        COMMENTS
---------- --------- ------------ ------------ --------- ----- -------------- ------- ---- ------- ----------- ---------------------
<S>        <C>       <C>          <C>          <C>       <C>   <C>            <C>     <C>  <C>     <C>         <C>
Campbell 1     312.0        260.0        260.0      16.0 3,600 Hydrogen         Yes     1     No       199

Campbell 2     492.0        355.0        360.0      20.0 3,600 Water/Hydrogen   Yes     1     No       299

Campbell 3   1,025.0        820.0        820.0      18.0 3,600 Water/Hydrogen   Yes     3     No    32R8/32H9  The MW ratings shown
                                                                                                               are acceptable to
                                                                                                               both Michigan
                                                                                                               Electric Transmission
                                                                                                               Company and Consumers
                                                                                                               Energy Company,
                                                                                                               recognizing that
                                                                                                               other system changes
                                                                                                               may be required that
                                                                                                               will be determined
                                                                                                               when transmission
                                                                                                               system planning
                                                                                                               studies currently
                                                                                                               being conducted are
                                                                                                               concluded.

Campbell A      21.9         13.0         17.0      13.8 3,600 Air               No     0    Yes       C16

Cobb 1          81.2         61.0         61.0      14.4 3,600 Hydrogen          No     0     No       199     Cobb 1-3 are capable
                                                                                                               of 68 MW each except
                                                                                                               that with 3 units
                                                                                                               running the combined
                                                                                                               output is boiler
                                                                                                               limited to 183 MW.

Cobb 2          81.2         61.0         61.0      14.4 3,600 Hydrogen          No     0     No       299     Cobb 1-3 are capable
                                                                                                               of 68 MW each except
                                                                                                               that with 3 units
                                                                                                               running the combined
                                                                                                               output is boiler
                                                                                                               limited to 183 MW.

Cobb 3          81.2         61.0         61.0      14.4 3,600 Hydrogen          No     0     No       399     Cobb 1-3 are capable
                                                                                                               of 68 MW each except
                                                                                                               that with 3 units
                                                                                                               running the combined
                                                                                                               output is boiler
                                                                                                               limited to 183 MW.

Cobb 4         184.0        158.0        160.0      18.0 3,600 Hydrogen         Yes     1     No       499

Cobb 5         184.0        158.0        160.0      18.0 3,600 Hydrogen         Yes     1     No       599

Gaylord 1       18.8         14.0         17.0      13.8 3,600 Air               No     0    Yes       116

Gaylord 2       18.8         14.0         17.0      13.8 3,600 Air               No     0    Yes       216

Gaylord 3       18.8         14.0         17.0      13.8 3,600 Air               No     0    Yes       316

Gaylord 4       18.8         14.0         17.0      13.8 3,600 Air               No     0    Yes       416

Gaylord 5       21.9         14.0         17.0      13.8 3,600 Air               No     0     No       516

Karn 1         336.0        255.0        255.0      16.0 3,600 Hydrogen          No     0     No       199

Karn 2         320.0        260.0        260.0      16.0 3,600 Hydrogen          No     0     No       299

Karn 3         814.7        638.0        638.0      26.0 3,600 Water/Hydrogen   Yes     6     No    28R8/28H9

Karn 4         835.0        638.0        638.0      26.0 3,600 Water/Hydrogen   Yes     6     No    32F7/32H9

Ludington
1 (gen)        388.0        312.0        312.0      20.0 112.5 Air              Yes     9   No (2)     116     NDC is 312 MW but can
                                                                                                               operate at 340 MWg
                                                                                                               (338 MW net) at full
                                                                                                               pond.

Ludington
2 (gen)        388.0        312.0        312.0      20.0 112.5 Air              Yes     9    Yes       216     NDC is 312 MW but can
                                                                                                               operate at 340 MWg
                                                                                                               (338 MW net) at full
                                                                                                               pond.

Ludington
3 (gen)        388.0        312.0        312.0      20.0 112.5 Air              Yes     9    Yes       316     NDC is 312 MW but can
                                                                                                               operate at 340 MWg
                                                                                                               (338 MW net) at full
                                                                                                               pond.
</TABLE>

                                        1

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                   EXHIBIT A - CONSUMERS GENERATION RESOURCES
<TABLE>
<CAPTION>
                        SUMMER       WINTER
                          NET          NET                                             AGC
           NAMEPLATE DEMONSTRATED DEMONSTRATED                                        RAMP  BLACK
GENERATING   RATED        MW           MW                                       AGC    MW/  START     SYNCH
UNIT        MVA (1)   CAPABILITY   CAPABILITY  KILOVOLTS  RPM      COOLING    CAPABLE  MIN CAPABLE  BREAKER(S)        COMMENTS
---------- --------- ------------ ------------ --------- ----- -------------- ------- ---- ------- ----------- ---------------------
<S>        <C>       <C>          <C>          <C>       <C>   <C>            <C>     <C>  <C>     <C>         <C>
Ludington
4 (gen)        388.0        312.0        312.0      20.0 112.5 Air              Yes     9   No (2)     416     NDC is 312 MW but can
                                                                                                               operate at 340 MWg
                                                                                                               (338 MW net) at full
                                                                                                               pond.

Ludington
5 (gen)        388.0        312.0        312.0      20.0 112.5 Air              Yes     9    Yes       516     NDC is 312 MW but can
                                                                                                               operate at 340 MWg
                                                                                                               (338 MW net) at full
                                                                                                               pond.

Ludington
6 (gen)        388.0        312.0        312.0      20.0 112.5 Air              Yes     9   No (2)     616     NDC is 312 MW but can
                                                                                                               operate at 340 MWg
                                                                                                               (338 MW net) at full
                                                                                                               pond.

Morrow A        20.7         14.0         17.0      13.8 3,600 Air               No     0    Yes       A16

Morrow B        20.7         14.0         17.0      13.8 3,600 Air               No     0    Yes       B16

Palisades
Nuclear        955.0        784.0        820.0      22.0 1,800 Hydrogen          No     0     No    25F7/25H9  Rating is based upon
                                                                                                               operating license
                                                                                                               issued by the Nuclear
                                                                                                               Regulatory
                                                                                                               Commission.

Straits 1       25.0         16.0         21.0      13.8 3,600 Air               No     0    Yes       S16

Thetford 1      39.5         30.0         37.0      13.8 3,600 Air               No     0    Yes       116

Thetford 2      39.5         29.0         37.0      13.8 3,600 Air               No     0    Yes       216

Thetford 3      39.5         30.0         37.0      13.8 3,600 Air               No     0    Yes       316

Thetford 4      39.5         30.0         37.0      13.8 3,600 Air               No     0    Yes       416

Thetford 5      20.7         15.0         17.0      13.8 3,600 Air               No     0    Yes       516

Thetford 6      20.7         15.0         17.0      13.8 3,600 Air               No     0    Yes       616

Thetford 7      20.7         14.0         17.0      13.8 3,600 Air               No     0    Yes       716

Thetford 8      20.7         15.0         18.0      13.8 3,600 Air               No     0    Yes       816

Thetford 9      20.7         14.0         17.0      13.8 3,600 Air               No     0    Yes       916

Weadock 7      202.0        155.0        155.0      18.0 3,600 Hydrogen         Yes     1     No       799

Weadock 8      184.0        155.0        155.0      18.0 3,600 Hydrogen         Yes     1     No       899

Weadock A       21.9         13.0         17.0      13.8 3,600 Air               No     0    Yes       A16

Whiting 1      125.0        102.0        102.0      14.4 3,600 Hydrogen         Yes     1     No       199

Whiting 2      125.0        102.0        102.0      14.4 3,600 Hydrogen         Yes     1     No       299

Whiting 3      156.3        122.0        124.0      15.5 3,600 Hydrogen         Yes     1     No       399

Whiting A       21.9         13.0         17.0      13.8 3,600 Air               No     0    Yes       46A

Alcona
Hydro 1          4.4          4.0          4.0       5.0    90 Air               NA    NA    Yes     116/166

Alcona
Hydro 2          4.4          4.0          4.0       5.0    90 Air               NA    NA    Yes     216/166

Allegan
Hydro 1          0.6          0.4          0.4       4.8   180 Air               NA    NA    Yes     116/166

Allegan
Hydro 2          1.1          0.9          0.9       4.8   120 Air               NA    NA    Yes     216/166

Allegan
Hydro 3          1.5          1.2          1.2       4.8   113 Air               NA    NA     No     316/166

Cooke
Hydro 1          3.3          1.5          1.5       2.5   180 Air               NA    NA    Yes     116/166

Cooke
Hydro 2          3.3          3.0          3.0       2.5   180 Air               NA    NA    Yes     216/166

Cooke
Hydro 3          3.3          3.0          3.0       2.5   180 Air               NA    NA    Yes     316/166

Croton
Hydro 1          3.8          2.9          2.9       7.2   225 Air               NA    NA    Yes     116/246

Croton
Hydro 2          3.8          2.9          2.9       7.2   225 Air               NA    NA    Yes     216/246
</TABLE>

                                        2

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                   EXHIBIT A - CONSUMERS GENERATION RESOURCES
<TABLE>
<CAPTION>
                        SUMMER       WINTER
                          NET          NET                                             AGC
           NAMEPLATE DEMONSTRATED DEMONSTRATED                                        RAMP  BLACK
GENERATING   RATED        MW           MW                                       AGC    MW/  START     SYNCH
UNIT        MVA (1)   CAPABILITY   CAPABILITY  KILOVOLTS  RPM      COOLING    CAPABLE  MIN CAPABLE  BREAKER(S)        COMMENTS
---------- --------- ------------ ------------ --------- ----- -------------- ------- ---- ------- ----------- ---------------------
<S>        <C>       <C>          <C>          <C>       <C>   <C>            <C>     <C>  <C>     <C>         <C>
Croton
Hydro 3          1.4          1.3          1.3       7.2   150 Air               NA    NA    Yes     316/246

Croton
Hydro 4          1.6          1.3          1.3       7.2   150 Air               NA    NA    Yes     416/246

Five
Channels 1       3.3          3.2          3.2       2.5   150 Air               NA    NA    Yes     116/166

Five
Channels 2       3.3          3.2          3.2       2.5   150 Air               NA    NA    Yes     216/166

Foote
Hydro 1          3.3          3.3          3.3       5.0    90 Air               NA    NA    Yes     116/366

Foote
Hydro 2          3.3          3.3          3.3       5.0    90 Air               NA    NA    Yes     216/366

Foote
Hydro 3          3.3          3.3          3.3       5.0    90 Air               NA    NA    Yes     316/366

Hardy
Hydro 1         12.5         10.8         10.8       7.5   164 Air               NA    NA    Yes     116/166

Hardy
Hydro 2         12.5         10.8         10.8       7.5   164 Air               NA    NA    Yes     216/166

Hardy
Hydro 3         12.5         10.8         10.8       7.5   164 Air               NA    NA    Yes     316/166

Hodenpyl
Hydro 1          8.9          9.2          9.2       7.5   120 Air               NA    NA    Yes     116/266

Hodenpyl
Hydro 2          8.9          9.2          9.2       7.5   120 Air               NA    NA    Yes     216/266

Loud
Hydro 1          2.2          2.2          2.2       2.5   120 Air               NA    NA    Yes     116/266

Loud
Hydro 2          2.2          2.2          2.2       2.5   120 Air               NA    NA    Yes     216/266

Mio
Hydro 1          2.7          2.2          2.2       2.5    80 Air               NA    NA    Yes     116/166

Mio
Hydro 2          2.7          2.2          2.2       2.5    80 Air               NA    NA    Yes     216/166

Rogers
Hydro 1          1.9          1.5          1.5       7.5   150 Air               NA    NA    Yes     116/166

Rogers
Hydro 2          1.9          1.5          1.5       7.5   150 Air               NA    NA    Yes     216/166

Rogers
Hydro 3          1.9          1.5          1.5       7.5   150 Air               NA    NA    Yes     316/166

Rogers
Hydro 4          1.9          1.5          1.5       7.5   150 Air               NA    NA    Yes     416/166

Tippy
Hydro 1          7.1          7.0          7.0       7.5   109 Air               NA    NA    Yes   116/266/126

Tippy
Hydro 2          7.1          7.0          7.0       7.5   109 Air               NA    NA    Yes   216/266/126

Tippy
Hydro 3          7.1          7.0          7.0       7.5   109 Air               NA    NA    Yes   316/266/126

Webber
Hydro 1          3.3          2.3          2.3       7.2   164 Air               NA    NA    Yes     116/166

Webber
Hydro 2          1.3          1.0          1.0       2.5   200 Air               NA    NA    Yes       216
</TABLE>

NOTES:

(1)  Rated MVA represents generator machine capability limits. Turbine or main
     transformer limits may be more restrictive.

(2)  Ludington units 1, 4 and 6 need to have one of the the other units on line
     before they can be started.

                                        3
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Execution Copy

                       EXHIBIT B - INTERCONNECTION ASSETS

GENERAL

The Parties agree that certain assets located at each of the electrical
Substations at which Consumers' Generation Resources are connected to
Transmission Provider's Transmission System are an integral part of the assets
required by the Parties to provide services under their respective charters and
that the physical partition would be impossible, impractical and wholly
inconsistent with the purposes for which this Agreement is made. Said assets are
deemed to be Jointly Owned Assets. In general, said assets include, but in some
of the electrical Substations shall not be limited to, the following:

Foundations      All foundations not identified as belonging to a specific
                 piece of assets in the Plant Accounting Records.

Structures       All steel support structures.

Station wiring   All buswork, control cables, batteries, battery chargers
                 and ground grids.

Fencing          All chain-link fencing surrounding or used within the
                 specific electrical Substation.

Control house    Any building located within the Substation used to house
                 relaying, controls or telemetry equipment beneficial to
                 and used by both Parties.

Stone            All stone used in the Substation yards, driveways and
                 drains.

At each of the substations listed in this Exhibit B, an allocated percentage of
the Jointly Owned Assets is determined for each Party hereto, in accordance with
the provisions of this Agreement

For each of the electrical Substations at which Consumers' Generation Resources
are connected to Transmission Provider's Transmission System, the specific
assets allocated to and owned by Consumers are identified below as Consumers'
Interconnection Assets. In certain 345 kV Substations, specific breakers and
associated assets that have been designated for operation by Consumers are also
specifically identified as Transmission Provider's Interconnection Assets.

Some of the electrical Substations containing Interconnection Assets also
contain Distribution System assets owned by Consumers. Unless said Distribution
System assets are directly involved in the connection of Consumers' Generation
Resources to the Transmission Provider's Transmission System, they are not
described in the description of assets that follow.

The balance of the assets in each electrical Substation are allocated to and
owned by the Transmission Provider and considered a part of Transmission
Provider's Transmission System.

To assist in the identification of the assets being listed, a wiring diagram for
each of the electrical Substations at which Consumers' Generation Resources are
connected to Transmission Provider's Transmission System is also included in
this Exhibit B.

                                       1

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GENERATOR CONNECTIONS LOCATED AT SUBSTATIONS IN THE TRANSMISSION SYSTEM

CAMPBELL GENERATING PLANT COMPLEX

NOTE: The Michigan Public Power Agency has a 4.8% ownership interest in the
Campbell 345 kV Substation circuit breakers 32H9, 32R8 and the electrical
equipment associated therewith, the Campbell 138 kV Substation circuit breaker
899, 138 kV buswork and electrical equipment associated therewith, the 138 kV
start-up power supply circuit for Unit 3 and the 345 kV transmission line
between the Unit 3 main power transformers and the Campbell 345 kV Substation.

The Campbell Generating Plant Complex consists of four generating Units, known
as Unit 1 (consisting of generators 1A and 1B), Unit 2, Unit 3 and Unit A.

The Connection Point for Units 1, 2 and A are in the Campbell 138 kV Substation
(see Wiring Diagram #93, Sheet 31 attached). The Connection Point for Unit 3 is
in the Campbell 345 kV Substation (see Wiring Diagram #883, Sheet 31 attached).

The Points of Receipt for all the Units in the Campbell Generating Plant Complex
are deemed to be the respective Connection Points.

Consumers' Interconnection Assets

Consumers and other third parties, as noted above, share ownership of the
following assets at the Campbell 138 kV Substation (Wiring Diagram #93, Sheet
31):

Transformer Bank      No A

Circuit Breakers      Nos. 199, 299, 799, 899 and 16A

Switches              Nos. 195, 196, 295, 296, 709, 793, 795, 796, 809, 893,
                      895, 896 and 99A

Circuit Connections   All wire, cable or buswork electrically connecting the
                      switches identified above to the Circuit Breakers
                      identified above and to the main or transfer buswork

Relay & Controls      All relays and controls associated with the Circuit
                      Breakers identified above

Foundations           All foundations supporting the Circuit Breakers identified
                      above

Consumers and other third parties, as noted above, share ownership of the
following assets at the Campbell 345 kV Substation (Wiring Diagram #883, Sheet
31):

Circuit Connections   All conductors electrically connecting the 345 kV
                      Transformer Banks Nos 3-1 and 3-2 to the buswork in the
                      Campbell 345 kV Substation

                                       2

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Transmission Provider's Interconnection Assets

Transmission Provider and other third parties, as noted above, share ownership
of the following assets at the Campbell 345 kV Substation (Wiring Diagram #883,
Sheet 31):

Circuit Breakers      Nos. 32H9 and 32R8

Switches              Nos. 32H5, 32H6, 32R2 and 32R4

Circuit Connections   All wire, cable or buswork electrically connecting the
                      switches identified above to the Circuit Breakers
                      identified above and to adjacent buswork

Relay & Controls      All relays and controls associated with the Circuit
                      Breakers identified above

Foundations           All foundations supporting the Circuit Breakers identified
                      above

Jointly Owned Assets - Percentage Split by Major Equipment Count

Campbell 138 kV Substation - Consumers (generation) = 43.15%;
                             Consumers (distribution) = 0.00%;
                             Transmission Provider = 56.25%;
                             Third Parties = 0.60%

Campbell 345 kV Substation - Consumers (generation) = 0.00%;
                             Consumers (distribution) = 0.00%;
                             Transmission Provider = 97.60%;
                             Third Parties = 2.40%

                                       3

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Execution Copy

NOTE: WIRING DIAGRAMS NO. 93 AND 883 WILL BE INSERTED HERE.

                                       4

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Execution Copy

COBB GENERATING PLANT COMPLEX

The Cobb Generating Plant Complex consists of five generating Units, known as
Units 1 through 5, respectively.

The Connection Points for Units 1 through 5 are in the BC Cobb Plant Substation
(see Wiring Diagram #240, Sheet 31 attached).

The Points of Receipt for all the Units in the Cobb Generating Plant Complex are
deemed to be the respective Connection Points.

Consumers' Interconnection Assets

Consumers owns the following assets at the BC Cobb Plant Substation (Wiring
Diagram #240, Sheet 31):

Transformer Banks     Nos. 1, 2, 3, 4 and 5

Circuit Breakers      Nos. 199, 299, 399, 499 and 599

Switches              Nos. 193, 195, 196, 293, 295, 296, 393, 395, 396, 493,
                      495, 496, 593, 595 and 596

Circuit Connections   All wire, cable or buswork electrically connecting the
                      switches identified above to the Circuit Breakers
                      identified above and to the main buswork.

Relay & Controls      All relays and controls associated with the Circuit
                      Breakers identified above

Foundations           All foundations supporting the Transformers and Circuit
                      Breakers identified above

Auxiliary Power       All 2400 Volt station power assets shown in the attached
                      Wiring Diagram #240

Jointly Owned Assets  - Percentage Split by Major Equipment Count

Cobb Plant Substation - Consumers (generation) = 27.78%;
                        Consumers (distribution) = 47.22%;
                        Transmission Provider = 25.00%

                                       5

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               NOTE: WIRING DIAGRAM NO 240 WILL BE INSERTED HERE.

                                       6

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Execution Copy

GAYLORD GENERATING PLANT COMPLEX

The Gaylord Generating Plant Complex consists of five combustion turbine
generating Units, known as Units 1 through 5, respectively.

The Connection Points for Units 1 through 5 are in the Gaylord Generating
Substation (see Wiring Diagram #495, Sheet 31 attached).

The Points of Receipt for all the Units in the Gaylord Generating Plant Complex
are deemed to be the respective Connection Points.

Consumers' Interconnection Assets

Consumers owns the following assets at the Gaylord Generating Substation (Wiring
Diagram #495, Sheet 31):

Transformer Banks     Nos. 2 and 3

Circuit Breakers      Nos. 146, 116, 216, 316, 416 and A16

Switches              Nos. 142, 144, 145, 299, 399, 493, 495, 496, 593, 595 and
                      596

Circuit Connections   All wire, cable or buswork electrically connecting the
                      switches identified above to the Circuit Breakers
                      identified above

Relay & Controls      All relays and controls associated with the Circuit
                      Breakers identified above

Foundations           All foundations supporting the Transformers and Circuit
                      Breakers identified above

Auxiliary Power       All station power assets shown in the attached Wiring
                      Diagram #495, Sheet 31

Jointly Owned Assets          - Percentage Split by Major Equipment Count

Gaylord Generating Substation - Consumers (generation) = 33.33%;
                                Consumers (distribution) = 44.45%;
                                Transmission Provider = 22.22%

                                       7

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Execution Copy

NOTE: WIRING DIAGRAM NO 495 WILL BE INSERTED HERE.

                                       8

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Execution Copy

HARDY HYDRO GENERATING PLANT

The Hardy Hydro Generating Plant consists of three generating Units, known as
Units 1, 2 and 3.

The Connection Point for Units 1, 2 and 3 is at Tower No 8203 in the 138 kV
transmission line (known as the O-15 Line) approximately 1,800 feet from the
Hardy Dam Substation (see Wiring Diagram #164, Sheet 31 attached). The
Connection Point is located as described (instead of in the Hardy Dam
Substation) because that portion of the O-15 Line is included in the FERC
License for the Hardy Plant.

The Point of Receipt for all the Units in the Hardy Hydro Generating Plant is
deemed to be the Connection Point.

Consumers' Interconnection Assets

Consumers owns the following assets at the Hardy Dam Substation (Wiring Diagram
#164, Sheet 31) and approximately 1,800 feet of the O-15 138 kV transmission
line immediately outside the Hardy Dam Substation:

Assets located at Hardy Dam Plant and Substation

Transformer Bank      No 1

Circuit Breakers      Nos. 199, 166, 116, 216 and 316

Switches              Nos. 191, 164 and 136

Circuit Connections   All wire, cable or buswork electrically connecting the
                      Transformer, Circuit Breakers and Switches identified
                      above to each other, as appropriate, and to the 138 kV
                      transmission system at the 191 Switch

Relay & Controls      All relays and controls associated with the Circuit
                      Breakers identified above

Foundations           All foundations supporting the Circuit Breakers
                      identified above

Auxiliary Power       All station power assets connected to the 7200 Volt
                      buswork

Jointly Owned Assets - Percentage Split by Major Equipment Count

Hardy Dam Substation - Consumers (generation) = 100.00%;
                       Consumers (distribution) = 0.00%;
                       Transmission Provider = 0.00%

                                       9

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NOTE: WIRING DIAGRAM NO 164 WILL BE INSERTED HERE

                                       10

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KARN GENERATING PLANT COMPLEX

The Karn Generating Plant Complex consists of four generating Units, known as
Units 1 (consisting of generators 1A and 1B), Unit 2 (consisting of generators
2A and 2B, Unit 3 and Unit 4.

The Connection Point for Units 1 and 2 are in the DE Karn Plant 138 kV
Substation (see Wiring Diagram #695, Sheet 31 attached). The Connection Point
for Units 3 and 4 are in the Hampton 345 kV Substation (see Wiring Diagram
#1327, Sheet 31 attached).

The Points of Receipt for all the Units in the DE Karn Generating Plant Complex
are deemed to be the respective Connection Points.

Consumers' Interconnection Assets

Consumers owns the following assets at the DE Karn 138 kV Substation (Wiring
Diagram #695, Sheet 31):

Transformer Banks     Nos. 1 and 2

Circuit Breakers      Nos. 199, 299, 399, 499, 799 and 899

Switches              Nos. 195, 196, 295, 296, 709, 793, 795, 796, 809, 893,
                      895, and 896

Circuit Connections   All wire, cable or buswork electrically connecting the
                      switches identified above to the Circuit Breakers
                      identified above and to the main or transfer buswork

Relay & Controls      All relays and controls associated with the Circuit
                      Breakers identified above

Foundations           All foundations supporting the Circuit Breakers
                      identified above

Auxiliary Power       All 480 Volt and 4160 Volt station power assets shown in
                      the attached Wiring Diagram #695, Sheet 31

Consumers owns the following assets at the Hampton 345 kV Substation (Wiring
Diagram #1327, Sheet 31):

Circuit Connections   All conductors electrically connecting the 345 kV
                      Transformer Banks Nos 3 and 4 to the buswork in the
                      Hampton 345 kV Substation

Transmission Provider's Interconnection Assets

Transmission Provider owns the following assets at the Hampton 345 kV
Substation (Wiring Diagram #1327, Sheet 31):

Circuit Breakers      Nos. 28H9, 28R8, 32F7 and 32H9

Switches              Nos. 28H5, 28H6, 28R2, 28R4, 32F1, 32F3, 32H5 and 32H6

Circuit Connections   All wire, cable or buswork electrically connecting the
                      switches identified above to the Circuit Breakers
                      identified above and to adjacent buswork

Relay & Controls      All relays and controls associated with the Circuit
                      Breakers identified above

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Foundations           All foundations supporting the Circuit Breakers identified
                      above

Jointly Owned Assets      - Percentage Split by Major Equipment Count

Hampton 345 kV Substation - Consumers (generation) = 0.00%;
                            Consumers (distribution) = 0.00%;
                            Transmission Provider = 100.00%

Karn Plant Substation     - Consumers (generation) = 46.15%;
                            Consumers (distribution) = 0.00%
                            Transmission Provider = 53.85%

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LUDINGTON PUMPED STORAGE GENERATING PLANT COMPLEX

Note: The Detroit Edison Company has a overall 49% ownership interest in the
Ludington Generating Plant and certain other related facilities and property.

The Ludington Pumped Storage Generating Plant Complex consists of six
motor-generator Units, known as Units 1 through 6, respectively.

The Connection Points for Units 1 through 6 are in the Ludington Substation (see
Wiring Diagram #1405, Sheet 31 attached).

The Points of Receipt for all the Units in the Ludington Pumped Storage
Generating Plant Complex are deemed to be the respective Connection Points.

Consumers' Interconnection Assets

Consumers and Detroit Edison, as noted above, share ownership of the following
assets at the Ludington Substation (Wiring Diagram #1405, Sheet 31):

Transformer Banks     Nos. 1, 2, and 3

Reactors              Nos 1 and 2

Circuit Breakers      Nos. 115, 116, 216, 316, 416 516, 615 and 616 (all
                      phase-reversing 3-pole breakers associated with the
                      motor-generators) and Nos. 1116 and 6116 (breakers
                      associated with Pony Motors Nos 1 and 2)

Switches              Nos. 105, 215, 315, 415, 515, 1112, 6112 and 1099

Removable Links       Nos. 111, 112, 113, 212, 213, 312, 313, 412, 413, 512,
                      513, 612 and 613

Circuit Connections   All 345 kV conductors connecting the 20/345 kV Transformer
                      Banks to the 345 kV buswork in the Ludington Substation

                      All wire, cable or buswork electrically connecting the
                      switches identified above to the Circuit Breakers
                      identified above and to the 20 kV main and starting
                      buswork

Relay & Controls      All relays and controls associated with the Circuit
                      Breakers identified above

Foundations           All foundations supporting the Transformers and Circuit
                      Breakers identified above

Auxiliary Power       All 480 Volt and 4160 Volt station power assets shown in
                      the attached Wiring Diagram #1405, Sheet 31

Transmission Provider's Interconnection Assets

Transmission Provider and Detroit Edison, as noted above, share ownership of the
following assets at the Ludington Substation (Wiring Diagram #1405, Sheet 31):

Circuit Breakers      Nos. 22F7, 22H9, 24F7, 24H9, 25F7 and 25H9

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Switches              Nos. 22F1, 22F3, 22H5, 22H6, 24F1, 24F3, 24H5, 24H6, 25F1,
                      25F3, 25H5 and 25H6

Circuit Connections   All wire, cable or buswork electrically connecting the
                      switches identified above to the Circuit Breakers
                      identified above and to adjacent buswork

Relay & Controls      All relays and controls associated with the Circuit
                      Breakers identified above

Foundations           All foundations supporting the Circuit Breakers identified
                      above

Jointly Owned Assets - Percentage Split by Major Equipment Count

Ludington Substation - Consumers (generation) = 0.00%;
                       Consumers (distribution) = 0.00%;
                       Transmission Provider = 56.76%;
                       Third Parties = 43.24%

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MORROW GENERATING PLANT COMPLEX

The Morrow Generating Plant Complex consists of two combustion turbine
generating Units, known as Units A and B.

The Connection Points for both Units A and B are in the Morrow Substation (see
Wiring Diagram #190, Sheet 31, attached).

The Points of Receipt for the Units in the Morrow Generating Plant Complex are
deemed to be the Connection Points.

Consumers' Interconnection Assets

Consumers owns the following assets at the Morrow Substation (Wiring Diagram
#190, Sheet 31):

Transformer Bank      No. 4

Circuit Breakers      Nos. 499, 16A and 16B

Switches              Nos. 495 and 496

Circuit Connections   All wire, cable or buswork electrically connecting the
                      Transformer, Circuit Breakers and Switches identified
                      above

Relay & Controls      All relays and controls associated with the Circuit
                      Breakers identified above

Foundations           All foundations supporting the Transformers and Circuit
                      Breakers identified above

Auxiliary Power       All 480 Volt station power assets shown in the attached
                      Wiring Diagram #190, Sheet 31

Jointly Owned Assets - Percentage Split by Major Equipment Count

Morrow Substation    - Consumers (generation) = 10.00%;
                       Consumers (distribution) = 66.67%;
                       Transmission Provider = 23.33%

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PALISADES GENERATING PLANT COMPLEX

The Palisades Nuclear Generating Plant Complex consists of one generating Unit,
known as Unit 1.

The Connection Points for Unit 1 are in the Palisades Substation (see Wiring
Diagram #1421, Sheet 31 attached).

The Points of Receipt for the Palisades Unit are deemed to be the respective
Connection Points.

Consumers' Interconnection Assets

Consumers owns the following assets at the Palisades Substation (Wiring Diagram
#1421, Sheet 31):

Transformer Bank      Safeguard Bank No 1-1

Switches              Nos. 24F1, 24R2 and 26H5 (each motor-operated)

Circuit Connections   All 345 kV conductors connecting the Transformer Banks
                      (Main, Safeguard and Start-Up) to the 345 kV buswork in
                      the Palisades Substation

Foundations           All foundations supporting the Transformer identified
                      above as being located in the Palisades Substation

Transmission Provider's Interconnection Assets

Transmission Provider owns the following assets at the Palisades Substation
(Wiring Diagram #1421, Sheet 31):

Circuit Breakers      Nos. 25F7, 25H9 and 25R8

Switches              Nos. 25F1, 25F3, 25H5, 25H6, 25R2 and 25R4

Circuit Connections   All wire, cable or buswork electrically connecting the
                      switches identified above to the Circuit Breakers
                      identified above and to adjacent buswork

Jointly Owned Assets - Percentage Split by Major Equipment Count

Palisades Substation - Consumers (generation) = 7.69%;
                       Consumers (distribution) = 0.00%;
                       Transmission Provider = 92.31%

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THETFORD GENERATING PLANT COMPLEX

The Thetford Generating Plant Complex consists of nine combustion turbine
generating Units, known as Units 1 through 9, respectively.

The Connection Points for Units 1 through 9 are in the Thetford Substation (see
Wiring Diagram #1000, Sheet 31 attached).

The Points of Receipt for all the Thetford Units are deemed to be the respective
Connection Points.

Consumers' Interconnection Assets

Consumers owns the following assets at the Thetford Substation (Wiring Diagram
#1000, Sheet 31):

Transformer Banks     Nos. 5, 6-1, 6-2 and 7

Circuit Breakers      Nos. 13B7, 13W8, 116, 216, 316, 416, 516, 616, 716, 816
                      and 916

Switches              Nos. 13B1, 13B3, 13M5, 13W2, 13W4, 591, 691-1, 691-2 and
                      791

Circuit Connections   All wire, cable or buswork electrically connecting the
                      Transformer Banks, Circuit Breakers and Switches
                      identified above

Relay & Controls      All relays and controls associated with the Circuit
                      Breakers identified above

Foundations           All foundations supporting the Transformers and Circuit
                      Breakers identified above

Jointly Owned Assets - Percentage Split by Major Equipment Count

Thetford Substation  - Consumers (generation) = 8.00%;
                       Consumers (distribution) = 0.00%;
                       Transmission Provider = 92.00%

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NOTE: WIRING DIAGRAM NO 1000 WILL BE INSERTED HERE

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WEADOCK GENERATING PLANT COMPLEX

The Weadock Generating Plant Complex consists of three generating Units, known
as Units 7, 8 and A.

The Connection Points for Units 7, 8 and A1 are in the John C Weadock Substation
(see Wiring Diagram #195, Sheet 31 attached). These Units are currently in
service. In addition, there are six other units, known as Units 1 through 6,
which have been retired from service, but are still in place. Those assets are
also described below, should the Units be restored to service in the future.

The Points of Receipt for all the Units currently in service at the Weadock
Generating Plant Complex are deemed to be the respective Connection Points.

Consumers' Interconnection Assets (for Units In Service)

Consumers owns the following assets at the John C Weadock Substation (Wiring
Diagram #195, Sheets 2 and 31):

Transformer Banks     Nos. 7, 8 and A1

Circuit Breakers      Nos. 799, 899 and 66A

Switches              Nos. 795, 796, 895, 896, 62A and 64A

Circuit Connections   All wire, cable or buswork electrically connecting the
                      Switches identified above to the Circuit Breakers
                      identified above and to the main buswork.

Relay & Controls      All relays and controls associated with the Circuit
                      Breakers identified above

Foundations           All foundations supporting the Transformer Banks and
                      Circuit Breakers identified above

Auxiliary Power       All 480 Volt and 4160 Volt station power assets shown in
                      the attached Wiring Diagram #195, Sheet 31

Consumers' Interconnection Assets (for Units Retired in Place)

Consumers owns the following assets at the John C Weadock Substation (Wiring
Diagram #195, Sheet 31):

Transformer Banks     Nos. 1, 2 and 6

Circuit Breakers      Nos. 166, 266, 316, 416, 136 and 236

Switches              Nos. 195, 196, 295, 296, 162, 164, 232, 234, 314, 414, 516
                      and 616

Circuit Connections   All wire, cable or buswork electrically connecting the
                      Switches identified above to the Circuit Breakers
                      identified above and to the main buswork.

Relay & Controls      All relays and controls associated with the Circuit
                      Breakers identified above

Foundations           All foundations supporting the Transformer Banks and
                      Circuit Breakers identified above

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Jointly Owned Assets      - Percentage Split by Major Equipment Count

John C Weadock Substation - Consumers (generation) = 43.59%;
                            Consumers (distribution) = 33.33%;
                            Transmission Provider = 23.08%

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NOTE: WIRING DIAGRAM NO 195 WILL BE INSERTED HERE

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WHITING GENERATING PLANT COMPLEX

The Whiting Generating Plant Complex consists of four generating Units, known as
Units 1, 2, 3 and A.

The Connection Points for Units 1, 2, 3 and A are in the Whiting Substation (see
Wiring Diagram #400, Sheet 31attached). Units 1, 2 and 3 are connected to the
138 kV buswork and Unit A is connected to the 46 kV buswork

The Points of Receipt for all the Units in the Whiting Generating Plant Complex
are deemed to be the respective Connection Points.

Consumers' Interconnection Assets

Consumers owns the following assets at the Whiting Substation (Wiring Diagram
#400, Sheet 31):

Transformer Banks     Nos. 1, 2, 3 and A

Circuit Breakers      Nos. 199, 299, 399, 46A and 16A

Switches              Nos. 191, 193, 195, 196, 291, 293, 295, 296, 391, 393,
                      395, 395, 42A, 44A, 45A and 99A

Circuit Connections   All wire, cable or buswork electrically connecting the
                      Transformer Banks, Circuit Breakers and Switches
                      identified above to each other, as appropriate, to the
                      main buswork and to the Auxiliary Power assets

Relay & Controls      All relays and controls associated with the Circuit
                      Breakers identified above

Foundations           All foundations supporting the Transformer Banks and
                      Circuit Breakers identified above

Auxiliary Power       All 480 Volt and 2400 Volt station power assets shown in
                      the attached Wiring Diagram #400, Sheet 31

Jointly Owned Assets - Percentage Split by Major Equipment Count

Whiting Substation   - Consumers (generation) = 26.32%;
                       Consumers (distribution) = 42.10%;
                       Transmission Provider = 31.58%

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GENERATOR CONNECTIONS LOCATED IN CONSUMERS' DISTRIBUTION SYSTEM

The following Units are connected indirectly to the Transmission System and do
not have specific connection data listed herein.

Alcona Hydro Generating Plant, Units 1 and 2
Allegan Hydro Generating Plant, Units 1, 2 and 3
Cooke Hydro Generating Plant, Units 1, 2 and 3
Croton Hydro Generating Plant, Units 1, 2, 3 and 4
Five Channels Generating Plant, Units 1 and 2
Foote Hydro Generating Plant, Units 1, 2 and 3
Hodenpyl Hydro Generating Plant, Units 1 and 2
Loud Hydro Generating Plant, Units 1 and 2
Mio Hydro Generating Plant, Units 1 and 2
Rogers Hydro Generating Plant, Units 1, 2, 3 and 4
Straits Combustion Turbine Generating Unit 1
Tippy Hydro Generating Plant, Units 1, 2 and 3
Webber Hydro Generating Plant, Units 1 and 2

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                                    EXHIBIT C

                      PALISADES INTERFACE SUPPLEMENT TO THE
                       GENERATOR INTERCONNECTION AGREEMENT

                                     between

                     MICHIGAN ELECTRIC TRANSMISSION COMPANY

                                       and

                            CONSUMERS ENERGY COMPANY

                            dated as of April 1, 2001

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                      PALISADES INTERFACE SUPPLEMENT TO THE
                       GENERATOR INTERCONNECTION AGREEMENT
                                     Between
                     Michigan Electric Transmission Company
                                       And
                            Consumers Energy Company

                                TABLE OF CONTENTS
<TABLE>
<S>                                                                            <C>
ARTICLE 1 - DEFINITIONS.....................................................   2

ARTICLE 2 - GENERAL PROVISIONS..............................................   2

ARTICLE 3 - REQUIREMENTS FOR OFFSITE POWER SUPPLY TO PALISADES..............   2

ARTICLE 4 - EMERGENCIES.....................................................   3

ARTICLE 5 - SAFETY AND SECURITY.............................................   3

ARTICLE 6 - TERM OF AGREEMENT; ASSIGNMENT...................................   3

ARTICLE 7 - MISCELLANEOUS...................................................   4
   7.1   Provisions from Interconnection Agreement..........................   4
   7.2   Entire Agreement...................................................   4
</TABLE>

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                   PALISADES INTERFACE SUPPLEMENT TO GENERATOR
                            INTERCONNECTION AGREEMENT

     THIS PALISADES INTERFACE SUPPLEMENT TO GENERATOR INTERCONNECTION AGREEMENT
(the "Palisades Supplement") is made and entered into as of this 1st day of
April, 2001, by and between Michigan Electric Transmission Company, a Michigan
corporation with offices at 212 West Michigan Avenue, Jackson, Michigan (herein
referred to as "Transmission Provider") and Consumers Energy Company, a Michigan
corporation with offices at 212 West Michigan Avenue, Jackson, Michigan (herein
referred to as "Consumers"). Consumers and Transmission Provider each may be
referred to individually as a "Party," or collectively as the "Parties."

                                   WITNESSETH:

     WHEREAS, Transmission Provider is engaged in the transmission of electric
energy; and

     WHEREAS, Consumers owns and operates the Palisades Nuclear Generating Plant
(herein referred to as "Palisades"); and

     WHEREAS, the Parties have entered into a Generator Interconnection
Agreement dated as of April 1, 2001 (herein referred to as the "Interconnection
Agreement") that defines the responsibilities and authority of the Transmission
Provider with respect to the Transmission System and the obligations, rights and
responsibilities of Consumers for the connection of its generation Resources,
including the Palisades Nuclear Generating plant ("Palisades"), to Transmission
Provider's system; and

     WHEREAS, there are special interconnection requirements associated with
Palisades, due to it being a nuclear generating plant, which are not associated
with the other Units in the Interconnection Agreement and which are not fully
covered in the Interconnection Agreement; and

     WHEREAS, Sections 5.1 and 5.6 of the Interconnection Agreement specifically
provide for further supplementation of the Interconnection Agreement with regard
to Palisades; and

     WHEREAS, Consumers and Transmission Provider are willing to maintain the
interconnection of Palisades with the Transmission Provider's System under the
additional terms and conditions contained herein.

     NOW, THEREFORE, in consideration of and subject to the mutual covenants
contained herein, the Parties hereto agree as follows:

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                                    ARTICLE 1
                                   DEFINITIONS

     All capitalized terms used herein shall have the same meaning ascribed
thereto in the Interconnection Agreement, unless otherwise indicated. In
addition, when used in this Palisades Supplement, the following terms shall have
the following meanings:

     "Offsite Power Supply" shall mean the power available to Palisades from
Transmission Provider's Transmission System through the Palisades Substation.

     "Operating License" shall mean the license, including associated Technical
Specifications, issued by the Nuclear Regulatory Commission authorizing the
license holder to operate Palisades.

                                    ARTICLE 2
                               GENERAL PROVISIONS

     Except as otherwise provided for in this Palisades Supplement, the
provisions of the Interconnection Agreement shall apply to Palisades and
Palisades-related Interconnection Facilities just as to any other Unit and any
other Interconnection Facilities. This Palisades Supplement covers additional
provisions that relate only to Palisades and Palisades-related Interconnection
Facilities. Transmission Provider and Consumers agree that specific transmission
system operating limitations required to satisfy Nuclear Regulatory Commission
Operating License and Design requirements applicable to the Palisades Nuclear
Plant are identified in Exhibit A of this Palisades Supplement and shall be
adhered to by both Parties.

                                    ARTICLE 3
               REQUIREMENTS FOR OFFSITE POWER SUPPLY TO PALISADES

3.1 In the event future changes in either (a) design or operation of Palisades,
(b) Consumers' requirements, or (c) Transmission Provider's requirements
resulting from parallel operation of Palisades with Transmission Provider's
System later necessitate additional Interconnection Facilities or modifications
to the then existing Interconnection Facilities, the Parties shall undertake
such additions and modifications as may be necessary. Before undertaking such
future additions or modifications, the Parties shall consult, develop plans and
coordinate schedules of activities, including the making of necessary amendments
to this Agreement (including its Exhibits) and/or entering into new agreements,
so as to insure continuous and reliable operation of the Interconnection
Facilities. The ownership, operation and maintenance responsibilities for any
such future additions or modifications shall be made consistent with the
responsibilities allocated in the Interconnection Agreement.

3.2 Except as otherwise permitted by the Operating License, two paths must be
available to transmit offsite power between the Palisades Substation and the
Palisades Plant equipment. During plant operation, Offsite Power can be supplied
to Palisades Plant equipment through Safeguards Transformer 1-1 and Startup
Transformer 1-2. With the plant shut down Offsite Power can also be supplied
through Main Transformer 1-1.

3.3 An Offsite Power Supply which is adequate for the operability of required
Palisades plant equipment shall be provided at all times by Consumers' units and
transmitted by

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Transmission Provider to the Palisades Substation, or action shall be promptly
initiated by the Transmission Provider to restore provision of such Offsite
Power Supply, including, but not limited to, initiation of Transmission
Provider's Black Start Plan. Consumers shall specify by separate correspondence
the specific unit or units designated to provide the Black Start Service for
Palisades.

3.4 The specific requirements to determine adequacy of voltage, frequency,
capacity, and reliability of offsite power to meet Palisades' Operating License
and design requirements are detailed in Exhibit A of this Agreement.

3.5 Specific procedures to minimize the potential for inadvertent interruptions
of the Offsite Power Supply and associated plant trips and transients are
specified in Exhibit A of this Agreement.

                                    ARTICLE 4
                                   EMERGENCIES

4.1 With respect to Palisades, the "Consumers Emergency procedures" referred to
in Section 7.1 of the Interconnection Agreement shall include Palisades
Emergency procedures.

4.2 In the event of a declared Emergency at Palisades, Consumers shall have
authority to exercise complete control over the Palisades Substation and
associated Transmission System easements located within the Exclusion Area as
defined in the Updated Final Safety Analysis Report (UFSAR), and to determine
all activities within that area, including evacuation and exclusion from the
Substation and the Exclusion Area of Transmission Provider personnel,
contractors, visitors, guests, and other persons.

                                    ARTICLE 5
                               SAFETY AND SECURITY

     Work performed by Transmission Provider in the Palisades Substation shall
be subject to Transmission Provider's safety rules. Work performed by Consumers
in the Palisades Substation shall be subject to Palisades Plant safety rules.
Any Party performing work inside the Palisades Plant Protected Area (security
area surrounding main plant) shall abide by the Palisades Plant safety and
security rules. To the extent these provisions differ from those of the last
sentence of Section 8.1 of the Interconnection Agreement, these provisions shall
prevail.

                                    ARTICLE 6
                          TERM OF AGREEMENT; ASSIGNMENT

     This Palisades Supplement shall become effective upon the effective date of
the Interconnection Agreement and shall have the same term and assignment
provisions as the Interconnection Agreement, except that:

     (a)  the term of this Palisades Supplement shall not extend past the date
          on which Palisades ceases to be licensed by the Nuclear Regulatory
          Commission, or successor agency; and

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     (b)  this Palisades Supplement may be assigned or otherwise transferred by
          Consumers without the prior written consent of Transmission Provider
          to a successor holder of the Palisades Operating License.

                                    ARTICLE 7
                                  MISCELLANEOUS

7.1 Provisions from Interconnection Agreement

     All provisions contained in the Interconnection Agreement not specifically
supplemented or addressed herein shall apply to this Palisades Supplement as if
restated herein.

7.2 Entire Agreement

     This Palisades Supplement and the Interconnection Agreement constitute the
entire agreement between the Parties hereto with reference to the subject matter
hereof and its execution supersedes all previous agreements, discussions,
communications and correspondence with respect to said subject matter. The terms
and conditions of this Palisades Supplement and Exhibit A thereto shall be
amended, as mutually agreed to by the Parties, to comply with changes or
alterations made necessary by a valid applicable order of any governmental
regulatory authority, or any court, having jurisdiction hereof.

     IN WITNESS WHEREOF, the Parties hereto have caused this Palisades
Supplement to be duly executed by their duly authorized officers.

                                        MICHIGAN ELECTRIC TRANSMISSION COMPANY

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

                                        CONSUMERS ENERGY COMPANY

                                        By /s/ Robert A Fenech
                                           -------------------------------------
                                        Title: Senior VP, Nuclear, Fossil and
                                               Hydro Operations

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                                    EXHIBIT A
                          PALISADES NUCLEAR POWER PLANT

                                REQUIREMENTS FOR
                        OFFSITE POWER SUPPLY OPERABILITY
                            AND SUBSTATION INTERFACES

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                           PALISADES REQUIREMENTS FOR
            OFFSITE POWER SUPPLY OPERABILITY AND SUBSTATION INTERFACE

OVERVIEW

During normal operation Palisades Plant electrical loads are supplied from the
unit's main onsite electrical generator and the 345 kV substation. If the
generator is not available, either due to unit shutdown or other reason, the
loads fed directly from the generator are transferred to an alternative source
from the 345 kV substation. The preferred immediate alternate source of
electrical power for electric loads (safety-related and non-safety-related) is
the Offsite Power Supply or 345 kV grid. The Offsite Power Supply is sometimes
referred to as the preferred power supply in regulatory documents.

The basic requirement for the Offsite Power Supply is that it provides
sufficient capacity and capability for safe shutdown and design basis accident
mitigation. When this condition is met, the Offsite Power Supply is considered
Operable with respect to Palisades Operating License and Technical
Specifications. It is a necessary condition of the Operating License that the
Offsite Power Supply be Operable at all times. If the Offsite Power Supply is
declared Inoperable, action must be taken to shut down, and if the unit is
off-line, to suspend certain activities, as required by the Palisades Operating
License and Technical Specifications. The Offsite Power Supply is considered
Inoperable if it is degraded to the point that it does not have the capability
to effect safe shutdown and to mitigate the effects of an accident. This level
of degradation can be caused by an unstable offsite power system, or any
condition that renders the offsite power unavailable for safe shutdown and
emergency purposes.

The Palisades Substation voltage will be planned as specified in the
Transmission Provider's FERC Form 715 Annual Transmission Planning and
Evaluation Report. The minimum tolerable transmission system operating voltage
to ensure the Offsite Power Supply is Operable shall be specified as 345 kV
unless Transmission Provider and Consumers agree in writing that a different
value should be specified.

Transmission System operating procedures and programs shall be in place to
ensure that various system operating conditions (generating unit outages, line
outages, system loads, spinning reserve, etc.), including multiple contingency
events, are evaluated and understood, such that impaired or potentially degraded
grid conditions are recognized, assessed, and immediately communicated to the
Palisades operating staff for Operability assessments of plant equipment.

The specific requirements in this Exhibit mirror operating protocols, equipment,
and regional and national reliability organization standards existing at the
time this agreement is signed, and are subject to modification as necessary when
new standards, equipment or protocols are adopted or updated.

                              SPECIFIC REQUIREMENTS

Note: This section identifies the operational requirements for the Palisades
Offsite Power Supply. These requirements are part of the Palisades design basis
and licensing basis. Failure to meet these requirements may render the Offsite
Power Supply Inoperable, thus requiring the

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unit to shut down. Failure to meet these requirements must be immediately
communicated to Consumers and the Palisades operating staff for assessment of
plant emergency equipment operability. Changes in the operation of the
transmission network that conflict with these requirements require prior
approval by Consumers.

1.   The Palisades Substation is connected to six 345kV transmission lines. Any
     long term increase or decrease in the physical number of lines into the
     Palisades Substation requires prior notification of and review by the
     Palisades Operating staff. Except in an emergency none of those six lines
     may be removed from service without prior notification of the Palisades
     Operating staff.

     At least two independent paths to transmit power between the substation and
     Palisades' emergency safeguards busses are required to be available at all
     times while the plant is operating. During shutdown conditions at least one
     power transmission path is required. Operability of the Offsite Power
     Supply sources through their associated transmission paths is to be
     determined by the Palisades Operating staff.

2.   The Palisades Offsite Power Supply shall be capable of providing 42MW and
     31MVAR to Palisades for normal operation, safe shutdown, and design basis
     accident mitigation.

3.   All efforts will be made to operate the Transmission Provider's system such
     that the voltage at the Palisades Substation will promptly recover to a
     minimum of 345 kV following a shutdown of the Palisades generator. The
     Palisades Operating staff will monitor substation voltage and will notify
     Transmission Provider if voltage falls below a predetermined screening
     value (e.g., 352 kV) to verify that any necessary actions will be taken to
     assure that this criterion will be met.

4.   Equipment operations, maintenance, and modification activities should be
     planned and conducted to meet the following performance criteria:

     a.   The Front and Rear Busses are available greater than 99.8% per 12
          months.

     b.   Breakers 25F7 and 25F9 have less than three Maintenance Preventable
          Functional Failures per 24 months. Maintenance Preventable Functional
          Failures are defined in NUMARC 93-01 "Nuclear Energy institute
          Industry Guideline for Monitoring the Effectiveness of Maintenance at
          Nuclear Power Plants," or successor publication.

     c.   Breakers 25F7 and 25F9 are available greater than 98.6% per 12 months.

     If any planned substation activities would invalidate these assumptions
     Palisades must be informed and compensatory measures or corrective actions
     must be evaluated.

5.   The maximum grid voltage at the Palisades substation shall be maintained at
     or below 369kV. This voltage shall not be exceeded unless required to
     preserve transmission network integrity

6.   Transmission Provider will provide a voltage schedule to be maintained by
     the Palisades generator.

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7.   System studies shall be performed periodically and updated by the
     Transmission Provider based on changing grid conditions to verify that
     certain postulated events will not render the Palisades offsite power
     supply inoperable. Events to be postulated include, but are not limited to,
     the following:

     a)   The loss of Palisades.

     b)   The loss of any generating unit on the Transmission Provider's grid.

     c)   The loss of any major transmission circuit or intertie on the
          Transmission Provider's grid.

     d)   The loss of any large load or block of load, (defined as 1000MW) on
          the Transmission Provider's grid.

     e)   Power transfers

8.   Records of the most recent system study results shall be maintained the
     Transmission Provider. These records are subject to Consumers Energy and
     NRC reviews. Study results, including revisions and updates, shall be
     transmitted via letter to Consumers Energy. Study results and conclusions
     shall be assessed at least annually and updated by the Transmission
     Provider, if needed, based on changing grid conditions.

9.   In the event of loss of the Palisades Offsite Power Supply, transmission
     lines terminating at the Palisades Substation will be returned to service
     based on the following criteria:

     Note: With regard to Station Blackout (SBO) Palisades is a 4-hour coping
     plant. The nuclear regulatory requirement is that Palisades be able to
     withstand a loss of all AC power (loss of Offsite Power Supply plus loss of
     both Emergency Diesel Generators) for 4 hours without sustaining reactor
     core damage.

     a)   Highest possible priority for Black Light Restoration Procedures shall
          be given to restoring power to the Palisades Substation.

     b)   Should incoming lines to the Palisades Substation be damaged, highest
          priority shall be assigned to repair and restoration of at least one
          line into the Palisades Substation.

     c)   Repair crews engaging in power restoration activities for Palisades
          shall be given the highest priority for manpower, equipment, and
          materials.

10.  Bulk Power Transmission System Reliability as described in the Updated
     Final Safety Analysis Report (UFSAR) sections 8.1 "Electrical Systems,
     Introduction" and 8.2 "Network Interconnection" (or successor document)
     shall be maintained. Changes to planning criteria or operating practices
     that have the potential to adversely impact grid reliability and
     availability as defined in the UFSAR require prior notification of and
     evaluation by the Palisades Engineering staff.

11.  Any equipment upgrades, circuit redesigns, or control logic revisions on
     the Transmission Provider's System that affect the operational requirements
     of the Palisades Offsite Power

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Execution Copy

     Supply shall be communicated to Consumers by the Transmission Provider in
     sufficient detail to permit the Palisades Engineering staff to accurately
     revise Section 8, "Electrical Systems", of the UFSAR. These updates shall
     be provided to Consumers by the Transmission Provider as necessary and will
     be used to prepare a UFSAR change submittal to the NRC. This includes the
     issuance of all Palisades substation drawings to Consumers at the time of
     revision.

12.  Observation, testing, maintenance, inspection and calibration of the
     Palisades substation circuit breakers, protective relays, and batteries
     shall be performed in accordance with Nuclear Electric Insurance Limited -
     Loss Control Standards Section 8-2A Boiler & Machinery Loss control
     Standards 13 & 14.

13.  General requirements for Palisades Substation interfaces and services are
     addressed in Palisades Nuclear Plant Administrative Procedure 5.28,
     "Control of Palisades Substation Activities", Revision 0, dated June 2,
     2000. These requirements may be amended from time to time by mutual
     agreement between Transmission Provider and Consumers Energy Company or any
     successor licensee of the Palisades Nuclear Plant.

14.  Notices, reports, etc. required under this Exhibit A shall be sent by
     either facsimile transmission or US mail to the following contact
     person(s). Either Party may change the following Notice information by
     giving the other Party prior written Notice:

For Consumers:                      For Transmission Provider:

Consumers Energy Company            Michigan Electric Transmission Company
Palisades Nuclear Plant             540 Avis Drive, Suite H
27780 Blue Star Highway             Ann Arbor, Michigan 48108
Covert, Michigan 49043

Attention: Plant General Manager    Attention: Executive Vice President and
                                               Chief Operating Officer

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