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[CMS ENERGY LOGO]
TO: Investment Community FROM: CMS Energy Investor Relations
Ph: 517-788-2590; Fx: 517-788-1006
DATE: July 12, 2001 http://www.cmsenergy.com
SUBJECT: GAS RATE CASE AND PURCHASED GAS AGREEMENT
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On June 29, 2001, Consumers Energy filed an application with the Michigan Public
Service Commission seeking its first gas service rate increase in 17 years. If
approved, the request would add about $6.50 per month, or about 10%, to the
typical residential customers average monthly bill. Consumers is seeking a
12.25% authorized return on equity along with a $140 million revenue deficiency
as detailed below. Contemporaneously with this filing, Consumers Energy has
requested partial and immediate relief in the amount of $34.5 million.
ITEM $ MILLIONS EXPLANATION
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1. Rate Base $59 Carrying cost of increased gas inventory: $36.
Return on new investment added since 1994, primarily
distribution plant to serve new customers: $23.
2. O&M 55 New or increased customer related expense: $24.
Safety, regulatory, employee benefits and system
reliability: $31.
3. Book Depreciation 45 New investment since 1994, primarily distribution
plant to serve new customers and new book depreciation
rates.
4. Cost of Money 8 Higher equity capitalization: $5.
Higher return on equity (12.25% v 11.6%): $4.
Lower debt cost: $(1).
5. Miscellaneous Revenues (30) Appliance Service Plan, Wholesale Services and other
fees.
6. Other (5) Lower real and personal property taxes, MSBT and
federal income tax.
7. Michigan Gas Storage Roll-in 8
8. Total Base Rate Increase $140
FINANCIAL CAPITAL STRUCTURE PRE-TAX
13-MONTH AVERAGE PERCENT OF TOTAL ANNUAL COST WEIGHTED COSTS
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Long Term Debt 43.12% 6.76% 2.91%
Short Term Debt 5.81 7.20 0.42
Preferred Stock 9.38 8.58 0.80
Common Equity 41.69 12.25 5.11
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100.00% 9.24%*
*Equivalent to 11.03% rate-making basis.
Gas Rate Case U-13000 can be accessed at the Michigan Public Service
Commission's website.
http://efile.mpsc.cis.state.mi.us/efile/gas.html