1 Exhibit (12) CONSUMERS ENERGY COMPANY Ratio of Earnings to Fixed Charges (Millions of Dollars) Twelve Months Ended June 30, 1997 1996 1995 1994 1993 1992 -------------- -------- -------- -------- -------- -------- Earnings as defined (a) - ----------------------- Net Income (Loss) $ 294 $ 296 $ 255 $ 226 $ 198 $ (244) Income taxes (benefits) 151 150 133 107 91 (127) Exclude equity basis subsidiaries to (50) (42) (38) (16) (6) 12 Fixed charges as defined, adjusted to exclude capitalized interest of $1, $2, $2, $1, $1 and $1 million for the twelve months ended June 30, 1997 and for the years ended December 31, 1996, 1995, 1994, 1993 and 1992, respectively 179 175 189 174 192 186 ----------------------------------------------------------------- Earnings as defined $ 574 $ 579 $ 539 $ 491 $ 475 $ (173) ================================================================= Fixed charges as defined (a) - ---------------------------- Interest on long-term debt $ 139 $ 139 $ 141 $ 136 $ 152 $ 150 Estimated interest portion of lease rental 9 9 10 10 11 14 Other interest charges 32 29 40 29 30 23 ----------------------------------------------------------------- Fixed charges as defined $ 180 $ 177 $ 191 $ 175 $ 193 $ 187 ================================================================= Ratio of earnings to fixed charges 3.19 3.27 2.82 2.81 2.46 - NOTES: (a) Earnings and Fixed charges as defined instructions for Item 503 of Regulation S-K. (b) For the year ended December 31, 1992, fixed charges exceeded earnings by $360 million. Earnings as defined include a $520 million pre-tax loss on the settlement of cost recovery issues relating to power purchases from the MCV Partnership partially offset by $(15) million for potential customer refunds and other reserves related to 1992 but recorded in 1991. The ratio of earnings to fixed charges would have been 1.78 excluding these amounts. 2 EXHIBIT (12) CONSUMERS ENERGY COMPANY Ratio of Earnings to Fixed Charges and Preferred Dividends (Millions of Dollars) Twelve Months Ended June 30, 1997 1996 1995 1994 1993 1992 -------------- ------ ------ ------ ------ ------ Earnings as defined (a) - ------------------------------------- Net Income (Loss) after dividends on preferred stock $ 258 $ 260 $ 227 $ 202 $ 187 $ (255) Income taxes (benefits) 151 150 123 107 91 (127) Exclude equity basis subsidiaries (50) (42) (38) (16) (6) 12 Fixed charges as defined, adjusted to exclude capitalized interest of $1, $2, $2, $1, $1 and $1 million and $15, $15, $15, $13, $6 and $6 for the twelve months ended June 30, 1997 and for the years ended December 31, 1996, 1995, 1994, 1993 and 1992, respectively 215 211 217 198 203 179 -------------------------------------------------------------------- Earnings as defined $ 574 $ 579 $ 539 $ 491 $ 475 $ (173) ==================================================================== Fixed charges as defined (a) - ---------------------------- Interest on Long-term debt $ 139 $ 139 $ 141 $ 136 $ 152 $ 150 Estimated interest portion of lease rental 9 9 10 10 11 14 Other interest charges 32 29 40 29 30 23 Preferred stock dividend requirement 51 51 43 37 17 17 -------------------------------------------------------------------- Fixed charges as defined $ 231 $ 228 $ 234 $ 212 $ 210 $ 204 ==================================================================== Ratio of earnings to fixed charges and preferred dividends 2.48 2.54 2.30 2.32 2.26 - NOTES: (a) Earnings and Fixed charges and preferred dividends as defined instructions for Item 503 of Regulation S-K. (b) For the year ended December 31, 1992, fixed charges and preferred dividends exceeded earnings by $377 million. Earnings as defined include a $520 million pre-tax loss on the settlement of cost recovery issues relating to power purchases from the MCV Partnership partially offset by $(15) million for potential customer refunds and other reserves related to 1992 but recorded in 1991. The ratio of earnings to fixed charges and preferred dividends would have been 1.63 excluding these amounts.