EXHIBIT 8.1
OPINION OF SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP,
WITH RESPECT TO MATERIAL FEDERAL TAX MATTERS
October 18, 2001
Consumers Energy Company
212 West Michigan Avenue, Suite M-1029
Jackson, MI 49201
Morgan Stanley & Co., Incorporated
on behalf of itself and as
Representative of the Underwriters
Re: Consumers Funding LLC
Ladies and Gentlemen:
In connection with the filing of Registration Statement No.
333-47938 on Form S- 3 relating to Consumers Funding LLC (the "Issuer"), as
amended from time to time, (the "Registration Statement") with the
Securities and Exchange Commission, you have requested our opinion
regarding certain descriptions of material federal income tax consequences
contained in the form of prospectus (the "Prospectus") and the form of
prospectus supplement (the "Prospectus Supplement") included in the
Registration Statement.
We have acted as special federal income tax counsel to the Issuer,
in connection with (a) the sale to the Issuer of Consumers' Securitization
Property, which is the property right created by Michigan's Customer Choice
Act representing the irrevocable right of Consumers Energy Company
("Consumers") or its assignee to receive through Securitization Charges
amounts sufficient to recover a portion of its Qualified Costs and (b) the
Issuer's issuance of Securitization Bonds (the "Securitization Bonds")
which are supported by the Securitization Property and which are offered
and sold pursuant to the Registration Statement.
In connection with our engagement, we have examined and relied
upon the forms of the Certificate of Formation of Consumers Funding LLC and
the Amended and Restated Limited Liability Company Agreement for Consumers
Funding LLC included as exhibits to the Registration Statement. In
addition, the opinion expressed below is based on the following
assumptions:
(a) the Registration Statement will become effective;
(b) the proposed transactions are consummated as contemplated in
the Registration Statement;
(c) prior to the issuance of any series or class of
Securitization Bonds:
(i) all necessary orders, approvals and
authorizations for the Issuer's purchase from
time to time of Securitization Property from
Consumers, in exchange for the net proceeds of
Securitization Bonds will have been obtained by
the Issuer;
(ii) the Amended and Restated Limited Liability
Company Agreement of the Issuer will have been
executed and delivered by an authorized
representative of Consumers as sole member of
the Issuer;
(iii) the Indenture will have been executed and
delivered by the Issuer's authorized
representative and The Bank of New York, as
trustee;
(iv) the maturity dates, the bond rates, the
redemption provisions and the other terms of the
Securitization Bonds being offered will be fixed
in accordance with the terms of the Indenture;
(v) the Sale Agreement between the Issuer and
Consumers, as Seller, will have been executed
and delivered;
(vi) the Servicing Agreement between the Issuer and
Consumers, as Servicer, will have been executed
and delivered;
(vii) an unrevoked private letter ruling addressed to
Consumers with respect to the issuance of the
Securitization Bonds will have been issued by
the Internal Revenue Service (the "Consumers
Private Letter Ruling"); and
(viii) the Underwriting Agreement among the Issuer and
the underwriters of the Securitization Bonds
(the "Underwriting Agreement") will have been
executed and delivered;
(d) the Indenture will be registered in accordance with the
provisions of the Trust Indenture Act of 1939, as amended.
Furthermore, we have, or will have, examined and considered
executed originals or counterparts, or certified or other copies identified
to our satisfaction as being true copies of such certificates, instruments,
documents and other corporate records of each of the Issuer and Consumers
and matters of fact and law as we deem necessary for the purposes of the
opinion expressed below, and we have assumed (i) that such documents will
in all material respects conform to the descriptions provided therefor in
the Registration Statement, (ii) that such documents will not be amended
and (iii) that the parties to such documents will comply with the terms
thereof. Capitalized terms not otherwise defined herein have the respective
meanings assigned to such terms in the Registration Statement.
In our examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals,
the conformity to original documents of all documents submitted to us as
certified or photostatic copies and the authenticity of the originals of
such latter documents. As to any facts material to the opinions expressed
herein which were not independently established or verified, we have relied
upon statements, representations, and certifications of officers and other
representatives of the Issuer, Consumers, the Underwriters and others.
In rendering our opinion, we have also considered and relied upon
the Internal Revenue Code of 1986, as amended, and administrative rulings,
judicial decisions, Treasury regulations, and such other authorities as we
have deemed appropriate, all as in effect as of the date hereof. In
particular we have relied on the Consumers Private Letter Ruling. The
statutory provisions, regulations and interpretations upon which our
opinion is based are subject to changes, and such changes could apply
retroactively. In addition, there can be no assurance that positions
contrary to those stated in our opinion may not be taken by the Internal
Revenue Service.
We also note that the Prospectus does not relate to a specific
transaction. Accordingly, the above-referenced description of federal
income tax consequences may, under certain circumstances, require
modification in the context of an actual transaction.
We express no opinions as to the laws of any jurisdiction other
than the federal laws of the United States of America to the extent
specifically referred to herein.
Based upon and subject to the foregoing, we are of the following
opinions:
1. the Issuer will not be subject to United States federal income
tax as an entity separate from Consumers;
2. the Securitization Bonds will constitute debt of Consumers for
federal income tax purposes; and
3. the statements in the Prospectus under the heading "Material
Income Tax Consequences for the Securitization Bonds"
subject to the qualifications set forth therein, accurately
describe the material federal income tax consequences to
holders of the Securitization Bonds that are not U.S.
persons (within the meaning of the Code), under existing law
and the assumptions stated therein.
Furthermore, subject to the qualifications and assumptions set forth
therein, we hereby adopt and confirm to you our opinion as set forth in the
Prospectus Supplement under the caption "Introduction - Tax Status" and in
the Prospectus under the captions "Payments of Principal and Interest -
Material Income Tax Consequences" and "Material Income Tax Consequences for
the Securitization Bonds". We disclaim, however, any undertaking to advise
you of any subsequent changes of the facts stated or assumed herein or any
subsequent changes in applicable law or interpretations thereof.
We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to Skadden, Arps, Slate,
Meagher & Flom LLP under the captions "Introduction - Tax Status" in the
Prospectus Supplement and "Various Legal Matters Relating to the
Securitization Bonds" and "Material Income Tax Consequences for the
Securitization Bonds" in the Prospectus.
Very truly yours,
/s/ Skadden, Arps, Slate,
Meagher & Flom LLP