This Form 10-Q and other written and oral statements that CMS Energy and Consumers make may contain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. The use of “might,” “may,” “could,” “should,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “projects,” “forecasts,” “predicts,” “assumes,” and other similar words is intended to identify forward-looking statements that involve risk and uncertainty. This discussion of potential risks and uncertainties is designed to highlight important factors that may impact CMS Energy’s and Consumers’ businessbusinesses and financial outlook. CMS Energy and Consumers have no obligation to update or revise forward-looking statements regardless of whether new information, future events, or any other factors affect the information contained in the statements. These forward-looking statements are subject to various factors that could cause CMS Energy’s and Consumers’ actual results to differ materially from the results anticipated in these statements. These factors include CMS Energy’s and Consumers’ inability to predict or control:control the following, all of which are potentially significant:

Regulatory matters are a key aspect of CMS Energy’s and Consumers’ businesses, particularly Consumers’ rate cases and regulatory proceedings before the MPSC. In February 2010, the MPSC issued an order requiring that it plannedConsumers refund to self-implementcustomers $85 million collected during a rate freeze from 2001 to 2003 plus interest; the MPSC determined that these funds should have been placed in a decommissioning trust fund. Consumers has filed an appeal of this order. In May 2010, the MPSC issued a gas rate order authorizing Consumers to increase its gas rates by $66 million based on an authorized return on equity of 10.55 percent.

Further, in July 2010, Consumers self-implemented an electric rate increase in the annual amount of $179 million based on an 11 percent authorized return on equity, beginning in May 2009. The MPSC issued an order in May 2009 requiring that, if Consumers self-implemented the $179 million electric rate increase, it must simultaneously distribute to customers $36 million of proceeds from the April 2007 sale of Palisades. Accordingly, Consumers self-implemented an annual electric rate increase of $179$150 million, subject to refund with interest, and also implemented a one-time distribution of $36 million. Consumers anticipates a final order in this rate filing in November 2009. Additionally, in May 2009,interest. In August 2010, Consumers filed an application with the MPSC seeking an annual gas rate increase in gas revenue of $114$55 million based on an 11 percent authorized return on equity. The filing requested recovery for investments made to enhance safety, system reliability, and operational efficiencies that improve service to customers. In October 2009,its order allowing Consumers filed tariff sheets indicating it plans to self-implement the July 2010 electric rate increase, the MPSC expressed concern about utilities repeatedly self-implementing rate increases over short time periods, and before the return of previous overcollections of self-implemented rate increases.

The Customer Choice Act allows Consumers’ electric customers to buy electric generation service from Consumers or from alternative electric suppliers. The 2008 Energy Legislation limits alternative electric supply to ten percent of Consumers’ weather-adjusted retail sales of the preceding calendar year. In May 2010, a gas rate case inbill was introduced to the annual amountMichigan Senate and House of $89 million beginning November 19, 2009. These rate filings include requests for increases in ratesRepresentatives that would increase the limit from ten percent to cover various costs, including capital additions25 percent. At September 30, 2010, electric deliveries under the balanced energy initiative.ROA program were at the ten percent limit.

In October 2009, the MPSC issued a show-cause order that directedAnother area of importance for CMS Energy and Consumers to present details of its forestry and fossil-fueled plant operation and maintenance expenditures for 2006 through 2008, as well as available detail for 2009 expenditures, and also to explain why Consumers should not be found in violation of the MPSC’s December 2005 order, which required certain minimum operation and maintenance expenditures on these activities.

Maintenance and other operating expenses:For the three months ended September 30, 2009,2010, maintenance and other operating expenses increased $5 million compared with 2008.2009. The increase was due to higher OPEB expense$6 million of $3 million, reflecting unfavorable market performance of Consumers’ retirement benefit plan assets and an expense associated with prior yearhigher retirement benefits expenses, which were recovered in revenue in 2009. Also contributing to2010, a $5 million increase associated with the increase were additional expenses related to the implementation

For the nine months ended September 30, 2009,2010, maintenance and other operating expenses increased $19$39 million compared with 2008.2009. The increase was due to $32 million of higher OPEB expense of $10retirement benefits expenses, which were recovered in revenue in 2010, a $19 million reflecting unfavorable market performance of Consumers’ retirement benefit plan assets.increase associated with the energy optimization program, and an $8 million increase in uncollectible accounts expense. Also contributing to the increase were higher uncollectible account expensewas $6 million of $8 million and additionalvoluntary separation plan expenses of $4 million related to the implementation of an energy optimization program.in 2010. These increases were offset partially by an $11 million reduction in expenses for forestry and tree-trimming services and a $15 million decrease of $3 million in health care expenses and other net operating expenses.

Depreciation and amortization:For the three months ended September 30, 2009,2010, depreciation and amortization expense decreased $1increased $8 million compared with 2008. The MPSC’s December 2008 gas rate order reduced amortization expense by $2 million,2009, and delayed collection of an equal amount of amortization in rates. This decrease was offset partially by $1 million of higher depreciation expense due to an increase in plant in service.

General taxes:For the three months ended September 30, 2009,2010, general taxes increased $2decreased $3 million and forcompared with 2009, due to lower property tax expense in 2010.

For the nine months ended September 30, 2009,2010, general taxes increaseddecreased $3 million due to increased property taxes, primarily reflecting higher capital spending.compared with 2009. The decrease resulted from adjustments associated with the State of Michigan’s use tax assessment.

Interest charges:For the three months ended September 30, 2010, interest charges decreased $3 million compared with 2009, due to lower debt levels in 2010.

For the nine months ended September 30, 2010, interest charges increased $1$3 million compared with 2009. The increase resulted from interest related to the State of Michigan’s use tax assessment. Also contributing to the increase was additional interest incurred as a result of an order received from the MPSC that disallowed recovery of certain power supply costs in Consumers’ 2007 PSCR reconciliation case. These increases were offset partially by lower debt levels in 2010.