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EXHIBIT D-1
Joint FPA Section 203 Application of CECo and Michigan
Transco to FERC
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UNITED STATES OF AMERICA
BEFORE THE
FEDERAL ENERGY REGULATORY COMMISSION
Consumers Energy Company )
Michigan Electric Transmission Company ) Docket No. EC01-____-000
CONSUMERS ENERGY COMPANY'S APPLICATION
FOR AUTHORIZATION TO TRANSFER JURISDICTIONAL
TRANSMISSION ASSETS TO MICHIGAN ELECTRIC TRANSMISSION
COMPANY PURSUANT TO SECTION 203 OF THE FEDERAL POWER ACT
William M. Lange, Esq Robert M. Neustifter
Assistant General Counsel Attorney
Consumers Energy Company Consumers Energy Company
Special Counsel Special Counsel
Michigan Electric Transmission Michigan Electric Transmission
Company Company
1016 16th Street, N.W., Suite 100 212 West Michigan Avenue
Washington, D.C. 20036 Jackson, MI 49201
Telephone: (202) 293-5795 Telephone: (517) 788-2974
Facsimile: (202) 293-5367 Facsimile: (517) 788-0768
Dated: October 13, 2000
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UNITED STATES OF AMERICA
BEFORE THE
FEDERAL ENERGY REGULATORY COMMISSION
Consumers Energy Company )
Michigan Electric Transmission Company ) Docket No. EC01-____-000
_____________________________________________)
CONSUMERS ENERGY COMPANY'S APPLICATION
FOR AUTHORIZATION TO TRANSFER JURISDICTIONAL
TRANSMISSION ASSETS TO MICHIGAN ELECTRIC TRANSMISSION
COMPANY PURSUANT TO SECTION 203 OF THE FEDERAL POWER ACT
I. INTRODUCTION AND REQUESTED AUTHORIZATIONS
Pursuant to Section 203 of the Federal Power Act ("FPA"), 16 U.S.C. ss.
824b (1994), and Part 33 of the Commission's regulations, 18 C.F.R. Part 33
(1999), Consumers Energy Company ("Consumers"), hereby tenders this application
("Application") seeking all authorizations from the Federal Energy Regulatory
Commission ("Commission") necessary for the completion of a transaction or a
series of transactions (collectively, the "Transfer Transaction")(1) pursuant to
which (1) Consumers will transfer its 100 percent ownership interest in
substantially all of its integrated transmission facilities with voltage ratings
of 120 kilovolts ("kV") and above, as well as all related tariffs, contracts,
books and records ("Transmission Assets") to Michigan Electric Transmission
Company ("Michigan Transco"), and (2) Michigan Transco will acquire a 100
percent ownership interest in the Transmission Assets and will assume
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(1) Although the instant Application seeks Commission approval under Section 203
of the FPA to consummate the Transfer Transaction, the Applicants note that
certain specifics of the proposed Transfer Transaction are, as of the date of
this filing, still undetermined. The Commission recently has approved the
transfer of transmission assets under Section 203 of the FPA in two situations
in which the details of the proposed transaction were yet to be determined. See
Wisconsin Power and Light Company, 90 FERC, [Paragraph] 61,347 (2000) ("WP&L");
Wisconsin Electric Power Company, 90 FERC [Paragraph] 61,346 (2000) ("WEPCO").
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certain contractual and other rights and obligations of Consumers relating to
the provision of open access transmission service.
The instant Application seeks authorization for the transfer of the
Transmission Assets from Consumers to Michigan Transco as an integral
preliminary step in Consumers' plan to transfer control of or to divest its
transmission business ("Divestiture Transaction") to a party which meets the
requirements of the Commission's Order No. 2000. Subsequent transactions in the
implementation of this plan could include: (1) one or more public or private
offerings of the securities of Michigan Transco and/or (2) a sale to, or
business combination with, one or more unaffiliated third parties, for purposes
of divesting control of Michigan Transco and/or the Transmission Assets
themselves. At the appropriate time, the appropriate parties will seek separate
Commission authorization under Section 203 of the FPA to engage in the
Divestiture Transaction. The Transfer Transaction for which the Applicants seek
approval herein is intended to be a first step in this process.
The Transfer Transaction is consistent with the public interest because
the proposed transaction will: (1) create a clear corporate separation between
Consumers' transmission business and its generation/distribution business; and
(2) create benefits to transmission customers beyond those contemplated by the
Commission's functional unbundling requirements set forth in Order Nos. 888 and
889,(2) and will ultimately
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(2) See Promoting Wholesale Competition Through Open Access Non-Discriminatory
Transmission Services by Public Utilities; Recovery of Stranded Costs by Public
Utilities and Transmitting Utilities, Order No. 888, FERC Stats. & Regs.
(Regulations Preambles) [Paragraph] 31,036 (1996), order on reh'g, Order No.
888-A, III FERC Stats. & Regs. [Paragraph] 31,048 (1997), order on reh'g, Order
No. 888-B, 81 FERC [Paragraph] 61,248 (1997), order on reh'g ,Order No. 888-C,
82 FERC [Paragraph] 61,046 (1998); Open Access Same-Time Information System
(Formerly Real-Time Information Networks) and Standards of Conduct, FERC Stats.
& Regs. (Regulations Preambles)[Paragraph] 31,305 (1996); order on reh'g, Order
No. 889-A, III FERC Stats. & Regs.[Paragraph] 31,049 (1997); reh'g denied, Order
No. 889-B, 81 FERC [Paragraph] 61,253 (1997).
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facilitate the Applicants' compliance with Order No. 2000. See Regional
Transmission Organizations, 89 FERC [Paragraph] 61,285 (1999) ("Order No.
2000"). In this regard, the Transfer Transaction should be approved as
consistent with the public interest because it is substantially similar to a
Commission-approved corporate restructuring proposed by the FirstEnergy
Operating Companies and The Detroit Edison Company. See FirstEnergy Operating
Companies, et al, 89 FERC [Paragraph] 61,090 (1999) ("FirstEnergy") and DTE
Energy Company, et al., 91 FERC [Paragraph] 61,317 (2000) ("DTE Energy"). In
FirstEnergy, the Commission approved the transfer of transmission facilities
from the FirstEnergy Operating Companies to American Transmission Systems, Inc.
("ATSI") in part because the transfer was intended to be an initial step in the
process of complying with the Commission's policy favoring regional transmission
organizations ("RTOs"). In DTE Energy, the Commission approved a similar
transfer of transmission facilities from The Detroit Edison Company to
International Transmission Company. Similarly, here, the Transfer Transaction
should be approved as consistent with the public interest for the reasons
described in Part V of this Application.
However, by this Application the Applicants are not seeking approval of
Michigan Transco as an entity that currently meets the minimum characteristics
and functions of an RTO which were established by the Commission in Order No.
2000. Moreover, Commission approval of the instant Application should not be
conditioned on Michigan Transco's compliance with Order No. 2000.(3) Applicants
commit that,
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(3)The Commission has approved Section 203 applications under similar
circumstances (even over the objections of intervenors) without conditioning
such approvals on compliance with Order No. 2000. See WP&L, 90 FERC at 162,149;
WEPCO, 90 FERC at 61,145. The Commission has also found that RTO compliance
issues are beyond the scope of a proceeding in which an applicant seeks
authorization under Section 203 of the FPA for a simple "paper transaction"
intended to facilitate the transfer of transmission assets to an affiliate. See
FirstEnergy, 89 FERC at 61,260.
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Michigan Transco (or a governing RTO on Michigan Transco's behalf) will submit a
plan to comply with Order No. 2000.
The transmission customers will gain benefits from the Transfer
Transaction in addition to Order No. 2000 compliance. The proposed
organizational change will result in the consolidation of transmission control,
planning, maintenance and financial responsibilities within a separate
affiliated corporation engaged in the process of becoming a fully independent
transmission operation.
As described throughout this Application (see specifically Section V),
the proposed Transfer Transaction satisfies the Commission's three-part test
established in Order No. 592, and should therefore be approved under Section 203
of the FPA, Inquiry Concerning the Commission's Merger Policy Under the Federal
Power Act: Policy Statement, FERC Stats, & Regs. (Regulations Preambles)
[Paragraph] 31,044 (1996), order on reconsideration, Order No. 592-A, 79 FERC
[Paragraph] 61,321 (1997) ("Merger Policy Statement").
Because this application is consistent with Commission precedent, the
public interest and the Commission's goals regarding electric transmission,
Consumers asks for a shortened notice period and prompt disposition of this
matter.
II. DESCRIPTION OF APPLICANTS
A. CONSUMERS ENERGY COMPANY
Consumers is a public utility operating company and wholly-owned
subsidiary of CMS Energy Corporation ("CMS Energy") engaged in the generation,
transmission, and distribution of electric energy in the State of Michigan. At
year-end 1999, Consumers provided retail electric service to approximately 1.67
million customers located in 61 of 68 counties of Michigan's lower peninsula.
For further information with
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respect to the general character of Consumers' business, reference is made to
Consumers' 1999 Report on FERC No. 1, heretofore filed with the Commission.
Consumers' retail operations are subject to the jurisdiction of the Michigan
Public Service Commission ("MPSC"). Consumers also transmits and sells electric
energy at wholesale subject to the Commission's jurisdiction under Part II of
the FPA, 16 U.S.C. ss.ss. 824 et seq.
Consumers owns and operates five fossil-fueled steam-electric
generating plants, one nuclear generating plant, seven oil or gas fueled peaking
generating plants, thirteen conventional hydroelectric plants and has a 51%
ownership interest in one pumped storage hydroelectric generating facility,
which generated an aggregate net amount of 25,329,352 million kWh's in 1999.
Consumers' electric generating plants are interconnected by a
transmission system operating at 120 to 345 kilovolts totaling approximately
5,700 pole miles. Consumers and The Detroit Edison Company ("Detroit Edison")
are parties to an Electric Coordination Agreement providing for emergency
assistance, coordination of operations and planning for bulk power supply, with
energy interchanged at nine interconnections. Consumers also interchanges
electric energy through interconnections with The Toledo Edison Company, Indiana
& Michigan Electric Company, Northern Indiana Public Service Company, the City
of Holland, the Michigan Municipal Cooperative Coordinated Pool and the Michigan
South Central Power Agency.
Consumers has wholesale electric service agreements with Wolverine
Power Supply Cooperative, Inc., Midwest Energy Cooperative, the cities of Bay
City, Eaton Rapids, St. Louis, Portland and Hart, the Village of Chelsea, Alpena
Power Company and Edison Sault Electric Company, all of which require the usual
facilities to supply such service.
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Consumers has an approved open access transmission tariff on file with the
Commission in Docket No. OA-96-77-000 ("OATT").(4) In addition, Consumers is a
member of the Michigan Electric Coordination System ("MECS"), a power pool
formed with Detroit Edison As a tight power pool, Detroit Edison and Consumers
jointly filed an open access tariff providing for non-discriminatory
transmission service with the Commission pursuant to Order No. 888 on December
31, 1996, in Docket No. OA97-249-000 ("JOATT").(5)
Consumers is a signatory to the East Central Area Reliability ("ECAR")
Coordination Agreement and a member of the proposed Alliance RTO.(6)
The Commission authorized Consumers to transact wholesale sales of
electric energy and power at market-based rates in Docket No. ER98-4421-000 and
See Consumers Energy, 85 FERC [Paragraph] 61,121 (1998).
B. MICHIGAN ELECTRIC TRANSMISSION COMPANY
Michigan Transco was organized on July 12, 2000 as a Michigan
corporation. Michigan Transco currently does not conduct any business or own any
facilities used for the generation, transmission, or distribution of electric
energy. Upon consummation of the Transfer Transaction, Michigan Transco will
acquire a 100 percent ownership interest in the Transmission Assets and,
thereafter, will be a "public utility" subject to the jurisdiction of the
Commission under Part II of the FPA.
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(4) On July 14, 1997, Consumers filed an open access transmission
tariff with the Commission in compliance with Order No. 888-A in Docket No.
OA97-648-000
(5) Subsequently, on July 14, 1997, Consumers and Detroit Edison
jointly filed an open access transmission tariff in compliance with Order No.
888-A, in Docket No. OA97-690-000.
(6) See Alliance Order, 89 FERC at 61,914.
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III. OVERVIEW OF THE PROPOSED TRANSFER TRANSACTION
A. REASONS FOR AND BENEFITS OF THE TRANSFER TRANSACTION
The Transfer Transaction is part of a proposed corporate restructuring
to comply with the Commission's policy goals regarding electric transmission and
to better serve local and regional customers. The formation of Michigan Transco
and the transfer of the Transmission Assets from Consumers to Michigan Transco
is not, however, the ultimate strategic goal. As noted in Section I, supra, the
Transfer Transaction is the first step in the process of Consumers exploring the
option of divesting ownership, operation, and control of its transmission
business. Regardless of whether Consumers chooses to divest its transmission
system or transfer control of it to an RTO, Consumers' current plan is to remain
in the business of generating and distributing electric energy to retail
customers.
This corporate restructuring strategy will be implemented in two steps.
The first step involves the corporate unbundling of the Transmission Assets from
Consumers (which is the subject of this Application). The second involves
Consumers Energy's possible complete exit from the transmission business (via
the Divestiture Transaction which will require the filing of an additional
subsequent FPA Section 203 filing). As described below, this corporate
restructuring strategy has been developed based on (1) compliance with the
Commission's policy goals regarding transmission; (2) enhancing service to
transmission customers, and (3) securing flexibility to meet the requirements of
Order No. 2000, and (4) facilitating compliance with the transmission-related
provisions of Michigan's recently-enacted "Customer Choice and Electric
Reliability Act." (2000 PA 141).
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1. COMPLIANCE WITH COMMISSION'S TRANSMISSION POLICY GOALS
Over the past five years, evolution of the Commission's transmission
policies has created regulatory and market environments, which make corporate
unbundling (and ultimately divestiture of the Transmission Assets) an
appropriate strategy. Prior to Order No. 2000, Commission policy under Order No.
888 required only that public utilities functionally separate their wholesale
merchant and transmission businesses to mitigate concerns that
vertically-integrated utilities have the opportunity and incentive to favor
their own generation interests over competitors. See Order No. 888 at 31,655-56.
Although the Commission clearly encouraged public utilities to consider the
benefits of corporate unbundling in Order No. 888, the Commission merely
required that the separation of wholesale generation and transmission functions
be implemented through the imposition of Standards of Conduct. Id. Specifically,
the Commission stated that:
...while we are not now requiring any form of corporate unbundling, we
again encourage utilities to explore whether corporate unbundling or
other restructuring mechanisms may be appropriate in particular
circumstances. Thus, we intend to accommodate other mechanisms that
public utilities may submit, including voluntary corporate
restructurings (e.g., ISOs, separate corporate divisions, divestiture,
poolcos), to ensure that open access transmission occurs on a
non-discriminatory basis. We will also continue to monitor - and stand
ready to work with parties engaging in - innovative restructuring
proposals occurring around the country.
2. ENHANCING SERVICE TO TRANSMISSION CUSTOMERS
In addition to seeking out opportunities to expand transmission in
order to facilitate generation market competition, one of Michigan Transco's
primary responsibilities will be to safely and reliably meet the transmission
needs of Consumers
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and Michigan Transco's other customers. Following this filing, Michigan Transco
will file with the Commission amendments to the OATT and the JOATT to substitute
Michigan Transco for Consumers as the transmission provider under these tariffs.
Upon consummation of the Transfer Transaction, Consumers will function solely as
a generation and distribution company taking service under Michigan Transco's
FERC-jurisdictional open access transmission tariffs. Consumers and its current
open access transmission customers will see no difference in the level or
quality of service that they currently receive. The Transfer Transaction has
been structured to enable Consumers to continue to meet its service obligations
in the same manner that it does today. In effect, the transaction will be
transparent to all of Consumers' customers. Consumers will remain the customers'
regulated electric utility, will maintain all of its state statutory service
obligations, and will continue to provide adequate, safe and reliable electric
service. Furthermore, as discussed in Section V.B.2, infra, the Transfer
Transaction will not result in any change in the rates for transmission service
paid by Consumers' existing bundled retail customers, and its wholesale
transmission customers. These customers will be unharmed by the Transfer
Transaction because Michigan Transco will charge such customers the same rates
as are currently in effect under Consumers' OATT and the JOATT.
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3. SECURING ORDER NO. 2000 COMPLIANCE
The Transfer Transaction has been designed to be flexible and
compatible with transmission market developments in the Midwest region, as well
as in other regions of the Eastern Interconnection. As noted elsewhere herein,
Consumers is currently a signatory to the Alliance RTO, an organization which
was formed well before the issuance of Order No. 2000.
Consumers is still currently exploring the best option for Order No.
2000 compliance, including forming Michigan Transco as a fully constituted RTO
that satisfies the minimum characteristics and functions of an RTO. See, e.g.,
Commonwealth Edison Company, et al., 90 FERC [Paragraph] 61,192 (2000)("ComEd").
Consequently, over the next several months, Applicants will be intently
investigating alternative business models and paths for compliance with Order
No. 2000. Whether Consumers follows a different path, or continues its
membership in the Alliance RTO (or another broader organization seeking RTO
status), the Applicants believe that the proposed formation of Michigan Transco
will provide significant benefits to customers.
B. DESCRIPTION OF TRANSMISSION ASSETS SUBJECT TO THE TRANSFER TRANSACTION
In Attachment 1 hereto Applicant has provided a specific listing of the
Transmission Assets that will be transferred from Consumers to Michigan Transco
pursuant to the Transfer Transaction. As described below, the Transmission
Assets constitute only those facilities determined to be "transmission" under
the Commission's Seven Factor Test. See Order No. 888 at 31,771. Furthermore,
the Commission has
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already conditionally approved under FPA Section 203 the transfer of the
Transmission Assets to the Alliance RTO. See Alliance Order, 89 FERC,
[Paragraph] 61,298 at 61,929.
In response to Order No. 888, Consumers developed a methodology for
identifying which of its facilities was "transmission," as opposed to "local
distribution," which specifically relied on the Commission's Seven Factor Test,
and conducted a study to classify its facilities either as "transmission" or
"local distribution" using the Seven Factor Test ("Seven Factor Study").
Consumers' filings reflecting the Seven Factor Study were approved by the MPSC
in Case No. U-11283 on January 14, 1998 and by the Commission in Docket No. EL
98-21-000 on July 29, 1998. On October 27, 1998, Consumers filed in Docket No.
ER99-361-000 OATT rates to reflect the Seven Factor Study, which were accepted
in a Commission letter order dated December 17, 1998. 85 FERC [Paragraph]
61,362. Accordingly, Consumers' currently-filed rates for its OATT and the JOATT
reflect the Seven Factor Study.
Although the Transmission Assets to be transferred from Consumers to
Michigan Transco are listed in Attachment 1 to this Application, generally, the
Transmission Assets include:
(1) transmission lines (including towers, poles, and conductors);
(2) transformers with voltage ratings of 120 kV and above;
(3) generation tie lines from the transmission grid to the point of
connection to generator step-up transformers;
(4) associated voltage control devices and power flow control
devices;
(5) associated transmission substations;
(6) equipment spares for transmission facilities.
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The Commission should note that the Transmission Assets to be
transferred to Michigan Transco do not include certain radial lines with voltage
rating of 138 kV, some of which are used to provide service to retail customers.
Additionally, other facilities owned and operated by Consumers that are
classified as distribution and used to provide transmission service to a limited
number of wholesale customers at delivery points below 120 kV ("Distribution
Facilities") are not subject to the Transfer Transaction. Nevertheless, in order
to ensure continuity of service to wholesale customers who take service over the
Distribution Facilities, Michigan Transco will provide open access,
non-discriminatory transmission service pursuant to the Michigan Transco OATT
and/or JOATT, and will credit to Consumers all charges billed to and collected
from wholesale customers for such use of the Distribution Facilities.
C. OPERATION OF THE TRANSMISSION SYSTEM POST-TRANSFER TRANSACTION
Michigan Transco does not currently own, operate, or control any
facilities used for the generation, transmission, or distribution of electric
energy. However, upon consummation of the Transfer Transaction, Michigan Transco
will acquire the Transmission Assets and exercise operational control over the
Transmission Assets (the "Transmission System"). Michigan Transco will operate
the Transmission System in accordance with the terms of the Michigan Transco
OATT and/or JOATT, and pursuant to an Operating Agreement to be entered into by
Michigan Transco and Consumers.(7) As
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(7) Michigan Transco's operational responsibilities are discussed in further
detail in the pro forma Operating Agreement hereto in Exhibit H (1)
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contemplated, Michigan Transco will administer the Michigan Transco OATT and/or
JOATT (including processing and implementing all requests for transmission
service under the tariff), and procure, offer and arrange for ancillary services
in support of such transmission service. In addition to these responsibilities,
Michigan Transco will function as the control area operator, and will also be
responsible for the maintenance of the Transmission System and the construction
of any new transmission facilities within its service territory.
As noted above, Michigan Transco will offer all ancillary services as
required by the Commission in Order No. 888. Because Michigan Transco will not
own any generating facilities, it will procure the necessary ancillary services
from third-party suppliers, including Consumers. Under the Operating Agreement,
Consumers is obligated, upon request, to offer to sell ancillary services to
Michigan Transco at Commission-approved rates. Michigan Transco will, however,
be free to purchase ancillary services from unaffiliated generators located
within its control area or in neighboring jurisdictions on a non-preferential,
competitive basis. Finally, it should be noted that Michigan Transco will not
engage in the purchase and sale of energy other than to obtain and provide the
necessary ancillary services required by its customers.
Upon receipt of the required regulatory approvals,(8) Michigan Transco
will commence providing open access transmission service to Consumers' existing
transmission customers, as well as all other eligible customers requesting
transmission
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(8) Shortly after the filing of this Application, Michigan Transco will make a
ministerial filing under FPA Section 205 seeking approval for Michigan Transco
to provide service under its own OATT. The OATT filed for Michigan Transco will
be virtually identical in all material aspects to Consumers' currently filed and
FERC-approved OATT and will include the same OATT rates charged by Consumers. In
addition, Michigan Transco will also make a similar ministerial filing under
Section 205 of the FPA to amend the JOATT between International Transmission
Company (formerly Detroit Edison) and Consumers Energy.
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service from Michigan Transco, under the terms of the Michigan Transco OATT
and/or JOATT. At that time, Consumers will become a transmission customer of
Michigan Transco and take Network Integration Transmission Service under the
Michigan Transco OATT or the JOATT. Consumers and Michigan Transco propose to
accomplish this by entering a five-year Service Agreement for NITS substantially
in the form of the service agreement attached as Exhibit H(2) hereto. The
parties would agree that the service agreement would contain a fixed rate for
transmission service that could not be increased by Michigan Transco. By
recently enacted state law (2000 P.A. 141) Consumers' retail residential rates
cannot be increased until at least January 1, 2006, and its retail commercial
and industrial rates cannot be increased for varying periods extending until at
least January 1, 2004. Thus, the fixed transmission rate is necessary to prevent
Consumers from experiencing revenue loss as a result of the Transfer
Transaction.
Further, pursuant to the Operating Agreement, Michigan Transco will be
obligated to make the Transmission System available to Consumers in order to
allow Consumers to provide transmission service to its existing wholesale
customers under agreements predating Order No. 888 ("Grandfathered Agreements").
D. FINANCIAL ASPECTS OF THE TRANSFER TRANSACTION
As currently contemplated, the transfer of the Transmission Assets from
Consumers to Michigan Transco will occur pursuant to the terms of the Transfer
Agreement between Consumers and Michigan Transco. The overall proposed Transfer
Transaction would proceed as follows: Michigan Transco, a Michigan corporation,
is being created initially as a wholly-owed subsidiary of Consumers. Pursuant to
the Transfer Agreement, Consumers will contribute and transfer to Michigan
Transco the Transmission Assets in exchange for the common stock of Michigan
Transco ("Transco
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Voting Securities") in a transaction designed to qualify as a tax-free exchange
under Section 351 of the Internal Revenue Code of 1986, as amended. The Transco
Voting Securities will constitute 100 percent of the issued and outstanding
common stock of Michigan Transco immediately following issuance. Simultaneously
with and upon the exchange closing, Michigan Transco will assume the existing
rights, obligations and liabilities of Consumers associated with the
Transmission Assets and the conduct of Consumers' transmission business. As
currently contemplated, the exchange will value the Transmission Assets (and the
Transco Voting Securities) at the Transmission Assets' actual depreciated value
("Net Book Value") as of the closing date. A form of proposed Bill of Sale is
included herewith as Exhibit H(4).
IV. COMMISSION'S PART 33 FILING REQUIREMENTS
A. APPLICANT'S NAME AND PRINCIPAL PLACE OF BUSINESS
CONSUMERS ENERGY COMPANY
Consumers is a Michigan corporation with its principal place of
business at 212 W. Michigan Avenue, Jackson, Michigan, 49201
MICHIGAN ELECTRIC TRANSMISSION COMPANY
Michigan Transco will be constituted as a Michigan corporation with its
initial principal place of business at 212 W. Michigan Avenue, Jackson, Michigan
49201.
B. NAMES AND ADDRESSES OF THE PERSONS AUTHORIZED TO RECEIVE NOTICES AND
COMMUNICATIONS WITH RESPECT TO THE APPLICATION
Applicants respectfully request that notices, correspondence, and other
communications concerning this Application be directed to the following persons:
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William M. Lange, Esq.
Assistant General Counsel
Consumers Energy Company
Special Counsel
Michigan Electric Transmission Company
Legal Department, Suite 100
1016 16th Street, NW
Washington, DC 20036
(202) 293-5795 (telephone)
(202) 293-5367 (facsimile)
Robert M. Neustifter
Attorney
Consumers Energy Company
Special Counsel
Michigan Electric Transmission Company
212 West Michigan Avenue
Jackson, MI 49201
(517) 788-2974 (telephone)
(517) 788-0768 (facsimile)
Applicants request that the foregoing persons be placed on the official
service list for this proceeding.
C. DESIGNATION OF TERRITORIES SERVICED, BY COUNTIES AND STATES
Applicants respectfully request waiver of the Commission's requirement
in 18 C.F.R.ss. 33.2(c) that they designate territories served. In the recent
Merger NOPR Filing, the Commission proposed to streamline applicants' filing
responsibilities and "eliminate . . . unnecessary or inapplicable information
requirements." See FERC Stats. & Regs. (Proposed Regulations) [Paragraph] 32,528
at 33,364. No franchises will be transferred as part of the Transfer Transaction
and, thus, Consumers' retail service territory will not change. Accordingly, the
Applicants respectfully submit that good cause exists to grant this request for
waiver.
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D. DESCRIPTION OF JURISDICTIONAL FACILITIES
CONSUMERS ENERGY COMPANY
Consumers owns facilities for the production, transmission, and
distribution of electric energy and power. Consumers also owns books and records
and has on file with the Commission numerous agreements, rate schedules, and
tariffs pursuant to which it provides transmission service at wholesale. The
individual physical FERC-jurisdictional Transmission Assets that are the subject
of this filing (listed in Attachment 1 hereto) generally consist of:
(1) transmission lines and stations (including towers, poles, and
conductors);
(2) transformers with voltage ratings of 120 kV and above;
(3) generation tie lines from the transmission grid to the point of
connection to generator step-up transformers;
(4) associated voltage control and power flow control devices;
(5) associated transmission substations;
(6) equipment spares for transmission facilities
MICHIGAN ELECTRIC TRANSMISSION COMPANY
Michigan Transco is special purpose subsidiary created for the purpose
of acquiring a 100 percent ownership interest in the Transmission Assets.
Michigan Transco does not currently own, operate, or control any facilities used
for the generation, transmission, or distribution of electric energy and power.
Upon consummation of the Transfer Transaction, Michigan Transco will acquire a
direct 100 percent ownership interest in the Transmission Assets and will
exercise operational authority over the Transmission System.
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E. DESCRIPTION OF TRANSACTION AND STATEMENT AS TO CONSIDERATION
For a description of the proposed Transfer Transaction, see Section
III.D., supra. The consideration for the Transfer Transaction will be an amount
equal to the Net Book Value of the Transmission Assets. The estimated Net Book
Value as of June 30, 2000 is quantified in Section IV.G, infra.
F. DESCRIPTION OF THE FACILITIES TO BE DISPOSED OF, CONSOLIDATED, OR
MERGED
As described elsewhere herein, Consumers will transfer to Michigan
Transco the Transmission Assets listed in Attachment 1 hereto. The assets to be
transferred also involve general and intangible plant assets associated with
Consumers' transmission operations, including plant materials, inventory, and
operating supplies. In addition, the Transmission Assets include all tariffs,
service agreements, books, and records which will be necessary for Michigan
Transco to provide transmission service under the terms of the Michigan Transco
OATT and/or JOATT, and otherwise assume Consumers' rights and obligations as a
transmission provider.
G. STATEMENT OF THE COST OF THE FACILITIES INVOLVED IN THE TRANSACTION
A statement of the costs of the facilities subject to the Transfer
Transaction is attached hereto in Attachment 2. As noted in Section III.D,
supra, the "purchase price" for the Transmission Assets will be equal to Net
Book Value of these facilities. As of June 30, 2000, the "purchase price" would
have been approximately $247.4 million, composed of transmission plant in
service (approximately $221.3 million), plus associated net intangible plant
(approximately $0.7 million), plus materials and supplies inventory
(approximately $6.9 million) plus associated construction work in
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progress (approximately $18.6 million). These values will be updated as of the
closing date for the Transfer Transaction.
H. STATEMENT AS TO THE EFFECT OF THE SALE OR TRANSFER UPON ANY CONTRACT
FOR THE PURCHASE, SALE, OR INTERCHANGE OF ELECTRIC ENERGY
The Transfer Transaction will have no direct impact on any contract for
the purchase, sale, or interchange of electric energy. As discussed above,
Consumers' wholesale transmission customers served under existing Grandfathered
Agreements will have the right to continue receiving transmission service under
these arrangements from Consumers. Furthermore, Consumers will be a transmission
customer of Michigan Transco and will take Network Integration Transmission
Service under Michigan Transco's OATT or the JOATT under a Service Agreement
described in Section III. C, infra, substantially in the form attached as
Exhibit H(2) Pursuant to the Transfer Transaction, Consumers' Transmission
service agreements currently on file with the Commission under the OATT and
JOATT will be transferred to Michigan Transco, which, in turn, will provide
service under these agreements. An index of wholesale transmission customers
served under Consumers' OATT and the JOATT is appended hereto as Attachment 3.
I. STATEMENT AS TO OTHER REQUIRED REGULATORY APPROVALS
The following are the other regulatory approvals required in
conjunction with the transfer of jurisdictional assets described in this
Application.
CMS Energy Corporation and Consumers will require an order from the Securities
and Exchange Commission for approval to acquire the securities of Michigan
Transco pursuant to Section 9(a)(2) and 10 of the PUHCA, in order to consummate
the Transfer Transaction.
Within six (6) months following the filing of the instant Application, Consumers
must file an application for an order from the MPSC approving the proposed
accounting treatment for the Transfer Transaction.
19
<PAGE> 22
Consumers will file an application with the Commission under Part I of the
Federal Power Act to remove certain transmission facilities from the license for
the Ludington Pumped Storage Project so that it will not be necessary for
Michigan Transco to be a licensee under Part I of the FPA.
Consumers will make copies of the SEC application and the one it files
with the MPSC available to the Commission reasonably contemporaneous with their
filing. Consumers intends to make all of the above filings in the near future.
J. FACTS SHOWING THAT THE PROPOSED TRANSACTIONS WILL BE CONSISTENT WITH
THE PUBLIC INTEREST
See Sections I., III., and V., infra.
K. BRIEF STATEMENT OF FRANCHISES HELD
See Section IV.C., supra.
L. FORM OF NOTICE
A form of notice suitable for publication in the Federal Register is
attached to the transmittal letter accompanying this Application. In addition,
an electronic version of this notice on a 3.5 inch computer diskette in
WordPerfect format is enclosed with this filing.
V. THE TRANSFER TRANSACTION IS CONSISTENT WITH THE PUBLIC INTEREST
The Transfer Transaction is consistent with the public interest and
therefore should be approved under Section 203 of the FPA. It is will
established that the Commission must approve the proposed transfer of the
jurisdictional Transmission Assets if it finds that the Transfer Transaction
"will be consistent with the public interest."(9)
--------
(9) Section 203(a) of the FPA, 16 U.S.C. ss. 824b, states:
No public utility shall sell,, lease, or otherwise dispose of . . . its
facilities subject to the jurisdiction of the Commission . . . or by any
means whatsoever, directly or indirectly merge or consolidate such
facilities or any part thereof with those of any other person, or purchase,
acquire, or take any security of any other public utility, without first
having secured an order of the
(Continued)
20
<PAGE> 23
Moreover, Commission precedent is clear that, while a positive benefit need not
be shown, the Applicants must demonstrate that the Transfer Transaction is
consistent with the public interest. See Pacific Power and Light Company v. FPC,
111 F.2d 1014 (9th Cir., 1940). As demonstrated below, the Transfer Transaction
is consistent with the public interest.
A. THE PROPOSED TRANSFER TRANSACTION IS CONSISTENT WITH AND
SUPERIOR TO THE COMMISSION'S FUNCTIONAL UNBUNDLING POLICY
In Order No.888, the Commission determined that functional
unbundling of wholesale generation and transmission services is necessary to
implement non-discriminatory open access transmission. In doing so, the
Commission stopped short of requiring corporate unbundling. See Order No. 888 at
31,655-56. Rather, the Commission concluded that "functional unbundling of
wholesale services is necessary to implement non-discriminatory, open access
transmission and that corporate unbundling should not now be required." Id. at
31,655.
The Commission determined that three requirements are
necessary to ensure that public utilities provide non-discriminatory service:
(1) a public utility must take transmission services (including ancillary
services) for all of its new wholesale sales and purchases of energy under the
same tariff of general applicability as do others; (2) a public utility must
state separate rates for wholesale generation, transmission, and ancillary
services; and (3) a public utility must rely on the same electronic information
network that its transmission customers rely on to obtain information about its
transmission system when buying or selling power. See Order No. 888 at 31,654.
--------------------------------------------------------------------------------
Commission authorizing it to do so . . . After notice and opportunity for
hearing, if the Commission finds that the proposed disposition, consolidation,
acquisition, or control will be consistent with the public interest, it shall
approve the same.
21
<PAGE> 24
While recognizing that these requirements gave public
utilities an incentive to file fair and efficient rates, terms and conditions,
the Commission concluded that functional unbundling would work only if strong
standards of conduct are in place. Id. at 61,655. As noted in Section III.A.1,
supra, the Commission encouraged utilities to explore whether corporate
unbundling or other restructuring mechanisms may be appropriate in particular
circumstances, and indicated that it would "accommodate other mechanisms that
public utilities may submit, including voluntary corporate restructurings (e.g.,
ISOs, separate corporate divisions, divestiture, poolcos), to ensure that open
access transmission occurs on a non-discriminatory basis." Id. at 31,656.
Although the Commission has not affirmatively required actual
corporate separation of generation/distribution from transmission, Applicants
propose to do exactly that, thereby accomplishing substantially more than what
is currently required by Order No. 888 and its progeny. Indeed, the Transfer
Transaction represents a significant step beyond functional unbundling.
Moreover, as described elsewhere herein, the Transfer Transaction is the
cornerstone of the Applicants' strategy for complying with Order No. 2000 and
preparing to divest control of Michigan Transco and /or the Transmission Assets.
Specifically, Michigan Transco's acquisition and operation of
the Transmission Assets from Consumers clearly surpasses the functional
unbundling requirements of Order No. 888 by implementing a bright-line corporate
separation between Consumers' current transmission business and its
generation/distribution businesses. Upon consummation of the Transfer
Transaction, Michigan Transco will be responsible for providing all open access
transmission and ancillary services currently provided pursuant to the terms of
Consumers' OATT, the JOATT and existing open
22
<PAGE> 25
access service agreements. Consumers' rights and obligations under the OATT and
JOATT and all related service agreements with Consumers' open access
transmission customers are being transferred to Michigan Transco via this
filing, and will be re-filed by Michigan Transco under FPA Section 205 in a
ministerial filing as described elsewhere herein. Consumers will, however,
remain responsible for obtaining transmission service necessary to serve
customers under the Grandfathered Agreements. Upon consummation of the Transfer
Transaction, Consumers will become a Network Integration Transmission Service
customer of Michigan Transco.
Michigan Transco will not engage in the electric power
generation business, and will purchase ancillary services from Consumers at
Commission-approved rates and from unaffiliated generators located both within
and outside of the Michigan Transco control area. Michigan Transco will not own
any facilities used to provide generation service. Furthermore, Michigan Transco
will focus solely on efficiently and effectively operating, maintaining and,
where necessary, expanding the Transmission System. As such, Michigan Transco
will be particularly well situated to respond quickly to customer needs.
Accordingly, the Applicants respectfully submit that by
transferring the Transmission Assets to an affiliated transmission-only company
and requiring that Consumers (as a generation/distribution company) take
transmission service under the Michigan Transco OATT or the JOATT, the Transfer
Transaction clearly surpasses the Commission's functional unbundling policy and
will facilitate the Applicants' compliance with Order No. 2000.
23
<PAGE> 26
B. THE TRANSFER TRANSACTION MEETS THE REQUIREMENTS OF THE
COMMISSION'S MERGER POLICY STATEMENT
As noted above, it is well established that when reviewing a
proposed transaction under Section 203 of the FPA, the Commission will undertake
a public interest evaluation pursuant to the three-pronged test set forth in the
Merger Policy Statement. FERC Stats. & Regs. (Regulations Preambles) at
30,116-25.10 Under this test, the Commission examines the proposed transaction's
effect on competition, on rates, and on regulation. Id. The Applicants
respectfully submit that the Transfer Transaction satisfies the public interest
requirements set forth in the Commission's Merger Policy Statement as it: (1)
will have a beneficial effect on competition in the electric generation market
and no adverse impact whatsoever on the regulated transmission market; (2) will
have a beneficial or neutral impact on rates; and (3) will have no negative
impact on regulation at either the state or Federal level. Therefore, the
Transfer Transaction should be approved by the Commission under FPA Section 203.
1. COMPETITION WILL BE UNAFFECTED OR ENHANCED
In the recent Merger Filing NOPR, the Commission noted that
its "competitive concern in any type of merger involving jurisdictional electric
utilities is whether the merger will result in higher prices or reduced output
in electricity markets." FERC Stats. & Regs. (Proposed Regulations) [Paragraph]
32,528 at 33,365. To evaluate this concern, the Merger Policy Statement sets
forth specific questions which parties are required to address in order to
determine whether a proposed transaction is "consistent with the public
interest." The fundamental inquiry is:
----------------
10 See also WP&L, 90 FERC at 62,148; WEPCO, 90 FERC at 62,144.
24
<PAGE> 27
Does the merger substantially reduce the alternatives
available to buyers of a product or service, relative to those
existing prior to the merger, and will reduction in the
alternatives reduce substantially the degree of competition in
the market?
The Applicants have not submitted a competitive screen
analysis because of the nature of the transaction proposed in this Application.
The Commission did not require such a competitive screen analysis in FirstEnergy
or DTE Energy. See 89 FERC [Paragraph] 61,090 at 61,259 and 91 FERC [Paragraph]
61,317 at 5 (mimeo). By engaging in the proposed Transfer Transaction, the
Applicants merely seek to implement a clearly defined corporate separation
between Consumers' generation/distribution and transmission businesses. As
proposed herein, the Transmission Assets currently owned, operated, and
controlled by Consumers will be transferred to Michigan Transco, an affiliated
transmission company, as the first step in preparing to divest control of
Michigan Transco and/or the Transmission Assets from Consumers.
Neither Consumers, nor Michigan Transco propose to merge with
any other entity in the instant Application. This transaction does not involve
any concentration of utility or other generation capacity and is designed to
lead to an even more substantial separation of Consumers' transmission from its
other utility businesses. Upon completion of the Transfer Transaction, Consumers
will no longer own, operate, or control facilities used to transmit electric
energy in interstate commerce. The proposed Transfer Transaction affects only
Consumers' ownership of the Transmission Assets; it will not alter generation
facility ownership or control. Accordingly, the Applicants submit that many of
the concerns that the Commission may have regarding vertical market power will
be severely diminished and ultimately eradicated.
25
<PAGE> 28
Accordingly, the Applicants respectfully submit that the
Transfer Transaction will have a positive effect upon competition in the State
of Michigan and the entire Great Lakes region.
2. RATES WILL BE UNAFFECTED BY THE TRANSFER TRANSACTION
The Transfer Transaction will have no impact on the wholesale
power rates charged by Consumers. In addition, approval of the Transfer
Transaction will have no impact on the rates charged to the current open access
transmission customers of Consumers who will become transmission customers of
the new, subsidiary company, Michigan Transco. Specifically, because the
Transfer Transaction will not result in any change in the rates for transmission
service currently paid by customers under Consumers' OATT and JOATT, ratepayers
will be unharmed by the Transfer Transaction.
Further, the rates presently charged for generation-based
ancillary services by Consumers will remain unchanged by the Transfer
Transaction. As contemplated, Michigan Transco will procure and offer to
transmission customers ancillary services purchased on a competitive basis at
Commission-approved rates from Consumers or from third party suppliers.
Since Michigan Transco's transmission and ancillary service
rates will remain unchanged from their current levels, and Michigan Transco is
free to purchase ancillary services from third-party suppliers where technically
feasible and services are cheaper, rates for transmission service, and ancillary
services will be unaffected by the Transfer Transaction.
26
<PAGE> 29
3. THERE WILL BE NO ADVERSE EFFECT ON REGULATION
Under the Merger Policy Statement, the Commission requires
parties to evaluate the effect on regulation of a merger or other proposed
transaction both at the federal and state level. The Commission has indicated
that it may set a Section 203 application for hearing if: (1) the merged entity
would be part of a registered holding company and the applicants do not commit
to abide by the Commission's policies on the pricing of non-power goods and
services between affiliates: or (2) the affected state commissions do not have
authority to act on the transaction. See FERC Stats. & Regs. (Regulation
Preambles) [Paragraph] 31,044 at 30,124-125. Neither of these concerns is raised
by this Application.
For the following reasons, the Transfer Transaction will not
have any adverse impact on federal regulation. First, Consumers, the seller of
the assets, will continue to be fully subject to Commission regulation with
respect to all wholesale sales, as well as services provided to its customers
under Grandfathered Agreements. Second, the transfer of the Transmission Assets
from Consumers to Michigan Transco will not result in the formation of a
registered holding company, but will result in a public utility fully subject to
the jurisdiction of the Commission under Part II of the FPA. Accordingly, there
should be no concern over the Commission's ability to regulate effectively after
the Transfer Transaction is consummated.
With regard to "affected state commissions," the Merger Policy
Statement reflects the Commission's concerns that state regulators should not be
divested of the authority to act on mergers of traditional vertically integrated
utilities with captive retail (as well as wholesale) customers. The Transfer
Transaction does not involve a merger of vertically integrated utilities. Upon
consummation of the Transfer Transaction,
27
<PAGE> 30
Consumers will continue to be subject fully to the jurisdiction of the MPSC with
respect to the retail rates charged, either as a provider of bundled electricity
or as a provider of electric distribution service for unbundled retail
electricity sales.
VI. LIST OF EXHIBITS REQUIRED BY PART 33 OF THE COMMISSION'S REGULATIONS
18 C.F.R.SS.33.3
Accompanying this application are the following Exhibits as required
by the Commission's Regulations:
Exhibit A Corporate Resolutions .
Exhibit B Statement Of The Measure Of Control or Ownership.
Exhibit C Balance Sheets.
Exhibit D Statement Of Contingent Liabilities.
Exhibit E Income Statement.
Exhibit F Analysis Of Retained Earnings.
Exhibit G Related Applications.
Exhibit H Contracts Relating To Transfer Of Transmission
Assets--Operating Agreement, Transmission Service Agreement,
Easement Agreement, and Bill of Sale.
Exhibit I Map Showing Proposed Transferred Facilities.
These Exhibits follow Attachments 1-3 to the application.
VII. REQUEST FOR AN EFFECTIVE DATE
Applicants respectfully request that the Commission approve
this Application by no later than December 1, 2000, in order to facilitate a
February 1, 2001 closing of the Transfer Transaction. To that end, the
Applicants request a shortened notice period for this filing.
28
<PAGE> 31
VIII. CONCLUSION
Consumers and Michigan Transco respectfully request that the
Commission expeditiously authorize the transfer from Consumers to Michigan
Transco of the Transmission Assets proposed herein under the terms and condition
set forth in this Application.
Respectfully submitted,
CONSUMERS ENERGY COMPANY
MICHIGAN ELECTRIC TRANSMISSION
COMPANY
By: /s/ William M. Lange
---------------------------------
William M. Lange
Assistant General Counsel
Consumers Energy Company
Special Counsel
Michigan Electric Transmission Company
1016 16th Street, N.W., Suite 100
Washington, D.C. 20036
Telephone: (202) 293-5795
Facsimile: (202) 293-5367
Robert M. Neustifter
Attorney
Consumers Energy Company
Special Counsel
Michigan Electric Transmission Company
212 West Michigan Avenue
Jackson, MI 49201
Telephone: (517) 788-2974
Facsimile: (517) 788-0768
Dated: October 13, 2000
29
<PAGE> 32
UNITED STATES OF AMERICA
BEFORE THE
FEDERAL ENERGY REGULATORY COMMISSION
Consumers Energy Company )
Michigan Electric Transmission Company ) Docket No. EC01- -000
)
--------------------------------------------
VERIFICATION
STATE OF MICHIGAN )
)SS
COUNTY OF JACKSON )
David W. Joos, first being duly sworn, deposes and states that
he is a representative legally authorized to bind Consumers Energy Company and
Michigan Electric Transmission Company; that he has read the attached
Application; that he knows the contents thereof; and that the statements therein
pertaining to Consumers Energy Company and Michigan Electric Transmission
Company are true and correct to the best of his knowledge, information, and
belief.
/s/ David W. Joos
---------------------------------
David W. Joos
Subscribed and sworn to before me this 13th day of October, 2000.
/s/ Barbara L. Morris
---------------------------------
Barbara L. Morris
Notary Public, Jackson County, Michigan
My Commission Expires: 12/22/2001
<PAGE> 33
STATEMENT
The verification to which this statement is attached was signed by someone
other than the person who signed the application being verified. This was done
to allow the application to be signed in Washington, DC, some distance from Mr.
Joos' offices, to facilitate the assembly and filing of the application and
exhibits.
This statement is being provided pursuant to 18 CFR Section 385.2005(b)(2).
<PAGE> 34
UNITED STATES OF AMERICA
BEFORE THE
FEDERAL ENERGY REGULATORY COMMISSION
Consumers Energy Company ) Docket No. EC01- -000
Michigan Electric Transmission Company )
NOTICE OF FILING
( , 2000)
Take notice that on October 13, 2000, Consumers Energy Company
("Consumers") and Michigan Electric Transmission Company ("Michigan Transco")
(collectively, "Applicants"), tendered for filing an application ("the
Application") under Section 203 of the Federal Power Act petitioning the
Commission for all authorizations necessary for Consumers to transfer 100%
ownership interest in all of its electric transmission assets and for Michigan
Transco to acquire and operate the same.
The Applicants state that the proposed transfer of facilities to
Michigan Transco, a wholly owned subsidiary of Consumers, is the first step in
Consumers' plan to transfer control of or to divest itself of ownership,
operation and control of its transmission assets to an unaffiliated third party.
The application states that regardless of whether Consumers chooses to divest
its transmission system or transfer control of it to an RTO, Consumers chooses
to divest its transmission system or transfer control of it to an RTO,
Consumers' current plan is to remain in the business of generating and
distributing electric energy to retail customers.
The proposed transfer would have no impact on existing
transmission rates charged by Consumers, according to the Applicants. The
Application states that it has been served on the Michigan Public Service
Commission, Consumers' wholesale electric customers and other potentially
effected parties.
The Applicants seek Commission approval by December 1, 2000.
Any person desiring to be heard or to protest such filing should
file a motion to intervene or protest with the Federal Energy Regulatory
Commission, 888 First Street, N.E., Washington, DC 20426, in accordance with
Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18
C.F.R. 385.211 and 385.214). All such motions and protests should be filed on
or before , 2000. Protests will be considered by the Commission to
determine the appropriate action to be taken, but will not serve to make
protestants parties to the proceedings. Any person wishing to become a party
must file a motion to intervene. Copies of this filing are on file with the
Commission and are available for public inspection. This filing may also be
viewed on the Internet at http://www.ferc.fed.us/online/rims.htm (call
202-208-2222 for assistance).
David P. Boergers
Secretary
<PAGE> 35
CERTIFICATE OF SERVICE
I hereby certify that I have caused the foregoing application of Consumers
Energy Company and Michigan Electric Transmission Company to be served this day
upon the following parties:
Alpena Power Company Bay City Electric Light & Power
310 North Second Avenue 900 South Water Street
Alpena, MI 49707 Bay City, MI 48708
Chelsea Electric Department City of Eaton Rapids, Michigan
104 East Middle Street 200 South Main Street
Chelsea, MI 48118 Eaton Rapids, MI 48827
The Detroit Edison Company Edison Sault Electric Company
2000 Second Avenue 725 E. Portage Avenue
Detroit, MI 48226 Sault Ste. Marie, MI 49783
Hart Hydro Electric Holland Board of Public Works
407 State Street 625 Hastings Avenue
Hart, MI 49420 Holland, MI 49423
Indiana Michigan Power Company Michigan Municipal Cooperative
One Summit Square Coordinated Pool
P.O. Box 60 809 Centennial Way
Fort Wayne, IN 46801 Lansing, MI 48917
Michigan Public Service Commission Michigan South Central Power
6545 Mercantile Way Agency
P.O. Box 30221 P.O. Box 62
Lansing, MI 48909 720 Herring Road
Litchfield, MI 49252
Midwest Energy Cooperative Northern Indiana Public Service Co.
901 E. State St. 5265 Hohman Avenue
P.O. Box 127 Hammond, IN 46320-1775
Cassopolis, MI 49031
Portland Light and Power Board St. Louis Municipal Electric
259 Kent Street 108 W. Saginaw
Portland, MI 48875 St. Louis, MI 48880
<PAGE> 36
The Toledo Edison Company Wolverine Power Supply
300 Madison Street Cooperative, Inc.
Toledo, OH 43652 10125 West Watergate Rd.
P.O. Box 229
Cadillac, MI 49601-0229
Dated at Washington, DC, this 13th day of October, 2000.
/s/ William M. Lange
-------------------------------
William M. Lange
<PAGE> 37
ATTACHMENT 1
Electric Transmission Plant in Service 4 Pages
(Excluding Land and Land Right of Way
Electric Transmission Intangible Plant 1 Page
Electric Transmission Plant Construction Work in Progress 1 Page
Plant Closings, and Plant Retirements
(excluding Land and Land Right of Way)
Electric Transmission Materials and Supplies Inventory 1 Page
Electric Transmission Plant Land Cost and Lease Payment Calculation 1 Page
<PAGE> 38
Consumers Energy Company
Electric Transmission Plant in Service Excluding Land and R/W
As of December 31, 1999
<TABLE>
<CAPTION>
Percent
Group Location Description Location KV Rating Total Location Cost Transmission
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
LINES 345 KV TRAINING FACILITY 131998 Training Facilities $36,043.16 100.00%
LINES ARGENTA - PONTIAC AND WAYNE 131311 345 KV $11,383,935.34 100.00%
LINES ARGENTA-TALLMADGE&KENOWA 131312 345 KV $6,593,897.54 100.00%
LINES ARGNTA-ROBINSON PARK&TW BRANCH 131313 345 KV $4,601,411.78 100.00%
LINES BAT CK-JACKSON-LANSING-138KV 131004 138 KV $3,072,225.78 78.09%
LINES CAMBEL-GD RAPS BATL CK 138KV 131122 138 KV $11,438,865.83 72.78%
LINES CAMPBELL PLANT TO 345KV SUB 131604 345 KV $794,927.52 100.00%
LINES CAMPBELL PLANTS TO 138KV SUB 131503 138 KV $64,802.24 100.00%
LINES CLAREMONT-MANNING 138 KV 131125 138 KV $874,851.00 88.95%
LINES COBB-BLACK RIVER 138KV 131087 138 KV $3,907,347.99 97.15%
LINES COBB-HOOKER 138KV 131100 138 KV $2,609,247.59 76.39%
LINES COLDWATER-BATAVIA 138KV 131124 138 KV $2,433,149.75 100.00%
LINES TEST FACILITY MIDLAND 131997 Training Facilities $3,715.31 100.00%
LINES CROTON-MUSK-GR RAPIDS 138KV 131003 138 KV $4,095,768.40 87.77%
LINES FLINT-BATTLE CREEK 138KV 131061 138 KV $8,221,989.56 83.80%
LINES FLINT-HEMPL-DET EDISON 120KV 131073 120 KV $154,378.32 100.00%
LINES GR RAPIDS KAZOO BAT CK 138KV 131008 138 KV $10,033,430.11 76.81%
LINES HARDY-GRAND RAPIDS 138KV 131002 138 KV $6,034,495.86 80.40%
LINES HIGGINS-MIO-GAYLORD 138KV 131085 138 KV $6,124,751.53 63.45%
LINES HODENPYL-CROTON 138KV 131001 138 KV $3,265,695.21 51.54%
LINES HODENPYL-TRAVERSE CITY 138KV 131090 138 KV $335,968.60 100.00%
LINES JACKSON-MANCHESTER 138KV 131010 138 KV $1,182,002.48 37.67%
LINES JACKSON-WHITING 138KV 131017 138 KV $4,883,182.79 69.22%
LINES JACKSON-WHITING 138KV 131084 138 KV $1,620,398.27 78.57%
LINES KARN-FLINT 138KV 131117 138 KV $6,641,923.11 100.00%
LINES KENOWA - THETFORD 131316 345 KV $16,199,017.20 100.00%
LINES KEYSTONE - LIVINGSTON 131308 345 KV $3,770,896.34 100.00%
LINES LANSING-FLINT G-7 138KV 131067 138 KV $3,290,677.80 59.72%
LINES LIVINGSTON - TITTABAWASSEE 131318 345 KV $9,146,425.38 100.00%
LINES LUD KEYSTN ON STE SHRD,NON-PRJ 131301 345 KV $557,537.95 100.00%
LINES LUD-KENWA OFF STE-SHRD,PROJECT 131304 345 KV $8,741,464.95 100.00%
LINES LUD-KENWA ON SITE-SHRD,PROJECT 131303 345 KV $421,020.28 100.00%
LINES LUD-KEYSTN OFF STE-SHRD NON PJ 131307 345 KV $7,417,084.87 100.00%
LINES LUD-TALMDGE OFF STE-SHRD NONPJ 131305 345 KV $10,643,484.06 100.00%
LINES LUD-TALMDGE ON STE-SHRD NON PJ 131302 345 KV $385,658.08 100.00%
LINES LULU-ALLEN JUNCTION 131319 345 KV $1,288,915.76 100.00%
LINES MAJESTIC-BLACKFOOT 345KV 131321 345 KV $23,095,083.26 100.00%
LINES MIO-ROCKPORT 138KV 131103 138 KV $3,059,824.32 94.77%
LINES MIO-SAGINAW 138KV 131005 138 KV $5,870,466.17 89.22%
LINES MONROE - LEMOYNE AND FOSTORIA 131315 345 KV $1,987,313.83 100.00%
LINES MORROW-BLACKSTONE Q-17 138KV 131074 138 KV $5,463,718.32 78.34%
LINES MORROW-WEALTHY V-22 138KV 131068 138 KV $1,523,234.69 65.10%
LINES MUSKEGON-GRAND RAPIDS 138KV 131106 138 KV $767,535.66 100.00%
LINES PALISADES - ARGENTA 131309 345 KV $4,608,645.34 100.00%
LINES PALISADES - PALISADE JCT 131310 345 KV $245,489.20 100.00%
LINES SAG RIVER-EDENVILE ALMA 138KV 131006 138 KV $9,532,883.25 84.47%
LINES SAG RIVR-OWOSSO P-16 138KV 131077 138 KV $8,270,192.70 75.75%
LINES SO WEST MARSHALL TRAIN FAC 131999 Training Facilities $160,123.26 100.00%
LINES TALMDGE-PALSDES-SHRD,NON-PROJ 131306 345 KV $18,022,443.97 100.00%
LINES THETFORD-ST CLAIR&PONTIAC 131314 345 KV $797,870.45 100.00%
LINES TITTABAWASSEE - THETFORD 131317 345 KV $22,887,387.87 100.00%
LINES TRAVERSE CITY-GAYLORD 138KV 131114 138 KV $3,996,010.44 47.80%
LINES VERONA-BATAVIA 138KV 131083 138 KV $1,281,812.97 100.00%
LINES WEADOCK-BULLOCK 138KV 131098 138 KV $2,297,456.86 79.62%
LINES WEADOCK-FLINT 138KV 131060 138 KV $5,935,102.90 96.70%
LINES WHITIN-DET EDSON-MONROE 120KV 131092 120 KV $329,504.45 100.00%
----------------- ---------
LINES TOTAL $262,402,687.04 93.64%
================= =========
<CAPTION>
Transmission Transmission Net
Group Location Description Original Cost Depr Reserve Transmission
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LINES 345 KV TRAINING FACILITY $36,043.16 $25,058.58 $10,984.58
LINES ARGENTA - PONTIAC AND WAYNE $11,383,935.34 $6,483,301.09 $4,900,634.25
LINES ARGENTA-TALLMADGE&KENOWA $6,593,897.54 $4,221,825.19 $2,372,072.35
LINES ARGNTA-ROBINSON PARK&TW BRANCH $4,601,411.78 $2,543,713.66 $2,057,698.12
LINES BAT CK-JACKSON-LANSING-138KV $2,398,956.39 $1,015,282.43 $1,383,673.96
LINES CAMBEL-GD RAPS BATL CK 138KV $8,325,041.08 $3,980,435.42 $4,344,605.66
LINES CAMPBELL PLANT TO 345KV SUB $794,927.52 $264,402.88 $530,524.64
LINES CAMPBELL PLANTS TO 138KV SUB $64,802.24 $39,743.53 $25,058.71
LINES CLAREMONT-MANNING 138 KV $778,198.47 $197,752.97 $580,445.50
LINES COBB-BLACK RIVER 138KV $3,796,140.69 $2,490,052.29 $1,306,088.40
LINES COBB-HOOKER 138KV $1,993,250.80 $1,391,913.14 $601,337.66
LINES COLDWATER-BATAVIA 138KV $2,433,149.75 $886,453.96 $1,546,695.79
LINES TEST FACILITY MIDLAND $3,715.31 $2,364.88 $1,350.43
LINES CROTON-MUSK-GR RAPIDS 138KV $3,594,902.13 $2,715,183.08 $879,719.05
LINES FLINT-BATTLE CREEK 138KV $6,890,436.26 $2,968,343.52 $3,922,092.74
LINES FLINT-HEMPL-DET EDISON 120KV $154,378.32 $131,486.63 $22,891.69
LINES GR RAPIDS KAZOO BAT CK 138KV $7,706,619.69 $4,853,477.71 $2,853,141.98
LINES HARDY-GRAND RAPIDS 138KV $4,851,550.76 $2,664,783.34 $2,186,767.42
LINES HIGGINS-MIO-GAYLORD 138KV $3,886,415.15 $2,090,452.42 $1,795,962.73
LINES HODENPYL-CROTON 138KV $1,683,248.98 $1,385,778.96 $297,470.02
LINES HODENPYL-TRAVERSE CITY 138KV $335,968.60 $239,899.54 $96,069.06
LINES JACKSON-MANCHESTER 138KV $445,217.53 $319,499.34 $125,718.19
LINES JACKSON-WHITING 138KV $3,380,120.23 $2,546,755.58 $833,364.65
LINES JACKSON-WHITING 138KV $1,273,225.60 $888,656.70 $384,568.90
LINES KARN-FLINT 138KV $6,641,923.11 $5,119,176.40 $1,522,746.71
LINES KENOWA - THETFORD $16,199,017.20 $9,506,346.24 $6,692,670.96
LINES KEYSTONE - LIVINGSTON $3,770,896.34 $2,094,801.61 $1,676,094.73
LINES LANSING-FLINT G-7 138KV $1,965,225.59 $1,165,413.08 $799,812.51
LINES LIVINGSTON - TITTABAWASSEE $9,146,425.38 $5,170,018.22 $3,976,407.16
LINES LUD KEYSTN ON STE SHRD,NON-PRJ $557,537.95 $313,295.81 $244,242.14
LINES LUD-KENWA OFF STE-SHRD,PROJECT $8,741,464.95 $5,313,055.91 $3,428,409.04
LINES LUD-KENWA ON SITE-SHRD,PROJECT $421,020.28 $250,751.04 $170,269.24
LINES LUD-KEYSTN OFF STE-SHRD NON PJ $7,417,084.87 $4,037,781.09 $3,379,303.78
LINES LUD-TALMDGE OFF STE-SHRD NONPJ $10,643,484.06 $5,800,690.76 $4,842,793.30
LINES LUD-TALMDGE ON STE-SHRD NON PJ $385,658.08 $234,396.44 $151,261.64
LINES LULU-ALLEN JUNCTION $1,288,915.76 $749,470.71 $539,445.05
LINES MAJESTIC-BLACKFOOT 345KV $23,095,083.26 $10,219,878.38 $12,875,204.88
LINES MIO-ROCKPORT 138KV $2,899,932.58 $1,965,240.78 $934,691.80
LINES MIO-SAGINAW 138KV $5,237,648.03 $3,301,912.28 $1,935,735.75
LINES MONROE - LEMOYNE AND FOSTORIA $1,987,313.83 $1,374,304.47 $613,009.36
LINES MORROW-BLACKSTONE Q-17 138KV $4,280,204.53 $2,552,718.87 $1,727,485.66
LINES MORROW-WEALTHY V-22 138KV $991,600.55 $618,805.53 $372,795.02
LINES MUSKEGON-GRAND RAPIDS 138KV $767,535.66 $651,871.55 $115,664.11
LINES PALISADES - ARGENTA $4,608,645.34 $3,117,086.60 $1,491,558.74
LINES PALISADES - PALISADE JCT $245,489.20 $173,445.94 $72,043.26
LINES SAG RIVER-EDENVILE ALMA 138KV $8,052,554.84 $3,168,626.85 $4,883,927.99
LINES SAG RIVR-OWOSSO P-16 138KV $6,264,709.45 $4,039,795.06 $2,224,914.39
LINES SO WEST MARSHALL TRAIN FAC $160,123.26 $72,979.12 $87,144.14
LINES TALMDGE-PALSDES-SHRD,NON-PROJ $18,022,443.97 $8,214,086.48 $9,808,357.49
LINES THETFORD-ST CLAIR&PONTIAC $797,870.45 $510,254.58 $287,615.87
LINES TITTABAWASSEE - THETFORD $22,887,387.87 $12,499,657.83 $10,387,730.04
LINES TRAVERSE CITY-GAYLORD 138KV $1,910,199.75 $1,205,573.73 $704,626.02
LINES VERONA-BATAVIA 138KV $1,281,812.97 $602,076.61 $679,736.36
LINES WEADOCK-BULLOCK 138KV $1,829,257.69 $1,308,063.18 $521,194.51
LINES WEADOCK-FLINT 138KV $5,739,399.55 $4,212,986.33 $1,526,413.22
LINES WHITIN-DET EDSON-MONROE 120KV $329,504.45 $234,946.74 $94,557.71
--------------- --------------- ---------------
LINES TOTAL $265,912,324.12 $144,146,125.34 $111,636,798.05
=============== =============== ===============
</TABLE>
Page 1 of 4
<PAGE> 39
Consumers Energy Company
Electric Transmission Plant in Service Excluding Land and R/W
As of December 31, 1999
<TABLE>
<CAPTION>
Percent
Group Location Description Location KV Rating Total Location Cost Transmission
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUBS AIRPORT SUB 135220 138 KV $26,548.77 100.00%
SUBS ALBA TIE SUBSTATION 135093 138 KV $22,513.06 66.90%
SUBS ALPENA SUBSTATION 135058 138 KV $1,458,077.36 94.22%
SUBS ARGENTA SUBSTATION 135133 138 KV $13,485,900.57 10.33%
SUBS ARGENTA SUBSTATION 135133 345 KV $13,485,900.57 44.68%
SUBS ARGENTA SUBSTATION 135133 345/138 KV $13,485,900.57 40.54%
135133 TOTAL $13,485,900.57 95.54%
SUBS BARD ROAD SUBSTATION 145159 138 KV $1,545,038.87 72.84%
SUBS BARTON LAKE SUB (NIPSCO) 135214 138 KV $11,803.16 100.00%
SUBS BATAVIA SUBSTATION 145002 138 KV $1,688,556.06 47.64%
SUBS BATTLE CREEK SUB 135177 138 KV $5,754,182.95 6.21%
SUBS BATTLE CREEK SUB 135177 345 KV $5,754,182.95 68.38%
SUBS BATTLE CREEK SUB 135177 345/138 KV $5,754,182.95 24.17%
135177 TOTAL $5,754,182.95 98.76%
SUBS BEALS ROAD SUBSTATION 145021 138 KV $5,551,444.26 20.86%
SUBS BEECHER SUBSTATION 145001 138 KV $4,628,089.03 18.84%
SUBS BLACK RIVER SUBSTATION 145050 138 KV $2,913,900.49 19.39%
SUBS BLACKSTONE SUBSTATION 145027 138 KV $3,342,049.08 49.59%
SUBS BLENDON SUB 135185 138 KV $6,496.28 100.00%
SUBS BRADLEY SUB 135236 138 KV $244.74 100.00%
SUBS BULLOCK SUBSTATION 145028 138 KV $3,143,433.99 29.19%
SUBS CAMPBELL 138KV SUB-SHARED 135228 138 KV $338,026.35 56.61%
SUBS CAMPBELL 138KV SUB-UNSHARED 135227 138 KV $5,135,652.96 15.32%
SUBS CAMPBELL 138KV SUB-UNSHARED 135227 345/138 KV $5,135,652.96 69.71%
135227 TOTAL $5,135,652.96 85.02%
SUBS CAMPBELL 345KV SUB-SHARED 135218 345 KV $2,457,922.89 100.00%
SUBS CAMPBELL 345KV SUB-UNSHARED 135226 345 KV $1,736,775.68 100.00%
SUBS CLAREMONT SUBSTATION 145008 138 KV $4,375,145.00 53.49%
SUBS CLINTON SUB-D.E 135225 345 KV $60,143.10 100.00%
SUBS COBB B C STEAM PLANT 111002 138 KV $7,481,902.69 21.03%
SUBS COLDWATER 138KV (MSCPA) 135221 138 KV $57,321.54 100.00%
SUBS CORNELL SUBSTATION 145051 138 KV $2,093,441.23 52.24%
SUBS CROTON SUBSTATION 145010 138 KV $1,871,785.39 30.48%
SUBS DELHI SUBSTATION 145011 138 KV $2,976,290.53 45.38%
SUBS DORT SUBSTATION 145012 138 KV $3,428,015.61 40.87%
SUBS EMMET SUBSTATION 145087 138 KV $1,842,092.21 37.93%
SUBS FOUR MILE SUBSTATION 145019 138 KV $5,311,684.05 19.23%
SUBS GAINES SUBSTATION 135246 138 KV $7,276,602.26 29.75%
SUBS GAINES SUBSTATION 135246 345/138 KV $7,276,602.26 70.25%
135246 TOTAL $7,276,602.26 100.00%
SUBS GALLAGHER SUB 135191 138 KV $2,801,425.98 13.16%
SUBS GALLAGHER SUB 135191 345 KV $2,801,425.98 15.81%
SUBS GALLAGHER SUB 135191 345/138 KV $2,801,425.98 66.64%
135191 TOTAL $2,801,425.98 95.61%
SUBS GARFIELD AVENUE SUBSTATION 145017 138 KV $3,422,113.03 34.60%
SUBS GOSS SUB 135184 138 KV $4,692,482.14 9.90%
SUBS GOSS SUB 135184 345 KV $4,692,482.14 36.69%
</TABLE>
<TABLE>
<CAPTION>
Transmission Transmission Net
Group Location Description Original Cost Depr Reserve Transmission
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SUBS AIRPORT SUB $26,548.77 $7,420.04 $19,128.73
SUBS ALBA TIE SUBSTATION $15,061.99 $5,133.82 $9,928.17
SUBS ALPENA SUBSTATION $1,373,819.17 $423,944.43 $949,874.74
SUBS ARGENTA SUBSTATION $1,393,369.83 $557,954.65 $835,415.18
SUBS ARGENTA SUBSTATION $6,024,911.78 $2,415,553.41 $3,609,358.37
SUBS ARGENTA SUBSTATION $5,466,513.67 $1,642,803.66 $3,823,710.01
$12,884,795.28 $4,616,311.72 $8,268,483.56
SUBS BARD ROAD SUBSTATION $1,125,470.70 $325,765.44 $799,705.26
SUBS BARTON LAKE SUB (NIPSCO) $11,803.16 $4,481.07 $7,322.09
SUBS BATAVIA SUBSTATION $804,441.62 $283,971.77 $520,469.85
SUBS BATTLE CREEK SUB $357,149.23 $152,390.92 $204,758.31
SUBS BATTLE CREEK SUB $3,934,665.39 $816,352.91 $3,118,312.48
SUBS BATTLE CREEK SUB $1,390,938.49 $593,495.31 $797,443.18
$5,682,753.10 $1,562,239.14 $4,120,513.97
SUBS BEALS ROAD SUBSTATION $1,158,297.25 $439,366.92 $718,930.33
SUBS BEECHER SUBSTATION $871,827.94 $259,230.23 $612,597.71
SUBS BLACK RIVER SUBSTATION $565,058.10 $209,326.63 $355,731.47
SUBS BLACKSTONE SUBSTATION $1,657,259.05 $723,234.14 $934,024.91
SUBS BLENDON SUB $6,496.28 $2,576.13 $3,920.15
SUBS BRADLEY SUB $244.74 ($136.22) $380.96
SUBS BULLOCK SUBSTATION $917,649.73 $308,362.01 $609,287.73
SUBS CAMPBELL 138KV SUB-SHARED $191,343.28 $72,003.93 $119,339.34
SUBS CAMPBELL 138KV SUB-UNSHARED $786,672.73 $339,904.03 $446,768.70
SUBS CAMPBELL 138KV SUB-UNSHARED $3,579,876.53 $735,700.31 $2,844,176.22
$4,366,549.26 $1,075,604.34 $3,290,944.92
SUBS CAMPBELL 345KV SUB-SHARED $2,457,922.89 $916,671.10 $1,541,251.79
SUBS CAMPBELL 345KV SUB-UNSHARED $1,736,775.68 $460,558.62 $1,276,217.05
SUBS CLAREMONT SUBSTATION $2,340,224.80 $835,581.99 $1,504,642.82
SUBS CLINTON SUB-D.E $60,143.10 $16,424.72 $43,718.38
SUBS COBB B C STEAM PLANT $1,573,665.51 $566,932.53 $1,006,732.99
SUBS COLDWATER 138KV (MSCPA) $57,321.54 $14,722.85 $42,598.69
SUBS CORNELL SUBSTATION $1,093,629.91 $547,297.81 $546,332.11
SUBS CROTON SUBSTATION $570,540.33 $256,949.24 $313,591.09
SUBS DELHI SUBSTATION $1,350,586.34 $526,489.84 $824,096.50
SUBS DORT SUBSTATION $1,400,936.71 $594,047.75 $806,888.97
SUBS EMMET SUBSTATION $698,763.09 $279,982.85 $418,780.24
SUBS FOUR MILE SUBSTATION $1,021,456.91 $388,070.95 $633,385.96
SUBS GAINES SUBSTATION $2,164,902.35 $138,745.90 $2,026,156.45
SUBS GAINES SUBSTATION $5,111,699.92 $216,233.77 $4,895,466.14
$7,276,602.26 $354,979.67 $6,921,622.59
SUBS GALLAGHER SUB $368,694.48 $140,269.90 $228,424.58
SUBS GALLAGHER SUB $442,827.62 $168,098.78 $274,728.84
SUBS GALLAGHER SUB $1,867,005.72 $708,721.33 $1,158,284.40
$2,678,527.82 $1,017,090.00 $1,661,437.82
SUBS GARFIELD AVENUE SUBSTATION $1,184,165.14 $508,219.60 $675,945.54
SUBS GOSS SUB $464,511.39 $182,906.51 $281,604.88
SUBS GOSS SUB $1,721,605.45 $672,394.17 $1,049,211.29
</TABLE>
Page 2 of 4
<PAGE> 40
Consumers Energy Company
Electric Transmission Plant in Service Excluding Land and R/W
As of December 31, 1999
<TABLE>
<CAPTION>
Percent
Group Location Description Location KV Rating Total Location Cost Transmission
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUBS GOSS SUB 135184 345/138 KV $4,692,482.14 50.11%
135184 TOTAL $4,692,482.14 96.70%
SUBS GRAND TRAVERSE SUB 135183 138 KV $41,122.81 57.51%
SUBS HALSEY SUBSTATION 145114 138 KV $2,002,704.12 52.22%
SUBS HEMPHILL SUBSTATION 145018 138 KV $6,282,002.03 20.24%
SUBS KARN STEAM PLANT UNITS 1&2 111011 138 KV $4,336,644.91 32.79%
SUBS KARN STEAM PLANT UNITS 3&4 111015 345 KV $10,441,350.81 34.55%
SUBS KENOWA SUB 135149 345 KV $2,524,505.94 99.83%
SUBS KENOWA SUB-SHARED,PROJECT 135161 345 KV $1,491,468.41 100.00%
SUBS KEYSTONE SUB 135178 138 KV $7,287,223.83 10.41%
SUBS KEYSTONE SUB 135178 345 KV $7,287,223.83 33.34%
SUBS KEYSTONE SUB 135178 345/138 KV $7,287,223.83 47.87%
135178 TOTAL $7,287,223.83 91.62%
SUBS LATSON SUBSTATION 135143 138 KV $45,109.67 100.00%
SUBS LAWNDALE SUBSTATION 145129 138 KV $2,401,808.04 25.35%
SUBS LIVINGSTON SUB 135175 138 KV $8,201,167.58 12.17%
SUBS LIVINGSTON SUB 135175 345 KV $8,201,167.58 25.19%
SUBS LIVINGSTON SUB 135175 345/138 KV $8,201,167.58 57.70%
135175 TOTAL $8,201,167.58 95.07%
SUBS LOUD HYDRO PLANT FPC 2449 121026 138 KV $480,614.89 57.31%
SUBS LUD PLT SUB-SHARED,NON-PROJECT 135187 345 KV $3,137,755.89 100.00%
SUBS LUD PLT SUB-UNSHRD;NON-PROJECT 135188 345 KV $1,003,976.65 100.00%
SUBS MANNING SUBSTATION 135217 138 KV $3,547,274.78 2.03%
SUBS MANNING SUBSTATION 135217 345 KV $3,547,274.78 11.77%
SUBS MANNING SUBSTATION 135217 345/138 KV $3,547,274.78 79.69%
135217 TOTAL $3,547,274.78 93.49%
SUBS MARQUETTE SUBSTATION 145054 138 KV $1,784,888.28 30.17%
SUBS MARSHALL 138KV (MSCPA) 135222 138 KV $44,861.11 100.00%
SUBS MCGULPIN SUBSTATION 145055 138 KV $2,475,992.21 31.79%
SUBS MILHAM SUBSTATION 145092 138 KV $1,532,086.65 40.93%
SUBS MIO HYDRO PLANT FPC 2448 121029 138 KV $1,223,921.92 78.26%
SUBS MOORE ROAD SUBSTATION 145132 138 KV $2,100,889.66 64.12%
SUBS MORROW SUBSTATION 145229 138 KV $5,251,047.17 29.76%
SUBS NORTH BELDING SUBSTATION 145031 138 KV $1,209,218.25 53.47%
SUBS ONEIDA SUBSTATION 135248 138 KV $6,935,143.42 1.68%
SUBS ONEIDA SUBSTATION 135248 345 KV $6,935,143.42 24.24%
SUBS ONEIDA SUBSTATION 135248 345/138 KV $6,935,143.42 73.24%
135248 TOTAL $6,935,143.42 99.16%
SUBS PALISADES SUB SHARED, NON-PROJ 135163 345 KV $1,693,769.98 100.00%
SUBS PERE MARQUETTE SUB 135192 138 KV $2,414,163.39 10.50%
SUBS PERE MARQUETTE SUB 135192 345 KV $2,414,163.39 18.85%
SUBS PERE MARQUETTE SUB 135192 345/138 KV $2,414,163.39 66.47%
135192 TOTAL $2,414,163.39 95.83%
SUBS PLASTER CREEK SUBSTATION 135258 138 KV $3,326,531.85 75.00%
SUBS PROJECT 1 SUB 135224 138 KV $57,225.27 66.67%
SUBS REDWOOD SUB 135180 138 KV $32,777.22 69.60%
SUBS RIGGSVILLE SUBSTATION 145035 138 KV $2,118,410.60 56.14%
<CAPTION>
Transmission Transmission Net
Group Location Description Original Cost Depr Reserve Transmission
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SUBS GOSS SUB $2,351,528.17 $918,418.23 $1,433,109.95
$4,537,645.01 $1,773,718.90 $2,763,926.11
SUBS GRAND TRAVERSE SUB $23,649.64 $8,938.16 $14,711.48
SUBS HALSEY SUBSTATION $1,045,862.30 $269,485.07 $776,377.23
SUBS HEMPHILL SUBSTATION $1,271,397.57 $586,465.11 $684,932.47
SUBS KARN STEAM PLANT UNITS 1&2 $1,422,137.74 $785,510.92 $636,626.82
SUBS KARN STEAM PLANT UNITS 3&4 $3,607,720.90 $1,583,498.41 $2,024,222.49
SUBS KENOWA SUB $2,520,324.05 $1,118,505.16 $1,401,818.89
SUBS KENOWA SUB-SHARED,PROJECT $1,491,468.41 $651,998.74 $839,469.67
SUBS KEYSTONE SUB $758,270.38 $202,650.97 $555,619.41
SUBS KEYSTONE SUB $2,429,903.42 $789,421.99 $1,640,481.42
SUBS KEYSTONE SUB $3,488,235.67 $990,557.58 $2,497,678.09
$6,676,409.47 $1,982,630.55 $4,693,778.93
SUBS LATSON SUBSTATION $45,109.67 $23,099.69 $22,009.98
SUBS LAWNDALE SUBSTATION $608,865.58 $211,970.30 $396,895.29
SUBS LIVINGSTON SUB $998,275.89 $290,346.05 $707,929.85
SUBS LIVINGSTON SUB $2,065,739.43 $741,980.64 $1,323,758.79
SUBS LIVINGSTON SUB $4,732,437.97 $1,312,654.37 $3,419,783.60
$7,796,453.29 $2,344,981.05 $5,451,472.24
SUBS LOUD HYDRO PLANT FPC 2449 $275,457.10 $94,248.87 $181,208.23
SUBS LUD PLT SUB-SHARED,NON-PROJECT $3,137,755.89 $1,462,826.54 $1,674,929.35
SUBS LUD PLT SUB-UNSHRD;NON-PROJECT $1,003,976.65 $342,823.39 $661,153.26
SUBS MANNING SUBSTATION $72,059.46 $17,435.33 $54,624.13
SUBS MANNING SUBSTATION $417,501.39 $106,630.62 $310,870.77
SUBS MANNING SUBSTATION $2,826,884.45 $812,280.89 $2,014,603.56
$3,316,445.31 $936,346.84 $2,380,098.46
SUBS MARQUETTE SUBSTATION $538,579.99 $243,283.99 $295,296.01
SUBS MARSHALL 138KV (MSCPA) $44,861.11 $13,761.35 $31,099.76
SUBS MCGULPIN SUBSTATION $787,033.46 $230,705.77 $556,327.69
SUBS MILHAM SUBSTATION $627,034.48 $210,924.98 $416,109.49
SUBS MIO HYDRO PLANT FPC 2448 $957,851.17 $437,762.14 $520,089.03
SUBS MOORE ROAD SUBSTATION $1,347,174.94 $399,920.95 $947,253.99
SUBS MORROW SUBSTATION $1,562,957.44 $585,155.77 $977,801.67
SUBS NORTH BELDING SUBSTATION $646,614.32 $295,808.93 $350,805.38
SUBS ONEIDA SUBSTATION $116,245.80 $17,065.84 $99,179.96
SUBS ONEIDA SUBSTATION $1,681,205.73 $246,814.78 $1,434,390.95
SUBS ONEIDA SUBSTATION $5,079,569.00 $745,722.36 $4,333,846.63
$6,877,020.52 $1,009,602.98 $5,867,417.54
SUBS PALISADES SUB SHARED, NON-PROJ $1,693,769.98 $577,237.70 $1,116,532.28
SUBS PERE MARQUETTE SUB $253,442.40 $58,913.62 $194,528.78
SUBS PERE MARQUETTE SUB $455,154.49 $170,669.06 $284,485.43
SUBS PERE MARQUETTE SUB $1,604,777.40 $618,858.97 $985,918.43
$2,313,374.29 $848,441.65 $1,464,932.64
SUBS PLASTER CREEK SUBSTATION $2,494,898.89 $260,270.96 $2,234,627.93
SUBS PROJECT 1 SUB $38,150.18 $11,779.82 $26,370.36
SUBS REDWOOD SUB $22,814.37 $8,642.47 $14,171.90
SUBS RIGGSVILLE SUBSTATION $1,189,184.19 $488,882.17 $700,302.02
</TABLE>
Page 3 of 4
<PAGE> 41
Consumers Energy Company
Electric Transmission Plant in Service Excluding Land and R/W
As of December 31, 1999
<TABLE>
<CAPTION>
Percent
Group Location Description Location KV Rating Total Location Cost Transmission
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUBS SAGINAW RIVER SUBSTATION 145146 138 KV $3,538,483.49 60.76%
SUBS SPARE EQUIP AT TRAVERSE CITY 139002 Spare Transmission Equipment $45,143.66 100.00%
SUBS SPARE EQUIPMENT AT ALMA 139008 Spare Transmission Equipment $1,292,821.69 100.00%
SUBS SPARE EQUIPMENT AT BAY CITY 139007 Spare Transmission Equipment $79,557.23 100.00%
SUBS SPARE EQUIPMENT AT CLAY ST 139006 Spare Transmission Equipment $319,882.98 100.00%
SUBS SPARE EQUIPMENT AT ELM STREET 139004 Spare Transmission Equipment $223,049.52 100.00%
SUBS SPARE EQUIPT AT SPEC LOCATION 139001 Spare Transmission Equipment $805,491.35 100.00%
SUBS SPAULDING SUBSTATION 145113 138 KV $1,309,131.63 43.22%
SUBS STERNBERG SUBSTATION 135235 138 KV $273.62 100.00%
SUBS STRONACH SUBSTATION 145085 138 KV $832,700.08 41.62%
SUBS TALLMADGE SUBSTATION 135135 138 KV $5,187,299.61 18.81%
SUBS TALLMADGE SUBSTATION 135135 345 KV $5,187,299.61 27.77%
SUBS TALLMADGE SUBSTATION 135135 345/138 KV $5,187,299.61 47.05%
135135 TOTAL $5,187,299.61 93.63%
SUBS TALMDGE SUB-SHRD,NON PROJECT 135162 345 KV $1,670,790.62 100.00%
SUBS THETFORD GENERATING STATION 161007 138 KV $8,876,628.74 10.68%
SUBS THETFORD GENERATING STATION 161007 345 KV $8,876,628.74 40.88%
SUBS THETFORD GENERATING STATION 161007 345/138 KV $8,876,628.74 24.00%
161007 TOTAL $8,876,628.74 75.56%
SUBS TIPPY HYDRO PLANT FPC 2580 121039 138 KV $1,164,668.78 59.06%
SUBS TITTABAWASSEE SUB 135164 138 KV $8,818,831.55 6.93%
SUBS TITTABAWASSEE SUB 135164 345 KV $8,818,831.55 29.51%
SUBS TITTABAWASSEE SUB 135164 345/138 KV $8,818,831.55 62.12%
135164 TOTAL $8,818,831.55 98.56%
SUBS TOMPKINS SUB 135176 138 KV $6,975,715.21 4.97%
SUBS TOMPKINS SUB 135176 345 KV $6,975,715.21 24.28%
SUBS TOMPKINS SUB 135176 345/138 KV $6,975,715.21 67.43%
135176 TOTAL $6,975,715.21 96.67%
SUBS TWINING SUBSTATION 145042 138 KV $1,512,506.24 42.28%
SUBS VERGENNES SUB 135196 138 KV $6,840,759.86 8.98%
SUBS VERGENNES SUB 135196 345 KV $6,840,759.86 59.44%
SUBS VERGENNES SUB 135196 345/138 KV $6,840,759.86 27.10%
135196 TOTAL $6,840,759.86 95.51%
SUBS VERONA SUBSTATION 145043 138 KV $3,237,701.27 46.40%
SUBS WEADOCK JOHN C STEAM PLANT 111008 138 KV $5,881,133.30 23.10%
SUBS WEALTHY STREET SUBSTATION 145158 138 KV $5,597,383.53 13.64%
SUBS WHITE LAKE SUBSTATION 145046 138 KV $1,128,898.09 34.25%
SUBS WHITING JUSTIN R STEAM PLANT 111009 138 KV $5,124,135.74 13.10%
SUBS WHITING JUSTIN R STEAM PLANT 111009 138/120 KV $5,124,135.74 9.52%
---------------- -------
111009 Total $5,124,135.74 22.62%
---------------- -------
$ 256,825,746.44 64.09%
================ =======
Grand Total $539,228,434.08 78.00%
================ =======
<CAPTION>
Transmission Transmission Net
Group Location Description Original Cost Depr Reserve Transmission
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SUBS SAGINAW RIVER SUBSTATION $2,150,109.84 $1,176,009.14 $974,100.69
SUBS SPARE EQUIP AT TRAVERSE CITY $45,143.66 $13,103.20 $32,040.46
SUBS SPARE EQUIPMENT AT ALMA $1,292,821.69 $19,762.20 $1,273,059.49
SUBS SPARE EQUIPMENT AT BAY CITY $79,557.23 $17,664.20 $61,893.03
SUBS SPARE EQUIPMENT AT CLAY ST $319,882.98 $73,907.36 $245,975.62
SUBS SPARE EQUIPMENT AT ELM STREET $223,049.52 $109,349.28 $113,700.24
SUBS SPARE EQUIPT AT SPEC LOCATION $805,491.35 $417,912.07 $387,579.28
SUBS SPAULDING SUBSTATION $565,759.49 $230,355.13 $335,404.36
SUBS STERNBERG SUBSTATION $273.62 ($164.22) $437.84
SUBS STRONACH SUBSTATION $346,572.36 $135,807.72 $210,764.63
SUBS TALLMADGE SUBSTATION $975,969.21 $445,092.02 $530,877.18
SUBS TALLMADGE SUBSTATION $1,440,360.76 $656,182.29 $784,178.47
SUBS TALLMADGE SUBSTATION $2,440,721.92 $1,113,094.40 $1,327,627.52
$4,857,051.89 $2,214,368.72 $2,642,683.18
SUBS TALMDGE SUB-SHRD,NON PROJECT $1,670,790.62 $826,351.81 $844,438.81
SUBS THETFORD GENERATING STATION $947,819.39 $460,145.08 $487,674.32
SUBS THETFORD GENERATING STATION $3,628,476.74 $1,718,352.60 $1,910,124.14
SUBS THETFORD GENERATING STATION $2,130,708.01 $1,053,527.73 $1,077,180.29
$6,707,004.15 $3,232,025.40 $3,474,978.74
SUBS TIPPY HYDRO PLANT FPC 2580 $687,834.96 $282,880.29 $404,954.67
SUBS TITTABAWASSEE SUB $610,856.68 $252,813.92 $358,042.76
SUBS TITTABAWASSEE SUB $2,602,840.52 $899,035.36 $1,703,805.16
SUBS TITTABAWASSEE SUB $5,477,848.58 $1,203,964.28 $4,273,884.30
$8,691,545.78 $2,355,813.56 $6,335,732.22
SUBS TOMPKINS SUB $346,411.39 $120,272.52 $226,138.87
SUBS TOMPKINS SUB $1,693,465.51 $580,752.85 $1,112,712.66
SUBS TOMPKINS SUB $4,703,629.60 $1,253,570.51 $3,450,059.10
$6,743,506.50 $1,954,595.88 $4,788,910.63
SUBS TWINING SUBSTATION $639,418.52 $276,135.98 $363,282.54
SUBS VERGENNES SUB $613,994.65 $158,588.50 $455,406.15
SUBS VERGENNES SUB $4,066,097.82 $1,242,794.87 $2,823,302.96
SUBS VERGENNES SUB $1,853,670.06 $591,142.18 $1,262,527.89
$6,533,762.53 $1,992,525.54 $4,541,237.00
SUBS VERONA SUBSTATION $1,502,304.80 $630,908.37 $871,396.43
SUBS WEADOCK JOHN C STEAM PLANT $1,358,621.24 $746,794.30 $611,826.95
SUBS WEALTHY STREET SUBSTATION $763,334.31 $319,431.46 $443,902.85
SUBS WHITE LAKE SUBSTATION $386,688.78 $189,658.18 $197,030.60
SUBS WHITING JUSTIN R STEAM PLANT $671,512.50 $304,174.21 $367,338.29
SUBS WHITING JUSTIN R STEAM PLANT $487,645.97 $241,591.50 $246,054.47
--------------- -------------- ---------------
$1,159,158.46 $545,765.70 $613,392.76
--------------- -------------- ---------------
$164,612,363.68 $55,163,045.66 $109,449,318.02
=============== =============== ===============
$420,585,287.80 $199,309,170.70 $221,276,117.10
=============== =============== ===============
</TABLE>
Page 4 of 4
<PAGE> 42
ATTACHMENT 1
CONSUMERS ENERGY COMPANY
Electric Transmission Plant
Intangible Plant
December 31, 1999
<TABLE>
<CAPTION>
Loc. No. Description Plant Balance Deprec Reserve Net Plant
-------- ----------- ------------- -------------- ---------
<S> <C> <C> <C> <C>
100002 Lambton - St Clair Interconnection $ 631,216 $ 424,682 $ 206,534
100003 B3N Interconnection (60,684) (36,657) (24,027)
100004 J5D Interconnection 743,270 419,017 324,253
100005 L51 D/L4D Interconnection 56,142 42,265 13,877
100009 Interconnection BC - Majestic 152,532 22,032 130,500
----------- --------- ---------
Total Transmission Intangible Plant $ 1,522,476 $ 871,339 $ 651,137
</TABLE>
1
<PAGE> 43
ATTACHMENT 1
CONSUMERS ENERGY COMPANY
Transmission Plant
Construction Work In Progress, Plant Closings & Plant Retirements
As of June 30, 2000
<TABLE>
<S> <C>
Construction Work In Progress Balance $ 15,172,954
CWIP Closed to Plant 1/1/2000 - 6/30/2000 3,511,599
Plant Retirements 1/1/2000 - 6/30/2000 (84,024)
------------
Total $ 18,600,529
</TABLE>
1
<PAGE> 44
ATTACHMENT 1
CONSUMERS ENERGY COMPANY
TRANSMISSION MATERIALS AND SUPPLIES INVENTORIES
AS OF JUNE 30, 2000
<TABLE>
<S> <C>
Towers and Accessories $ 5,170,374
Poles and Anchors 199,483
Conductors 757,368
Line Hardware 748,634
-----------
Total Inventories $ 6,875,859
</TABLE>
1
<PAGE> 45
ATTACHMENT 1
CONSUMERS ENERGY COMPANY
Transmission Plant Land Costs & Lease Payment Calculation
As of June 30, 2000
<TABLE>
<CAPTION>
TRANSMISSION DISTRIBUTION PLT
Transmission Land Investments LANT NETWORK ALLOCATED TO TRANS TOTAL
----------------------------- ------------ ------------------ -----
<S> <C> <C> <C>
Substations Original Cost (12/31/99)
Account 350.1 Land $ 2,154,927 $ 188,505 $ 2,343,432
Account 350.2 Land & Right of Way 52 111 163
----------- --------- -----------
Total Substations $ 2,154,979 $ 188,616 $ 2,343,595
Overhead Lines Original Cost (12/31/99)
Account 350.1 Land $44,546,476 $ - $44,546,476
Account 350.2 Land & Right of Way 12,294,897 - 12,294,897
----------- --------- -----------
Total Lines $56,841,373 $ - $56,841,373
Total Plant Original Cost $58,996,352 $ 188,616 $59,184,968
Right of Way Depreciation Reserves (12/31/99)
Substations $ (88) $ - $ (88)
Overhead Lines (3,539,353) - (3,539,353)
----------- --------- -----------
Total Depreciation Reserves $(3,539,441) $ - $(3,539,441)
Net Plant In Service $55,456,911 $ 188,616 $55,645,527
Transmission Plant Held for Future Use (12/31/99)
Account 350.1A Land $13,985,423 $ - $13,985,423
Account 350.2A Land & Right of Way 5,213,994 - 5,213,994
----------- --------- -----------
Total Plant Held For Future Use $19,199,417 $ - $19,199,417
Construction Work In Progress & Plant
Closings (As of 6/30/2000)
Construction Work In Progress $ 945,830 $ - $ 945,830
Plant Closings (1/1/2000-6/30/2000) 66 - 66
----------- --------- -----------
Total $ 945,896 $ - $ 945,896
Total Transmission Land Investments $75,602,224 $ 188,616 $75,790,840
</TABLE>
<TABLE>
<CAPTION>
LEASE PAYMENT CALCULATION % LEASE AMOUNT ANNUAL COST LEASE PAYMENT
------------------------- - ------------ ----------- -------------
<S> <C> <C> <C> <C>
Debt 54.35% $41,192,322 7.29% $ 3,003,080
Preferred & Preference Stock 2.41% 1,826,559 6.94% 126,833
Common Equity 43.24% 32,771,959 19.07% 6,250,296
------ ----------- -----------
Total 100.00% $75,790,840 $ 9,380,209
Annual Right of Way Depreciation Expense 250,280
-----------
Total Annual Lease Payment $ 9,630,489
Annual Cost
Debt (7.13%/1-2.2% MSBT) = 7.29%
Preferred & Preference Stock (4.46%/(1-.3577)) = 6.94%
Common Equity (12.25%/(1-.3577)) = 19.07%
Tax Rate 35% x 102.2% MSBT = 35.77%
</TABLE>
1
<PAGE> 46
ATTACHMENT 2
CONSUMERS ENERGY COMPANY
TRANSMISSION PLANT INVESTMENT
As of June 30, 2000
<TABLE>
<S> <C>
TRANSMISSION PLANT NETWORK (12/31/99)
(Excluding Land & Right of Way Costs)
Plant at Original Cost $ 420,585,288
Less: Depreciation Reserves 199,309,171
-------------
Net Transmission Plant Network $ 221,276,117
INTANGIBLE PLANT (12/31/99)
Plant at Original Cost - Interconnections $ 1,522,476
Less: Depreciation Reserves 871,339
-------------
Net Intangible Plant $ 651,137
PLANT CONSTRUCTION WORK IN PROGRESS, PLANT CLOSINGS,
AND PLANT RETIREMENTS
Plant CWIP Balance at 6/30/2000 $ 15,172,954
CWIP Closed to Plant 1/1/2000 - 6/30/2000 3,511,599
Plant Retirements 1/1/2000 - 6/30/2000 (84,024)
-------------
Total $ 18,600,529
MATERIALS AND SUPPLIES INVENTORY (6/30/2000) $ 6,875,859
TOTAL TRANSMISSION PLANT INVESTMENT $ 247,403,642
</TABLE>
1 Rates/Property Accounting
<PAGE> 47
Index of Point-to-Point Transmission Service Customers of Consumers Energy
Under the Corporate and Joint Open Access Transmission Tariff
Service Agreement Termination Date - December 31, 2000
<TABLE>
<CAPTION>
Service Agreement
Customer Contact/Address Date
-------- --------------- ----
<S> <C> <C>
1 The American Electric Power Service Corporation Steven A. Appelt 1/1/00
Vice President
1 Riverside Plaza, 22nd Floor
Columbus, OH 43215
2 Aquila Energy Marketing Corporation Contract Administration 8/1/00
1100 Walnut, Suite 3300
Kansas City, MO 64106
3 CMS Marketing, Services & Trading David M. Zwitter 1/1/00
Director, Power Trading & Operations
One Jackson Square, Suite 1060
Jackson, MI 49201
4 Cargill-Alliant, LLC Richard B. Davenport 1/1/00
Assistant Vice President
12700 Whitewater Drive
Minnetonka, MN 55343-9497
5 Cinergy Corporation Vice President 1/1/00
Energy Commodities Service
139 East Fourth Street
Cincinnati, OH 45202
6 Commonwealth Edison Company Steven T. Naumann 1/1/00
Director, T&D Regulatory Services, 35 FNE
One First National Plaza
10 S. Dearborn
Chicago, IL 60690-0767
7 Conectiv Energy Supply, Inc. Tim Jurco 7/17/00
24 Hour Power Trading Supervisor
PO Box 6066
Newark, DE 19714-6066
8 Consumers Energy - Electric Sourcing & Trading David A. Lapinski 1/1/00
Merchant Manager
Electric Sourcing & Trading Department
1945 West Parnall Road
Jackson, MI 49201-8658
9 DTE Energy Trading, Inc. Marcia Hissong 1/1/00
Manager Contract Administration
101 N. Main Street, Suite 300
Ann Arbor, MI 48104
10 Detroit Edison Merchant Operation Ronald Bauer 1/1/00
Director of Long Term Sourcing
2000 Second Avenue
Suite 102 - WCB
Detroit, MI 48226
11 Duke Power Ken A. Hatley 1/1/00
Bulk Power Contracts Manager
526 South Church Street
Charlotte, NC 28202
</TABLE>
<PAGE> 48
Index of Point-to-Point Transmission Service Customers of Consumers Energy
Under the Corporate and Joint Open Access Transmission Tariff
Service Agreement Termination Date - December 31, 2000
<TABLE>
<CAPTION>
Service Agreement
Customer Contact/Address Date
-------- --------------- ----
<S> <C> <C>
12 El Paso Merchant Energy, L.P. David Webb 5/25/00
Manager Power Operations
1001 Louisiana Street
Houston, TX 77002
13 Engage Energy US, LP Yvonne Buszek 3/21/00
Manager, Planning & Coordination
3000 Town Center, Suite 2800
Southfield, MI 48075
14 Florida Power & Light Company Paul A. Karns 1/1/00
Director of Contracts
11770 US Highway One
North Palm Beach, FL 33408
15 Holland BPW David G. Koster 1/1/00
Power Resources Director
625 Hastings Avenue
Holland, MI 49423
16 H.Q. Energy Services (U.S.) Inc. Michael R. Godfrey 10/4/00
VP Administration
345 Rouser Road, Bldg. 5
Coraopolis, PA 15108
17 Lansing Board of Water & Light Dan Cooper 1/1/00
809 Centennial Way
Lansing, MI 48917
18 Minnesota Power & Light Michael B. Critchley 1/1/00
President, MPEX, a Division of
Minnesota Power, Inc.
30 West Superior Street
Duluth, MN 55802
19 Morgan Stanley & Co., Inc. Deborah Hart 1/1/00
Vice President
1585 Broadway, 4th Floor
New York, NY 10036
20 Nordic Electric, LLC President 1/7/00
2010 Hogback Rd., Suite #4
Ann Arbor, MI 48105
21 Northern Indiana Public Service Company Kevin M. Largura 1/1/00
Generation Operations Manager
5265 Hohman Avenue
Hammond, IN 46320-1775
22 OGE Energy Resources, Inc. Darrell Anthony 1/1/00
Manage - 24 Hour Desk
PO Box 24300 - Suite 408
Oklahoma City, OK 73124-0300
23 PECO Energy Company Marjorie R. Philips, Esq. 1/1/00
2004 Renaissance Blvd.
King of Prussia, PA 19406
</TABLE>
<PAGE> 49
Index of Point-to-Point Transmission Service Customers of Consumers Energy
Under the Corporate and Joint Open Access Transmission Tariff
Service Agreement Termination Date - December 31, 2000
<TABLE>
<CAPTION>
Service Agreement
Customer Contact/Address Date
-------- --------------- ----
<S> <C> <C>
24 PP&L, Inc. Contract Administrator 1/1/00
Energy Marketing Center
Two North Ninth Street
Allentown, PA 18101
25 Public Service Company of Colorado Thomas A. Imbler 6/29/00
Manager Energy Trading
1099 18th Street, Ste. 3000
Denver, CO 80202
26 Rainbow Energy Marketing Corporation Joe Wolfe 9/5/00
Vice President - Operations
919 South 7th Street - Suite 405
Bismarck, ND 58504
27 Sempra Energy Trading Corp. Cliff Papish 6/1/00
Vice President
58 Commerce Road
Stamford, CT 06902
28 Tenaska Power Services Co. Contract Administrator 1/1/00
2000 E. Lamar Blvd, Suite 450
Arlington, TX 76006
29 Tractebel Energy Marketing, Inc. Deanna Newcomb 1/1/00
Director Trading Control
1177 West Loop South, Suite 800
Houston, TX 77027
30 Virginia Electric & Power Company Contract Administration 1/1/00
The Wholesale Power Group
5000 Dominion Blvd., 3N
Glen Allen, VA 23060
Ancillary Services 1 and 2 Only
-------------------------------
1 Croswell Light & Power John Williams 1/1/00
Manager, Electric Utility
120 E. Sanborn, PO Box 197
Croswell, MI 48422
2 Thumb Electric Cooperative Michael Krause 1/1/00
Manager
2231 Main Street
Ubly, MI 48475-0157
</TABLE>
<PAGE> 50
18 C.F.R. SS. 33.3, EXHIBIT A
-----------------------------
CORPORATE RESOLUTIONS
<PAGE> 51
Extract from the minutes of a meeting of the Board of Directors of Consumers
Energy Company (the "Company") held on July 28, 2000.
- - - - - - - -
Transfer of Transmission Assets
To facilitate compliance with Michigan's recently-enacted Customer
Choice and Electric Reliability Act, management of the Company recommended that
the Board approve the formation of a wholly-owned subsidiary of the Company as
the first step in the proposed corporate restructuring and the eventual exiting
from the transmission business.
Upon motion duly made and seconed, the following resolutions were
thereupon unanimously adopted:
RESOLVED: That the actions of the officers of the Company, and each
of them, in forming a new, wholly-owned subsidiary of the Company, Michigan
Electric Transmission Company ("METC"), are ratified, approved and
confirmed; and the officers of the Company, and each of them, are
authorized to take such action as they may deem in their discretion to be
necessary or appropriate to assist in the structuring and capitalization of
METC, which will own and operate transmission assets of the Company (the
"Transmission Assets") and the related transmission business (the
"Transmission Business") of the Company; and
RESOLVED FURTHER: That the officers of the Company, and each of
them, are authorized in their discretion and as they deem advisable, to
transfer to the METC the Transmission Assets and the Transmission Business
at values, and under circumstances consistent with regulatory standards,
orders or other requirements, if applicable, and to enter into agreements
and arrangements with the METC for the sale or purchase, provision,
licensing, leasing or sharing of services, facilities, products,
obligations, rights or entitlements, or for other matters of mutual benefit
at prices or for considerations consistent with regulatory standards,
orders or requirements, if applicable; and
RESOLVED FURTHER: That, prior to any transfer, sale or other
disposition of the Transmission Assets by METC, such disposition shall be
approved by this Board; and
RESOLVED FURTHER: That the officers of the Company, and each of
them, are authorized to take any and all such actions as they may deem
necessary or appropriate, including, without limitation, the making of
filings, applications, requests and other disclosures and the commencement
and participation in proceedings, in order to obtain or assure any and all
necessary or advisable regulatory approvals, consents or compliances in
connection with the creation and capitalization of the METC and transfer of
the Transmission Assets and the Transmission Business; and
<PAGE> 52
RESOLVED FURTHER: That the officers of the Company, and each of
them, are authorized to take or cause to be taken any action, for and on
behalf of the Company, and to enter into, execute and deliver any
agreements, certificates, applications, deeds, leases, instruments or other
documents relating to the transactions contemplated by these resolutions as
each of them, in their sole discretion, deems necessary or appropriate and
as counsel shall advise; and
RESOLVED FURTHER: That any and all actions taken by any officer of
the Company in furtherance of the purpose and intent of these resolutions
are ratified, approved and confirmed in all respects.
Upon motion duly made and seconded, the following resolution was
unanimously adopted:
RESOLVED: That the Board of Directors determines that it is
desirable in the conduct of the business of the Company, that certain
property described in this resolution (and as fully described in release
documents to be delivered to the Trustee and filed in the Company's
corporate files) be released and that The Chase Manhattan Bank, as Trustee,
is requested to release from the lien of the Company's Indenture dated as
of September 1, 1945, as amended and supplemented, in accordance with the
provisions of Section 10.03 thereof, the following described property:
certain real and personal property located throughout the State of
Michigan, acquired for electric transmission purposes, to be sold to
Michigan Electric Transmission Company for consideration consistent with
regulatory standards, order or requirements.
- - - - - - - -
I, Joyce H. Norkey, Assistant Secretary of the Company, CERTIFY that the
foregoing are true and correct resolutions adopted at a meeting of the Board of
Directors of the Company held on July 28, 2000 and that said resolutions have
not since been rescinded but are still in full force and effect.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the
Company this 24th day of August 2000.
/s/ Joyce H. Norkey
-------------------
Joyce H. Norkey
Assistant Secretary
<PAGE> 53
18 C.F.R. SS. 33.3, EXHIBIT B
STATEMENT OF MEASURE OF CONTROL
OR OWNERSHIP EXERCISED BY OR OVER APPLICANT
<PAGE> 54
EXHIBIT B
CONSUMERS ENERGY COMPANY
STATEMENT OF THE MEASURE OF CONTROL OR OWNERSHIP
On May 26, 1987, all of the common stock of Consumers Energy Company
("Applicant"), then known as Consumers Power Company, was acquired by CMS Energy
Corporation, a Michigan corporation, organized to act as the parent holding
company of Applicant. CMS Energy Corporation is not expressly authorized by law
to underwrite or participate in the marketing of securities of a utility. CMS
Energy Corporation is engaged neither in the underwriting or marketing of the
securities of a utility, nor in the supplying of electric equipment to
Applicant. As of July 31, 2000, as far as is known to Applicant, no person
utility, bank trust company, banking association or firm expressly authorized by
law to underwrite or participate in the marketing of the securities of a
utility, or any company supplying electric equipment to Applicant beneficially
owns as much as 10% of the outstanding Preferred Stock of Applicant. Further,
Applicant does not own any shares of stock of any utility, bank, trust company,
banking association or film that is expressly authorized by law to underwrite or
participate in the marketing of securities of a utility or of any company
supplying electrical equipment to Applicant. Consumers Energy Company and
Michigan Electric Transmission Company have officers and directors in common.
<PAGE> 55
18 C.F.R. SS. 33.3, EXHIBIT C
-----------------------------
Balance Sheets
<PAGE> 56
EXHIBIT C
Request for Waiver of
18 C.F.R. ss. 33.3, Exhibit C
Michigan Transco, a special purpose subsidiary created exclusively for
purposes of consummating the proposed Transfer Transaction, respectfully
requests waiver of 18 C.F.R. ss. 33.3, Exhibit C to this Application, balance
sheets and plant schedules. Michigan Transco currently owns or controls no
facilities used for generation, transmission, or distribution of electric
energy. As such, Michigan Transco is not presently required to keep its records
in conformance with the Commission's Uniform System of Accounts set forth at 18
C.F.R. ss. 101. Accordingly, Michigan Transco submits that good cause exists to
grant its request for waiver.
<PAGE> 57
<TABLE>
<CAPTION>
<S><C>
NAME OF RESPONDENT THIS REPORT IS: DATE OF REPORT YEAR OF REPORT
(MO, DA, YR)
CONSUMERS ENERGY COMPANY (1) [X] AN ORIGINAL / /
(2) [ ] A RESUBMISSION DEC. 31, 1999
----
------------------------------------------------------------------------------------------------------------------------------
COMPARATIVE BALANCE SHEET (ASSETS AND OTHER DEBITS)
------------------------------------------------------------------------------------------------------------------------------
Ref. Balance at Balance at
Line Title of Account Page No. Beginning of Year End of Year
No. (a) (b) (c) (d)
------------------------------------------------------------------------------------------------------------------------------
1 UTILITY PLANT
------------------------------------------------------------------------------------------------------------------------------
2 Utility Plant (101-106,114) 200-201 8,389,573,340 8,745,079,075
------------------------------------------------------------------------------------------------------------------------------
3 Construction Work in Progress (107) 200-201 163,529,357 196,386,432
------------------------------------------------------------------------------------------------------------------------------
4 TOTAL Utility Plant (Enter Total of lines 2 and 3) 8,553,102,697 8,941,465,507
------------------------------------------------------------------------------------------------------------------------------
5 (Less) Accum. Prov. For Depr. Amort. Dept. (108,111,115) 200-201 4,291,458,978 5,049,876,246
------------------------------------------------------------------------------------------------------------------------------
6 Net Utility Plant (Enter Total of line 4 less 5) 4,261,643,719 3,891,589,261
------------------------------------------------------------------------------------------------------------------------------
7 Nuclear Fuel (120.1-120.4, 120.6) 202-203 254,070,397 239,989,916
------------------------------------------------------------------------------------------------------------------------------
8 (Less) Accum. Prov. for Amort. of Nucl. Fuel Assemblies (120.5) 202-203 226,732,082 226,732,082
------------------------------------------------------------------------------------------------------------------------------
9 Net Nuclear Fuel (Enter Total of line 7 less 8) 27,338,315 13,257,834
------------------------------------------------------------------------------------------------------------------------------
10 Net Utility Plant (Enter Total of lines 6 and 9) 4,288,982,034 3,904,847,095
------------------------------------------------------------------------------------------------------------------------------
11 Utility Plant Adjustments (116) 122 0 0
------------------------------------------------------------------------------------------------------------------------------
12 Gas Stored Underground - Noncurrent (117) 0 0
------------------------------------------------------------------------------------------------------------------------------
13 OTHER PROPERTY AND INVESTMENTS
------------------------------------------------------------------------------------------------------------------------------
14 Nonutility Property (121) 221 25,707,204 24,611,723
------------------------------------------------------------------------------------------------------------------------------
15 (Less) Accum. Prov. for Depr. and Amort. (122) 5,228,378 5,836,423
------------------------------------------------------------------------------------------------------------------------------
16 Investments in Associated Companies (123) 241,239,776 139,351,060
------------------------------------------------------------------------------------------------------------------------------
17 Investment in Subsidiary Companies (123.1) 224-225 343,169,092 394,752,645
------------------------------------------------------------------------------------------------------------------------------
18 (For Cost of Account 123.1. See Footnote Page 224, line 42)
------------------------------------------------------------------------------------------------------------------------------
19 Noncurrent Portion of Allowances 228-229 0 0
------------------------------------------------------------------------------------------------------------------------------
20 Other Investments (124) 8,927,327 8,215,157
-----------------------------------------------------------------------------------------------------------------------------
21 Special Funds (125-128) 582,422,585 631,158,054
------------------------------------------------------------------------------------------------------------------------------
22 TOTAL Other Property and Investments (Total of lines 14-17, 19-21) 1,196,237,606 1,192,252,216
------------------------------------------------------------------------------------------------------------------------------
23 CURRENT AND ACCRUED ASSETS
------------------------------------------------------------------------------------------------------------------------------
24 Cash (131) 6,380,389 3,256,739
------------------------------------------------------------------------------------------------------------------------------
25 Special Deposits (132-134) 500 500
------------------------------------------------------------------------------------------------------------------------------
26 Working Fund (135) 243,869 368,013
------------------------------------------------------------------------------------------------------------------------------
27 Temporary Cash Investments (136) 12,734,096 566,506
------------------------------------------------------------------------------------------------------------------------------
28 Notes Receivable (141) 136,349 136,349
------------------------------------------------------------------------------------------------------------------------------
29 Customer Accounts Receivable (142) -116,599,664 -111,911,666
------------------------------------------------------------------------------------------------------------------------------
30 Other Accounts Receivable (143) 9,815,135 8,153,693
------------------------------------------------------------------------------------------------------------------------------
31 (Less) Accum. Prov. for Uncollectible Acct.-Credit (144) 5,299,816 3,925,633
------------------------------------------------------------------------------------------------------------------------------
32 Notes Receivable from Associated Companies (145) 0 4,485,000
------------------------------------------------------------------------------------------------------------------------------
33 Accounts Receivable from Assoc. Companies (146) 64,617,649 70,131,762
------------------------------------------------------------------------------------------------------------------------------
34 Fuel Stock (151) 227 42,534,993 46,152,220
------------------------------------------------------------------------------------------------------------------------------
35 Fuel Stock Expenses Undistributed (152) 227 0 0
------------------------------------------------------------------------------------------------------------------------------
36 Residuals (Elec) and Extracted Products (153) 227 0 0
------------------------------------------------------------------------------------------------------------------------------
37 Plant Materials and Operating Supplies (154) 227 67,368,229 61,174,684
------------------------------------------------------------------------------------------------------------------------------
38 Merchandise (155) 227 0 0
------------------------------------------------------------------------------------------------------------------------------
39 Other Materials and Supplies (156) 227 215,095 506,328
------------------------------------------------------------------------------------------------------------------------------
40 Nuclear Materials Held for Sale (157) 202-203/227 0 0
------------------------------------------------------------------------------------------------------------------------------
41 Allowances (158.1 and 158.2) 228-229 0 0
------------------------------------------------------------------------------------------------------------------------------
42 (Less) Noncurrent Portion of Allowances 0 0
------------------------------------------------------------------------------------------------------------------------------
43 Stores Expense Undistributed (163) 227 -714,466 -88,445
------------------------------------------------------------------------------------------------------------------------------
44 Gas Stored Underground - Current (164.1) 218,925,525 215,712,985
------------------------------------------------------------------------------------------------------------------------------
45 Liquefied Natural Gas Stored and Held for Processing (164.2-164.3) 0 0
------------------------------------------------------------------------------------------------------------------------------
46 Prepayments (165) 10,666,886 13,585,666
------------------------------------------------------------------------------------------------------------------------------
47 Advances for Gas (166-167) 0 0
------------------------------------------------------------------------------------------------------------------------------
48 Interest and Dividends Receivable (171) -2,893 -2,893
------------------------------------------------------------------------------------------------------------------------------
49 Rents Receivable (172) 777,574 489,184
------------------------------------------------------------------------------------------------------------------------------
50 Accrued Utility Revenues (173) 179,570,726 195,310,008
------------------------------------------------------------------------------------------------------------------------------
51 Miscellaneous Current and Accrued Assets (174) 259,223,104 208,718,816
------------------------------------------------------------------------------------------------------------------------------
52 TOTAL Current and Accrued Assets (Enter Total of lines 24 thru 51) 750,594,280 712,819,816
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
FERC FORM NO. 1 (ED. 12-94) PAGE 110
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 58
<TABLE>
<CAPTION>
<S><C>
NAME OF RESPONDENT THIS REPORT IS: DATE OF REPORT YEAR OF REPORT
(MO,DA,YR)
CONSUMERS ENERGY COMPANY (1) [X] AN ORIGINAL / /
(2) [ ] A RESUBMISSION DEC. 31, 1999
----
------------------------------------------------------------------------------------------------------------------------------
COMPARATIVE BALANCE SHEET (ASSETS AND OTHER DEBITS) (Continued)
------------------------------------------------------------------------------------------------------------------------------
Ref. Balance at Balance at
Line Title of Account Page No. Beginning of Year End of Year
No. (a) (b) (c) (d)
-------------------------------------------------------------------------------------------------------------------------------
53 DEFERRED DEBITS
-------------------------------------------------------------------------------------------------------------------------------
54 Unamortized Debt Expenses (181) 25,201,899 30,694,419
-------------------------------------------------------------------------------------------------------------------------------
55 Extraordinary Property Losses (182.1) 230 0 0
-------------------------------------------------------------------------------------------------------------------------------
56 Unrecovered Plant and Regulatory Study Costs (182.2) 230 71,169,895 47,536,162
-------------------------------------------------------------------------------------------------------------------------------
57 Other Regulatory Assets (182.3) 232 649,900,430 1,180,574,726
-------------------------------------------------------------------------------------------------------------------------------
58 Prelim. Survey and Investigation Charges (Electric) (183) 8,774,540 0
-------------------------------------------------------------------------------------------------------------------------------
59 Prelim. Sur. and Invest. Charges (Gas) (183.1, 183.2) 0 0
-------------------------------------------------------------------------------------------------------------------------------
60 Clearing Accounts (184) -86,025 8,293,473
-------------------------------------------------------------------------------------------------------------------------------
61 Temporary Facilities (185) 0 0
-------------------------------------------------------------------------------------------------------------------------------
62 Miscellaneous Deferred Debits (186) 233 66,093,991 64,976,567
-------------------------------------------------------------------------------------------------------------------------------
63 Def. Losses from Disposition of Utility Plt. (187) 0 0
-------------------------------------------------------------------------------------------------------------------------------
64 Research. Devel. and Demonstration Expend. (188) 352-363 0 0
-------------------------------------------------------------------------------------------------------------------------------
65 Unamortized Loss on Reaquired Debt (189) 25,982,406 24,177,219
-------------------------------------------------------------------------------------------------------------------------------
66 Accumulated Deferred Income Taxes (190) 234 626,554,045 629,093,425
-------------------------------------------------------------------------------------------------------------------------------
67 Unrecovered Purchased Gas Costs (191) 0 0
-------------------------------------------------------------------------------------------------------------------------------
68 TOTAL Deferred Debits (Enter Total of lines 54 thru 67) 1,473,591,181 1,968,759,045
-------------------------------------------------------------------------------------------------------------------------------
69 TOTAL Assets and Other Debits (Enter Total of lines 10.11.12, 22,52,66) 7,709,405,101 7,778,678,172
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
FERC FORM NO. 1 (ED. 12-94) PAGE 111
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 59
18 C.F.R. SS. 33.3, EXHIBIT D
-----------------------------
Statement of Contingent Liabilities
<PAGE> 60
EXHIBIT E
Request for Waiver of
18 C.F.R. ss. 33.3, Exhibit E
Michigan Transco, a special purpose subsidiary created exclusively for
purposes of consummating the proposed Transfer Transaction, respectfully
requests waiver of 18 C.F.R. ss. 33.3, Exhibit E to this Application, an actual
and pro forma income statement. Michigan Transco currently owns, operates, or
otherwise controls no facilities used for the generation, transmission, or
distribution of electric energy. As such, Michigan Transco is not presently
required to keep its records in conformance with the Commission's Uniform System
of Accounts set forth at 18 C.F.R. ss. 101. Accordingly, Michigan Transco
submits that good cause exists to grant its request for waiver.
<PAGE> 61
EXHIBIT D
Request for Waiver of
18 C.F.R. ss. 33.3, Exhibit D
Applicants respectfully request waiver of the Commission's requirement
in 18 C.F.R. ss. 33.3, that they file, as Exhibit D of this Application, a
statement of all known and contingent liabilities. In the Merger Filing NOPR,
the Commission proposes to streamline applicants' filing responsibilities and
"eliminate these unnecessary or inapplicable information requests..." See FERC
Stats. & Regs. [Paragraph] 32,528 at 33,364. This includes the elimination of
the current Exhibit D filing requirement. In addition, information with respect
to known contingent liabilities is filed in Consumers Energy Company's FERC Form
1 and, thus, the Commission already has such information in its files.
Accordingly, Applicants submit that good cause exists to grant their request for
waiver.
<PAGE> 62
18 C.F.R. SS. 33.3, EXHIBIT E
-----------------------------
Income Statement
<PAGE> 63
<TABLE>
<CAPTION>
<S><C>
NAME OF RESPONDENT THIS REPORT IS: DATE OF REPORT YEAR OF REPORT
CONSUMERS ENERGY COMPANY (1) [X] AN ORIGINAL (MO,DA,YR) DEC. 31, 1999
(2) [ ] A RESUBMISSION / / ----
------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INCOME FOR THE YEAR
------------------------------------------------------------------------------------------------------------------------------
1. Report amounts for accounts 412 and 413. Revenue and Expenses from Utility Plant Leased to Others, in another Utility column
(j, k, m, o) in a similar manner to a utility department. Spread the amount(s) over Lines 02 thru 24 as appropriate. Include
these amounts in columns (c) and (d) totals.
2. Report amounts in account 414. Other Utility Operating income, in the same manner as accounts 412 and 413 above.
3. Report data for lines 7, 9, and 10 for Natural Gas companies using accounts 404.1, 404.2, 404.3, 407.1 and 407.2.
4. Use pages 122-123 for important notes regarding the statement of income or any account thereof.
5. Give concise explanations concerning unsettled rate proceedings where a contingency exists such that refunds of a material
amount may need to be made to the utility's customers or which may result in a material refund to the utility with respect to
power or gas purchases. State for each year affected the gross revenues or costs to which the contingency relates and the tax
effects together with an explanation of the major factors which affect the rights of the utility to retain such revenues or
recover amounts paid with respect to power and gas purchases.
6. Give concise explanations concerning significant amounts of any refunds made or
received during the year.
-----------------------------------------------------------------------------------------------------------------------------------
(Ref.) TOTAL
Line Account Page No. Current Year Previous Year
No. (a) (b) (c) (d)
-----------------------------------------------------------------------------------------------------------------------------------
1 UTILITY OPERATING INCOME
-----------------------------------------------------------------------------------------------------------------------------------
2 Operating Revenues (400) 300-301 3,812,479,551 3,648,679,920
-----------------------------------------------------------------------------------------------------------------------------------
3 Operating Expenses
-----------------------------------------------------------------------------------------------------------------------------------
4 Operation Expenses (401) 320-323 2,391,018,802 2,272,792,652
-----------------------------------------------------------------------------------------------------------------------------------
5 Maintenance Expenses (402) 320-323 170,684,646 168,998,754
-----------------------------------------------------------------------------------------------------------------------------------
6 Depreciation Expense (403) 336-337 331,611,898 351,471,257
-----------------------------------------------------------------------------------------------------------------------------------
7 Amort. & Dept. of Utility Plant (404-405) 336-337 59,608,998 19,015,176
-----------------------------------------------------------------------------------------------------------------------------------
8 Amort. of Utility Plant Acq. Adj. (406) 336-337
-----------------------------------------------------------------------------------------------------------------------------------
9 Amort. Property Losses, Unrecov Plant and Regulatory Study Costs (407) 29,191,886 29,287,879
-----------------------------------------------------------------------------------------------------------------------------------
10 Amort. of Conversion Expenses (407)
-----------------------------------------------------------------------------------------------------------------------------------
11 Regulatory Debits (407.3)
-----------------------------------------------------------------------------------------------------------------------------------
12 (Less) Regulatory Credits (407.4)
-----------------------------------------------------------------------------------------------------------------------------------
13 Taxes Other Than Income Taxes (408.1) 262-263 199,414,122 199,054,481
-----------------------------------------------------------------------------------------------------------------------------------
14 Income Taxes - Federal (409.1) 262-263 194,740,093 152,804,050
-----------------------------------------------------------------------------------------------------------------------------------
15 *Other (409.1) 262-263 622,906 571,089
-----------------------------------------------------------------------------------------------------------------------------------
16 Provision for Deferred Income Taxes (410.1) 234, 272-277 149,116,607 156,946,433
-----------------------------------------------------------------------------------------------------------------------------------
17 (Less) Provision for Deferred Income Taxes - Cr. (411.1) 234, 272-277 173,761,776 150,914,014
-----------------------------------------------------------------------------------------------------------------------------------
18 Investment Tax Credit Adj. - Net (411.4) 266 5,914,069 12,526,979
-----------------------------------------------------------------------------------------------------------------------------------
19 (Less) Provision for Disp. of Utility Plant (411.6)
-----------------------------------------------------------------------------------------------------------------------------------
20 Losses from Disp. of Utility Plant (411.7)
-----------------------------------------------------------------------------------------------------------------------------------
21 (Less) Gains from Disposition of Allowances (411.8)
-----------------------------------------------------------------------------------------------------------------------------------
22 Losses from Disposition of Allowances (411.9)
-----------------------------------------------------------------------------------------------------------------------------------
23 TOTAL Utility Operating Expenses (Enter Total of lines 4 thru .22) 3,346,334,113 3,187,500,778
-----------------------------------------------------------------------------------------------------------------------------------
24 Net Util Oper Inc (Enter Tot line 2 less 23) Carry fwd to P117.line 25 466,145,438 461,179,142
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
FERC FORM NO. 1 (ED. 12-96) PAGE 114
<PAGE> 64
--------------------------------------------------------------------------------
Name of Respondent This Report is:
Consumers Energy Company (1) [X] An Original
(2) [ ] A Resubmission
Date of Report Year of Report
(Mo. Da. Yr) Dec. 31, 1999
/ /
--------------------------------------------------------------------------------
STATEMENT OF INCOME FOR THE YEAR (Continued)
--------------------------------------------------------------------------------
resulting from settlement of any rate proceeding affecting revenues received or
costs incurred for power or gas purchases, and a summary of the adjustments
made to balance sheet, income, and expense accounts.
7. If any notes appearing in the report to stockholders are applicable to this
Statement of Income, such notes may be included on pages 122-123.
B. Enter on pages 122-123 a concise explanation of only those changes in
accounting methods made during the year which had an effect on net income,
including the basis of allocations and appointments from those used in the
preceding year. Also give the approximate dollar effect of such changes.
9. Explain in a footnote if the previous year's figures are different from that
reported in prior reports.
10. If the columns are insufficient for reporting additional utility
departments, supply the appropriate account titles, lines 2 to 23, and report
the information in the blank space on pages 122-123 or in a footnote.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITY GAS UTILITY OTHER UTILITY
------------------------------------------------------------------------------------------------------------------------------ Line
Current Year Previous Year Current Year Previous Year Current Year Previous Year No.
(e) (f) (g) (h) (i) (j)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1
------------------------------------------------------------------------------------------------------------------------------------
2,666,473,891 2,604,333,186 1,146,005,650 1,044,346,734 2
------------------------------------------------------------------------------------------------------------------------------------
3
------------------------------------------------------------------------------------------------------------------------------------
1,567,003,559 1,531,308,557 824,015,243 741,484,096 4
------------------------------------------------------------------------------------------------------------------------------------
139,918,099 140,895,901 30,766,547 28,102,853 5
------------------------------------------------------------------------------------------------------------------------------------
233,697,661 262,094,683 97,914,237 89,376,574 6
------------------------------------------------------------------------------------------------------------------------------------
52,379,856 12,841,662 7,229,142 6,173,514 7
------------------------------------------------------------------------------------------------------------------------------------
8
------------------------------------------------------------------------------------------------------------------------------------
29,191,886 29,287,879 9
------------------------------------------------------------------------------------------------------------------------------------
10
------------------------------------------------------------------------------------------------------------------------------------
11
------------------------------------------------------------------------------------------------------------------------------------
12
------------------------------------------------------------------------------------------------------------------------------------
144,187,713 145,657,342 55,226,408 53,397,139 13
------------------------------------------------------------------------------------------------------------------------------------
152,657,680 127,291,189 42,082,413 25,512,861 14
------------------------------------------------------------------------------------------------------------------------------------
439,191 398,434 183,715 172,655 15
------------------------------------------------------------------------------------------------------------------------------------
122,890,921 119,899,843 26,225,686 37,046,590 16
------------------------------------------------------------------------------------------------------------------------------------
144,290,278 124,926,538 29,471,498 25,987,476 17
------------------------------------------------------------------------------------------------------------------------------------
4,696,118 -11,859,973 -1,217,951 -667,006 18
------------------------------------------------------------------------------------------------------------------------------------
19
------------------------------------------------------------------------------------------------------------------------------------
20
------------------------------------------------------------------------------------------------------------------------------------
21
------------------------------------------------------------------------------------------------------------------------------------
22
------------------------------------------------------------------------------------------------------------------------------------
2,293,380,170 2,232,888,979 1,052,953,942 954,611,800 23
------------------------------------------------------------------------------------------------------------------------------------
373,093,721 371,444,207 93,051,718 89,734,934 24
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
FERC FORM NO. 1 (ED.12-95) Page 115
<PAGE> 65
--------------------------------------------------------------------------------
Name of Respondent This Report is:
Consumers Energy Company (1) [x] An Original
(2) [ ] An Resubmission
Date of Report Year of Report
(Mo, Da, Yr) Dec. 31, 1999
--------------------------------------------------------------------------------
STATEMENT OF INCOME FOR THE YEAR (Continued)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(Ref.) TOTAL
Line No. Account (a) Page No. (b) Current Year (c) Previous Year (d)
------- ----------- ------------ ---------------- -----------------
<S> <C> <C> <C> <C>
25 Net Utility Operating Income (Carried forward from page 114) 466,145,438 461,179,142
-----------------------------------------------------------------------------------------------------------------------------------
26 Other Income and Deductions
-----------------------------------------------------------------------------------------------------------------------------------
27 Other Income
-----------------------------------------------------------------------------------------------------------------------------------
28 Nonutility Operating Income
-----------------------------------------------------------------------------------------------------------------------------------
29 Revenues From Merchandising, Jobbing and Contract Work (415) 1,418,760 68,568
-----------------------------------------------------------------------------------------------------------------------------------
30 (Less) Costs and Exp. of Merchandising, Job & Contract Work (416) 813,230 730,376
-----------------------------------------------------------------------------------------------------------------------------------
31 Revenues From Nonutility Operations (417) 2,892,738 3,190,635
-----------------------------------------------------------------------------------------------------------------------------------
32 (Less) Expenses of Nonutility Operations (417.1) 7,873,952 5,092,308
-----------------------------------------------------------------------------------------------------------------------------------
33 Nonoperating Rental Income (41.8) 628,999 649,061
-----------------------------------------------------------------------------------------------------------------------------------
34 Equity in Earnings of Subsidiary Companies (418.1) 119 38,795,241 37,105,689
-----------------------------------------------------------------------------------------------------------------------------------
35 Interest and Dividend Income (419) 18,098,945 21,123,842
-----------------------------------------------------------------------------------------------------------------------------------
36 Allowance for Other Funds Used During Construction (419.1)
-----------------------------------------------------------------------------------------------------------------------------------
37 Miscellaneous Nonoperating Income (421) 12,860,725 6,552,639
-----------------------------------------------------------------------------------------------------------------------------------
38 Gain on Disposition of Property (421.1) 4,461,841 791,220
-----------------------------------------------------------------------------------------------------------------------------------
39 TOTAL Other Income (Enter Total of lines 29 thru 38) 70,490,068 63,638,970
-----------------------------------------------------------------------------------------------------------------------------------
40 Other Income Deductions
-----------------------------------------------------------------------------------------------------------------------------------
41 Loss on Disposition of Property (421.2) 407,898 28,410
-----------------------------------------------------------------------------------------------------------------------------------
42 Miscellaneous Amortization (425) 340
-----------------------------------------------------------------------------------------------------------------------------------
43 Miscellaneous Income Deduction (426.1-426.5) 340 28,578,123 72,499,875
-----------------------------------------------------------------------------------------------------------------------------------
44 TOTAL Other Income Deductions (Total of Lines 41 thru 43) 28,986,021 72,528,286
-----------------------------------------------------------------------------------------------------------------------------------
45 Taxes Applic. to Other Income and Deductions
-----------------------------------------------------------------------------------------------------------------------------------
46 Taxes Other Than Income Taxes (408.2) 262-263 -1,501,673 -941,698
-----------------------------------------------------------------------------------------------------------------------------------
47 Income Taxes-Federal (409.2) 262-263 -37,609,588 -34,172,261
-----------------------------------------------------------------------------------------------------------------------------------
48 Income Taxes-Other (409.2) 262-263
-----------------------------------------------------------------------------------------------------------------------------------
49 Provision for Deferred Inc. Taxes (410.2) 234,272-277 28,815,552 26,341,820
-----------------------------------------------------------------------------------------------------------------------------------
50 (Less) Provision for Deferred Income Taxes-Cr. (411.2) 234,272-277 2,415,333 19,803,387
-----------------------------------------------------------------------------------------------------------------------------------
51 Investment Tax Credit Adj.-Net (411.5)
-----------------------------------------------------------------------------------------------------------------------------------
52 (Less) Investment Tax Credits (420)
-----------------------------------------------------------------------------------------------------------------------------------
53 TOTAL Taxes on Other Income and Deduct. (Total of 46 thru 52) -12,711,042 -28,575,526
-----------------------------------------------------------------------------------------------------------------------------------
54 Net Other Income and Deductions (Enter Total lines 39,44,53) 54,215,089 19,686,210
-----------------------------------------------------------------------------------------------------------------------------------
55 Interest Charges
-----------------------------------------------------------------------------------------------------------------------------------
56 Interest on Long-Term Debt (427) 134,686,705 132,357,711
-----------------------------------------------------------------------------------------------------------------------------------
57 Amort. of Debt Dis. and Expenses (428) 4,176,101 3,467,580
-----------------------------------------------------------------------------------------------------------------------------------
58 Amortization of Loss on Reaquired Debt (428.1) 1,622,042 1,452,436
-----------------------------------------------------------------------------------------------------------------------------------
59 (Less) Amort. of Premium on Debt-Credit (429.1)
-----------------------------------------------------------------------------------------------------------------------------------
60 (Less) Amortization of Gain on Reaquired Debt-Credit (429.1)
-----------------------------------------------------------------------------------------------------------------------------------
61 Interest on Debt to Assoc. Companies (430) 340 22,201,899 19,914,151
-----------------------------------------------------------------------------------------------------------------------------------
62 Other Interest Expense (431) 340 40,000,605 37,552,565
-----------------------------------------------------------------------------------------------------------------------------------
63 (Less) Allowance for Borrowed Funds Used During Construction-Cr. (432) 61,193 1,003,353
-----------------------------------------------------------------------------------------------------------------------------------
64 Net Interest Charges (Enter Total of lines 56 thru 63) 201,439,287 192,794,508
-----------------------------------------------------------------------------------------------------------------------------------
65 Income Before Extraordinary Items (Total of lines 25,54 and 64) 318,921,240 288,070,844
-----------------------------------------------------------------------------------------------------------------------------------
66 Extraordinary Items
-----------------------------------------------------------------------------------------------------------------------------------
67 Extraordinary Income (434) 65,338,193
-----------------------------------------------------------------------------------------------------------------------------------
68 (Less) Extraordinary Deductions (435)
-----------------------------------------------------------------------------------------------------------------------------------
69 Net Extraordinary Items (Enter Total of line 67 less line 68 65,338,193
-----------------------------------------------------------------------------------------------------------------------------------
70 Income Taxes-Federal and Other (409.3) 262-263 22,868,368
-----------------------------------------------------------------------------------------------------------------------------------
71 Extraordinary Items After Taxes (Enter Total of line 69 less line 70) 42,469,825
-----------------------------------------------------------------------------------------------------------------------------------
72 Net Income (Enter Total of lines 65 and 71) 318,921,240 330,540,669
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 117
<PAGE> 66
<TABLE>
<S> <C> <C> <C>
Name of Respondent This Report is: Date of Report Year of Report
(1) X An Original (Mo. Da. Yr)
Consumers Energy Company (2) _ A Resubmission / / Dec 31, 1999
</TABLE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
CONSUMERS ENERGY COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1: CORPORATE STRUCTURE AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CORPORATE STRUCTURE: Consumers is a combination electric and gas utility
company serving the lower peninsula of Michigan and is a subsidiary of CMS
Energy, a holding company. Consumers' customer base includes a mix of
residential, commercial and diversified industrial customers, the largest
segment of which is the automotive industry.
BASIS OF PRESENTATION: The consolidated financial statements include Consumers
and its wholly owned subsidiaries. The financial statements are prepared in
conformity with generally accepted accounting principles and include the use of
management's estimates. Consumers uses the equity method of accounting for
investments in its companies and partnerships where it has more than a 20
percent but less than a majority ownership interest and includes these results
in operating income.
ACCRETION INCOME AND EXPENSE: In 1991, the MPSC allowed Consumers to recover a
portion of its abandoned Midland investment over a 10-year period, but did not
allow Consumers to earn a return on that amount. Consumers reduced the
recoverable investment to the present value of the future recoveries. During
the recovery period, Consumers adjusts the unrecovered asset to is present
value. It reflects this adjustment as accretion income. Conversely, Consumers
recorded a loss in 1992 for the present value of its estimated future
underrecoveries of power costs resulting from purchases from the MCV
Partnership (see Note 2). It now recognizes accretion expense annually to
reflect the time value of money on the recorded loss.
GAS INVENTORY: Consumers uses the weighted average cost method for valuing
working gas inventory. It records cushion gas, which is gas stored to maintain
reservoir pressure for recovery of working gas, in the appropriate gas utility
plant account. Consumers stores gas inventory in its underground storage
facilities.
MAINTENANCE, DEPRECIATION AND DEPLETION: Consumers charges property repairs and
minor property replacements to maintenance expense. Depreciable property
retired or sold, plus cost of removal (net of salvage credits), is charged to
accumulated depreciation. Consumers bases depreciation provisions for utility
property on straight-line and units-of-production rates approved by the MPSC.
The composite depreciation rate for electric utility property was 3.0 percent
for 1999, 3.5 percent for 1998 and 3.6 percent for 1997. The composite rate
for gas utility property was 4.4 percent for 1999, 4.2 percent for 1998 and 4.1
percent for 1997. The composite rate for other property was 8.6 percent for
1999, 7.4 percent for 1998 and 8.2 percent for 1997.
NUCLEAR FUEL COST: Consumers amortizes nuclear fuel cost to fuel expense based
on the quantity of heat produced for electric generation. Interest on leased
nuclear fuel is expensed as incurred. Under current federal law, as confirmed
by court decision, the DOE was to begin accepting deliveries of spent nuclear
fuel for disposal by January 31, 1998. For fuel used after April 6, 1983.
Consumers charges disposal costs to nuclear fuel expense, recovers them through
electric rates, and then remits them to the DOE quarterly. Consumers elected to
defer payment for disposal of spent nuclear fuel burned before April 7, 1983.
At December 1, 1999, Consumers had a recorded liability to the DOE of $123
million, including interest, which is payable upon the first delivery of spent
nuclear fuel to the DOE. Consumers recovered through electric rates the amount
of this liability, excluding a portion of interest. In January 1997, in
FERC FORM NO. 1 (ED. 12-88) Page 123
<PAGE> 67
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
Name of Respondent This Report is: Date of Report Year of Report
(1) X An Original (Mo. Da. Yr)
Consumers Energy Company (2) _ A Resubmission / / Dec 31, 1999
</TABLE>
NOTES TO FINANCIAL STATEMENTS (Continued)
response to the DOE's declaration that it would not begin to accept spent
nuclear fuel deliveries in 1998, Consumers and other utilities filed suit in
federal court. The court issued a decision in late 1997 affirming the DOE's
duty to take delivery of spent fuel, but was not specific as to the relief
available for failure of the DOE to comply. Further litigation brought by
Consumers and others in 1998 that was intended to produce specific relief for
the DOE's failure to comply has not been successful to date, although such
litigation efforts continue. In January 1999, federal legislation was
reintroduced in the House of Representatives to clarify the timing of the DOE's
obligation to accept spent nuclear fuel and to direct the DOE to establish an
integrated spent fuel management system that includes designing and constructing
an interim storage facility in Nevada. Similar legislation was reintroduced
in the Senate. Consumers cannot predict the outcome of this process.
NUCLEAR PLANT DECOMMISSIONING: Consumers collected $50 million in 1999 from
its electric customers for decommissioning of its two nuclear plants. Amounts
collected from electric retail customers and deposited in trusts (including
trust earnings) are credited to accumulated depreciation. On March 22, 1999,
Consumers received a decommissioning order from the MPSC that approved
estimated decommissioning costs for Big Rock and Palisades of $315 million and
$566 million (calculated in 1999 dollars), respectively. Consumers'
site-specific decommissioning cost estimates for Big Rock and Palisades assume
that each plant site will eventually be restored to conform to the adjacent
landscape, and all contaminated equipment will be disassembled and disposed of
in a licensed burial facility. The MPSC order also set the annual
decommissioning surcharges for Big Rock and Palisades at $32 million and $14
million a year, respectively, and required Consumers to file revised
decommissioning surcharges for Palisades that incorporate a gradual reduction
in the decommissioning trust's equity investments following the plant's
retirement. On December 16, 1999, the MPSC approved a revised decommissioning
surcharge for Palisades in the amount of $6 million a year, effective January 1,
2000.
Big Rock closed permanently in 1997 because management determined that it would
be uneconomical to operate in an increasingly competitive environment. The
plant was originally scheduled to close on May 31, 2000, at the end of the
plant's operating license. The MPSC allowed Consumers to continue collecting
decommissioning surcharges through December 31, 2000. Plant decommissioning
began in 1997 and it may take five to ten years to return the site to its
original condition. For 1999, Consumers incurred costs of $51 million that were
charged to the accumulated depreciation reserve for decommissioning and withdrew
$43 million from the Big Rock nuclear decommissioning trust fund. In total,
Consumers had incurred costs of $126 million that have been charged to the
accumulated depreciation reserve for decommissioning and withdrew $112 million
from the Big Rock nuclear decommissioning trust fund. These activities had no
material impact on net income. At December 31, 1999, Consumers is the
beneficiary of the investment in nuclear decommissioning trust funds of $181
million for Big Rock.
After retirement of Palisades, Consumers plans to maintain the facility in
protective storage if radioactive waste disposal facilities are not available.
Consumers will incur most of the Palisades decommissioning costs after the
plant's NRC operating license expires. When the Palisades' NRC license expires
in 2007, the trust funds are currently estimated to have accumulated $667
million, assuming currently approved MPSC surcharge levels. Consumers estimates
that at the time Palisades is fully decommissioned in the year 2046, the trust
funds will have provided $1.9 billion, including trust earnings, over this
decommissioning period. At December 31, 1999, Consumers is the beneficiary of
the investment in nuclear decommissioning trust funds of $421 million for
Palisades.
RECLASSIFICATIONS: Consumers has reclassified certain prior year amounts for
comparative purposes. These reclassifications did not affect consolidated net
income for the years presented.
FERC FORM NO. 1 (ED. 12-88) Page 123.1
<PAGE> 68
<TABLE>
<S> <C> <C> <C>
Name of Respondent This Report is: Date of Report Year of Report
(1) X An Original (Mo, Da, Yr)
Consumers Energy Company (2) _ A Resubmission / / Dec 31, 1999
</TABLE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
RELATED-PARTY TRANSACTIONS: Consumers' investment in Enterprises' preferred
stock was $100 million at December 1, 1999 and $150 million at December 1,
1998. Beginning in 1997, Enterprises commenced a five-year redemption program
of $50 million per year. In addition, Consumers has an investment in 2.9
million shares of CMS Energy Common Stock with a fair value totaling $90
million at December 1, 1999 (see Note 5). From these two investments, Consumers
received dividends from affiliates' common and preferred stock totaling $11
million, $14 million, and $17 million in 1999, 1998 and 1997, respectively.
Consumers purchases a portion of its gas from CMS Oil and Gas. The purchases
for the years ended 1999, 1998 and 1997 were $19 million, $24 million and $25
million, respectively. In 1999, 1998 and 1997, Consumers paid $52 million,
$51 million and $51 million, respectively, for electric generating capacity and
the energy generated by that capacity from affiliates of Enterprises. Consumers
pays a portion of its gas transportation costs to Panhandle and its subsidiary
Trunkline. Transportation fees paid for the nine months ended December 31, 1999
following the March 29, 1999 acquisition were $33 million. Consumers and its
subsidiaries sold, stored and transported natural gas and provided other
services to the MCV Partnership totaling $23 million, $13 million and $13
million in 1999, 1998 and 1997, respectively. For additional discussion of
related-party transactions with the MCV Partnership and the FMLP, see Notes and
11. other related-party transaction are immaterial.
UTILITY REGULATION: Consumers accounts for the effects of regulation based on
the regulated utility accounting standard SFAS 71, Accounting for the Effects
of Certain Types of Regulation. As a result, the actions of regulators affect
when Consumers recognizes revenues, expenses, assets and liabilities.
In March 1999, Consumers received MPSC electric restructuring order which,
among other things, identified the terms and timing for implementing electric
restructuring in Michigan. Consistent with these orders, Consumers
discontinued application of SFAS 71 for the energy supply portion of its
business in the first quarter of 1999 because Consumers expected to implement
retail open access for its electric customers in September 1999.
Discontinuation of SFAS 71 for the energy supply portion of Consumers' business
resulted in Consumers reducing the carrying value of its Palisades
plant-related assets by approximately $535 million and establishing a
regulatory asset for a corresponding amount. The regulatory asset is
collectible as part of the Transition Costs which are recoverable through the
regulated transmission and distribution portion of Consumers' business as
approved by an MPSC order in 1998. This order also allowed Consumers to
recover any energy supply-related regulatory assets, plus a return on any
unamortized balance of those assets, from its transmission and distribution
customers. According to current accounting standards, Consumers can continue
to carry its energy supply-related regulatory assets if legislation or an MPSC
rate order allows the collection of cash flows to recover these regulatory
assets from its regulated transmission and distribution customers. At December
31, 1999, Consumers had a net investment in energy supply facilities of $949
million included in electric plant and property.
SFAS 121. Accounting for the Impairment Of Long-Lived Assets and for Long-Lived
Assets to be Disposed of imposes stricter criteria for retention of
regulatory-created assets by requiring that such assets be probable of future
recovery at each balance sheet date. Management believes these asset will be
recovered.
The following regulatory assets (liabilities), which include both current and
non-current amounts, are reflected in the Consolidated Balance Sheets. These
costs are being recovered through rates over periods of up to 13 years.
In Millions
FERC FORM NO. 1 (ED. 12-88) Page 123.2
<PAGE> 69
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
Name of Respondent This Report is: Date of Report: Year of Report
(1) X An Original (Mo, Da, Yr)
Consumers Energy Company (2) A Resubmission / / Dec 31, 1999
---------------------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
---------------------------------------------------------------------------------------------
December 31 1999 1998
--------------------------------------------------------------------------------------------
<S> <C> <C>
Postretirement benefits (Note 7) $366 $397
Income taxes (Note 4) 193 148
Abandoned Midland project 48 71
Manufactured gas plant sites (Note 2) 65 48
DSM - deferred costs 13 32
Uranium enrichment facility 18 20
Other 33 38
-----------------
Total regulatory assets $736 $754
============================================================================================
Income taxes (Note 4) ($257) ($235)
DSM - deferred revenue (17) (24)
Total regulatory liabilities ($274) ($259)
</TABLE>
RISK MANAGEMENT ACTIVITIES AND DERIVATIVES TRANSACTIONS: Consumers and its
subsidiaries use derivative instruments, including swaps and options, to manage
exposure to fluctuations in interest rates and commodity prices, respectively.
To qualify for hedge accounting, derivatives must meet the following criteria:
1) the item to be hedged exposes the enterprise to price and interest rate risk;
and 2) the derivative reduces that exposure and is designated as a hedge.
Derivative instruments contain credit risk if the counterparties, including
financial institutions and energy marketers, fail to perform under the
agreements. Consumers minimizes such risk by performing financial credit
reviews using, among other things, publicly available credit ratings of such
counterparties. The risk of nonperformance by the counterparties is considered
remote.
Consumers enters into interest rate swap agreements to exchange variable-rate
interest payment obligations for fixed-rate obligations without exchanging the
underlying notional amounts. These agreements convert variable-rate debt to
fixed-rate debt in order to reduce the impact of interest rate fluctuations.
The notional amounts parallel the underlying debt levels and are used to
measure interest to be paid or received and do not represent the exposure
credit loss.
Consumers enters into electric option contracts to ensure a reliable source of
capacity to meet its customers' electric requirements and to limit its risk
associated with electricity price increases. It is management's intent to take
physical delivery of the commodity. Consumers continuously evaluates its daily
capacity needs and sells the option contracts, if marketable, when it has
excess daily capacity. Consumers' maximum exposure associated with these
options is limited to the price paid.
OTHER: For significant accounting policies regarding income taxes, see Note 4;
for executive incentive compensation, see Note 6; and for pensions and other
postretirement benefits, see Note 7.
IMPLEMENTATION OF NEW ACCOUNTING STANDARDS: In 1998, the American Institute of
Certified Public Accountants issued Statement of Position 98-1, Accounting for
the Costs of Computer Software Developed or Obtained for Internal
FERC FORM NO. 1 (ED. 12-88) Page 123.3
<PAGE> 70
<TABLE>
<S> <C> <C> <C>
Name of Respondent This Report is: Date of Report Year of Report
(1) X An Original (Mo. Da. Yr)
Consumers Energy Company (2) _ A Resubmission / / Dec 31, 1999
</TABLE>
NOTES TO FINANCIAL STATEMENTS (Continued)
Use, and Statement of Position 98-5, Reporting on the Costs of Start-Up
Activities. Also in 1998, the Emerging Issues Task Force published Issue 98-10,
Accounting for Energy Trading and Risk Management Activities. Each of these
statements was effective in 1999. Application of these standards has not had a
material affect on Consumers' financial position, liquidity or results of
operations.
CHANGE IN METHOD OF ACCOUNTING FOR PROPERTY TAXES: During the first quarter
1998, Consumers implemented a change in the method of accounting for property
taxes so that such taxes are recognized during the fiscal period of the taxing
authority for which the taxes are levied. This change better matches property
tax expense with the services provided by the taxing authorities, and is
considered the most acceptable basis of recording property taxes. Prior to
1998, Consumers recorded property taxes monthly during the year following the
assessment date (December 31). The cumulative effect of this one-time change in
accounting increased other income in 1998 by $66 million, and earnings, net of
tax, by $43 million. The pro forma effect on prior years' consolidated net
income of retroactively recording property taxes as if the new method of
accounting had been in effect for all periods presented is not material.
2: UNCERTAINTIES
ELECTRIC CONTINGENCIES
ELECTRIC ENVIRONMENTAL MATTERS: The Clean Air Act limits emissions of sulfur
dioxide and nitrogen oxides and requires emissions and air quality monitoring.
Consumers currently operates within these limits and meets current emission
requirements. The Clean Air Act requires the EPA to review periodically the
effectiveness of the national air quality standards in preventing adverse
health effects. In 1997, the EPA revised these standards to impose further
limitations on nitrogen oxide and small particulate-related emissions. In May
1999, a United States Court of Appeals ruled that the grant of authority to the
EPA, to revise the standards as the EPA did, would amount to an
unconstitutional delegation of legislative power. As a result, the EPA will not
implement the standards under the 1997 rule. On October 28, 1999, the United
States Court of Appeals denied a request by the EPA for a rehearing. On January
27, 2000, the Department of Justice filed a petition for the United States
Supreme Court to review the case. Because of the United States Court of Appeals
decisions, the EPA has proposed to reinstate the pre-1997 standards.
In September 1998, based in part upon the 1997 standards, the EPA Administrator
issued final regulations requiring the state of Michigan to limit further
nitrogen oxide emissions. Consumers anticipates a reduction in nitrogen oxide
emissions by 2003 to only 32 percent of levels allowed for the year 2000. The
state of Michigan had one year to submit an implementation plan. The state of
Michigan filed a lawsuit objecting to the extent of the required emission
reductions and requesting an extension of the submission date. In May 1999, the
United States Court of Appeals granted an indefinite stay of the submission
date for the state of Michigan's implementation plan. In early 2000, the United
States Court of Appeals upheld the EPA's final regulations. The state of
Michigan is expected to appeal this ruling. Until the appeal is decided, it is
unlikely that the state of Michigan will establish Consumers' nitrogen oxide
emissions reduction target. In December 1999, the EPA Administrator signed a
revised final rule under Section 126 of the Clean Air Act. The rule requires
some electric utility generators, including some of Consumers' electric
generating facilities, to achieve the same emission rate as that required by
the currently challenged September 1998 EPA final rule. Under the revised
Section 126 rule, the emission rate will become effective on May 1, 2003 and
apply during the ozone section in 2003 and during each subsequent year. Various
parties' petitions challenging the EPA's rule have been filed. Until these
targets are lawfully established, the estimated cost of compliance discussed
below is subject to revision.
FERC FORM NO 1. (ED. 12-88) Page 123.4
<PAGE> 71
18 C.F.R. SS. 33.3, EXHIBIT F
-----------------------------
Analysis of Retained Earnings
<PAGE> 72
EXHIBIT F
Request for Waiver of
18 C.F.R. ss. 33.3, Exhibit F
Michigan Transco, a special purpose subsidiary created exclusively for
purposes of consummating the proposed Transfer Transaction, respectfully
requests waiver of 18 C.F.R. ss. 33.3, Exhibit F to this Application, analysis
of retained earnings. Michigan Transco currently owns, operates, or otherwise
controls no facilities used for the generation, transmission, or distribution of
electric energy. As such, Michigan Transco is not presently required to keep its
records in conformance with the Commission's Uniform System of Accounts set
forth at 18 C.F.R. ss. 101. Accordingly, Michigan Transco submits that good
cause exists to grant its request for waiver.
<PAGE> 73
<TABLE>
<S><C>
Name of Respondent This Report is: Date of Report Year of Report
(1) [X] An Original (Mo. Da, Yr)
Consumers Energy Company (2) [ ] A Resubmission / / December 31, 1999
----
</TABLE>
STATEMENT OF RETAINED EARNINGS FOR THE YEAR
1. Report all changes in appropriated retained earnings, unappropriated retained
earnings, and unappropriated undistributed subsidiary earning for the year.
2. Each credit and debit during the year should be identified as to the retained
earnings account in which recorded (Accounts 433, 436, 439 inclusive). Show the
contra primary account affected in column (b)
3. State the purpose and amount of each reservation or appropriation of retained
earnings.
4. List first account 439, Adjustments to Retained Earnings, reflecting
adjustments to the opening balance of retained earnings. Follow by credit, then
debit items in that order.
5. Show dividends for each class and series of capital stock.
6. Show separately the State and Federal income tax effect of items shown in
account 439, Adjustments to Retained Earnings.
7. Explain in footnote the basis for determining the amount reserved or
appropriated. If such reservation or appropriation is to be recurrent, state the
number and annual amounts to be reserved or appropriated as well as the totals
eventually to be accumulated.
8. If any notes appearing in the report to stockholders are applicable to this
statement, include them on pages 122-123.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Contra Primary Amount
Line Item Account Affected
No. (a) (b) (c)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
UNAPPROPRIATED RETAINED EARNING (Account 215)
------------------------------------------------------------------------------------------------------------------------------------
1 Balance-Beginning of Year 186,087,106
------------------------------------------------------------------------------------------------------------------------------------
2 Changes
------------------------------------------------------------------------------------------------------------------------------------
3 Adjustment to Retained Earnings (Account 439)
------------------------------------------------------------------------------------------------------------------------------------
4
------------------------------------------------------------------------------------------------------------------------------------
5
------------------------------------------------------------------------------------------------------------------------------------
6
------------------------------------------------------------------------------------------------------------------------------------
7
------------------------------------------------------------------------------------------------------------------------------------
8
------------------------------------------------------------------------------------------------------------------------------------
9 TOTAL Credits to Retained Earnings (Acct. 439)
------------------------------------------------------------------------------------------------------------------------------------
10
------------------------------------------------------------------------------------------------------------------------------------
11
------------------------------------------------------------------------------------------------------------------------------------
12
------------------------------------------------------------------------------------------------------------------------------------
13
------------------------------------------------------------------------------------------------------------------------------------
14
------------------------------------------------------------------------------------------------------------------------------------
15 TOTAL Debits to Retained Earnings (Acct. 439)
------------------------------------------------------------------------------------------------------------------------------------
16 Balance Transferred from Income (Account 433 less Account 418.1) 280,125,999
------------------------------------------------------------------------------------------------------------------------------------
17 Appropriations of Retained Earnings (Acct. 436)
------------------------------------------------------------------------------------------------------------------------------------
18 Excess Earnings of Hydro Plants 215.1 -6,478,138
------------------------------------------------------------------------------------------------------------------------------------
19
------------------------------------------------------------------------------------------------------------------------------------
20
------------------------------------------------------------------------------------------------------------------------------------
21
------------------------------------------------------------------------------------------------------------------------------------
22 TOTAL Appropriations of Retained Earnings (Acct. 436) -6,476,138
------------------------------------------------------------------------------------------------------------------------------------
23 Dividends Declared-Preferred Stock (Account 437)
------------------------------------------------------------------------------------------------------------------------------------
24 $4.50 Preferred Stock -1,679,183
------------------------------------------------------------------------------------------------------------------------------------
25 $4.16 Preferred Stock -284,756
------------------------------------------------------------------------------------------------------------------------------------
26 $2.08 Preferred Stock -4,160,000
------------------------------------------------------------------------------------------------------------------------------------
27
------------------------------------------------------------------------------------------------------------------------------------
28
------------------------------------------------------------------------------------------------------------------------------------
29 TOTAL Dividends Declared-Common Stock (Acct. 437) -6,123,939
------------------------------------------------------------------------------------------------------------------------------------
30 Dividends Declared-Common Stock (Account 438)
------------------------------------------------------------------------------------------------------------------------------------
31 -262,500,000
------------------------------------------------------------------------------------------------------------------------------------
32
------------------------------------------------------------------------------------------------------------------------------------
33
------------------------------------------------------------------------------------------------------------------------------------
34
------------------------------------------------------------------------------------------------------------------------------------
35
------------------------------------------------------------------------------------------------------------------------------------
36 TOTAL Dividends Declared-Common Stock (Acct. 438) -262,500,000
------------------------------------------------------------------------------------------------------------------------------------
37 Transfers from Acct 216.1 Unapprop. Undistrib. Subsidiary Earnings 10,200,000
------------------------------------------------------------------------------------------------------------------------------------
38 Balance - End of Year (Total 1,9,15,16,22,29,36,37) 201,311,028
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
PAGE 118
<PAGE> 74
<TABLE>
<S> <C> <C> <C>
----------------------------------------------------------------------------------------------------------------------------------
| Name of Respondent | This Report is: | Date of Report | Year of Report |
| | (1) [X] An Original | (Mo. Da. Yr) | Dec. 31, 1999 |
| Consumers Energy Company | (2) [ ] A Resubmission | // | -------- |
----------------------------------------------------------------------------------------------------------------------------------
| STATEMENT OF RETAINED EARNINGS FOR THE YEAR |
----------------------------------------------------------------------------------------------------------------------------------
| 1. Report all changes in appropriated retained earnings, unappropriated retained earnings, and unappropriated undistributed |
|subsidiary earnings for the year. |
| 2. Each credit and debit during the year should be identified as to the retained earnings account in which recorded (Accounts |
|433, 436-439 inclusive). Show the contra primary account affected in column (b) |
| 3. State the purpose and amount of each reservation or appropriation of retained earnings. |
| 4. List first account 439, Adjustments to Retained Earnings, reflecting adjustments to the opening balance of retained |
|earnings. Follow by credit, then debit items in that order. |
| 5. Show dividends for each class and series of capital stock. |
| 6. Show separately the State and Federal income tax effect of items shown in account 439, Adjustments to Retained Earnings. |
| 7. Explain in a footnote the basis for determining the amount reserved or appropriated. If such reservation or appropriation |
|is to be recurrent, state the number and annual amounts to be reserved or appropriated as well as the totals eventually to be |
|accumulated. |
| 8. If any notes appearing in the report to stockholders are applicable to this statement, include them on pages 122-123. |
| |
| |
----------------------------------------------------------------------------------------------------------------------------------
| Line | | Contra Primary | Amount |
| No. | Item | Account Affected | |
| | (a) | (b) | (c) |
----------------------------------------------------------------------------------------------------------------------------------
| |APPROPRIATED RETAINED EARNINGS (Account 215) | | |
-------|----------------------------------------------------------------------------------|------------------|-------------------|
| 39| | | 100,000,000 |
----------------------------------------------------------------------------------------------------------------------------------
| 40| | | |
----------------------------------------------------------------------------------------------------------------------------------
| 41| | | |
----------------------------------------------------------------------------------------------------------------------------------
| 42| | | |
----------------------------------------------------------------------------------------------------------------------------------
| 43| | | |
----------------------------------------------------------------------------------------------------------------------------------
| 44| | | |
----------------------------------------------------------------------------------------------------------------------------------
| 45|TOTAL Appropriated Retained Earnings (Account 215) | | 100,000,000 |
----------------------------------------------------------------------------------------------------------------------------------
| |APPROP. RETAINED EARNINGS - AMORT. Reserve. Federal (Account 215.1) | | |
----------------------------------------------------------------------------------------------------------------------------------
| 46|TOTAL Approp. Retained Earnings-Amort. Reserve. Federal (Acct. 215.1) | | 21,753,589 |
----------------------------------------------------------------------------------------------------------------------------------
| 47|TOTAL Approp. Retained Earnings (Acct. 215, 215.1) (Total 45,46) | | 121,753,589 |
----------------------------------------------------------------------------------------------------------------------------------
| 48|TOTAL Retained Earnings (Account 215,215.1.216) (Total 38, 47) | | 323,064,617 |
----------------------------------------------------------------------------------------------------------------------------------
| |UNAPPROPRIATED UNDISTRIBUTED SUBSIDIARY EARNINGS (Account 216.1) | | |
----------------------------------------------------------------------------------------------------------------------------------
| 49|Balance-Beginning of Year (Debit or Credit) | | 132,514,833 |
----------------------------------------------------------------------------------------------------------------------------------
| 50|Equity in Earnings for Year (Credit) (Account 418.1) | | 38,795,241 |
----------------------------------------------------------------------------------------------------------------------------------
| 51|(Less) Dividends Received (Debit) | | 10,200,000 |
----------------------------------------------------------------------------------------------------------------------------------
| 52| | | |
----------------------------------------------------------------------------------------------------------------------------------
| 53|Balance-End of Year (Total lines 49 thru 52) | | 161,110,074 |
----------------------------------------------------------------------------------------------------------------------------------
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
----------------------------------------------------------------------------------------------------------------------------------
FERC FORM NO.1 (ED. 12-96) Page 119
</TABLE>
<PAGE> 75
18 C.F.R. SECTION 33.3, EXHIBIT G
---------------------------------
Other Required Regulatory Filings
<PAGE> 76
EXHIBIT G
CMS Energy Corporation and Consumers will require an order from the Securities
and Exchange Commission for approval to acquire the securities of Michigan
Transco pursuant to Section 9(a)(2) and 10 of the PUCHA, in order to consummate
the Transfer Transaction.
Within six (6) months following the filing of the instant Application,
Consumers must file an application for an order from the MPSC approving the
proposed accounting treatment for the Transfer Transaction.
Consumers will file an application with the Commission under Part I of the
Federal Power Act to remove certain transmission facilities from the license
for the Ludington Pumped Storage Project so that it will not be necessary for
Michigan Transco to be a licensee under Part 1 of the FPA.
Applicants intend to provide copies of these applications to the Commission
reasonably contemporaneous with the filing of each one.
<PAGE> 77
18 C.F.R. SS. 33.3, EXHIBIT H
-----------------------------
Contracts Relating to Transfer of Transmission Assets
(1) Operating Agreement
(2) Transmission Service Agreement
(3) Easement Agreement
(4) Bill of Sale
<PAGE> 78
OPERATING AGREEMENT
BY AND BETWEEN
MICHIGAN ELECTRIC TRANSMISSION COMPANY
AND
CONSUMERS ENERGY COMPANY
Dated as of October __, 2000
(PRO FORMA AGREEMENT)
<PAGE> 79
OPERATING AGREEMENT
BY AND BETWEEN
MICHIGAN ELECTRIC TRANSMISSION COMPANY
AND
CONSUMERS ENERGY COMPANY
This agreement is made and entered into as of this __ day of October,
2000, by and between Michigan Electric Transmission Company ("MICHIGAN
TRANSCO"), a Michigan corporation, having its principal place of business at 212
W Michigan Avenue, Jackson, Michigan 49201, and Consumers Energy Company
("CONSUMERS"), a Michigan corporation, having its principal place of business at
212 W Michigan Avenue, Jackson, Michigan 49201. (Michigan Transco and Consumers
may be referred to individually as "PARTY" or collectively as the "PARTIES").
WHEREAS, as a consequence of the comprehensive restructuring of the
bulk power and retail electric markets in the State of Michigan, Consumers has
entered into an agreement pursuant to which it will sell a substantial amount of
Consumers transmission facilities located in the State of Michigan with voltage
ratings of 120 kilovolts ("kV") and above (collectively, the "TRANSMISSION
SYSTEM") to Michigan Transco (the "TRANSFER TRANSACTION");
WHEREAS, Michigan Transco desires to engage in the transmission of
electric energy in interstate commerce and to exercise operational authority
over the Transmission System for the purpose of providing open access,
non-discriminatory transmission service to Consumers and all other eligible
customers;
WHEREAS, Michigan Transco also desires to provide open access,
non-discriminatory transmission service over certain facilities owned and
operated by Consumers with voltage ratings below 120 kV ("DISTRIBUTION
FACILITIES") that are used to serve certain wholesale customers and credit all
charges collected therefrom to Consumers; and
WHEREAS, Michigan Transco and Consumers desire to enter into a
comprehensive agreement defining the post-Transfer Transaction responsibilities
for the Transmission System including the exercise of operational control,
planning, and expansion thereof by Michigan Transco.
NOW THEREFORE, in consideration of the mutual agreements and
commitments contained herein, Michigan Transco and Consumers agree as follows:
ARTICLE 1. DEFINITIONS
1.1 The following terms shall have the meanings set forth below. Any
term used in this Agreement that is not defined herein shall have the meaning
customarily attributed to such term within the electric utility industry.
2
<PAGE> 80
"AGREEMENT" means this Operating Agreement By and Between Michigan
Electric Transmission Company and Consumers Energy Company, as it may be amended
from time to time.
"CLOSING DATE" means the date and time upon which the closing of the
Transfer Transaction actually occurs.
"CONTROL AREA" means an electrical 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.
"CONTROL AREA OPERATOR" means the person(s) and/or entity(ies)
responsible for exercising operational control over the Transmission System.
"ECAR" means the East Central Area Reliability council, its successors
and assigns.
"FERC" means the Federal Energy Regulatory Commission or the successor
thereto.
"GENERATION RESOURCES" means the facilities used for the production of
electric energy, which are owned and operated by Consumers and located within
Michigan Transco's Control Area available to meet the capacity and energy needs
of Consumers.
"GOOD UTILITY PRACTICE" means any of the practices, methods, or acts
engaged in or approved by a significant portion of the electric utility industry
with respect to similar facilities during the relevant time period which, in
each case, in the exercise of reasonable judgment in light of the facts known or
that should have been 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, law, regulation, environmental
protection, and expedition. Good Utility Practice are not intended to be limited
to the optimum practices, methods, or acts to the exclusion of all others, but
rather to delineate the acceptable practices, methods, or acts generally
accepted in such industry.
"MICHIGAN TRANSCO TRANSMISSION TARIFFS" means either the Open Access
Transmission Tariff or the Joint Open Access Transmission Tariff in which
Michigan Transco 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.
"OASIS STANDARDS OF CONDUCT" means the rules and regulations
promulgated by the FERC, 18 C.F.R. Part 37 (1999), as amended from time to time,
requiring the implementation of Standards of Conduct governing the transfer of
information and communications between public utilities' wholesale merchant and
transmission system operation functions, and that of their affiliates.
3
<PAGE> 81
"REGULATORY AUTHORITY" means any federal, state, local, or other
governmental, regulatory, or administrative agency having jurisdiction over the
subject matter of this Agreement.
"TRANSMISSION CUSTOMER" means a transmission customer taking service
under the Michigan Transco Transmission Tariffs, any entity that is a party to a
transaction under the Michigan Transco Transmission Tariffs, including
Consumers, or any entity on whose behalf Michigan Transco is providing
transmission service.
ARTICLE 2. TERM AND TERMINATION
2.1 This agreement shall become effective when signed by the Parties.
Parties' corresponding obligations as set forth herein shall begin at 12:01 a.m.
(EPT) on the day immediately following the Closing Date ("EFFECTIVE DATE"). The
initial term of this Agreement shall commence as of the Effective Date and shall
continue for three (3) years ("INITIAL TERM"), unless terminated earlier in
accordance with the provisions of this Agreement. Following the Initial Term, or
each subsequent Renewal Term (as hereinafter defined), as the case may be, this
Agreement shall automatically be renewed for a period of one (1) year ("RENEWAL
TERM"), unless either Party delivers a written notice of termination to the
other Party at least sixty (60) days prior to the end of the then current term.
2.2 Any obligations incurred by the Parties under this Agreement to
make payments due, remit costs, or complete construction of designated
facilities, as agreed to prior to the termination hereof, shall survive the
termination of this Agreement.
ARTICLE 3.
OBLIGATIONS, RIGHTS AND RESPONSIBILITIES OF
MICHIGAN ELECTRIC TRANSMISSION COMPANY
3.1 Operation of Transmission System. Pursuant to the terms of this
Agreement, upon the consummation of the Transfer Transaction, Michigan Transco
shall be responsible for operating the Transmission System in order to provide
all Transmission Customers with safe, efficient, reliable, and
non-discriminatory transmission service pursuant to terms and conditions set
forth in the Michigan Transco Transmission Tariffs. As more fully set forth in
the Operating Protocols attached hereto as Appendix 1, such operation shall be
in accordance with Good Utility Practice and shall conform to the applicable
reliability requirements of NERC, ECAR or other regional reliability councils,
or any successor organizations, and all applicable requirements of federal or
state laws or Regulatory Authorities. As further detailed in Appendix 1,
Michigan Transco shall assume the following operational responsibilities from
Consumers:
3.1.1 Administration and Maintenance of Michigan Transco Transmission
Tariffs. Michigan Transco shall be responsible for administering the Michigan
Transco Transmission Tariffs and for providing open access, non-discriminatory
transmission service to all Transmission Customers taking service under such
tariff and for maintaining the Michigan Transco Transmission Tariffs on file
with the FERC.
4
<PAGE> 82
3.1.2 Review and Approval of Requests for Transmission Service Under
the Michigan Transco Transmission Tariffs. Michigan Transco shall be responsible
for reviewing and approving, as appropriate, all requests for open access,
non-discriminatory transmission service under the Michigan Transco Transmission
Tariffs.
3.1.3 Determination of Available Transmission Capacity. Michigan
Transco shall be responsible for calculating available transmission capacity
("ATC") for the Transmission System in accordance with the terms and conditions
set forth in the Michigan Transco Transmission Tariffs.
3.1.4 Provision of Ancillary Services. Michigan Transco shall be
responsible for offering ancillary services, as required by the rules and
regulations of the FERC, to all Transmission Customers taking service under the
Michigan Transco Transmission Tariffs. Michigan Transco shall procure ancillary
services on a non-preferential and competitive basis from Consumers and from any
third-party suppliers of such services at FERC-approved rates.
3.1.5 Administration of Open Access Same-Time Information System.
Michigan Transco shall assume responsibility for operating the open access
same-time information system ("OASIS") for the Transmission System.
3.1.6 Maintenance and Operation Services. Michigan Transco shall be
responsible for maintenance and operation of the Transmission System and may
employ persons and enter into agreements as necessary to perform these services.
Michigan Transco may contract with Consumers to perform these services. Pursuant
to the terms of a separate services agreement, Consumers agrees to perform
maintenance and operation services for Michigan Transco, in accordance with Good
Utility Practice.
3.1.7 Coordination of Maintenance Schedules. Michigan Transco shall be
responsible for establishing a maintenance schedule for all Transmission Assets
making up the Transmission System. Michigan Transco shall coordinate with
Consumers, as appropriate, both the scheduling of maintenance on all Generation
Resources connected to the Transmission System and the scheduling of maintenance
on Transmission Assets that could affect the operation of any Generation
Resources.
3.1.8 Maintenance of Transmission System Security. Michigan Transco
shall be responsible for maintaining the security of the Transmission System and
shall monitor and coordinate voltage levels with neighboring control areas.
3.1.9 Construction of New Transmission Assets. Michigan Transco shall
be responsible for the construction of new Transmission Assets where necessary
or desirable to provide transmission service over the Transmission System, or in
response to requests for transmission service under the Michigan Transco
Transmission Tariffs. Upon request from Consumers, Michigan Transco shall
construct necessary connection facilities to permit the interconnection of the
Transmission System with new Distribution Facilities constructed by Consumers.
Michigan Transco shall be responsible for acquiring all land, licenses, or
rights-or-way necessary for such construction. Michigan Transco may, in its
reasonable business
5
<PAGE> 83
judgment, contract with Consumers for design, construction, and related real
estate services. Pursuant to the terms of separate design, construction, and
real estate services agreements, Consumers agrees to design and construct all
new Transmission Assets for Michigan Transco as well as provide real estate
services.
3.1.10 Access to Transmission System. During reasonable business
hours and under reasonable conditions, Michigan Transco shall, upon request,
allow a duly-authorized representative(s) of Consumers such access to the
Transmission System as is necessary for Consumers to perform its obligations
under this Agreement or to comply with the requirements of Regulatory
Authorities. Any such access provided pursuant to this Section 3.1.10 shall be
subject to the relevant rules and regulations set forth in the OASIS Standards
of Conduct.
3.1.11 Providing Information to Consumers. Michigan Transco shall
provide such information to Consumers as is necessary for Consumers to perform
the obligations set forth in Article IV of this Agreement or any Grandfathered
Agreement, or to comply with the requirements of any Regulatory Authority. All
such information provided by Michigan Transco shall be submitted in accordance
with the relevant rules and regulations set forth in the OASIS Standards of
Conduct. Information identified as "confidential" shall be treated as
confidential to the extent permitted by law. Any information provided pursuant
to this Section 3.1.11 shall be subject to the relevant rules and regulations
set forth in the OASIS Standards of Conduct.
3.1.12 Inspection and Auditing of Records. During reasonable
business hours and under reasonable conditions, Michigan Transco shall, upon
request, grant a duly-authorized representative(s) of Consumers and/or
Regulatory Authorities such access to Michigan Transco's books and records as is
necessary to verify compliance by Michigan Transco under this Agreement, and to
audit and verify transactions under this Agreement. Michigan Transco shall also
comply with all applicable reporting requirements of Regulatory Authorities
having jurisdiction over Michigan Transco with respect to the business aspects
of its operations, and shall maintain such accounting records and metering data
as is necessary to perform its obligations under this Agreement. The inspection
and auditing of Michigan Transco's books and records pursuant to this Section
3.1.12 shall be subject to the relevant rules and regulations of the OASIS
Standards of Conduct.
3.2 Provision of Transmission Service over Distribution Facilities by
Michigan Transco. Michigan Transco shall provide open access, non-discriminatory
transmission service to certain wholesale customers over the Distribution
Facilities, as defined herein, pursuant to the terms of the Michigan Transco
Transmission Tariffs and shall credit all charges associated with the provision
of such services over the Distribution Facilities to Consumers.
3.3 Metering. Consumers and Michigan Transco shall provide
communications, metering, and other facilities necessary for the metering and
control of the Transmission Assets. Michigan Transco shall be responsible for
any expenses it incurs for the installation, operation, and maintenance of
Transmission Assets or the Transmission System.
3.4 Obligations as Control Area Operator. Upon consummation of the
Transfer Transaction, Michigan Transco shall administer and perform the duties,
as defined in this Section
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3.4, of Control Area Operator for the Transmission System and, at a minimum,
shall be obligated to:
3.4.1 match, at all times, the power supply located within the
Control Area and power purchased from or sold to entities located outside of the
Control Area with the load located within the Control Area;
3.4.2 maintain scheduled interchange with other Control Areas
directly connected with the Transmission System within the limits of Good
Utility Practice;
3.4.3 maintain system frequency within reasonable limits in
accordance with Good Utility Practice;
3.4.4 procure from Consumers, or from other third-party entities, a
sufficient amount of ancillary services, as necessary, to maintain the operating
reserve requirement for the Consumers portion of the Control Area in accordance
with Good Utility Practice;
3.4.5 provide operational and transaction data as necessary through
the ECAR OASIS or other OASIS facilities performing these functions on behalf of
the Control Area Operator.
3.5 Grandfathered Transmission Agreements. Where Consumers is obligated
to provide transmission under agreements or tariffs which were executed or
effective prior to July 9, 1996 ("GRANDFATHERED AGREEMENTS"), Michigan Transco
and Consumers will execute a Network Integration Transmission Service ("NITS")
agreement under the Michigan Transco Transmission Tariffs to ensure that
Consumers' obligation to provide transmission service under the Grandfathered
Agreements is satisfied. Consumers will continue to bill customers served
pursuant to the Grandfathered Agreements in accordance with the rates, terms and
conditions set forth therein.
3.6 Performance of Regulatory Obligations. Michigan Transco shall
comply with transmission operation and planning obligations of Consumers imposed
by federal or state laws or Regulatory Authorities, as of the effective date of
this Agreement, which can no longer be performed solely by Consumers following
transfer of ownership and control of their Transmission Facilities to Michigan
Transco, until such time as such obligations are changed or revised to relieve
Consumers or Michigan Transco in whole or in part of such obligations.
ARTICLE 4.
OBLIGATIONS, RIGHTS AND RESPONSIBILITIES
OF CONSUMERS ENERGY COMPANY
4.1 Duty to Cooperate with Michigan Transco. Consumers shall, to the
greatest extent practicable, cooperate with Michigan Transco as Michigan Transco
performs its duties as Control Area Operator, including providing reactive
supply and voltage control from generation
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sources or other ancillary services and reducing load, when reasonably requested
by Michigan Transco, in accordance with the terms and conditions of the Michigan
Transco Transmission Tariffs and Good Utility Practice. Consumers shall not
operate its Generation Resources or Distribution Facilities in a manner which
unduly interferes with the provision of transmission service by Michigan
Transco.
4.2 Construction of New Distribution Facilities. Consumers shall, at
the request of Michigan Transco, plan and construct such Distribution Facilities
necessary to provide adequate and reliable transmission service to wholesale
customers served over the Distribution Facilities.
4.2.1 Consumers shall obtain all required authorizations, permits,
licenses, or other regulatory approvals, including without limitation, siting
and environmental requirements as may be imposed by state, local, and federal
laws and regulations, for all facilities constructed by Consumers. Construction
of new facilities shall be performed in accordance with Good Utility Practice,
industry standards, and any requirements of Regulatory Authorities.
4.3 Access to Distribution Facilities. During reasonable business hours
and under reasonable conditions, Consumers shall, upon request, allow a
duly-authorized representative(s) of Michigan Transco access to the Distribution
Facilities as is necessary for Michigan Transco to perform its obligations under
this Agreement, the Michigan Transco Transmission Tariffs, and any service
agreements thereunder, or to comply with the requirements of Regulatory
Authorities. Any such access provided pursuant to this Section 4.3 shall be
subject to the relevant rules and regulations set forth in the OASIS Standards
of Conduct.
4.4 Providing Information to Michigan Transco. Consumers shall provide
such information to Michigan Transco as is necessary for Michigan Transco to
perform its obligations under this Agreement, the Michigan Transco Transmission
Tariffs, and any transmission service agreements thereunder, or to comply with
the requirements of Regulatory Authorities. Any such information provided
pursuant to this Section 4.4 shall be subject to the relevant rules and
regulations established pursuant to the OASIS Standards of Conduct.
4.5 Inspection and Auditing of Records. During reasonable business
hours and under reasonable conditions, Consumers shall, upon request, allow a
duly-authorized representative(s) of Michigan Transco such access to books and
records as is necessary for Michigan Transco to perform its obligations under
this Agreement, the Michigan Transco Transmission Tariffs, and any service
agreements thereunder, or to comply with the requirements of Regulatory
Authorities, for purposes of auditing and verifying transactions under this
Agreement. Consumers shall, upon consummation of the Transfer Transaction,
comply with all applicable reporting requirements of Regulatory Authorities
having jurisdiction over Consumers with respect to the business aspects of its
operations and shall maintain such accounting records and metering data as is
necessary to perform its obligations under this Agreement. Any such inspection
and auditing of Consumers' books and records conducted by Michigan Transco
pursuant to this Section 4.5 shall be subject to the relevant rules and
regulations set forth in the OASIS Standards of Conduct.
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ARTICLE 5. ASSIGNMENT OF REVENUES
Transmission revenues from all Grandfathered Agreements will be billed
and collected by Consumers. Michigan Transco will bill and collect all revenues
for open access transmission service agreements assigned by Consumers to
Michigan Transco pursuant to the terms of the Transfer Transaction. The revenues
billed, collected, and received pursuant to open access transmission service
provided pursuant to the terms and conditions of the Michigan Transco
Transmission Tariffs shall be retained by Michigan Transco. Michigan Transco
shall credit to Consumers those charges billed and collected for the use of the
Distribution Facilities by wholesale customers taking transmission service under
Michigan Transco Transmission Tariffs. Michigan Transco shall also use its best
efforts to collect (to the extent allowed by FERC policy) from wholesale
customers taking transmission service under Michigan Transco Transmission
Tariffs for costs of Distribution Facilities constructed by Consumers pursuant
to Section 4.2 hereof, and shall credit to Consumers any collections therefor.
ARTICLE 6.
OBLIGATIONS, RIGHTS AND RESPONSIBILITIES
OF THE ADMINISTRATIVE COMMITTEE
6.1 Creation of Administrative Committee. Upon the consummation of the
Transfer Transaction, the Parties hereto shall create an Administrative
Committee which shall consist of two members designated by each party; provided
however, that any third-party transferring ownership and/or control over its
FERC-jurisdictional transmission facilities to Michigan Transco shall be granted
the opportunity to designate two representatives to the Administrative
Committee.
6.2 Meeting Dates. The Administrative Committee shall hold such
meetings at such times designated by the Committee, but at least once per
calendar year. Meetings of the Administrative Committee may also be held at any
time upon the request of a member of the Administrative Committee. Minutes of
the Administrative Committee meeting shall be prepared and maintained.
6.3 Decisions. All decisions of the Administrative Committee shall be
made by unanimous vote of the members present or voting by proxy at the meeting
at which the vote is taken.
6.4 Duties. The Administrative Committee shall have the following
duties, unless such duties are otherwise assigned by a vote of the
Administrative Committee to Michigan Transco or Consumers, in which case the
so-assigned party shall perform such duties. The Administrative Committee shall:
6.4.1 Consider any matters in connection with the administration of
this agreement as may, from time-to-time, arise.
6.4.2 Review and recommend additional duties and responsibilities
for Michigan Transco or Consumers consistent with FERC Order Nos. 888, 889 and
2000.
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6.4.3 Establish as necessary any other committees for the purpose
of carrying out the day-to-day administration of this Agreement including, but
not limited to, the coordination of generation and maintenance schedules,
operating reserve monitoring, transmission/distribution activity coordination,
and transmission/distribution systems planning coordination.
6.4.4 Provide coordination of other matters not specifically
provided herein which the Parties agree are necessary to operate the
Transmission System reliably and economically.
6.5 Committee Expenses. Each Party shall pay the expenses of its
representative to the Administrative Committee.
ARTICLE 7. FORCE MAJEURE
7.1 Force Majeure. A Party shall not be considered to be in default or
breach of this Agreement, and shall be excused from performance, or liability
for damages to the other Party, to the extent it shall be delayed in or
prevented from performing or carrying out any of the obligations or
responsibilities of this Agreement because of a Force Majeure Event. "FORCE
MAJEURE EVENT" means any occurrence beyond the reasonable control of a Party
which causes such Party to be delayed in or prevented from performing or
carrying out any of its obligations under this Agreement and which by the
exercise of due diligence in accordance with Good Utility Practice, that Party
is unable to prevent, avoid, mitigate, or overcome, including any of the
following: any act of God, labor disturbance, act of the public enemy, war,
insurrection, riot, fire, storm or flood, ice, explosion, breakage or accident
to machinery or equipment, order, regulation or restriction imposed by
governmental military or lawfully established civilian authorities, provided
that a Force Majeure Event shall not include lack of finances or change in
market conditions, and provided further that any failure by Michigan Transco to
obtain services for the Transmission System due to the failure of any supplier
or subcontractor of Michigan Transco to perform any obligation to Michigan
Transco (including Consumers as maintenance supplier) shall not constitute a
Force Majeure Event hereunder unless such subcontractor or supplier is unable to
perform for reasons that would constitute a "Force Majeure Event" hereunder.
7.2 Procedure. Any Party claiming that a Force Majeure Event has
occurred shall (i) provide prompt written notice of such Force Majeure Event to
the other Party giving a detailed written explanation of the event and an
estimate of its expected duration and probable effect on the performance of that
Party's obligations hereunder; and (ii) use commercially reasonable efforts in
accordance with Good Utility Practice to mitigate the effect of the Force
Majeure Event on the other Party, except that settlement of any labor dispute
shall be in the sole judgment of the affected Party.
ARTICLE 8. DEFAULT
Unless excused by a Force Majeure Event, or the other Party's Event of
Default, each of the following events shall be deemed to be an "EVENT OF
DEFAULT" hereunder: failure of either
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Party, in a material respect, to comply with, observe, or perform any covenant,
warranty, or obligation under this Agreement, without limitation, and such
failure is not cured or rectified within thirty (30) days after receipt of
written notice of such failure from the other Party or such longer period as may
be reasonably required, provided that the defaulting Party diligently attempts
to cure the Event of Default.
ARTICLE 9. DISPUTES
Any disagreement between Michigan Transco and Consumers as to their
rights and obligations under this Agreement shall first be addressed by the
Parties. If representatives of the Parties are unable in good faith to
satisfactorily resolve their disagreement, the Parties shall refer the matter to
their respective senior management. If, after using their best efforts to try to
resolve the dispute, senior management cannot resolve the dispute in thirty (30)
days, either Party may exercise any right or remedy available pursuant to this
Agreement.
ARTICLE 10. REPRESENTATIONS AND WARRANTIES
10.1 Michigan Transco. Michigan Transco represents and warrants to
Consumers as follows:
10.1.1 Organization. Michigan Transco is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Michigan and Michigan Transco has the requisite corporate power and authority to
carry on its business as now being conducted.
10.1.2 Authority Relative to this Agreement. Michigan Transco has
the requisite power and authority to execute and deliver this Agreement and,
subject to the procurement of applicable regulatory approvals, to carry out the
actions required of it by this Agreement. The execution and delivery of this
Agreement and the actions it contemplates have been duly and validly authorized
by all required corporate action. The Agreement has been duly and validly
executed and delivered by Michigan Transco and constitutes a valid and binding
Agreement of Michigan Transco.
10.1.3 Regulatory Approval. Michigan Transco has obtained or will
obtain by the Closing Date any and all approvals of, and given notice to, any
public authority that is required for it to execute and deliver this Agreement.
10.1.4 Compliance With Law. Michigan Transco represents and
warrants that it is not in violation of any applicable law, statute, order,
rule, or regulation promulgated or judgment entered by any Federal, state, or
local governmental authority, which violation would materially affect Michigan
Transco's performance of its obligations under this Agreement. Michigan Transco
represents and warrants that it will comply in all material respects with all
applicable laws, rules, regulations, codes, and standards of all Federal, state,
and local governmental agencies having jurisdiction over this Agreement, except
to the extent that a failure to so comply would not have a material adverse
effect on Michigan Transco's obligations hereunder.
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10.2 Consumers. Consumers represents and warrants to Michigan Transco
as follows:
10.2.1 Organization. Consumers is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Michigan,
and has the requisite power and authority to carry on its business as is now
being conducted.
10.2.2 Authority Relative to this Agreement. Consumers has the
requisite power and authority to execute and deliver this Agreement and, subject
to the procurement of applicable regulatory approvals, to carry out the actions
required of it by this Agreement. The execution and delivery of this Agreement
and the actions it contemplates have been duly and validly authorized by all
required corporate action. The Agreement has been duly and validly executed and
delivered by Consumers and constitutes a valid and binding Agreement of
Consumers.
10.2.3 Regulatory Approval. Consumers has obtained or will obtain
by the Closing Date any and all approvals of, and given notice to, any public
authority that is required for it to execute and deliver this Agreement.
10.2.4 Compliance With Law. Consumers represents and warrants that
it is not in violation of any applicable law, statute, order, rule, or
regulation promulgated or judgment entered by any Federal, state, or local
governmental authority, which violation would materially affect its performance
of its obligations under this Agreement. Consumers represents and warrants that
it will comply in all material respects with all applicable laws, rules,
regulations, codes, and standards of all Federal, state, and local governmental
agencies having jurisdiction over this Agreement, except to the extent that a
failure so to comply would not have a material adverse effect on its obligations
hereunder.
10.3 Effectiveness. The representations and warranties in Sections 13.1
and 13.2 shall continue in full force and effect for the term of this Agreement.
ARTICLE 11.
ASSIGNMENT OR OTHER CHANGE IN CORPORATE IDENTITY
This Agreement and all of the provisions hereof shall be binding upon,
and inure to the benefit of the Parties and their respective successors and
permitted assigns, but assignment of any right, interest, or obligation under
this Agreement may not be made without the other Party's prior written consent,
which consent shall not be unreasonably withheld. Assignments to which there is
not consent may be voided by the non-assigning Party.
ARTICLE 12. MISCELLANEOUS
12.1 Waiver. Except as otherwise provided in this Agreement, any
failure of a Party to comply with any obligation, covenant, agreement, or
condition herein may be waived by the Party entitled to the benefit thereof only
by a written instrument signed by the Party granting such waiver, but such
waiver shall not operate as a waiver of, or estoppel with respect to any
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subsequent failure of the first Party to comply with such obligation, covenant,
agreement, or condition.
12.2 Governing Law. This Agreement, and all rights, obligations, and
performances of the Parties hereunder, are subject to all applicable Federal and
state laws, and to all duly-promulgated orders, and other duly-authorized action
of governmental authorities having jurisdiction. When not in conflict with or
preempted by Federal law, this Agreement will be governed by and construed in
accordance with the laws of the State of Michigan, without giving effect to the
conflict of law principles thereof.
12.3 Severability. If any of the provisions of this Agreement are held
to be unenforceable or invalid by any court or Regulatory Authority of competent
jurisdiction, the Parties shall, to the extent possible, negotiate an equitable
adjustment to the provisions of this Agreement with a view toward effecting the
purpose of this Agreement, and the validity and enforceability of the remaining
provisions hereof shall not be affected thereby.
12.4 Amendment. If the applicable provisions relating to the
implementation of this Agreement are changed materially from the policies,
methods, and procedures contemplated herein, the Parties shall endeavor in good
faith to make conforming changes to this Agreement with the intent to fulfill
the purposes of this Agreement. Any amendment to this Agreement shall be in
writing and signed by both Parties.
12.5 Further Assurances. The Parties hereto agree to promptly execute
and deliver, at the expense of the Party requesting such action, any and all
other and further instruments and documents which may be reasonably requested in
order to effectuate the transactions contemplated hereby, and shall carry out
their obligations under this Agreement.
12.6 Third Party Agreements. This Agreement, including the appendices
to this Agreement, the Michigan Transco Transmission Tariffs, the Service
Agreements thereunder, and other agreements referenced herein, shall not be
construed, interpreted or applied in such a manner as to cause Consumers to be
in breach, anticipatory or otherwise, of any agreement between Consumers and one
or more third parties who are not Parties to this Agreement for the joint
ownership, operation, or maintenance of any electric facilities covered by this
Agreement, or the Michigan Transco Transmission Tariffs. Consumers shall discuss
with Michigan Transco any material conflict between such third-party joint
agreement and this Agreement, or the Michigan Transco Transmission Tariffs,
raised by a third party to such joint agreement, and shall act in good faith to
resolve such conflict in accordance with Good Utility Practice.
12.7 No Third Party Beneficiaries. Nothing in this Agreement, express
or implied, is intended to confer on any person, other than the Parties, any
rights or remedies under or by reason of this Agreement.
12.8 No Power of Representation. Michigan Transco shall have no power
to represent, bind, or otherwise obligate Consumers.
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12.9 Confidentiality. 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.
12.9.1 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.
12.9.2 Recipient may disclose the Confidential Information to its
affiliates and its affiliates' respective directors, officers, employees,
consultants, advisors, and agents who 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.
12.9.3 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.
12.10 Survival. The indemnification obligations of each Party under
Article 7 shall become effective upon the occurrence of the Closing Date, and,
for acts and occurrences prior to expiration, termination, completion,
suspension, or cancellation of this Agreement shall continue in full force and
effect regardless of whether this Agreement expires, terminates, or is
suspended, completed, or canceled. The provisions of Articles 8, 9, and 10 shall
survive termination, expiration, cancellation, suspension, or completion of this
Agreement.
12.11 Notices. All notices, requests, claims, demands, and other
communications hereunder shall be in writing and shall be deemed effective upon
receipt when delivered either
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by hand delivery, cable, telecopy (confirmed in writing), or telex, or by mail
(registered or certified, postage prepaid) to the respective Parties as follows:
If to Michigan Transco to:
______________________________
______________________________
______________________________
Attention: ___________________
Fax: _________________________
If to Consumers to:
______________________________
______________________________
______________________________
Attention: ___________________
Fax: _________________________
12.12 Entire Agreement. This Agreement constitutes the entire
understanding between the Parties, and supersedes any and all previous
understandings, oral or written, which pertain to the subject matter contained
herein.
12.13 Counterparts. This Agreement may be executed in counterparts, all
of which will be considered one and the same Agreement and each of which will be
deemed an original.
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed as of the date and year first above written.
MICHIGAN ELECTRIC TRANSMISSION COMPANY
By: ________________________
Name: ________________________
Title: ________________________
CONSUMERS ENERGY COMPANY
By: _________________________
Name: _________________________
Title: _________________________
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APPENDIX 1
OPERATING PROTOCOLS
<PAGE> 95
OPERATING PROTOCOLS
Pursuant to and in accordance with the Operating Agreement between
Michigan Electric Transmission Company ("MICHIGAN TRANSCO") and Consumers Energy
Company ("CONSUMERS") entered into concurrently herewith, the Parties agree to
the following Operating Protocols. The Effective Date of this agreement is the
same as that described in the Operating Agreement ("Agreement"), and all
capitalized terms used herein shall have the same meaning ascribed thereto in
the Operating Agreement, unless otherwise indicated.
ARTICLE 1
CONTROL OF TRANSMISSION SYSTEM
1.1 Michigan Control Area Responsibilities. Agreements have been
reached with entities responsible for Control Area Operations as defined by the
NERC to calculate and operate to a single area control error for Michigan
Transco's Transmission System.
1.2 Michigan Transco Operational Responsibilities. Michigan Transco
shall have operational control over the Transmission Assets that comprise the
Transmission System. Michigan Transco shall function as Control Area Operator.
Upon consummation of the Transfer Transaction, Consumers will transfer
operational control to Michigan Transco in a manner consistent with Good Utility
Practice. Michigan Transco will cooperate with Consumers to facilitate the
transfer of operational control.
1.2.1 Michigan Transco shall periodically review whether the
Transmission Assets under its operational control constitute all of the
facilities necessary to provide reliable, non-discriminatory transmission
service as contemplated under the Operating Agreement and the Michigan Transco
Transmission Tariffs.
1.2.2 Michigan Transco shall, in consultation with Consumers, develop,
and revise from time-to-time as appropriate, operating procedures for its
exercise of operational control over the Transmission System (hereinafter
"Operating Procedures"). The Operating Procedures shall be provided to Consumers
and, except to the extent determined necessary for emergency or security
reasons, such procedures shall be made available to the public. Michigan Transco
shall comply with its Operating Procedures in exercising its operational control
over the facilities described above.
1.2.3 Michigan Transco shall operate the Transmission System in such a
way as to preserve the rights of Consumers' existing open access Transmission
Customers and transmission customers taking service under Grandfathered
Agreements.
1.2.4 Michigan Transco shall be responsible for coordinating the
operation of the Transmission System with Consumers, NERC, ECAR, and any other
applicable regional reliability councils. Michigan Transco may join such
regional reliability councils as appropriate.
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1.2.5 Michigan Transco shall comply with any transmission
operating obligations imposed by federal or state law or Regulatory Authorities
which can no longer be performed solely by Consumers following transfer of
ownership and operational control of the Transmission System to Michigan
Transco, until such obligations are revised or changed.
1.3 Operational Responsibilities of Consumers. Consumers shall own and
maintain its Distribution Facilities in accordance with Good Utility Practice,
and shall comply with the reasonable requests of Michigan Transco with respect
to such operation and maintenance issued in compliance with these Operating
Procedures.
1.4 Retained Rights by Consumers. Consumers shall retain all rights of
ownership in the Distribution Facilities. Nothing in this agreement shall be
deemed to restrict or prohibit access to the Transmission System by Consumers,
or its duly authorized representative(s), in furtherance of its obligations
under the Operating Agreement so long as such access does not affect the
provision of safe, reliable, and efficient transmission service under the
Michigan Transco Transmission Tariffs. Consumers shall be notified by Michigan
Transco immediately of any event which results or which may result in unplanned
outages of a transmission line, transformer or other transmission facilities.
Michigan Transco shall credit to Consumers those charges billed and collected
for the use of the Distribution Facilities by wholesale customers taking
transmission service under Michigan Transco Transmission Tariffs.
ARTICLE 2
DETERMINATION OF AVAILABLE TRANSMISSION CAPACITY
AND TRANSMISSION SCHEDULING
2.1 Determination of Available Transmission Capacity. Michigan Transco
shall determine the ATC consistent with the terms of the Michigan Transco
Transmission Tariffs.
2.1.1 Michigan Transco shall review all data received from other
control areas, independent transmission system operators, regional reliability
councils, or other entities that impact ATC calculations.
2.1.2 Michigan Transco shall share data with other control areas,
independent transmission system operators, regional reliability councils, or
other entities with whom data must be exchanged, as requested, in order to
determine ATC.
2.1.3 Michigan Transco shall determine the capacity, rating,
control settings, and contingency analysis parameters for all Transmission
Assets used to calculate ATC.
2.2 Transmission Service Requests. Michigan Transco shall receive and
process all transmission service requests in accordance with the Michigan
Transco Transmission Tariffs.
2.2.1 Michigan Transco shall be responsible for conducting all
System Impact Studies associated with a request for transmission service. To the
extent that a request for transmission service under the Michigan Transco
Transmission Tariffs will or may have an
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adverse affect on Consumers' ability to safely and reliably serve its
transmission customers pursuant to the terms of the Grandfathered Agreements,
Michigan Transco shall coordinate its System Impact Study analysis with
Consumers as follows:
2.2.1.1 Michigan Transco shall provide sufficient information to
representatives of Consumers to allow them to model load consequences of the
requested service on Distribution Facilities.
2.2.1.2 Michigan Transco shall coordinate with Consumers
representatives when processing requests for open access, non-discriminatory
transmission service over Distribution Facilities pursuant the terms of the
Michigan Transco Transmission Tariffs.
2.2.1.3 Michigan Transco shall consult with Consumers with respect
to the construction of new Transmission Assets, or the expansion of existing
Transmission Assets, which affects or may affect the Distribution Facilities.
2.2.1.4 Upon completion of any required System Impact Studies,
Michigan Transco shall be responsible for making the final determination as to
the amount of firm and non-firm transmission capacity that is available under
the Michigan Transco Transmission Tariffs and for resolving requests for
transmission service in accordance with the terms of the Michigan Transco
Transmission Tariffs.
2.2.2 To the extent that there is not adequate transmission capability
to satisfy a transmission request, Michigan Transco shall relieve or facilitate
the relief of the transmission constraint consistent with Good Utility Practice
and the terms of the Michigan Transco Transmission Tariffs.
2.2.3 Michigan Transco shall document all requests for transmission
under the Michigan Transco Transmission Tariffs, the disposition of such
requests, and any supporting data required to support the decision with respect
to such requests.
2.3 Implementation of Transmission Service Transactions. Michigan
Transco shall process and implement all requests for transmission service made
under the Michigan Transco Transmission Tariffs, as follows:
2.3.1 Michigan Transco shall schedule and curtail transmission service
in accordance with the terms of Michigan Transco Transmission Tariffs.
2.3.2 Michigan Transco shall, in consultation with Consumers, develop,
and from time-to-time amend, as necessary, scheduling protocols ("Scheduling
Procedures"). The Scheduling Procedures shall not conflict with the terms of the
Michigan Transco Transmission Tariffs or requirements of any applicable
Regulatory Authorities. All scheduling shall be performed in accordance with the
Scheduling Procedures.
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2.3.3 Michigan Transco shall operate its Control Area to maintain
load and supply balance. In so doing, Michigan Transco shall comply with the
scheduling instructions issued pursuant to the Scheduling Procedures.
2.3.4 In performing its scheduling functions, Michigan Transco
shall ensure that the Transmission System is operated in compliance with
applicable NERC, ECAR or other regional reliability council or successor
organizations' reliability requirements, and all other applicable operating
reliability criteria.
2.3.5 Michigan Transco shall perform all inadvertent flow
accounting for its control area and shall coordinate the performance of such
accounting with other control areas.
ARTICLE 3
MICHIGAN TRANSCO'S OBLIGATIONS PURSUANT TO THE MICHIGAN
TRANSCO TRANSMISSION TARIFFS
3.1 Michigan Transco shall be solely responsible for administering the
Michigan Transco Transmission Tariffs.
3.2 Michigan Transco shall negotiate as appropriate to develop
reciprocal service, equitable tariff application, compensation principles, and
any related arrangements.
3.3 Michigan Transco shall credit to Consumers those charges billed and
collected for the use of the Distribution Facilities by wholesale customers
taking transmission service under Michigan Transco Transmission Tariffs.
ARTICLE 4
SECURITY OF THE TRANSMISSION SYSTEM
4.1 Obligations of Michigan Transco to Maintain the Security of the
Transmission System. Michigan Transco shall be responsible for the security and
reliability of the Transmission System. In addition, Michigan Transco shall be
responsible for operating its control area in a secure and reliable manner. As
Control Area Operator, Michigan Transco, shall exercise security monitoring and
emergency response functions, as described in more detail below.
4.2 Security Monitoring.
4.2.1 Michigan Transco shall perform load-flow and stability
studies of the Transmission System to identify and address security problems.
4.2.2 Michigan Transco shall monitor its control area for system
security. It shall be responsible for identifying and addressing local security
problems.
4.2.3 Michigan Transco shall exchange necessary security
information with other control areas, independent transmission system operators,
ECAR, and any other
21
<PAGE> 99
applicable regional reliability councils consistent with NERC (or successor
organizations) and regional requirements, and the OASIS Standards of Conduct.
4.2.4 Consumers shall continuously provide Michigan Transco with
all data required to assess the security of the Transmission System consistent
with NERC (or successor organizations), ECAR, and any other applicable regional
requirements, and OASIS Standards of Conduct.
4.3 Emergency Response. Michigan Transco shall work with Consumers,
other security coordinators, NERC, ECAR, and other applicable regional councils
to develop regional security plans and emergency operating procedures.
4.3.1 Michigan Transco shall, in coordination with Consumers,
other security coordinators, NERC, ECAR, or other applicable regional
reliability councils, develop, and from time-to-time update, procedures for
responding to emergencies (hereinafter the "Emergency Procedures"). Such
Emergency Procedures shall include procedures for responding to specified
critical contingencies.
4.3.2 Michigan Transco shall continuously analyze issues that may
require the initiation of emergency response actions. Such analysis may be made
at Michigan Transco's initiative, or at the request of Consumers and/or other
Transmission Customers, NERC, regional reliability councils, security
coordinators, or other system operators. The Emergency Procedures shall be
amended to include any changes or additions resulting from such analysis.
4.3.3 Michigan Transco shall direct the response to any emergency
in the Transmission System pursuant to the Emergency Procedures. Consumers and
other Transmission Customers shall carry out the required emergency procedures
as directed by Michigan Transco. Michigan Transco will alert Consumers and other
Transmission Customers to the possibility of load shedding and will provide as
much advance notice as possible of the need to shed firm load.
ARTICLE 5
ANCILLARY SERVICES
Pursuant to Section 3.1.4 of the Operating Agreement, Michigan Transco
shall be obligated to offer ancillary services, as required by the applicable
rules and regulations of the FERC, to all Transmission Customers taking service
under the Michigan Transco Transmission Tariffs. Michigan Transco shall procure
such ancillary services on a non-preferential and competitive basis from
Consumers and from any third-party suppliers of such services at FERC-approved
rates. Upon request, Consumers shall provide ancillary services to Michigan
Transco. So long as Michigan Transco and Consumers are corporate affiliates, the
charges for such ancillary services provided by Consumers shall be in accordance
with FERC-approved rates.
22
<PAGE> 100
ARTICLE 6
TRANSMISSION AND GENERATION MAINTENANCE
6.1 Planned Transmission Maintenance. Michigan Transco is responsible
for reviewing, establishing, and updating schedules for all planned maintenance
of the Transmission System. Michigan Transco shall establish its planned
transmission maintenance schedules for a minimum of a rolling one (1) year
period, which shall be updated monthly.
6.1.1 Michigan Transco shall determine if, and to the extent
which, such planned transmission maintenance affects transmission service, ATC,
ancillary services, the security of the Transmission System, Consumers
distribution service and any other relevant effects. This determination shall
include appropriate analytical detail. As part of its review process, Michigan
Transco shall identify planned transmission maintenance schedules that limit
ATC, and opportunities and associated costs for rescheduling planned maintenance
to enhance ATC. If Michigan Transco reschedules maintenance at Consumers
request, Michigan Transco shall be compensated for additional costs associated
with rescheduling such planned maintenance pursuant to procedures jointly agreed
to by Consumers and Michigan Transco.
6.1.2 Michigan Transco will coordinate planned outages of the
Transmission System with Consumers. Consumers shall inform Michigan Transco of
all customer-owned equipment outages that could impact loading on the
Transmission System.
6.1.3 In developing its transmission maintenance schedule,
Michigan Transco will comply with all applicable reliability standards,
including, but not limited to, the current maintenance practices of Consumers,
will meet Consumers' requirements for access to the Transmission System, and
will endeavor to minimize transmission congestion.
6.2 Unplanned and Emergency Transmission Maintenance. Michigan Transco
shall coordinate unplanned transmission maintenance with Consumers to assure
that reliability of the Transmission System and Consumers distribution system is
maintained. For emergency conditions which are likely to result in significant
disruption of service or damage to Generation Resources, the Transmission System
or Distribution Facilities, or are likely to endanger life, property, or the
environment, Consumers (to the extent responsible for performing said
maintenance) shall notify Michigan Transco of such emergency maintenance. Prior
approval by Michigan Transco for such emergency transmission maintenance is not
required.
6.3 Generation Maintenance. Consumers shall coordinate the maintenance
of Generation Resources with Michigan Transco to the extent such generation
maintenance affects the capability or reliability of the Transmission System as
follows:
6.3.1 Consumers shall submit its planned generating unit
maintenance schedules to Michigan Transco annually for a two (2) year period,
updated to include changes.
23
<PAGE> 101
6.3.2 Michigan Transco shall analyze planned generating unit
maintenance schedules to determine the effect on Consumers (and other
Transmission Customers), ATC, ancillary services, the security of the
Transmission System, identification of must-run units, and any other relevant
effects. Michigan Transco shall inform Consumers if its generation maintenance
schedule is expected to have an impact on the security of the Transmission
System.
6.3.3 As part of its review process, Michigan Transco shall
identify Generation Resource maintenance schedules that limit ATC and shall
recommend opportunities for rescheduling planned maintenance to enhance ATC. If
Consumers reschedules maintenance at Michigan Transco's request, Consumers shall
be compensated for additional costs associated with rescheduling such planned
maintenance pursuant to procedures adopted by Michigan Transco, and applied on a
non-discriminatory basis to all similarly situated generation owners located
within Michigan Transco's Control Area.
6.3.4 With respect to all Generating Resources connected to the
Transmission System, Michigan Transco will enter into interconnection agreements
and, if necessary, must-run agreements which define coordinated operations and
such other operating requirements as are necessary to ensure the safe and
reliable operation of such Generation Resources with the Transmission System.
6.4 Unplanned Generation Maintenance. Consumers shall notify Michigan
Transco promptly in the event of an unplanned outage of the Generation
Resources, including partial forced outages. Consumers will coordinate unplanned
generation maintenance with Michigan Transco to ensure that the reliability of
the Transmission System is maintained. For emergency conditions which are likely
to result in significant disruption of service or damage to Generation
Resources, the Transmission System, or Distribution Facilities, or are likely to
endanger life, property, or the environment, Consumers shall notify Michigan
Transco of the emergency generation maintenance. Prior approval for emergency
generation maintenance is not required.
ACCEPTED AND AGREED THIS ______ day of October, 2000.
Michigan Electric Transmission Company Consumers Energy Company
_________________________________ ______________________________
By: By:
Its: Its:
24
<PAGE> 102
SERVICE AGREEMENT FOR
NETWORK INTEGRATION TRANSMISSION SERVICE
Dated:
Parties: Michigan Electric Transmission Company
212 West Michigan Avenue
Jackson, Michigan 49201
[Michigan Transco]
Consumers Energy Company
1945 West Parnall Road
Jackson, Michigan 49201-8658
[The Purchaser]
1. General Agreement
Michigan Transco agrees to provide Network Integration Transmission Service
(NITS) to the Purchaser to facilitate the transmission of electric capacity
and energy. The Purchaser agrees to purchase said NITS subject to the
terms and conditions of service, but not the rates, as provided for in the
Joint Open Access Transmission Tariff filed on December 31, 1996, (the
"Tariff"), or any effective superseding transmission tariff, including any
Standard Rules and Regulations applicable thereto, on file with the Federal
Energy Regulatory Commission. Such transmission service shall also be
subject to the terms and conditions of this Service Agreement.
Notwithstanding anything to the contrary in the Tariff, any superseding
tariff, or in this service agreement, it is expressly understood by the
parties hereto that this is a fixed rate contract and that the rate and
payment procedure included in this agreement may not be increased through
filings by Michigan Transco or any other party with the Federal Energy
Regulatory Commission or its successor governmental entity. To that end
Michigan Transco, its successors and assigns expressly waive all rights to
seek, pursuant to the Federal Power Act, rate increases or payment
procedure changes for this agreement. The fixed rates described in
paragraphs 3 and 9 hereto may be reduced in accordance with the terms of
those provisions of this service agreement. If established such reduced
rates will become the fixed rates of this agreement not subject to change
pursuant to Federal Power Act filings.
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<PAGE> 103
2. Network Integrated Transmission Service (NITS)
Michigan Transco shall provide NITS as described in Part III of the Tariff.
The Network Resources and Network Load designated by the Purchaser are
specified in Exhibit A attached hereto.
3. Fixed Rate Payment For Network Integration Transmission Service
Purchaser will pay to Michigan Transco a rate of $.98 per kW per month of
delivery. The billing determinant will be Purchaser's monthly network
load, which is Purchaser's hourly load coincident with Michigan Transco's
monthly transmission system peak.
If the Federal Energy Regulatory Commission ("Commission") issues a final
order in Consumers Energy Company, Docket Nos. OA96-77-000, ER97-1502-000
and ER98-1247-000 establishing a revenue requirement for Network
Integration Transmission Service at or above 120 kV which, when divided by
the Commission approved transmission load (MW), produces a
monthly rate lower than specified above, this Service Agreement shall be
amended to state such lower rate as the applicable fixed rate for such
service hereunder.
4. Billing
Billing procedures shall be accordance with Section 7 of the Tariff.
5. Points of Receipt and Delivery
Michigan Transco agrees to accept delivery of capacity and energy not
originating on its system from Purchaser at the Point(s) of Receipt listed
in Exhibit B attached hereto.
Michigan Transco agrees to deliver capacity and energy to Purchaser at the
Point(s) of Delivery listed in Exhibit B attached hereto.
6. Term
The term of this Service Agreement shall be from January 1, through
December 31, .
7. Metering
Electric capacity and energy received and delivered by Michigan Transco
under this Service Agreement shall be measured by suitable billing
metering equipment operated by or on behalf of Michigan Transco and
installed at the connection points with the native load customers of the
Purchaser.
2
<PAGE> 104
8. Real Power Losses
During the term of this Service Agreement, the Purchaser agrees
that a percentage reduction in the capacity and energy delivered to the
Purchaser shall be made by applying the applicable Real Power Loss
factor as set forth in Section 28.5 of the Tariff, or any effective
superseding factor.
9. Ancillary Services
During the term of this Service Agreement, the Purchaser has elected to
have Michigan Transco supply the following Ancillary Services. The
corresponding charge for each Service shall be as established
hereinbelow:
Schedule 1 $.056 per kW mo
Schedule 2 $.21 per kW mo
Schedule 3 $.17 per kW mo
Schedule 4 For energy imbalances less than or equal to
the elected deviation band:
During On-Peak Hours: The greater of actual
replacement cost plus $0.01 per kWh, or
$0.10 per kWh.
During Off-Peak Hours: The greater of actual
replacement cost plus $0.01 per kWh, or
$0.05 per kWh,
For energy imbalances greater than the
elected deviation band:
A demand charge of $50 per kW, applied to
the highest unauthorized use demand incurred
during the month, plus an energy charge of
the greater of actual replacement cost plus
$O.01 per kWh, or $0.05 per kWh.
Schedule 5 $.17 per kW mo
Schedule 6 $.35 per kW mo
If the Federal Energy Regulatory Commission ("Commission") issues a
final order in Consumers Energy Company, Docket Nos. OA 96-77-000, ER
97-1502-000 and ER 98-1247-000 establishing lower Ancillary Service
rates than those specified above, this Service Agreement shall be
amended to state new fixed rates for Ancillary Services which conform
to such Commission Order.
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<PAGE> 105
10. Data to be Supplied by Purchaser
The Purchaser shall provide Michigan Transco with data and operating
records which are necssary to permit Michigan Transco to implement the
provisions of this Service Agreement and the Tariff.
11. Incorporation
The Tariff is incorporated herein and made a part hereof. Where
differences occur between the Tariff and this agreement, the terms of
this agreement shall control.
IN WITNESS WHEREOF, this Service Agreement has been executed on behalf
of the Parties by their duly authorized officers.
Michigan Electric Transmission Company
By
-------------------------------
Name:
Title:
Date:
CONSUMERS ENERGY COMPANY
By
-------------------------------
Name:
Title:
Date:
4
<PAGE> 106
Exhibit A
NETWORK RESOURCES AND NETWORK LOAD
Under Service Agreement
Dated as of January 1,
--------
Between Michigan Transco
and
Purchaser
NETWORK RESOURCES
Consumers Energy Owned Capability
<TABLE>
<S> <C>
J H Campbell Plant J R Whiting Plant Combustion Turbine
B C Cobb Plant Gaylord Combustion Turbines
D E Karn Plant Morrow Combustion Turbines
J C Weadock Plant Straits Combustion Turbine
J R Whiting Plant Thetford Combustion Turbines
Palisades Plant Ludington Pumped Storage Plant
J H Campbell Combustion Turbine Hydroelectric Plants
J C Weadock Combustion Turbine
</TABLE>
Purchased Non-Utility Generation Capability
<TABLE>
<S> <C>
Ada Cogeneration Limited Partnership - Ada Cogen Plant (Natural Gas)
Adrian Energy Associates, LLC - Laidlaw Landfill (Landfill Gas)
Alternative Power Limited Partnership - C&C Generating Plant (Landfill Gas)
Bio Energy Partners - Granger Venice Park (Landfill Gas)
Black River Limited Partnership - Alvemo Hydro
Cadillac Renewable Energy, LLC - Cadillac Renewable Energy Plant (Wood)
Cameron Gas and Electric Company - Mix Hydro
City of Beaverton - Beaverton Hydro
Commonwealth Power Company - Hubbardston Hydro
Commonwealth Power Company - Irving Hydro
Commonwealth Power Company - LaBarge Hydro
Commonwealth Power Company - Middleville Hydro
Genesee Power Station Limited Partnership - Genesee Power Station (Waste to Energy)
Granger Electric Company - Landfill No. 1 (Landfill Gas)
Granger Electric Company - Landfill No. 2 (Landfill Gas)
Granger Electric Company - Ottawa Generating Station (Landfill Gas)
Granger Electric Company - Grand Blanc Generating Station (Landfill Gas)
Granger Electric Company - Seymour Generating Station (Landfill Gas)
Granger Electric Company - Brent Run Generating Station (Landfill Gas)
Grayling Generating Station Limited Partnership - Grayling Power Plant (Wood)
Grenfell Hydro, Inc. - Belding Hydro
</TABLE>
<PAGE> 107
EXHIBIT A
Hillman Power Company - Hillman Generating Plant (Wood)
Jackson County - Southern Michigan Prison (Mass Burn Incinerator)
Kent County - Mass Burn Incinerator (Waste to Energy)
Michiana Hydroelectric Company - Bellevue Mill Plant (Hydro)
Michigan Power Limited Partnership - Michigan Power Plant (Natural Gas)
Michigan State University - University Generating Plant (Coal)
Midland Cogeneration Venture Limited Partnership - MCV Facility (Gas)
North American Natural Resources - Peoples Generating Station (Landfill
Gas)
S D Warren - (Coal and Wood)
STS Hydropower Ltd - Cascade Hydro
STS Hydropower Ltd - Fallasburg Hydro
STS Hydropower Ltd - Morrow Hydro
TES Filer City Station Limited Partnership - Filer City Station (Coal)
The Great Lakes Tissue Company - Cheboygan Hydro
Thornapple Association, Inc - Ada Hydro
Viking Energy of McBain A Limited Partnershlp - McBain Michigan Plant
(Wood)
Viking Energy of Lincoln A Limited Partnership - Lincoln Michigan Plant
(Wood)
Whites Bridge Hydro Company - White's Bridge Hydro
Wolverine Power Corporation - Edenville Hydro
Wolverine Power Corporation - Sanford Hydro
Wolverine Power Corporation - Secord Hydro
Wolverine Power Corporation - Smallwood Hydro
NETWORK LOADS
The Network Loads of Purchaser are defined as the load of the native
load customers of Consumers Energy Company.
<PAGE> 108
EXHIBIT B
POINTS OF RECEIPT AND DELIVERY
Under Service Agreement
Dated as of January 1,_____
Between Michigan Transco
and
The Purchaser
The Points of Receipt are defined as the connection points between the
transmission system of Michigan Transco and the Network Resources of Purchaser
listed in Exhibit A.
The Points of Delivery are defined as the connection points(s) between the
transmission system of Michigan Transco and the local distribution facilities
of Purchaser.
<PAGE> 109
EASEMENT AGREEMENT
BETWEEN
CONSUMERS ENERGY COMPANY
AND
MICHIGAN ELECTRIC TRANSMISSION COMPANY
(PRO FORMA)
Dated:
<PAGE> 110
TABLE OF CONTENTS
Page
----
INDEX OF DEFINED TERMS................................................. iii
ARTICLE 1 ............................................................ 1
ARTICLE 2 ............................................................ 5
ARTICLE 3 ............................................................ 5
ARTICLE 4 ............................................................ 6
ARTICLE 5 ............................................................ 6
ARTICLE 6 ............................................................ 8
ARTICLE 7 ............................................................ 10
ARTICLE 8 ............................................................ 12
ARTICLE 9 ............................................................ 16
ARTICLE 10 ........................................................... 17
ARTICLE 11 ........................................................... 19
ARTICLE 12 ........................................................... 21
ARTICLE 13 ........................................................... 22
ARTICLE 14 ........................................................... 22
ARTICLE 15 ........................................................... 24
ARTICLE 16 ........................................................... 25
ARTICLE 17 ........................................................... 25
ARTICLE 18 ........................................................... 26
ARTICLE 19 ........................................................... 27
ARTICLE 20 ........................................................... 28
i
<PAGE> 111
TABLE OF CONTENTS (Cont'd)
Page
----
ARTICLE 21 ........................................................... 29
ARTICLE 22 ........................................................... 31
ARTICLE 23 ........................................................... 32
ARTICLE 24 ........................................................... 34
EXHIBIT A
EXHIBIT B
EXHIBIT C
ii
<PAGE> 112
INDEX OF DEFINED TERMS
Defined Terms Where Article or Section Defined
------------- --------------------------------
Addition/Alteration Section 5.1
Agreement Opening Paragraph
Applicable Laws Article 4
Authorized User Section 6.1
Base Rent Section 3.1
Commencement Date Section 2.2
Compatible Uses Section 6.1
Conflicting Uses Section 6.2
Consumers Opening Paragraph
Consumers' Fair Market Value Estimate Exhibit B
Distribution Section 1.1
Distribution Facilities Section 6.1
Easement Section 1.1
Easement Mortgage Section 23.1
Easement Mortgagee Section 23.1
Extension Term Section 2.3
Event of Default Section 19.1
Extension Period Section 2.2
Impositions Section 11.1
Independent Third Party Users Section 8.5
Initial Term Section 2.2
Initiating User Section 9.1
METC Opening Paragraph
METC's Appraisal Exhibit B
NESC Article 4
Permitted Uses Section 1.1
Premises Section 1.1
Sale Offer Section 10.1
Term Section 2.2
Third Party Appraisal Exhibit B
Transmission Section 1.1
Transmission Facilities Recitals
Trustee Article 9
iii
<PAGE> 113
EASEMENT AGREEMENT
THIS EASEMENT AGREEMENT ("Agreement") is made as of the _____ day of
_______________, 2000 by and between CONSUMERS ENERGY COMPANY, a Michigan
corporation, whose address is 212 West Michigan Avenue, Jackson, Michigan 49201
("Consumers"), and MICHIGAN ELECTRIC TRANSMISSION COMPANY, a Michigan
corporation, whose address is 212 West Michigan Avenue, Jackson, Michigan 49201
("METC").
RECITALS
A. On the date of this Agreement, Consumers has sold and conveyed to METC
all of the electric energy transmission system of Consumers (excluding
certain radial lines); which conveyed facilities include towers, pole
structures, poles, crossarms, wires, cables, conduits, guys, anchors,
transformers, insulators, substations, switching stations and other
fixtures and equipment, all as more particularly defined and described
in a certain Bill of Sale executed and delivered by Consumers to METC
on the date hereof. Said conveyed facilities, as located on the
"Premises" hereinafter defined, as same may be hereafter altered,
improved, relocated or added to pursuant to the terms and conditions of
this Agreement (i.e., "Additions/Alterations" as hereinafter defined),
are hereinafter referred to as the "Transmission Facilities." Said term
"Transmission Facilities", as used in this Agreement, may mean all of
said facilities collectively, it may mean specific or individual
portions of said facilities, or it may mean both of the foregoing
simultaneously, as may apply in the context where used.
B. Pursuant to this Agreement, Consumers grants an "Easement" (as more
fully defined hereinbelow) to METC for the Transmission Facilities in
respect to the Premises (as hereinafter defined) on, over, under,
across and along which the Transmission Facilities are located on the
date hereof, on the terms and conditions set forth below.
C. Capitalized terms listed in the "Index of Defined Terms" that is set
forth at the end of the Table of Contents to this Agreement shall, as
used in this Agreement, have the meanings assigned to them in the
Article or Section indicated in said Index of Defined Terms (with such
definitions applying to both singular and plural usages where
applicable), unless the context indicates otherwise.
NOW, THEREFORE, in consideration of the mutual covenants and promises
of the parties set forth herein, Consumers and METC agree as follows:
ARTICLE 1
Grant of Easement
Section 1.1. Premises. Consumers hereby grants to METC, for the Term
set forth in Article 2 below, and subject to METC's payment of the rents
provided for herein and to all of the other terms and conditions set forth in
this Agreement, an easement to use, for the Permitted Uses (as defined below in
this Section 1.1) and not for any other uses whatsoever, the following
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<PAGE> 114
lands:
(a) the lands identified as "fee lands" in Part "I" of Exhibit A, attached
hereto;
(b) the lands covered by the easements held by Consumers that are
identified in Part "II" of said Exhibit A; and
(c) the lands covered by the leases, permits and licenses held by Consumers
that are identified in Part "III" of said Exhibit A.
The lands covered by the foregoing clauses (a), (b) and (c) are
referred to herein as the "Premises." Said term "Premises", as used in this
Agreement, may mean all of said lands collectively, it may mean specific or
individual portions of said lands, or it may mean both of the foregoing
simultaneously, as may apply in the context where used.
METC may use the Premises for operation of the Transmission Facilities,
solely for the purpose of Transmission (and in no event Distribution) of
electricity, and, incidental thereto, for the purposes of inspecting,
maintaining, repairing, replacing and removing the Transmission Facilities and
trimming or removing such trees and brush on the Premises as may interfere with
or be hazardous to the operation of the Transmission Facilities. Subject to
Article 5 hereof, METC may also alter, improve, relocate or construct additional
Transmission Facilities on the Premises. All of such uses as METC is so
authorized to make of the Premises, as defined in the preceding two sentences
and subject to any restrictions or limitations pursuant to any other terms or
conditions of this Agreement, are herein referred to as the "Permitted Uses."
METC shall not have the right to use the Premises or the Transmission Facilities
and METC may not permit others to use the Premises or the Transmission
Facilities, or any part of either, for any use or purpose whatsoever other than
Permitted Uses; all such rights for other uses and purposes being reserved to
Consumers as provided in Article 6.
As used herein, "Transmission" of electricity means transmission of
electric energy through the Transmission Facilities at voltages of 120 kilovolts
or more, intended for delivery of energy across a network, and in no event
(regardless of voltage) includes any of the following: (i) delivery of electric
energy to end-use retail customers; (ii) transmission of electric energy through
a line(s) running to a substation out of which all electric energy is
transmitted at less than 120 kilovolts; and (iii) transmission of electric
energy between any electric generating plant or facility and the first
substation located down-line of such electric generating plant or facility. As
used herein, "Distribution" of Electricity means all transmission of electric
energy, at whatever voltage, that is not "Transmission" as defined in the
preceding sentence.
All of the rights, interests and privileges in, to and regarding the
Premises that are granted to METC in this Section 1.1 or anywhere else in this
Agreement, as same are governed, limited or circumscribed by all terms and
conditions set forth in this Agreement, are referred to herein as the
"Easement."
Section 1.2 Title Limitations. The Easement is granted expressly
subject to the following limitations:
2
<PAGE> 115
(a) It is expressly acknowledged and agreed that the Easement is granted,
with respect to any particular Premises, only to the extent that same
is within the scope of Consumers' now-existing right, title and
interest in and to such particular Premises, and to no further or other
extent. To whatever extent the scope of the Easement granted to METC in
this Agreement, as set forth in Section 1.1 above or anywhere else in
this Agreement, would with respect to any particular Premises exceed
Consumers' now-existing right, title or interest, the Easement shall be
deemed granted hereunder only to the extent of Consumers' now-existing
right, title and interest.
(b) With respect to any particular Premises in which Consumers'
now-existing right, title and interest is less than a fee simple title,
i.e., where Consumers' now-existing right, title or interest is an
easement, lease, permit or license, then the grant of the Easement
herein made to METC shall be deemed an assignment by Consumers to METC
of such easement, lease, permit or license that is held by Consumers as
of the date hereof; but subject to the following:
(i) To whatever extent there are limitations or restrictions
(express, implied by law, or otherwise) upon Consumers' right
to make an assignment of any such easement, lease, permit or
license, the assignment thereof to METC shall be deemed made
only to the extent that Consumers has the right to make such
assignment. Further, even to the extent that Consumers has the
right to make an assignment, such assignment is expressly made
subject to clause (a), above, of this Subsection 1.2.
(ii) If and to whatever extent the scope of Consumers' rights,
interests and privileges under any such easement, lease,
permit or license may be broader than the scope of the rights,
interests and privileges granted to METC in this Agreement, as
expressly described in Section 1.1 above or elsewhere in this
Agreement, then the assignment of such easement, lease, permit
or license to METC shall be deemed made only to the extent of
the rights, interests and privileges granted to METC as
expressly described in Section 1.1 above or as expressly set
forth elsewhere in this Agreement.
(iii) Without limiting the generality of the preceding clause
(b)(ii), such assignment is expressly limited to the duration
of the Term set forth herein (and upon expiration or any other
termination hereof all of the assigned rights, interests and
privileges shall revert to Consumers), subject to the payment
of the rentals set forth herein, and otherwise subject to all
of the terms and conditions of this Agreement.
(c) Wherever the documents by which Consumers acquired its right, title or
interest in any particular premises, or any other documents in the
chain of title, or any agreement made in connection with the foregoing,
impose (directly or indirectly in any manner) upon Consumers any
particular restrictions, limitations, duties, obligations, agreements,
covenants or conditions in regard to or in connection with the use or
occupation of, or activities or operations upon, such Premises, or
otherwise in regard to or in connection
3
<PAGE> 116
with the existence or continuance of Consumers' right, title or
interest in such Premises, METC shall, in regard to the Transmission
Facilities and otherwise in connection
with its use or occupation of, and activities and operations upon, such
Premises comply with and fulfill all such restrictions, limitations,
duties, obligations, agreements, covenants and conditions. Without
limiting the generality of METC's obligations under Article 15 hereof,
METC shall indemnify and save Consumers harmless from all losses,
liabilities, damages, costs and expenses (including without limitation
reasonable attorneys' and consultants' fees) arising from any failure
or alleged failure of METC to so comply with and fulfill any such
restriction, limitation, duty, obligation, agreement, covenant or
condition.
(d) Without limiting the generality of the preceding clause (c), it is
agreed that wherever the documents by which Consumers acquired its
right, title or interest in any particular premises, or any other
documents in the chain of title, or any other agreement, require
Consumers to pay rentals, insurance premiums, inspection fees, or other
amounts, in regard to its right, title or interest in any Premises, or
the use or occupancy thereof or activities or operations thereon, METC
shall either pay all of same, in full and in an timely manner when due,
directly to the party entitled thereto, or shall reimburse Consumers
therefor within thirty (30) days of billing by Consumers to METC
therefor, whatever is specified by Consumers in regard to any
particular such payments and any particular such Premises. The parties
hereto expressly recognize that because the Premises are primarily used
for Transmission Facilities and, even where there are portions of the
Premises not that may not be specifically used for the Transmission
Facilities those portions are not readily capable of being separately
identified and described, METC shall be responsible hereunder for the
entire amount of all such rentals, insurance premiums, inspection fees
and other amounts that are required to be paid with respect to any
Premises, unless the payment is directly and specifically assessed in
regard to Distribution Facilities or other Compatible Uses of Consumers
or an Authorized User (as such terms are hereinafter defined) or
activities or operations of Consumers or an Authorized User in
connection with Distribution Facilities or other Compatible Uses.
Section 1.3 No Warranties. METC ACCEPTS THE PREMISES "AS-IS," IN THE
CONDITION EXISTING ON THE DATE OF THIS AGREEMENT. METC ACKNOWLEDGES AND AGREES
THAT CONSUMERS HAS MADE NO REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE
PREMISES, INCLUDING WITHOUT LIMITATION ANY REPRESENTATIONS OR WARRANTIES
REGARDING (i) CONSUMERS' RIGHT, TITLE OR INTEREST IN OR TO ANY PART OF THE
PREMISES (AND THE EASEMENT IS ACCORDINGLY GRANTED HEREUNDER WITHOUT ANY
WARRANTIES OR COVENANTS OF TITLE); (ii) ENCROACHMENT OR TRESPASS OF TRANSMISSION
FACILITIES ONTO, OVER OR UNDER THE PROPERTY OF OTHERS, OR ENCROACHMENTS OR
TRESPASS OF FACILITIES, STRUCTURES OR USES OF THIRD PARTIES ONTO, OVER, OR UNDER
THE PREMISES; (iii) THE SPECIFIC LOCATION OF THE TRANSMISSION FACILITIES ON,
OVER, UNDER, ACROSS OR ALONG THE PREMISES OR ANY PART THEREOF; OR (iv) THE
SUITABILITY OF THE PREMISES FOR THE TRANSMISSION FACILITIES OR ANY PART THEREOF,
THE FREEDOM OF THE PREMISES FROM HAZARDS, OR
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OTHERWISE IN ANY MANNER REGARDING THE PHYSICAL CONDITION OR CHARACTERISTICS OF
THE PREMISES OR ANY PART THEREOF.
ARTICLE 2
Term
Section 2.1 Term. The grant of the Easement herein made is limited to
the duration of the Term, as defined below in this Article 2. At the end of the
Term, or upon any earlier termination of this Agreement as herein provided, the
Easement herein granted shall terminate and revert to, and revest, in Consumers,
its successors and assigns.
Section 2.2 Commencement Date: Initial Term. The initial term of the
Easement shall commence on the date of this Agreement (the "Commencement Date")
and expire at midnight on December 31, 20 __ (hereinafter referred to as the
"Initial Term") unless the Easement shall sooner terminate as provided in this
Agreement. The Initial Term and any period(s) for which the same may be extended
pursuant to Section 2.3 hereof is hereinafter referred to as the "Term."
Section 2.3 Extension Term. METC shall have the option to extend the
Term of the Easement for up to ten (10) additional, successive periods of fifty
(50) years each (each an "Extension Term"), the first of which shall commence at
12:01 a.m. on January 1 following the expiration of the Initial Term; provided,
in respect to the exercise of said option for each such 50-year Extension Term,
that (i) METC is, at the end of the Initial Term or of the immediately preceding
Extension Term, as the case may be, not in material default in performing or
observing any of its covenants or obligations under this Agreement, (ii) METC
exercised (or is deemed to have exercised, as set forth in the immediately
following paragraph hereof) its said option to extend the Term for each and
every previous Extension Term, and (iii) this Agreement has not otherwise been
terminated as provided herein.
Provided that each of the conditions set forth in the immediately
preceding paragraph of this Section 2.3 has been fulfilled, METC shall be deemed
to have exercised its option to extend the Term for the next ensuing Extension
Term, and the Term shall automatically be so extended, unless METC gives
Consumers written notice of METC's decision not to extend the Term at least one
(1) year prior to the expiration of the Initial Term or immediately preceding
Extension Term, as the case may be.
All of the terms and conditions set forth herein shall apply during
each and every Extension Term that the Term is so extended.
ARTICLE 3
Rent
Section 3.1 Base Rent. During the Term, METC shall pay Base Rent to
Consumers at the rate of Nine Million Six Hundred Thirty Thousand Four Hundred
Eighty Nine Dollars ($9,630,489.00) per calendar year (the "Base Rent"). Said
Base Rent shall be payable in advance in equal quarterly installments of Two
Million Four Hundred Seven Thousand Six Hundred Twenty Two and 25/100 Dollars
($2,407,622.25) on the first day of each calendar
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quarter during the Term. Said annual Base Rent amount shall be prorated in
respect to any partial calendar year at the beginning or the end of the Term,
and said quarterly installment thereof shall be prorated for any partial
calendar quarter at the beginning or end of the Term. With respect to any
partial calendar quarter at the beginning of the Initial Term, METC shall pay to
Consumers, within five (5) business days after the Commencement Date, such
prorated Base Rent for the period from the Commencement Date to the end of the
calendar quarter in which the Commencement Date occurs.
Section 3.2. Payment. METC covenants and agrees to pay Base Rent to
Consumers as required by this Agreement as and when due and payable. All Base
Rent payable, as well as all other amounts payable by METC to Consumers pursuant
to this Agreement, shall be payable to Consumers by wire transfer of immediately
available funds to Consumers' account at _____________________________ or in
such other manner or at such place as Consumers shall, from time to time,
designate by notice to METC.
Section 3.3. Net Rentals. It is intended that the Base Rent provided
for in this Agreement shall be absolutely net to Consumers throughout the Term
-- net of any taxes, costs, expenses, liabilities, charges or other deductions
whatsoever, with respect to the Premises or with respect to any interest of
Consumers therein; unless and except as may be specifically provided otherwise
herein.
ARTICLE 4
Compliance With NESC and Applicable Laws
METC shall be responsible for ensuring that all use and occupation of
and operations upon the Premises by METC shall be in compliance with the
National Electric Safety Code, as in effect from time to time and including any
successor thereto (the "NESC"), and in accordance with all applicable
constitutional provisions, laws, ordinances, orders, requirements, rules and
regulations made by any governmental entity, body or authority ("Applicable
Laws") and METC's service obligations under applicable tariffs.
ARTICLE 5
Additions/Alterations
Section 5.1 Additions/Alterations -- Notices; Manner of Performance.
METC may alter, improve, relocate or construct additional Transmission
Facilities (any of the foregoing being referred to herein as an
"Addition/Alteration") on Premises only after prior written notice thereof to
Consumers. Prior to undertaking any work on an Addition/Alteration, METC shall
notify Consumers in writing and, with such notice, submit plans, specifications,
surveys and/or other information pertaining to the proposed Addition/Alteration
so as to fully inform Consumers as to the nature and extent thereof. Within
sixty (60) days after such notice to Consumers, Consumers shall notify METC
whether such proposed Addition/Alteration will result in an additional burden on
the Premises and Consumers' estimate of the amount of the fair market value of
the property rights required therefor. Wherever the Addition/Alteration will
result in an additional burden on the Premises, METC shall be obligated to pay
Consumers said fair market value in accordance with Section 5.3 below. It is
understood that a proposed Addition/Alternation may result in an
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additional burden on the premises, for which payment of fair market value by
METC will be required, even if the Addition/Alteration is not one for which
Consumers' approval is required under Section 5.2 below.
METC shall construct and/or perform all Additions/Alterations in
compliance with the NESC and Applicable Laws, and otherwise in a good and
workmanlike manner.
All Additions/Alterations shall be subject to all terms and conditions
of this Agreement the same as any other parts of the Transmission Facilities;
including without limitation the restriction that all Alterations/Additions
shall be limited to Permitted Uses.
Section 5.2 Consumers' Approval Required for Certain
Additions/Alterations. Whenever a proposed Addition/Alteration consists of (i)
any material enlargement of Transmission Facilities on the Premises (which
material enlargements shall include, but are not limited to, replacement of any
towers, pole structures, poles or crossarms with larger such facilities), or
(ii) relocation of any Transmission Facilities on the Premises, or (iii)
construction of additional Transmission Facilities on the Premises, or any
combination of the foregoing, such material enlargement, relocation and/or
construction shall be subject to Consumers' prior written approval. Wherever
such material enlargement or relocation of Transmission Facilities and/or
construction of additional Transmission Facilities is involved, METC shall
expressly request such approval in the written notice that it is to give to
Consumers pursuant to Section 5.1; and Consumers will, in the notice it is to
give METC within sixty (60) days after METC's notice to Consumers as provided in
Section 5.1, indicate whether or not such approval is granted. Consumers will
not unreasonably withhold such approval, so long as Consumers does not, in good
faith, determine that (i) withholding approval is necessary to preserve present
or future Compatible Uses (as hereinafter defined); or (ii) the
Addition/Alternation would violate some other provision of this Agreement or
exceed the scope of the Easement herein granted; or (iii) the
Addition/Alternation would in any way fail to comply with the NESC and/or
Applicable Laws. In regard to the immediately preceding clauses (ii) and (iii),
it is expressly understood that (x) Consumers undertakes no obligation to ensure
that any Addition/Alteration will comply with the this Agreement, or will be
within the scope of the Easement herein granted, or will comply with the NESC
and/or Applicable Laws, (y) assumes no liability for failure to detect that any
Addition/Alteration will comply with this Agreement, or will be within the scope
of the Easement herein granted, or will comply with the NESC and/or Applicable
Laws, and (z) METC shall be and remain fully responsible and liable for ensuring
that all Additions/Alternations, and the use thereof and operations connected
therewith, comply with this Agreement, are within the scope of the Easement
herein granted, and comply with the NESC and Applicable Laws, notwithstanding
any approval of such Additions/Alternations given by Consumers, and Consumers
will not be deemed to have waived METC's obligations to comply with all of the
foregoing unless such waiver is expressly stated in writing by Consumers.
Section 5.3 Payment of Fair Market Value. If Consumers determined, as
set forth in Section 5.1, that the Addition/Alternation will result in an
additional burden on the Premises, then prior to commencing any work on the
Premises with respect to the Addition/Alteration, METC shall, subject to the
further terms of this Section 5.3, make a lump sum payment to Consumers of an
amount equal to the fair market value of the property rights required therefor.
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If METC agrees with Consumers' estimate of such fair market value, as
specified by Consumers in its notice to METC pursuant to Section 5.1, then the
amount to be paid by METC prior to such commencement of the work shall be the
amount of Consumers' estimate. Payment by METC of such sum, and in all events
commencement by METC of work on the Premises, shall be deemed to indicate METC's
agreement with Consumers' estimate, unless METC has expressly notified Consumers
otherwise in writing as set forth in the immediately following paragraph hereof
that METC does not agree with Consumers' estimate.
If METC disagrees with Consumers' determination of such fair market
value (including any case where METC does not believe that the
Addition/Alteration will constitute any additional burden on the Premises and
therefore asserts that no fair market value applies), METC must, prior to
commencing any work on the Premises with respect to the Addition/Alternation,
(i) notify Consumers in writing that METC so disagrees, and of the amount of
METC's estimate of the fair market value of the property rights required for the
Addition/Alteration (or stating that METC does not believe any additional burden
on the Premises to be involved and that no fair market value applies); and (ii)
deposit with Consumers a sum equal to the amount of Consumers' estimate.
Thereafter, METC may proceed with the work, and the fair market value of the
property rights required for the Addition/Alternation will be determined in the
manner set forth in Exhibit B, attached hereto and made a part hereof. If such
fair market value is, pursuant to Exhibit B, determined to be less than the
amount so deposited by METC with Consumers, then Consumers will promptly refund
the difference to METC. If such fair market value is, pursuant to Exhibit B,
determined to be greater than the amount so deposited by METC with Consumers,
then METC will promptly pay the additional amount to Consumers.
ARTICLE 6
Consumers' Reserved Rights to Use the Premises and Transmission Facilities
Section 6.1 Compatible Uses. It is expressly understood that:
(a) the Easement is granted to METC hereunder subject to all rights of
Authorized Users (as defined below) for Compatible Uses (as defined
below) pursuant to all grants and authorizations made at any time prior
to the Commencement Date; and
(b) subject to Articles 7 and 8 hereof, Consumers hereby expressly reserves
and retains the rights (i) to at all times use and occupy the Premises
and the Transmission Facilities for its own Compatible Uses, and (ii)
to authorize and permit Authorized Users to use and occupy the Premises
and the Transmission Facilities for Compatible Uses pursuant to grants
and authorizations given by Consumers at any time after the
Commencement Date.
As used herein, "Authorized User" means (A) any third party who is
authorized to use or occupy any Premises or Transmission Facilities pursuant to
any grant or authorization made by Consumers (or its predecessors in interest),
or by rights acquired by other valid means, at any time prior to the
Commencement Date, and (B) any third party who is authorized to use or occupy
any Premises or Transmission Facilities pursuant to any grant or authorization
made by Consumers (or its successors in interest) at any time on and after the
Commencement Date.
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As used herein, "Compatible Uses" means use and occupation of the
Premises and/or the Transmission Facilities by Consumers or Authorized Users for
any and all purposes not inconsistent with METC's Permitted Uses; and, without
limiting the generality of the foregoing, Compatible Uses shall be conclusively
deemed to include all of the following:
(i) all uses and occupations of the Premises and/or of Transmission
Facilities by Consumers or any Authorized User that exist on the
Commencement Date;
(ii) all uses and occupations of the Premises and/or of Transmission
Facilities, not existing on the Commencement Date but for which any
Authorized User has rights validly acquired prior to the Commencement
Date; and
(iii) all other uses and occupations, not existing on the Commencement Date,
of the Premises and of Transmission Facilities by Consumers or any
Authorized User that: (x) do not cause the Transmission Facilities to
be in violation of the NESC or any Applicable Laws; (y) do not
materially impair METC's ability to satisfy its service obligations
under applicable tariffs; and (z) do not unreasonably interfere with
METC's ability to install additional Transmission lines on the Premises
that METC has specific plans to install and can reasonably and
practically so install (considering, among other matters, existing
property rights and property configurations).
Compatible Uses include, for example and not limitation, all of the following,
to the extent that any of them fit within any of the immediately preceding
clauses (i), (ii) or (iii):
(a) towers, pole structures, poles, crossarms, cables, wires, conduits,
guys, anchors, transformers, insulators, meters, connections, fuses,
junction boxes, pads, cabinets, enclosures, substations and other
structures, equipment and facilities, whether overhead, underground or
ground surface, relating to Distribution of electricity ("Distribution
Facilities");
(b) any and all other types of underground wires, cables, conduits, pipes,
structures, equipment and facilities, including, without limitation,
telephone, fiber optic, cable TV or other communications lines; sewers;
pipelines and mains for water, oil, gas or other substances; drainage
tile; and all ground surface facilities (including without limitation
pads, cabinets, valves and enclosures) relating to any such underground
facilities;
(c) ground-surface and above-ground/overhead towers, pole structures,
poles, antennae, cables, wires, conduits and other structures,
equipment and facilities relating to microwave, cellular telephone,
conventional telephone, cable TV, fiber optic and other communications
operations;
(d) farming, gardening, and other agricultural, landscaping and similar
uses;
(e) roads, streets, highways, driveways, parking lots, bridges, open ditch
drains, storm water detention or retention ponds, and buildings; and
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(f) towers, pole structures, poles, crossarms, cables, wires, conduits,
guys, anchors, transformers, insulators, meters, connections, fuses,
junction boxes, pads, cabinets, enclosures, substations and other
structures, equipment and facilities, whether overhead, underground or
ground surface, relating to Transmission of electricity; provided, that
facilities for Transmission of Electricity by entities other than METC
(or its successors or assigns) will be considered Compatible Uses only
to the extent that such facilities now or hereafter exist pursuant to
(y) rights or interests now held by an Authorized User, its successors
or assigns (whether or not for such rights or interests are now being
exercised or fully exercised), or (z) rights or interests hereafter
granted to an Authorized User who, in Consumers' good faith opinion,
has power of condemnation or similar powers.
Where applicable, it is understood that the above-listed (or other)
Compatible Uses may involve use of the Transmission Facilities; for example and
not limitation the attachment onto the towers, pole structures and poles that
are part of the Transmission Facilities or the placement into conduit that is
part of the Transmission Facilities of (1) Distribution Facilities, and (2)
telephone lines, cable TV lines, fiber optic cables, other communication lines
and cables, antennae, and other equipment.
Without limiting the scope of Consumers' reserved rights regarding
Compatible Uses, it is expressly understood that Consumers reserves the right to
receive any and all rentals, fees and other revenue and payments that may be
generated by the granting of rights to Authorized Users or that are otherwise
associated with Compatible Uses, whether such Compatible Uses are already
existing or hereafter come into existence pursuant to grants made at any time
before or at any time after the Commencement Date. Subject to Applicable Laws,
and to any applicable existing agreements with third parties, it is also
expressly understood that Consumers has the sole right to determine the amount
of any rentals, fees and other amounts to be paid for the granting of rights to
Authorized Users or that are otherwise associated with Compatible Uses.
Section 6.2 Conflicting Uses. Any use or occupation of Premises by
Consumers or an Authorized User that is not a Compatible Use as defined above is
referred to herein as a "Conflicting Use."
ARTICLE 7
Electric Distribution Facilities on Transmission Facilities and the Premises
Section 7.1 Proposed Installation of Future Distribution Facilities. To
the extent that Consumers proposes, after the date of this Agreement, to
construct/install Distribution Facilities on Transmission Facilities, or
otherwise on the Premises, that METC regards as conflicting with METC's planned
installation of additional Transmission Facilities, METC may preclude Consumers'
use of the existing Transmission Facilities and/or of the Premises for such
construction/installation. In such event, METC shall pay to Consumers, within
thirty (30) days of billing(s) from Consumers therefor, the additional costs of
the alternative actions or measures required in order for Consumers to construct
and/or install the Distribution Facilities proposed by Consumers using an
alternative route and/or other alternative design, over the cost Consumers would
have incurred if Distribution Facilities were installed on the existing
Transmission
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Facilities and/or the Premises as originally planned by Consumers. Such
additional costs will include, without limitation, both of the following:
(a) The incremental costs, as reasonably determined by Consumers, of
constructing the Distribution Facilities on the alternative route
(whether such alternative route is on or off of the Premises) and/or
with the alterative design, together with all related design,
engineering, surveying, permitting and other costs associated with the
project; over the costs that would have been incurred with Consumers'
originally contemplated plans.
(b) If and to the extent that Consumers determines it necessary to obtain
alternative right-of-way for the Distribution Facilities, the cost to
Consumers of obtaining alternative right-of-way satisfactory to
Consumers. Such costs of alternative rights-of-way will include all
costs incidental to the acquisition (such as but not limited to title
insurance, searches or abstracts, surveys, and time of right-of-way
buyers) as well as the actual amounts of the consideration paid by
Consumers for the alternative rights-of-way. Without in any way
limiting the generality of the concept of "satisfactory" alternative
right-of-way, in no event will Consumers be required to utilize any
premises (i) on which Consumers will have property rights that, in
Consumers' judgment, are of any less secure nature than those that
Consumers would have had on the Premises, or (ii) having any physical
characteristics that are unsatisfactory to Consumers.
In addition to the foregoing requirements of this Section 7.1, METC
shall, in regard to the planned additional Transmission Facilities for which it
is precluding Consumers from pursuing Consumers' originally intended plans for
installation of Distribution Facilities, perform and comply with all provisions
of Article 5, including without limitation, the provisions of Article 5
requiring notice to Consumers, approval of Consumers, and payment to Consumers
of fair market value for the additional burden on the premises.
Section 7.2 Relocation of Distribution Facilities. Consumers and METC
also recognize that Distribution Facilities may now or in the future be
installed on Transmission Facilities or the Premises that METC subsequently
determines will preclude installation by METC of additional Transmission
Facilities planned by METC unless such Distribution Facilities are removed and
relocated. In such event, METC shall have the right to require Consumers to
remove such Distribution Facilities, provided METC pays Consumers both of the
following:
(a) The costs of alternative rights-of-way (if the Distribution Facilities
cannot be completely relocated within the Premises or, in Consumers'
judgment, it is not feasible to do so), satisfactory to Consumers, upon
which Consumers may construct/install Distribution Facilities to
replace the then-existing Distribution Facilities that are to be
removed and relocated. Such costs of alternative rights-of-way will
include all costs incidental to the acquisition (such as but not
limited to title insurance, searches or abstracts, surveys, and time of
right-of-way buyers) as well as the actual amounts of the consideration
paid by Consumers for the alternative rights-of-way.
(b) The cost of removing the then-existing Distribution Facilities from
their then-existing location; and the cost of constructing/installing
the replacement Distribution Facilities in
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the new location, together with all related design, engineering,
surveying, permitting and other costs associated with the project. If
and to the extent any such work is done or is to be done by Consumers'
own crews, such internal costs will be as determined by Consumers in
accordance with its normal and customary methods.
Consumers may require payment in advance or the provision of reasonable
security for payment by METC prior to Consumers taking any action to so remove
and relocate its Distribution Facilities; and if Consumers needs to obtain
alternative right-of-way, Consumers will not be required to commence any work on
such relocation until such alternative right-of-way, satisfactory to Consumers,
has been obtained. Without in any way limiting the generality of the concept of
"satisfactory" alternative right-of-way, in no event will Consumers be required
to relocate to premises (i) on which Consumers will have property rights that,
in Consumers' judgment, are of any less secure nature than those that Consumers
had on the Premises, or (ii) having any physical characteristics that are
unsatisfactory to Consumers.
In addition to the foregoing requirements of this Section 7.2, METC
shall, in regard to the planned additional Transmission Facilities for which it
is requiring Consumers to remove and relocate Distribution Facilities, perform
and comply with all provisions of Article 5, including without limitation, the
provisions of Article 5 requiring notice to Consumers, approval of Consumers,
and payment to Consumers of fair market value for the additional burden on the
premises.
If Consumers, in its sole judgment, decides to remove its Distribution
Facilities without relocating them, then the provisions of this Section 7.2
regarding relocation to a new location will accordingly not apply, but the
provisions of this Section 7.2 shall remain fully applicable in respect to the
costs of and METC's payment for the removal, and Article 5 shall be fully
applicable in respect to the planned additional Transmittal Facilities in
connection with which Consumers is so removing its Distribution Facilities.
ARTICLE 8
Compatible Uses by Consumers or Authorized Users
Section 8.1 Notice of Compatible Use. Whenever Consumers, or an
Authorized User acting under rights granted to it by Consumers after the date of
this Agreement, as the case may be (an "Initiating User"), intends to initiate
on the Premises, any use, not now existing on the Premises, that such Initiating
User deems to be a Compatible Use, then the Initiating User shall give METC
written notice of the intention to initiate such proposed use at least thirty
(30) days prior to undertaking any excavation, construction, installation or
similar activities on the Premises in furtherance of such proposed use. Within
thirty (30) days after such notice to METC of such proposed use, METC shall
notify the Initiating User in writing of whether METC believes the proposed use
to be a Conflicting Use. If METC does not, within thirty (30) days after the
Initiating User's said written notice to METC, so notify the Initiating User in
writing that METC considers the proposed use to be a Conflicting Use, METC shall
be deemed to have agreed that such proposed use is not a Conflicting Use. If
METC notifies Initiating User that it believes the proposed use to be a
Conflicting Use, METC shall together therewith specifically document the manner
in which the proposed use is a Conflicting Use, and activities in
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furtherance thereof shall not be undertaken until METC notifies the Initiating
User in writing that METC withdraws its claim that such proposed use is a
Conflicting Use. METC shall promptly so withdraw its objections upon
presentation to METC of modifications of the proposed use or other appropriate
measures taken or to be taken as will reasonably resolve the reasons, as so
identified by METC, for which the proposed use would be a Conflicting Use. The
Initiating User shall furnish to METC such plans and specifications, surveys or
other information regarding the proposed use as METC may reasonably request in
order to evaluate the nature and extent of the proposed use.
Wherever Consumers is not the Initiating User, METC shall, for any
notices to such Initiating User pursuant to the immediately preceding paragraph,
simultaneously send a copy of such notice to Consumers.
METC and Initiating Users shall cooperate in good faith to accommodate
Permitted Uses and Compatible Uses of Premises and Transmission Facilities to
the extent reasonably feasible. If and to the extent that Transmission
Facilities can be relocated or modified to accommodate proposed uses, such as to
make otherwise Conflicting Uses into Compatible Uses without materially
adversely affecting the operation of such Transmission Facilities, METC shall
undertake, or authorize the Initiating User to undertake, such relocation or
modification provided the Initiating User is willing and agrees to pays all
costs reasonably incurred in making such relocations or modifications
(including, without limitation, land or right of way acquisition costs if
applicable, engineering and construction costs) and observes such requirements
as METC may reasonably specify in connection therewith.
Where the proposed use that METC claims to be a Conflicting Use
consists of Consumers' Distribution Facilities, Consumers shall be entitled,
anything in this Section 8.1 to the contrary notwithstanding, to payment from
METC as provided in Section 7.1. Where the proposed use consists of Consumers'
Distribution Facilities, all rights of Consumers under Section 7.1 shall be in
addition to all rights under this Section 8.1.
It is understood that the foregoing provisions of this Section 8.1 will
not bind, nor restrict or limit any rights of, Authorized Users who are acting
under rights validly granted to them prior hereto. However, nothing herein is
intended to relieve any such Authorized Users of any duties and obligations that
they may otherwise have, under the terms of the grants to them or at law or
equity.
It is also intended that Authorized Users acting under rights granted
to them hereafter will be bound by the terms of this Section 8.1 by operation of
law, by virtue of receiving their interests after the time of the execution and
recording of this Agreement, and that METC may on that basis seek to enforce
such terms against such Authorized Users. However, Consumers does not itself
guarantee the compliance herewith by any such Authorized User or assume any
liability whatsoever for any such Authorized User's non-compliance.
Section 8.2 Maintenance and Repair Obligations of Consumers. Consumers
shall at its own expense (i) maintain and repair, in structurally and
operationally safe condition, Consumers' own facilities and equipment relating
to its Compatible Uses of the Premises or Transmission
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Facilities, (ii) maintain such portions, if any, of the Premises as are
exclusively used, occupied and controlled by Consumers, and (iii) with
reasonable promptness cause all damage to the Premises or Transmission
Facilities resulting from activities associated with Compatible Uses undertaken
by Consumers to be repaired to a condition at least substantially equivalent to
that existing prior thereto including, as appropriate in the case of the
particular Premises involved, leveling of the surface thereof and seeding with
grasses or other ground cover as appropriate following excavation (it being
understood that the reasonable time for performance of certain restoration work,
such as reseeding, may depend on weather or seasonal considerations).
Section 8.3 Maintenance and Repair Obligations of Authorized Users.
Each Authorized User using or occupying Premises or Transmission Facilities
under a grant hereafter made shall, at its own expense, (i) maintain and repair,
in structurally and operationally safe condition, such Authorized User's own
facilities and equipment relating to its Compatible Uses of the Premises or (if
applicable) Transmission Facilities, (ii) maintain such portions, if any, of the
Premises as are exclusively used, occupied and controlled by such Authorized
User, and (iii) with reasonable promptness cause all damage to the Premises or
Transmission Facilities resulting from activities associated with Compatible
Uses undertaken by such Authorized User to be repaired to a condition at least
substantially equivalent to that existing prior thereto including, as
appropriate in the case of the particular Premises involved, leveling of the
surface thereof and seeding with grasses or other ground cover as appropriate
following excavation (it being understood that the reasonable time for
performance of certain restoration work, such as reseeding, may depend on
weather or seasonal considerations).
It is understood that the foregoing provisions of this Section 8.3 will
not bind Authorized Users who are acting under rights validly granted to them
prior hereto. However, nothing herein is intended to relieve any such Authorized
Users of any duties and obligations that they may otherwise have, under the
terms of the grants to them or at law or equity.
It is also intended that Authorized Users acting under rights granted
to them hereafter will be bound by the terms of this Section 8.3 by operation of
law, by virtue of receiving their interests after the time of the execution and
recording of this Agreement, and that METC may on that basis seek to enforce
such terms against such Authorized Users. However, Consumers does not itself
guarantee the compliance herewith by any such Authorized User or assume any
liability whatsoever for their non-compliance.
Section 8.4 Replacement or Removal of Towers, Pole Structures, Poles,
Conduit and Similar Transmission Facilities In or Upon Which Distribution
Facilities or Other Compatible Use Facilities are Attached or Located. Whenever
METC intends to replace any tower, pole structure, pole, conduit or similar
Transmission Facilities in or upon which Distribution Facilities or other
Compatible Use facilities of Consumers or an Authorized User are attached or
otherwise physically located, METC shall give at least sixty (60) days' prior
written notice to Consumers or the applicable Authorized User so that Consumers
or the applicable Authorized User, as the case may be, can at its own expense
either remove its facilities (if it no longer needs or desires the attachment)
or move/reattach such facilities to METC's replacement tower, pole structure,
pole, conduit or other similar Transmission Facilities. METC shall keep
Consumers or the applicable Authorized User, as the case may be, informed of the
time(s) for performance of such work of
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replacing such tower, pole structure, pole, conduit or other similar
Transmission Facilities, so that Consumers or such Authorized User may
reasonably coordinate with METC the performance of Consumers' or such Authorized
User's work of so removing and/or moving/reattaching its own facilities.
Whenever METC intends to remove -- without replacing -- any tower, pole
structure, pole, conduit or other similar Transmission Facilities in or upon
which Distribution Facilities or other Compatible Use facilities of Consumers or
an Authorized User are attached or otherwise physically located, METC shall give
at least sixty (60) days' prior written notice to Consumers or the applicable
Authorized User so that Consumers or the applicable Authorized User, as the case
may be, can at its own expense either remove its facilities (if it no longer
needs or desires the attachment) or, at Consumers' or the applicable Authorized
User's option, purchase from METC the tower, pole structure, pole, conduit or
other similar Transmission Facilities that METC intends to so remove. If
Consumers or the applicable Authorized User elects to purchase such tower, pole
structure, pole or other Transmission Facilities from METC, it shall so notify
METC in writing within forty five (45) days after the giving of METC's aforesaid
notice to Consumers or such Authorized User. Within a reasonable time
thereafter, and following METC's removal of all of its wires, cables, conductors
and other facilities that may be attached to or located in or on the tower, pole
structure, pole, conduit or other similar facility in question, (i) Consumers or
the applicable Authorized User, as the case may be, shall pay METC for such
tower, pole structure, pole, conduit or other similar facility at a price
computed in accordance with the provisions of Exhibit C, attached hereto and
made a part hereof, and (ii) METC shall convey such tower, pole structure, pole,
conduit or other similar facility to Consumers or the applicable Authorized User
by a good and sufficient bill of sale. Such conveyance shall be on an "AS IS"
basis, but METC shall warrant the title to such tower, pole structure, pole,
conduit or other similar facility that is so conveyed. Where both Consumers and
an Authorized User would be eligible to, and both desire to, purchase a tower,
pole structure, pole, conduit or other similar facility from METC pursuant to
this paragraph, Consumers shall have the right to decide which of them shall buy
same. Any tower, pole structure, pole, conduit or other similar facility
purchased by Consumers or an Authorized User under this paragraph shall, upon
such purchase, become part of the Distribution Facilities or other Compatible
Use facilities, as the case may be, of Consumers or the applicable Authorized
User. It is understood that the provisions of this paragraph, including without
limitation any obligation to pay METC for Transmission Facilities, does not
apply to any acquisition by Consumers of Transmission Facilities pursuant to the
provisions of Section 21.5.
Nothing in this Section 8.4 is intended to limit, override or affect
any rights granted to an Authorized User prior to the Commencement Date.
Section 8.5 Independent Third Party Users. It is understood that
wherever Consumers' right, title and interest in Premises is less than a fee
simple title, i.e., where Consumers' right, title or interest is an easement,
lease, permit or license, Consumers generally does not have exclusive control of
such Premises, and generally has only limited control over the use or occupation
of such Premises by third parties. Any third party (whether the fee title owner
or anyone else whomsoever) using or occupying Premises in which Consumers does
not have fee simple title, who is (i) not actually attaching its own facilities
to Transmission Facilities by virtue
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of rights to do so granted to it by Consumers, or (ii) otherwise using or
occupying such Premises by virtue of rights to do so granted to it by Consumers,
shall not be considered an Authorized User under this Agreement. No such
third-party users or occupiers (who are hereinafter referred to as "Independent
Third Party Users") will be deemed to be Authorized Users under this Agreement
merely because Consumers (under whatever terms or conditions, and whether or not
for compensation) consented or agreed to or approved their uses or occupations
of the Premises, without actually purporting to grant them the right to make
such uses or occupations. It is expressly understood, notwithstanding anything
else in this Agreement, that Consumers has no obligations to METC in connection
with Independent Third Party Users.
ARTICLE 9
Maintenance of the Premises and Transmission Facilities
Section 9.1 METC's Maintenance Obligations. The parties hereto
expressly recognize that because the Premises are primarily used for
Transmission Facilities and, even where there are portions of the Premises that
may not be specifically used for Transmission Facilities those portions are not
readily capable of being separately identified and described, METC shall be
responsible hereunder for the maintenance of the entire Premises except as
otherwise specifically provided in this Section 9.1.
METC shall be solely responsible for maintaining, at its expense, (i)
all Transmission Facilities, and (ii) except as expressly provided otherwise in
this Section 9.1, the Premises.
Without limiting the generality of any of the foregoing, METC shall, at
its expense, be responsible for at all times:
(i) keeping and maintaining the Transmission Facilities in a structurally
and operationally safe condition and in a state of repair complying
with all requirements of the NESC and Applicable Laws;
(ii) maintaining the Premises in a clean and orderly condition, free from
all litter and debris without regard to how the same became placed
thereon or therein;
(iii) mowing the Premises and removing noxious weeds and brush therefrom;
(iv) maintaining and repairing all buildings, structures and fixtures on the
Premises to keep the same in good condition and repair and in
compliance with Applicable Laws;
(v) repairing, maintaining and replacing, as necessary, and removing snow
and ice from, all parking areas, driveways, passageways, sidewalks,
walkways and similar areas on the Premises, in good and proper
condition and in compliance with Applicable Laws.
Notwithstanding the foregoing, METC shall not be responsible for (i)
performing repairs to or maintenance of Distribution Facilities or other
Compatible Use facilities (unless actions, operations or omissions of METC, its
employees, agents, contractors, subcontractors, invitees or licensees, or the
Transmission Facilities, were the cause of the need for such repairs or
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maintenance); (ii) repair or maintenance of any areas on the Premises that are
exclusively used, occupied and controlled by Consumers or an Authorized User
(unless actions, operations or omissions of METC, its employees, agents,
contractors, subcontractors, invitees or licensees, or the Transmission
Facilities, were the cause of the need therefor for such repairs or
maintenance); or (iii) clean-up of litter or debris, or repair of damage to the
Premises, resulting from the facilities, occupation, use or operations of
Consumers or an Authorized User. Furthermore, nothing in this Section 9.1 is
intended to relieve Consumers or an Authorized User, as the case may be, from
responsibility for the cost of repairing damage to the Transmission Facilities
resulting from the facilities, occupation, use or operations of Consumers or
such Authorized User, as the case may be. Nothing, however, in the preceding
provisions of this paragraph is intended to relieve METC from any duty,
obligation or liability that it may have to an Authorized User for reasons apart
from the terms and conditions of this Agreement. It is expressly understood that
Consumers does not assume liability for damage resulting from the facilities,
occupation, use, acts, omissions or operations of an Authorized User; METC's
rights and remedies in connection therewith being governed by the last paragraph
of Section 8.3, and such rights as METC may otherwise have against an Authorized
User at law or equity.
Section 9.2 Patrol; Encroachments. METC shall, at its own expense,
patrol by air the Premises at least annually. METC shall notify Consumers of any
unauthorized uses of the Premises or encroachments thereon that may be
identified as a result of such annual air patrol or that it may otherwise become
aware of. If there are unauthorized uses of, or encroachments upon, any Premises
that adversely affect the Transmission Facilities or METC's interests under this
Agreement, METC shall notify Consumers in writing and consult with Consumers
before METC takes action to terminate or otherwise resolve same. METC shall in
no event have any right or authority to take any action or make any agreement in
regard to any encroachment or other unauthorized use that extends beyond the
scope of METC's own interests under this Agreement or that adversely affects in
any manner Consumers' or any third party's interest in any Premises. Any action
that METC takes to resolve any encroachment or other unauthorized use shall be
at METC's sole expense, unless otherwise agreed upon in writing.
Consumers assumes no liability to METC to detect or prevent
encroachments or any other unauthorized use of any Premises or Transmission
Facilities, or arising from any encroachments or other unauthorized use of any
Premises or Transmission Facilities.
Section 9.3 Consumers Not Responsible for Maintenance. Unless and
except as may be expressly otherwise provided herein, Consumers shall not be
responsible or liable to METC for, or by reason of, the condition of Premises,
or arising from any failure to keep the same in good and lawful order and
condition. Consumers shall not be required to make any expenditure whatsoever
for the maintenance of Premises except as, in Consumers' judgment, is necessary
or desirable in relation to Consumers' facilities and equipment on, under or
over the Premises.
ARTICLE 10
Sale of Premises
Section 10.1 Sale Offer of Premises. Subject to Sections 10.3 and 10.4,
in the event Consumers determines to sell any Premises, Consumers shall notify
METC in writing thereof
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and the sales price and terms upon which Consumers wishes to sell the same (the
"Sale Offer"). METC shall have the right to purchase the particular Premises
that Consumers proposes to sell at the price and upon the terms of the Sale
Offer by notifying Consumers in writing within thirty (30) days after the giving
of such Sale Offer by Consumers to METC. In the event that METC does not so
accept such Sale Offer, Consumers may, at any time within one (1) year after the
date that Consumers gave such Sale Offer to METC, sell the Premises that were
the subject of the Sale Offer to any third party for a price that is not less
than 90% of the sale price set forth in the Sale Offer and otherwise on
substantially the same terms as were set forth in the Sale Offer.
Section 10.2 Effect of Sale on Rights and Obligations of the Parties.
Subject to Sections 10.3 and 10.4, any sale of Premises to a third party shall
not affect the rights of METC under this Agreement. Subject to said Sections
10.3 and 10.4, any buyer shall take subject to this Agreement.
It is understood that the covenants, agreements and obligations of
Consumers set forth in this Agreement shall not be deemed personal covenants of
Consumers, except to the extent of Consumers' interest in the Premises and only,
in respect to any particular part of the Premises, so long as such interest
shall continue, and thereafter the covenants, agreements and obligations of
Consumers shall be binding only upon such subsequent owners and successors in
interest to the extent of their respective interests, as and when they shall
acquire the same, and only so long as they shall retain such interest.
Notwithstanding the foregoing, unless Consumers expressly agrees
otherwise in writing with the buyer of any sold Premises and notifies METC in
writing thereof: (i) the buyer shall not acquire any right to receive any part
of the Base Rent provided for in this Agreement, (ii) such sale shall not result
in an adjustment of the amount of the Base Rent payable by METC to Consumers
under the terms of this Agreement, and (iii) METC shall continue to pay the
herein specified Base Rent to Consumers in full. In respect to the foregoing, it
is understood that while Consumers shall have the right to assign its right to
receive Base Rent, same shall not be deemed to pass to a buyer of any part of
the Premises, and shall fully remain with Consumers, in the absence of an
express, duly executed, assignment.
In a sale of any Premises, Consumers may reserve any rights and
interests in the Premises as are specified in the applicable conveyance
instruments.
Section 10.3 Sale of Certain Premises. Consumers shall have the right
to sell any portion of any Premises that is located more than feet from any
then-existing Transmission Facilities premises without first offering to sell
the same to METC as provided in Section 10.1. If any such portion of the
Premises is sold to a third party, Consumers shall notify METC thereof and
thereafter the same shall no longer be subject to this Agreement in any manner,
including that the Easement or any rights or obligations of the parties shall no
longer apply thereto; provided, that the Base Rent payable by METC under this
Agreement shall not be reduced in respect thereto. Following such notice, METC
shall, upon request of Consumers, execute and deliver to Consumers or such other
party as Consumers' designates a release of its right, title and interest under
this Agreement with respect to the Premises in question.
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Section 10.4 Premises in Which Consumers' Interest is Less Than Fee. It
is understood that wherever Consumers' right, title and interest in Premises is
less than a fee simple title, i.e., where Consumers' right, title or interest is
an easement, lease, permit or license, then METC's rights and Consumers'
obligations under Sections 10.1 and 10.2 shall apply only to an actual,
voluntary sale (or, as applicable under Section 10.1, desired sale) by Consumers
to a third party of Consumers' said easement, lease, permit or license rights in
those Premises. Nothing in said Sections 10.1 or 10.2 is intended to confer any
rights on METC or impose any obligations on Consumers in connection with a sale
of any Premises (or of any rights or interests therein) in which Consumers'
right, title or interest is an easement, lease, permit or license by the fee
title owner of such Premises or by the owner of any other interest in such
Premises. Furthermore, with respect to any Premises in which Consumers' right,
title or interest is an easement, lease, permit or license, nothing in said
Sections 10.1 or 10.2 is intended to confer any rights upon METC or any
obligations or liability upon Consumers in connection with any expiration,
termination, reversion or other loss of such easement, lease, permit or license,
by operation of law, by the terms of the operative document, or otherwise, not
constituting an actual, voluntary sale (or, as applicable under Section 10.1,
desired sale) by Consumers; and no such expiration, termination, reversion or
other loss of such easement, lease, permit or license shall reduce the Base Rent
Payable by METC hereunder.
Section 10.5 Conveyance of Less than Consumers' Full Interest. In
respect to any parts of the Premises owned by Consumers in fee simple, METC's
rights and Consumers' obligations under the provisions of Sections 10.1 and 10.2
shall apply only to a sale (or, as applicable under Section 10.1, desired sale)
by Consumers of its fee simple title therein, and not to any conveyance or
proposed conveyance by Consumers of any other or lesser right, title or interest
in such Premises.
In respect to any parts of the Premises in which Consumers' right,
title and interest is less than a fee simple title, i.e., where Consumers'
right, title or interest is an easement, lease, permit or license, then, without
limiting the generality of anything in Section 10.4 above, METC's rights and
Consumers' obligations under Sections 10.1 and 10.2, shall apply only to a sale
(or, as applicable under Section 10.1, desired sale) by Consumers of its entire
interest in such easement, lease, permit or license, and not to any conveyance
or proposed conveyance by Consumers of other than or less than its complete and
entire interest in such easement, lease, permit or license.
ARTICLE 11
Taxes and Other Impositions
Section 11.1 METC's Responsibility for Impositions. The parties hereto
expressly recognize that because the primary intended use of the Premises is for
Transmission Facilities and, even where there are portions of the Premises not
that may not be specifically used for the Transmission Facilities those portions
are not readily capable of being separately identified and described, METC shall
be responsible hereunder for payment of the Impositions on the entire Premises,
except as otherwise provided in Sections 11.2 and 11.4.
Except as hereinafter provided in Sections 11.2 and 11.4, METC shall
reimburse Consumers within ten (10) business days after receipt of an invoice
from Consumers therefor,
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before any fine, penalty, interest or cost may be added thereto for the
non-payment thereof, all property taxes (real or personal), special assessments,
or any other tax levied on the Premises (whether imposed on or measured by the
rents payable by METC or otherwise), and other governmental levies and charges,
of any kind and nature whatsoever, which are assessed, levied, confirmed,
imposed or become a lien upon the Premises and/or any part thereof during the
Term, and any tax upon or measured by the rent payable by METC under this
Agreement, whether such tax is imposed on Consumers or METC (all of which are
hereinafter referred to as "Impositions"). Upon request, Consumers shall furnish
to METC all bills relating to Impositions received by Consumers so that METC may
determine whether or not to contest same as permitted by Section 11.3 hereof. If
any Imposition is at the option of the taxpayer payable in installments (whether
or not interest shall accrue on the unpaid balance of such Imposition),
Consumers will determine whether same should be paid off in full or paid in
installments, and METC shall reimburse Consumers accordingly (including
reimbursement of any applicable interest if Consumers pays in installments). Any
Imposition which is assessed in a calendar year during which the Term of this
Agreement as to any of the Premises begins or ends, shall be apportioned so that
METC shall pay only that proportion of such Imposition which corresponds with
the portion of said calendar year as is within the Term.
Section 11.2 Apportionment. Notwithstanding Section 11.1, METC shall
not be responsible for reimbursing Consumers for the portions of Impositions
attributable to Distribution Facilities or other improvements or facilities of
Consumers or an Authorized User, it being contemplated that METC will be
responsible for Impositions attributable to the Premises and to buildings and
improvements that relate to Transmission Facilities (i.e. to the extent
attributable to use for transmission of electricity). Distribution Facilities,
the Transmission Facilities and the rights of way (not owned in fee), upon which
such facilities are located, are generally treated under applicable state tax
law as personal property and taxed as such to the owner of such facilities and
rights of way. Real property taxes on the fee lands upon which such rights of
way (not owned in fee) are located, and on rights of way owned in fee are
generally payable by the fee owner. Accordingly, it is anticipated that real
property taxes and assessments with respect to fee land that is a part of the
Premises will have to be apportioned so that the taxes attributable to the land
and buildings and improvements (or portions thereof) relating to transmission of
electricity are allocated to METC and Consumers shall cooperate in order to
effect an appropriate allocation of real property taxes, assessments and any
other Impositions such that METC, Consumers or Authorized Users are charged with
payment of the proper portion thereof.
Section 11.3 Contested Impositions. Notwithstanding anything to the
contrary herein contained, if METC deems any Imposition for which it is
responsible to be excessive or illegal, METC may request that Consumers defer
payment thereof in order to permit the validity or the amount thereof to be
contested in good faith by METC (or by Consumers on METC's behalf) provided METC
shall have furnished to Consumers such security as Consumers may reasonably
require in order to assure the discharge of the amounts so contested and unpaid,
together with all interest and penalties in connection therewith and all charges
that may or might be assessed against or become a charge on the Premises in said
proceedings. If, at any time during the continuance of such proceedings,
Consumers shall deem the security provided to it insufficient, METC shall, upon
demand, furnish to Consumers such additional security as Consumers may
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reasonably require, and upon failure of METC so to do, the security theretofore
provided may be applied to the payment, removal and discharge of such Imposition
and interest and penalties in connection therewith and any costs, fees or other
liabilities accruing in such proceedings, and the balance, if any, shall be
returned to METC, provided METC is not in default hereunder. If the amount so
deposited or the amount paid by METC or its surety shall be insufficient for
this purpose, METC shall forthwith pay to Consumers such additional sum as may
be necessary to pay the same. Any contest as to the validity or amount of any
Imposition, whether before or after payment, may be made by METC, in the name of
Consumers or of METC, or both, as METC shall determine, and Consumers will, at
METC's expense, cooperate with METC in any such contest to such extent as METC
may reasonably request. It is understood, however, that Consumers shall not be
subject to any liability for the payment of any costs or expenses in connection
with any such proceeding brought by METC and METC covenants to pay, and to
indemnify and save Consumers harmless from, any such costs or expenses. METC
shall be entitled to any refund of any such Imposition and penalties or interest
thereon which have been paid by METC or which have been paid by Consumers and
reimbursed to Consumers by METC.
Section 11.4 Consumers' Taxes. It is expressly understood and agreed
that METC shall not be required to pay, or reimburse Consumers for, any federal,
capital levy, franchise tax, gross receipts tax, revenue tax, premium tax,
personal property tax, income tax, profits tax or Michigan Single Business Tax
of Consumers or any such tax imposed after the date hereof, by any state or
local governmental authority or jurisdiction if such tax is determined on the
basis of the general assets, or the general net income or net revenue of
Consumers.
ARTICLE 12
Compliance With Applicable Laws
Section 12.1 Compliance with Applicable Laws. METC shall, throughout
the Term, and at no expense whatsoever to Consumers, promptly comply, or cause
compliance, with all Applicable Laws relating to the Transmission Facilities and
all of the Premises except as the same specifically relate to Compatible Uses by
Consumers and/or Authorized Users.
Section 12.2 METC Contest of Applicable Laws. METC shall have the right
to contest by appropriate legal proceedings, without cost or expense to
Consumers, the validity of any Applicable Law relating to its use of Premises or
Transmission Facilities and to postpone compliance with the same if (and only so
long as), by the terms of such Applicable Law, compliance therewith may legally
be held in abeyance without incurring any lien, charge or liability of any kind
against the Premises or any interest of Consumers therein and without subjecting
Consumers to any liability, civil or criminal, of any nature whatsoever, for
failure to comply therewith. METC shall prosecute all such proceedings with all
due diligence and dispatch, and shall fully comply with the Applicable Law if
and to the extent it does not prevail in such contest. METC shall fully advise
Consumers in writing as to all details of any such contest, including the
tribunal in which proceedings are to be filed, the law, ordinance, order,
ruling, regulation or requirement contested, and such additional data as
Consumers may from time to time request to enable it to understand the facts and
evaluate them.
Section 12.3 Contest of Applicable Laws by Consumers or Authorized
User. Nothing in
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this Article 12 shall preclude Consumers or an Authorized User from contesting
the validity of any law, ordinance, rule or regulation applicable to the
Premises or any use thereof by Consumers or an Authorized User as the case may
be.
ARTICLE 13
Damage or Destruction of Transmission Facilities and Condemnation
Section 13.1 Damage, Destruction and Condemnation. This Agreement shall
not terminate, nor, except to the extent otherwise specifically provided herein,
shall METC be entitled to any abatement or return of Base Rent or reduction
thereof, nor shall the respective obligations of Consumers and METC be otherwise
affected, by reason of damage to or destruction of all or any of the
Transmission Facilities from whatever cause; the taking of the Premises or
Transmission Facilities by condemnation or exercise of the power of eminent
domain or otherwise; the lawful imposition of any restrictions on, or
prohibition, of METC's use of any Premises or Transmission Facilities; or any
other cause similar to any of the foregoing, any present or future law to the
contrary notwithstanding, it being the intention of the parties hereto that the
Base Rent and other charges paid or payable by METC shall continue to be payable
in all events unless the obligation to pay the same shall be terminated pursuant
to the express provisions of this Agreement.
Section 13.2 Condemnation Award. Consumers shall be entitled to the
entire award resulting from any taking of the Premises pursuant to exercise of
the power of eminent domain and METC shall have no claim with respect thereto.
Notwithstanding the foregoing, in the event of a taking of Premises by exercise
of the power of eminent domain such that METC cannot continue use of the portion
affected thereby for its Transmission Facilities, then METC shall have the right
to terminate this Agreement as to such portion; but the Base Rent payable by
METC under this Agreement shall not be reduced as a result thereof.
In cases where Consumers' right, title and interest in Premises is less
than fee simple title, the first sentence of the immediately preceding paragraph
is intended to apply to all proceeds of any taking as may be payable in
connection with such right, title and interest as Consumers has in the Premises
and in connection with the Easement granted to METC hereunder. Also, regardless
of the nature of Consumers' right, title and interest in the applicable
Premises, (i) nothing herein is intended to apply to condemnation proceeds
payable to third parties by reason of their interests in any Premises; and (ii)
nothing herein shall deprive METC of entitlement to any compensation to which it
may be entitled from a governmental entity of other agency having power of
eminent domain which is given specifically for the costs of removing and/or
relocating METC's Transmission Facilities.
ARTICLE 14
Environmental Matters
Section 14.1 Waste Disposal. METC shall not dispose or suffer to be
disposed of any waste material whatsoever upon the Premises without the prior
written consent of Consumers and shall not, without the prior written consent of
Consumers, use or maintain, or suffer to be used or maintained, upon the
Premises any material which is or may be or become hazardous to
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human health or the environment or the storage, treatment or disposal of which
is regulated by any governmental authority. The granting or withholding of any
consent of Consumers under the terms of this paragraph shall be within the sole
discretion of Consumers, and METC shall, when requested by Consumers, promptly
give to Consumers any information required by Consumers concerning products,
substances or processes used, maintained or undertaken by METC or on its behalf
or with its approval upon the Premises.
Section 14.2 Environmental Indemnity. In the event that the use or
exercise of the rights granted in this Agreement at any time results in the
presence on or under the Premises and/or other land of Consumers (which shall
include but not be limited to the groundwater underlying any of such lands) of
contaminants, hazardous waste, hazardous substances, hazardous constituents, or
toxic substances, as currently or hereafter defined in the Comprehensive
Environmental Response, Compensation and Liability Act (CERCLA), 42 USCA 9601 et
seq.; the Resource Conservation and Recovery Act (RCRA), 42 USCA 6901 et seq.;
the Toxic Substances Control Act (TSCA), 15 USCA 2601 et seq.; the Michigan
Natural Resources and Environmental Protection Act (NREPA), MCLA 324.101 et
seq.; or any other similar existing or future statutes, METC shall, at METC's
sole cost and expense, promptly take all actions that are either: (i) required
by any federal, state, or local governmental agency or political subdivision, or
(ii) necessary to restore all such lands to the condition existing prior to the
introduction of such contaminants, hazardous waste, hazardous substances or
constituents, or toxic substances, notwithstanding any lesser standard of
remediation allowable under applicable law or governmental policies. The actions
required of METC shall include, but not be limited to: (a) the investigation of
the environmental condition of said lands, (b) the preparation of any
feasibility studies, reports, or remedial plans required by law or governmental
policy, and (c) the performance of cleanup, remediation, containment, operation,
maintenance, monitoring, or restoration work, whether on or off said lands. METC
shall proceed continuously and diligently with such investigatory and remedial
actions. METC shall promptly provide to Consumers copies of all test results and
reports generated in connection with the above activities and of all reports
submitted to any governmental entity.
METC shall indemnify, defend, and hold Consumers, its officers,
directors, employees, agents, affiliates, and parent corporation, harmless from
and against any and all losses, liabilities, claims, damages, payments, actions,
recoveries, settlements, judgments, orders, costs, expenses, attorney fees,
consultant and expert fees, cost of investigation, monitoring, cleanup,
containment, restoration, removal, or other remedial work or response action,
penalties, fines, encumbrances, and liens arising out of: (i) the presence on or
beneath the Premises, and/or other land of Consumers, and/or other land, and the
groundwater underlying any of such lands, of contaminants, hazardous waste,
hazardous substances or constituents, or toxic substances, as currently or
hereafter defined in CERCLA, RCRA, TSCA, NREPA, or any other similar existing or
future statutes, as a result of the use or exercise of the rights herein
granted, whether arising during or after the Term of this Agreement; (ii) METC's
violation or alleged violation of any federal, state, or local law related
directly or indirectly to METC's exercise of the rights herein granted; or (iii)
METC's failure to comply with the terms and conditions of this Agreement.
Section 14.3 Survival of Environmental Covenants. The covenants,
agreements and obligations of METC set forth in this Article 14 shall survive
termination of this Agreement.
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ARTICLE 15
Indemnification
Section 15.1 METC's Indemnification Obligation. Except as herein
expressly provided otherwise, METC covenants and agrees, at its sole cost and
expense, to indemnify, defend and save harmless Consumers from and against any
and all claims, actions or proceedings by or on behalf of any person, firm,
corporation, governmental authority or other entity, arising from or with
respect to:
(a) the occupancy, use, possession, conduct or maintenance of, or from any
work or thing whatsoever done on or about, the Premises during the
Term, or
(b) the Transmission Facilities, or
(c) any accident, injury (or death) to any persons or damage to any
property whatsoever, however caused, occurring during the Term, in or
about the Premises, or
(d) without limiting the generality of any of the preceding foregoing
clauses (a) through (c), (i) any breach or default on the part of METC
in the performance or observance of any covenant or agreement on the
part of METC to be performed or observed pursuant to this Agreement, or
(ii) any negligent act or omission or willful misconduct of METC, or
any of its agents, employees, contractors, subcontractors, invitees or
licensees,
and from and against all damages, liabilities, judgments, cost and expenses
(including without limitation reasonable attorneys' and consultants' fees)
suffered or incurred by Consumers in connection with any such claim, action or
proceeding; and in case any action or proceeding be brought against Consumers,
METC covenants to resist or defend such action or proceeding by counsel
reasonably satisfactory to Consumers unless such action or proceeding is
resisted or defended by counsel for any carrier of commercial general liability
insurance referred to in Section 17.1 hereof, as authorized by the provisions of
any policy of commercial general liability insurance maintained pursuant to said
Section.
Notwithstanding the above, METC shall not be required to indemnify or
defend Consumers for any injuries (or death) to persons or damage to property
(i) caused by the sole negligence or willful misconduct of Consumers, an
Authorized User, or their agents, employees, contractors, subcontractors,
invitees or licensees, or (ii) other than to the extent attributable to the
acts, operations or omissions of METC, its agents, employees, contractors,
subcontractors, invitees or licensees, caused by the presence, operation,
maintenance, repair, replacement or removal of the Distribution Facilities of
Consumers on the Premises or of improvements, equipment or facilities of an
Authorized User on the Premises.
Section 15.2. METC's Indemnification for Consumers' Costs of Enforcing
Agreement METC shall indemnify, defend and hold Consumers harmless against and
from, all costs and charges, including counsel and consultants' fees, reasonably
incurred in obtaining possession of the Premises after default by METC or upon
expiration or earlier termination of the Term hereof, or in enforcing any
covenant or agreement of METC herein contained.
Section 15.3. Workers Compensation Indemnity Waivers. For the purpose
of
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indemnification of Consumers from judgments, claims, suits or actions brought
against it by METC employees, METC expressly and specifically waives any and all
immunity to which it may be entitled under the workers compensation laws of the
jurisdiction in which the Premises are located.
ARTICLE 16
Liens
Section 16.1 No Liens. METC shall not allow the interest of Consumers
or, except as expressly provided in Article 23 hereof, the interest of METC in
the Premises or Transmission Facilities to become subject to any lien, charge or
encumbrance whatsoever and shall indemnify, defend and hold Consumers harmless
from and against all such liens, charges and encumbrances.
Section 16.2 Discharge of Certain Liens. METC shall not suffer or
permit any mechanic's, laborer's or materialman's liens to stand against the
Premises, or any part thereof, by reason of any work, labor, services, equipment
or materials done for, or supplied to, or claimed to have been done for, or
supplied to, METC. If any such lien shall at any time be filed against the
Premises, or any part thereof, or against the interest of Consumers or METC in
the Premises, METC shall cause the same to be discharged of record within thirty
(30) days after the date of filing the same, by either payment, deposit or bond.
If METC shall fail to discharge any such lien within such period, then, in
addition to any other right or remedy of Consumers, Consumers may, but shall not
be obligated to, procure the discharge of the same by payment, deposit, bonding
or in such other manner as Consumers sees fit. All amounts incurred, paid or
deposited by Consumers in procuring the discharge of any such lien, and all
other costs, expenses or other disbursements of Consumers (including reasonable
attorneys' and consultants' fees) in defending any foreclosure action or
otherwise in connection with such lien, shall be payable by METC to Consumers as
additional Base Rent within thirty (30) days after invoice by Consumers to METC
therefor; and Consumers shall have the same rights and remedies in the event of
the nonpayment thereof by METC as in the case of default by METC in the payment
of any other Base Rent.
Section 16.3 No Consumers Consent to Liens. Nothing in this Agreement
shall be deemed to be, or construed in any way as constituting, the consent of
Consumers to the filing of any lien against Consumers' interest in the Premises
by any person, firm or corporation for the performance of any work or labor or
the furnishing of any equipment or materials in any way connected with any of
the Transmission Facilities.
ARTICLE 17
Insurance and Waiver of Subrogation
Section 17.1 Insurance. During the Term, METC shall maintain in effect
commercial general liability insurance protecting METC and Consumers (as
evidenced by policies in which Consumers is named as an additional insured)
against claims of any and all persons, firms and corporations for personal
injury, death or property damage occurring upon, in or about the Premises, with
such limits of liability as are customarily carried by prudent electric
transmission companies or such amount as Consumers shall approve in writing from
time to time. All
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insurance policies provided pursuant to this Section 17.1 shall be obtained by
METC from an insurance carrier or carriers of good reputation and sound
financial responsibility selected by METC and may be subject to self-insured
retentions or deductibles in such amounts as Consumers may approve in writing
from time to time, which approval Consumers agrees not to unreasonably withhold.
Policies or certificates evidencing such insurance shall be delivered by METC to
Consumers upon execution of this Agreement and certificates evidencing renewal
of such insurance shall be delivered to Consumers at least ten (10) days' prior
to the expiration of any such policy of insurance. Each such policy shall
contain an agreement by the insurers not to cancel such policy or materially
alter its coverages except upon at least thirty (30) days' prior written notice
to Consumers.
The maintenance of any insurance pursuant hereto does not limit METC's
indemnification obligations under Article 15.
Section 17.2 Waivers of Subrogation. Consumers and METC each hereby
mutually waive its respective rights of subrogation and recovery against the
other for any loss for which payment can be collected by such party under
property insurance maintained by such party. The Transmission Facilities and all
other property on the Premises belonging to METC, its agents, employees,
contractors, subcontractors, invitees and licensees shall be at the risk of METC
or such other person only, and Consumers shall not be liable for damage thereto
or for the theft, misappropriation or loss thereof.
ARTICLE 18
Consumers' Rights To Perform METC's Covenants
If METC at any time fails to pay, or cause to be paid, any Imposition
required to be paid by METC pursuant to the provisions of Article 11 hereof, or
to take out, pay for, maintain or deliver or cause to be taken out, paid for,
maintained or delivered any of the insurance policies provided for in Article 17
hereof, or fails to make any other payment or perform any other act which METC
is obligated to make or perform under this Agreement, or cause such to be done,
then Consumers may, but shall not be obligated so to do, after thirty (30) days'
written notice to METC (but without notice in the event of an emergency or if
Consumers will be exposed to loss or damage by a delay) and without waiving, or
releasing METC from, any obligation of METC in this Agreement contained, pay any
such Imposition or effect such insurance coverage and pay premiums therefor, and
may make any other payment or perform any other act which METC is obligated to
perform under this Agreement, in such manner and to such extent as shall be
reasonable, and, in exercising any such rights, pay necessary, reasonable and
incidental costs and expenses, employ counsel and incur and pay attorneys' and
consultants' fees. All sums so paid by Consumers and all necessary, reasonable
and incidental costs and expenses in connection with the performance of any such
act by Consumers, shall be deemed additional Base Rent hereunder and, except as
may be otherwise expressly provided in this Agreement, shall be payable by METC
to Consumers as additional Base Rent within thirty (30) days after the date of
Consumers' invoice to METC therefor, and Consumers shall have the same tights
and remedies in the event of the nonpayment thereof by METC as in the case of
default by METC in the payment of any other Base Rent. Consumers' rights under
this Article 18 are in addition, and do not limit, any other rights or remedies
of Consumers.
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ARTICLE 19
Default Provisions
Section 19.1 Events of Default. This Agreement and the Term hereof are
subject to the limitation that if, at any time during the Term, any one or more
of the following events (herein called an "Event of Default") shall occur:
(a) if METC fails to pay any installment of the Base Rent provided for
herein, or any part thereof, when the same shall become due and
payable, and such failure continues for ten (10) days after Consumers
has given written notice thereof to METC; or
(b) if METC fails to pay any other charge or sum required to be paid by
METC hereunder and any such failure continues for thirty (30) days
after Consumers has given written notice thereof to METC; or
(c) if METC fails to perform or observe any other requirement of this
Agreement (not already specified in this Section 19.1) on the part of
the METC to be performed or observed, and such failure continues for
thirty (30) days after Consumers has given written notice thereof to
METC; or
(d) if substantially all of the Transmission Facilities or of METC's
interest in this Agreement are attached or levied upon under execution
and the same is not discharged within sixty (60) days thereafter;
then Consumers shall have the right, then or at any time thereafter, and while
such default or defaults continue, to give METC written notice of Consumers'
intention to terminate this Agreement on a date specified in such notice, which
date shall not be less than thirty (30) days after the date of giving of such
notice, and, on the date specified in such notice, METC's right to use and
occupancy of the Premises shall cease and METC shall peaceably and quietly yield
to and surrender to Consumers the Premises, and this Agreement (and the
Easement) shall thereupon terminate and all of the right, title and interest of
METC hereunder shall wholly cease and expire in the same manner and with the
same force and effect as such date so specified in said notice was the date
originally specified herein for the expiration of this Agreement and the Term
hereof, and METC shall then quit and surrender the Premises and the Transmission
Facilities on the Premises to Consumers, but METC shall remain liable to
Consumers as provided below. In the event of termination of this Agreement, METC
shall be deemed to have abandoned all Transmission Facilities on, under or over
the Premises to the extent the same have not been removed thereon prior to the
date of such termination.
Section 19.2 Possession Following Event of Default. In the event of any
termination of this Agreement pursuant to Section 19.1 or if an Event of Default
shall continue beyond the expiration of any grace or cure period provided for in
Section 19.1, Consumers may enter upon the Premises and have, repossess and
enjoy the same by summary proceedings, ejectment or otherwise, and in any such
event neither METC nor any person claiming through or under METC shall be
entitled to possession or to remain in possession of the Premises but shall
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forthwith quit and surrender the Premises. Consumers shall be under no liability
for or by reason of any such entry, repossession or removal of METC or any
person claiming through or under METC.
Section 19.3 METC Responsibility for Costs. In case of any such
termination, re-entry or dispossession by summary proceedings, ejectment or
otherwise, the rent and other charges required to be paid by METC hereunder
shall thereupon become due and payable up to the time of such termination,
re-entry or dispossession, and METC shall also pay to Consumers all reasonable
expenses which Consumers may then or thereafter incur for legal expenses,
attorneys' and consultants' fees, brokerage commissions, and all other
reasonable costs paid or incurred by Consumers for keeping the Premises and the
Transmission Facilities in, or restoring same to, good order and condition as
Consumers may elect to do. The retention or removal of the Transmission
Facilities, and other matters in respect to the Transmission Facilities, shall
be covered by Section 21.5, and METC shall be liable for all costs and expenses
as set forth in said Section 21.5 in addition to those specified in this Section
19.3.
Consumers shall be under no obligation to sell, lease or otherwise
reconvey the Premises or Transmission Facilities or any part of either or
interest in or respecting same in order to mitigate damages.
Section 19.4 Survival of METC's Payment Obligation. The right of
Consumers to recover from METC the amounts provided for above shall survive the
issuance of any order for possession or other termination hereof.
Section 19.5 Extension of Cure Period for Certain Events of Default.
Anything in this Article 19 to the contrary notwithstanding, it is expressly
understood that, with respect to any failure of METC to perform or observe any
requirement of this Agreement that is within the purview of clause (c) of
Section 19.1 hereof, if such failure is of such a nature that it cannot, with
due diligence, be cured within a period of thirty (30) days, the same will not
constitute an Event of Default such as to allow Consumers to exercise the
remedies for Events of Default provided for in this Article 19 if, and so long
as, METC (i) notifies Consumers in writing that METC will cure such default,
(ii) commences the curing of such default within the thirty (30) day period
referred to in said clause 19.1(c), and (iii) thereafter proceeds diligently and
in good faith to complete the curing of such default and does cure such default
within a reasonable time. Other than making the remedies for Events of Default
provided for in this Article 19 inapplicable if and so long as the preceding
conditions are met, nothing in this Section 19.5 shall relieve METC of any
liabilities or obligations, or deprive Consumers of any remedy, for METC's
failure to perform or observe, in a timely manner, the applicable requirement(s)
of this Agreement.
ARTICLE 20
Remedies Cumulative; Waiver
Section 20.1 Cumulative Remedies. The specified rights and remedies to
which Consumers may resort under the terms of this Agreement are cumulative and
are not intended to be exclusive of any other rights, remedies or means of
redress to which Consumers may be entitled at law or in equity in case of any
breach or threatened breach by METC of any provision
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of this Agreement. In addition to the other remedies in this Agreement provided,
Consumers shall be entitled to the restraint by injunction of any violation or
attempted or threatened violation of any of the terms, covenants, condition,
provisions or agreements of this Agreement.
Section 20.2 Waiver. The failure of Consumers to insist in any one or
more cases upon the strict performance of any of the terms, covenants,
conditions, provisions or agreements of this Agreement or to exercise any option
herein contained shall not be construed as a waiver or a relinquishment for the
future of any such term, covenant, condition, provision, agreement or option. A
receipt and acceptance by Consumers of Base Rent or any other payment, or the
acceptance of any performance of anything required by this Agreement to be
performed, with knowledge of the breach of any term, covenant, condition,
provision or agreement of this Agreement, shall not be deemed a waiver of such
breach, nor shall any acceptance of any payment in a lesser amount than is
herein provided for (regardless of any endorsement on any check, or any
statement in any letter accompanying any payment) operate or be construed either
as an accord and satisfaction or in any manner other than as payment on account
of the amounts then unpaid by METC, and no waiver by Consumers of any term,
covenant, condition, provision or agreement of this Agreement shall be deemed to
have been made unless specifically acknowledged as such in a writing signed by
Consumers.
ARTICLE 21
Surrender of Premises
Section 21.1 Surrender of Premises. METC shall, upon the expiration or
termination of this Agreement for any reason whatsoever (whether such
termination is under Article 19, Section 21.3 or otherwise), surrender the
Premises (or applicable portion of the Premises in the case of a partial
termination) to Consumers in good order, condition and repair, and in accordance
with all requirements of this Agreement, except for reasonable and ordinary wear
and tear. In the event of termination of this Agreement as to part of the
Premises pursuant to the provisions hereof, METC shall surrender that part of
the Premises to Consumers in good order, condition and repair, and in accordance
with all requirements of this Agreement, except for reasonable and ordinary wear
and tear.
If and to the extent that METC fails to leave any Premises in the
proper condition, Consumers may in addition to any other rights or remedies
available to Consumers under this Agreement or at law or equity, do the
necessary work to put the Premises in such condition and METC shall reimburse
Consumers for all costs thereof on demand.
METC shall surrender all the Premises to Consumers upon expiration of
the Term without notice of any kind, and METC hereby waives all right to any
such notice as may be provided under any present or future law.
Expiration or any termination (in whole or in part) of this Agreement
(whether such termination is under Article 19, Section 21.3 or otherwise) shall
not relieve METC of any obligations or liabilities that arose prior to such
expiration or termination, or are attributable to events, acts or omissions
occurring prior to such expiration or termination, or otherwise relate to
periods prior to such expiration or termination.
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Section 21.2 Holdover. If METC continues to use or occupy the Premises
with the written consent of Consumers after the last day of the Term, METC shall
be a tenant from month to month, at Base Rent twice the rate in effect prior to
the end of the Term and such tenancy shall otherwise be subject to all of the
covenants and agreements of this Agreement. Such month to month tenancy shall be
terminable by either party upon 30 days' notice to the other. In the event that
Consumers does not so consent to METC's continued use or occupation after the
expiration of the Term of this Agreement, or if no new agreement shall have been
entered into by the parties hereto, METC shall pay Consumers all damages
sustained by reason of METC's continuation or use or occupation after such
expiration.
Section 21.3 METC's Right to Terminate Agreement as to All or Part of
Premises. From time to time during the Term, METC shall have the right to
terminate this Agreement as to, and cease use and occupation of, all or any
portion of the Premises as of the end of any calendar quarter. METC shall give
Consumers written notice of its intention to terminate this Agreement as to, and
cease use and occupation of, the Premises or the applicable portion thereof not
less than one hundred eighty (180) days prior to the date for termination
specified therein and, if appropriate, its wish to remove some or all of the
Transmission Facilities located thereon as specified in such notice. If an
Easement Mortgagee shall exist as of the time of any notice of termination to
Consumers pursuant to this Section, such notice of termination shall be
accompanied by a written consent thereto signed by the Easement Mortgagee and no
such notice of termination shall be effective unless accompanied by such written
consent. In the event of any termination by METC pursuant to this Section 21.3,
whether as to all or as to any part of the Premises, the Base Rent payable by
METC under this Agreement shall, unless otherwise expressly agreed in writing by
Consumers, continue unchanged and shall not be reduced by the portion thereof
that is attributable to the Premises as to which such termination relates or
otherwise. If METC so terminates this Agreement as to all of the Premises, such
Base Rent will continue until the end of the then current term (Initial Term or
Extension Term, as the case may be) pursuant to Article 2, and no automatic
renewal pursuant to the second paragraph of Section 2.3 shall be deemed to occur
beyond such then current term (Initial Term or Extension Term, as the case may
be).
Section 21.5 Surrender or Removal of Transmission Facilities. Upon
expiration of the Term or any other termination of this Agreement (whether such
termination is under Article 19, Section 21.3 or otherwise), in its entirety or
with respect to less than all of the Premises, METC shall surrender to Consumers
all Transmission Facilities then on, under or over the Premises (or applicable
portion of the Premises, if the termination is as to less than all of the
Premises) and title thereto shall vest in Consumers unless Consumers notifies
METC in writing that some or all of the Transmission Facilities are to be
removed therefrom. If Consumers notifies METC that some or all of the
Transmission Facilities are to be so removed, METC shall, at its own expense,
remove same with all reasonable diligence thereafter, restore the surface of the
Premises affected thereby, and otherwise leave such Premises in good and proper
condition. If and to the extent that Transmission Facilities are not to be so
removed, METC shall leave same in such condition as would apply with same having
been fully and properly kept, maintained and repaired by METC in compliance with
the terms and conditions of this Agreement. METC shall coordinate removal
activities with Consumers and Authorized Users as and to the extent necessary to
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protect or relocate Distribution Facilities or other uses of Transmission
Facilities then being made of Transmission Facilities by Consumers and/or
Authorized Users. METC shall continue to have access to the Premises after such
expiration or termination for such purpose and shall not be deemed to be
continuing to occupy Leased Property pursuant to Section 21.3. Until completion
of such removal, Section 9.1, Articles 12, 14, 15, 16, 17 and 18 shall continue
in effect notwithstanding expiration or termination of this Agreement. In the
event title to some or all of the Transmission Facilities vests in Consumers
pursuant to this Section 21.5, METC shall execute and deliver to Consumers from
time to time such bills of sale or other conveyance as Consumers may reasonably
request for the purpose of confirming Consumers' ownership thereof.
If and to the extent that METC fails to remove any Transmission
Facilities that Consumers specified that METC was to remove, as set forth above
in this Section 21.5, then, in addition to any other rights or remedies
available to Consumers under this Agreement or at law or equity, Consumers may
exercise any or all of the following rights and remedies: (i) Consumers may at
its sole option decide that title to any or all such Transmission Facilities
shall vest in Consumers, even though that was not Consumers' previous intent,
and title shall vest accordingly; (ii) Consumers may at its sole option remove,
or leave in place, as it sees fit, any or all such Transmission Facilities, and
if Consumers so removes any such Transmission Facilities, METC shall pay
Consumers on demand all costs incurred by Consumers therefor and for restoration
of the premises; (iii) Consumers may, at its sole option, bring any or all of
such Transmission Facilities that are not in the condition required hereunder to
the appropriate condition, and METC shall pay all costs thereof to Consumers
upon demand; and (iv) whether or not Consumers has taken title thereto, and
whether same have been removed or left in place by Consumers, Consumers may at
its sole option dispose of any or all such Transmission Facilities in such
manner as Consumers sees fit, with the cost of such disposition being payable to
Consumers by METC upon demand and any proceeds of such disposition belonging
solely to Consumers, and as to any such Transmission Facilities that Consumers
so disposes of without taking title METC hereby grants to Consumers all
necessary right and authority to make such disposition.
ARTICLE 22
Assignment; Transfer
Section 22.1 Prohibition Against Assignment of Agreement Without
Consumers' Approval. Except as specifically provided otherwise in Section 22.2,
neither this Agreement nor the Easement created hereby, nor any right or
interest therein, shall be sold, assigned or otherwise transferred by METC in
any manner, in whole or in part, by operation of law or otherwise, without the
prior written approval of Consumers, which Consumers may withhold for any reason
or no reason.
Section 22.2 Assignments Permitted Without Prior Written Approval.
Without Consumers' prior written approval:
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(i) METC may, subject to the terms and conditions of Article 23, grant
Easement Mortgages in accordance with said Article 23, and such
Easement Mortgages may be assigned as referred to in Section 23.1;
(ii) this Agreement and the Easement granted hereunder may be assigned, in
total and not in part, to any Easement Mortgagee or the assignee of an
Easement Mortgagee as described and set forth in Section 23.5 hereof
(but this Agreement and the Easement may not be resold, transferred or
assigned, in any manner, in whole or in part, by any such assignee of
an Easement Mortgagee pursuant to Section 23.5, without Consumers'
prior written consent); and
(iii) this Agreement and the Easement granted hereunder may be assigned, in
total and not in part, by METC to any electric transmission company
with which METC is merged or consolidated or which purchases all of the
Transmission Facilities (as then existing on the Premises);
but none of the foregoing shall in any way release METC from any liability
except and unless as otherwise specified in Section 22.3.
Section 22.3 Assumption by Assignee. Each purchaser, assignee or other
transferee of this Agreement, or any part hereof, whether by consent of
Consumers pursuant to Section 22.1, or as allowed without Consumers' consent
pursuant to Section 22.2 (other than the mere granting or assignment of an
Easement Mortgage as mentioned in clause (i) of Section 22.2, which Easement
Mortgage exists as a lien on the Easement and has not been foreclosed upon or
the Easement itself taken by assignment or other means in lieu of foreclosure)
shall promptly execute and deliver to Consumers a written assumption of METC's
obligations under this Agreement in such form as Consumers may require. Upon
such purchase, assignment or other transfer, and the associated assumption of
METC's obligations (duly executed and delivered and in form fully satisfactory
to Consumers) becoming effective, METC shall have no further liability under
this Agreement except liabilities that arose prior to the sale, assignment or
transfer, or are attributable to events, acts or omissions occurring prior to
the sale, assignment or transfer, or that otherwise relate to periods prior to
the sale, assignment or other transfer. In the event METC has been notified by
Consumers of an Event of Default which has not been cured as of the time of a
proposed sale, assignment or other transfer, the assumption to be signed by the
proposed purchaser, assignee or other transferee shall include a specific
commitment to cure any such Event of Default in timely fashion.
In the event of a sale, assignment or other transfer of this Agreement
insofar as it applies only to part, and not all, of the Premises, then the
release of METC from further obligations under this Agreement set forth in the
immediately preceding paragraph shall apply only insofar as this Agreement
applies to the specific Premises as to which the sale, assignment or other
transfer was made.
ARTICLE 23
Mortgaging of the Easement
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Section 23.1 Easement Mortgages. METC, without Consumers' consent, may
mortgage the Easement (in whole and not in part), at any time and from time to
time, on such terms as METC may deem desirable, and such mortgage may be
assigned by the mortgagee thereunder. Each such mortgage, that may be validly
existing and outstanding at a particular time, is herein called an "Easement
Mortgage." Any Easement Mortgage shall not attach or purport to attach to any
right, title or interest in the Premises other than or beyond that granted and
existing under this Agreement. No holder of an Easement Mortgage shall have any
of the rights or benefits set forth in this Article 23, nor shall the provisions
of this Article 23 be in any manner binding upon or obligate Consumers with
respect to any holder of an Easement Mortgage, unless and until such holder of
an Easement Mortgage has notified Consumers in writing that it is a holder of
such Easement Mortgage and of the name and address to which all notices and
other communications hereunder to it may be addressed; and such a holder of an
Easement Mortgage, having fully and properly given such notice, is herein called
an "Easement Mortgagee."
All notices from an Easement Mortgagee to Consumers (including without
limitation the notice mentioned above in this Section 23.1), or from Consumers
to an Easement Mortgagee, shall be deemed given on the same terms and conditions
as are provided for in Section 24.1 below (it being understood that the Easement
Mortgagee's address for such notices will be that specified by the Easement
Mortgagee in its written notice to Consumers mentioned above in this Section
23.1 or such other address as the Easement Mortgagee may thereafter specify by
written notice to Consumers given in accordance with said Section 24.1).
Section 23.2 No Cancellation. Surrender or Material Modification
Without Easement Mortgagee Consent. Consumers and METC shall not agree between
themselves to any cancellation, surrender or material modification of this
Agreement without the prior written consent of each Easement Mortgagee. Nothing
in this Section 23.2 shall prevent Consumers from terminating this Agreement
pursuant to Article 19, or from taking any other action or pursuing any remedy
that, other than solely by reason of METC's mutual agreement thereto, Consumers
is at any time entitled to take or pursue pursuant to the terms and conditions
of this Agreement or by law or equity.
Section 23.3 Notices of Default to Leasehold Mortgagee. Consumers shall
give to each Easement Mortgagee a copy of any notice of default or notice of
Consumers' intention to terminate this Agreement given by Consumers to METC
hereunder not later than ten (10) days after giving any such notice to METC.
Section 23.4 Payment or Performance by Easement Mortgagee. At any time
when any Easement Mortgage shall remain unsatisfied of record, any Easement
Mortgagee may, on the same terms and conditions and within the same time periods
as would apply hereunder to METC, make any payment or perform any act required
hereunder to be made or performed by METC and Consumers shall accept such
payment and performance. No such performance by an Easement Mortgagee shall
release METC from any obligation or default hereunder except in the case of any
obligation or default which shall have been fully performed or corrected by such
payment or performance by an Easement Mortgagee.
Section 23.5 Assignment by Easement Mortgagee. If any Easement
Mortgagee shall
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acquire title to the Easement, by foreclosure of an Easement Mortgage or by
assignment in lieu of foreclosure, such Easement Mortgagee may assign the
Easement, in total and not in part, and shall thereupon be released from all
liability for the performance or observance of the covenants and conditions in
this Agreement contained on the part of METC to be performed and observed from
and after the date of such assignment, provided that the assignee from such
Easement Mortgagee shall have assumed this Agreement in accordance with Section
22.3 hereof and shall have complied otherwise with said Section.
ARTICLE 24
Miscellaneous
Section 24.1 Notices. Any and all notices required or permitted under
this Agreement shall be in writing and shall be deemed sufficiently given (i) as
of the third business day after the same has been deposited with the United
States Postal Service, certified or registered mail, return receipt requested,
postage fully prepaid, properly addressed to the other party as indicated below,
or (ii) upon actual receipt when same is delivered in person, by courier or in
any other manner (it being understood that a telecopy or similar transmittal
that is actually received at the proper location of the applicable party shall
comply with this clause (ii)).
If to Consumers: Consumers Energy Company
212 West Michigan Avenue
Jackson, Michigan 49201
Attention:
---------------------
If to METC: Michigan Electric Transmission Company
212 West Michigan Avenue
Jackson, Michigan 49201
Attention:
---------------------
Either party may change its above-indicated address, or the
above-indicated person or department to whose attention notices are to be
directed, by written notice to the other party given in accordance with this
section.
Section 24.2 Invalidity of Particular Provisions. If any term or
provision of this Agreement or the application thereof to any person or
circumstance shall to any extent be invalid or unenforceable, the remainder of
this Agreement, or the application of such term or provision to persons or
circumstances other than those as to which it is invalid or unenforceable, shall
not be affected thereby, and each term and provision of this Agreement shall be
valid and may be enforced to the fullest extent permitted by law.
Section 24.3 Successors and Assigns. Subject to the restrictions on
sale, assignment or transfer by METC set forth herein, and subject to the
provisions of Section 10.2, the terms, conditions, covenants, agreements and
reservations herein contained shall be binding upon and inure to the benefit of
the respective successors and assigns of the parties hereto.
Section 24.4 Amendments; Modifications. This Agreement, or any part
hereof, may not
34
<PAGE> 147
be changed, superseded or supplemented except in writing, signed by Consumers
and METC; it being the express intention of the parties hereto that no
provision, term or condition of this Agreement may be amended or varied in any
way by an oral understanding.
Section 24.5 Recordation. The parties hereto shall execute multiple
originals of this Agreement in conformity with legal requirements for recording
in the State of Michigan, and the same shall be promptly placed of record at
METC's expense in all counties in which Premises may be located.
If requested by Consumers, METC shall, upon expiration or termination
of this Agreement as to some or all Premises as provided herein, execute and
deliver to Consumers an appropriate release or releases, in content reasonably
satisfactory to Consumers and in proper form for recording, of METC's interest
therein.
Section 24.6 Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Michigan.
Section 24.7 Headings. The Section and Article headings in this
Agreement are included for reference only. They shall not affect the
interpretation and construction of this Agreement.
Section 24.8 Entire Agreement. Except as set forth in an [NAME OF
AGREEMENT] of even date herewith, this Agreement supersedes all previous
representations, understandings and negotiations, either written or oral,
between the parties hereto or their representatives with respect to the subject
matter hereof, and constitutes the entire agreement between the parties with
respect to such subject matter.
Section 24.9 Further Assurances. Subject to the terms and conditions of
this Agreement, each of the parties hereto will use its best efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or advisable to consummate the transactions contemplated by
this Agreement and to fully effect the intent of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Easement
Agreement to be duly executed as of the day and year first above written.
WITNESSES:
CONSUMERS ENERGY COMPANY
-----------------------------------
By
----------------------------------- ----------------------------------
35
<PAGE> 148
MICHIGAN ELECTRIC TRANSMISSION
COMPANY
-----------------------------------
By
----------------------------------- ----------------------------------
Acknowledged before me in County, Michigan, on ,
20 by , of
CONSUMERS ENERGY COMPANY, a Michigan corporation, for the corporation.
------------------------------------------
Notary Public, County, Michigan
My Commission Expires
Acknowledged before me in County, Michigan, on ,
20 by , of MICHIGAN
ELECTRIC TRANSMISSION COMPANY, a Michigan corporation, for the corporation.
------------------------------------------
Notary Public, County, Michigan
My Commission Expires
Prepared by D. E. Barth
Consumers Energy Company
212 West Michigan Avenue
Jackson, Michigan 49201
36
<PAGE> 149
EXHIBIT A
Page 1 of 2
EXHIBIT A
PREMISES
I. Fee Lands:
(a) In respect to all Transmission Facilities listed on the pages
attached hereto that are existing on the Commencement Date,
any parcels and strips of land upon which said Transmission
Facilities are located that, on the Commencement Date, are
owned by Consumers in fee simple; and
(b) in respect to those planned future Transmission Facilities
listed on said attached pages that have not yet been built as
of the Commencement Date, any parcels or strips of land that,
on the Commencement Date, are owned by Consumers in fee simple
and are designated on Consumers' records as being held for
purposes of such future Transmission Facilities.
In respect to any parcels of land referred to the preceding items I(a)
and I(b) that, in size and/or configuration, exceed what is needed for
purposes of Transmission Facilities and for which Consumers uses or can
potentially use the excess land for purposes unrelated to Transmission
Facilities (for instance, but not necessarily limited to, office
building, power plant or hydroelectric project lands that are crossed
by Transmission Facilities) or can potentially dispose of such excess
land, Consumers reserves the right to limit the amount of such parcels
that are deemed to be included in the Premises covered by this
Agreement to a strip of width reasonably needed for Transmission
Facility purposes, as determined by Consumers.
II. Easements:
(a) In respect to all Transmission Facilities listed on the pages
attached hereto that are existing on the Commencement Date,
any parcels and strips of land upon which said Transmission
Facilities are located on which, as of the Commencement Date,
Consumers has easement rights for such Transmission
Facilities; and
(b) in respect to those planned future Transmission Facilities
listed on said attached pages that have not yet been built as
of the Commencement Date, any parcels or strips of land on
which, as of the Commencement Date, Consumers has easement
rights that are designated on Consumers' records as being held
for purposes of such future Transmission Facilities.
III. Leases, Permits and Licenses:
(a) In respect to all Transmission Facilities listed on the pages
attached hereto that are existing on the Commencement Date,
any parcels and strips of land upon which said Transmission
Facilities are located on which, as of the Commencement Date,
Consumers has leasehold, permit or license easement rights for
such Transmission
<PAGE> 150
EXHIBIT A
Page 2 of 2
Facilities; and
(b) in respect to those planned future Transmission Facilities
listed on said attached pages that have not yet been built as
of the Commencement Date, any parcels or strips of land on
which, as of the Commencement Date, Consumers has leasehold,
license or permit rights that are designated on Consumers'
records as being held for purposes of such future Transmission
Facilities.
NOTES:
(i) The attached pages identify Transmission Facilities (existing or
planned) by the electric transmission line name or substation name by
which they are referred to in Consumers' records.
(ii) Consumers and METC shall cooperate in replacing the descriptions set
forth in the foregoing Parts I, II and III of this Exhibit A with more
specific legal descriptions, and/or references (e.g., by liber and
page) to other existing conveyances or other instruments that contain
more specific legal descriptions. Such replacement of the descriptions
set forth in the foregoing Parts I, II and III of this Exhibit A shall
be by supplemental agreement or amendment to this Agreement, signed by
Consumers and METC.
(iii) To the extent that portions of any of the facilities listed on the
pages attached hereto are not Transmission Facilities as defined
herein, it is understood that only the lands on which the Transmission
Facility portions, and not the lands on which such non-Transmission
Facility portions are located, are intended to be included in the
Premises covered by this Agreement.
<PAGE> 151
EXHIBIT A
CONSUMERS ENERGY COMPANY
ELECTRIC TRANSMISSION PLANT IN SERVICE - LAND AND R/W ONLY
AS OF JUNE 30, 2000
<TABLE>
<CAPTION>
Percent
Group Location Description Location KV Rating Transmission
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LINES ARGENTA - PONTIAC AND WAYNE 131311 345 KV 100.00%
LINES ARGENTA-TALLMADGE&KENOWA 131312 345 KV 100.00%
LINES ARGNTA-ROBINSON PARK&TW BRANCH 131313 345 KV 100.00%
LINES BAT CK-JACKSON-LANSING-138KV 131004 138 KV 75.55%
LINES CAMBEL-GD RAPS BATL CK 138KV 131122 138 KV 89.94%
LINES COBB-BLACK RIVER 138KV 131087 138 KV 91.78%
LINES COBB-HOOKER 138KV 131100 138 KV 74.30%
LINES COLDWATER-BATAVIA 138KV 131124 138 KV 100.00%
LINES CROTON-MUSK-GR RAPIDS 138KV 131003 138 KV 93.46%
LINES FLINT-BATTLE CREEK 138KV 131061 138 KV 80.31%
LINES FLINT-HEMPL-DET EDISON 120KV 131073 120 KV 100.00%
LINES GR RAPIDS KAZOO BAT CK 138KV 131008 138 KV 80.57%
LINES HARDY-GRAND RAPIDS 138KV 131002 138 KV 53.02%
LINES HIGGINS-MIO-GAYLORD 138KV 131085 138 KV 93.82%
LINES HODENPYL-CROTON 138KV 131001 138 KV 78.52%
LINES HODENPYL-TRAVERSE CITY 138KV 131090 138 KV 100.00%
LINES JACKSON-MANCHESTER 138KV 131010 138 KV 21.66%
LINES JACKSON-WHITING 138KV 131017 138 KV 65.54%
LINES JACKSON-WHITING 138KV 131084 138 KV 52.80%
LINES KARN-FLINT 138KV 131117 138 KV 100.00%
LINES KENOWA - THETFORD 131316 345 KV 100.00%
LINES KEYSTONE - LIVINGSTON 131308 345 KV 100.00%
LINES LANSING-FLINT G-7 138KV 131067 138 KV 83.10%
LINES LIVINGSTON - TITTABAWASSEE 131318 345 KV 100.00%
LINES LUD-KENWA OFF STE-SHRD,PROJECT 131304 345 KV 100.00%
LINES LUD-KEYSTN OFF STE-SHRD NON PJ 131307 345 KV 100.00%
LINES LUD-KNWA OFF SITE LAND-UNSHARD 131204 345 KV 100.00%
LINES LUD-TALMDGE OFF SITE LD UNSHRD 131205 345 KV 100.00%
LINES LUD-TALMDGE OFF STE-SHRD NONPJ 131305 345 KV 100.00%
LINES LULU-ALLEN JUNCTION 131319 345 KV 100.00%
LINES MAJESTIC-BLACKFOOT 345KV 131321 345 KV 100.00%
LINES MIO-ROCKPORT 138KV 131103 138 KV 94.33%
LINES MIO-SAGINAW 138KV 131005 138 KV 75.13%
LINES MONROE - LEMOYNE AND FOSTORIA 131315 345 KV 100.00%
LINES MORROW-BLACKSTONE Q-17 138KV 131074 138 KV 95.11%
LINES MORROW-WEALTHY V-22 138KV 131068 138 KV 89.16%
LINES MUSKEGON-GRAND RAPIDS 138KV 131106 138 KV 100.00%
LINES PALISADES - ARGENTA 131309 345 KV 100.00%
LINES SAG RIVER-EDENVILE ALMA 138KV 131006 138 KV 81.07%
LINES SAG RIVR-OWOSSO P-16 138KV 131077 138 KV 77.87%
LINES TALMDGE-PALISADES LD UNSHRD 131206 345 KV 100.00%
LINES TALMDGE-PALSDES-SHRD,NON-PROJ 131306 345 KV 100.00%
LINES THETFORD-ST CLAIR&PONTIAC 131314 345 KV 100.00%
LINES TITTABAWASSEE - THETFORD 131317 345 KV 100.00%
LINES TRAVERSE CITY-GAYLORD 138KV 131114 138 KV 25.97%
LINES VERONA-BATAVIA 138KV 131083 138 KV 100.00%
LINES WEADOCK-BULLOCK 138KV 131098 138 KV 81.43%
LINES WEADOCK-FLINT 138KV 131060 138 KV 99.67%
LINES WHITIN-DET EDSON-MONROE 120KV 131092 120 KV 100.00%
SUBS ARGENTA SUBSTATION 135133 138 KV 10.34%
SUBS ARGENTA SUBSTATION 135133 345 KV 44.69%
SUBS ARGENTA SUBSTATION 135133 345/138 KV 40.55%
</TABLE>
Page 1 of 4
<PAGE> 152
EXHIBIT A
CONSUMERS ENERGY COMPANY
ELECTRIC TRANSMISSION PLANT IN SERVICE - LAND AND R/W ONLY
AS OF JUNE 30, 2000
<TABLE>
<CAPTION>
Percent
Group Location Description Location KV Rating Transmission
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
135133 TOTAL 95.57%
SUBS BARD ROAD SUBSTATION 145159 138 KV 72.84%
SUBS BATAVIA SUBSTATION 145002 138 KV 47.64%
SUBS BATTLE CREEK SUB 135177 138 KV 6.21%
SUBS BATTLE CREEK SUB 135177 345 KV 68.38%
SUBS BATTLE CREEK SUB 135177 345/138 KV 24.17%
135177 TOTAL 98.76%
SUBS BEALS ROAD SUBSTATION 145021 138 KV 20.86%
SUBS BEECHER SUBSTATION 145001 138 KV 18.84%
SUBS BLACK RIVER SUBSTATION 145050 138 KV 19.39%
SUBS BLACKSTONE SUBSTATION 145027 138 KV 49.59%
SUBS BULLOCK SUBSTATION 145028 138 KV 29.19%
SUBS CLAREMONT SUBSTATION 145008 138 KV 53.49%
SUBS CORNELL SUBSTATION 145051 138 KV 52.24%
SUBS DELHI SUBSTATION 145011 138 KV 45.52%
SUBS DORT SUBSTATION 145012 138 KV 40.87%
SUBS EMMET SUBSTATION 145087 138 KV 37.93%
SUBS FOUR MILE SUBSTATION 145019 138 KV 19.23%
SUBS GAINES SUBSTATION 135246 138 KV 29.75%
SUBS GAINES SUBSTATION 135246 345/138 KV 70.25%
135246 TOTAL 100.00%
SUBS GALLAGHER SUB 135191 138 KV 13.16%
SUBS GALLAGHER SUB 135191 345 KV 15.81%
SUBS GALLAGHER SUB 135191 345/138 KV 66.64%
135191 TOTAL 95.61%
SUBS GARFIELD AVENUE SUBSTATION 145017 138 KV 34.64%
SUBS GOSS SUB 135184 138 KV 9.90%
SUBS GOSS SUB 135184 345 KV 36.69%
SUBS GOSS SUB 135184 345/138 KV 50.11%
135184 TOTAL 96.70%
SUBS HALSEY SUBSTATION 145114 138 KV 52.22%
SUBS HEMPHILL SUBSTATION 145018 138 KV 20.24%
SUBS KARN STEAM PLANT UNITS 3&4 111015 345 KV 34.58%
SUBS KENOWA SUB 135149 345 KV 100.00%
SUBS KEYSTONE SUB 135178 138 KV 10.41%
SUBS KEYSTONE SUB 135178 345 KV 33.36%
SUBS KEYSTONE SUB 135178 345/138 KV 47.90%
135178 TOTAL 91.67%
SUBS LATSON SUBSTATION 135143 138 KV 100.00%
SUBS LAWNDALE SUBSTATION 145129 138 KV 25.35%
SUBS LIVINGSTON SUB 135175 138 KV 12.18%
</TABLE>
Page 2 of 4
<PAGE> 153
EXHIBIT A
CONSUMERS ENERGY COMPANY
ELECTRIC TRANSMISSION PLANT IN SERVICE - LAND AND R/W ONLY
AS OF JUNE 30, 2000
<TABLE>
<CAPTION>
Percent
Group Location Description Location KV Rating Transmission
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SUBS LIVINGSTON SUB 135175 345 KV 25.20%
SUBS LIVINGSTON SUB 135175 345/138 KV 57.74%
135175 TOTAL 95.13%
SUBS MANNING SUBSTATION 135217 138 KV 2.03%
SUBS MANNING SUBSTATION 135217 345 KV 11.77%
SUBS MANNING SUBSTATION 135217 345/138 KV 79.69%
135217 TOTAL 93.49%
SUBS MARQUETTE SUBSTATION 145054 138 KV 30.17%
SUBS MCGULPIN SUBSTATION 145055 138 KV 31.99%
SUBS MILHAM SUBSTATION 145092 138 KV 40.93%
SUBS MOORE ROAD SUBSTATION 145132 138 KV 64.12%
SUBS MORROW SUBSTATION 145229 138 KV 29.76%
SUBS NORTH BELDING SUBSTATION 145031 138 KV 53.47%
SUBS ONEIDA SUBSTATION 135248 138 KV 1.68%
SUBS ONEIDA SUBSTATION 135248 345 KV 24.24%
SUBS ONEIDA SUBSTATION 135248 345/138 KV 73.24%
135248 TOTAL 99.16%
SUBS PERE MARQUETTE SUB 135192 138 KV 10.50%
SUBS PERE MARQUETTE SUB 135192 345 KV 18.85%
SUBS PERE MARQUETTE SUB 135192 345/138 KV 66.47%
135192 TOTAL 95.83%
SUBS PLASTER CREEK SUBSTATION 135258 138 KV 75.00%
SUBS RIGGSVILLE SUBSTATION 145035 138 KV 56.14%
SUBS SAGINAW RIVER SUBSTATION 145146 138 KV 60.76%
SUBS SPAULDING SUBSTATION 145113 138 KV 43.22%
SUBS STRONACH SUBSTATION 145085 138 KV 41.62%
SUBS TALLMADGE SUBSTATION 135135 138 KV 18.83%
SUBS TALLMADGE SUBSTATION 135135 345 KV 27.79%
SUBS TALLMADGE SUBSTATION 135135 345/138 KV 47.10%
135135 TOTAL 93.72%
SUBS TITTABAWASSEE SUB 135164 138 KV 6.93%
SUBS TITTABAWASSEE SUB 135164 345 KV 29.53%
SUBS TITTABAWASSEE SUB 135164 345/138 KV 62.15%
135164 TOTAL 98.61%
SUBS TOMPKINS SUB 135176 138 KV 4.97%
SUBS TOMPKINS SUB 135176 345 KV 24.28%
SUBS TOMPKINS SUB 135176 345/138 KV 67.44%
135176 TOTAL 96.69%
SUBS TRAIL STREET SUBSTATION 135068 138 KV 100.00%
SUBS TWINING SUBSTATION 145042 138 KV 42.28%
SUBS VERGENNES SUB 135196 138 KV 8.98%
SUBS VERGENNES SUB 135196 345 KV 59.44%
SUBS VERGENNES SUB 135196 345/138 KV 27.10%
</TABLE>
Page 3 of 4
<PAGE> 154
EXHIBIT A
CONSUMERS ENERGY COMPANY
ELECTRIC TRANSMISSION PLANT IN SERVICE - LAND AND R/W ONLY
AS OF JUNE 30, 2000
<TABLE>
<CAPTION>
Percent
Group Location Description Location KV Rating Transmission
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
135196 TOTAL 95.51%
SUBS VERONA SUBSTATION 145043 138 KV 46.40%
SUBS WEALTHY STREET SUBSTATION 145158 138 KV 13.64%
SUBS WHITE LAKE SUBSTATION 145046 138 KV 34.25%
</TABLE>
Page 4 of 4
<PAGE> 155
CONSUMERS ENERGY COMPANY EXHIBIT A
FUTURE USE END DATE: JUNE 30, 2000
PAGE 1 OF 2
Location Description
--------------------------------------------------------------------------------
913016 MONITOR-BULLOCK-LINE R/W
913016 MONITOR-BULLOCK-LINE R/W
913021 EAST GRANDS LINE R/W
913021 EAST GRANDS LINE R/W
913024 SUTTONS BAY-LELAND LINE R/W
913027 ALLEGAN NORTH-HOPKINS R/W
913028 VERONA-ISLAND ROAD R/W
913032 PAGE AVENUE-WHITING R/W
913032 PAGE AVENUE-WHITING R/W
913034 DORT-HEMPHULL R/W
913034 DORT-HEMPHULL R/W
913039 LELAND SUB SITE
913040 COLEMAN-MOUNT PLEASANT R/W
913044 BOARDMAN-BOYNE RIVER R/W
913045 BOYNE RIVER-CONWAY R/W
913090 PINCONNING GLADWIN RR R/W
913102 BARRY-DELHI-LOOKIN GLASS R/W
913102 BARRY-DELHI-LOOKIN GLASS R/W
913105 RACE ST-SPAULDING
913130 THETFORD SUB EXIT WEST
913137 G RAPIDS-KAL-BATT CR & BUCK CR
913137 G RAPIDS-KAL-BATT CR & BUCK CR
913138 WEADOCK-FLINT R/W
913148 SPRAGUE CR SUB SITE
913158 TITTABAWASSEE-BULLOCK R/W
913158 TITTABAWASSEE-BULLOCK R/W
913160 GARY RD SUB SITE
913162 COLE CR-W FLINT LINE R/W
913162 COLE CR-W FLINT LINE R/W
913164 PARR RD SUB AND 138KV EXITS
913178 FERRIS SPUR R/W FUTURE
913190 BARRY-W LANSING JCT-DELHI
913191 4 MILE-CROTON-SPAULDING
913199 DELHI - WEST BELT LINE R/W
913199 DELHI - WEST BELT LINE R/W
913200 DOWNS - THORNAPPLE - RICKERT
913203 QUANICASSE GARY RD 765KV R/W
913203 QUANICASSE GARY RD 765KV R/W
913205 MILLINGTON SUB SITE
913206 MILLINGTON-BLACKFOOT 765KV
913206 MILLINGTON-BLACKFOOT 765KV
913207 TITTAB-THET-KEN/CLARM-LWNDALE
913211 MECOSTA-HERSEY LINE R/W
913214 RIVERVIEW-PITCHER-KAL TREA R/W
913218 TOWER BEACH-DUQUITE-SAGINAW R
913221 BOMBAY-WACKERLY 138 KV R/W
913221 BOMBAY-WACKERLY 138 KV R/W
913225 HERSEY-EVART LINE R/W
913228 THOMPSON ROAD-BARRY R/W
913228 THOMPSON ROAD-BARRY R/W
913229 GARY ROAD-SPRAGUE CREEK R/W
913229 GARY ROAD-SPRAGUE CREEK R/W
913230 BOARDMAN-SUTTONS BAY R/W
913232 EAGLE SUB SITE 765 KV
913234 OSTERHOUT LINE R/W
<PAGE> 156
CONSUMERS ENERGY COMPANY EXHIBIT A
FUTURE USE END DATE: JUNE 30, 2000
PAGE 2 OF 2
Location Description
--------------------------------------------------------------------------------
913236 POMPEII SUB & POMPEII-BINGHAM
913236 POMPEII SUB & POMPEII-BINGHAM
913238 ZEELAND S'WEST TO PAL-TALLMADG
913239 WOLF RD SUB R/W
913239 WOLF RD SUB R/W
913241 SPRAGUE CK-ZEELAND R/W
913241 SPRAGUE CK-ZEELAND R/W
913243 RICKERT-SPAULDING RIGHT OF WAY
913246 THOMPSON SUB & THOMP-SPAUL-MQT
913246 THOMPSON SUB & THOMP-SPAUL-MQT
913247 HALSEY-HEMPHILL&LINDEN JCT R/W
913247 HALSEY-HEMPHILL&LINDEN JCT R/W
913249 VROOMAN-MOORE RD 138KV R/W
913249 VROOMAN-MOORE RD 138KV R/W
913251 WARREN SUMMERTON 138KV R/W
913251 WARREN SUMMERTON 138KV R/W
913257 SPRAGUE CR-GOSS RIGHT OF WAY
913257 SPRAGUE CR-GOSS RIGHT OF WAY
913260 LEFFINGWELL HARVEY SPALD R/W
913261 ZEELAND SUB SITE LAND
913262 DAVID SUB LINE R/W
913264 DELHI-LAWSON TRANSMISSION LINE
913265 HARVEY-SPAULDING 138 KV LN R/W
913267 MARBLE LAKE SUB SITE
913270 LOVEJOY-FILLMER ROW
913270 LOVEJOY-FILLMER ROW
913271 MEADOWBROOKE-KENDRICK
913272 TITTABAWASSEE-LAWNDALE
913274 THOMPSON RD/SPAULDING-MARQ
913274 THOMPSON RD/SPAULDING-MARQ
913275 DAVID TO WESTPHALIA SPUR
913276 PHILLIPS-MILHAM NEW 138KV LINE
913300 BATTLE CREEK - BATAVIA
913300 BATTLE CREEK - BATAVIA
913301 BLACKSTONE-BROUGHALL-TOMPKINS
913302 VAN WAGONER TO TAFT SPUR
914131 GREEN LAKE SUB R/W
<PAGE> 157
EXHIBIT A
CONSUMERS ENERGY COMPANY
ANALYSIS OF CWIP FOR ELECTRIC TRANSMISSION
LAND AND R/W ONLY
AS OF JUNE 30, 2000
Work
Order Location WO Description
------------------------------------------------------------------------
1873 131060 GOSS-SPRAGUR CRK EASEMENTS
1926 131994 CALEDONIA-GAINES R/W ONLY
2649 131084 PARR ROAD-BLACSTONE ROW
2655 131994 VEVAY-DELHI R/W ONLY
2657 131994 VEVAY-TOMPKINS R/W ONLY
3021 131994 BAYBERRY/CAMP-BUCK CK R/W ONLY
3048 131306 CSX CONSVERSION-PERMANENT ESMT
3065 131994 RAILROAD EASEMENT LEELANAU TRN
3186 131307 KEYSTONE-LUDINGTON 307A - R/W
3510 131060 WEADOCK-HEMPHILL 60D LAND
3549 131114 LIVINGTON-ROGERS 114C ROW
3648 131002 COBBS-BEALS RD 138KV EASEMENT
5466 131006 ALMA-SUMMERTON R/W
5676 131306 CAMPBELL ASH POND ROW
5891 131002 PISTON RING-CROTON 138KV ROW
6351 135274 ROGUE RIVER SUB ACQUIRE LAND
6516 131074 VROOMAN-MOORE RD 138KV ROW
6986 131114 LIVINGTON-EMMET 138KV ROW
7073 131006 REFINERY-POMINI 138KV ROW
7788 131092 WHITING-CUSTER 138KV R/W
8328 131002 RACE STREET-SPAULDING ROW
8364 131017 LENAWEE - ACQUIRE SITE
8419 131074 FORT CUSTER-MORROW ROW
8659 135286 ROOSEVELT SUB R/W ONLY
8799 135257 PEARLINE SUB PURCH LAND
9050 131098 SAGINAW RV-MONITOR 98C ROW
9480 131006 BEGOLE JCT-SUMMERTON ROW
Page 1 of 1
<PAGE> 158
EXHIBIT B
Page 1 of 2
EXHIBIT B
Attached to and made a part of the Easement Agreement ("Agreement") dated
, 20 between Consumers Energy Company ("Consumers") and
Michigan Electric Transmission Company ("METC").
Procedure for Determining Fair Market Value
If, pursuant to Article 5 of the Agreement, METC desires to make an
Addition/Alteration which Consumers determines will result in an additional
burden on the Premises, and if METC disagrees with Consumers' determination of
the fair market value ("Consumers' Fair Market Value Estimate") of the property
rights required for such Addition/Alteration (including any case where METC does
not believe that the Addition/Alteration will constitute any additional burden
on the Premises and therefore asserts that no fair market value applies), such
fair market value shall be determined by the following procedure:
1. METC shall at its own expense obtain an appraisal of such fair market
value ("METC's Appraisal"), and shall deliver to Consumers a complete
copy of METC's Appraisal at the same time as METC delivers to Consumers
METC's notice, pursuant to the last paragraph of Section 5.3 of the
Agreement, that METC disagrees with Consumers' Fair Market Value
Estimate. METC's Appraisal shall (i) comply with all requirements of
the Uniform Standards of Appraisal Practice as promulgated by the
Appraisal Foundation, and (ii) be based on the definition of fair
market value set forth in Clause 3, below, of this Exhibit B, and
reflect on its face that the appraiser has made his/her appraisal based
only on such definition and taking into account all aspects of such
definition.
If METC's Appraisal does not comply with the immediately preceding
requirements, METC shall, within thirty (30) days after being notified
thereof by Consumers, have the deviations corrected and resubmit same
to Consumers (and all references in Clause 2 below to METC's Appraisal
shall be deemed to mean such corrected and resubmitted appraisal).
2. If the higher of Consumers' Fair Market Value Estimate and the amount
established by METC's Appraisal exceeds the lower thereof by an amount
equal to fifteen percent (15%) or less of such higher value, then the
average of those two values shall be deemed to be the fair market
value.
If Consumers' Fair Market Value Estimate and the amount established by
METC's Appraisal differ by more than an amount equal to fifteen percent
(15%) of the higher thereof as specified in the immediately preceding
paragraph, then Consumers and METC shall, acting in good faith,
mutually agree upon a third party independent appraiser who will be
retained to complete an additional appraisal (the "Third Party
Appraisal"). Such Third Party Appraisal shall comply with the same
criteria as are set forth in Clause 1, above; and a full copy thereof
shall be simultaneously delivered by the third party independent
appraiser to both Consumers and METC. The amount established by the
Third Party Appraisal shall constitute the fair market value.
<PAGE> 159
EXHIBIT B
Page 2 of 2
METC shall reimburse Consumers for, or pay directly, the entire cost of
the Third Party Appraisal.
3. For purposes hereof, fair market value shall be deemed to be the
estimated value of the additional burden that METC's proposed
Addition/Alternation imposes on the use of the Premises in question by
Consumers and others authorized by Consumers for existing and potential
future Compatible Uses (such existing and potential future use of such
Premises for "Compatible Uses" being considered entirely in the absence
of METC's proposed Addition/Alteration or any other Transmission
Facilities not then already existing). The valuation shall consider
Consumers' inability or reduced ability, as a consequence of METC's
proposed Addition/Alteration, to (i) utilize the Premises in question
for its own purposes or uses; and (ii) generate revenue from Authorized
Users from the Premises in question. The valuation shall not be limited
to the diminution in value or loss of use of or revenue from the
directly encumbered area, but shall be based on the diminution in value
or loss of use of the entire tract or tracts of land that are under
beneficial control of Consumers, or otherwise have an integrated
highest and best use. Elements for consideration in this regard are
contiguity, or proximity as it bears on the highest and best use of the
property, unity of ownership and unity of highest and best use.
<PAGE> 160
EXHIBIT C
Attached to and made a part of the Easement Agreement ("Agreement")
dated , 20 between Consumers Energy Company ("Consumers")
and Michigan Electric Transmission Company ("METC").
Prices for sale to Consumers or an Authorized User of towers, pole
structures, poles, conduits or similar transmission facilities pursuant to the
second paragraph of Section 8.4 of the Agreement will be as follows:
(a) Wood poles/pole structures: Sale price will be the original cost of
such pole or pole structure, as shown on METC's books at time of
original installation, depreciated to the time of the sale utilizing a
straight-line depreciation over a 30 year period from time of original
installation to a value of $1.00 at the end of 30 years. If a pole/pole
structure that was purchased in place by METC from Consumers is
involved, then Consumers' original cost and date of installation shall
be used in making such calculation.
(b) Towers: If a tower from a 138 kV line is involved, the price will be a
fixed price of One Hundred Dollars ($100.00), and if a tower from a 345
kV line is involved, the price will be a fixed price of One Hundred
Fifty Dollars ($150.00), which prices the parties hereby stipulate and
agree to represent reasonable, average, estimates of the scrap value of
towers. If a tower from a line operated at a different voltage is
involved, the parties will use one of the foregoing prices based on
whether the tower is closest in size to a 138 kV line tower or a 345 kV
line tower.
(c) Conduits/other facilities: If METC would otherwise abandon same in
place, then the price will be One Dollar ($1.00). If METC would
otherwise remove same, then the price will be the scrap value thereof
as reasonably agreed to by the parties.
<PAGE> 161
BILL OF SALE
CONSUMERS ENERGY COMPANY, a Michigan corporation, whose address is 212
West Michigan Avenue, Jackson, Michigan 49201 ("Seller"), for good and valuable
consideration, the receipt of which Seller hereby acknowledges, does hereby sell
and convey unto MICHIGAN ELECTRIC TRANSMISSION COMPANY, a Michigan corporation,
whose address is 212 West Michigan Avenue, Jackson, Michigan 49201
("Purchaser"), certain electric transmission facilities, consisting of towers,
pole structures, poles, crossarms, wires, cables, conduits, guys, anchors,
transformers, insulators, substations, switching stations and other fixtures and
equipment, now installed and existing on, over and across various premises in
the State of Michigan, said electric transmission facilities and the locations
thereof being more specifically identified on Exhibit A, attached hereto and
made a part hereof.
It is understood that to the extent that portions of any of the
facilities listed on the pages attached hereto are not used or intended for
"Transmission" of electricity as defined in a certain Easement Agreement between
the parties of even date herewith, such non-Transmission portions of such
facilities are not included in the facilities conveyed herein.
It is further understood that sole consideration for said electric
transmission facilities is Seller's retention of 100 percent of the issued and
outstanding common stock of Purchaser ("Transco Voting Securities"). The sale
will value both said electric transmission facilities and the Transco Voting
Securities at the actual depreciated value ("Net Book Value") of said electric
transmission facilities as of the date set forth below. Seller will retain no
interest in said electric transmission facilities except for the Transco Voting
Securities.
The sale of said electric transmission facilities is made expressly
contingent on Purchaser's execution of (1) the Operating Agreement By And
Between Michigan Electric Transmission Company and Consumers Energy Company,
(2) the Service Agreement For Network Integration Transmission Service and (3)
the Easement Agreement Between Consumers Energy Company and Michigan Electric
Transmission Company in the same form as shown in Exhibits H(1), H(2) and H(3),
respectively, of the October 13, 2000 application of Seller and Purchaser for
authorization of the Federal Energy Regulatory Commission to transfer said
electric transmission facilities to Purchaser in Docket No. EC01-4-000.
SAID ELECTRIC TRANSMISSION FACILITIES ARE SOLD "AS IS" AND "WHERE IS."
SELLER MAKES NO REPRESENTATIONS OR WARRANTIES WHATSOEVER, EXPRESSED, IMPLIED OR
STATUTORY, INCLUDING, WITHOUT LIMITATION, ANY REPRESENTATION OR WARRANTY AS TO
THE TITLE, VALUE, FREEDOM FROM DEFECTS OR HAZARDS, QUANTITY, CONDITION,
SALABILITY, OBSOLESCENCE, WORKING ORDER, FITNESS OR SUITABILITY FOR ANY PURPOSE
OR USE, OR MERCHANTABILITY OF ANY OF SAID ELECTRIC TRANSMISSION FACILITIES.
IN WITNESS WHEREOF, Consumers Energy Company has caused this instrument
to be executed by its duly authorized representative this day of
, 20 .
WITNESSES:
CONSUMERS ENERGY COMPANY
---------------------------------
By
--------------------------------- ---------------------------------
MICHIGAN ELECTRIC TRANSMISSION COMPANY, a Michigan corporation,
Purchaser in the foregoing Bill of Sale, hereby accepts the conveyance set forth
in said foregoing Bill of Sale as of the above set forth date thereof.
WITNESSES:
MICHIGAN ELECTRIC TRANSMISSION
COMPANY
---------------------------------
By
--------------------------------- ---------------------------------
<PAGE> 162
EXHIBIT A
See attached sheets
<PAGE> 163
EXHIBIT A
CONSUMER ENERGY COMPANY
ELECTRIC TRANSMISSION PLANT IN SERVICE EXCLUDING LAND AND R/W
AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Percent
Group Location Description Location kV Rating Transmission
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LINES 345 KV TRAINING FACILITY 131998 Training Facilities 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
LINES ARGENTA - PONTIAC AND WAYNE 131311 345 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
LINES ARGENTA-TALLMADGE&KENOWA 131312 345 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
LINES ARGNTA-ROBINSON PARK&TW BRANCH 131313 345 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
LINES BAT CK-JACKSON-LANSING-138KV 131004 138 KV 78.09%
-----------------------------------------------------------------------------------------------------------------------------------
LINES CAMBEL-GD RAPS BATL CK 138KV 131122 138 KV 72.78%
-----------------------------------------------------------------------------------------------------------------------------------
LINES CAMPBELL PLANT TO 345KV SUB 131604 345 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
LINES CAMPBELL PLANTS TO 138KV SUB 131503 138 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
LINES CLAREMONT-MANNING 138 KV 131125 138 KV 88.95%
-----------------------------------------------------------------------------------------------------------------------------------
LINES COBB-BLACK RIVER 138KV 131087 138 KV 97.15%
----------------------------------------------------------------------------------------------------------------------------------
LINES COBB-HOOKER 138KV 131100 138 KV 76.39%
-----------------------------------------------------------------------------------------------------------------------------------
LINES COLDWATER-BATAVIA 138KV 131124 138 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
LINES TEST FACILITY MIDLAND 131997 Training Facilities 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
LINES CROTON-MUSK-GR RAPIDS 138KV 131003 138 KV 87.77%
-----------------------------------------------------------------------------------------------------------------------------------
LINES FLINT-BATTLE CREEK 138KV 131061 138 KV 83.80%
-----------------------------------------------------------------------------------------------------------------------------------
LINES FLINT-HEMPL-DET EDISON 120KV 131073 120 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
LINES GR RAPIDS KAZOO BAT CK 138KV 131008 138 KV 76.81%
-----------------------------------------------------------------------------------------------------------------------------------
LINES HARDY-GRAND RAPIDS 138KV 131002 138 KV 80.40%
-----------------------------------------------------------------------------------------------------------------------------------
LINES HIGGINS-MIO-GAYLORD 138KV 131085 138 KV 63.45%
-----------------------------------------------------------------------------------------------------------------------------------
LINES HODENPYL-CROTON 138KV 131001 138 KV 51.54%
-----------------------------------------------------------------------------------------------------------------------------------
LINES HODENPYL-TRAVERSE CITY 138KV 131090 138 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
LINES JACKSON-MANCHESTER 138KV 131010 138 KV 37.67%
-----------------------------------------------------------------------------------------------------------------------------------
LINES JACKSON-WHITING 138KV 131017 138 KV 69.22%
-----------------------------------------------------------------------------------------------------------------------------------
LINES JACKSON-WHITING 138KV 131084 138 KV 78.57%
-----------------------------------------------------------------------------------------------------------------------------------
LINES KARN-FLINT 138KV 131117 138 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
LINES KENOWA - THETFORD 131316 345 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
LINES KEYSTONE - LIVINGSTON 131308 345 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
LINES LANSING-FLINT G-7 138KV 131067 138 KV 59.72%
-----------------------------------------------------------------------------------------------------------------------------------
LINES LIVINGSTON - TITTABAWASSEE 131318 345 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
LINES LUD KEYSTN ON STE SHRD,NON-PRJ 131301 345 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
LINES LUD-KENWA OFF STE-SHRD,PROJECT 131304 345 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
LINES LUD-KENWA ON SITE-SHRD,PROJECT 131303 345 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
LINES LUD-KEYSTN OFF STE-SHRD NON PJ 131307 345 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
LINES LUD-TALMDGE OFF STE-SHRD NONPJ 131305 345 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
LINES LUD-TALMDGE ON STE-SHRD NON PJ 131302 345 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
LINES LULU-ALLEN JUNCTION 131319 345 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
LINES MAJESTIC-BLACKFOOT 345KV 131321 345 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
LINES MIO-ROCKPORT 138KV 131103 138 KV 94.77%
-----------------------------------------------------------------------------------------------------------------------------------
LINES MIO-SAGINAW 138KV 131005 138 KV 89.22%
-----------------------------------------------------------------------------------------------------------------------------------
LINES MONROE - LEMOYNE AND FOSTORIA 131315 345 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
LINES MORROW-BLACKSTONE Q-17 138KV 131074 138 KV 78.34%
-----------------------------------------------------------------------------------------------------------------------------------
LINES MORROW-WEALTHY V-22 138KV 131068 138 KV 65.10%
-----------------------------------------------------------------------------------------------------------------------------------
LINES MUSKEGON-GRAND RAPIDS 138KV 131106 138 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
LINES PALISADES - ARGENTA 131309 345 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
LINES PALISADES - PALISADE JCT 131310 345 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
LINES SAG RIVER-EDENVILE ALMA 138KV 131006 138 KV 84.47%
-----------------------------------------------------------------------------------------------------------------------------------
LINES SAG RIVR-OWOSSO P-16 138KV 131077 138 KV 75.75%
-----------------------------------------------------------------------------------------------------------------------------------
LINES SO WEST MARSHALL TRAIN FAC 131999 Training Facilities 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
LINES TALMDGE-PALSDES-SHRD,NON-PROJ 131306 345 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
LINES THETFORD-ST CLAIR&PONTIAC 131314 345 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
LINES TITTABAWASSEE - THETFORD 131317 345 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
LINES TRAVERSE CITY-GAYLORD 138KV 131114 138 KV 47.80%
-----------------------------------------------------------------------------------------------------------------------------------
LINES VERONA-BATAVIA 138KV 131083 138 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
LINES WEADOCK-BULLOCK 138KV 131098 138 KV 79.62%
-----------------------------------------------------------------------------------------------------------------------------------
LINES WEADOCK-FLINT 138KV 131060 138 KV 96.70%
-----------------------------------------------------------------------------------------------------------------------------------
LINES WHITIN-DET EDSON-MONROE 120KV 131092 120 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS AIRPORT SUB 135220 138 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS ALBA TIE SUBSTATION 135093 138 KV 66.90%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS ALPENA SUBSTATION 135058 138 KV 94.22%
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 1 of 4
<PAGE> 164
EXHIBIT A
CONSUMER ENERGY COMPANY
ELECTRIC TRANSMISSION PLANT IN SERVICE EXCLUDING LAND AND R/W
AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Percent
Group Location Description Location kV Rating Transmission
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SUBS ARGENTA SUBSTATION 135133 138 KV 10.33%
----------------------------------------------------------------------------------------------------------------------------------
SUBS ARGENTA SUBSTATION 135133 345 KV 44.68%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS ARGENTA SUBSTATION 135133 345/138 KV 40.54%
-----------------------------------------------------------------------------------------------------------------------============
135133 TOTAL 95.54%
-----------------------------------------------------------------------------------------------------------------------============
SUBS BARD ROAD SUBSTATION 145159 138 KV 72.84%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS BARTON LAKE SUB (NIPSCO) 135214 138 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS BATAVIA SUBSTATION 145002 138 KV 47.64%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS BATTLE CREEK SUB 135177 138 KV 6.21%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS BATTLE CREEK SUB 135177 345 KV 68.38%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS BATTLE CREEK SUB 135177 345/138 KV 24.17%
-----------------------------------------------------------------------------------------------------------------------============
135177 TOTAL 98.76%
-----------------------------------------------------------------------------------------------------------------------============
SUBS BEALS ROAD SUBSTATION 145021 138 KV 20.86%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS BEECHER SUBSTATION 145001 138 KV 18.84%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS BLACK RIVER SUBSTATION 145050 138 KV 19.39%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS BLACKSTONE SUBSTATION 145027 138 KV 49.59%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS BLENDON SUB 135185 138 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS BRADLEY SUB 135236 138 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS BULLOCK SUBSTATION 145028 138 KV 29.19%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS CAMPBELL 138KV SUB-SHARED 135228 138 KV 56.61%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS CAMPBELL 138KV SUB-UNSHARED 135227 138 KV 15.32%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS CAMPBELL 138KV SUB-UNSHARED 135227 345/138 KV 69.71%
-----------------------------------------------------------------------------------------------------------------------============
135227 TOTAL 85.02%
-----------------------------------------------------------------------------------------------------------------------============
SUBS CAMPBELL 345KV SUB-SHARED 135218 345 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS CAMPBELL 345KV SUB-UNSHARED 135226 345 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS CLAREMONT SUBSTATION 145008 138 KV 53.49%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS CLINTON SUB-D.E 135225 345 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS COBB B C STEAM PLANT 111002 138 KV 21.03%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS COLDWATER 138KV (MSCPA) 135221 138 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS CORNELL SUBSTATION 145051 138 KV 52.24%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS CROTON SUBSTATION 145010 138 KV 30.48%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS DELHI SUBSTATION 145011 138 KV 45.38%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS DORT SUBSTATION 145012 138 KV 40.87%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS EMMET SUBSTATION 145087 138 KV 37.93%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS FOUR MILE SUBSTATION 145019 138 KV 19.23%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS GAINES SUBSTATION 135246 138 KV 29.75%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS GAINES SUBSTATION 135246 345/138 KV 70.25%
-----------------------------------------------------------------------------------------------------------------------============
135246 TOTAL 100.00%
-----------------------------------------------------------------------------------------------------------------------============
SUBS GALLAGHER SUB 135191 138 KV 13.16%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS GALLAGHER SUB 135191 345 KV 15.81%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS GALLAGHER SUB 135191 345/138 KV 66.64%
-----------------------------------------------------------------------------------------------------------------------============
135191 TOTAL 95.61%
-----------------------------------------------------------------------------------------------------------------------============
SUBS GARFIELD AVENUE SUBSTATION 145017 138 KV 34.60%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS GOSS SUB 135184 138 KV 9.90%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS GOSS SUB 135184 345 KV 36.69%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS GOSS SUB 135184 345/138 KV 50.11%
-----------------------------------------------------------------------------------------------------------------------============
135184 TOTAL 96.70%
=-----------------------------------------------------------------------------------------------------------------------===========
SUBS GRAND TRAVERSE SUB 135183 138 KV 57.51%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS HALSEY SUBSTATION 145114 138 KV 52.22%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS HEMPHILL SUBSTATION 145018 138 KV 20.24%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS KARN STEAM PLANT UNITS 1&2 111011 138 KV 32.79%
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 2 of 4
<PAGE> 165
EXHIBIT A
CONSUMER ENERGY COMPANY
ELECTRIC TRANSMISSION PLANT IN SERVICE EXCLUDING LAND AND R/W
AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Percent
Group Location Description Location kV Rating Transmission
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SUBS KARN STEAM PLANT UNITS 3&4 111015 345 KV 34.55%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS KENOWA SUB 135149 345 KV 99.83%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS KENOWA SUB-SHARED, PROJECT 135161 345 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS KEYSTONE SUB 135178 138 KV 10.41%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS KEYSTONE SUB 135178 345 KV 33.34%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS KEYSTONE SUB 135178 345/138 KV 47.87%
-----------------------------------------------------------------------------------------------------------------------============
135178 TOTAL 91.62%
-----------------------------------------------------------------------------------------------------------------------============
SUBS LATSON SUBSTATION 135143 138 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS LAWNDALE SUBSTATION 145129 138 KV 25.35%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS LIVINGSTON SUB 135175 138 KV 12.17%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS LIVINGSTON SUB 135175 345 KV 25.19%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS LIVINGSTON SUB 135175 345/138 KV 57.70%
-----------------------------------------------------------------------------------------------------------------------============
135175 TOTAL 95.07%
-----------------------------------------------------------------------------------------------------------------------============
SUBS LOUD HYDRO PLANT FPC 2449 121026 138 KV 57.31%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS LUD PLT SUB-SHARED, NON-PROJECT 135187 345 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS LUD PLT SUB-UNSHRD; NON-PROJECT 135188 345 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS MANNING SUBSTATION 135217 138 KV 2.03%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS MANNING SUBSTATION 135217 345 KV 11.77%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS MANNING SUBSTATION 135217 345/138 KV 79.69%
-----------------------------------------------------------------------------------------------------------------------============
135217 TOTAL 93.49%
-----------------------------------------------------------------------------------------------------------------------============
SUBS MARQUETTE SUBSTATION 145054 138 KV 30.17%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS MARSHALL 138KV (MSCPA) 135222 138 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS MCGULPIN SUBSTATION 145055 138 KV 31.79%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS MILHAM SUBSTATION 145092 138 KV 40.93%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS MIO HYDRO PLANT FPC 2448 121029 138 KV 78.26%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS MOORE ROAD SUBSTATION 145132 138 KV 64.12%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS MORROW SUBSTATION 145229 138 KV 29.76%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS NORTH BELDING SUBSTATION 145031 138 KV 53.47%
----------------------------------------------------------------------------------------------------------------------------------
SUBS ONEIDA SUBSTATION 135248 138 KV 1.68%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS ONEIDA SUBSTATION 135248 345 KV 24.24%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS ONEIDA SUBSTATION 135248 345/138 KV 73.24%
-----------------------------------------------------------------------------------------------------------------------============
135248 TOTAL 99.16%
-----------------------------------------------------------------------------------------------------------------------============
SUBS PALISADES SUB SHARED, NON-PROJ 135163 345 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS PERE MARQUETTE SUB 135192 138 KV 10.50%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS PERE MARQUETTE SUB 135192 345 KV 18.85%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS PERE MARQUETTE SUB 135192 345/138 KV 66.47%
-----------------------------------------------------------------------------------------------------------------------============
135192 TOTAL 95.83%
-----------------------------------------------------------------------------------------------------------------------============
SUBS PLASTER CREEK SUBSTATION 135258 138 KV 75.00%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS PROJECT 1 SUB 135224 138 KV 66.67%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS REDWOOD SUB 135180 138 KV 69.60%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS RIGGSVILLE SUBSTATION 145035 138 KV 56.14%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS SAGINAW RIVER SUBSTATION 145146 138 KV 60.76%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS SPARE EQUIP AT TRAVERSE CITY 139002 Spare Transmission Equipment 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS SPARE EQUIPMENT AT ALMA 139008 Spare Transmission Equipment 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS SPARE EQUIPMENT AT BAY CITY 139007 Spare Transmission Equipment 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS SPARE EQUIPMENT AT CLAY ST 139006 Spare Transmission Equipment 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS SPARE EQUIPMENT AT ELM STREET 139004 Spare Transmission Equipment 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS SPARE EQUIPT AT SPEC LOCATION 139001 Spare Transmission Equipment 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS SPAULDING SUBSTATION 145113 138 KV 43.22%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS STERNBERG SUBSTATION 135235 138 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS STRONACH SUBSTATION 145085 138 KV 41.62%
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 3 of 4
<PAGE> 166
EXHIBIT A
Consumer Energy Company
Electric Transmission Plant in Service Excluding Land and R/W
As of December 31, 1999
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Percent
Group Location Description Location kV Rating Transmission
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------------------------------
SUBS TALLMADGE SUBSTATION 135135 138 KV 18.81%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS TALLMADGE SUBSTATION 135135 345 KV 27.77%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS TALLMADGE SUBSTATION 135135 345/138 KV 47.05%
-----------------------------------------------------------------------------------------------------------------------------------
135135 TOTAL 93.63%
===================================================================================================================================
SUBS TALMDGE SUB-SHRD,NON PROJECT 135162 345 KV 100.00%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS THETFORD GENERATING STATION 161007 138 KV 10.68%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS THETFORD GENERATING STATION 161007 345 KV 40.88%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS THETFORD GENERATING STATION 161007 345/138 KV 24.00%
-----------------------------------------------------------------------------------------------------------------------------------
161007 TOTAL 75.56%
===================================================================================================================================
SUBS TIPPY HYDRO PLANT FPC 2580 121039 138 KV 59.06%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS TITTABAWASSEE SUB 135164 138 KV 6.93%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS TITTABAWASSEE SUB 135164 345 KV 29.51%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS TITTABAWASSEE SUB 135164 345/138 KV 62.12%
-----------------------------------------------------------------------------------------------------------------------------------
135164 TOTAL 98.56%
===================================================================================================================================
SUBS TOMPKINS SUB 135176 138 KV 4.97%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS TOMPKINS SUB 135176 345 KV 24.28%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS TOMPKINS SUB 135176 345/138 KV 67.43%
-----------------------------------------------------------------------------------------------------------------------------------
135176 TOTAL 96.67%
===================================================================================================================================
SUBS TWINING SUBSTATION 145042 138 KV 42.28%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS VERGENNES SUB 135196 138 KV 8.98%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS VERGENNES SUB 135196 345 KV 59.44%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS VERGENNES SUB 135196 345/138 KV 27.10%
-----------------------------------------------------------------------------------------------------------------------------------
135196 TOTAL 95.51%
===================================================================================================================================
SUBS VERONA SUBSTATION 145043 138 KV 46.40%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS WEADOCK JOHN C STEAM PLANT 111008 138 KV 23.10%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS WEALTHY STREET SUBSTATION 145158 138 KV 13.64%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS WHITE LAKE SUBSTATION 145046 138 KV 34.25%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS WHITING JUSTIN R STEAM PLANT 111009 138 KV 13.10%
-----------------------------------------------------------------------------------------------------------------------------------
SUBS WHITING JUSTIN R STEAM PLANT 111009 138/120 KV 9.52%
-----------------------------------------------------------------------------------------------------------------------------------
111009 TOTAL 22.62%
===================================================================================================================================
</TABLE>
Page 4 of 4
<PAGE> 167
EXHIBIT A
Consumers Energy Company
CWIP for Electric Transmission & Year 2000 Closings
As of June 30, 2000
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
<S> <C> <C>
Work Order Location WO Description
--------------------------------------------------------------------------------
0617 135133 ARGENTA - REPL 3 BKRS
0759 131004 BLACKSTONE-BROUGHWELL 4F
0766 131004 TOMPKINS JCT-BROUGHWELL 4C
0796 135176 TOMPKINS - NEW EXIT & BKR
0808 135177 BATTLE CREEK - SITE PREP
0809 135177 BATTLE CREEK - INC CAPACITY
0868 135177 DEARBORN INDUSTRIAL GENERATION
0936 135227 CAMPBELL 138KV - REPL CCPD'S
0937 135227 CAMPBELL 138 - REPL 3 BUS POTS
0970 135283 VESTABURG - INST INTERC METER
0972 135283 VESTABURG - TELEMETRY
0975 131002 VESTABURG TO ALMA-EUREKA 2
0987 131017 SAMARIA-WHITING 17G - RELO
1007 131006 BARD RD-WARREN - INST 1 STAY
1011 131005 GALLAGHER-TWINING 5J - POLES
1018 131098 HOTCHKISS-WACKERLY 98G - POLES
1032 131006 WARREN TO BULL-EDENVILLE 6E
1242 131006 ALMA-SUMMERTON - NEW 138KV LIN
1246 131005 E TAWAS-COTTAGE GROVE 5O
1537 135284 KALAMAZOO RVR GENERATION SUB
1541 135184 GOSS ELECTRIC SUB
1578 135196 VERGENNES ELECTRIC SUB
1588 135177 BATTLE CREEK ELECTRIC SUB
1680 131008 ARGENTA-HAZELWOOD 8L - REPL
1694 131313 ARGENTA-ROBINSON PARK 313B
1699 131087 ARGENTA-SCOTT LAKE 87C - REPL
1811 131002 DERBY TO ALMA-EUREKA 2
2845 135246 GAINES - SITE PREP - TRF PURCH
3312 131114 WEXFORD-KEYSTONE 114K - POLE
3318 131084 PARR RD-WHITING 84A - 2-H-F'S
3319 131122 RIVERTOWN/CAMP-BUCK CK 122AF
3537 135133 ARGENTA - REPL PRI 2 RELAYS
3560 135227 CAMPBELL - REPL OSCILLOGRAPH
3597 135184 GOSS - REPL PER 1&2 RELAYS
3608 135149 KENOWA - REPL PRI 1&2 RELAYS
3612 135175 LIVINGSTON - REPL BKR FAILURE
3620 135192 PERE MARQUETTE - REPL RELAYS
3666 135135 TALLMADGE - REPL PRI 1&2 RELAY
3675 135164 TITTABAWASSEE - REPL RELAYS
3685 135176 TOMPKINS - REPL PRI 1&2 RELAYS
3862 135135 TALLMADGE - REPL RTU
4168 131077 BINGHAM-MARQUETTE 77D - POLES
4227 131317 BELLE RIVER-BLACKFOOT 345KV
4230 131002 CRDAR SPRINGS SPUR 2 138KV
4269 135177 BATTLE CREEK - INST PULLOFF
4270 131061 BATTLE CR-ISLAND RD - RELO
4274 131087 VERONA-ARGENTA 87D - RELO
4275 131074 VERONA-BATTLE CREEK 74E - RELO
</TABLE>
Page 1 of 2
<PAGE> 168
EXHIBIT A
Consumers Energy Company
CWIP for Electric Transmission & Year 2000 Closings
As of June 30, 2000
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
<S> <C> <C>
Work Order Location WO Description
--------------------------------------------------------------------------------
4465 135221 COLDWATER 138KV
4628 131002 SPAULDING/RACE ST-4 MILE-NEW
4695 135248 ONEIDA - INST 345KV CB'S/EXIT
4705 131311 ONEIDA TO BATTLE CK-MAJ 311
4756 131017 BEECHER-MOORE RD 17F - POLE
4779 131100 COBB-WHITE LAKE 100A - POLE
4782 131100 COBB-DUPONT 100E - REPL POLE
4786 131103 ROCKPORT-PORT CALCITE 103C
4804 131114 STOVER-KEYSTONE 114A - POLE
4808 131114 STOVER-LIVINGSTON 114I - POLE
4813 131114 LIVINGSTON-GAYLORD 114M - POLE
4849 135177 BATTLE CREEK - REPL RELAYS
4916 131060 DORT TO STR #1788 60H - TWR
5014 135177 BATTLE CREEK - SITE PREP
5100 131068 GAINES-BRADLEY - REPL 7 POLES
5267 131077 BEALS RD-BROADMOOR 77Q - MO-OP
6463 131085 ODEN-MCGULPIN 85 LOOP
6650 139001 RCV & HOLD MAJ EQUIP FOR FUTUR
6798 135155 RICKERT - REPL 3-PH REGULATOR
6855 131084 PARR RD-WHITING 84A - POLES
6883 135161 KENOWA - REPL RELAYS
6887 135175 LIVINGSTON - REPL OSCILLOGRAPH
6893 135187 LUDINGTON - REPL RELAYS
6898 135162 TALLMADGE - REPL RELAYS
7245 131060 WEADOCK-THETFORD 60E - 3 POLES
7335 135192 PERE MARQUETTE - REPL CCPD
7419 131117 THETFORD-HEMPHILL 117H - 1POLE
7501 131006 BULLOCK-EDENVILLE 6B - RECOND
7549 135246 GAINES SUB SATEL BASED PHONE
7595 131085 MIO-HIGGINS 85A - 33 POLES
7747 135175 LIVINGSTON PEAKER - TELEMETRY
8002 139000 MARBLE LKE-EDON RD 138KV PUR
8024 131008 MORROW-CORK STREET 8I
8030 131008 MORROW-MORROW PEAKER 8
8266 131100 WHITE LAKE-COBB 100
8276 139001 TRANSM RCV/HOLD MAJ EQ -FUTURE
8378 131122 CAMPBELL-BUCK CREEK 122F-RELO
8414 139008 OPERATING SPARE EQUIPMENT
8416 131122 RIVERTOWN/CAMP-BUCK CK 122AF
8661 131994 ROOSEVELT-SOUTHERN PWR PLT
8718 135286 ROOSEVELT - SITE PREP
8719 135286 ROOSEVELT - NEW SWITCHING STA
8734 131306 ROOSEVELT-SOUTHERN 306 - 345KV
8894 131122 BLENDON-FOUR MILE 122I - REPL
9200 135241 FILER CITY COGEN - BUSHINGS
9262 131122 EAST PARIS-GAINES - RELO POLES
9374 135286 ROOSEVELT - FDN, FENCE, GNDNG
</TABLE>
Page 2 of 2
<PAGE> 169
EXHIBIT I
MAP
TRANSMISSION VS. NON-TRANSMISSION
CONSUMERS ENERGY
345kV and 138kV Networks
As of 08/01/2000
