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<SEC-DOCUMENT>0000950134-05-001716.txt : 20050131
<SEC-HEADER>0000950134-05-001716.hdr.sgml : 20050131
<ACCEPTANCE-DATETIME>20050131172513
ACCESSION NUMBER:		0000950134-05-001716
CONFORMED SUBMISSION TYPE:	S-4
PUBLIC DOCUMENT COUNT:		12
FILED AS OF DATE:		20050131
DATE AS OF CHANGE:		20050131

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CONSUMERS ENERGY CO
		CENTRAL INDEX KEY:			0000201533
		STANDARD INDUSTRIAL CLASSIFICATION:	ELECTRIC & OTHER SERVICES COMBINED [4931]
		IRS NUMBER:				380442310
		STATE OF INCORPORATION:			MI
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		S-4
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-122429
		FILM NUMBER:		05562949

	BUSINESS ADDRESS:	
		STREET 1:		ONE ENERGY PLAZA
		CITY:			JACKSON
		STATE:			MI
		ZIP:			49201
		BUSINESS PHONE:		5177881031

	MAIL ADDRESS:	
		STREET 1:		ONE ENERGY PLAZA
		CITY:			JACKSON
		STATE:			MI
		ZIP:			49201

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	CONSUMERS POWER CO
		DATE OF NAME CHANGE:	19920703
</SEC-HEADER>
<DOCUMENT>
<TYPE>S-4
<SEQUENCE>1
<FILENAME>k91595sv4.txt
<DESCRIPTION>REGISTRATION STATEMENT ON FORM S-4
<TEXT>
<PAGE>

    AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 31, 2005
                                                           REGISTRATION NO. 333-
================================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                 ---------------
                                    FORM S-4
                             REGISTRATION STATEMENT
                        UNDER THE SECURITIES ACT OF 1933
                                ----------------
                            CONSUMERS ENERGY COMPANY
             (Exact name of registrant as specified in its charter)

<TABLE>
<CAPTION>
          MICHIGAN                             4939                       38-0442310
<S>                                 <C>                               <C>
(State or other jurisdiction of     (Primary Standard Industrial       (I.R.S. Employer
incorporation or organization)       Classification Code Number)      Identification No.)
</TABLE>

                                ONE ENERGY PLAZA
                             JACKSON, MICHIGAN 49201
                                  517-788-0550
    (Address, including zip code, and telephone number, including area code,
                  of registrant's principal executive offices)
                                 ---------------
                                 THOMAS J. WEBB
              EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
                            CONSUMERS ENERGY COMPANY
                                One Energy Plaza
                             Jackson, Michigan 49201
                                  517-788-0351
 (Name, address, including zip code, and telephone number, including area code,
                             of agent for service)

                                With copies to:

                            ROBERT C. SHROSBREE, ESQ.
                            ASSISTANT GENERAL COUNSEL
                             CMS ENERGY CORPORATION
                                One Energy Plaza
                             Jackson, Michigan 49201
                                  517-768-7323
                                 ---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
                               -------------------
If the only securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: [ ]

If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering: [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ]
                                ----------------
                         CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
                                                                     PROPOSED MAXIMUM  PROPOSED MAXIMUM
                                                                      OFFERING PRICE       AGGREGATE       AMOUNT OF
           TITLE OF EACH CLASS OF                      AMOUNT TO BE        PER             OFFERING      REGISTRATION
         SECURITIES TO BE REGISTERED                    REGISTERED        UNIT(1)          PRICE(1)           FEE
- ---------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>           <C>               <C>               <C>
4.40% First Mortgage Bonds due 2009, Series N........  $150,000,000        100%        $ 150,000,000     $ 17,655.00

5.00% First Mortgage Bonds due 2012, Series O........   300,000,000        100%          300,000,000       35,310.00

5.50% First Mortgage Bonds due 2016, Series P........   350,000,000        100%          350,000,000       41,195.00

Total................................................  $800,000,000        100%        $ 800,000,000     $ 94,160.00
=====================================================================================================================
</TABLE>

(1) Estimated pursuant to Rule 457(f) solely for the purpose of calculating the
registration fee.

WE HERE BY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE
NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL WE FILE A FURTHER AMENDMENT WHICH
SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME
EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL
THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE
COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.

================================================================================

<PAGE>

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT CONSUMMATE THE EXCHANGE OFFER UNTIL THE REGISTRATION STATEMENT FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

                  SUBJECT TO COMPLETION, DATED JANUARY 31, 2005

                             Preliminary Prospectus

                                  $800,000,000

                             [CONSUMERS ENERGY LOGO]

                            CONSUMERS ENERGY COMPANY

                       Exchange Offer for all Outstanding

                  4.40% First Mortgage Bonds due 2009, Series K
                  5.00% First Mortgage Bonds due 2012, Series L
                  5.50% First Mortgage Bonds due 2016, Series M

       The Exchange Offer will expire at 5:00 p.m., New York City time, on
                  _________________, 2005 unless we extend it.

                           Terms of the Exchange Offer

                             -----------------------

We are offering to exchange new registered 4.40% First Mortgage Bonds due 2009,
Series N for all of our old unregistered 4.40% First Mortgage Bonds due 2009,
Series K; new registered 5.00% First Mortgage Bonds due 2012, Series O, for all
of our old unregistered 5.00% First Mortgage Bonds due 2012, Series L; and new
registered 5.50% First Mortgage Bonds due 2016, Series P for all old
unregistered 5.50% First Mortgage Bonds due 2016, Series M.

The terms of the new bonds will be identical in all material respects to the
terms of the old bonds, except that the registration rights and related
liquidated damages provisions and the transfer restrictions applicable to the
old bonds will not be applicable to the new bonds. The new bonds will have the
same financial terms and covenants as the old bonds, and will be subject to the
same business and financial risks. Any outstanding old bonds not validly
tendered will remain subject to existing transfer restrictions.

Subject to the satisfaction or waiver of specified conditions, we will exchange
the new bonds for all old bonds that are validly tendered and not withdrawn by
you at any time prior to the expiration of the Exchange Offer as described in
this prospectus.

The new bonds will not be listed on any securities exchange or included in any
automatic quotation system.

We will not receive any proceeds for the exchange.

We are not asking you for a proxy and you are requested not to send us a proxy.

     THIS INVESTMENT INVOLVES RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 16.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.

             The date of this prospectus is January 31, 2005

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                           PAGE
                                                                           ----
<S>                                                                        <C>
Important Notice about Information in this Prospectus...............         1
Where You Can Find More Information.................................         2
Forward-Looking Statements and Information..........................         3
Summary.............................................................         6
Risk Factors........................................................        16
Use of Proceeds.....................................................        25
Ratio of Earnings to Fixed Charges..................................        25
Description of the New Bonds........................................        26
Ratings.............................................................        34
The Exchange Offer .................................................        34
Certain United States Federal Income Tax Consequences...............        44
Plan of Distribution................................................        47
Legal Opinions......................................................        47
Experts.............................................................        48
</TABLE>

              IMPORTANT NOTICE ABOUT INFORMATION IN THIS PROSPECTUS

      You should rely only on the information contained in this prospectus or to
which we have referred you. We have not authorized anyone to provide you with
information that is different or to make any representations about us or about
the transactions we discuss in this prospectus. If you receive information about
these matters that is not included in this prospectus, you must not rely on that
information. This document may only be used where it is legal to sell these
securities. The information in this document may only be accurate on the date of
this document.

<PAGE>

                       WHERE YOU CAN FIND MORE INFORMATION

      We file reports, proxy statements and other information with the
Securities and Exchange Commission ("SEC") under File No. 1-5611. Our SEC
filings are available over the Internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any document we file at the SEC's
public reference room at 450 Fifth Street N.W., Room 1024, Washington D.C.
20549. Please call the SEC at 1-800-SEC-0330 for more information on the public
reference rooms and their copy charges. You may also inspect our SEC reports and
other information at the New York Stock Exchange, 20 Broad Street, New York, New
York 10005. You can find additional information about us, including our Annual
Report on Form 10-K/A for the year ended December 31, 2003 and our Quarterly
Reports on Form 10-Q for the quarters ended March 31, 2004, June 30, 2004 and
September 30, 2004, on the web site of our parent company at
http://www.cmsenergy.com. The information on this web site is not a part of this
prospectus.

      We are "incorporating by reference" information into this prospectus. This
means that we are disclosing important information by referring to another
document filed separately with the SEC. The information incorporated by
reference is deemed to be part of this prospectus, except for any information
superseded by information in this prospectus. This prospectus incorporates by
reference the documents set forth below that we have previously filed with the
SEC. These documents contain important information about us and about our
finances.

      -     Annual Report on Form 10-K/A for the year ended December 31, 2003
            filed on July 21, 2004

      -     Quarterly Report on Form 10-Q for the quarter ended March 31, 2004
            filed on May 7, 2004, Quarterly Report on Form 10-Q for the quarter
            ended June 30, 2004 filed on August 6, 2004 and Quarterly Report on
            Form 10-Q for the quarter ended September 30, 2004 filed on November
            4, 2004

      -     Current Reports on Form 8-K filed on January 22, 2004, March 18,
            2004, June 3, 2004, August 20, 2004, September 1, 2004, October 6,
            2004, October 12, 2004, October 13, 2004, October 19, 2004, December
            6, 2004, December 8, 2004, December 13, 2004, January 12, 2005,
            January 14, 2005, January 20, 2005 and January 27, 2005

      The documents filed by us with the SEC pursuant to Section 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT") after the date of this prospectus, until the Exchange Offer is terminated,
are also incorporated by reference into this prospectus. Any statement contained
in such document will be deemed to be modified or superseded for purposes of
this prospectus to the extent that a statement contained in this prospectus or
any other subsequently filed document modifies or supersedes such statement.

      We will provide, upon your oral or written request, a copy of any or all
of the information that has been incorporated by reference in this prospectus
but not delivered with this prospectus. You may request a copy of these filings
at no cost by writing or telephoning us at the following address:

Consumers Energy Company
One Energy Plaza
Jackson, Michigan 49201
Tel: (517) 788-0550
Attention: Office of the Secretary

                                        2
<PAGE>

                   FORWARD-LOOKING STATEMENTS AND INFORMATION

This prospectus includes or incorporates by reference forward-looking
statements. From time to time, we may make statements regarding our assumptions,
projections, expectations, intentions or beliefs about future events. These
statements are intended as "forward looking statements" under the Private
Securities Litigation Reform Act of 1995. Forward-looking statements give our
expectations or forecasts of future events. You can identify these statements by
the fact that they do not relate strictly to historical or current facts.
Forward-looking statements have been and will be made in this prospectus and in
our other written documents (such as press releases, visual presentations and
securities disclosure documents) and oral presentations (such as analyst
conference calls). Such statements are based on management's beliefs as well as
assumptions made by and information currently available to management. When used
in our documents or oral presentations, we intend the words "anticipate,"
"believe," "estimate," "expect," "forecast," "intend," "objective," "plan,"
"possible," "potential," "project," "projection," and variations of such words
and similar expressions to target forward-looking statements that involve risk
and uncertainty.

Any or all of our forward-looking statements in oral or written statements or in
other publications may turn out to be wrong. They can be affected by inaccurate
assumptions or by known or unknown risks and uncertainties. Many such factors
will be important in determining our actual future results. Consequently, we
cannot guarantee any forward-looking statement.

In addition to any assumptions and other factors referred to specifically in
connection with such forward-looking statements, there are numerous factors that
could cause our actual results to differ materially from those contemplated in
any forward-looking statements. Such factors include our inability to predict
and/or control:

            -     capital and financial market conditions, including the price
                  of the common stock of CMS Energy Corporation, our parent
                  company ("CMS ENERGY"), and the effect of such market
                  conditions on our pension plan, interest rates and access to
                  the capital markets, as well as availability of financing to
                  us or CMS Energy or any of its affiliates, and the energy
                  industry;

            -     market perception of the energy industry, us and CMS Energy,
                  or any of our affiliates;

            -     credit ratings of us, CMS Energy or any of its affiliates;

            -     factors affecting utility and diversified energy operations
                  such as unusual weather conditions, catastrophic
                  weather-related damage, unscheduled generation outages,
                  maintenance or repairs, environmental incidents or electric
                  transmission or gas pipeline system constraints;

            -     international, national, regional and local economic,
                  competitive and regulatory policies, conditions and
                  developments;

            -     adverse regulatory or legal decisions, including those related
                  to environmental laws and regulations;

            -     the extent of favorable regulatory treatment and regulatory
                  lag concerning a number of significant questions presently
                  before the Michigan Public Service Commission ("MPSC")
                  relating to the Michigan Customer Choice and Electricity
                  Reliability Act of 2000 (the "CUSTOMER CHOICE ACT"),
                  including:

                                       3
<PAGE>

            -     recovery of stranded costs incurred due to customers choosing
                  alternative energy suppliers;

            -     recovery of Clean Air Act costs and other environmental and
                  safety-related expenditures;

            -     power supply and natural gas supply costs when energy supply
                  and oil prices are increasing rapidly;

            -     timely recognition in rates of additional equity investments
                  in Consumers; and

            -     adequate and timely recovery of additional electric and gas
                  rate-based expenditures;

      -     the impact of adverse natural gas prices on the Midland Cogeneration
            Venture Limited Partnership (the "MCV PARTNERSHIP") investment and
            regulatory decisions that limit our recovery of capacity and fixed
            energy payments;

      -     federal regulation of electric sales and transmission of
            electricity, including re-examination by federal regulators of the
            market-based sales authorizations by which our affiliates
            participate in wholesale power markets without price restrictions;

      -     energy markets, including the timing and extent of changes in
            commodity prices for oil, coal, natural gas, natural gas liquids,
            electricity and certain related products due to lower or higher
            demand, shortages, transportation problems or other developments;

      -     the generally accepted accounting principles requirement that we
            utilize mark-to-market accounting on certain of our energy commodity
            contracts, and possibly other types of contracts in the future,
            which may have, in any given period, a significant positive or
            negative effect on earnings, which could change dramatically or be
            eliminated in subsequent periods or could add to earnings
            volatility;

      -     potential disruption or interruption of facilities or operations due
            to accidents or terrorism, and the ability to obtain or maintain
            insurance coverage for such events;

      -     nuclear power plant performance, decommissioning, policies,
            procedures, incidents and regulation, including the availability of
            spent nuclear fuel storage;

      -     technological developments in energy production, delivery and usage;

      -     achievement of capital expenditure and operating expense goals;

      -     changes in financial or regulatory accounting principles or
            policies;

      -     outcome, cost and other effects of legal and administrative
            proceedings, settlements, investigations and claims;

      -     limitations on our ability to control the development or operation
            of projects in which our subsidiaries have a minority interest;

      -     disruptions in the normal commercial insurance and surety bond
            markets that may increase costs or reduce traditional insurance
            coverage, particularly terrorism and sabotage insurance and
            performance bonds;

      -     other business or investment considerations that may be disclosed
            from time to time in CMS Energy's or our SEC filings or in other
            publicly issued written documents;

                                       4
<PAGE>

      -     other uncertainties that are difficult to predict and many of which
            are beyond our control; and

      -     the factors identified under "Risk Factors" beginning on page 16.

Except to the extent required by the federal securities laws, we undertake no
obligation to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise. The foregoing review of
factors should not be construed as exhaustive or as any admission regarding the
adequacy of our disclosures. Certain risk factors are detailed from time to time
in our various public filings. You are advised, however, to consult any further
disclosures we make on related subjects in our reports to the SEC. In
particular, you should read the discussion in the section entitled
"Forward-Looking Statements and Risk Factors" in our most recent reports to the
SEC on Form 10-K/A and Form 10-Q or Form 8-K filed subsequent to such Form
10-K/A and Form 10-Q.

                                       5
<PAGE>

                                     SUMMARY

      This summary may not contain all the information that may be important to
you. You should read this prospectus and the documents incorporated by reference
in this prospectus in their entirety before making an investment decision. The
terms "Consumers", "Company", "our", "us", and "we" as used in this document
refer to Consumers Energy Company and its subsidiaries and predecessors as a
combined entity, except where it is made clear that such term means only
Consumers Energy Company. In this document, "MW" means megawatts.

                            CONSUMERS ENERGY COMPANY

      Consumers, a wholly-owned subsidiary of CMS Energy, is a public utility
that provides natural gas and/or electricity to almost 6.5 million of Michigan's
10 million residents in Michigan's lower peninsula. Consumers' electric
operations include the generation, purchase, distribution and sale of
electricity. It provides electric services in 61 of the 68 counties of
Michigan's lower peninsula. In 2003, Consumers' electric utility owned and
operated 30 electric generating plants with an aggregate of 6,435 MW of capacity
and served 1.77 million customers in Michigan's lower peninsula. Consumers' gas
utility operation purchases, transports, stores, distributes and sells natural
gas. It renders gas sales and delivery service in 44 of the 68 counties in
Michigan's lower peninsula. In 2003, Consumers' gas utility owned and operated
over 25,055 miles of distribution mains and 2,408 miles of transmission lines
throughout the lower peninsula of Michigan, providing natural gas to 1.67
million customers. Our principal executive offices are located at One Energy
Plaza, Jackson, Michigan 49201 and our telephone number is (517) 788-0550.

                               RECENT DEVELOPMENTS

THIRD QUARTER 2004 RESULTS OF OPERATIONS

NET INCOME AVAILABLE TO COMMON STOCKHOLDER

<TABLE>
<CAPTION>
  SEPTEMBER 30,            2004      2003       CHANGE
                           ----      ----       ------
                                  (UNAUDITED)
                                 (IN MILLIONS)
<S>                        <C>       <C>        <C>
Three months ended         $ 34      $ 33       $  1
Nine months ended           162       172        (10)
</TABLE>

      For the three months ended September 30, 2004, our net income increased $1
million versus the same period in 2003 primarily due to increases in gas
revenues, electric fuel recovery revenues, earnings from the MCV Partnership,
reductions in general tax expense and increased interest income. The annual
unbilled gas volume analysis led to an increase in accrued gas revenues of $7
million versus the 2003 results. In addition, gas revenues increased net income
$1 million due to the interim MPSC gas rate order issued in December 2003. The
Customer Choice Act authorized us to recognize interest income on the excess of
capital expenditures over our depreciation base. The increase in interest income
offset higher operating expenses, benefiting net income $4 million. Net income
also increased $1 million versus the same period in 2003 due to the absence of a
prior year underrecovery of power supply cost recovery revenue versus cost.
Further, net income increased $3 million due to a decrease in general taxes from
decreased property tax expense. Finally, net income increased $2 million due to
higher earnings from the MCV Partnership reflecting increases in the fair value
of certain long-term gas contracts.

      Decreased electric delivery revenues and increased interest charges
substantially offset these increases to net income. Decreased electric delivery
revenues reduced net income by $13 million, primarily due to milder summer
temperatures, tariff revenue reductions, and the continued loss of

                                       6
<PAGE>

commercial and industrial customers switching to alternative electric suppliers,
as allowed by the Customer Choice Act. An increase in interest expense decreased
net income $4 million due to greater average borrowings, partially offset by a
reduction in the average rate of interest.

      For the nine months ended September 30, 2004, our net income decreased $10
million versus the same period in 2003. Electric delivery revenues decreased net
income $28 million due to milder summer weather, tariff revenue reductions, and
the continued loss of customers to alternative electric suppliers, as allowed by
the Customer Choice Act. The milder weather lowered gas delivery revenues,
decreasing net income by $7 million. Earnings from the MCV Partnership declined
$6 million primarily due to increases in non-recoverable fuel costs incurred at
the natural gas-fueled, combined-cycle cogeneration facility operated by the MCV
Partnership (the "MCV FACILITY"). In addition, net income was decreased $12
million due to higher interest expense from greater average borrowings,
partially offset by a reduction in our average interest rate. Higher general
taxes decreased net income $7 million due to a 2003 reduction in Michigan small
business tax expense to reflect the benefit of CMS Energy's receipt of approval
to file consolidated tax returns for the years 2000 and 2001. Further, in 2003,
under provisions of the Customer Choice Act, the excess or recovery of power
supply cost recovery revenues over power supply cost recovery costs benefited
net income. In contrast, in 2004, power supply cost recovery overrecoveries must
be reserved for possible future refund and, consequently, do not benefit net
income. This change in the treatment of power supply cost recovery
overrecoveries reduced net income $2 million.

      Partially offsetting these reductions to net income were $31 million in
benefits relating primarily to reduced depreciation expense and increases in
interest income. The Customer Choice Act authorized us to defer electric
depreciation on the excess of capital expenditures over our depreciation base
and recognize interest income on the excess capital expenditures. Gas
depreciation expense also declined in the nine months ended September 30, 2004
versus the same period in 2003 due to the interim MPSC gas rate order issued in
December 2003. This interim order also authorized a gas rate increase that
benefited net income by $8 million. Finally, net income benefited from the
absence of a $12 million charge taken in 2003. The 2003 charge reflected a
decline in the market value of CMS Energy stock held by us.

STRANDED COST ORDER

      On November 23, 2004, the MPSC issued an order authorizing Consumers to
collect its combined 2002 and 2003 "net" stranded costs under the Customer
Choice Act, of approximately $63.2 million. The amount, including interest at an
annual rate of 7 percent, will be collected through use of a stranded cost
recovery charge of 1.2 mills per kilowatt-hour starting in December 2004 until
fully collected. The order also approved a methodology for the calculation of
stranded costs.

2003 GAS RATE CASE AND 2001 GAS DEPRECIATION CASE

      On December 2, 2004, the MPSC issued orders in Consumers' rehearing
requests stemming from MPSC orders issued October 14, 2004 regarding Consumers'
2003 gas rate case and the 2001 gas depreciation case.

      Regarding the 2003 gas rate case, the MPSC issued an order clarifying the
method of computing Consumers' rate of return on common equity, for purposes of
whether the rate of return on common equity exceeds the authorized 11.4% rate,
consistent with Consumers' rehearing request. The MPSC held that (i) the actual
current level of equity invested in

                                       7
<PAGE>

Consumers should be used and (ii) actual (not weather-normalized) results should
be used for the rate of return calculation required by the October 14, 2004
order.

      Regarding the 2001 gas depreciation case, the MPSC issued an order
approving Consumers' rehearing request that the book depreciation rates be
restored to the levels set forth in the MPSC's December 18, 2003 interim gas
rate relief order, effective and retroactive to October 14, 2004.

ISSUANCE AND SALE OF FIRST MORTGAGE BONDS

      On December 13, 2004, Consumers issued and sold $225 million principal
amount of its 5.00% First Mortgage Bonds due 2015 pursuant to an effective shelf
registration statement and a Prospectus Supplement dated December 8, 2004 to a
Prospectus dated December 1, 2004. Consumers used the proceeds (i) to redeem the
aggregate outstanding balance of $207.7 million of its 7.375% First Mortgage
Bonds due 2023, (ii) to pay the attendant call premium of $6,893,563, (iii) to
pay accrued interest to the redemption date and (iv) for general corporate
purposes.

      On January 20, 2005, Consumers issued and sold $250 million principal
amount of its 5.15% First Mortgage Bonds due 2017 pursuant to an effective shelf
registration statement and a Prospectus Supplement dated January 13, 2005 to a
Prospectus dated December 1, 2004. Consumers used the proceeds (i) to redeem the
aggregate outstanding balance of $70 million of its 8.36% Trust Originated
Preferred Securities due 2015, (ii) to redeem the aggregate outstanding balance
of $120 million of its 8.20% Trust Originated Preferred Securities due 2027 and
(iii) to pay off its $60 million term loan due November 2006 with a current
floating interest rate of 3.79%.

APPROVAL OF RESOURCE CONSERVATION PLAN

      Consumers purchases power under a long term contract from the MCV Facility
operated by the MCV Partnership, in which Consumers has a 49 percent interest.
In February 2004, Consumers filed with the MPSC a request for approval of a
resource conservation plan (the "RCP"). On January 25, 2005, the MPSC issued an
order approving the RCP, with modifications. The terms of the order are
consistent with Consumers' expectations in the RCP proceeding. The purpose of
the RCP is to help conserve natural gas and thereby improve Consumers'
investment in the MCV Partnership as discussed below, without raising the costs
paid by Consumers' electric customers. The RCP allows for a change in the
operation of the MCV Facility to dispatch it on the basis of natural gas market
prices. This change will reduce the MCV Facility's production of electricity and
consumption of natural gas by an estimated 30 to 40 billion cubic feet annually.
The substantial MCV Facility fuel cost savings will be used first to offset
fully the cost of replacement power to Consumers' electric customers. Second, $5
million annually will be used to fund a renewable energy program. Remaining
savings will be split between the MCV Partnership and Consumers. Consumers'
direct savings will be shared 50 percent with its customers in 2005 and 70
percent in 2006 and beyond. In addition, the RCP subjects a larger portion of
the MCV Facility's gas contracts to mark-to-market accounting. Based upon
current market gas prices, this is expected to result in a gain in Consumers'
2005 earnings. Consumers and the MCV Partnership's general partners have
accepted the terms of the order and are implementing the RCP.

                                       8
<PAGE>

                                  THE OLD BONDS
<TABLE>
<S>                                             <C>
The Old Bonds..............................     On August 17, 2004 we sold: $150 million principal
                                                amount of our 4.40% First Mortgage Bonds due 2009,
                                                Series K; $300 million principal amount of our 5.00%
                                                First Mortgage Bonds due 2012, Series L; and $350
                                                million principal amount of our 5.50% First Mortgage
                                                Bonds due 2016, Series M (each series collectively
                                                referred to as the "OLD BONDS"). The old bonds were
                                                offered to qualified institutional buyers ("QIBS") under
                                                Rule 144A.

Registration Rights
Agreement..................................     We executed a registration rights agreement that
                                                provides that we would grant certain registration and
                                                exchange rights to old bond holders (the "REGISTRATION
                                                RIGHTS AGREEMENT"). As a result, we have filed a
                                                registration statement with the SEC, which will permit
                                                you to exchange the old bonds for new bonds that are
                                                registered under the Securities Act of 1933, as amended
                                                (the "SECURITIES ACT"). The transfer restrictions and
                                                liquidated damages provisions will be removed from the
                                                new bonds. We are conducting the Exchange Offer to
                                                satisfy our obligations with respect to certain exchange
                                                and registration rights. Except for a few limited
                                                circumstances, these rights will terminate when the
                                                Exchange Offer ends.
</TABLE>

                               THE EXCHANGE OFFER

<TABLE>
<S>                                             <C>
Securities Offered.........................     -     $150 million principal amount of our 4.40% First
                                                      Mortgage Bonds due 2009, Series N;

                                                -     $300 million principal amount of our 5.00% First
                                                      Mortgage Bonds due 2012, Series O; and

                                                -     $350 million principal amount of our 5.50% First
                                                      Mortgage Bonds due 2016, Series P; (each series
                                                      collectively referred to as the "NEW BONDS").
</TABLE>

                                       9
<PAGE>

<TABLE>
<S>                                             <C>
Exchange Offer.............................     We are offering to exchange (the "EXCHANGE OFFER") up
                                                to:

                                                -     $150 million principal amount of our 4.40% First
                                                      Mortgage Bonds due 2009, Series N that have been
                                                      registered under the Securities Act for a like
                                                      principal amount of our 4.40% First Mortgage Bonds
                                                      due 2009, Series K;

                                                -     $300 million principal amount of our 5.00% First
                                                      Mortgage Bonds due 2012, Series O that have been
                                                      registered under the Securities Act for a like
                                                      principal amount of our $300 million principal
                                                      amount of our 5.00% First Mortgage Bonds due 2012,
                                                      Series L;

                                                -     $350 million principal amount of our 5.50% First
                                                      Mortgage Bonds due 2016, Series P that have been
                                                      registered under the Securities Act for a like
                                                      principal amount of our 5.50% First Mortgage Bonds
                                                      due 2016, Series M;

                                                The new bonds will be offered for all of the outstanding
                                                old bonds. The terms of the new bonds will be identical
                                                to the terms of the old bonds, except that the
                                                registration rights and related liquidated damages
                                                provisions and the transfer restrictions are not
                                                applicable to the new bonds. The old bonds may be
                                                tendered only in integral amounts of $1,000.

Resale of New Bonds........................     Based on SEC no action letters, we believe that after
                                                the Exchange Offer you may offer and sell the new bonds
                                                without registration under the Securities Act so long
                                                as:

                                                -     You acquire the new bonds in the ordinary course
                                                      of business.

                                                -     When the Exchange Offer begins you do not have an
                                                      arrangement with another person to participate in
                                                      a distribution of the new bonds.
</TABLE>

                                       10
<PAGE>

<TABLE>
<S>                                             <C>

                                                -     You are not distributing and do not intend to
                                                      distribute the new bonds.

                                                When you tender the old bonds we will ask you to
                                                represent to us that:

                                                -     You are not our affiliate.

                                                -     You will acquire the new bonds in the ordinary
                                                      course of business.

                                                -     When the Exchange Offer begins you are not
                                                      distributing and you do not plan to distribute
                                                      with anyone else the new bonds.

                                                If you are unable to make these representations, you
                                                will be required to comply with the registration and
                                                prospectus delivery requirements under the Securities
                                                Act in connection with any secondary resale transaction.

                                                If you are a broker-dealer and receive new bonds for
                                                your own account, you must acknowledge that you will
                                                deliver a prospectus if you resell the new bonds. By
                                                acknowledging your intent and delivering a prospectus
                                                you will not be deemed to admit that you are an
                                                "underwriter" under the Securities Act. You may use this
                                                prospectus as it is amended from time to time when you
                                                resell new bonds that were acquired from market-making
                                                or trading activities. For a year after the Expiration
                                                Date we will make this prospectus available to any
                                                broker-dealer in connection with such a resale. See
                                                "Plan of Distribution."

                                                If necessary, we will cooperate with you to register and
                                                qualify the new bonds for offer or sale without any
                                                restrictions or limitations under state "blue sky" laws.

Consequences of Failure to
Exchange Old Bonds.........................     If you do not exchange your old bonds during the
                                                Exchange Offer you will no longer be entitled to
                                                registration rights. You will not be able to offer or
                                                sell the old bonds unless they are later registered,
                                                sold pursuant to an exemption from registration or sold
                                                in a transaction not subject to the Securities Act or
                                                state securities laws. See "The Exchange
                                                Offer--Consequences of Failure to Exchange."

Expiration Date............................     5:00 p.m., EST on _____________ ___, 2005 (the
                                                "EXPIRATION DATE"). We may extend the Exchange Offer.
</TABLE>

                                       11
<PAGE>

<TABLE>
<S>                                             <C>
Conditions to the Exchange
Offer......................................     No minimum principal amount of old bonds must be
                                                tendered to complete the Exchange Offer. However, the
                                                Exchange Offer is subject to certain customary
                                                conditions, which we may waive. See "The Exchange
                                                Offer--Conditions." Other than United States federal and
                                                state securities laws we do not need to satisfy any
                                                regulatory requirements or obtain any regulatory
                                                approval to conduct the Exchange Offer.

Procedures for Tendering
Old Bonds .................................     If you wish to participate in the Exchange Offer you
                                                must complete, sign and date the letter of Transmittal
                                                (the "LETTER OF TRANSMITTAL") or a facsimile copy and
                                                mail it or deliver it to the Exchange Agent along with
                                                any necessary documentation. Instructions and the
                                                address of the Exchange Agent will be on the Letter of
                                                Transmittal and can be found in this prospectus. See
                                                "The Exchange Offer--Procedures for Tendering" and;
                                                "--Exchange Agent." You must also effect a tender of old
                                                bonds pursuant to the procedures for book-entry transfer
                                                as described in this prospectus. See "The Exchange Offer
                                                -- Procedures for Tendering."

Guaranteed Delivery
Procedures.................................     If you cannot tender the old bonds, complete the Letter
                                                of Transmittal or provide the necessary documentation
                                                prior to the termination of the Exchange Offer, you may
                                                tender your old bonds according to the guaranteed
                                                delivery procedures set forth in "The Exchange Offer --
                                                Guaranteed Delivery Procedures."

Withdrawal Rights..........................     You may withdraw tendered old bonds at any time prior to
                                                5:00 p.m. EST on the Expiration Date. You must send a
                                                written or facsimile withdrawal notice to the Exchange
                                                Agent prior to 5:00 p.m. EST on the Expiration Date.

Acceptance of Old Bonds and
Delivery of New Bonds......................     All old bonds properly tendered to the Exchange Agent by
                                                5:00 p.m. EST on the Expiration Date will be accepted
                                                for exchange. The new bonds will be delivered promptly
                                                after the Expiration Date. See "The Exchange Offer -
                                                Acceptance of Old Bonds for Exchange; Delivery of New
                                                Bonds."

Certain United States Tax
Consequences...............................     Exchanging old bonds for the new bonds will not be a
                                                taxable exchange for United States federal income tax
                                                purposes. See "Certain United States Federal Income Tax
                                                Consequences."
</TABLE>

                                       12
<PAGE>

<TABLE>
<S>                                             <C>
Exchange Agent.............................     JPMorgan Chase Bank, N.A. is the exchange agent (the
                                                "EXCHANGE AGENT") for the Exchange Offer.

Fees and Expenses..........................     We will pay all fees and expenses associated with the
                                                Exchange Offer and compliance with the Registration
                                                Rights Agreement.

Use of Proceeds............................     We will receive no cash proceeds in connection with the
                                                issuance of the new bonds pursuant to the Exchange
                                                Offer. See "Use of Proceeds."
</TABLE>

                                  THE NEW BONDS

<TABLE>
<S>                                             <C>
Issuer.....................................     Consumers Energy Company.

Securities Offered.........................     -     $150 million aggregate principal amount of 4.40%
                                                      First Mortgage Bonds due 2009, Series N (the
                                                      "SERIES N BONDS");

                                                -     $300 million aggregate principal amount of 5.00%
                                                      First Mortgage Bonds due 2012, Series O (the
                                                      "SERIES O BONDS"); and

                                                -     $350 million aggregate principal amount of 5.50%
                                                      First Mortgage Bonds due 2016, Series P (the
                                                      "SERIES P BONDS");

                                                to be issued under the indenture dated as of September
                                                1, 1945 between us and JPMorgan Chase Bank, N.A.
                                                (ultimate successor to City Bank Farmers Trust Company),
                                                as Trustee, and as amended and supplemented from time to
                                                time (the "INDENTURE").

Maturity...................................     The Series N Bonds will mature on August 15, 2009. The
                                                Series O Bonds will mature on February 15, 2012. The
                                                Series P Bonds will mature on August 15, 2016.

Interest Rate..............................     The Series N Bonds will bear interest at 4.40% per
                                                annum. The Series O Bonds will bear interest at 5.00%
                                                per annum. The Series P Bonds will bear interest at
                                                5.50% per annum.
</TABLE>

                                       13
<PAGE>

<TABLE>
<S>                                             <C>
Interest Payment Dates.....................     We will pay interest on each series of the new bonds on
                                                February 15 and August 15 of each year, beginning August
                                                15, 2005, and on the date of maturity.

Record Date for Interest Payments..........     The first calendar day of the month in which an Interest
                                                Payment Date occurs.

Ratings....................................     BBB- by Standard & Poor's Ratings Group, a division of
                                                The McGraw Hill Companies, Inc. ("S&P"), Baa3 by Moody's
                                                Investors Service, Inc. ("MOODY'S") and BBB- by Fitch,
                                                Inc. ("FITCH"). See "Ratings."

Ranking....................................     The new bonds will rank equally in right of payment with
                                                our other existing or future first mortgage bonds issued
                                                either independently or as collateral for outstanding or
                                                future securities or loans.

Mandatory Redemption.......................     None.

Optional Redemption........................     Each series of new bonds will be redeemable at our
                                                option, in whole or in part, at any time, on not less
                                                than 30 days' notice at the applicable redemption prices
                                                described herein, plus any accrued interest to the date
                                                fixed for redemption. See "Description of the New Bonds
                                                - Optional Redemption."

Form of New Bonds..........................     One or more global securities held in the name of the
                                                Depository Trust Company ("DTC") in a minimum
                                                denomination of $1,000 and any integral multiple thereof
                                                for each series of new bonds.

Settlement and Payment.....................     Same-day immediately available funds.

Trustee and Paying Agent...................     JPMorgan Chase Bank, N.A.
</TABLE>

                                       14
<PAGE>

                      SELECTED CONSOLIDATED FINANCIAL DATA

      The following selected financial data for the fiscal years ended December
31, 1999 through December 31, 2003 have been derived from our audited
consolidated financial statements, which have been audited by Ernst & Young LLP,
independent registered public accounting firm, for the fiscal years ended
December 31, 2003, 2002, 2001 and 2000, except for the amounts included from the
consolidated financial statements of the MCV Partnership. The MCV Partnership
represents an investment accounted for under the equity method of accounting
through December 31, 2003, which was audited by another independent registered
public accounting firm (the other auditors for 2001 and 2000 have ceased
operations), for the fiscal years ended December 31, 2003, 2002, 2001 and 2000.
The selected financial data for the fiscal year ended December 31, 1999 have
been derived from our audited consolidated financial statements, which have been
audited by Arthur Andersen LLP, independent accountants (who have ceased
operations). The following selected consolidated financial data for the nine
months ended September 30, 2004 and 2003 have been derived from our unaudited
consolidated financial statements. Please refer to our Form 10-K/A for the
fiscal year ended December 31, 2003 and our Form 10-Q for the three-month period
ended September 30, 2004, each of which is incorporated by reference herein.
Operating results for the nine months ended September 30, 2004 are not
necessarily indicative of the results that may be expected for the entire year
ended December 31, 2004. The financial information set forth below should be
read in conjunction with our consolidated financial statements, related notes
and other financial information also incorporated by reference in this
prospectus. See "Where You Can Find More Information."

<TABLE>
<CAPTION>
                                    NINE MONTHS ENDED
                                      SEPTEMBER 30,             YEAR ENDED DECEMBER 31,
                                    ----------------  -------------------------------------------
                                    2004(1)   2003     2003     2002     2001     2000     1999
                                    -------  -------  -------  -------  -------  -------  -------
                                                                 (DOLLARS IN MILLIONS)
<S>                                 <C>      <C>      <C>      <C>      <C>      <C>      <C>
Operating revenue.................  $ 3,355  $ 3,223  $ 4,435  $ 4,169  $ 3,976  $ 3,878  $ 3,824
Net income........................      163      206      196      381      188      284      340
Net income available to common
  stockholder.....................      162      172      194      335      145      248      313
Total assets......................   12,501   10,231   10,745    9,598    9,191    8,672    8,044
Long-term debt, excluding
  current maturities..............    3,986    3,531    3,583    2,442    2,472    2,110    2,006
Long-term debt -- related
  parties.........................      506       --      506       --       --       --       --
Non-current portion of capital
  and finance lease obligations...      318      116       58      116       72       49       85
Preferred stock...................       44       44       44       44       44       44       44
Company-obligated mandatorily
  redeemable preferred securities
  of subsidiaries.................       --      490       --      490      520      395      395
</TABLE>

- ----------

(1)   Under Revised FASB Interpretation No. 46, we are the primary beneficiary
      of several entities, most notably the MCV Partnership and the First
      Midland Limited Partnership. As a result, we have consolidated the assets,
      liabilities and activities of these entities into our financial statements
      for the three and nine months ended September 30, 2004. These entities
      were consolidated for the first time as of and for the three months ended
      March 31, 2004 and were previously reported as equity investments.
      Therefore, the consolidation of these entities had no impact on our
      consolidated net income for the three and nine months ended September 30,
      2004.

                                       15
<PAGE>

                                  RISK FACTORS

      In considering whether to exchange the old bonds for new bonds, you should
carefully consider all the information we have included in this prospectus. In
particular, you should carefully consider the risk factors described below. In
addition, please read the information in "Forward-Looking Statements and
Information" beginning on page 3 of this prospectus.

IF YOU FAIL TO EXCHANGE YOUR OLD BONDS, YOU MAY BE UNABLE TO SELL THEM.

      Because we did not register the old bonds under the Securities Act or any
state securities laws, and we do not intend to do so after the Exchange Offer,
the old bonds may only be transferred in limited circumstances under applicable
securities laws. If the holders of the old bonds do not exchange their old bonds
in the Exchange Offer, they may lose their right to have their old bonds
registered under the Securities Act, subject to some limitations. As a holder of
old bonds after the Exchange Offer, you may be unable to sell your old bonds.

THERE IS NO PUBLIC MARKET FOR THE NEW BONDS, SO YOU MAY BE UNABLE TO SELL THEM.

      The new bonds are new securities for which there is currently no market.
Consequently, the new bonds will be relatively illiquid, and you may be unable
to sell them. We do not intend to apply for listing of the new bonds on any
securities exchange or for the inclusion of the new bonds in any automated
quotation system. Accordingly, we cannot assure you that a liquid market for the
new bonds will develop.

REGULATORY CHANGES AND OTHER DEVELOPMENTS HAVE RESULTED AND WILL CONTINUE TO
RESULT IN INCREASED COMPETITION IN OUR ENERGY BUSINESS. GENERALLY, INCREASED
COMPETITION THREATENS OUR MARKET SHARE IN CERTAIN SEGMENTS OF OUR BUSINESS AND
CAN REDUCE OUR PROFITABILITY.

      We have in the last several years experienced, and expect to continue to
experience, a significant increase in competition for generation services with
the introduction of retail open access in the State of Michigan. Pursuant to the
Customer Choice Act, as of January 1, 2002, all electric customers have the
choice of buying electric generation service from an alternative electric
supplier. We continue to lose industrial and commercial customers to other
electric suppliers. As of December 2004, we had lost 926 MW or 11 percent of our
electric generation business to these alternative electric suppliers. We expect
the loss to be in the range of 1,000 MW to 1,200 MW by year-end 2005. We cannot
predict the total amount of electric supply load that we may lose to competitor
suppliers in the future.

ELECTRIC INDUSTRY REGULATION COULD ADVERSELY AFFECT OUR BUSINESS, INCLUDING OUR
ABILITY TO RECOVER OUR EXPENSES FROM OUR CUSTOMERS.

      Federal and state regulation of electric utilities has changed
dramatically in the last two decades and could continue to change over the next
several years. These changes could adversely affect our business, financial
condition and profitability.

      In June 2000, the Michigan Legislature enacted the Customer Choice Act
that became effective June 5, 2000. Pursuant to the Customer Choice Act,
residential rates were reduced by five percent and then capped through at least
December 31, 2005. Ultimately, the rate cap could extend until December 31, 2013
depending upon whether or not we exceed the market power supply test established
by the legislation (a requirement that we believe ourselves to be in compliance
with at this time). Under circumstances specified in the Customer Choice Act,
certain costs can be deferred for future recovery after the expiration of the
rate cap period. The rate cap could, however, result in us being unable to
collect customer rates sufficient to recover fully our

                                       16
<PAGE>

cost of conducting business. Some of these costs may be beyond our ability to
control. In particular, if we need to purchase power supply from wholesale
suppliers during the period when retail rates are frozen or capped, the rate
restrictions imposed by the Customer Choice Act may make it impossible for us to
recover fully the cost of purchased power and associated transmission costs
through the rates we charge our customers. As a result, it is not certain that
we can maintain our profit margins in our electric utility business during the
period of the rate freeze or rate cap.

      We filed an electric rate case with the MPSC in December 2004 for
approximately $320 million in rate increases. We cannot predict the outcome of
the electric rate case.

      There are multiple proceedings pending before the Federal Energy
Regulatory Commission ("FERC") involving transmission rates, regional
transmission organizations and standard market design for electric bulk power
markets and transmission. FERC is also reviewing the standards under which
electric utilities are allowed to participate in wholesale power markets without
price restrictions. FERC is currently reviewing information submitted by us to
support our ability to continue to sell power at market-based rates. We cannot
predict the impact of these electric industry-restructuring proceedings on our
financial position, liquidity or results of operations.

PENDING UTILITY LEGISLATION IN MICHIGAN MAY AFFECT US IN WAYS WE CANNOT PREDICT.

      In July 2004, as a result of legislative hearings, several bills were
introduced into the Michigan Senate that could change the Customer Choice Act.
The proposals include:

      -     requiring that rates be based on cost of service;

      -     establishing a defined stranded cost calculation method;

      -     allowing customers who stay with or switch to alternative electric
            suppliers after December 31, 2005 to return to utility services, and
            requiring them to pay current market rates upon return;

      -     establishing reliability standards that all electric suppliers must
            follow;

      -     requiring electric utilities and electric alternative suppliers to
            maintain a 15 percent power reserve margin;

      -     creating a service charge to fund the Low Income and Energy
            Efficiency Fund;

      -     giving kindergarten through twelfth-grade schools a discount of 10
            percent to 20 percent on electric rates; and

      -     authorizing a service charge payable by all customers for meeting
            Clean Air Act requirements.

      In September 2004, the Chair of the Senate Technology and Energy Committee
formed a workgroup, which analyzed the merits of the proposed legislation.
Workgroup activities have since concluded that the impact of the proposed
legislation is still uncertain. In October 2004, a substitute to one of the
bills was introduced, but has not yet been adopted by the Michigan Senate.

      Although we do not believe the terms of the proposed bills, if enacted,
would have a material adverse effect on our business, the final form of any new
utility legislation may differ from the

                                       17
<PAGE>

bills proposed in 2004. We cannot predict whether these or other measures will
be enacted into law or their potential effect on us.

OUR ABILITY TO RECOVER CERTAIN REGULATORY ASSETS UNDER SECTION 10(d)(4) OF THE
CUSTOMER CHOICE ACT MAY AFFECT OUR FINANCIAL RESULTS.

      Section 10(d)(4) of the Customer Choice Act allows deferred recovery of an
annual return of and on capital expenditures in excess of depreciation levels
and certain other expenses incurred prior to and throughout the current electric
rate freeze and rate cap periods. See "Electric industry regulation could
adversely affect our business, including our ability to recover our expenses
from our customers." In October 2004, we filed an application with the MPSC
seeking recovery of $628 million in costs from 2000 through 2005 under Section
10(d)(4). The request includes capital expenditures in excess of depreciation,
Clean Air Act costs and other expenses related to changes in law or governmental
action incurred during the rate freeze-cap period. Of the $628 million, $152
million relates to the cost of money.

      As allowed by the Customer Choice Act, in January 2004, we began accruing
and deferring for recovery the 2004 portion of our Section 10(d)(4) regulatory
assets. In November 2004, the MPSC issued an order in the Detroit Edison
Company's general electric rate case, which concluded that the Detroit Edison
Company's return of and on Clean Air Act costs incurred from June 2000 through
December 2003 are recoverable under Section 10(d)(4). Based on the precedent set
by this order, we accrued and recorded an additional regulatory asset of $55
million (pre-tax), $36 million net of tax, in November 2004 for our return of
and on Clean Air Act expenditures incurred from 2000 through 2003. Additional
accruals will continue to be recorded until a decision on our request is issued
by the MPSC. Certain aspects of the Detroit Edison Company's electric rate case
are different than our Section 10(d)(4) regulatory asset filing. We cannot
predict the amount, if any, the MPSC will approve as recoverable and failure to
recover these regulatory assets could adversely affect our financial condition.

WE COULD INCUR SIGNIFICANT CAPITAL EXPENDITURES TO COMPLY WITH ENVIRONMENTAL
STANDARDS AND FACE DIFFICULTY IN RECOVERING THESE COSTS ON A CURRENT BASIS.

      We are subject to costly and increasingly stringent environmental
regulations. We expect that the cost of future environmental compliance,
especially compliance with clean air and water laws, will be significant.

      In 1998, the United States Environmental Protection Agency (the "EPA")
issued regulations requiring the State of Michigan to further limit nitrogen
oxide emissions at our coal-fired electric plants. The EPA and the State of
Michigan regulations require us to make significant capital expenditures
estimated to be $802 million. As of September 30, 2004, we had incurred $500
million in capital expenditures to comply with the EPA regulations and we
anticipate that the remaining $302 million of capital expenditures will be
incurred between 2004 and 2011. Additionally, we currently expect we will
supplement our compliance plan with the purchase of nitrogen oxide emissions
credits for the years 2004 through 2009. The cost of these credits based on the
current market is estimated to average $7 million per year for 2004-2006 and
then decrease with our installation of control technology; however, the market
for nitrogen oxide emissions credits and their price could change substantially.
As new environmental standards become effective, we will need additional capital
expenditures to comply with the standards.

      Based on the Customer Choice Act, beginning January 2004 an annual return
of and on these types of capital expenditures, to the extent they are above
depreciation levels, subject to an MPSC prudency hearing shall be accrued and
deferred for recovery. After notice and hearing, the MPSC shall determine the
amount of reasonable and prudent costs, if any, to be recovered and the

                                       18
<PAGE>

recovery period.

      The EPA has proposed a Clean Air Interstate Rule that would require
additional coal-fired electric plant emission controls for nitrogen oxides and
sulfur dioxide. If implemented, this rule could potentially require substantial
additional expenditures. The rule proposes a two-phase program to reduce
emissions of sulfur dioxide by 70 percent and nitrogen oxides by 65 percent by
2015. Additionally, the EPA also proposed two alternative sets of rules to
reduce emissions of mercury and nickel from coal-fired and oil-fired electric
plants. Until the proposed environmental rules are finalized, an accurate cost
of compliance cannot be determined.

      The EPA has alleged that some utilities have incorrectly classified plant
modifications as "routine maintenance" rather than seek modification permits
from the EPA. We have received and responded to information requests from the
EPA on this subject. We believe that we have properly interpreted the
requirements of "routine maintenance." If our interpretation is found to be
incorrect, we may be required to install additional pollution controls at some
or all of our coal-fired electric plants and potentially pay fines.
Additionally, the viability of certain plants remaining in operation could be
called into question.

      These and other required environmental expenditures, if not recovered from
customers in our rates, may require us to seek significant additional financing
to fund such expenditures and could strain our cash resources.

OUR ENERGY RISK MANAGEMENT STRATEGIES MAY NOT BE EFFECTIVE IN MANAGING FUEL AND
ELECTRICITY PRICING RISKS, WHICH COULD RESULT IN UNANTICIPATED LIABILITIES TO US
OR IN INCREASED VOLATILITY OF OUR EARNINGS.

      We are exposed to changes in market prices for natural gas, coal,
electricity and emission credits. Prices for natural gas, coal, electricity and
emission credits may fluctuate substantially over relatively short periods of
time and expose us to commodity price risk. A substantial portion of our
operating expenses for our plants consists of the costs of obtaining these
commodities. We manage these risks using established policies and procedures,
and we may use various contracts to manage these risks, including swaps,
options, futures and forward contracts. We cannot assure you that these
strategies will be successful in managing our pricing risk, or that they will
not result in net liabilities to us as a result of future volatility in these
markets.

      Natural gas prices in particular have historically been volatile. To
manage market risks associated with the volatility of natural gas prices, the
MCV Partnership maintains a gas hedging program. The MCV Partnership enters into
natural gas futures contracts, option contracts and over-the-counter swap
transactions in order to hedge against unfavorable changes in the market price
of natural gas in future months when gas is expected to be needed. These
financial instruments are being used principally to secure anticipated natural
gas requirements necessary for projected electric and steam sales, and to lock
in sales prices of natural gas previously obtained in order to optimize the MCV
Partnership's existing gas supply, storage and transportation arrangements.
Consumers also routinely enters into contracts to offset its positions, such as
hedging exposure to the risks of demand, market effects of weather and changes
in commodity prices associated with its gas distribution business. Such
positions are taken in conjunction with the gas cost recovery mechanism, which
allows Consumers to recover prudently incurred costs associated with such
positions. However, neither Consumers nor the MCV Partnership always hedges the
entire exposure of its operations from commodity price volatility. Furthermore,
the ability to hedge exposure to commodity price volatility depends on liquid
commodity markets. As a result, to the extent the commodity markets are
illiquid, we may not be able to execute our risk management strategies, which
could result in greater open positions than we would prefer at a given time. To
the extent that open positions exist, fluctuating commodity

                                       19
<PAGE>

prices can improve or diminish our financial results and financial position.

      In addition, we currently have a power supply cost recovery mechanism to
recover the increased cost of fuel used to generate electricity from our
industrial and large commercial customers, but not from our residential or small
commercial customers. Therefore, to the extent that we have not hedged our fuel
costs, we are exposed to changes in fuel prices to the extent fuel for our
electric generating facilities must be purchased on the open market in order for
us to serve our residential and small commercial customers.

OUR REVENUES AND RESULTS OF OPERATIONS ARE SUBJECT TO RISKS THAT ARE BEYOND OUR
CONTROL, INCLUDING BUT NOT LIMITED TO FUTURE TERRORIST ATTACKS OR RELATED ACTS
OF WAR.

      The cost of repairing damage to our facilities due to storms, natural
disasters, wars, terrorist acts and other catastrophic events, in excess of
reserves established for such repairs, may adversely impact our results of
operations, financial condition and cash flows. The occurrence or risk of
occurrence of future terrorist activity and the high cost or potential
unavailability of insurance to cover such terrorist activity may impact our
results of operations and financial condition in unpredictable ways. These
actions could also result in disruptions of power and fuel markets. In addition,
our natural gas distribution system and pipelines could be directly or
indirectly harmed by future terrorist activity.

WE HAVE FINANCING NEEDS AND WE MAY BE UNABLE TO SUCCESSFULLY ACCESS BANK
FINANCING OR THE CAPITAL MARKETS.

      We rely on access to bank financing and the capital markets as a source of
liquidity for capital requirements not satisfied by the cash flow from our
operations. In addition, the amount we pay for natural gas stored as inventory
normally requires additional financing due to timing of cost recoveries. We plan
to seek new financing as required for our ongoing operations and construction
program, including substantial construction expenditures for federal Clean Air
Act compliance. We currently plan to seek funds through the capital markets and
commercial lenders. Entering into new financings is subject in part to capital
market receptivity to utility industry securities in general and to Consumers'
securities issuances in particular. We believe that our current level of cash
and borrowing capacity, along with anticipated cash flows from operating and
investing activities, will be sufficient to meet our liquidity needs through
2005. Consumers cannot guarantee the capital market's acceptance of its
securities or predict the impact of factors beyond its control, such as actions
of rating agencies. If we are unable to access bank financing or the capital
markets to incur or refinance indebtedness, there could be a material adverse
effect upon our liquidity and operations.

      Our current credit ratings are discussed in "Ratings." We cannot assure
you that these credit ratings will remain in effect for any given period of time
or that one or more of these ratings will not be lowered or withdrawn entirely
by a rating agency. We note that these credit ratings are not recommendations to
buy, sell or hold our securities. Each rating should be evaluated independently
of any other rating. Any future reduction or withdrawal of one or more of our
credit ratings could have a material adverse impact on our ability to access
capital on acceptable terms. We cannot assure you that any of our current
ratings or those of our affiliates, including CMS Energy, will remain in effect
for any given period of time or that a rating will not be lowered or withdrawn
entirely by a rating agency. Further, any adverse developments relating to CMS
Energy that resulted in a lowering of CMS Energy's credit ratings could have an
adverse effect on our credit ratings. Any lowering of the ratings of our first
mortgage bonds would likely reduce the market value of the new bonds.

                                       20
<PAGE>

WE MAY BE NEGATIVELY IMPACTED BY THE RESULTS OF AN EMPLOYEE BENEFIT PLAN
LAWSUIT.

      We are a defendant, along with CMS Energy, CMS Marketing, Services and
Trading Company (now known as CMS Energy Resource Management Company) ("CMS
MST") and certain named and unnamed officers and directors, in two lawsuits
brought as purported class actions on behalf of participants and beneficiaries
of our 401(k) plan. The two cases, filed in July 2002 in the United States
District Court for the Eastern District of Michigan, were consolidated by the
trial judge and an amended and consolidated complaint has been filed. Plaintiffs
allege breaches of fiduciary duties under the Employee Retirement Income
Security Act of 1974 ("ERISA") and seek restitution on behalf of the plan with
respect to a decline in value of the shares of our common stock held in the
plan. The plaintiffs also seek other equitable relief and legal fees. The judge
issued an opinion and order dated March 31, 2004 in connection with the motions
to dismiss filed by CMS Energy, us and the individuals. The judge dismissed
certain of the amended counts in the plaintiffs' complaint and denied CMS
Energy's motion to dismiss the other claims in the complaint. CMS Energy, we and
the individual defendants filed answers to the amended complaint on May 14,
2004. The judge issued an opinion and order dated December 27, 2004
conditionally granting plaintiff's motion for class certification. A trial date
has not been set, but is expected to be no earlier than late in 2005.

      We cannot predict the outcome of the ERISA litigation and it is possible
that an adverse outcome in this lawsuit could adversely affect our financial
condition, liquidity or results of operations.

THE FINANCIAL DIFFICULTIES OF OUR PARENT COMPANY, CMS ENERGY, COULD ADVERSELY
AFFECT OUR ABILITY TO OBTAIN COMMON EQUITY CAPITAL, OUR CREDIT RATINGS AND OUR
ABILITY TO ACCESS THE CAPITAL MARKETS.

      In addition to working to resolve the investigation discussed herein, CMS
Energy is actively engaged in improving its own liquidity and financial
position, including through efforts to attract new external financing. CMS
Energy is subject to uncertainties in accessing the capital markets that are
similar to, if not more pronounced than, those discussed above in respect of
Consumers. As the sole holder of our common stock, CMS Energy is currently our
only source of common equity capital. CMS Energy has pledged the common stock of
its principal subsidiaries, including Consumers, as security for bank credit
facilities. We engage in transactions with other subsidiaries and affiliates of
CMS Energy in the ordinary course of business, including the MCV Partnership,
and paid overhead costs to CMS Energy that totaled $8 million in 2003. Any
inability of CMS Energy to successfully execute its strategy for liquidity
improvement and stabilization could have an adverse effect on our credit ratings
or our ability to access the capital markets. Dividends from Consumers are a
major contribution to CMS Energy's cash resources and significantly affect the
ability of CMS Energy to service its debt.

                                       21
<PAGE>

WE MAY BE ADVERSELY AFFECTED BY A REGULATORY INVESTIGATION AND LAWSUITS
REGARDING "ROUND-TRIP" TRADING BY OUR AFFILIATE AS WELL AS CIVIL LAWSUITS
REGARDING PRICING INFORMATION THAT TWO OF OUR AFFILIATES PROVIDED TO MARKET
PUBLICATIONS.

      We are a direct subsidiary of CMS Energy. As a result of round-trip
trading transactions at CMS MST, CMS Energy is under investigation by the United
States Department of Justice (the "DOJ"). CMS Energy has also received subpoenas
from U.S. Attorneys Offices regarding investigations of those trades. CMS Energy
and Consumers have also been named in numerous class action lawsuits by
individuals who allege that they purchased CMS Energy securities during a
purported class period. These complaints generally seek unspecified damages
based on allegations that the defendants violated United States securities laws
and regulations by making allegedly false and misleading statements about our
business and financial condition. The cases have been consolidated into a single
lawsuit and an amended and consolidated complaint was filed on May 1, 2003. The
judge issued an opinion and order dated March 31, 2004 in connection with
various pending motions, including the plaintiffs' motion to amend the complaint
and the motions to dismiss the complaint filed by CMS Energy, us and other
defendants. The judge directed the plaintiffs to file an amended complaint under
seal and ordered an expedited hearing on the motion to amend, which was held on
May 12, 2004. At the hearing, the judge ordered the plaintiffs to file an
amended complaint deleting certain counts related to purchasers of CMS
Energy-related securities, which the judge ordered dismissed with prejudice. The
plaintiffs filed this complaint on May 26, 2004. CMS Energy, we and the
individual defendants filed new motions to dismiss on June 21, 2004. A hearing
on those motions occurred on August 2, 2004 and on January 7, 2005, the judge
ruled on the motions to dismiss. The judge agreed to dismiss Consumers as well
as three individual defendants. The judge denied the motion to dismiss with
respect to CMS Energy and the other remaining individual defendants.

      In March 2004, the SEC approved a cease-and-desist order settling an
administrative action against CMS Energy relating to round-trip trading. The
order did not assess a fine and CMS Energy neither admitted nor denied the
order's findings.

      The Board of Directors of CMS Energy has received a demand on behalf of a
shareholder to commence civil actions (i) to remedy alleged breaches of
fiduciary duties by CMS Energy officers and directors in connection with
round-trip trading at CMS MST and (ii) to recover damages sustained by CMS
Energy as a result of alleged insider trades alleged to have been made by
certain current and former officers of CMS Energy and its subsidiaries. In
December 2002, two new directors were appointed to the CMS Energy Board of
Directors. A special litigation committee was formed by the Board of Directors
in January 2003 to determine whether it is in the best interest of CMS Energy to
bring the action demanded by the shareholder. The disinterested members of the
Board of Directors appointed the two new directors to serve on the special
litigation committee.

      On December 2, 2003, during the continuing review by the special
litigation committee, CMS Energy was served with a derivative complaint filed by
the shareholder in the Circuit Court of Jackson County, Michigan in furtherance
of his demands. The date for CMS Energy and other defendants to answer or
otherwise respond to the complaint was stayed by the court to February 21, 2005,
subject to such further stays as may be mutually agreed upon by the parties and
authorized by the court.

      CMS Energy has notified appropriate regulatory and governmental agencies
that some employees at CMS MST and CMS Field Services, Inc. (now Cantera Gas
Company), a former indirect subsidiary of CMS Energy, appeared to have provided
inaccurate information regarding

                                       22
<PAGE>

natural gas trades to various energy industry publications which compile and
report index prices. CMS Energy is cooperating with an investigation by the DOJ
regarding this matter. On November 25, 2003, the Commodity Futures Trading
Commission (the "CFTC") issued a settlement order regarding this matter. CMS MST
and CMS Field Services, Inc. agreed to pay a fine to the CFTC totaling $16
million. CMS Energy neither admitted nor denied the findings of the CFTC in the
settlement order.

      CMS Energy has also been named as a defendant in several gas industry
civil lawsuits regarding inaccurate gas trade reporting that include claims
alleging manipulation of natural gas prices and violations of the Commodities
Exchange Act and federal and state antitrust laws.

      We cannot predict the outcome of the DOJ investigation and the lawsuits.
It is possible that the outcome in one or more of the investigation or the
lawsuits could adversely affect CMS Energy's and our financial condition,
liquidity or results of operations.

OUR OWNERSHIP OF A NUCLEAR GENERATING FACILITY CREATES RISK RELATING TO NUCLEAR
ENERGY.

      We own the Palisades nuclear power plant and we are, therefore, subject to
the risks of nuclear generation, including the risks associated with the
operation of plant facilities and the storage and disposal of spent fuel and
other radioactive waste. The Nuclear Regulatory Commission (the "NRC") has broad
authority under federal law to impose licensing and safety-related requirements
for the operation of nuclear generation facilities. In the event of
non-compliance, the NRC has the authority to impose fines or shut down a unit,
or both, depending upon its assessment of the severity of the situation, until
compliance is achieved. In addition, although we have no reason to anticipate a
serious nuclear incident at our plant, if an incident did occur, it could harm
our results of operations and financial condition. A major incident at a nuclear
facility anywhere in the world could cause the NRC to limit or prohibit the
operation or licensing of any domestic nuclear unit.

WE CURRENTLY UNDERRECOVER IN OUR RATES OUR PAYMENTS TO THE MCV PARTNERSHIP FOR
CAPACITY AND ENERGY, AND ARE ALSO EXPOSED TO FUTURE CHANGES IN THE MCV
PARTNERSHIP'S FINANCIAL CONDITION THROUGH OUR EQUITY AND LESSOR INVESTMENTS.

      Our power purchase agreement with the MCV Partnership ("PPA") expires in
2025. We estimate that we will incur estimated cash underrecoveries of payments
under the PPA aggregating $206 million through 2007. For availability payments
billed by the MCV Partnership after September 15, 2007, and not recovered from
customers, we would expect to claim a "regulatory out" under the PPA which we
believe we have the right to do after satisfying our obligation to "support and
defend" full recovery of PPA charges from customers. The MCV Partnership has
indicated that it may take issue with our exercise of the regulatory out clause
after September 2007. The effect of exercise of the regulatory out would be to
reduce cash flow to the MCV Partnership, which could in turn have an adverse
effect on our equity and lessor interests in the MCV Facility.

      Further, under the PPA, energy payments to the MCV Partnership are based
on the cost of coal burned at our coal plants and costs associated with fuel
inventory, operations and maintenance, and administrative and general expenses
associated with our coal plants. However, the MCV Partnership's costs of
producing electricity are tied, in large part, to the cost of natural gas.
Because natural gas prices have increased substantially in recent years, while
energy charge payments to the MCV Partnership have not, the MCV Partnership's
financial performance has been impacted negatively.

                                       23
<PAGE>

      We cannot estimate, at this time, the impact of these issues on our future
earnings or cash flow from our interest in the MCV Partnership. The forward
price of natural gas for the next 20 years and the MPSC decision in 2007 or
later related to our recovery of capacity payments are the two most significant
variables in the analysis of the MCV Partnership's future financial performance.
Natural gas prices have historically been volatile and presently there is no
consensus in the marketplace on the price or range of prices of natural gas
beyond the next five years. Further, it is not presently possible for us to
predict the actions of the MPSC in 2007 or later. Even with the implementation
of the RCP, if gas prices continue at present levels or increase, the economics
of operating the MCV Facility may be adverse enough to require us to recognize
an impairment of our investment in the MCV Partnership. For these reasons, at
this time we cannot predict the impact of these issues on its future earnings or
cash flows or on the value of our equity interest in the MCV Partnership.

                                       24
<PAGE>

                                 USE OF PROCEEDS

      The Exchange Offer is intended to satisfy our obligations under the
Registration Rights Agreement. We will not receive any cash proceeds from the
issuance of the new bonds. The old bonds that are surrendered in exchange for
the new bonds will be retired and canceled and cannot be reissued. As a result,
the issuance of the new bonds will not result in any increase or decrease in our
indebtedness. We have agreed to bear the expenses of the Exchange Offer to the
extent indicated in the Registration Rights Agreement. No underwriter is being
used in connection with the Exchange Offer. We used the net proceeds from the
sale of the old bonds of approximately $792.9 million, after deducting offering
discounts but before deducting offering expenses, (i) to redeem the aggregate
outstanding balance of $300 million of our 6% Senior Notes due March 15, 2005,
(ii) to redeem the aggregate outstanding balance of $141 million of our Senior
Remarketed Secured Notes due 2018 with an initial interest rate of 6.5% until
June 15, 2005, (iii) to redeem the aggregate outstanding balance of $140 million
of our Term Loan Agreement with Beal Bank, S.S.B. with an interest rate of 6.23%
and a maturity date of March 26, 2009, (iv) to pay any attendant call premiums
associated with those redemptions, (v) to pay accrued interest to the redemption
dates and (vi) for general corporate purposes.

                       RATIO OF EARNINGS TO FIXED CHARGES

      The ratios of earnings to fixed charges for the nine months ended
September 30, 2004 and for each of the years ended December 31, 1999 through
2003 are as follows:

<TABLE>
<CAPTION>
                                               NINE MONTHS                       YEAR ENDED DECEMBER 31,
                                                  ENDED             -------------------------------------------------
                                            SEPTEMBER 30, 2004      2003        2002       2001        2000      1999
                                            ------------------      ----        ----       ----        ----      ----
<S>                                         <C>                     <C>         <C>        <C>         <C>       <C>
Ratio of earnings to fixed charges (a)            1.98              2.25        3.59(b)    2.28(c)     2.90      3.46
</TABLE>

(a)   For purposes of computing the ratio, earnings represent the sum of pretax
      income, net interest charges and the estimated interest portions of lease
      rentals, plus distributed income of equity investees less earnings from
      equity investees.

(b)   Excludes a cumulative effect of change in accounting after-tax gain of $18
      million: if included, ratio would be unchanged, since the change in
      accounting resulted from the equity-based subsidiary, MCV Partnership. The
      total net income of equity-based subsidiaries is excluded from determining
      earnings as defined.

(c)   Excludes a cumulative effect of change in accounting after-tax loss of $11
      million; if included, ratio would be 1.81.

                                       25
<PAGE>

                          DESCRIPTION OF THE NEW BONDS

GENERAL

      The new bonds are to be issued under an Indenture dated as of September 1,
1945, between Consumers and JPMorgan Chase Bank, N.A. (ultimate successor to
City Bank Farmers Trust Company), as trustee (the "TRUSTEE"), as amended and
supplemented by various supplemental indentures. In connection with the change
of the state of incorporation from Maine to Michigan in 1968, Consumers
succeeded, and was substituted for, the Maine corporation under the Indenture.
At January 21, 2005, ten series of first mortgage bonds in an aggregate
principal amount of approximately $2.550 billion were outstanding under the
Indenture, excluding six series of first mortgage bonds in an approximate
aggregate principal amount of $1.373 billion to secure outstanding senior notes
and credit facilities and three series of first mortgage bonds in an approximate
aggregate principal amount of $126 million to secure outstanding pollution
control revenue bonds.

      The statements herein concerning the new bonds and the Indenture are a
summary and do not purport to be complete and are subject to, and qualified in
their entirety by, all of the provisions of the Indenture, which is incorporated
herein by this reference. They make use of defined terms and are qualified in
their entirety by express reference to the Indenture, including the supplements
thereto, copy of which will be available upon request to the Trustee.

PRINCIPAL, MATURITY AND INTEREST

      The Indenture permits us to "re-open" this offering of each series of new
bonds without the consent of the holders of the new bonds of such series.
Accordingly, the principal amount of each series of new bonds may be increased
in the future on the same terms and conditions and with the same CUSIP numbers
as the new bonds of such series being offered by this prospectus. The Series N
Bonds will mature on August 15, 2009, the Series O Bonds will mature on February
15, 2012 and the Series P Bonds will mature on August 15, 2016, unless earlier
redeemed or otherwise repaid. The Series N Bonds will bear interest at 4.40% per
year, the Series O Bonds will bear interest at a rate of 5.00% per year, and the
Series P Bonds will bear interest at a rate of 5.50% per year, payable
semi-annually in arrears on February 15 and August 15 of each year, beginning
August 15, 2005 and at the date of maturity. Interest will be paid to the person
in whose name the new bonds are registered at the close of business on the first
calendar day of the month in which the interest payment date occurs. Interest
payable on any interest payment date or on the date of maturity will be the
amount of interest accrued from and including the date of original issuance or
from and including the most recent interest payment date on which interest has
been paid or duly made available for payment to but excluding such interest
payment date or the date of maturity, as the case may be. So long as the new
bonds are in book-entry form, principal of and interest on the new bonds will be
payable, and the new bonds may be transferred, only through the facilities of
DTC. If any interest payment date falls on a day that is not a business day, the
interest payment date will be the next succeeding business day (and without any
interest or other payment in respect of any such delay). Interest will be
computed on the basis of a 360-day year consisting of twelve 30-day months.

REGISTRATION, TRANSFER AND EXCHANGE

      Each series of new bonds will be initially issued in the form of one or
more global new bonds, in registered form, without coupons, in denominations of
$1,000 and any integral multiple thereof as described under "Book-Entry Only
Issuance -- The Depository Trust Company." The global new bonds will be
registered in the name of the nominee of DTC. Except as described under
"Book-Entry Only Issuance -- The Depository Trust Company," owners of beneficial
interests in

                                       26
<PAGE>

a global new bond will not be entitled to have new bonds registered in their
names, will not receive or be entitled to receive physical delivery of any such
new bond and will not be considered the registered holder thereof under the
Indenture.

OPTIONAL REDEMPTION

      Each series of new bonds will be redeemable as a whole or in part, at our
option, at any time upon at least 30 days' notice, at a redemption price equal
to the greater of (1) 100% of the principal amount of such new bonds and (2) the
sum of the present values of the Remaining Scheduled Payments (as defined below)
of principal and interest on such new bonds discounted to the redemption date
semi-annually (assuming a 360-day year consisting of twelve 30-day months) at
the Treasury Rate (as defined below), plus 20 basis point for the Series N Bonds
and the Series O Bonds and plus 25 basis points for the Series P Bonds, plus in
any case accrued interest on the new bonds to the date of redemption.

"TREASURY RATE" means, with respect to any redemption date, the rate per annum
equal to the semi-annual equivalent yield to maturity of the Comparable Treasury
Issue (as defined below), assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price (as defined below) for such redemption date.

"COMPARABLE TREASURY ISSUE" means the United States Treasury security selected
by an Independent Investment Banker (as defined below) as having a maturity
comparable to the remaining term of the applicable new bonds to be redeemed that
would be used, at the time of selection and in accordance with customary
financial practice, in pricing new issues of corporate debt securities of
comparable maturity to the remaining term of such new bonds.

"INDEPENDENT INVESTMENT BANKER" means Barclays Capital Inc., Citigroup Global
Markets Inc. or Merrill Lynch, Pierce, Fenner & Smith Incorporated or, if such
firms are unwilling or unable to select the Comparable Treasury Issue, an
independent banking institution of national standing selected by us.

"COMPARABLE TREASURY PRICE" means, with respect to any redemption date, (1) the
average of the bid and asked prices for the Comparable Treasury Issue (expressed
in each case as a percentage of its principal amount) on the third business day
preceding such redemption date, as set forth in the daily statistical release
(or any successor release) published by the Federal Reserve Bank of New York and
designated "H.15(519)" or (2) if such release (or any successor release) is not
published or does not contain such prices on such business day, (a) the average
of the Reference Treasury Dealer Quotations (as defined below) for such
redemption date, after excluding the highest and lowest of such Reference
Treasury Dealer Quotations, or (b) if the Company obtains fewer than four such
Reference Treasury Dealer Quotations, the average of all such quotations.

"REFERENCE TREASURY DEALER QUOTATIONS" means, with respect to each Reference
Treasury Dealer (as defined below) and any redemption date, the average, as
determined by the Company, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Company by such Reference Treasury Dealer at 5:00 p.m.
on the third business day preceding such redemption date.

"REFERENCE TREASURY DEALER" means (1) each of Barclays Capital Inc., Citigroup
Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated and
their respective successors; provided, however, that if any of the foregoing
shall cease to be a primary U.S. government securities dealer in New York City
(a "PRIMARY TREASURY DEALER"), we shall replace that former dealer with another
Primary Treasury Dealer and (2) up to four other Primary

                                       27
<PAGE>

Treasury Dealers selected by us.

"REMAINING SCHEDULED PAYMENTS" means, with respect to each new bond to be
redeemed, the remaining scheduled payments of the principal thereof and interest
thereon that would be due after the related redemption date but for such
redemption; provided, however, that, if that redemption date is prior to an
interest payment date with respect to such new bond, the amount of the next
succeeding scheduled interest payment thereon will be reduced by the amount of
interest accrued thereon to that redemption date.

      We will mail notice of any redemption between 30 days and 60 days before
the redemption date to each holder of the debt securities to be redeemed.

SINKING FUND REQUIREMENT

      The new bonds will not have the benefit of any sinking fund.

ISSUANCE OF ADDITIONAL FIRST MORTGAGE BONDS

      Additional first mortgage bonds may be issued under the Indenture for up
to 60% of unfunded net property additions or against the deposit of an equal
amount of cash, if, for any period of twelve consecutive months within the
fifteen preceding calendar months, the net earnings of Consumers (before income
or excess profit taxes) shall have been at least twice the interest requirement
for one year on all first mortgage bonds outstanding and to be issued and on
indebtedness of prior or equal rank. Additional first mortgage bonds may also be
issued to refund first mortgage bonds outstanding under the Indenture. Deposited
cash may be applied to the retirement of first mortgage bonds or be withdrawn in
an amount equal to the principal amount of first mortgage bonds which may be
issued on the basis of unfunded net property additions. As of November 30, 2004,
unfunded net property additions were $1.864 billion. Consumers could issue
$1.118 billion of additional first mortgage bonds on the basis of such property
additions. In addition, as of January 21, 2005, Consumers could issue $474
million of additional first mortgage bonds on the basis of first mortgage bonds
previously retired.

LIMITATIONS ON DIVIDENDS

      The Indenture does not restrict Consumers' ability to pay dividends on its
common stock.

CONCERNING THE TRUSTEE

      JPMorgan Chase Bank, N.A. is the Trustee and Paying Agent. Consumers and
its affiliates maintain lending, depository and other normal banking
relationships with JPMorgan Chase Bank, N.A. JPMorgan Chase Bank, N.A. is also a
lender to Consumers and its affiliates.

      The Indenture provides that Consumers' obligations to compensate the
Trustee and reimburse the Trustee for expenses, disbursements and advances will
constitute indebtedness which will be secured by a lien generally prior to that
of the first mortgage bonds upon all property and funds held or collected by the
Trustee as such.

      The Trustee or the holders of 20% in total principal amount of the first
mortgage bonds may declare the principal due on default, but the holders of a
majority in total principal amount may rescind such declaration and waive the
default if the default has been cured. Subject to certain limitations, the
holders of a majority in total principal amount of the first mortgage bonds may
generally direct the time, method and place of conducting any proceeding for the

                                       28
<PAGE>

enforcement of the Indenture. No first mortgage bondholder has the right to
institute any proceedings for the enforcement of the Indenture unless that
holder has given the Trustee written notice of a default, the holders of 20% of
total principal amount of outstanding first mortgage bonds shall have tendered
to the Trustee reasonable security or indemnity against costs, expenses and
liabilities and requested the Trustee to take action, the Trustee shall have
declined to take action or failed to do so within 60 days and no inconsistent
directions shall have been given by the holders of a majority in total principal
amount of the first mortgage bonds.

PRIORITY AND SECURITY

      The new bonds are ranked equally with all other series of first mortgage
bonds now outstanding or issued later under the Indenture. The Indenture is a
direct first lien on substantially all of Consumers' property and franchises
(other than certain property expressly excluded from the lien (such as cash,
bonds, stock and certain other securities, contracts, accounts and bills
receivables, judgments and other evidences of indebtedness, stock in trade,
materials or supplies manufactured or acquired for the purpose of sale and/or
resale in the usual course of business or consumable in the operation of any of
the properties of Consumers, natural gas, oil and minerals, motor vehicles and
certain real property listed in Schedule A to the Indenture)). This lien is
subject to excepted encumbrances (and certain other limitations) as defined and
described in the Indenture. The new bonds are also subject to certain provisions
of Michigan law which provide that, under certain circumstances, the State of
Michigan's lien against property on which it has incurred costs related to any
environmental response activity that is subordinate to prior recorded liens can
become superior to such prior liens pursuant to court order. The Indenture
permits, with certain limitations, the acquisition of property subject to prior
liens and, under certain conditions, permits the issuance of additional
indebtedness under such prior liens to the extent of 60% of net property
additions made by Consumers to the property subject to such prior liens.

RELEASE AND SUBSTITUTION OF PROPERTY

      The Indenture provides that, subject to various limitations, property may
be released from the lien thereof when sold or exchanged, or contracted to be
sold or exchanged, upon the basis of:

      -     cash deposited with the Trustee;

      -     bonds or purchase money obligations delivered to the Trustee;

      -     prior lien bonds delivered to the Trustee or reduced or assumed by
            the purchaser;

      -     property additions acquired in exchange for the property released;
            or

      -     a showing that unfunded net property additions exist.

The Indenture also permits the withdrawal of cash upon a showing that unfunded
net property additions exist or against the deposit of bonds or the application
thereof to the retirement of bonds.

MODIFICATION OF INDENTURE

      The Indenture, the rights and obligations of Consumers and the rights of
the holders of first mortgage bonds may be modified by Consumers with the
consent of the holders of 75% in principal amount of the first mortgage bonds
and of not less than 60% of the principal amount of each series affected. In
general, however, no modification of the terms of payment of principal or
interest and no modification affecting the lien or reducing the percentage
required for modification is effective against any first mortgage bonds without
the first mortgage bondholders'

                                       29
<PAGE>

consent. Consumers has reserved the right without any consent or other action by
the holders of first mortgage bonds of any series created after September 15,
1993 or by the holder of any senior note or exchange note that is secured by
first mortgage bonds to amend the Indenture in order to substitute a majority in
principal amount of first mortgage bonds outstanding under the Indenture for the
75% requirement set forth above (and then only in respect of such series of
outstanding bonds as shall be affected by the proposed action) and to eliminate
the requirement for a series-by-series consent requirement.

DEFAULTS

      The Indenture defines the following as "defaults":

      -     failure to pay principal when due;

      -     failure to pay interest for sixty days;

      -     failure to pay any installment of any sinking or other purchase fund
            for ninety days;

      -     certain events in bankruptcy, insolvency or reorganization; and

      -     failure to perform any other covenant for ninety days following
            written demand by the Trustee for Consumers to cure such failure.

      Consumers has covenanted to pay interest on any overdue principal and (to
the extent permitted by law) on overdue installments of interest, if any, on the
first mortgage bonds under the Indenture at the rate of 6% per year. The
Indenture does not contain a provision requiring any periodic evidence to be
furnished as to the absence of default or as to compliance with the terms
thereof. However, Consumers is required by law to furnish annually to the
Trustee a certificate as to compliance with all conditions and covenants under
the Indenture.

BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY

      The new bonds that are exchanged for old bonds that were sold to QIBs will
be in the form of one or more bonds in registered, global form without interest
coupons (the "GLOBAL NEW BONDS"). Upon issuance, the global new bonds will be
deposited with the Trustee, as custodian for DTC, and registered in the name of
DTC or its nominee, in each case for credit to the accounts of DTC's Direct
Participants and Indirect Participants (each as defined below).

      Beneficial interests in all global new bonds and all new bonds in
certificated form ("CERTIFICATED NEW BONDS"), if any, will be subject to the
applicable rules and procedures of DTC and its Direct Participants or Indirect
Participants, which may change from time to time.

      The global new bonds may be transferred, in whole and not in part, only to
another nominee of DTC or to a successor of DTC or its nominee in certain
limited circumstances. Beneficial interests in the global new bonds may be
exchanged for certificated new bonds in certain limited circumstances. See " --
Exchange of Interests in Global New Bonds for Certificated New Bonds."

DEPOSITARY PROCEDURES

      DTC has advised Consumers that DTC is a limited-purpose trust company
created to hold securities for its participating organizations (collectively,
the "DIRECT PARTICIPANTS") and to facilitate the clearance and settlement of
transactions in those securities between Direct Participants through electronic
book-entry changes in accounts of Direct Participants. The Direct

                                       30
<PAGE>

Participants include securities brokers and dealers (including the Initial
Purchasers), banks, trust companies, clearing corporations and certain other
organizations. Access to DTC's system is also available to other entities that
clear through or maintain a direct or indirect, custodial relationship with a
Direct Participant (collectively, the "INDIRECT PARTICIPANTS"). DTC may hold
securities beneficially owned by other persons only through the Direct
Participants or Indirect Participants, and such other persons' ownership
interest and transfer of ownership interest will be recorded only on the records
of the appropriate Direct Participant and/or Indirect Participant, and not on
the records maintained by DTC.

      DTC has also advised Consumers that, pursuant to DTC's procedures, (1)
upon deposit of the global new bonds, DTC will credit the accounts of the Direct
Participants designated by the Initial Purchasers with portions of the principal
amount of the global new bonds allocated by the Initial Purchasers to such
Direct Participants and (2) DTC will maintain records of the ownership interests
of such Direct Participants in the global new bonds and the transfer of
ownership interests by and between Direct Participants. DTC will not maintain
records of the ownership interests of, or the transfer of ownership interests by
and between, Indirect Participants or other owners of beneficial interests in
the global new bonds. Direct Participants and Indirect Participants must
maintain their own records of the ownership interests of, and the transfer of
ownership interests by and between, Indirect Participants and other owners of
beneficial interests in the global new bonds. Investors in the global new bonds
may hold their interests therein directly through DTC if they are Direct
Participants in DTC or indirectly through organizations that are Direct
Participants in DTC. All ownership interests in any global new bonds will be
subject to the procedures and requirements of DTC.

      The laws of some states require that certain persons take physical
delivery in definitive, certificated form, of securities that they own. This may
limit or curtail the ability to transfer beneficial interests in a global new
bond to such persons. Because DTC can act only on behalf of Direct Participants,
which in turn act on behalf of Indirect Participants and others, the ability of
a person having a beneficial interest in a global new bond to pledge such
interest to persons or entities that are not Direct Participants in DTC, or to
otherwise take actions in respect of such interests, may be affected by the lack
of physical certificates evidencing such interests. For certain other
restrictions on the transferability of the new bonds, see " -- Exchange of
Interests in Global New Bonds for Certificated New Bonds."

      EXCEPT AS DESCRIBED IN " -- EXCHANGE OF INTERESTS IN GLOBAL NEW BONDS FOR
CERTIFICATED NEW BONDS", OWNERS OF BENEFICIAL INTERESTS IN THE GLOBAL NEW BONDS
WILL NOT HAVE NEW BONDS REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL
DELIVERY OF CERTIFICATED NEW BONDS IN CERTIFICATED FORM AND WILL NOT BE
CONSIDERED THE REGISTERED OWNERS OR HOLDERS THEREOF UNDER THE INDENTURE FOR ANY
PURPOSE.

      Under the terms of the Indenture, Consumers and the Trustee will treat the
persons in whose names the new bonds are registered (including new bonds
represented by global new bonds) as the owners thereof for the purpose of
receiving payments and for any and all other purposes whatsoever. Payments in
respect of the principal, premium, liquidated damages, if any, and interest on
global new bonds registered in the name of DTC or its nominee will be payable by
the Trustee to DTC or its nominee as the registered holder under the Indenture.
Consequently, neither Consumers, the Trustee nor any agent of Consumers or the
Trustee has or will have any responsibility or liability for (1) any aspect of
DTC's records or any Direct Participant's or Indirect Participant's records
relating to or payments made on account of beneficial ownership interests in the
global new bonds or for maintaining, supervising or reviewing any of DTC's
records or any Direct Participant's or Indirect Participant's records relating
to the beneficial ownership interests in any global new bond or (2) any other
matter relating to the actions and practices of DTC or any of its Direct
Participants or Indirect Participants.

                                       31
<PAGE>

      DTC has advised Consumers that its current payment practice (for payments
of principal, interest and the like) with respect to securities such as the new
bonds is to credit the accounts of the relevant Direct Participants with such
payment on the payment date in amounts proportionate to such Direct
Participant's respective ownership interests in the applicable global new bonds
as shown on DTC's records. Payments by Direct Participants and Indirect
Participants to the beneficial owners of the new bonds will be governed by
standing instructions and customary practices between them and will not be the
responsibility of DTC, the Trustee or Consumers. Neither Consumers nor the
Trustee will be liable for any delay by DTC or its Direct Participants or
Indirect Participants in identifying the beneficial owners of the new bonds, and
Consumers and the Trustee may conclusively rely on and will be protected in
relying on instructions from DTC or its nominee as the registered owner of the
new bonds for all purposes.

      The global new bonds will trade in DTC's Same-Day Funds Settlement System
and, therefore, transfers between Direct Participants in DTC will be effected in
accordance with DTC's procedures, and will be settled in immediately available
funds. Transfers between Indirect Participants who hold an interest through a
Direct Participant will be effected in accordance with the procedures of such
Direct Participant but generally will settle in immediately available funds.

      DTC has advised Consumers that it will take any action permitted to be
taken by a holder of new bonds of a series only at the direction of one or more
Direct Participants to whose account interests in the related global new bonds
are credited and only in respect of such portion of the aggregate principal
amount of such new bonds as to which such Direct Participant or Direct
Participants has or have given direction. However, if there is an event of
default with respect to the new bonds, DTC reserves the right to exchange the
related global new bonds (without the direction of one or more of its Direct
Participants) for legended certificated new bonds, and to distribute such
certificated new bonds to its Direct Participants. See " -- Exchange of
Interests in Global New Bonds for Certificated New Bonds."

      Although DTC has agreed to the foregoing procedures to facilitate
transfers of interests in the global new bonds among Direct Participants, it is
under no obligation to perform or to continue to perform such procedures, and
such procedures may be discontinued at any time. None of Consumers, the Initial
Purchasers or the Trustee will have any responsibility for the performance by
DTC, or its respective Direct Participants and Indirect Participants, of their
respective obligations under the rules and procedures governing any of their
operations.

      The information in this section concerning DTC and its book-entry system
has been obtained from DTC, and Consumers takes no responsibility for the
accuracy thereof.

EXCHANGE OF INTERESTS IN GLOBAL NEW BONDS FOR CERTIFICATED NEW BONDS

      Global new bonds may be exchanged for certificated new bonds if (1) (a)
DTC notifies Consumers that it is unwilling or unable to continue as depositary
for the global new bonds or Consumers determines that DTC is unable to act as
such depositary and Consumers thereupon fails to appoint a successor depositary
within 90 days or (b) DTC has ceased to be a clearing agency registered under
the Exchange Act, (2) Consumers, at its option, notifies the Trustee in writing
that it elects to cause the issuance of certificated new bonds or (3) there
shall have occurred and be continuing a default or an event of default with
respect to the new bonds. In any such case, Consumers will notify the Trustee in
writing that, upon surrender by the Direct Participants and Indirect
Participants of their interest in such global new bond, certificated new bonds
will be issued to each person that such Direct Participants and Indirect
Participants and DTC identify as being the beneficial owner of the related new
bonds.

                                       32
<PAGE>

      Beneficial interests in global new bonds held by any Direct Participant or
Indirect Participant may be exchanged for certificated new bonds upon request to
DTC, or by such Direct Participant (for itself or on behalf of an Indirect
Participant), to the Trustee in accordance with customary DTC procedures.
Certificated new bonds delivered in exchange for any beneficial interest in any
global new bond will be registered in the names, and issued in any approved
denominations, requested by DTC on behalf of such Direct Participants or
Indirect Participants (in accordance with DTC's customary procedures).

      Neither Consumers nor the Trustee will be liable for any delay by the
holder of global new bonds or DTC in identifying the beneficial owners of the
related new bonds, and Consumers and the Trustee may conclusively rely on, and
will be protected in relying on, instructions from the holder of the global new
bond or DTC for all purposes.

CERTIFICATED NEW BONDS

      Certificated new bonds may be exchangeable for other certificated new
bonds of any authorized denominations and of a like aggregate principal amount
and tenor. Certificated new bonds may be presented for exchange, and may be
presented for registration of transfer (duly endorsed, or accompanied by a duly
executed written instrument of transfer), at the designated office of the
Trustee in Detroit, Michigan (the "SECURITY REGISTRAR"). The Security Registrar
will not charge a service charge for any registration of transfer or exchange of
new bonds; however, Consumers may require payment by a holder of a sum
sufficient to cover any tax, assessment or other governmental charge payable in
connection therewith, as described in the Indenture. Such transfer or exchange
will be effected upon the Security Registrar being satisfied with the documents
of title and identity of the person making the request. Consumers may at any
time designate additional transfer agents with respect to the new bonds.

      Consumers shall not be required to (a) issue, exchange or register the
transfer of any certificated new bond for a period of 15 days next preceding the
mailing of notice of redemption of such new bond or (b) exchange or register the
transfer of any certificated new bond or portion thereof selected, called or
being called for redemption, except, in the case of any certificated new bond to
be redeemed in part, the portion thereof not so to be redeemed.

      If a certificated new bond is mutilated, destroyed, lost or stolen, it may
be replaced at the office of the Security Registrar upon payment by the holder
of such expenses as may be incurred by Consumers and the Security Registrar in
connection therewith and the furnishing of such evidence and indemnity as
Consumers and the Security Registrar may require. Mutilated new bonds must be
surrendered before substitute new bonds will be issued.

SAME DAY SETTLEMENT

      Payments in respect of the new bonds represented by the global new bonds
(including principal, premium, if any, and interest) will be made by wire
transfer of immediately available same day funds to the accounts specified by
DTC as the holder of the global new bonds. Principal, premium, if any, and
interest and liquidated damages, if any, on all certificated new bonds in
registered form will be payable at the office or agency of the Trustee in The
City of New York, except that, at the option of Consumers, payment of any
interest and liquidated damages, if any, may be made except for DTC (1) by check
mailed to the address of the person entitled thereto as such address shall
appear in the security register or (2) by wire transfer to an account maintained
by the person entitled thereto as specified in the security register.

                                       33
<PAGE>

                                     RATINGS

      S&P has assigned each series of old bonds a rating of BBB - , Moody's has
assigned each series of old bonds a rating of Baa3 and Fitch has assigned each
series of old bonds a rating of BBB-. The terms of the new bonds will be
identical in all material respects to the terms of the old bonds, except that
the registration rights and related liquidated damages provisions and the
transfer restrictions applicable to the old bonds will not be applicable to the
new bonds. The new bonds will have the same financial terms and covenants as the
old bonds, and will be subject to the same business and financial risks. The
ratings mentioned above reflect only the views of such ratings agencies, and do
not constitute a recommendation to buy, sell or hold securities. In general,
ratings address credit risk. Each rating should be evaluated independently of
any other rating. An explanation of the significance of such ratings may be
obtained only from such rating agencies at the following addresses: Standard &
Poor's, 25 Broadway, New York, New York 10004; Moody's Investors Service, Inc.,
99 Church Street, New York, New York 10007; and Fitch, Inc., 1 State Street
Plaza, New York, New York 10004. The security rating may be subject to revision
or withdrawal at any time by the assigning rating organization, and,
accordingly, there can be no assurance that such ratings will remain in effect
for any period of time or that they will not be revised downward or withdrawn
entirely by the rating agencies if, in their judgment, circumstances warrant.
Neither Consumers nor the Initial Purchasers have undertaken any responsibility
to oppose any proposed downward revision or withdrawal of a rating on the old
bonds. Any such downward revision or withdrawal of such ratings may have an
adverse effect on the market price of the new bonds.

                               THE EXCHANGE OFFER

PURPOSE OF THE EXCHANGE OFFER

      We initially sold the old bonds in private offerings to Barclays Capital
Inc., Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Goldman, Sachs & Co., ABN AMRO Incorporated, BNP Paribas
Securities Corp., Comerica Securities, Inc., Fifth Third Securities, Inc.,
Huntington Capital Corp., J.P. Morgan Securities Inc., and Wedbush Morgan
Securities Inc. (the "INITIAL PURCHASERS") pursuant to a purchase agreement
dated August 11, 2004 between us and them. The Initial Purchasers resold the old
bonds to QIBs in reliance on, and subject to the restrictions imposed under,
Rule 144A under the Securities Act. As of the date of this prospectus, $800
million of the old bonds are outstanding.

EXCHANGE OFFER REGISTRATION

      In connection with the private offering of the old bonds, we entered into
a Registration Rights Agreement with the Initial Purchasers pursuant to which we
agreed, for the benefit of the holders of the old bonds, at our cost to:

      -     within 180 days following the original issue date of the old bonds,
            prepare and file with the SEC an exchange offer registration
            statement with respect to a proposed exchange offer and the issuance
            and delivery to the holders, in exchange for the old bonds of each
            series, of new bonds, which will have terms identical in all
            material respects to the old bonds of such series, except that the
            new bonds will not contain terms with respect to transfer
            restrictions and will not provide for the payment of additional
            interest under the circumstances described below;

      -     use our reasonable best efforts to cause the exchange offer
            registration statement to be declared effective under the Securities
            Act within either 270 days of the original issue date

                                       34
<PAGE>

            of the old bonds;

      -     use our reasonable best efforts to keep the exchange offer
            registration statement effective until the closing of the exchange
            offer; and

      -     use our reasonable best efforts to cause the exchange offer to be
            consummated not later than 30 days following the effectiveness of
            the exchange offer registration statement.

      The new bonds will be issued under the Indenture. Upon the effectiveness
of the exchange offer registration statement, we will offer the new bonds in
exchange for surrender of the old bonds of the related series. We will keep the
Exchange Offer open for not less than 20 business days after the date notice of
the Exchange Offer is mailed to the holders of the old bonds of the related
series, or longer if required by applicable law.

      For each old bond surrendered to us pursuant to the Exchange Offer and not
withdrawn by the holder, the holder of the old bond will receive a new bond
having a principal amount equal to that of the surrendered old bond. Interest on
each new bond will accrue from the last date on which interest was paid on the
old bond surrendered in exchange or, if no interest has been paid on that old
bond, from the original issue date of the new bonds.

ADDITIONAL INTEREST

      We are making this Exchange Offer to satisfy our obligations and your
registration rights under the Registration Rights Agreement. If a registration
default occurs, which means one of the following events occurs:

      -     the exchange offer registration statement is not filed with the SEC
            on or prior to the 180th calendar day following the original issue
            date of the old bonds;

      -     the exchange offer registration statement is not declared effective
            on or prior to the 270th calendar day following the original issue
            date of the old bonds;

      -     the Exchange Offer is not consummated on or prior to the 30th
            calendar day following effectiveness of the exchange offer
            registration statement;

      -     if required, a shelf registration statement with respect to the old
            bonds is not filed with the SEC on or prior to the date specified
            above;

      -     if required, a shelf registration statement with respect to the old
            bonds is not declared effective on or prior to such date specified
            above; or

      -     either the exchange offer registration statement or a shelf
            registration statement has been filed and declared effective but
            after its effective date ceases to be effective or is unusable for
            its intended purpose without being succeeded within 15 business days
            by a post-effective amendment to such registration statement that
            cures such failure and that is itself declared effective by the SEC
            within five business days;

      then additional interest will accrue on the old bonds, from and including
the date on which any such registration default shall occur to, but excluding,
the date on which the registration default has been cured, at the rate of 0.50%
per year. We will have no other liabilities for monetary damages with respect to
our registration obligations. The receipt of additional interest will be the
sole monetary remedy available to a holder if we fail to meet these obligations.

                                       35
<PAGE>

SEC INTERPRETATIONS

      Based on existing interpretations of the Securities Act by the staff of
the SEC in several no-action letters to third parties, and subject to the
immediately following sentence, we believe that the new bonds issued pursuant to
the Exchange Offer may be offered for resale, resold or otherwise transferred by
the holders, other than holders who are broker-dealers, without further
compliance with the registration and prospectus delivery provisions of the
Securities Act. Any purchaser of the old bonds, however, who is our affiliate or
who intends to participate in the Exchange Offer for the purpose of distributing
the new bonds, or any participating broker-dealer who purchased the old bonds
for its own account, other than as a result of market-making activities or other
trading activities, to resell pursuant to Rule 144A or any other available
exemption under the Securities Act:

      -     will not be able to rely on the interpretations by the staff of the
            SEC;

      -     will not be able to tender its old bonds in the Exchange Offer; and

      -     must comply with the registration and prospectus delivery
            requirements of the Securities Act in connection with any sale or
            transfer of the new bonds, unless the sale or transfer is made under
            an exemption from those requirements.

      We do not intend to seek our own interpretation regarding the Exchange
Offer, and we cannot assure you that the staff of the SEC would make a similar
determination with respect to the new bonds as it has in other interpretations
to third parties.

      Each holder of the old bonds of a series, other than specified holders,
who wishes to exchange such old bonds for the related new bonds in the Exchange
Offer will be required to make representations that:

      -     it is not our affiliate;

      -     the old bonds being exchanged, and any new bonds to be received by
            it, have been or will be acquired in the ordinary course of its
            business; and

      -     it has no arrangement or understanding with any person to
            participate in the distribution, within the meaning of the
            Securities Act, of the new bonds.

      In addition, in connection with resales of the new bonds, any
participating broker-dealer must deliver a prospectus meeting the requirements
of the Securities Act. The staff of the SEC has taken the position that
participating broker-dealers may fulfill their prospectus delivery requirements
with respect to the new bonds, other than a resale of an unsold allotment from
the original sale of the old bonds, with the prospectus contained in the
exchange offer registration statement. Under the Registration Rights Agreement,
we have agreed, for a period of one year following the consummation of the
Exchange Offer, to make available a prospectus meeting the requirements of the
Securities Act to any participating broker-dealer for use in connection with any
resale of any new bonds acquired in the Exchange Offer.

SHELF REGISTRATION

      If:

      (1)   we are not permitted to consummate the Exchange Offer because the
            Exchange Offer is not permitted by applicable law or SEC policy; or

                                       36
<PAGE>

      (2)   upon notice to us by any holder in specified circumstances,

we will, in addition to or instead of effecting the registration of the new
bonds pursuant to the exchange offer registration statement, as the case may be,

      (1)   on or prior to 90 days after the earlier of any event in (1) or (2)
            above, file with the SEC a shelf registration statement covering
            resales of the old bonds;

      (2)   use our reasonable best efforts to cause the shelf registration
            statement to be declared effective under the Securities Act not
            later than 180 days after the date of any event in (1) or (2) above;

      (3)   use our reasonable best efforts to keep the shelf registration
            statement effective for two years; and

      (4)   use our reasonable best efforts to ensure that the shelf
            registration statement and any amendment to the shelf registration
            statement and any prospectus included in the shelf registration
            statement conforms with the requirements of the Securities Act.

      We will, in the event of the filing of a shelf registration statement,
provide to each holder of the old bonds that are covered by the shelf
registration statement copies of the prospectus that is a part of the shelf
registration statement and notify each holder when the shelf registration
statement has become effective. A holder of the old bonds that sells the old
bonds pursuant to the shelf registration statement generally will be required to
be named as a selling security holder in the related prospectus, to deliver
information to be used in connection with the shelf registration, and to deliver
a prospectus to purchasers, will be subject to the civil liability provisions
under the Securities Act in connection with the sales and will be bound by the
provisions of the Registration Rights Agreement that are applicable to the
holder, including indemnification obligations.

EXPIRATION DATE; EXTENSIONS; AMENDMENTS; TERMINATION

      The term "Expiration Date" shall mean ___________ __, 2005 unless we, in
our sole discretion, extend the Exchange Offer, in which case the term
"Expiration Date" shall mean the latest date to which the Exchange Offer is
extended.

      To extend the Expiration Date, we will notify the Exchange Agent of any
extension by oral or written notice and will notify the holders of the old bonds
by means of a press release or other public announcement prior to 9:00 a.m., New
York City time, on the next business day after the previously scheduled
Expiration Date. Such announcement may state that we are extending the Exchange
Offer for a specified period of time.

      We reserve the right:

      -     to delay acceptance of any old bonds, extend the Exchange Offer or
            terminate the Exchange Offer and not permit acceptance of the old
            bonds not previously accepted if any of the conditions set forth
            herein under "--Conditions" shall have occurred and shall not have
            been waived by us, by giving oral or written notice of such delay,
            extension or termination to the Exchange Agent, or

      -     to amend the terms of the Exchange Offer in any manner deemed by it
            to be advantageous to the holders of the old bonds.

                                       37
<PAGE>

Any such delay in acceptance, extension, termination or amendment will be
followed as promptly as practicable by oral or written notice thereof to the
Exchange Agent. If the Exchange Offer is amended in a manner determined by us to
constitute a material change, we will promptly disclose such amendment in a
manner reasonably calculated to inform the holders of the old bonds of such
amendment.

      Without limiting the manner in which we may choose to make public
announcement of any delay, extension, amendment or termination of the Exchange
Offer, we shall have no obligations to publish, advertise, or otherwise
communicate any such public announcement, other than by making a timely release
to an appropriate news agency.

INTEREST ON THE NEW BONDS

      Interest on the new bonds will accrue from the last date on which interest
was paid on the old bonds, or, if no interest has been paid on a series of old
bonds, from the date of issuance of each series of old bonds for which the
Exchange Offer is being made. Relevant interest information for each series of
the new bonds is as follows:

<TABLE>
<CAPTION>
                                                               Interest            Date of
                                    Semiannual               Commencement          Issuance
  Issuance         Rate            Dates Payable           Date of New Bonds     of Old Bonds
- --------------     ----      -------------------------     -----------------    ---------------
<S>                <C>       <C>                           <C>                  <C>
Series N Bonds     4.40%     February 15 and August 15      August 15, 2005     August 17, 2004
Series O Bonds     5.00%     February 15 and August 15      August 15, 2005     August 17, 2004
Series P Bonds     5.50%     February 15 and August 15      August 15, 2005     August 17, 2004
</TABLE>

PROCEDURES FOR TENDERING

      To tender in the Exchange Offer, a holder must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, have the signatures thereon
medallion guaranteed if required by the Letter of Transmittal, and mail or
otherwise deliver such Letter of Transmittal or such facsimile, together with
any other required documents, to the Exchange Agent prior to 5:00 p.m., New York
City time, on the Expiration Date. In addition, either (i) a timely confirmation
of a book-entry transfer (a "BOOK-ENTRY CONFIRMATION") of such old bonds into
the Exchange Agent's account at The Depositary (the "BOOK-ENTRY TRANSFER
FACILITY") pursuant to the procedure for book-entry transfer described below,
must be received by the Exchange Agent prior to the Expiration Date or (ii) the
holder must comply with the guaranteed delivery procedures described below. THE
METHOD OF DELIVERY OF LETTERS OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO
THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE HOLDERS. IF SUCH DELIVERY
IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED, WITH
RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE TIMELY DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION
DATE. NO LETTERS OF TRANSMITTAL OR OTHER REQUIRED DOCUMENTS SHOULD BE SENT TO
CONSUMERS. Delivery of all documents must be made to the Exchange Agent at its
address set forth below. Holders may also request their respective brokers,
dealers, commercial banks, trust companies or nominees to effect such tender for
such holders.

      The tender by a holder of old bonds will constitute an agreement between
such holder and Consumers in accordance with the terms and subject to the
conditions set forth herein and in the Letter of Transmittal. Any beneficial
owner whose old bonds are registered in the name of a broker, dealer, commercial
bank, trust company or other nominee and who wishes to tender should contact
such registered holder promptly and instruct such registered holder to tender on
his behalf.

                                       38
<PAGE>

      Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be medallion guaranteed by any member firm of a registered
national securities exchange or of the National Association of Securities
Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States or an "eligible guarantor" institution within
the meaning of Rule 17Ad-15 under the Exchange Act (each an "ELIGIBLE
INSTITUTION") unless the old bonds tendered pursuant thereto are tendered for
the account of an Eligible Institution.

      If the Letter of Transmittal is signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations, or
others acting in a fiduciary or representative capacity, such person should so
indicate when signing, and unless waived by Consumers, evidence satisfactory to
Consumers of their authority to so act must be submitted with the Letter of
Transmittal.

      All questions as to the validity, form, eligibility (including time of
receipt) and withdrawal of the tendered old bonds will be determined by
Consumers, in its sole discretion, which determination will be final and
binding. Consumers reserves the absolute right to reject any and all old bonds
not properly tendered or any old bonds which, if accepted, would, in the opinion
of counsel for Consumers, be unlawful. Consumers also reserves the absolute
right to waive any irregularities or conditions of tender as to particular old
bonds. Consumers' interpretation of the terms and conditions of the Exchange
Offer (including the instructions in the Letter of Transmittal) will be final
and binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of old bonds must be cured within such time as Consumers
shall determine. Neither Consumers, the Exchange Agent nor any other person
shall be under any duty to give notification of defects or irregularities with
respect to tenders of old bonds, nor shall any of them incur any liability for
failure to give such notification. Tenders of old bonds will not be deemed to
have been made until such irregularities have been cured or waived. Any old
bonds received by the Exchange Agent that are not properly tendered and as to
which the defects or irregularities have not been cured or waived will be
returned without cost to such holder by the Exchange Agent, unless otherwise
provided in the Letter of Transmittal, as soon as practicable following the
Expiration Date.

      In addition, Consumers reserves the right, in its sole discretion, subject
to the provisions of the Indenture, to purchase or make offers for any old bonds
that remain outstanding subsequent to the Expiration Date or, as set forth under
"--Conditions," to terminate the Exchange Offer in accordance with the terms of
the Registration Rights Agreement, and to the extent permitted by applicable
law, purchase old bonds in the open market, in privately negotiated transactions
or otherwise. The terms of any such purchases or offers could differ from the
terms of the Exchange Offer.

ACCEPTANCE OF OLD BONDS FOR EXCHANGE; DELIVERY OF NEW BONDS

      Upon satisfaction or waiver of all of the conditions to the Exchange
Offer, all old bonds properly tendered will be accepted promptly after the
Expiration Date, and the new bonds will be issued promptly after acceptance of
the old bonds. See "--Conditions." For purposes of the Exchange Offer, the old
bonds shall be deemed to have been accepted as validly tendered for exchange
when Consumers gives oral or written notice to the Exchange Agent.

      In all cases, issuance of new bonds for old bonds that are accepted for
exchange pursuant to the Exchange Offer will be made only after the Exchange
Agent has timely received a Book-Entry Confirmation of such old bonds into its
account at the Book-Entry Transfer Facility and a properly completed and duly
executed Letter of Transmittal and all other required documents. If any tendered
old bonds are not accepted for any reason set forth in the terms and conditions
of the Exchange Offer, such unaccepted or such nonexchanged old bonds will be
credited to an account

                                       39
<PAGE>

maintained with such Book- Entry Transfer Facility as promptly as practicable
after the expiration or termination of the Exchange Offer.

BOOK-ENTRY TRANSFER

      The Exchange Agent will make a request to establish an account with
respect to the old bonds at the Book-Entry Transfer Facility for purposes of the
Exchange Offer within two business days after the date of this prospectus. Any
financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of old bonds by causing the
Book-Entry Transfer Facility to transfer such old bonds into the Exchange
Agent's account at the Book-Entry Transfer Facility in accordance with such
Book-Entry Transfer Facility's procedures for transfer. However, the Letter of
Transmittal (or facsimile) thereof with any required signature guarantees and
any other required documents must, in any case, be transmitted to and received
by the Exchange Agent at one of the addresses set forth under "--Exchange Agent"
on or prior to the Expiration Date or the guaranteed delivery procedures
described below must be complied with.

GUARANTEED DELIVERY PROCEDURES

      If the procedures for book-entry transfer cannot be completed on a timely
basis, a tender may be effected if:

      -     the tender is made through an Eligible Institution,

      -     prior to the Expiration Date, the Exchange Agent receives from such
            Eligible Institution a properly completed and duly executed Letter
            of Transmittal (or a facsimile thereof) and Notice of Guaranteed
            Delivery, substantially in the form provided by Consumers (by
            facsimile transmission, mail or hand delivery), setting forth the
            name and address of the holder of old bonds and the amount of old
            bonds tendered, stating that the tender is being made thereby and
            guaranteeing that within three New York Stock Exchange, Inc.
            ("NYSE") trading days after the date of execution of the Notice of
            Guaranteed Delivery, a Book-Entry Confirmation and any other
            documents required by the Letter of Transmittal will be deposited by
            the Eligible Institution with the Exchange Agent, and

      -     a Book-Entry Confirmation and all other documents required by the
            Letter of Transmittal are received by the Exchange Agent within
            three NYSE trading days after the date of execution of the Notice of
            Guaranteed Delivery.

WITHDRAWAL OF TENDERS

      Tenders of old bonds may be withdrawn at any time prior to 5:00 p.m., New
York City time, on the Expiration Date.

      For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent prior to 5:00 p.m., New York City time, on the
Expiration Date at one of the addresses set forth under "--Exchange Agent." Any
such notice of withdrawal must:

      -     specify the name and number of the account at the Book-Entry
            Transfer Facility from which the old bonds were tendered,

      -     identify the principal amount of the old bonds to be withdrawn, and

      -     specify the name and number of the account at the Book-Entry
            Transfer Facility to be credited with the withdrawn old bonds and
            otherwise comply with the procedures of such

                                       40
<PAGE>

            Book-Entry Transfer Facility.

All questions as to the validity, form and eligibility (including time of
receipt) of such notice will be determined by Consumers, whose determination
shall be final and binding on all parties. Any old bonds so withdrawn will be
deemed not to have been validly tendered for exchange for purposes of the
Exchange Offer. Any old bonds which have been tendered for exchange but which
are not exchanged for any reason will be credited to an account maintained with
such Book-Entry Transfer Facility for the old bonds as soon as practicable after
withdrawal, rejection of tender or termination of the Exchange Offer. Properly
withdrawn old bonds may be retendered by following one of the procedures
described under "--Procedures for Tendering" and "--Book-Entry Transfer" at any
time on or prior to the Expiration Date.

CONDITIONS

      Notwithstanding any other term of the Exchange Offer, old bonds will not
be required to be accepted for exchange, nor will new bonds be issued in
exchange for any old bonds, and Consumers may terminate or amend the Exchange
Offer as provided herein before the acceptance of such old bonds, if, because of
any change in law, or applicable interpretations thereof by the SEC, Consumers
determines that it is not permitted to effect the Exchange Offer. Consumers has
no obligation to, and will not knowingly, permit acceptance of tenders of old
bonds from affiliates of Consumers or from any other holder or holders who are
not eligible to participate in the Exchange Offer under applicable law or
interpretations thereof by the staff of the SEC, or if the new bonds to be
received by such holder or holders of old bonds in the Exchange Offer, upon
receipt, will not be tradable by such holder without restriction under the
Securities Act and the Exchange Act and without material restrictions under the
"blue sky" or securities laws of substantially all of the states of the United
States. Other than the United States federal and state securities laws we do not
need to satisfy any regulatory requirements or obtain any regulatory approvals
to conduct the Exchange Offer.

EXCHANGE AGENT

      JPMorgan Chase Bank, N.A. has been appointed as Exchange Agent for the
Exchange Offer. Questions and requests for assistance and requests for
additional copies of this prospectus or of the Letter of Transmittal should be
directed to the Exchange Agent addressed as follows:

      By Certified or Registered Mail:         By Overnight Courier or Hand:
          JPMorgan Chase Bank, N.A.              JPMorgan Chase Bank, N.A.
        Institutional Trust Services           Institutional Trust Services
               P.O. Box 2320                   2001 Bryan Street, 9th Floor
          Dallas, Texas 75221-2320                  Dallas, Texas 75201
           Attention: Beth Mullin                 Attention: Beth Mullin

                         Facsimile Transmission Number:
                                 (214) 468-6494
                          (Eligible Institutions Only)

                              Confirm By Telephone:
                                 (214) 468-6464

                                       41
<PAGE>

FEES AND EXPENSES

      The expenses of soliciting tenders pursuant to the Exchange Offer will be
borne by Consumers. The principal solicitation for tenders pursuant to the
Exchange Offer is being made by mail; however, additional solicitations may be
made by telephone, facsimile or in person by officers and regular employees of
Consumers.

      Consumers will not make any payments to brokers, dealers or other persons
soliciting acceptances of the Exchange Offer. Consumers, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
the Exchange Agent for its reasonable out-of-pocket expenses in connection
therewith.

      The expenses to be incurred in connection with the Exchange Offer will be
paid by Consumers, including fees and expenses of the Exchange Agent and the
Trustee, and accounting, legal, printing and related fees and expenses.

      Consumers will pay all transfer taxes, if any, applicable to the exchange
of old bonds pursuant to the Exchange Offer. If, however, new bonds or old bonds
for principal amounts not tendered or accepted for exchange are to be registered
or issued in the name of any person other than the registered holder of the old
bonds tendered, or if tendered old bonds are registered in the name of any
person other than the person signing the Letter of Transmittal, or if a transfer
tax is imposed for any reason other than the exchange of old bonds pursuant to
the Exchange Offer, then the amount of any such transfer taxes (whether imposed
on the registered holder or any other persons) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or exemption therefrom
is not submitted with the Letter of Transmittal, the amount of such transfer
taxes will be billed directly to such tendering holder.

RESALE OF NEW BONDS

      Based on an interpretation by the staff of the SEC set forth in no-action
letters issued to third parties, Consumers believes that new bonds issued
pursuant to the Exchange Offer in exchange for old bonds may be offered for
resale, resold and otherwise transferred by any owner of such new bonds (other
than any such owner which is an "affiliate" of Consumers within the meaning of
Rule 405 under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such new
bonds are acquired in the ordinary course of such owner's business and such
owner does not intend to participate, and has no arrangement or understanding
with any person to participate, in the distribution of such new bonds. Any owner
of old bonds who tenders in the Exchange Offer with the intention to
participate, or for the purpose of participating, in a distribution of the new
bonds may not rely on the position of the staff of the SEC enunciated in Exxon
Capital Holdings Corporation (available May 13, 1988, as interpreted in the
SEC's letter to Shearman & Sterling dated July 2, 1993), Morgan Stanley & Co.,
Incorporated (available June 5, 1991), Warnaco, Inc. (available June 5, 1991),
and Epic Properties, Inc. (available October 21, 1991) or similar no-action
letters (collectively the "NO-ACTION LETTERS") but rather must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. In addition, any such resale transaction
should be covered by an effective registration statement containing the selling
security holders information required by Item 507 of Regulation S-K of the
Securities Act. Each broker-dealer that receives new bonds for its own account
in exchange for old bonds, where such old bonds were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, may be a statutory underwriter and must acknowledge that it will
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such new bonds.

                                       42
<PAGE>

      By tendering in the Exchange Offer, each holder (or DTC participant, in
the case of tenders of interests in the global old bonds s held by DTC) will
represent to Consumers (which representation may be contained the Letter of
Transmittal) to the effect that:

      -     it is not an affiliate of Consumers,

      -     it is not engaged in, and does not intend to engage in, and has no
            arrangement or understanding with any person to participate in, a
            distribution of the new bonds to be issued in the Exchange Offer and

      -     it is acquiring the new bonds in its ordinary course of business.

Each holder will acknowledge and agree that any broker-dealer and any such
holder using the Exchange Offer to participate in a distribution of the new
bonds acquired in the Exchange Offer:

      -     could not under SEC policy as in effect on the date of the
            Registration Rights Agreement rely on the position of the SEC
            enunciated in the No-Action Letters, and

      -     must comply with the registration and prospectus delivery
            requirements of the Securities Act in connection with a secondary
            resale transaction and that such a secondary resale transaction must
            be covered by an effective registration statement containing the
            selling security holder information required by Item 507 or 508, as
            applicable, of Regulation S-K if the resales are of new bonds
            obtained by such holder in exchange for old bonds acquired by such
            holder directly from Consumers or an affiliate thereof.

      To comply with the securities laws of certain jurisdictions, it may be
necessary to qualify for sale or to register the new bonds prior to offering or
selling such new bonds. Consumers has agreed, pursuant to the Registration
Rights Agreement and subject to certain specified limitations therein, to
cooperate with selling holders or underwriters in connection with the
registration and qualification of the new bonds for offer or sale under the
securities or "blue sky" laws of such jurisdictions as may be necessary to
permit the holders of new bonds to trade the new bonds without any restrictions
or limitations under the securities laws of the several states of the United
States.

CONSEQUENCES OF FAILURE TO EXCHANGE

      Holders of old bonds who do not exchange their old bonds for new bonds
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such old bonds as set forth in the legend thereon as a
consequence of the issuance of the old bonds pursuant to exemptions from, or in
transactions not subject to, the registration requirements of the Securities Act
and applicable state securities laws. In general, the old bonds may not be
registered under the Securities Act, except pursuant to a transaction not
subject to, the Securities Act and applicable state securities laws. Consumers
does not currently anticipate that it will register the old bonds under the
Securities Act. To the extent that old bonds are tendered and accepted in the
Exchange Offer, the trading market for untendered and tendered but unaccepted
old bonds could be adversely affected.

                                       43
<PAGE>

              CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

DESCRIPTION OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OF OLD
BONDS FOR NEW BONDS

      The following summary describes the principal United States federal income
tax consequences to holders who exchange old bonds for new bonds pursuant to the
Exchange Offer. This summary is intended to address the beneficial owners of old
bonds that are citizens or residents of the United States, corporations,
partnerships or other entities created or organized in or under the laws of the
United States or any State or the District of Columbia, or estates or trusts
that are not foreign estates or trusts for United States federal income tax
purposes, in each case, that hold the old bonds as capital assets.

      The exchange of old bonds for new bonds pursuant to the Exchange Offer
will not constitute a taxable exchange for United States federal income tax
purposes. As a result, a holder of an old bond whose old bond is accepted in the
Exchange Offer will not recognize gain or loss on the exchange. A tendering
holder's tax basis in the new bonds received pursuant to the Exchange Offer will
be the same as such holder's tax basis in the old bonds surrendered therefor. A
tendering holder's holding period for the new bonds received pursuant to the
Exchange Offer will include its holding period for the old bonds surrendered
therefor.

      ALL HOLDERS OF OLD BONDS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS
REGARDING THE UNITED STATES FEDERAL, STATE AND LOCAL TAX CONSEQUENCES OF THE
EXCHANGE OF OLD BONDS FOR NEW BONDS AND OF THE OWNERSHIP AND DISPOSITION OF NEW
BONDS RECEIVED IN THE EXCHANGE OFFER IN LIGHT OF THEIR OWN PARTICULAR
CIRCUMSTANCES.

DESCRIPTION OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF AN INVESTMENT IN THE
NEW BONDS

      The following is a summary of the material United States federal income
tax consequences of the acquisition, ownership and disposition of the old bonds
or the new bonds by a United States Holder (as defined below). This summary
deals only with the United States Holders that will hold the old bonds or the
new bonds as capital assets. The discussion does not cover all aspects of
federal taxation that may be relevant to, or the actual tax effect that any of
the matters described herein will have on, the acquisition, ownership or
disposition of the old bonds or the new bonds by particular investors, and does
not address state, local, foreign or other tax laws. In particular, this summary
does not discuss all of the tax considerations that may be relevant to certain
types of investors subject to special treatment under the federal income tax
laws (such as banks, insurance companies, investors liable for the alternative
minimum tax, individual retirement accounts and other tax-deferred accounts,
tax-exempt organizations, dealers in securities or currencies, investors that
will hold the old bonds or the new bonds as part of straddles, hedging
transactions or conversion transactions for federal tax purposes or investors
whose functional currency is not United States Dollars). Furthermore, the
discussion below is based on provisions of the Internal Revenue Code of 1986, as
amended (the "CODE"), and regulations, rulings, and judicial decisions
thereunder as of the date hereof, and such authorities may be repealed, revoked
or modified so as to result in U.S. federal income tax consequences different
from those discussed below.

      PERSONS CONSIDERING THE PURCHASE, OWNERSHIP, OR DISPOSITION OF NEW BONDS
SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE U.S. FEDERAL INCOME TAX
CONSEQUENCES IN LIGHT OF THEIR PARTICULAR SITUATIONS AS WELL AS ANY CONSEQUENCES
ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR INTERNATIONAL TAXING JURISDICTION.

                                       44
<PAGE>

      As used herein, the term "UNITED STATES HOLDER" means a beneficial owner
of the old bonds or the new bonds that is (i) a citizen or resident of the
United States for United States federal income tax purposes, (ii) a corporation
created or organized under the laws of the United States or any State thereof,
(iii) a person or entity that is otherwise subject to United States federal
income tax on a net income basis in respect of income derived from the old bonds
or the new bonds, or (iv) a partnership to the extent the interest therein is
owned by a person who is described in clause (i), (ii) or (iii) of this
paragraph.

INTEREST

      Interest paid on an old bond or a new bond will be taxable to a United
States Holder as ordinary income at the time it is received or accrued,
depending on the holder's method of accounting for tax purposes.

PURCHASE, SALE, EXCHANGE, RETIREMENT AND REDEMPTION OF THE NEW BONDS

      In general (with certain exceptions described below) a United States
Holder's tax basis in a new bond will equal the price paid for the old bonds for
which such new bond was exchanged pursuant to the Exchange Offer. A United
States Holder generally will recognize gain or loss on the sale, exchange,
retirement, redemption or other disposition of an old bond or a new bond (or
portion thereof) equal to the difference between the amount realized on such
disposition and the United States Holder's tax basis in the old bond or the new
bond (or portion thereof). Except to the extent attributable to accrued but
unpaid interest, gain or loss recognized on such disposition of an old bond or a
new bond will be capital gain or loss. Such capital gain or loss will generally
be long-term capital gain or loss if the United States Holder held such bond
(including in the holding period of the new bond, the period during which the
United Stated Holder held the old bonds surrendered for it) for more than one
year immediately prior to such disposition. Long-term capital gains of
individuals are eligible for preferential rates of taxation, which have been
reduced for long-term capital gains recognized on or after May 6, 2003 and
before January 1, 2009. The deductibility of capital losses is subject to
limitations.

BOND PREMIUM

      If a United States Holder acquires a new bond or has acquired an old bond,
in each case, for an amount more than its redemption price, the Unites States
Holder may elect to amortize such bond premium on a yield to maturity basis.
Once made, such an election applies to all bonds (other than bonds the interest
on which is excludable from gross income) held by the United States Holder at
the beginning of the first taxable year to which the election applies or
thereafter acquired by the United States Holder, unless the Internal Revenue
Service (the "IRS") consents to a revocation of the election. The basis of a new
bond will be reduced by any amortizable bond premium taken as a deduction.

MARKET DISCOUNT

      The purchase of a new bond or the purchase of an old bond other than at
original issue may be affected by the market discount provisions of the Code.
These rules generally provide that, if a United States Holder purchases a new
bond (or purchased an old bond) at a "market discount," as defined below, and
thereafter recognizes gain upon a disposition of the new bond (including
dispositions by gift or redemption), the lesser of such gain (or appreciation,
in the case of a gift) or the portion of the market discount that has accrued
("ACCRUED MARKET DISCOUNT") while the new bond (and its predecessor old bond, if
any) was held by such United States Holder will be treated as ordinary interest
income at the time of disposition rather than as capital gain. For a new

                                       45
<PAGE>

bond or an old bond, "market discount" is the excess of the stated redemption
price at maturity over the tax basis immediately after its acquisition by a
United States Holder. Market discount generally will accrue ratably during the
period from the date of acquisition to the maturity date of the new bond, unless
the United States Holder elects to accrue such discount on the basis of the
constant yield method. Such an election applies only to the bond with respect to
which it is made (except that an election with respect to the predecessor old
bond would also apply to the new bond) and is irrevocable.

      In lieu of including the accrued market discount income at the time of
disposition, a United States Holder of a new bond acquired at a market discount
(or acquired in exchange for an old bond acquired at a market discount) may
elect to include the accrued market discount in income currently either ratably
or using the constant yield method. Once made, such an election applies to all
other obligations that the United States Holder purchases at a market discount
during the taxable year for which the election is made and in all subsequent
taxable years of the United States Holder, unless the IRS consents to a
revocation of the election. If an election is made to include accrued market
discount in income currently, the basis of a new bond (or, where applicable, a
predecessor old bond) in the hands of the United States Holder will be increased
by the accrued market discount thereon as it is includible in income. A United
States Holder of a market discount new bond who does not elect to include market
discount in income currently generally will be required to defer deductions for
interest on borrowings allocable to such new bond, if any, in an amount not
exceeding the accrued market discount on such new bond until the maturity or
disposition of such new bond.

BACKUP WITHHOLDING AND INFORMATION REPORTING

      Payments of interest and principal on, and the proceeds of sale or other
disposition of the old bonds or the new bonds payable to a United States Holder,
may be subject to information reporting requirements and backup withholding at
the applicable statutory rate will apply to such payments if the United States
Holder fails to provide an accurate taxpayer identification number or to report
all interest and dividends required to be shown on its federal income tax
returns. Certain United States Holders (including, among others, corporations)
are not subject to backup withholding. United States Holders should consult
their tax advisors as to their qualification for exemption from backup
withholding and the procedure for obtaining such an exemption.

                                       46
<PAGE>

                              PLAN OF DISTRIBUTION

      Each broker-dealer that receives new bonds for its own account pursuant
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such new bonds. This prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connections with resales of the new bonds received in exchange for the old bonds
where such old bonds were acquired as a result of market-making activities or
other trading activities. Consumers has agreed that, starting on the Expiration
Date and ending on the close of business on the first anniversary of the
Expiration Date, it will make this prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale.

      Consumers will not receive any proceeds from any sale of the new bonds by
broker-dealers. The new bonds received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the counter market, in negotiated transactions, through
the writing of options on the new bonds or a combination of such methods of
resale, at market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such new bonds. Any broker-dealer
that resells new bonds that were received by it for its own account pursuant to
the Exchange Offer and any broker or dealer that participates in a distribution
of such new bonds may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit of any such resale of new bonds and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.

      For a period of one year after the Expiration Date, Consumers will
promptly send additional copies of this prospectus and any amendment or
supplement to this prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. Consumers has agreed to pay all expenses incident
to the Exchange Offer and will indemnify the holders of the new bonds against
certain liabilities, including liabilities under the Securities Act.

                                  LEGAL OPINION

      Robert C. Shrosbree, Assistant General Counsel for CMS Energy Corporation,
will render opinions as to the legality of the new bonds for Consumers.

      Jay M. Silverman, Director of Tax Planning and Assistant Tax Counsel,
will render an opinion regarding tax matters.

                                       47
<PAGE>

                                     EXPERTS

      The consolidated financial statements and schedule of Consumers appearing
in Consumers' Annual Report (Form 10-K/A) for the year ended December 31, 2003
have been audited by Ernst & Young LLP, independent registered public accounting
firm, as set forth in their report thereon included therein and incorporated
herein by reference, and are based in part on the reports of
PricewaterhouseCoopers LLP for 2003 and 2002, an independent registered public
accounting firm, and Arthur Andersen LLP (who have ceased operations) for 2001,
independent accountants, for the MCV Partnership. Such consolidated financial
statements and schedule are incorporated herein by reference in reliance upon
such reports given on the authority of such firms as experts in accounting and
auditing.

      The consolidated financial statements of the MCV Partnership as of and for
the years ended December 31, 2003 and 2002, not separately presented or
incorporated by reference in this prospectus, have been audited by
PricewaterhouseCoopers LLP, an independent registered public accounting firm, as
stated in their report appearing in Consumers' Annual Report on Form 10-K/A for
the year ended December 31, 2003, which report is incorporated by reference
herein. Such financial statements, to the extent they have been included in the
financial statements of Consumers, have been so included in reliance on the
report of such independent registered public accounting firm given on the
authority of said firm as experts in auditing and accounting.

      The audited consolidated financial statements of the MCV Partnership for
the year ended December 31, 2001, not separately presented or incorporated by
reference in this prospectus, have been audited by Arthur Andersen LLP,
independent accountants. Arthur Andersen LLP has not consented to the inclusion
of their report on the financial statements of the MCV Partnership for the year
ended December 31, 2001 in this prospectus, and we have dispensed with the
requirement to file their consent in reliance upon Rule 437a under the
Securities Act. Because Arthur Andersen LLP has not consented to the
incorporation by reference of their report in this prospectus, you will not be
able to recover against Arthur Andersen LLP under Section 11 of the Securities
Act for any untrue statements of a material fact contained in the financial
statements audited by Arthur Andersen LLP or any omissions to state a material
fact required to be stated therein.

      Future consolidated financial statements of Consumers and the reports
thereon of Ernst & Young LLP also will be incorporated by reference in this
prospectus in reliance upon the authority of that firm as experts in giving
those reports to the extent that said firm has audited said consolidated
financial statements and consented to the use of their reports thereon.

                                       48
<PAGE>

                                    PART II.

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

      The following resolution was adopted by the Board of Directors of
Consumers on May 6, 1987:

      RESOLVED: That effective March 1, 1987 the Company shall indemnify to the
full extent permitted by law every person (including the estate, heirs and legal
representatives of such person in the event of the decease, incompetency,
insolvency or bankruptcy of such person) who is or was a director, officer,
partner, trustee, employee or agent of the Company, or is or was serving at the
request of the Company as a director, officer, partner, trustee, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against all liability, costs, expenses, including attorneys' fees,
judgments, penalties, fines and amounts paid in settlement, incurred by or
imposed upon the person connection with or resulting from any claim or any
threatened, pending or completed action, suit or proceeding whether civil,
criminal, administrative, investigative or of whatever nature, arising from the
person's service or capacity as, or by reason of the fact that the person is or
was, a director, officer, partner, trustee, employee or agent of the Company or
is or was serving at the request of the Company as a director, officer, partner,
trustee, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise. Such right of indemnification shall not be deemed
exclusive of any other rights to which the person may be entitled under statute,
bylaw, agreement, vote of shareholders or otherwise.

      Article XIII, Section 1 of Consumers Bylaws provides:

      The Company may purchase and maintain liability insurance, to the full
extent permitted by law, on behalf of any person who is or was a director,
officer, employee or agent of the Company, or is or was serving at the request
of the Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against such person and incurred by such person in any such capacity.

      Article V of Consumers Restated Articles of Incorporation reads:

      A director shall not be personally liable to the Company or its
shareholders for monetary damages for breach of duty as a director except (i)
for a breach of the director's duty of loyalty to the Company or its
shareholders, (ii) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law, (iii) for a violation of
Section 551(1) of the Michigan Business Corporation Act, and (iv) any
transaction from which the director derived an improper personal benefit. No
amendment to or repeal of this Article V, and no modification to its provisions
by law, shall apply to, or have any effect upon, the liability or alleged
liability of any director of the Company for or with respect to any acts or
omissions of such director occurring prior to such amendment, repeal or
modification.

      Article VI of Consumers Restated Articles of Incorporation reads:

      Each director and each officer of the Company shall be indemnified by the
Company to the fullest extent permitted by law against expenses (including
attorneys' fees), judgments, penalties, fines and amounts paid in settlement
actually and reasonably incurred by him or her in connection with the defense of
any proceeding in which he or she was or is a party or is threatened to be made
a party by reason of being or having been a director or an officer of the
Company. Such right of indemnification is not exclusive of any other rights to
which such director or officer may

                                      II-1
<PAGE>

be entitled under any now or thereafter existing statute, any other provision of
these Articles, bylaw, agreement, vote of shareholders or otherwise. If Business
Corporation Act of the State of Michigan is amended after approval by the
shareholders of this Article VI to authorize corporate action further
eliminating or limiting the personal liability of directors, then the liability
of a director of the Company shall be eliminated or limited to the fullest
extent permitted by the Business Corporation Act of the State of Michigan, as so
amended. Any repeal or modification of this Article VI by the shareholders of
the Company shall not adversely affect any right or protection of a director of
the Company existing at the time of such repeal or modification.

      Sections 561 through 569 of the Michigan Business Corporation Act provides
Consumers with the power to indemnify directors, officers, employees and agents
against certain expenses and payments, and to purchase and maintain insurance on
behalf of directors, officers, employees and agents.

      Officers and directors are covered within specified monetary limits by
insurance against certain losses arising from claims made by reason of their
being directors or officers of Consumers or of Consumers' subsidiaries and
Consumers' officers and directors are indemnified against such losses by reason
of their being or having been directors or officers of another corporation,
partnership, joint venture, trust or other enterprise at Consumers' request. In
addition, Consumers has indemnified each of its present directors by contracts
that contain affirmative provisions essentially similar to those in Sections 561
through 569 of the Michigan Business Corporation Act cited above.

      Officers and directors and Regular Trustees of the trust are covered
within specified monetary limits by insurance against certain losses arising
from claims made by reason of their being directors or officers of Consumers or
of Consumers' subsidiaries and Consumers' officers and directors are indemnified
against such losses by reason of their being or having been directors or
officers of another corporation, partnership, joint venture, trust or other
enterprise at Consumers' request. In addition, Consumers has indemnified each of
its present directors by contracts that contain affirmative provisions
essentially similar to those in sections 561 through 569 of the Michigan
Business Corporation Act cited above.

      The amended and restated Declaration of Trust provides that to the fullest
extent permitted by applicable law, Consumers shall indemnify and hold harmless
each of the Trustees, any Affiliate of the Trustees, any officer, director,
shareholder, employee, representative or agent of any Trustee and any employee
or agent of the trust or its Affiliates (each an "INDEMNIFIED PERSON"), from and
against any loss, damage, liability, tax, penalty, expense or claim of any kind
or nature whatsoever incurred by such Indemnified Person by reason the creation,
operation or termination of the trust or any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the trust and in a
manner such Indemnified Person reasonably believed to be within the scope of
authority conferred on such Indemnified Person by the amended and restated
Declaration of Trust, except that no Indemnified Person shall be entitled to be
indemnified in respect of any loss, damage or claim incurred by such Indemnified
Person by reason of negligence or willful misconduct with respect to such acts
or omissions.

                                      II-2
<PAGE>

ITEM 21. EXHIBITS.

      Exhibits listed below which have been previously filed with the SEC are
incorporated herein by reference with the same effect as if filed with this
registration statement.

<TABLE>
<CAPTION>
  EXHIBIT
     NO.                                    DESCRIPTION
     ---                                    -----------
<S>                  <C>
*(4)(a)              -- Indenture dated as of January 1, 1996 between Consumers
                        Energy Company and The Bank of New York, as Trustee.
                        (Previously filed with Consumers' Form 10-K for the year
                        ended December 31, 1995 as Exhibit (4)(b).)

                     -- Indentures Supplemental thereto:

*(4)(a)(i)           -- 1st dated as of January 18, 1996 (Previously filed with
                        Consumers' Form 10-K for the year ended December 31,
                        1995 as Exhibit (4)(b).)

*(4)(a)(ii)          -- 2nd dated as of September 4, 1997 (Previously filed with
                        Consumers' Form 10-Q for the quarter ended September 30,
                        1997 as Exhibit (4)(a).)

*(4)(a)(iii)         -- 3rd dated as of November 4, 1999 (Previously filed with
                        Consumers' Form 10-Q for the quarter ended September 30,
                        1999 as Exhibit (4)(a).)

*(4)(a)(iv)          -- 4th dated as of May 31, 2001 (Previously filed with
                        Consumers' Form 10-Q for the quarter ended September 30,
                        2001 as Exhibit (4)(a).)

*(4)(b)              -- Indenture dated as of February 1, 1998 between Consumers
                        Energy Company and JPMorgan Chase Bank, N.A. (formerly
                        The Chase Manhattan Bank), as Trustee. (Previously filed
                        with Consumers' Form 10-K for the year ended December
                        31, 1997 as Exhibit (4)(c).)

                     -- Indentures Supplemental thereto:

*(4)(b)(i)           -- 1st dated as of May 1, 1998 (Previously filed with
                        Consumers' Form 10-Q for the quarter ended March 31,
                        1998 as Exhibit (4)(a).)

*(4)(b)(ii)          -- 2nd dated as of June 15, 1998 (Previously filed with
                        Consumers' Registration Statement on Form S-4 dated July
                        13, 1998 as Exhibit (4)(b).)

*(4)(b)(iii)         -- 3rd dated as of October 29, 1998 (Previously filed with
                        Consumers' Form 10-Q for the quarter ended September 30,
                        1998 as Exhibit (4)(a).)

*(4)(c)              -- Indenture dated as of September 1, 1945, between
                        Consumers Energy Company and JPMorgan Chase Bank, N.A.
                        (successor to City Bank Farmers Trust Company, as
                        Trustee, including therein indentures supplemental
                        thereto through the Forty-third supplemental Indenture
                        dated as of May 1, 1979. (Previously filed with
                        Consumers' Registration Statement No. 2-65973, as
                        Exhibit (b)(1)-(4).)

                     -- Indentures Supplemental thereto:

*(4)(c)(i)           -- 69th dated as of September 15, 1993 (Previously filed
                        with Consumers' Form 8-K dated September 21, 1993 as
                        Exhibit (4).)

*(4)(c)(ii)          -- 70th dated as of February 1, 1998 (Previously filed with
                        Consumers' Form 10-K for the year ended December 31,
                        1997 as Exhibit (4).)

*(4)(c)(iii)         -- 71st dated as of March 1, 1998 (Previously filed with
                        Consumers' Form 10-K for the year ended December 31,
                        1997 as Exhibit (4).)

*(4)(c)(iv)          -- 74th dated as of October 29, 1998 (Previously filed with
                        Consumers' Form 10-Q for the quarter ended September 30,
                        1998 as Exhibit (4)(b).)

*(4)(c)(v)           -- 75th dated as of October 1, 1999 (Previously filed with
                        Consumers' Form 10-K for the year ended December 31,
                        1999 as Exhibit (4)(b).)

*(4)(c)(vi)          -- 77th dated as of October 1, 1999 (Previously filed with
                        Consumers' Form 10-K for the year ended December 31,
                        1999 as Exhibit (4)(d).)

*(4)(c)(vii)         -- 79th dated as of September 26, 2001 (Previously filed
                        with Consumers' Form 10-Q for the quarter ended
                        September 30, 2001 as Exhibit (4)(b).)

*(4)(c)(viii)        -- 90th dated as of March 30, 2003 (Previously filed with
                        Consumers' Form 10-Q for the quarter ended March 31,
                        2003 as Exhibit (4)(d).)

*(4)(c)(ix)          -- 91st dated as of May 23, 2003 (Previously filed with
                        Consumers' Form 10-Q for the quarter ended September 30,
                        2003 as Exhibit (4)(a).)

*(4)(c)(x)           -- 92nd dated as of August 26, 2003 (Previously filed with
                        Consumers' Form 10-Q for the quarter ended September 30,
                        2003 as Exhibit (4)(b).)

*(4)(c)(xi)          -- 93rd dated as of September 17, 2003 (Previously filed
                        with Consumers' Form 10-Q for the quarter ended
                        September 30, 2003 as Exhibit (4)(c).)

*(4)(c)(xii)         -- 94th dated as of November 7, 2003 (Previously filed with
                        Consumers' Registration Statement on Form S-4 dated
                        December 16, 2003 as Exhibit (4)(a)(i).)

*(4)(c)(xiii)        -- 95th dated as of August 3, 2004 (Previously filed with
                        Consumers' Registration Statement on Form S-3 dated
                        November 18, 2004 as Exhibit (4)(e)(xiii).)

*(4)(c)(xiv)         -- 96th dated as of August 17, 2004 (Previously filed with
                        Consumers' Registration Statement on Form S-3 dated
                        November 18, 2004 as Exhibit (4)(e)(xiv).)

*(4)(c)(xv)          -- 97th dated as of September 1, 2004 (Previously filed
                        with Consumers' Registration Statement on Form S-3 dated
                        November 18, 2004 as Exhibit (4)(e)(xv).)

*(4)(c)(xvi)         -- 98th dated as of December 13, 2004 (Previously filed
                        with Consumers' Form 8-K dated December 13, 2004 as
                        Exhibit 4.4)

*(4)(c)(xvii)        -- 99th dated as of January 20, 2005 (Previously filed with
                        Consumers' Form 8-K dated January 20, 2005 as Exhibit
                        4.4)

(4)(d)               -- Form of Series N Bond (included in Exhibit (4)(c)(xvii)
                        above.)

(4)(e)               -- Form of Series O Bond (included in Exhibit (4)(c)(xvii)
                        above.)
</TABLE>

                                      II-3
<PAGE>

<TABLE>
<S>                 <C>
(4)(f)              --  Form of Series P Bond (included in Exhibit (4)(c)(xvii)
                        above.)

(4)(g)              --  Registration Rights Agreement dated as of August 17,
                        2004 between Consumers and the Initial Purchasers, as
                        defined therein.

*(4)(h)             --  Instruments defining the rights of security holders,
                        including indentures. Consumers Energy Company hereby
                        agrees to furnish to the SEC upon request a copy of any
                        Instrument covering securities the amount of which does
                        not exceed 10% of the total assets of Consumers Energy
                        Company and its subsidiaries on a consolidated basis.
                        (Previously filed with Consumers' Registration Statement
                        on Form S-3, dated October 20, 1999 as Exhibit (4)(f).)

(5)                 --  Opinion of Robert C. Shrosbree, Assistant General
                        Counsel for CMS Energy

(8)                 --  Opinion of Jay M. Silverman, Tax Counsel for Consumers,
                        regarding tax matters

(12)                --  Statement regarding computation of ratio of earnings to
                        fixed charges

(23)(a)             --  Consent of Robert C. Shrosbree, Assistant General
                        Counsel for CMS Energy (included in Exhibit (5) above).

(23)(b)             --  Consent of Jay M. Silverman, Tax Counsel for Consumers
                        (included in Exhibit (8) above).

(23)(c)             --  Consent of Ernst & Young LLP

(23)(d)             --  Consent of PricewaterhouseCoopers LLP

(24)                --  Powers of Attorney

(25)                --  Statement of Eligibility and Qualification of JPMorgan
                        Chase Bank, N.A.

(99)(a)             --  Form of Letter of Transmittal

(99)(b)             --  Certification of Taxpayer Identification Number on
                        Substitute Form W-9

(99)(c)             --  Form of Notice of Guaranteed Delivery
</TABLE>

- ----------

* Previously filed.

                                      II-4
<PAGE>

ITEM 22. UNDERTAKINGS.

      The undersigned registrants hereby undertake:

      (1) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in this registration statement shall be deemed to be a
new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

      (2) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described under Item 20
above, or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that as
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
be governed by the final adjudication of such issue.

      (3) To respond to requests for information that is incorporated by
reference in to the prospectus pursuant to Item 4, 10(b), 11, or 13 of this
form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means. This
includes information contained in documents filed subsequent to the effective
date of the registration statement through the date of responding to the
request.

      (4) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein, that
was not the subject of and included in the registration statement when it became
effective.

                                      II-5
<PAGE>

                                   SIGNATURES

      Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Form S-4
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Jackson, and State of Michigan, on the 31st day
of January, 2005.

                                             Consumers Energy Company

                                             By: /s/ Thomas J. Webb
                                                 -------------------------------
                                                 Thomas J. Webb
                                                 Executive Vice President and
                                                 Chief Financial Officer

      Pursuant to the requirements of the Securities Act of 1933, this Form S-4
Registration Statement has been signed below by the following persons in the
capacities indicated on the 31st day of January, 2005.

<TABLE>
<CAPTION>
NAME                                                        TITLE
- ----                                                        -----
<S>                                                 <C>
(i)   PRINCIPAL EXECUTIVE OFFICER:

      /s/  DAVID W. JOOS                            Chief Executive Officer
- ---------------------------------
           David W. Joos

(ii)  PRINCIPAL FINANCIAL OFFICER:

      /s/  THOMAS J. WEBB                           Executive Vice President and
- ---------------------------------                   Chief Financial Officer
           Thomas J. Webb

(iii) CONTROLLER OR PRINCIPAL ACCOUNTING OFFICER

      /s/  GLENN P. BARBA                           Vice President, Controller
- ---------------------------------                   and Chief Accounting Officer
           Glenn P. Barba

               *
- ---------------------------------
      (Merribel S. Ayers)                           Director

               *
- ---------------------------------
           (Earl D. Holton)                         Director

               *
- ---------------------------------
          (David W. Joos)                           Director

               *
- ---------------------------------
      (Michael T. Monahan)                          Director
</TABLE>

                                      II-6
<PAGE>

<TABLE>
<S>                                                     <C>
               *
- ---------------------------------
      (Joseph F. Paquette, Jr.)                         Director


- ---------------------------------
        (William U. Parfet)                             Director

               *
- ---------------------------------
         (Percy A. Pierre)                              Director

               *
- ---------------------------------
      (S. Kinnie Smith, Jr.)                            Director


- ---------------------------------
         (Kenneth L. Way)                               Director

               *
- ---------------------------------
         (Kenneth Whipple)                              Director

               *
- ---------------------------------
         (John B. Yasinsky)                             Director
</TABLE>

*By:  /s/ Thomas J. Webb
      ---------------------------
      Thomas J. Webb
      Attorney in-fact

                                      II-7
<PAGE>

                                  EXHIBIT INDEX

      Exhibits listed below which have been previously filed with the SEC are
incorporated herein by reference with the same effect as if filed with this
registration statement.

<TABLE>
<CAPTION>
  EXHIBIT
     NO.                                    DESCRIPTION
     ---                                    -----------
<S>            <C>      <C>

*(4)(a)        --       Indenture dated as of January 1, 1996 between Consumers
                        Energy Company and The Bank of New York, as Trustee.
                        (Previously filed with Consumers' Form 10-K for the year
                        ended December 31, 1995 as Exhibit (4)(b).)

               --       Indentures Supplemental thereto:

*(4)(a)(i)     --       1st dated as of January 18, 1996 (Previously filed with
                        Consumers' Form 10-K for the year ended December 31,
                        1995 as Exhibit (4)(b).)

*(4)(a)(ii)    --       2nd dated as of September 4, 1997 (Previously filed with
                        Consumers' Form 10-Q for the quarter ended September 30,
                        1997 as Exhibit (4)(a).)

*(4)(a)(iii)   --       3rd dated as of November 4, 1999 (Previously filed with
                        Consumers' Form 10-Q for the quarter ended September 30,
                        1999 as Exhibit (4)(a).)

*(4)(a)(iv)    --       4th dated as of May 31, 2001 (Previously filed with
                        Consumers' Form 10-Q for the quarter ended September 30,
                        2001 as Exhibit (4)(a).)

*(4)(b)        --       Indenture dated as of February 1, 1998 between Consumers
                        Energy Company and JPMorgan Chase Bank, N.A. (formerly
                        The Chase Manhattan Bank), as Trustee. (Previously filed
                        with Consumers' Form 10-K for the year ended December
                        31, 1997 as Exhibit (4)(c).)

               --       Indentures Supplemental thereto:

*(4)(b)(i)     --       1st dated as of May 1, 1998 (Previously filed with
                        Consumers' Form 10-Q for the quarter ended March 31,
                        1998 as Exhibit (4)(a).)

*(4)(b)(ii)    --       2nd dated as of June 15, 1998 (Previously filed with
                        Consumers' Registration Statement on Form S-4 dated July
                        13, 1998 as Exhibit (4)(b).)

*(4)(b)(iii)   --       3rd dated as of October 29, 1998 (Previously filed with
                        Consumers' Form 10-Q for the quarter ended September 30,
                        1998 as Exhibit (4)(a).)

*(4)(c)        --       Indenture dated as of September 1, 1945, between
                        Consumers Energy Company and JPMorgan Chase Bank, N.A.
                        (successor to City Bank Farmers Trust Company, as
                        Trustee, including therein indentures supplemental
                        thereto through the Forty-third supplemental Indenture
                        dated as of May 1, 1979. (Previously filed with
                        Consumers' Registration Statement No. 2-65973, as
                        Exhibit (b)(1)-(4).)

               --       Indentures Supplemental thereto:

*(4)(c)(i)     --       69th dated as of September 15, 1993 (Previously filed
                        with Consumers' Form 8-K dated September 21, 1993 as
                        Exhibit (4).)

*(4)(c)(ii)    --       70th dated as of February 1, 1998 (Previously filed with
                        Consumers' Form 10-K for the year ended December 31,
                        1997 as Exhibit (4).)

*(4)(c)(iii)   --       71st dated as of March 1, 1998 (Previously filed with
                        Consumers' Form 10-K for the year ended December 31,
                        1997 as Exhibit (4).)

*(4)(c)(iv)    --       74th dated as of October 29, 1998 (Previously filed with
                        Consumers' Form 10-Q for the quarter ended September 30,
                        1998 as Exhibit (4)(b).)

*(4)(c)(v)     --       75th dated as of October 1, 1999 (Previously filed with
                        Consumers' Form 10-K for the year ended December 31,
                        1999 as Exhibit (4)(b).)

*(4)(c)(vi)    --       77th dated as of October 1, 1999 (Previously filed with
                        Consumers' Form 10-K for the year ended December 31,
                        1999 as Exhibit (4)(d).)

*(4)(c)(vii)   --       79th dated as of September 26, 2001 (Previously filed
                        with Consumers' Form 10-Q for the quarter ended
                        September 30, 2001 as Exhibit (4)(b).)

*(4)(c)(viii)  --       90th dated as of March 30, 2003 (Previously filed with
                        Consumers' Form 10-Q for the quarter ended March 31,
                        2003 as Exhibit (4)(d).)

*(4)(c)(ix)    --       91st dated as of May 23, 2003 (Previously filed with
                        Consumers' Form 10-Q for the quarter ended September 30,
                        2003 as Exhibit (4)(a).)

*(4)(c)(x)     --       92nd dated as of August 26, 2003 (Previously filed with
                        Consumers' Form 10-Q for the quarter ended September 30,
                        2003 as Exhibit (4)(b).)

*(4)(c)(xi)    --       93rd dated as of September 17, 2003 (Previously filed
                        with Consumers' Form 10-Q for the quarter ended
                        September 30, 2003 as Exhibit (4)(c).)

*(4)(c)(xii)   --       94th dated as of November 7, 2003 (Previously filed with
                        Consumers' Registration Statement on Form S-4 dated
                        December 16, 2003 as Exhibit (4)(a)(i).)

*(4)(c)(xiii)  --       95th dated as of August 3, 2004 (Previously filed with
                        Consumers' Registration Statement on Form S-3 dated
                        November 18, 2004 as Exhibit (4)(e)(xiii).)

*(4)(c)(xiv)   --       96th dated as of August 17, 2004 (Previously filed with
                        Consumers' Registration Statement on Form S-3 dated
                        November 18, 2004 as Exhibit (4)(e)(xiv).)

*(4)(c)(xv)    --       97th dated as of September 1, 2004 (Previously filed
                        with Consumers' Registration Statement on Form S-3 dated
                        November 18, 2004 as Exhibit (4)(e)(xv).)

*(4)(c)(xvi)   --       98th dated as of December 13, 2004 (Previously filed
                        with Consumers' Form 8-K dated December 13, 2004 as
                        Exhibit 4.4)

*(4)(c)(xvii)  --       99th dated as of January 20, 2005 (Previously filed with
                        Consumers' Form 8-K dated January 20, 2005 as Exhibit
                        4.4)
</TABLE>

                                      II-8
<PAGE>

<TABLE>
<S>            <C>      <C>
(4)(d)         --       Form of Series N Bond (included in Exhibit (4)(c)(xvii)
                        above.)

(4)(e)         --       Form of Series O Bond (included in Exhibit (4)(c)(xvii)
                        above.)

(4)(f)         --       Form of Series P Bond (included in Exhibit (4)(c)(xvii)
                        above.)

(4)(g)         --       Registration Rights Agreement dated as of August 17,
                        2004 between Consumers and the Initial Purchasers, as
                        defined therein.

*(4)(h)        --       Instruments defining the rights of security holders,
                        including indentures. Consumers Energy Company hereby
                        agrees to furnish to the SEC upon request a copy of any
                        Instrument covering securities the amount of which does
                        not exceed 10% of the total assets of Consumers Energy
                        Company and its subsidiaries on a consolidated basis.
                        (Previously filed with Consumers' Registration Statement
                        on Form S-3, dated October 20, 1999 as Exhibit (4)(f).)

(5)            --       Opinion of Robert C. Shrosbree, Assistant General
                        Counsel for CMS Energy

(8)            --       Opinion of Jay M. Silverman, Tax Counsel for Consumers,
                        regarding tax matters

(12)           --       Statement regarding computation of ratio of earnings to
                        fixed charges

(23)(a)        --       Consent of Robert C. Shrosbree, Assistant General
                        Counsel for CMS Energy (included in Exhibit (5) above).

(23)(b)        --       Consent of Jay M. Silverman, Tax Counsel for Consumers
                        (included in Exhibit (8) above).

(23)(c)        --       Consent of Ernst & Young LLP

(23)(d)        --       Consent of PricewaterhouseCoopers LLP

(24)           --       Powers of Attorney

(25)           --       Statement of Eligibility and Qualification of JPMorgan
                        Chase Bank, N.A.

(99)(a)        --       Form of Letter of Transmittal

(99)(b)        --       Certification of Taxpayer Identification Number on
                        Substitute Form W-9

(99)(c)        --       Form of Notice of Guaranteed Delivery
</TABLE>

- ----------

* Previously filed.

                                      II-9

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.G
<SEQUENCE>2
<FILENAME>k91595exv4wg.txt
<DESCRIPTION>REGISTRATION RIGHTS AGREEMENT DATED AS OF AUGUST 17, 2004
<TEXT>
<PAGE>

                                                                     EXHIBIT 4 g

================================================================================

                          REGISTRATION RIGHTS AGREEMENT

                           Dated as of August 17, 2004

                                       by

                            Consumers Energy Company

                                       and

                              Barclays Capital Inc.
                          Citigroup Global Markets Inc.
               Merrill Lynch, Pierce, Fenner & Smith Incorporated
                              Goldman, Sachs & Co.
                              ABN AMRO Incorporated
                          BNP Paribas Securities Corp.
                            Comerica Securities, Inc.
                          Fifth Third Securities, Inc.
                            Huntington Capital Corp.
                           J.P. Morgan Securities Inc.
                         Wedbush Morgan Securities Inc.

================================================================================

<PAGE>

      This Registration Rights Agreement (this "Agreement") is made and entered
into as of August 17, 2004 by Consumers Energy Company, a Michigan corporation
(the "Company"), and Barclays Capital Inc., Citigroup Global Markets Inc.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Goldman, Sachs & Co., ABN
AMRO Incorporated, BNP Paribas Securities Corp., Comerica Securities, Inc.,
Fifth Third Securities, Inc., Huntington Capital Corp., J.P. Morgan Securities
Inc. and Wedbush Morgan Securities Inc. (each an "Initial Purchaser" and,
collectively, the "Initial Purchasers"), which have agreed to purchase the
Company's $150,000,000 4.40% First Mortgage Bonds due 2009, Series K (the
"Series K Bonds"), $300,000,000 5.00% First Mortgage Bonds due 2012, Series L
(the "Series L Bonds") and $350,000,000 5.50% First Mortgage Bonds due 2016,
Series M (the "Series M Bonds" and, together with the Series K Bonds and the
Series L Bonds, the "Restricted Bonds") pursuant to the Purchase Agreement (as
defined below).

      This Agreement is made pursuant to the Purchase Agreement, dated August
11, 2004 (the "Purchase Agreement"), by the Company and the Initial Purchasers.
In order to induce the Initial Purchasers to purchase the Restricted Bonds, the
Company has agreed to provide the registration rights set forth in this
Agreement. The execution and delivery of this Agreement is a condition to the
obligations of the Initial Purchasers in the Purchase Agreement.

      The parties hereby agree as follows:

SECTION 1. DEFINITIONS

      Capitalized terms used but not defined herein shall have the meanings
ascribed to such terms in the Purchase Agreement. As used in this Agreement, the
following capitalized terms shall have the following meanings:

      Act: The Securities Act of 1933, as amended.

      Advice: As defined in Section 6(d) hereof.

      Agreement: As defined in the first paragraph hereof.

      Bonds: The Restricted Bonds and the Exchange Bonds.

      Broker-Dealer: Any broker or dealer registered under the Exchange Act.

      Broker-Dealer Transfer Restricted Securities: Exchange Bonds that are
acquired by a Broker-Dealer in the Exchange Offer in exchange for Restricted
Bonds that such Broker-Dealer acquired for its own account as a result of
market-making activities or other trading activities (other than Restricted
Bonds acquired directly from the Company or any of its affiliates).

      Business Day: Any day except a Saturday, Sunday or other day in The City
of New York, or in the city of the primary corporate trust office of the
Trustee, on which banks are authorized to close.

      Certificated Securities: Bonds that are not in Global Bond form.

<PAGE>

      Closing Date: The date hereof.

      Commission: The Securities and Exchange Commission.

      Company: As defined in the first paragraph hereof.

      Consummate: An Exchange Offer shall be deemed "Consummated" for purposes
of this Agreement upon the occurrence of (a) the filing and effectiveness under
the Act of the Exchange Offer Registration Statement relating to the Exchange
Bonds to be issued in the Exchange Offer, (b) the maintenance of such Exchange
Offer Registration Statement continuously effective and the keeping of the
Exchange Offer open for a period not less than the minimum period required
pursuant to Section 3(b) hereof and (c) the delivery by the Company to the
Registrar of the Series N Bonds in the same aggregate principal amount as the
aggregate principal amount of the Series K Bonds tendered by Holders thereof,
the delivery by the Company to the Registrar of the Series O Bonds in the same
aggregate principal amount as the aggregate principal amount of the Series L
Bonds tendered by Holders thereof and the delivery by the Company to the
Registrar of the Series P Bonds in the same aggregate principal amount as the
aggregate principal amount of the Series M Bonds tendered by holders thereof, in
each case, pursuant to the Exchange Offer.

      Damages Payment Date: With respect to the Restricted Bonds, each Interest
Payment Date.

      Exchange Act: The Securities Exchange Act of 1934, as amended.

      Exchange Bonds: The Series N Bonds, the Series O Bonds and the Series P
Bonds.

      Exchange Offer: The Series K Exchange Offer, the Series L Exchange Offer
and/or the Series M Exchange Offer, as the case may be.

      Exchange Offer Registration Statement: The Registration Statement relating
to the Exchange Offer, including the related Prospectus.

      Exempt Resales: The transactions in which the Initial Purchasers propose
to sell the Restricted Bonds to certain "qualified institutional buyers", as
such term is defined in Rule 144A under the Act, or to persons who are not "U.S.
persons", as such term is defined in Regulation S under the Act.

      Global Bond: As defined in the Bonds.

      Global Bond Holder: As defined in the Bonds.

      Holder: As defined in Section 2 hereof.

      Indemnified Holder: As defined in Section 8(a) hereof.

      Indemnified Person: As defined in Section 8(c) hereof.

      Indemnifying Person: As defined in Section 8(c) hereof.

                                       2
<PAGE>

      Indenture: Indenture dated as of September 1, 1945, between the Company
and the Trustee, as supplemented by various supplemental indentures.

      Initial Purchaser: As defined in the first paragraph hereof.

      Initial Purchasers: As defined in the first paragraph hereof.

      Interest Payment Date: As defined in the Bonds.

      NASD: National Association of Securities Dealers, Inc.

      Person: An individual, partnership, corporation, trust, limited liability
company, unincorporated organization, or a government or agency or political
subdivision thereof.

      Prospectus: The prospectus included in a Registration Statement at the
time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.

      Purchase Agreement: As defined in the second paragraph hereof.

      Record Holder: With respect to any Damages Payment Date, each Person who
is a Holder of Bonds on the record date with respect to the Interest Payment
Date on which such Damages Payment Date shall occur.

      Registrar: As defined in the Indenture.

      Registration Default: As defined in Section 5 hereof.

      Registration Statement: Any registration statement of the Company relating
to (a) an offering of Exchange Bonds pursuant to an Exchange Offer or (b) the
registration for resale of Transfer Restricted Securities pursuant to the Shelf
Registration Statement, in each case, (i) which is filed pursuant to the
provisions of this Agreement and (ii) including the Prospectus included therein,
all amendments and supplements thereto (including post-effective amendments) and
all exhibits and material incorporated by reference therein.

      Restricted Bonds: As defined in the first paragraph hereof.

      Restricted Broker-Dealer: Any Broker-Dealer which holds Broker-Dealer
Transfer Restricted Securities.

      Series K Bonds: As defined in the first paragraph hereof.

      Series K Exchange Offer: The registration by the Company under the Act of
the Series N Bonds pursuant to the Exchange Offer Registration Statement
pursuant to which the Company shall offer the Holders of all outstanding
Transfer Restricted Securities relating to Series K Bonds the opportunity to
exchange all such outstanding Transfer Restricted Securities relating to Series
K Bonds for Series N Bonds in an aggregate principal amount equal to the
aggregate

                                       3
<PAGE>

principal amount of the Transfer Restricted Securities relating to Series K
Bonds tendered in such exchange offer by such Holders.

      Series L Bonds: As defined in the first paragraph hereof.

      Series L Exchange Offer: The registration by the Company under the Act of
the Series O Bonds pursuant to the Exchange Offer Registration Statement
pursuant to which the Company shall offer the Holders of all outstanding
Transfer Restricted Securities relating to Series L Bonds the opportunity to
exchange all such outstanding Transfer Restricted Securities relating to Series
L Bonds for Series O Bonds in an aggregate principal amount equal to the
aggregate principal amount of the Transfer Restricted Securities relating to
Series L Bonds tendered in such exchange offer by such Holders.

      Series M Bonds: As defined in the first paragraph hereof.

      Series M Exchange Offer: The registration by the Company under the Act of
the Series P Bonds pursuant to the Exchange Offer Registration Statement
pursuant to which the Company shall offer the Holders of all outstanding
Transfer Restricted Securities relating to Series M Bonds the opportunity to
exchange all such outstanding Transfer Restricted Securities relating to Series
M Bonds for Series P Bonds in an aggregate principal amount equal to the
aggregate principal amount of the Transfer Restricted Securities relating to
Series M Bonds tendered in such exchange offer by such Holders.

      Series N Bonds: The Company's 4.40% First Mortgage Bonds due 2009, Series
N, to be issued pursuant to the Indenture (i) in the Exchange Offer or (ii) upon
the request of any Holder of Series K Bonds covered by a Shelf Registration
Statement, in exchange for such Series K Bonds.

      Series O Bonds: The Company's 5.00% First Mortgage Bonds due 2012, Series
O, to be issued pursuant to the Indenture (i) in the Exchange Offer or (ii) upon
the request of any holder of Series L Bonds covered by a Shelf Registration
Statement, in exchange for such Series L Bonds.

      Series P Bonds: The Company's 5.50% First Mortgage Bonds due 2016, Series
P, to be issued pursuant to the Indenture (i) in the Exchange Offer or (ii) upon
the request of any Holder of Series M Bonds covered by a Shelf Registration
Statement, in exchange for such Series M Bonds.

      Shelf Filing Date: As defined in Section 4(a) hereof.

      Shelf Registration Statement: As defined in Section 4(a) hereof.

      TIA: The Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as
in effect on the date of the Indenture.

      Transfer Restricted Securities: Each Restricted Bond, until the earliest
to occur of (a) the date on which such Restricted Bond is exchanged in the
Exchange Offer and entitled to be resold to the public by the Holder thereof
without complying with the prospectus delivery requirements

                                       4
<PAGE>

of the Act, (b) the date on which such Restricted Bond has been disposed of in
accordance with a Shelf Registration Statement, (c) the date on which such
Restricted Bond is disposed of by a Broker-Dealer pursuant to the "Plan of
Distribution" contemplated by the Exchange Offer Registration Statement
(including delivery of the Prospectus contained therein) or (d) the date on
which such Restricted Bond is distributed to the public pursuant to Rule 144
under the Act.

      Trustee: JPMorgan Chase Bank (ultimate successor to City Bank Farmers
Trust Company), as trustee under the Indenture.

      Underwritten Offering or Underwritten Registration: An offering or
registration in which securities of the Company are sold to an underwriter for
reoffering to the public.

SECTION 2. HOLDERS

      A Person is deemed to be a holder of Transfer Restricted Securities (each,
a "Holder") whenever such Person owns Transfer Restricted Securities.

SECTION 3. REGISTERED EXCHANGE OFFER

      (a) Unless the Exchange Offer shall not be permitted by applicable federal
law (after the procedures set forth in Section 6(a)(i) hereof have been complied
with), the Company shall (i) cause to be filed with the Commission as soon as
practicable after the Closing Date, but in no event later than 180 days after
the Closing Date, the Exchange Offer Registration Statement, (ii) use its
reasonable best efforts to cause such Exchange Offer Registration Statement to
become effective at the earliest possible time, but in no event later than 270
days after the Closing Date, (iii) in connection with the foregoing, (A) file
all pre-effective amendments to such Exchange Offer Registration Statement as
may be necessary in order to cause such Exchange Offer Registration Statement to
become effective, (B) file, if applicable, a post-effective amendment to such
Exchange Offer Registration Statement pursuant to Rule 430A under the Act and
(C) cause all necessary filings, if any, in connection with the registration and
qualification of the Exchange Bonds to be made under the blue sky laws of such
jurisdictions as are necessary to permit Consummation of the Exchange Offer, and
(iv) upon the effectiveness of such Exchange Offer Registration Statement,
commence and Consummate the Exchange Offer. The Exchange Offer shall be on the
appropriate form permitting registration of the Exchange Bonds to be offered in
exchange for the Restricted Bonds that are Transfer Restricted Securities and to
permit sales of Broker-Dealer Transfer Restricted Securities by Restricted
Broker-Dealers as contemplated by Section 3(c) hereof.

      (b) The Company shall use its reasonable best efforts to cause the
Exchange Offer Registration Statement to be effective continuously, and shall
keep the Exchange Offer open for a period of not less than the minimum period
required under applicable federal and state securities laws to Consummate the
Exchange Offer; provided, however, that in no event shall such period be less
than 20 Business Days. The Company shall cause the Exchange Offer to comply with
all applicable federal and state securities laws. No securities other than the
Bonds shall be included in the Exchange Offer Registration Statement. The
Company shall use its best efforts to cause the Exchange Offer to be Consummated
on the earliest practicable date after the

                                       5
<PAGE>

Exchange Offer Registration Statement has become effective, but in no event
later than 30 days thereafter.

      (c) The Company shall include a "Plan of Distribution" section in the
Prospectus contained in the Exchange Offer Registration Statement and indicate
therein that any Restricted Broker-Dealer who holds Restricted Bonds that are
Transfer Restricted Securities and that were acquired for the account of such
Broker-Dealer as a result of market-making activities or other trading
activities, may exchange such Restricted Bonds (other than Transfer Restricted
Securities acquired directly from the Company or any affiliate of the Company)
pursuant to the Exchange Offer; however, such Broker-Dealer may be deemed to be
an "underwriter" within the meaning of the Act and must, therefore, deliver a
prospectus meeting the requirements of the Act in connection with its initial
sale of each Exchange Bond received by such Broker-Dealer in the Exchange Offer,
which prospectus delivery requirement may be satisfied by the delivery by such
Broker-Dealer of the Prospectus contained in the Exchange Offer Registration
Statement. Such "Plan of Distribution" section shall also contain all other
information with respect to such sales of Broker-Dealer Transfer Restricted
Securities by Restricted Broker-Dealers that the Commission may require in order
to permit such sales pursuant thereto, but such "Plan of Distribution" shall not
name any such Broker-Dealer or disclose the amount of Bonds held by any such
Broker-Dealer, except to the extent required by the Commission as a result of a
change in policy after the date of this Agreement.

      The Company shall use its best efforts to keep the Exchange Offer
Registration Statement continuously effective, supplemented and amended as
required by the provisions of Section 6(c) hereof to the extent necessary to
ensure that it is available for sales of Broker-Dealer Transfer Restricted
Securities by Restricted Broker-Dealers, and to ensure that such Registration
Statement conforms with the requirements of this Agreement, the Act and the
policies, rules and regulations of the Commission as announced from time to
time, for a period of one year from the date on which the Exchange Offer is
Consummated.

      The Company shall promptly provide sufficient copies of the latest version
of such Prospectus to such Restricted Broker-Dealers promptly upon request, and
in no event later than one day after such request, at any time during such
one-year period in order to facilitate such sales.

SECTION 4. SHELF REGISTRATION

      (a) Shelf Registration. If (i) the Company is not required to file an
Exchange Offer Registration Statement with respect to the Exchange Bonds because
the Exchange Offer is not permitted by applicable law or Commission policy
(after the procedures set forth in Section 6(a)(i) hereof have been complied
with) or (ii) any Holder of Transfer Restricted Securities shall notify the
Company within 20 Business Days following the Consummation of the Exchange Offer
that (A) such Holder was prohibited by law or Commission policy from
participating in the Exchange Offer or (B) such Holder may not resell the
Exchange Bonds acquired by it in the Exchange Offer to the public without
delivering a prospectus and the Prospectus contained in the Exchange Offer
Registration Statement is not appropriate or available for such resales by such
Holder, the Company shall (x) cause to be filed on or prior to 90 days after the
date on which the Company determines that it is not required to file the
Exchange Offer Registration Statement

                                       6
<PAGE>

pursuant to clause (i) above or 90 days after the date on which the Company
receives the notice specified in clause (ii) above (each such date, a "Shelf
Filing Date") a shelf registration statement pursuant to Rule 415 under the Act
(which may be an amendment to the Exchange Offer Registration Statement (in
either event, the "Shelf Registration Statement")), relating to all Transfer
Restricted Securities the Holders of which shall have provided the information
required pursuant to Section 4(b) hereof, and (y) use its best efforts to cause
such Shelf Registration Statement to become effective on or prior to 180 days
after the Shelf Filing Date. If the Company is not eligible to use Act Form S-3
on a Shelf Filing Date, then its obligation to file a Shelf Registration
Statement shall be deferred until the 30th day after the earliest time that such
eligibility is restored. If, after the Company has filed an Exchange Offer
Registration Statement which satisfies the requirements of Section 3(a) hereof,
the Company is required to file and make effective a Shelf Registration
Statement solely because the Exchange Offer shall not be permitted under
applicable federal law, then the filing of the Exchange Offer Registration
Statement shall be deemed to satisfy the requirements of clause (x) above. Such
an event shall have no effect on the requirements of clause (y) above. The
Company shall use its reasonable best efforts to keep the Shelf Registration
Statement discussed in this Section 4(a) continuously effective, supplemented
and amended as required by and subject to the provisions of Sections 6(b) and
(c) hereof to the extent necessary to ensure that it is available for sales of
Transfer Restricted Securities by the Holders thereof entitled to the benefit of
this Section 4(a), and to ensure that it conforms with the requirements of this
Agreement, the Act and the policies, rules and regulations of the Commission as
announced from time to time, for a period of at least two years (as extended
pursuant to Section 6(c)(i) hereof) following the date on which such Shelf
Registration Statement first becomes effective under the Act.

      (b) Provision by Holders of Certain Information in Connection with the
Shelf Registration Statement. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 days after receipt of a request therefor, such
information specified in Item 507 of Regulation S-K for use in connection with
any Shelf Registration Statement or Prospectus or preliminary Prospectus
included therein. No Holder of Transfer Restricted Securities shall be entitled
to liquidated damages pursuant to Section 5 hereof unless and until such Holder
shall have used its best efforts to provide all such information. Each Holder as
to which any Shelf Registration Statement is being effected agrees to furnish
promptly to the Company all information required to be disclosed in order to
make the information previously furnished to the Company by such Holder not
materially misleading.

SECTION 5. LIQUIDATED DAMAGES

      If (i) any Registration Statement required by this Agreement is not filed
with the Commission on or prior to the date specified for such filing in this
Agreement, (ii) any such Registration Statement has not been declared effective
by the Commission on or prior to the date specified for such effectiveness in
this Agreement, (iii) the Exchange Offer has not been Consummated within 30
calendar days after the Exchange Offer Registration Statement is first declared
effective by the Commission or (iv) any Registration Statement required by this
Agreement is filed and declared effective but shall thereafter cease to be
effective or fail to be usable for its intended purpose without being succeeded
within 15 Business Days by a post-

                                       7
<PAGE>

effective amendment to such Registration Statement that cures such failure and
that is itself declared effective within five Business Days (each such event
referred to in clauses (i) through (iv), a "Registration Default"), then the
Company agrees to pay liquidated damages in the form of additional interest on
the Transfer Restricted Securities to each Holder of Transfer Restricted
Securities, from and including the date on which any Registration Default shall
occur to, but excluding, the date on which such Registration Default has been
cured, at a rate of 0.50% per annum. Notwithstanding anything to the contrary
set forth herein, (1) upon filing of the Exchange Offer Registration Statement
(and/or, if applicable, the Shelf Registration Statement), in the case of clause
(i) above, (2) upon the effectiveness of the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration Statement), in the case
of clause (ii) above, (3) upon Consummation of the Exchange Offer, in the case
of clause (iii) above, or (4) upon the filing of a post-effective amendment to
the Registration Statement or an additional Registration Statement that causes
the Exchange Offer Registration Statement (and/or, if applicable, the Shelf
Registration Statement) to again be declared effective or made usable, in the
case of clause (iv) above, the liquidated damages payable with respect to the
Transfer Restricted Securities as a result of such clause (i), (ii), (iii) or
(iv), as applicable, shall cease.

      All additional interest shall be paid on each payment date to the Global
Bond Holder by wire transfer of immediately available funds or by federal funds
check and to Holders of Certificated Securities by mailing checks to their
registered addresses on the books of the Company or the Trustee for such
payment. All obligations of the Company set forth in the preceding paragraph
that are outstanding with respect to any Transfer Restricted Security at the
time such security ceases to be a Transfer Restricted Security shall survive
until such time as all such obligations with respect to such security shall have
been satisfied in full.

SECTION 6. REGISTRATION PROCEDURES

      (a) Exchange Offer Registration Statement. In connection with the Exchange
Offer, the Company shall comply with all applicable provisions of Section 6(c)
hereof, shall use its reasonable best efforts to effect such exchange and to
permit the sale of Broker-Dealer Transfer Restricted Securities being sold in
accordance with the intended method or methods of distribution thereof, and
shall comply with all of the following provisions:

            (i) If, following the date hereof, there has been published a change
      in Commission policy with respect to exchange offers such as the Exchange
      Offer, such that in the reasonable opinion of counsel to the Company there
      is a substantial question as to whether the Exchange Offer is permitted by
      applicable federal law, the Company hereby agrees to seek a no-action
      letter or other favorable decision from the Commission allowing the
      Company to Consummate an Exchange Offer for the Restricted Bonds. The
      Company hereby agrees to pursue the issuance of such a decision to the
      Commission staff level. In connection with the foregoing, the Company
      hereby agrees to take all such other actions as are reasonably requested
      by the Commission or otherwise required in connection with the issuance of
      such decision, including without limitation (A) participating in
      telephonic conferences with the Commission, (B) delivering to the
      Commission staff an analysis prepared by counsel to the Company setting
      forth the legal bases, if any, upon which such counsel has concluded that
      such an

                                       8
<PAGE>

      Exchange Offer should be permitted and (C) diligently pursuing a
      resolution (which need not be favorable) by the Commission staff of such
      submission.

            (ii) As a condition to its participation in the Exchange Offer
      pursuant to the terms of this Agreement, each Holder of Transfer
      Restricted Securities shall furnish upon the request of the Company, prior
      to the Consummation of the Exchange Offer, a written representation to the
      Company (which may be contained in the letter of transmittal contemplated
      by the Exchange Offer Registration Statement) to the effect that (A) it is
      not an affiliate of the Company, (B) it is not engaged in, and does not
      intend to engage in, and has no arrangement or understanding with any
      Person to participate in, a distribution of the Exchange Bonds to be
      issued in the Exchange Offer and (C) it is acquiring the Exchange Bonds in
      its ordinary course of business. Each Holder hereby acknowledges and
      agrees that any Broker-Dealer and any such Holder using the Exchange Offer
      to participate in a distribution of the securities to be acquired in the
      Exchange Offer (1) could not under Commission policy as in effect on the
      date of this Agreement rely on the position of the Commission enunciated
      in Morgan Stanley and Co. Inc. (available June 5, 1991) and Exxon Capital
      Holdings Corp. (available May 13, 1988), as interpreted in the
      Commission's letter to Shearman & Sterling (available July 2, 1993), and
      similar no-action letters (including, if applicable, any no-action letter
      obtained pursuant to clause (i) above), and (2) must comply with the
      registration and prospectus delivery requirements of the Act in connection
      with a secondary resale transaction and that such a secondary resale
      transaction must be covered by an effective registration statement
      containing the selling security holder information required by Item 507 or
      508, as applicable, of Regulation S-K if the resales are of Exchange Bonds
      obtained by such Holder in exchange for Restricted Bonds acquired by such
      Holder directly from the Company or an affiliate thereof.

            (iii) Prior to effectiveness of the Exchange Offer Registration
      Statement, the Company shall provide a supplemental letter to the
      Commission (A) stating that the Company is registering the Exchange Offer
      in reliance on the position of the Commission enunciated in Exxon Capital
      Holdings Corp. (available May 13, 1988), Morgan Stanley and Co. Inc.
      (available June 5, 1991) and, if applicable, any no-action letter obtained
      pursuant to clause (i) above, (B) including a representation that the
      Company has not entered into any arrangement or understanding with any
      Person to distribute the Exchange Bonds to be received in the Exchange
      Offer and that, to the best of the Company's information and belief, each
      Holder participating in the Exchange Offer is acquiring the Exchange Bonds
      in its ordinary course of business and has no arrangement or understanding
      with any Person to participate in the distribution of the Exchange Bonds
      received in the Exchange Offer and (C) any other undertaking or
      representation required by the Commission as set forth in any no-action
      letter obtained pursuant to clause (i) above.

      (b) Shelf Registration Statement. In connection with the Shelf
Registration Statement, the Company shall comply with all the provisions of
Section 6(c) hereof and shall use

                                       9
<PAGE>

its best efforts to effect such registration to permit the sale of the Transfer
Restricted Securities being sold in accordance with the intended method or
methods of distribution thereof (as indicated in the information furnished to
the Company pursuant to Section 4(b) hereof), and pursuant thereto the Company
will prepare and file with the Commission a Registration Statement relating to
the registration on any appropriate form under the Act, which form shall be
available for the sale of the Transfer Restricted Securities in accordance with
the intended method or methods of distribution thereof within the time periods
and otherwise in accordance with the provisions hereof.

      (c) General Provisions. In connection with any Registration Statement and
any related Prospectus required by this Agreement to permit the sale or resale
of Transfer Restricted Securities (including, without limitation, any Exchange
Offer Registration Statement and the related Prospectus, to the extent that the
same are required to be available to permit sales of Broker-Dealer Transfer
Restricted Securities by Restricted Broker-Dealers), the Company shall:

            (i) use its best efforts to keep such Registration Statement
      continuously effective and provide all requisite financial statements for
      the period specified in Section 3 or 4 hereof, as applicable. Upon the
      occurrence of any event that would cause any such Registration Statement
      or the Prospectus contained therein (A) to contain a material misstatement
      or omission or (B) not to be effective and usable for resale of Transfer
      Restricted Securities during the period required by this Agreement, the
      Company shall file promptly an appropriate amendment to such Registration
      Statement, (1) in the case of clause (A), correcting any such misstatement
      or omission, and (2) in the case of clauses (A) and (B), using its best
      efforts to cause such amendment to be declared effective and such
      Registration Statement and the related Prospectus to become usable for
      their intended purpose(s) as soon as practicable thereafter;

            (ii) prepare and file with the Commission such amendments and
      post-effective amendments to the Registration Statement as may be
      necessary to keep the Registration Statement effective for the applicable
      period set forth in Section 3 or 4 hereof, or such shorter period as will
      terminate when all Transfer Restricted Securities covered by such
      Registration Statement have been sold; cause the Prospectus to be
      supplemented by any required Prospectus supplement, and as so supplemented
      to be filed pursuant to Rule 424 under the Act, and to comply fully with
      Rules 424, 430A and 462, as applicable, under the Act in a timely manner;
      and comply with the provisions of the Act with respect to the disposition
      of all securities covered by such Registration Statement during the
      applicable period in accordance with the intended method or methods of
      distribution by the sellers thereof set forth in such Registration
      Statement or supplement to the Prospectus;

            (iii) advise the underwriter(s), if any, and selling Holders
      promptly and, if requested by such Persons, confirm such advice in
      writing, (A) when the Prospectus or any Prospectus supplement or
      post-effective amendment has been filed, and, with respect to any
      Registration Statement or any post-effective amendment thereto, when the
      same has become effective, (B) of any request by the Commission for
      amendments to the Registration Statement or amendments or

                                       10
<PAGE>

      supplements to the Prospectus or for additional information relating
      thereto, (C) of the issuance by the Commission of any stop order
      suspending the effectiveness of the Registration Statement under the Act
      or of the suspension by any state securities commission of the
      qualification of the Transfer Restricted Securities for offering or sale
      in any jurisdiction, or the initiation of any proceeding for any of the
      preceding purposes, (D) of the existence of any fact or the happening of
      any event that makes any statement of a material fact made in the
      Registration Statement, the Prospectus, any amendment or supplement
      thereto or any document incorporated by reference therein untrue, or that
      requires the making of any additions to or changes in the Registration
      Statement in order to make the statements therein not misleading, or that
      requires the making of any additions to or changes in the Prospectus in
      order to make the statements therein, in the light of the circumstances
      under which they were made, not misleading. If at any time the Commission
      shall issue any stop order suspending the effectiveness of the
      Registration Statement, or any state securities commission or other
      regulatory authority shall issue an order suspending the qualification or
      exemption from qualification of the Transfer Restricted Securities under
      state securities or blue sky laws, the Company shall use its best efforts
      to obtain the withdrawal or lifting of such order at the earliest possible
      time;

            (iv) furnish to the Initial Purchaser(s), each selling Holder named
      in any Registration Statement or Prospectus and each of the underwriter(s)
      in connection with such sale, if any, before filing with the Commission,
      copies of any Registration Statement or any Prospectus included therein or
      any amendments or supplements to any such Registration Statement or
      Prospectus (including all documents incorporated by reference after the
      initial filing of such Registration Statement), which documents will be
      subject to the review and comment of such Holders and underwriter(s) in
      connection with such sale, if any, for a period of at least five Business
      Days, and the Company will not file any such Registration Statement or
      Prospectus or any amendment or supplement to any such Registration
      Statement or Prospectus (including all such documents incorporated by
      reference) to which the selling Holders of the Transfer Restricted
      Securities covered by such Registration Statement or the underwriter(s) in
      connection with such sale, if any, shall reasonably object within five
      Business Days after the receipt thereof;

            (v) promptly prior to the filing of any document that is to be
      incorporated by reference into a Registration Statement or Prospectus,
      provide copies of such document to the selling Holders and to the
      underwriter(s) in connection with such sale, if any, make the Company's
      representatives available for discussion of such document and other
      customary due diligence matters, and include such information in such
      document prior to the filing thereof as such selling Holders or
      underwriter(s), if any, reasonably may request;

            (vi) make available at reasonable times for inspection by the
      selling Holders, any managing underwriter participating in any disposition
      pursuant to such Registration Statement and any attorney or accountant
      retained by such

                                       11
<PAGE>

      selling Holders or any of such underwriter(s), all financial and other
      records, material corporate documents and properties of the Company and
      cause the Company's officers, directors and employees to supply all
      information reasonably requested by any such Holder, underwriter, attorney
      or accountant in connection with such Registration Statement or any
      post-effective amendment thereto subsequent to the filing thereof and
      prior to its effectiveness;

            (vii) if requested by any selling Holders or the underwriter(s) in
      connection with such sale, if any, promptly include in any Registration
      Statement or Prospectus, pursuant to a supplement or post-effective
      amendment if necessary, such information as such selling Holders and
      underwriter(s), if any, may reasonably request to have included therein,
      including, without limitation, information relating to the "Plan of
      Distribution" of the Transfer Restricted Securities, information with
      respect to the principal amount of Transfer Restricted Securities being
      sold to such underwriter(s), the purchase price being paid therefor and
      any other terms of the offering of the Transfer Restricted Securities to
      be sold in such offering; and make all required filings of such Prospectus
      supplement or post-effective amendment as soon as practicable after the
      Company is notified of the matters to be included in such Prospectus
      supplement or post-effective amendment;

            (viii) if requested in writing by any selling Holder and each of the
      underwriter(s) in connection with such sale, if any, furnish, without
      charge, at least one copy of the Registration Statement, as first filed
      with the Commission, and of each amendment thereto, including all
      documents incorporated by reference therein and all exhibits (including
      exhibits incorporated therein by reference);

            (ix) if requested in writing by any selling Holder and each of the
      underwriter(s), if any, deliver, without charge, as many copies of the
      Prospectus (including each preliminary Prospectus) and any amendment or
      supplement thereto as such Persons reasonably may request; the Company
      hereby consents to the use (in accordance with law) of the Prospectus and
      any amendment or supplement thereto by each of the selling Holders and
      each of the underwriter(s), if any, in connection with the offering and
      the sale of the Transfer Restricted Securities covered by the Prospectus
      or any amendment or supplement thereto;

            (x) enter into such agreements (including an underwriting or similar
      agreement) and make such representations and warranties and take all such
      other actions in connection therewith in order to expedite or facilitate
      the disposition of the Transfer Restricted Securities pursuant to any
      Registration Statement contemplated by this Agreement as may be reasonably
      requested by any Holder of Transfer Restricted Securities or underwriter
      in connection with any sale or resale pursuant to any Registration
      Statement contemplated by this Agreement, and in such connection, whether
      or not an underwriting or similar agreement is entered into and whether or
      not the registration is an Underwritten Registration, the Company shall:

                                       12
<PAGE>

                  (A) furnish (or in the case of clauses (2) and (3) below, use
            its best efforts to furnish) to each selling Holder and each
            underwriter, if any, upon the effectiveness of the Shelf
            Registration Statement and to each Restricted Broker-Dealer upon
            Consummation of the Exchange Offer:

                        (1) a certificate, dated the date of Consummation of the
                  Exchange Offer or the date of effectiveness of the Shelf
                  Registration Statement, as the case may be, signed on behalf
                  of the Company by (x) the President or any Vice President and
                  (y) a principal financial or accounting officer of the
                  Company, confirming, as of the date thereof, the matters set
                  forth in Sections 10(d) and 10(e) of the Purchase Agreement
                  and such other similar matters as the Holders, underwriter(s)
                  and/or Restricted Broker-Dealers may reasonably request;

                        (2) an opinion, dated the date of Consummation of the
                  Exchange Offer or the date of effectiveness of the Shelf
                  Registration Statement, as the case may be, of counsel for the
                  Company covering matters similar to those set forth in Section
                  10(b)(i) of the Purchase Agreement and such other matters as
                  the Holders, underwriter(s) and/or Restricted Broker-Dealers
                  may reasonably request, and in any event including a statement
                  to the effect that such counsel has participated in
                  conferences with officers and other representatives of the
                  Company, representatives of the independent public accountants
                  for the Company and have considered the matters required to be
                  stated therein and the statements contained therein, although
                  such counsel has not independently verified the accuracy,
                  completeness or fairness of such statements; and that such
                  counsel advises that, on the basis of the foregoing (relying
                  as to materiality to a large extent upon facts provided to
                  such counsel by officers and other representatives of the
                  Company and without independent check or verification), no
                  facts came to such counsel's attention that caused such
                  counsel to believe that the applicable Registration Statement,
                  at the time such Registration Statement or any post-effective
                  amendment thereto became effective and, in the case of the
                  Exchange Offer Registration Statement, as of the date of
                  Consummation of the Exchange Offer, contained an untrue
                  statement of a material fact or omitted to state a material
                  fact required to be stated therein or necessary to make the
                  statements therein not misleading, or that the Prospectus
                  contained in such Registration Statement as of its date and,
                  in the case of the opinion dated the date of Consummation of
                  the Exchange Offer, as of the date of Consummation,

                                       13
<PAGE>

                  contained an untrue statement of a material fact or omitted to
                  state a material fact necessary in order to make the
                  statements therein, in the light of the circumstances under
                  which they were made, not misleading. Without limiting the
                  foregoing, such counsel may state further that such counsel
                  assumes no responsibility for, and has not independently
                  verified, the accuracy, completeness or fairness of the
                  financial statements, Bonds and schedules and other financial
                  data included in any Registration Statement contemplated by
                  this Agreement or the related Prospectus; and

                        (3) a customary comfort letter, dated as of the date of
                  effectiveness of the Shelf Registration Statement or the date
                  of Consummation of the Exchange Offer, as the case may be,
                  from the Company's independent accountants, in the customary
                  form and covering matters of the type customarily covered in
                  comfort letters to underwriters in connection with primary
                  underwritten offerings, and affirming the matters set forth in
                  the comfort letters delivered pursuant to Section 10(c)(i) and
                  Section 10(c)(ii) of the Purchase Agreement, without
                  exception;

                  (B) set forth in full or incorporate by reference in the
            underwriting or similar agreement, if any, in connection with any
            sale or resale pursuant to any Shelf Registration Statement, the
            indemnification provisions and procedures of Section 8 hereof with
            respect to all parties to be indemnified pursuant to said Section 8;
            and

                  (C) deliver such other documents and certificates as may be
            reasonably requested by the selling Holders, the underwriter(s), if
            any, and Restricted Broker-Dealers, if any, to evidence compliance
            with clause (A) above and with any customary conditions contained in
            the underwriting agreement or other agreement entered into by the
            Company pursuant to this clause (C);

the above shall be done at each closing under such underwriting or similar
agreement, as and to the extent required thereunder, and if at any time the
representations and warranties of the Company contemplated in clause (A)(1)
above cease to be true and correct, the Company shall so advise the
underwriter(s), if any, the selling Holders and each Restricted Broker-Dealer
promptly and, if requested by such Persons, shall confirm such advice in
writing;

            (xi) prior to any public offering of Transfer Restricted Securities,
      cooperate with the selling Holders, the underwriter(s), if any, and their
      respective counsel in connection with the registration and qualification
      of the Transfer Restricted Securities under the securities or blue sky
      laws of such jurisdictions as the selling Holders or underwriter(s), if
      any, may request and do any and all other

                                       14
<PAGE>

      acts or things necessary or advisable to enable the disposition in such
      jurisdictions of the Transfer Restricted Securities covered by the
      applicable Registration Statement; provided, however, that the Company
      shall not be required to register or qualify as a foreign corporation
      where it is not now so qualified or to take any action that would subject
      it to the service of process in suits or to taxation, other than as to
      matters and transactions relating to the Registration Statement, in any
      jurisdiction where it is not now so subject;

            (xii) (A) issue, upon the request of any Holder of Series K Bonds
      covered by any Shelf Registration Statement contemplated by this
      Agreement, Series N Bonds having an aggregate principal amount equal to
      the aggregate principal amount of Series K Bonds surrendered to the
      Company by such Holder in exchange therefor or being sold by such Holder;
      such Series N Bonds to be registered in the name of such Holder or in the
      name of the purchaser(s) of such Bonds, as the case may be; in return, the
      Series K Bonds held by such Holder shall be surrendered to the Company for
      cancellation;

                  (B) issue, upon the request of any Holder of Series L Bonds
      covered by any Shelf Registration Statement contemplated by this
      Agreement, Series O Bonds having an aggregate principal amount equal to
      the aggregate principal amount of Series L Bonds surrendered to the
      Company by such Holder in exchange therefor or being sold by such Holder;
      such Series O Bonds to be registered in the name of such Holder or in the
      name of the purchaser(s) of such Bonds, as the case may be; in return, the
      Series L Bonds held by such Holder shall be surrendered to the Company for
      cancellation;

                  (C) issue, upon the request of any Holder of Series M Bonds
      covered by any Shelf Registration Statement contemplated by this
      Agreement, Series P Bonds having an aggregate principal amount equal to
      the aggregate principal amount of Series M Bonds surrendered to the
      Company by such Holder in exchange therefor or being sold by such Holder;
      such Series P Bonds to be registered in the name of such Holder or in the
      name of the purchaser(s) of such Bonds, as the case may be; in return, the
      Series M Bonds held by such Holder shall be surrendered to the Company for
      cancellation;

            (xiii) in connection with any sale of Transfer Restricted Securities
      that will result in such securities no longer being Transfer Restricted
      Securities, cooperate with the selling Holders and the underwriter(s), if
      any, to facilitate the timely preparation and delivery of certificates
      representing Transfer Restricted Securities to be sold and not bearing any
      restrictive legends; and to register such Transfer Restricted Securities
      in such denominations and such names as the Holders or the underwriter(s),
      if any, may request at least two Business Days prior to such sale of
      Transfer Restricted Securities;

            (xiv) use its best efforts to cause the disposition of the Transfer
      Restricted Securities covered by the Registration Statement to be
      registered with or approved by such other governmental agencies or
      authorities as may be

                                       15
<PAGE>

      necessary to enable the seller or sellers thereof or the underwriter(s),
      if any, to consummate the disposition of such Transfer Restricted
      Securities, subject to the proviso contained in clause (xi) above;

            (xv) subject to clause (i) above, if any fact or event contemplated
      by clause (iii)(D) above shall exist or have occurred, prepare a
      supplement or post-effective amendment to the Registration Statement or
      related Prospectus or any document incorporated therein by reference or
      file any other required document so that, as thereafter delivered to the
      purchasers of Transfer Restricted Securities, the Prospectus will not
      contain an untrue statement of a material fact or omit to state any
      material fact necessary to make the statements therein, in the light of
      the circumstances under which they were made, not misleading;

            (xvi) provide CUSIP numbers for all Transfer Restricted Securities
      not later than the effective date of a Registration Statement covering
      such Transfer Restricted Securities and provide the Trustee with printed
      certificates for the Transfer Restricted Securities which are in a form
      eligible for deposit with The Depository Trust Company;

            (xvii) cooperate and assist in any filings required to be made with
      the NASD and in the performance of any due diligence investigation by any
      underwriter (including any "qualified independent underwriter") that is
      required to be retained in accordance with the rules and regulations of
      the NASD, and use its best efforts to cause such Registration Statement to
      become effective and approved by such governmental agencies or authorities
      as may be necessary to enable the Holders selling Transfer Restricted
      Securities to consummate the disposition of such Transfer Restricted
      Securities;

            (xviii) otherwise use its best efforts to comply with all applicable
      rules and regulations of the Commission, and make generally available to
      its security holders with regard to any applicable Registration Statement,
      as soon as practicable, a consolidated earning statement meeting the
      requirements of Rule 158 under the Act (which need not be audited)
      covering a twelve-month period beginning after the effective date of the
      Registration Statement (as such term is defined in paragraph (c) of Rule
      158 under the Act);

            (xix) cause the Indenture to be qualified under the TIA not later
      than the effective date of the first Registration Statement required by
      this Agreement and, in connection therewith, cooperate with the Trustee
      and the Holders of Bonds to effect such changes to the Indenture as may be
      required for such Indenture to be so qualified in accordance with the
      terms of the TIA; and execute and use its best efforts to cause the
      Trustee to execute all documents that may be required to effect such
      changes and all other forms and documents required to be filed with the
      Commission to enable such Indenture to be so qualified in a timely manner;
      and

                                       16
<PAGE>

            (xx) provide promptly to each Holder upon request each document
      filed with the Commission pursuant to the requirements of Section 13 or
      Section 15(d) of the Exchange Act.

      (d) Restrictions on Holders. Each Holder agrees by acquisition of a
Transfer Restricted Security that, upon receipt of a notice of actions to be
taken as referred to in Section 6(c)(i) hereof or any notice from the Company of
the existence of any fact of the kind described in Section 6(c)(iii)(D) hereof,
such Holder will forthwith discontinue disposition of Transfer Restricted
Securities pursuant to the applicable Registration Statement until such Holder's
receipt of the copies of the supplemented or amended Prospectus contemplated by
Section 6(c)(xv) hereof, or until it is advised in writing by the Company that
the use of the Prospectus may be resumed, and has received copies of any
additional or supplemental filings that are incorporated by reference in the
Prospectus (the "Advice"). If so directed by the Company, each Holder will
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies then in such Holder's possession, of the Prospectus
covering such Transfer Restricted Securities that was current at the time of
receipt of either such notice. In the event the Company shall give any such
notice, the time period regarding the effectiveness of such Registration
Statement set forth in Section 3 or 4 hereof, as applicable, shall be extended
by the number of days during the period from and including the date of the
giving of such notice pursuant to Section 6(c)(i) or Section 6(c)(iii)(D) hereof
to and including the date when each selling Holder covered by such Registration
Statement shall have received the copies of the supplemented or amended
Prospectus contemplated by Section 6(c)(xv) hereof or shall have received the
Advice.

SECTION 7. REGISTRATION EXPENSES

      (a) All expenses incident to the Company's performance of or compliance
with this Agreement will be borne by the Company, regardless of whether a
Registration Statement becomes effective, including without limitation: (i) all
registration and filing fees; (ii) all fees and expenses of compliance with
federal securities and state blue sky or securities laws; (iii) all expenses of
printing (including printing certificates for the Exchange Bonds to be issued in
the Exchange Offer and printing of Prospectuses), messenger and delivery
services and telephone; (iv) all fees and disbursements of counsel for the
Company and (other than in connection with the Exchange Offer) the Holders of
Transfer Restricted Securities; (v) all application and filing fees, if any, in
connection with listing the Bonds on a national securities exchange or automated
quotation system pursuant to the requirements hereof; and (vi) all fees and
disbursements of independent certified public accountants of the Company
(including the expenses of any special audit and comfort letters required by or
incident to such performance).

      The Company will, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any annual audit and the
fees and expenses of any Person, including special experts, retained by the
Company.

      (b) In connection with the Shelf Registration Statement, the Company will
reimburse the Holders of Transfer Restricted Securities registered pursuant to
the Shelf Registration Statement for the reasonable fees and disbursements of
not more than one counsel, who shall be chosen by the Holders of a majority in
principal amount of the Transfer Restricted Securities for

                                       17
<PAGE>

whose benefit the Shelf Registration Statement is being prepared in consultation
with the Company.

SECTION 8. INDEMNIFICATION AND CONTRIBUTION

      (a) The Company agrees, to the extent permitted by law, to indemnify and
hold harmless each Holder and each Person, if any, who controls any Holder
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
against any and all losses, claims, damages or liabilities, joint or several, to
which they or any of them may become subject under the Act or otherwise
("Indemnified Holder"), and to reimburse the Holders and such controlling Person
or Persons, if any, for any legal or other expenses incurred by them in
connection with defending any action, suit or proceeding (including governmental
investigations) as provided in Section 8(c) hereof, insofar as such losses,
claims, damages, liabilities or actions, suits or proceedings (including
governmental investigations) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in any Registration
Statement, or, if any Registration Statement shall be amended or supplemented,
in the Registration Statement as so amended or supplemented, or arise out of or
are based upon any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities or
actions arise out of or are based upon any such untrue statement or alleged
untrue statement or omission or alleged omission which was made in the
Registration Statement or in the Registration Statement as so amended or
supplemented, in reliance upon and in conformity with information furnished in
writing to the Company by any Holder expressly for use therein.

      The Company's indemnity agreement contained in this Section 8(a), and the
covenants, representations and warranties of the Company contained in this
Agreement, shall remain in full force and effect regardless of any investigation
made by or on behalf of any Person, and the indemnity agreement contained in
this Section 8 shall survive any termination of this Agreement. The liabilities
of the Company in this Section 8 are in addition to any other liabilities of the
Company under this Agreement or otherwise.

      (b) Each Holder agrees, severally and not jointly, to the extent permitted
by law, to indemnify, hold harmless and reimburse the Company and each Person,
if any, who controls the Company within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, to the same extent and upon the same terms as
the indemnity agreement of the Company set forth in Section 8(a) hereof, but
only with respect to alleged untrue statements or omissions made in the
Registration Statement or in the Registration Statement, as amended or
supplemented (if applicable), in reliance upon and in conformity with
information furnished in writing to the Company by such Holder expressly for use
therein.

      The indemnity agreement on the part of each Holder contained in this
Section 8(b) shall remain in full force and effect regardless of any
investigation made by or on behalf of the Company or any other Person, and the
indemnity agreement contained in this Section 8(b) shall survive any termination
of this Agreement.

      (c) If a claim is made or an action, suit or proceeding (including
governmental investigations) is commenced or threatened against any person as to
which indemnity may be

                                       18
<PAGE>

sought under Section 8(a) or 8(b) hereof, such Person (the "Indemnified Person")
shall notify the Person against whom such indemnity may be sought (the
"Indemnifying Person") promptly after any assertion of such claim threatening to
institute an action, suit or proceeding or, if such an action, suit or
proceeding is commenced against such Indemnified Person, promptly after such
Indemnified Person shall have been served with a summons or other first legal
process, giving information as to the nature and basis of the claim. Failure to
so notify the Indemnifying Person shall not, however, relieve the Indemnifying
Person from any liability which it may have on account of the indemnity under
Section 8(a) or 8(b) hereof if the Indemnifying Person has not been prejudiced
in any material respect by such failure. Subject to the immediately succeeding
sentence, the Indemnifying Person shall assume the defense of any such
litigation or proceeding, including the employment of counsel and the payment of
all expenses, with such counsel being designated, subject to the immediately
succeeding sentence, in writing by a majority in principal amount of the Holders
in the case of parties indemnified pursuant to Section 8(b) hereof and by the
Company in the case of parties indemnified pursuant to Section 8(a) hereof. Any
Indemnified Person shall have the right to participate in such litigation or
proceeding and to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Person unless (i) the
Indemnifying Person and the Indemnified Person shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include (x) the Indemnifying Person and (y)
the Indemnified Person and, in the written opinion of counsel to such
Indemnified Person, representation of both parties by the same counsel would be
inappropriate due to actual or likely conflicts of interest between them, in
either of which cases the reasonable fees and expenses of counsel (including
disbursements) for such Indemnified Person shall be reimbursed by the
Indemnifying Person to the Indemnified Person. If there is a conflict as
described in clause (ii) above, and the Indemnified Persons have participated in
the litigation or proceeding utilizing separate counsel whose fees and expenses
have been reimbursed by the Indemnifying Person, and the Indemnified Persons, or
any of them, are found to be solely liable, such Indemnified Person shall repay
to the Indemnifying Parties such fees and expenses of such separate counsel as
the Indemnifying Person shall have reimbursed. It is understood that the
Indemnifying Person shall not, in connection with any litigation or proceeding
or related litigation or proceedings in the same jurisdiction as to which the
Indemnified Persons are entitled to such separate representation, be liable
under this Agreement for the reasonable fees and out-of-pocket expenses of more
than one separate firm (together with not more than one appropriate local
counsel) for all such Indemnified Persons. Subject to the next paragraph, all
such fees and expenses shall be reimbursed by payment to the Indemnified Persons
of such reasonable fees and expenses of counsel promptly after payment thereof
by the Indemnified Persons.

      In furtherance of the requirement above that fees and expenses of any
separate counsel for the Indemnified Persons shall be reasonable, the Holders
and the Company agree that the Indemnifying Person's obligations to pay such
fees and expenses shall be conditioned upon the following:

            (1) in case separate counsel is proposed to be retained by the
      Indemnified Persons pursuant to clause (ii) of the preceding paragraph,
      the Indemnified Persons shall in good faith fully consult with the
      Indemnifying Person in advance as to the selection of such counsel;

                                       19
<PAGE>

            (2) reimbursable fees and expenses of such separate counsel shall be
      detailed and supported in a manner reasonably acceptable to the
      Indemnifying Person (but nothing herein shall be deemed to require the
      furnishing to the Indemnifying Person of any information, including,
      without limitation, computer print-outs of lawyers' daily time entries, to
      the extent that, in the judgment of such counsel, furnishing such
      information might reasonably be expected to result in a waiver of any
      attorney-client privilege); and

            (3) the Company and the Holders shall cooperate in monitoring and
      controlling the fees and expenses of separate counsel for Indemnified
      Persons for which the Indemnifying Person is liable hereunder, and the
      Indemnified Person shall use every reasonable effort to cause such
      separate counsel to minimize the duplication of activities as between
      themselves and counsel to the Indemnifying Person.

      The Indemnifying Person shall not be liable for any settlement of any
litigation or proceeding effected without the written consent of the
Indemnifying Person, but if settled with such consent or if there be a final
judgment against the Indemnified Person, the Indemnifying Person agrees, subject
to the provisions of this Section 8, to indemnify the Indemnified Person from
and against any loss, damage, liability or expenses by reason of such settlement
or judgment. The Indemnifying Person shall not, without the prior written
consent of the Indemnified Persons, effect any settlement of any pending or
threatened litigation, proceeding or claim in respect of which indemnity has
been properly sought by the Indemnified Persons hereunder, unless such
settlement includes an unconditional release by the claimant of all Indemnified
Persons from all liability with respect to claims which are the subject matter
of such litigation, proceeding or claim.

      (d) If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an Indemnified Person under this Section 8
in respect of any losses, claims, damages or liabilities (or actions, suits or
proceedings (including governmental investigations) in respect thereof) referred
to therein, then each Indemnifying Person under this Section 8 shall contribute
to the amount paid or payable by such Indemnified Person as a result of such
losses, claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received by the
Indemnifying Person on the one hand and the Indemnified Person on the other from
the sale of the Transfer Restricted Securities. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law, then each Indemnifying Person shall contribute to such amount paid or
payable by such Indemnified Person in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of each
Indemnifying Person, if any, on the one hand and the Indemnified Person on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions, suits or proceedings
(including governmental investigations) in respect thereof), as well as any
other relevant equitable considerations. The relative fault shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company on the one hand or
the Holders on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Holders agree that it would not be just and equitable if
contribution pursuant to this Section 8 were determined by pro rata allocation
(even if the Holders were treated as one entity for such

                                       20
<PAGE>

purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in this Section 8. The amount paid or
payable by an Indemnified Person as a result of the losses, claims, damages or
liabilities (or actions, suits or proceedings (including governmental
proceedings) in respect thereof) referred to in this Section 8 shall be deemed
to include any legal or other expenses reasonably incurred by such Indemnified
Person in connection with investigating or defending any such actions, suits or
proceedings (including governmental proceedings) or claims, provided that the
provisions of this Section 8 have been complied with (in all material respects)
in respect of any separate counsel for such Indemnified Person. Notwithstanding
the provisions of this Section 8, no Holder shall be required to contribute any
amount greater than the excess of the amount by which the total received by such
Holder with respect to the sale of its Transfer Restricted Securities pursuant
to a Registration Statement exceeds the sum of (A) the amount paid by such
Holder for such Transfer Restricted Securities plus (B) the amount of any
damages which such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Holders' obligations in this Section 8 to
contribute are several in proportion to their respective obligations and not
joint.

      The agreement with respect to contribution contained in this Section 8
shall remain in full force and effect regardless of any investigation made by or
on behalf of the Company or any Holder, and shall survive any termination of
this Agreement.

SECTION 9. RULE 144A

      The Company hereby agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding and during any period in which the
Company is not subject to Section 13 or 15(d) of the Exchange Act, to make
available, upon request of any Holder of Transfer Restricted Securities, to any
Holder or beneficial owner of Transfer Restricted Securities in connection with
any sale thereof and any prospective purchaser of such Transfer Restricted
Securities designated by such Holder or beneficial owner, the information
required by Rule 144A(d)(4) under the Act in order to permit resales of such
Transfer Restricted Securities pursuant to Rule 144A.

SECTION 10. UNDERWRITTEN REGISTRATIONS

      No Holder may participate in any Underwritten Registration hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in customary underwriting arrangements entered
into in connection therewith and (b) completes and executes all reasonable
questionnaires, powers of attorney, and other documents required under the terms
of such underwriting arrangements.

SECTION 11. SELECTION OF UNDERWRITERS

      For any Underwritten Offering, the investment banker or investment bankers
and manager or managers for any Underwritten Offering that will administer such
offering will be selected by the Holders of a majority in aggregate principal
amount of the Transfer Restricted

                                       21
<PAGE>

Securities included in such offering; provided, that such investment bankers and
managers must be reasonably satisfactory to the Company. The Holders of Transfer
Restricted Securities included in any such Underwritten Offering shall be
responsible for paying all underwriting or placement fees charged, or costs or
expenses incurred, by such investment bankers and managers in connection with
such Underwritten Offering. Such investment bankers and managers are referred to
herein as the "underwriters".

SECTION 12. MISCELLANEOUS

      (a) Remedies. Each Holder, in addition to being entitled to exercise all
rights provided herein, in the Indenture, in the Purchase Agreement or granted
by law, including recovery of liquidated or other damages, will be entitled to
specific performance of its rights under this Agreement. The Company agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by the Company of the provisions of this Agreement and hereby
agrees to waive the defense in any action for specific performance that a remedy
at law would be adequate.

      (b) No Inconsistent Agreements. The Company will not, on or after the date
of this Agreement, enter into any agreement with respect to its securities that
is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. The Company has not previously
entered into any agreement granting any registration rights with respect to its
securities to any Person. The rights granted to the Holders hereunder do not in
any way conflict with and are not inconsistent with the rights granted to the
holders of the Company's securities under any agreement in effect on the date
hereof.

      (c) Adjustments Affecting the Bonds. The Company will not take any action,
or voluntarily permit any change to occur, with respect to the Bonds that would
materially and adversely affect the ability of the Holders to Consummate any
Exchange Offer.

      (d) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given, unless (i) in the case of Section 5
hereof and this Section 12(d)(i), the Company has obtained the written consent
of Holders of all outstanding Transfer Restricted Securities and (ii) in the
case of all other provisions hereof, the Company has obtained the written
consent of Holders of a majority of the outstanding principal amount of Transfer
Restricted Securities. Notwithstanding the foregoing, a waiver or consent to or
departure from the provisions hereof that relates exclusively to the rights of
Holders whose securities are being tendered pursuant to the Exchange Offer and
that does not affect directly or indirectly the rights of other Holders whose
securities are not being tendered pursuant to such Exchange Offer may be given
by the Holders of a majority of the outstanding principal amount of Transfer
Restricted Securities subject to such Exchange Offer.

      (e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telecopier, or air courier
guaranteeing overnight delivery:

                                       22
<PAGE>

            (i)  if to a Holder, at the address set forth on the records of the
      Registrar under the Indenture, with a copy to the Registrar; and

            (ii) if to the Company:

                 Consumers Energy Company
                 One Energy Plaza
                 Jackson, Michigan 49201
                 Telecopier No.: (517) 788-2186, Attention:
                                 Chief Financial Officer

            With a copy at the same address to:

                 Robert C. Shrosbree, Esq.
                 Telecopier No.: (313) 436-9225

      All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next Business Day, if timely delivered
to an air courier guaranteeing overnight delivery.

      Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.

      (f) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties,
including, without limitation and without the need for an express assignment,
subsequent Holders of Transfer Restricted Securities; provided, however, that
this Agreement shall not inure to the benefit of or be binding upon a successor
or assign of a Holder unless and to the extent such successor or assign acquired
Transfer Restricted Securities directly from such Holder.

      (g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

      (h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

      (i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.

      (j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.

                                       23
<PAGE>

      (k) Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein,
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.

                                       24
<PAGE>

      IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.

                                       CONSUMERS ENERGY COMPANY

                                       By: /s/ Thomas J. Webb
                                          --------------------------------------
                                          Name: Thomas J. Webb
                                          Title: Executive Vice President and
                                                 Chief Financial Officer

BARCLAYS CAPITAL INC.
CITIGROUP GLOBAL MARKETS INC.
MERRILL LYNCH, PIERCE, FENNER & SMITH
              INCORPORATED
GOLDMAN, SACHS & CO.
ABN AMRO INCORPORATED
BNP PARIBAS SECURITIES CORP.
COMERICA SECURITIES, INC.
FIFTH THIRD SECURITIES, INC.
HUNTINGTON CAPITAL CORP.
J.P. MORGAN SECURITIES INC.
WEDBUSH MORGAN SECURITIES INC.

BY: BARCLAYS CAPITAL INC.

By: /s/ Pamela Kendall
    ---------------------------------
    Name: Pamela Kendall
    Title: Director

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-5
<SEQUENCE>3
<FILENAME>k91595exv5.txt
<DESCRIPTION>OPINION OF ROBERT C. SHROSBREE, ASSISTANT GENERAL COUNSEL
<TEXT>
<PAGE>
                                                                       EXHIBIT 5

(CMS ENERGY LOGO)

January 31, 2005

Consumers Energy Company
One Energy Plaza
Jackson, MI  49201

Ladies and Gentlemen:

         I am the Assistant General Counsel of CMS Energy Corporation, a
Michigan corporation, and have acted as special counsel to Consumers Energy
Company ("Consumers") in connection with the Registration Statement on Form S-4
(the "Registration Statement") being filed by Consumers with the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Securities Act"), relating to the registration of $800 million of
4.40% First Mortgage Bonds due 2009, Series N; 5.00% First Mortgage Bonds due
2012, Series O; and 5.50% First Mortgage Bonds due 2016, Series P (the "new
bonds") to be issued under the Indenture dated as of September 1, 1945, between
Consumers and JPMorgan Chase Bank, N.A. (ultimate successor to City Bank Farmers
Trust Company) (the "Trustee"), as supplemented (collectively, the "Indenture").
The new bonds are being exchanged for all of the outstanding 4.40% First
Mortgage Bonds due 2009, Series K; 5.00% First Mortgage Bonds due 2012, Series
L; and 5.50% First Mortgage Bonds due 2016, Series M (the "old bonds") pursuant
to an Exchange Offer. Capitalized terms not otherwise defined herein have the
respective meanings specified in the Registration Statement.

         In rendering this opinion, I have examined and relied upon a copy of
the Registration Statement. I have also examined, or have arranged for the
examination by an attorney or attorneys under my general supervision, originals,
or copies of originals certified to my satisfaction, of such agreements,
documents, certificates and other statements of governmental officials and other
instruments, and have examined such questions of law and have satisfied myself
as to such matters of fact, as I have considered relevant and necessary as a
basis for this opinion. I have assumed the authenticity of all documents
submitted to me as originals, the genuineness of all signatures, the legal
capacity of all natural persons and the conformity with the original documents
of any copies thereof submitted to me for examination.

         Based on the foregoing it is my opinion that:

         1.       Consumers is duly incorporated and validly existing under the
                  laws of the State of Michigan.

         2.       Consumers has the corporate power and authority to authorize
                  and deliver the new bonds pursuant to the Indenture.

         3.       The new bonds will be legally issued and binding obligations
                  of Consumers (except to the extent enforceability may be
                  limited by applicable bankruptcy, insolvency, reorganization,
                  moratorium, fraudulent transfer or other similar laws
                  affecting the enforcement of creditors' rights generally and
                  by the effect of general principles of equity, regardless of
                  whether enforceability is considered in

<PAGE>




                  a proceeding in equity or at law) when (i) the Registration
                  Statement, as finally amended (including any necessary
                  post-effective amendments) shall have become effective under
                  the Securities Act, and the Indenture shall have been
                  qualified under the Trust Indenture Act of 1939, as amended;
                  (ii) an appropriate prospectus with respect to the new bonds
                  shall have been filed with the Commission pursuant to Rule 424
                  under the Securities Act; and (iii) the new bonds shall be
                  duly authenticated by the Trustee and the new bonds shall have
                  been delivered to those holders of old bonds in exchange for
                  such old bonds pursuant to the Exchange Offer.

         For purposes of this opinion, I have assumed that there will be no
changes in the laws currently applicable to Consumers and that such laws will be
the only laws applicable to Consumers.

         I do not find it necessary for the purposes of this opinion to cover,
and accordingly I express no opinion as to, the application of the securities or
blue sky laws of the various states to the exchange of the new bonds for the old
bonds.

         I am a member of the bar of the State of Michigan and I express no
opinion as to the laws of any jurisdiction other than the State of Michigan and
the federal law of the United States of America.

         I hereby consent to the filing of this opinion as an exhibit to
Consumers' Registration Statement relating to the new bonds and to all
references to me included in or made a part of the Registration Statement.

                                                   Very truly yours,

                                                   /s/ Robert C. Shrosbree

                                                   Robert C. Shrosbree

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-8
<SEQUENCE>4
<FILENAME>k91595exv8.txt
<DESCRIPTION>OPINION OF JAY M. SILVERMAN, TAX COUNSEL FOR CONSUMERS
<TEXT>
<PAGE>

                                                                       EXHIBIT 8



January 31, 2005



Consumers Energy Company
One Energy Plaza
Jackson, Michigan 49201

Ladies and Gentlemen:

         Reference is made to the prospectus, (the "Prospectus"), which
constitutes part of the registration statement on Form S-4 (the "Registration
Statement"), to be filed by Consumers Energy Company with the Securities and
Exchange Commission on or about the date hereof pursuant to the Securities Act
of 1933, as amended, for the registration of its 4.40% First Mortgage Bonds due
2009, Series N; 5.00% First Mortgage Bonds due 2012, Series O; and 5.50% First
Mortgage Bonds due 2016, Series P (collectively the "Exchange Notes").

         I am of the opinion that the statements set forth under the caption
"Certain United States Federal Income Tax Consequences" in the Prospectus
constitute an accurate description, in general terms, of certain United States
federal income tax consideration that may be relevant to the prospective holders
of the Exchange Notes.

                  I hereby consent to the filing of this opinion as an exhibit
to the Registration Statement.

                                                   Very truly yours,

                                                    /s/ Jay M. Silverman
                                                   ----------------------------
                                                   Jay M. Silverman
                                                   Director of Tax Planning and
                                                   Assistant Tax Counsel

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12
<SEQUENCE>5
<FILENAME>k91595exv12.txt
<DESCRIPTION>STATEMENT RE: COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TEXT>
<PAGE>
                                                                               .
                                                                               .
                                                                               .

                                                                      Exhibit 12

                            CONSUMERS ENERGY COMPANY

                       Ratio of Earnings to Fixed Charges
                              (Millions of Dollars)

<TABLE>
<CAPTION>
                                              Nine Months                    Years Ended December 31 -
                                                Ended
                                             September 30-
                                                 2004         2003         2002         2001         2000         1999
                                                                            (c)          (b)
<S>                                          <C>             <C>          <C>          <C>          <C>          <C>
Earnings as defined (a)
Consolidated net income                         $   175      $   196      $   363      $   199      $   284      $   340
Income taxes                                         91          137          180           97          137          172
Exclude equity basis subsidiaries (e)                (1)         (42)         (53)         (38)         (57)         (50)
Include equity basis dividends received (e)           -           45           15            8           10           10
Fixed charges as defined, adjusted to
exclude capitalized interest of $3, $9,
$12, $6, $2, and $5 for the nine months
ended September 30, 2004 and the years
ended December 31, 2003, 2002, 2001,
2000, and 1999, respectively                        259          252          178          197          194          192
                                                -------      -------      -------      -------      -------      -------
Earnings as defined                             $   524      $   588      $   683      $   463      $   568      $   664
                                                =======      =======      =======      =======      =======      =======
Fixed charges as defined (a)
Interest on long-term debt (d)                  $   248      $   241      $   153      $   151      $   141      $   140
Estimated interest portion of lease
rental                                                5            7           10           11           11           11
Other interest charges                               11           13           27           41           44           41
                                                -------      -------      -------      -------      -------      -------
Fixed charges as defined                        $   264      $   261      $   190      $   203      $   196      $   192
                                                =======      =======      =======      =======      =======      =======
Ratio of earnings to fixed charges                 1.98         2.25         3.59         2.28         2.90         3.46
                                                =======      =======      =======      =======      =======      =======
</TABLE>

NOTES:
(a) Earnings and fixed charges as defined in instructions for Item 503 of
Regulation S-K.

(b) Excludes a cumulative effect of change-in-accounting after-tax loss of $11
million; if included, ratio would be 1.81.

(c) Excludes a cumulative effect of change-in-accounting after-tax gain of $18
million; if included, ratio would be unchanged, since the change-in-accounting
resulted from the equity-based subsidiary MCV Partnership. The total net incomes
of equity-based subsidiaries are excluded from determining earnings as defined.

(d) We determined that we do not hold the controlling interest in our trust
preferred security structures. Accordingly, those securities have been
deconsolidated as of December 31, 2003. Therefore, our trust preferred
securities that were previously included in mezzanine equity, have been
eliminated due to deconsolidation and are reflected in Long-term debt - related
parties.

(e) The MCV Partnership and the FMLP are variable interest entities and
Consumers was determined to be the primary beneficiary. Therefore, these
entities are no longer equity method subsidiaries and we have consolidated the
MCV Partnership and the FMLP into our consolidated financial statements for the
first time as of and for the quarter ended March 31, 2004.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.C
<SEQUENCE>6
<FILENAME>k91595exv23wc.txt
<DESCRIPTION>CONSENT OF ERNST & YOUNG LLP
<TEXT>
<PAGE>
                                                                EXHIBIT (23) (c)



            Consent of Independent Registered Public Accounting Firm


We consent to the reference to our firm under the captions "Selected
Consolidated Financial Data" and "Experts" in the Registration Statement on Form
S-4 and the related Prospectus of Consumers Energy Company dated January 31,
2005 for the registration of $150,000,000 of 4.40% First Mortgage Bonds due
2009, Series N; $300,000,000 of 5.00% First Mortgage Bonds due 2012, Series O;
and $350,000,000 of 5.50% First Mortgage Bonds due 2016, Series P and to the
incorporation by reference therein of our report dated February 27, 2004, with
respect to the consolidated financial statements and schedule of Consumers
Energy Company included in its Annual Report (Form 10-K/A) for the year ended
December 31, 2003, filed with the Securities and Exchange Commission.


                                         /s/ Ernst & Young LLP

Detroit, Michigan
January 27, 2005





</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.D
<SEQUENCE>7
<FILENAME>k91595exv23wd.txt
<DESCRIPTION>CONSENT OF PRICEWATERHOUSECOOPERS LLP
<TEXT>
<PAGE>

                                                                 Exhibit (23)(d)

            CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in this Registration
Statement on Form S-4 of our report dated February 18, 2004 relating to the
financial statements of the Midland Cogeneration Venture Limited Partnership,
which appears in the Consumers Energy Company Annual Report on Form 10-K/A for
the year ended December 31, 2003. We also consent to the reference to us under
the heading "Experts" in such Registration Statement.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP

Detroit, Michigan
January 28, 2005

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-24
<SEQUENCE>8
<FILENAME>k91595exv24.txt
<DESCRIPTION>POWER OF ATTORNEY
<TEXT>
<PAGE>

                                                                      Exhibit 24

January 27, 2005

Mr. S. Kinnie Smith, Jr.
Mr. Thomas J. Webb
Mr. Michael D. VanHemert
Consumers Energy Company
One Energy Plaza
Jackson, MI 49201

We hereby appoint each of you lawful attorney for each of us and in each of our
names to sign and cause to be filed with the Securities and Exchange Commission
registration statement(s) and/or any amendment(s) thereto, including
post-effective amendment(s), to be accompanied in each case by a prospectus or
supplemental prospectus and any necessary exhibits with respect to the issuance
of up to $800 million of new debt securities of the Company in exchange for $800
million of any debt securities of the Company that were issued during 2004
pursuant to Rule 144A of the Securities Act of 1933, as amended, but have not
previously been registered pursuant to the Securities Act of 1933, as amended.

Very truly yours,

/s/ K. Whipple                              ________________________________
- ---------------------------                 William U. Parfet
Kenneth Whipple

/s/ Merribel S. Ayres                       /s/ Percy A. Pierre
- ---------------------------                 --------------------------------
Merribel S. Ayres                           Percy A. Pierre

/s/ Earl D. Holton                          /s/ S. Kinnie Smith Jr.
- ---------------------------                 --------------------------------
Earl D. Holton                              S. Kinnie Smith, Jr.

/s/ David W. Joos
- ---------------------------                 ________________________________
David W. Joos                               Kenneth L. Way

/s/ M. T. Monahan                           /s/ John B. Yasinsky
- ---------------------------                 --------------------------------
Michael T. Monahan                          John B. Yasinsky

/s/ Joseph F. Paquette, Jr.
- ---------------------------
Joseph F. Paquette, Jr.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-25
<SEQUENCE>9
<FILENAME>k91595exv25.txt
<DESCRIPTION>STATEMENT OF ELIGIBILITY AND QUALIFICATION
<TEXT>
<PAGE>

                                                                      Exhibit 25

    -----------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549
                            -------------------------

                                    FORM T-1

                            STATEMENT OF ELIGIBILITY
                    UNDER THE TRUST INDENTURE ACT OF 1939 OF
                   A CORPORATION DESIGNATED TO ACT AS TRUSTEE

                   -------------------------------------------
               CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
                     A TRUSTEE PURSUANT TO SECTION 305(b)(2)
                    ----------------------------------------

                    JPMORGAN CHASE BANK, NATIONAL ASSOCIATION
               (Exact name of trustee as specified in its charter)

                                                                      13-4994650
(State of incorporation                                         (I.R.S. employer
if not a national bank)                                      identification No.)

1111 POLARIS PARKWAY
COLUMBUS, OHIO                                                             43271
(Address of principal executive offices)                              (Zip Code)

                                Thomas F. Godfrey
                  Vice President and Assistant General Counsel
                    JPMorgan Chase Bank, National Association
                       1 Chase Manhattan Plaza, 25th Floor
                               New York, NY 10081
                               Tel: (212) 552-2192
            (Name, address and telephone number of agent for service)
                ------------------------------------------------
                            CONSUMERS ENERGY COMPANY
               (Exact name of obligor as specified in its charter)

MICHIGAN                                                              38-2726431
(State or other jurisdiction of                                 (I.R.S. employer
incorporation or organization)                               identification No.)

ONE ENERGY PLAZA
JACKSON, MICHIGAN                                                          49201
(Address of principal executive offices)                              (Zip Code)

    -----------------------------------------------------------------------

           $150,000,000 4.40% First Mortgage Bonds due 2009, Series K
           $300,000,000 5.00% First Mortgage Bonds due 2012, Series L
           $350,000,000 5.50% First Mortgage Bonds due 2016, Series M
                       (Title of the indenture securities)

    -----------------------------------------------------------------------

<PAGE>

                                     GENERAL

Item 1. General Information.

      Furnish the following information as to the trustee:

      (a) Name and address of each examining or supervising authority to which
it is subject.

      Comptroller of the Currency, Washington, D.C.

      Board of Governors of the Federal Reserve System, Washington, D.C., 20551

      Federal Deposit Insurance Corporation, Washington, D.C., 20429.

      (b) Whether it is authorized to exercise corporate trust powers.

      Yes.

Item 2. Affiliations with the Obligor and Guarantors.

      If the obligor or any guarantor is an affiliate of the trustee, describe
each such affiliation.

      None.

                                       -2-

<PAGE>

Item 16. List of Exhibits

      List below all exhibits filed as a part of this Statement of Eligibility.

      1. A copy of the Articles of Association of JPMorgan Chase Bank, N.A. (see
Exhibit 1 to Form T-1 filed in connection with Registration Statement No.
333-106575 which is incorporated by reference).

      2. A copy of the Certificate of Authority of the Comptroller of the
Currency for the trustee to commence business. (see Exhibit 2 to Form T-1 filed
in connection with Registration Statement No. 333-106575 which is incorporated
by reference).

      3. None, the authority of the trustee to exercise corporate trust powers
being contained in the documents described in Exhibits 1 and 2.

      4. A copy of the existing By-Laws of the Trustee. (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 333-106575 which is
incorporated by reference).

      5. Not applicable.

      6. The consent of the Trustee required by Section 321(b) of the Act. (see
Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
333-106575 which is incorporated by reference).

      7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
(see Exhibit 7 to Form T-1 filed in connection with Registration Statement No.
333-106575 which is incorporated by reference).

      8. Not applicable.

      9. Not applicable.

                                    SIGNATURE

      Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, JPMorgan Chase Bank, N.A., has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York and State of New York, on the 31st day
of January, 2005.

                                                JPMORGAN CHASE BANK, N.A.

                                                By
                                                   -----------------------------
                                                   L. O'Brien
                                                   Vice President

                                       -3-

<PAGE>

Item 16. List of Exhibits

      List below all exhibits filed as a part of this Statement of Eligibility.

      1. A copy of the Articles of Association of JPMorgan Chase Bank, N.A. (see
Exhibit 1 to Form T-1 filed in connection with Registration Statement No.
333-106575 which is incorporated by reference).

      2. A copy of the Certificate of Authority of the Comptroller of the
Currency for the trustee to commence business. (see Exhibit 2 to Form T-1 filed
in connection with Registration Statement No. 333-106575 which is incorporated
by reference).

      3. None, the authority of the trustee to exercise corporate trust powers
being contained in the documents described in Exhibits 1 and 2.

      4. A copy of the existing By-Laws of the Trustee. (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 333-106575 which is
incorporated by reference).

      5. Not applicable.

      6. The consent of the Trustee required by Section 321(b) of the Act. (see
Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
333-106575 which is incorporated by reference).

      7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
(see Exhibit 7 to Form T-1 filed in connection with Registration Statement No.
333-106575 which is incorporated by reference).

      8. Not applicable.

      9. Not applicable.

                                    SIGNATURE

      Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, JPMorgan Chase Bank, N.A., has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York and State of New York, on the 31st day
of January, 2005.

                                               JPMORGAN CHASE BANK, N.A.

                                               By   /s/  L. O'Brien
                                                    ----------------------------
                                                    L. O'Brien
                                                    Vice President

                                       -4-

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(A)
<SEQUENCE>10
<FILENAME>k91595exv99wxay.txt
<DESCRIPTION>FORM OF LETTER OF TRANSMITTAL
<TEXT>
<PAGE>

                                                                   Exhibit 99(a)

                              LETTER OF TRANSMITTAL
                            CONSUMERS ENERGY COMPANY

                                OFFER TO EXCHANGE

                  4.40% FIRST MORTGAGE BONDS DUE 2009, SERIES N
                  5.00% FIRST MORTGAGE BONDS DUE 2012, SERIES O
                  5.50% FIRST MORTGAGE BONDS DUE 2016, SERIES P

                           FOR ANY AND ALL OUTSTANDING

                  4.40% FIRST MORTGAGE BONDS DUE 2009, SERIES K
                  5.00% FIRST MORTGAGE BONDS DUE 2012, SERIES L
                  5.50% FIRST MORTGAGE BONDS DUE 2016, SERIES M

            THIS EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
                     5:00 P.M., NEW YORK CITY TIME, ON 2005
                          UNLESS THE OFFER IS EXTENDED

                            JPMORGAN CHASE BANK, N.A.
                             (THE "EXCHANGE AGENT")

By Certified or Registered Mail:                   By Overnight Courier or Hand:
    JPMorgan Chase Bank, N.A.                        JPMorgan Chase Bank, N.A.
  Institutional Trust Services                     Institutional Trust Services
          P.O. Box 2320                            2001 Bryan Street, 9th Floor
    Dallas, Texas 75221-2320                            Dallas, Texas 75201
     Attention: Beth Mullin                           Attention: Beth Mullin

                         Facsimile Transmission Number:
                                 (214) 468-6494
                          (Eligible Institutions Only)

                              Confirm By Telephone:
                                 (214) 468-6464

           DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET
                FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A
                   FACSIMILE NUMBER OTHER THAN THE ONES LISTED
                   ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
                       THE INSTRUCTIONS ACCOMPANYING THIS
                         LETTER OF TRANSMITTAL SHOULD BE
                           READ CAREFULLY BEFORE THIS
                              LETTER OF TRANSMITTAL
                                  IS COMPLETED.

<PAGE>

      The undersigned hereby acknowledges receipt of the prospectus dated
________________, 2005 (the "Prospectus") of Consumers Energy Company (the
"Company") and this Letter of Transmittal, which together constitute the
Company's offer (the "Exchange Offer") to exchange $1,000 principal amount of
its 4.40% First Mortgage Bonds due 2009, Series N; 5.00% First Mortgage Bonds
due 2012, Series O; and 5.50% First Mortgage Bonds due 2016, Series P (the "new
bonds"), which have been registered under the Securities Act of 1933, as amended
(the "Securities Act"), pursuant to a Registration Statement of which the
Prospectus is a part, for each $1,000 principal amount of its 4.40% First
Mortgage Bonds due 2009, Series K; 5.00% First Mortgage Bonds due 2012, Series
L; and 5.50% First Mortgage Bonds due 2016, Series M (the "old bonds"),
respectively. The term "Expiration Date" shall mean 5:00 p.m., New York City
time, on ________________, 2005 unless the Company, in its reasonable judgment,
extends the Exchange Offer, in which case the term shall mean the latest date
and time to which the Exchange Offer is extended. Capitalized terms used but not
defined herein have the meaning given to them in the Prospectus.

      YOUR BANK OR BROKER CAN ASSIST YOU IN COMPLETING THIS FORM. THE
INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED.
QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS
AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.

      List on the next page the old bonds to which this Letter of Transmittal
relates. If the space indicated is inadequate, the Certificate of Registration
Numbers and Principal Amounts should be listed on a separately signed schedule
affixed hereto.

                    DESCRIPTION OF OLD BONDS TENDERED HEREBY

<TABLE>
<CAPTION>
                              CERTIFICATE            AGGREGATE
NAME(s) AND ADDRESS(ES)           OR             PRINCIPAL AMOUNT        PRINCIPAL
OF REGISTERED OWNER(s)       REGISTRATION           REPRESENTED           AMOUNT
   (PLEASE FILL IN)           NUMBER(s)*           BY OLD BONDS         TENDERED**
- -----------------------      -----------------------------------------------------
<S>                          <C>                 <C>                    <C>
                             -----------------------------------------------------

                             -----------------------------------------------------

                             -----------------------------------------------------
                             Total
</TABLE>

* Need not be completed by Book-Entry Holders.

** Unless otherwise indicated, the Holder will be deemed to have tendered the
Full Aggregate Principal Amount represented by such old bonds. All Tenders must
be in integral multiples of $1,000.

      This Letter of Transmittal is to be used (i) if certificates of old bonds
are to be forwarded herewith, (ii) if delivery of old bonds is to be made by
book-entry transfer to an account maintained by the Exchange Agent at The
Depository Trust Company (the "Depository"), pursuant to the procedures set
forth in "The Exchange Offer - Procedures for Tendering" in the Prospectus or
(iii) if tender of the old bonds is to be made according to the guaranteed
delivery procedures described in the Prospectus under the caption "The Exchange
Offer - Guaranteed Delivery Procedures." See Instruction 2. DELIVERY OF
DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE
EXCHANGE AGENT.

                                       2
<PAGE>

      The term "Holder" with respect to the Exchange Offer means any person in
whose name old bonds are registered on the books of the Company or any other
person who has obtained a properly completed bond power from the registered
holder. The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with respect
to the Exchange Offer. Holders who wish to tender their old bonds must complete
this letter in its entirety.

[ ]   CHECK HERE IF TENDERED OLD BONDS ARE BEING DELIVERED BY BOOK-ENTRY
      TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
      DEPOSITORY AND COMPLETE THE FOLLOWING:

      Name of Tendering Institution_____________________________________________

      [ ]   The Depository Trust Company

      Account Number____________________________________________________________

      Transaction Code Number___________________________________________________

      Holders whose old bonds are not immediately available or who cannot
deliver their old bonds and all other documents required hereby to the Exchange
Agent on or prior to the Expiration Date must tender their old bonds according
to the guaranteed delivery procedure set forth in the Prospectus under the
caption "The Exchange Offer - Guaranteed Delivery Procedures." See Instruction
2.

[ ]   CHECK HERE IF TENDERED OLD BONDS ARE BEING DELIVERED PURSUANT TO A NOTICE
      OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:

      Name of Registered Holder(s)______________________________________________

      Name of Eligible Institution that Guaranteed Delivery_____________________

      If delivery by book-entry transfer:

      Account Number____________________________________________________________

      Transaction Code Number___________________________________________________

[ ]   CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
      COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
      THERETO.

      Name______________________________________________________________________

      Address___________________________________________________________________

                                       3
<PAGE>

               PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY

Ladies and Gentlemen:

      Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the principal amount of the old bonds
indicated above. Subject to, and effective upon, the acceptance for exchange of
such old bonds tendered hereby, the undersigned hereby exchanges, assigns and
transfers to, or upon the order of, the Company all right, title and interest in
and to such old bonds as are being tendered hereby, including all rights to
accrued and unpaid interest thereon as of the Expiration Date. The undersigned
hereby irrevocably constitutes and appoints the Exchange Agent the true and
lawful agent and attorney-in-fact of the undersigned (with full knowledge that
said Exchange Agent acts as the agent of the Company in connection with the
Exchange Offer) to cause the old bonds to be assigned, transferred and
exchanged. The undersigned represents and warrants that it has full power and
authority to tender, exchange, assign and transfer the old bonds and to acquire
new bonds issuable upon the exchange of such tendered old bonds, and that when
the same are accepted for exchange, the Company will acquire good and
unencumbered title to the tendered old bonds, free and clear of all liens,
restrictions, charges and encumbrances and not subject to any adverse claim.

      The undersigned represents to the Company that (A) it is not an affiliate
of the Company, (B) it is not engaged in, and does not intend to engage in, and
has no arrangement or understanding with any person to participate in, a
distribution of the new bonds to be issued in the Exchange Offer and (C) it is
acquiring the new bonds in its ordinary course of business. If the undersigned
or the person receiving the new bonds covered hereby is a broker-dealer that is
receiving the new bonds for its own account in exchange for old bonds that were
acquired as a result of market-making activities or other trading activities,
the undersigned acknowledges that it or such other person will deliver a
prospectus in connection with any resale of such new bonds; however, by so
acknowledging and by delivering a prospectus, the undersigned will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
The undersigned and any such other person acknowledges that, if they are
participating in the Exchange Offer for the purpose of distributing the new
bonds, (i) they cannot rely on the position of the staff of the Securities and
Exchange Commission enunciated in Exxon Capital Holdings Corporation (available
May 13, 1988) as interpreted in the Securities and Exchange Commission's letter
to Shearman & Sterling dated July 2, 1993, Morgan Stanley & Co., Incorporated
(available June 5, 1991), Warnaco, Inc. (available June 5, 1991), and Epic
Properties, Inc. (available October 21, 1991 or similar no-action letters and,
in the absence of an exemption therefrom, must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with the
resale transaction and (ii) failure to comply with such requirements in such
instance could result in the undersigned or any such other person incurring
liability under the Securities Act for which such persons are not indemnified by
the Company. If the undersigned or the person receiving the new bonds covered by
this letter is an affiliate (as defined under Rule 405 of the Securities Act) of
the Company, the undersigned represents to the Company that the undersigned
understands and acknowledges that such new bonds may not be offered for resale,
resold or otherwise transferred by the undersigned or such other person without
registration under the Securities Act or an exemption therefrom.

      The undersigned also warrants that it will, upon request, execute and
deliver any additional documents deemed by the Exchange Agent or the Company to
be necessary or desirable to complete the exchange, assignment and transfer of
tendered old bonds or transfer ownership of such old bonds on the account books
maintained by a book-entry facility. The undersigned further agrees that
acceptance of any tendered old bonds by the Company and the issuance of new
bonds in exchange therefor shall constitute performance in full by the Company
of its obligations under the Registration Rights Agreements and that the Company
shall have no further obligations or liabilities thereunder for the registration
of the old bonds or the new bonds.

      The Exchange Offer is subject to certain conditions set forth in the
Prospectus under the caption "The Exchange Offer - Conditions." The undersigned
recognizes that as a result of these conditions (which may be waived, in whole
or in part, by the Company), as more particularly set forth in the Prospectus,
the Company may not be required to exchange any of the old bonds tendered hereby
and, in such event, the old bonds not exchanged will be returned to the
undersigned at the address shown below the signature of the undersigned.

                                       4
<PAGE>

      All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned. Tendered old bonds may be withdrawn at any time
prior to the Expiration Date.

      Unless otherwise indicated in the box entitled "Special Registration
Instructions" or the box entitled "Special Delivery Instructions" in this Letter
of Transmittal, certificates for all new bonds delivered in exchange for
tendered old bonds, and any old bonds delivered herewith but not exchanged, will
be registered in the name of the undersigned and shall be delivered to the
undersigned at the address shown below the signature of the undersigned. If an
Exchange Note is to be issued to a person other than the person(s) signing this
Letter of Transmittal, or if the Exchange Note is to be mailed to someone other
than the person(s) signing this Letter of Transmittal or to the person(s)
signing this Letter of Transmittal at an address different than the address
shown on this Letter of Transmittal, the appropriate boxes of this Letter of
Transmittal should be completed. If old bonds are surrendered by Holder(s) that
have completed either the box entitled "Special Registration Instructions" or
the box entitled "Special Delivery Instructions" in this Letter of Transmittal,
signature(s) on this Letter of Transmittal must be Medallion Guaranteed by an
Eligible Institution (defined in Instruction 2).

                              SPECIAL REGISTRATION
                                  INSTRUCTIONS

      To be completed ONLY if the new bonds are to SPECIAL DELIVERY be issued in
the name of someone other than the INSTRUCTIONS undersigned.

Name:______________________________________________

Address:___________________________________________

___________________________________________________

Book-Entry Transfer Facility Account:______________

___________________________________________________

Employee Identification or Social Security Number:

___________________________________________________
                 (PLEASE PRINT OR TYPE)

                                SPECIAL DELIVERY
                                  INSTRUCTIONS

      To be completed ONLY if the new bonds are to be sent to someone other than
the undersigned, or to the undersigned at an address other than that shown under
"Description of Old Bonds Tendered Hereby."

Name:_______________________________________________

Address:____________________________________________

____________________________________________________
                   (PLEASE PRINT OR TYPE)

                                       5
<PAGE>

                  (REGISTERED HOLDER(S) OF OLD BONDS SIGN HERE)
                (IN ADDITION, COMPLETE SUBSTITUTE FORM W-9 BELOW)

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
                     (SIGNATURE(s) OF REGISTERED HOLDER(s))

      Must be signed by registered holder(s) exactly as name(s) appear(s) on the
old bonds or on a security position listing as the owner of the old bonds or by
person(s) authorized to become registered holder(s) by properly completed bond
powers transmitted herewith. If signature is by attorney-in-fact, trustee,
executor, administrator, guardian, officer of a corporation or other person
acting in a fiduciary capacity, please provide the following information.
(Please print or type):

Name and Capacity (full title):_________________________________________________

Address (including zip code):___________________________________________________

Area Code and Telephone Number:_________________________________________________

Taxpayer Identification or Social Security No.:_________________________________

Dated:______________________________________

                               MEDALLION GUARANTEE
                        (IF REQUIRED - SEE INSTRUCTION 4)

Authorized Signature:___________________________________________________________
              (SIGNATURE OF REPRESENTATIVE OF MEDALLION GUARANTOR)

Name and Title:_________________________________________________________________

Name of Plan:___________________________________________________________________

Area Code and Telephone Number:_________________________________________________
                             (PLEASE PRINT OR TYPE)

Dated:____________________

                                       6
<PAGE>

                     PAYOR'S NAME: JPMORGAN CHASE BANK, N.A.
<TABLE>
<S>                         <C>
        SUBSTITUTE          PART I - Please provide your TIN in the  ____________________________________
         FORM W-9           box at right and certify by signing and         Social Security Number
                            dating below.                                             or

                                                                      ____________________________________
                                                                          Employer Identification Number
                                                                      (If awaiting TIN write "Applied For")

DEPARTMENT OF THE TREASURY
 INTERNAL REVENUE SERVICE   PART II - For Payees exempt from backup withholding, see the enclosed Guidelines
                            for Certification of Taxpayer Identification Number on Substitute Form W-9 and
  PAYER'S REQUEST FOR       complete as instructed therein.
TAXPAYER IDENTIFICATION
      NUMBER (TIN)          CERTIFICATION - Under penalties of perjury, I certify that:

                            (1)  The number shown on this form is my correct Taxpayer Identification Number
                                 (or a Taxpayer Identification Number has not been issued to me and either
                                 (a) I have mailed or delivered an application to receive a Taxpayer
                                 Identification Number to the appropriate Internal Revenue Service ("IRS")
                                 or Social Security Administration office or (b) I intend to mail or deliver
                                 an application in the near future.) I understand that if I do not provide a
                                 Taxpayer Identification Number within 60 days, 28% of all reportable
                                 payments made to me will be withheld until I provide a number, and

                            (2)  I am not subject to backup withholding either because (a) I am exempt from
                                 backup withholding, (b) I have not been notified by the IRS that I am
                                 subject to backup withholding as a result of a failure to report all
                                 interest or dividends, or (c) the IRS has notified me that I am no longer
                                 subject to backup withholding, and

                            (3)  I am a U.S. person (including a U.S. resident alien).

                            CERTIFICATION INSTRUCTIONS - You must cross out item (2) above if you have been
                            notified by the IRS that you are currently subject to backup withholding because
                            you have failed to report all interest and dividends on your tax return. (Also
                            see instructions in the enclosed Guidelines.)

                            Signature of U.S. Person_____________________________ Date _______________, 2005
</TABLE>

NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
      OF 28% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
      THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
      NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.

                                       7
<PAGE>

                                  INSTRUCTIONS

                          FORMING PART OF THE TERMS AND
                        CONDITIONS OF THE EXCHANGE OFFER

      1. Delivery of this Letter of Transmittal and Certificates. All physically
delivered old bonds or confirmations of any book-entry transfer to the Exchange
Agent's account at a book-entry transfer facility of old bonds tendered by
book-entry transfer, as well as a properly completed and duly executed copy of
this Letter of Transmittal or facsimile thereof, and any other documents
required by this Letter of Transmittal, must be received by the Exchange Agent
at the address set forth herein on or prior to the Expiration Date (as defined
in the Prospectus). The method of delivery of this Letter of Transmittal, the
old bonds and any other required documents is at the election and risk of the
Holder, and except as otherwise provided below, the delivery will be deemed made
only when actually received by the Exchange Agent. If such delivery is by mail,
it is suggested that registered mail with return receipt requested, properly
insured, be used.

      No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering Holders, by execution of this Letter of Transmittal (or
facsimile thereof), shall waive any right to receive notice of the acceptance of
the old bonds for exchange.

      Delivery to an address other than as set forth herein, or instructions via
a facsimile number other than the ones set forth herein, will not constitute a
valid delivery.

      2. Guaranteed Delivery Procedures. Holders who wish to tender their old
bonds, but whose old bonds are not immediately available and thus cannot deliver
their old bonds, the Letter of Transmittal or any other required documents to
the Exchange Agent (or comply with the procedures for book-entry transfer) on or
prior to the Expiration Date, may effect a tender if:

            (a) the tender is made through a member firm of a registered
      national securities exchange or of the National Association of Securities
      Dealers, Inc., a commercial bank or trust company having an office or
      correspondent in the United States or an "eligible guarantor institution"
      within the meaning of Rule 17Ad-15 under the Exchange Act (an "Eligible
      Institution");

            (b) prior to the Expiration Date, the Exchange Agent receives from
      such Eligible Institution a properly completed and duly executed Notice of
      Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
      setting forth the name and address of the Holder, the registration
      number(s) of such old bonds and the principal amount of old bonds
      tendered, stating that the tender is being made thereby and guaranteeing
      that, within three New York Stock Exchange trading days after the
      Expiration Date, the Letter of Transmittal (or facsimile thereof),
      together with the old bonds (or a confirmation of book-entry transfer of
      such old bonds into the Exchange Agent's account at the Depository) and
      any other documents required by the Letter of Transmittal, will be
      deposited by the Eligible Institution with the Exchange Agent; and

            (c) such properly completed and executed Letter of Transmittal (or
      facsimile thereof), as well as all tendered old bonds in proper form for
      transfer (or a confirmation of book-entry transfer of such old bonds into
      the Exchange Agent's account at the Depository) and all other documents
      required by the Letter of Transmittal, are received by the Exchange Agent
      within three New York Stock Exchange trading days after the Expiration
      Date.

      Any Holder who wishes to tender old bonds pursuant to the guaranteed
delivery procedures described above must ensure that the Exchange Agent receives
the Notice of Guaranteed Delivery relating to such old bonds prior to the
Expiration Date. Failure to complete the guaranteed delivery procedures outlined
above will not, of itself, affect the validity or effect a revocation of any
Letter of Transmittal form properly completed and executed by a Holder who
attempted to use the guaranteed delivery procedures.

                                       8
<PAGE>

      3. Partial Tenders; Withdrawals. If less than the entire principal amount
of old bonds evidenced by a submitted certificate is tendered, the tendering
Holder should fill in the principal amount tendered in the column entitled
"Principal Amount Tendered" of the box entitled "Description of Old Bonds
Tendered Hereby." A newly issued old bond for the principal amount of old bonds
submitted but not tendered will be sent to such Holder as soon as practicable
after the Expiration Date. All old bonds delivered to the Exchange Agent will be
deemed to have been tendered in full unless otherwise indicated.

      Old bonds tendered pursuant to the Exchange Offer may be withdrawn at any
time prior to the Expiration Date, after which tenders of old bonds are
irrevocable. To be effective, a written telegraphic or facsimile transmission
notice of withdrawal must be timely received by the Exchange Agent. Any such
notice of withdrawal must (i) specify the name of the person having deposited
the old bonds to be withdrawn (the "Depositor"), (ii) identify the old bonds to
be withdrawn (including the registration number(s) and principal amount of such
old bonds or, in the case of old bonds transferred by book-entry transfer, the
name and number of the account at the Depository to be credited), (iii) be
signed by the Holder in the same manner as the original signature on this Letter
of Transmittal (including any required Medallion Guarantees) or be accompanied
by documents of transfer sufficient to have the Trustee with respect to the old
bonds register the transfer of such old bonds into the name of the person
withdrawing the tender and (iv) specify the name in which any such old bonds are
to be registered, if different from that of the Depositor. All questions as to
the validity, form and eligibility (including time of receipt) of such notices
will be determined by the Company, whose determination shall be final and
binding on all parties. Any old bonds so withdrawn will be deemed not to have
been validly tendered for purposes of the Exchange Offer and no new bonds will
be issued with respect thereto unless the old bonds so withdrawn are validly
retendered. Any old bonds which have been tendered but which are not accepted
for exchange, will be returned to the Holder thereof without cost to such
Holder, or will be credited to an account maintained with the Depository, as
soon as practicable after withdrawal, rejection of tender or termination of
Exchange Offer.

      4. Signature on this Letter of Transmittal; Written Instruments and
Endorsements; Medallion Guarantee. If this Letter of Transmittal is signed by
the registered Holder(s) of the old bonds tendered hereby, the signature must
correspond with the name(s) as written on the face of the certificates without
alteration or enlargement or any change whatsoever. If this Letter of
Transmittal is signed by a participant in the Depository, the signature must
correspond with the name as it appears on the security position listing as the
owner of the old bonds.

      If any of the old bonds tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.

      If a number of old bonds registered in different names is tendered, it
will be necessary to complete, sign and submit as many separate copies of this
Letter of Transmittal as there are different registrations of old bonds.

      Signatures on this Letter of Transmittal or on a notice of withdrawal, as
the case may be, must be Medallion Guaranteed by an Eligible Institution unless
the old bonds tendered hereby are tendered (i) by a registered Holder who has
not completed the box entitled "Special Registration Instructions" or "Special
Delivery Instructions" on the Letter of Transmittal or (ii) for the account of
an Eligible Institution.

      If this Letter of Transmittal is signed by the registered Holder or
Holders of old bonds (which term, for the purposes described herein, shall
include a participant in the Depository whose name appears on a security listing
as the owner of the old bonds) listed and tendered hereby, no endorsements of
the tendered old bonds or separate written instruments of transfer or exchange
are required. In any other case, the registered Holder (or acting Holder) must
either properly endorse the old bonds or transmit properly completed bond powers
with this Letter of Transmittal (in either case, executed exactly as the name(s)
of the registered Holder(s) appear(s) on the old bonds, and, with respect to a
participant in the Depository whose name appears on a security position listing
as the owner of old bonds, exactly as the name of the participant appears on
such security position listing), with the signature on the old bonds or bond
power guaranteed by an Eligible Institution (except where the old bonds are
tendered for the account of an Eligible Institution).

                                       9
<PAGE>

      If this Letter of Transmittal, any certificates or separate written
instruments of transfer or exchange are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such persons should so
indicate when signing, and, unless waived by the Company, proper evidence
satisfactory to the Company of their authority to so act must be submitted.

      5. Special Registration and Delivery Instructions. Tendering Holders
should indicate, in the applicable box, the name and address (or account at the
Depository) in which the new bonds or substitute old bonds for principal amounts
not tendered or not accepted for exchange are to be issued (or deposited), if
different from the names and addresses or accounts of the person signing this
Letter of Transmittal. In the case of issuance in a different name, the employer
identification number or social security number of the person named must also be
indicated and the tendering Holder should complete the applicable box.

      If no instructions are given, the new bonds (and any old bonds not
tendered or not accepted) will be issued in the name of and sent to the acting
Holder of the old bonds or deposited at such Holder's account at the Depository.

      6. Transfer Taxes. The Company shall pay all transfer taxes, if any,
applicable to the transfer and exchange of old bonds to it or its order pursuant
to the Exchange Offer. If a transfer tax is imposed for any other reason other
than the transfer and exchange of old bonds to the Company or its order pursuant
to the Exchange Offer, the amount of any such transfer taxes (whether imposed on
the registered Holder or any other person) will be payable by the tendering
Holder. If satisfactory evidence of payment of such taxes or exception therefrom
is not submitted herewith, the amount of such transfer taxes will be collected
from the tendering Holder by the Exchange Agent.

      Except as provided in this Instruction 6, it will not be necessary for
transfer stamps to be affixed to the old bonds listed in this Letter of
Transmittal.

      7. Waiver of Conditions. The Company reserves the right, in its reasonable
judgment, to waive, in whole or in part, any of the conditions to the Exchange
Offer set forth in the Prospectus.

      8. Mutilated, Lost, Stolen or Destroyed Old Bonds. Any Holder whose old
bonds have been mutilated, lost, stolen or destroyed should contact the Exchange
Agent at the address indicated above for further instructions.

      9. Requests for Assistance or Additional Copies. Questions relating to the
procedure for tendering as well as requests for additional copies of the
Prospectus and this Letter of Transmittal, may be directed to the Exchange Agent
at the address and telephone number set forth above. In addition, all questions
relating to the Exchange Offer, as well as requests for assistance or additional
copies of the Prospectus and this Letter of Transmittal, may be directed to
Consumers Energy Company, One Energy Plaza, Jackson, Michigan 49201-2276,
Attention: Chief Financial Officer, telephone (517) 788-0550.

      10. Validity and Form. All questions as to the validity, form, eligibility
(including time of receipt), acceptance of tendered old bonds and withdrawal of
tendered old bonds will be determined by the Company in its sole discretion,
which determination will be final and binding. The Company reserves the absolute
right to reject any and all old bonds not properly tendered or any old bonds the
Company's acceptance of which would, in the opinion of counsel for the Company,
be unlawful. The Company also reserves the right, in its reasonable judgment, to
waive any defects, irregularities or conditions of tender as to particular old
bonds. The Company's interpretation of the terms and conditions of the Exchange
Offer (including the instructions in this Letter of Transmittal) will be final
and binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of old bonds must be cured within such time as the
Company shall determine. Although the Company intends to notify Holders of
defects or irregularities with respect to tenders of old bonds, neither the
Company, the Exchange Agent nor any other person shall incur any liability for
failure to give such notification. Tenders of old bonds will not be deemed to
have been made until such defects or irregularities have been cured or waived.
Any old bonds received by the Exchange Agent that are not properly tendered and
as to which the defects or irregularities have not been cured or waived will be
returned by the Exchange Agent to the tendering Holder as soon as practicable
following the Expiration Date.

                                       10
<PAGE>

                            IMPORTANT TAX INFORMATION

      Under federal income tax law, a Holder tendering old bonds is required to
provide the Exchange Agent with such Holder's correct TIN on the Substitute Form
W-9 above. If such Holder is an individual, the TIN is the Holder's social
security number. The Certificate of Awaiting Taxpayer Identification Number
should be completed if the tendering Holder has not been issued a TIN and has
applied for a number or intends to apply for a number in the near future. If the
Exchange Agent is not provided with the correct TIN, the Holder may be subject
to a $50 penalty imposed by the Internal Revenue Service. In addition, payments
that are made to such Holder with respect to tendered old bonds may be subject
to backup withholding of 28%.

      Certain Holders (including, among others, all domestic corporations) are
not subject to these backup withholding and reporting requirements. See the
enclosed Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 for additional instructions.

      If backup withholding applies, the Exchange Agent is required to withhold
28% of any amounts otherwise payable to the Holder. Backup withholding is not an
additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.

      PURPOSE OF SUBSTITUTE FORM W-9

      To prevent backup withholding on payments that are made to a Holder with
respect to old bonds tendered for exchange, the Holder is required to notify the
Exchange Agent of his or her correct TIN by completing the form herein
certifying that the TIN provided on Substitute Form W-9 is correct (or that such
Holder is awaiting a TIN) and that the Holder is not subject to backup
withholding because either (i) each Holder is exempt from backup withholding,
(ii) such Holder has not been notified by the Internal Revenue Service that he
or she is subject to backup withholding as a result of failure to report all
interest or dividends or (iii) the Internal Revenue Service has notified such
Holder that he or she is no longer subject to backup withholding and that the
Holder is a U.S. person.

      WHAT NUMBER TO GIVE THE EXCHANGE AGENT

      Each Holder is required to give the Exchange Agent the social security
number or employer identification number of the record Holder(s) of the old
bonds. If old bonds are in more than one name or are not in the name of the
actual Holder, consult the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional guidance on which
number to report. If the tendering Holder has not been issued a TIN and has
applied for a number or intends to apply for a number in the near future, the
Holder should write "Applied For" in the space provided for the TIN in Part I,
and sign and date the Substitute Form W-9. If "Applied For" is written in Part I
and the Depositary is not provided with a TIN within 60 days, the Depositary
will withhold 28% of all payments of the purchase price to such stockholder
until a TIN is provided to the Depositary.

      IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE THEREOF (TOGETHER
WITH OLD BONDS OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED
DOCUMENTS) OR A NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE EXCHANGE
AGENT ON OR PRIOR TO THE EXPIRATION DATE.

                                       11

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(B)
<SEQUENCE>11
<FILENAME>k91595exv99wxby.txt
<DESCRIPTION>CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER
<TEXT>
<PAGE>

                                                                   Exhibit 99(b)

             GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
                          NUMBER ON SUBSTITUTE FORM W-9

GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER.
- -- Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.

<TABLE>
<CAPTION>
                                                        GIVE THE
     FOR THIS TYPE OF ACCOUNT:                      SOCIAL SECURITY
                                                       NUMBER OF -
- ----------------------------------------------------------------------------------------
<S>  <C>                              <C>
1.    Individual                      The individual

2.    Two or more individuals         The actual owner of  the account or, if combined
        (joint account)               funds, the first individual on the account(1)

3.   Custodian account of a minor     The minor(2)
     (Uniform Gift to Minors Act)

4.   a. The usual revocable savings   The grantor-trustee (1)
        trust (grantor is also
        trustee)

     b. So-called trust account that  The actual owner(1)
        is not a legal or valid
        trust under State law

5.   Sole proprietorship or single-   The owner(3)
     owner LLC

6.   Sole proprietorship or single-   The owner(3)
     owner LLC
</TABLE>

<TABLE>
<CAPTION>
                                           GIVE THE EMPLOYER
      FOR THIS TYPE OF ACCOUNT:             IDENTIFICATION
                                             NUMBER OF --
- --------------------------------------------------------------
<S>  <C>                                 <C>
7.   A valid trust, estate, or pension   The legal entity(4)
     trust

8.   Corporate or LLC electing           The corporation
     corporate status on Form 8832

9.   Association, club, religious,       The organization
     charitable, educational, or other
     tax-exempt organization account

10.  Partnership or multi-member LLC     The partnership

11.  A broker or registered nominee      The broker or nominee

12.  Account with the Department of      The public entity
     Agriculture in the name of a
     public entity (such as a State or
     local government, school district,
     or prison) that receives
     agricultural program payments
</TABLE>

- -----------------
(1)   List first and circle the name of the person whose number you furnish. If
      only one person on a joint account has a social security number, that
      person's number must be furnished.

(2)   Circle the minor's name and furnish the minor's social security number.

(3)   You must show your individual name, but you may also enter your business
      or "doing business as" name. You may use either your social security
      number or your employer identification number (if you have one).

(4)   List first and circle the name of the legal trust, estate or pension
      trust. (Do not furnish the taxpayer identification number of the personal
      representative or trustee unless the legal entity itself is not designated
      in the account title.)

NOTE: If no name is circled when there is more than one name, the number will be
      considered to be that of the first name listed.

<PAGE>

             GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
                          NUMBER OF SUBSTITUTE FORM W-9
                                     PAGE 2

PURPOSE OF FORM

Use Substitute Form W-9 only if you are a U.S. person (including a resident
alien). If you are a foreign person, use the appropriate Form W-8.

OBTAINING A NUMBER

If you don't have a taxpayer identification number apply for one immediately.
Obtain Form SS-5. Application for a Social Security Number Card, or Form SS-4,
Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.

PAYEES EXEMPT FROM BACKUP WITHHOLDING

Payees specifically exempted from backup withholding include the following:

   -  A U.S. corporation.

   -  A financial institution.

   -  An organization exempt from tax under section 501(a), an individual
      retirement account or a custodial account under section 403(b)(7) if the
      account satisfies the requirements of section 401(f)(2).

   -  The United States or any agency or instrumentality thereof.

   -  A State, the District of Columbia, a possession of the United States, or
      any political subdivision or instrumentality thereof.

   -  A foreign government or any political subdivision, agency or
      instrumentality thereof.

   -  An international organization or any agency or instrumentality thereof.

   -  A dealer in securities or commodities registered in the U.S. or a
      possession of the U.S.

   -  A real estate investment trust.

   -  A common trust fund operated by a bank under section 584(a).

   -  An entity registered at all times during the tax year under the Investment
      Company Act of 1940.

   -  A foreign central bank of issue.

   Exempt payees described above should file Form W-9 to avoid possible
erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR
TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" IN PART II OF THE FORM, AND
RETURN IT TO THE PAYER. ALSO SIGN AND DATE THE FORM.

   Certain payments other than interest, dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.

   Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:

   -  Payments to nonresident aliens subject to withholding under section 1441.

   -  Payments to partnerships not engaged in a trade or business in the U.S.
      and which have at least one non-resident alien partner.

   -  Payments of patronage dividends where the amount received is not paid in
      money.

   -  Payments made by certain foreign organizations.

   -  Section 404(k) payments made by an ESOP.

   Payments of interest not generally subject to backup withholding include the
following:

   -  Payments of interest on obligations issued by individuals. Note: You may
      be subject to backup withholding if this interest is $600 or more and is
      paid in the course of the payer's trade or business and you have not
      provided your correct taxpayer identification number to the payer.

   -  Payments of tax-exempt interest (including exempt-interest dividends under
      section 852).

   -  Payments described in section 6049(b)(5) to non-resident aliens.

   -  Payments on tax-free covenant bonds under section 1451.

   -  Payments made by certain foreign organizations.

   -  Mortgage interest paid to you.

PRIVACY ACT NOTICE. -- Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes and to help verify the accuracy of your tax return and may also provide
this information to other governments and agencies, when allowed by law. Payers
must be given the number whether or not recipients are required to file tax
returns. Payers must generally withhold 28% of taxable interest, dividend, and
certain other payments to a payee who does not furnish a taxpayer identification
number to a payer. Certain penalties may also apply.

PENALTIES

(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. -- If you
fail to furnish your taxpayer identification number to a payer, you are subject
to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.

(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS. -- If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 5% on any portion of an
underpayment attributable to that failure unless there is a clear and convincing
evidence to the contrary.

(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.

(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.

                  FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
                   CONSULTANT OR THE INTERNAL REVENUE SERVICE

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(C)
<SEQUENCE>12
<FILENAME>k91595exv99wxcy.txt
<DESCRIPTION>FORM OF NOTICE OF GUARANTEED DELIVERY
<TEXT>
<PAGE>

                                                                   Exhibit 99(c)

                          NOTICE OF GUARANTEED DELIVERY
                                  FOR TENDER OF

                 4.40% FIRST MORTGAGE BONDS DUE 2009, SERIES K
                 5.00% FIRST MORTGAGE BONDS DUE 2012, SERIES L
                 5.50% FIRST MORTGAGE BONDS DUE 2016, SERIES M
                      (INCLUDING THOSE IN BOOK-ENTRY FORM)

                                       OF

                            CONSUMERS ENERGY COMPANY

      This form or one substantially equivalent hereto must be used to accept
the Exchange Offer of Consumers Energy Company (the "Company") made pursuant to
the Prospectus, dated      , 2005 (the "Prospectus"), if certificates for the
outstanding 4.40% First Mortgage Bonds due 2009, Series K; 5.00% First Mortgage
Bonds due 2012, Series L; and 5.50% First Mortgage Bonds due 2016, Series M
issued by the Company (the "old bonds") are not immediately available or if the
procedure for book-entry transfer cannot be completed on a timely basis or time
will not permit all required documents to reach the Exchange Agent prior to 5:00
p.m., New York time, on the Expiration Date of the Exchange Offer. Such form may
be delivered or transmitted by telegram, telex, facsimile transmission, mail or
hand delivery to JPMorgan Chase Bank, N.A. (the "Exchange Agent") as set forth
below. In addition, in order to utilize the guaranteed delivery procedure to
tender old bonds pursuant to the Exchange Offer, a completed, signed and dated
Letter of Transmittal (or facsimile thereof) as well as all tendered old bonds
in proper form for transfer (or a confirmation of book-entry transfer of such
old bonds into the Exchange Agent's account at the Depository Trust Company) and
all other documents required by the Letter of Transmittal must also be received
by the Exchange Agent within three New York Stock Exchange trading days after
the Expiration Date. Capitalized terms not defined herein are defined in the
Prospectus.

                   JPMorgan Chase Bank, N.A., Exchange Agent

   By Certified or Registered Mail:             By Overnight Courier or Hand:
       JPMorgan Chase Bank, N.A.                  JPMorgan Chase Bank, N.A.
     Institutional Trust Services               Institutional Trust Services
             P.O. Box 2320                      2001 Bryan Street, 9th Floor
       Dallas, Texas 75221-2320                      Dallas, Texas 75201
        Attention: Beth Mullin                       Attention: Beth Mullin

                         Fac simile Transmission Number:
                                 (214) 468-6494
                          (Eligible Institutions Only)

                              Confirm By Telephone:
                                 (214) 468-6464

           DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET
           FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE
                       OTHER THAN AS SET FORTH ABOVE, WILL
                        NOT CONSTITUTE A VALID DELIVERY.

<PAGE>

Ladies and Gentlemen:

      Upon the terms and conditions set forth in the Prospectus and the
accompanying Letter of Transmittal, the undersigned hereby tenders to the
Company the principal amount of old bonds set forth below, pursuant to the
guaranteed delivery procedure described in "The Exchange Offer --Guaranteed
Delivery Procedures" section of the Prospectus.

Principal Amount of old bonds Tendered: (1)

      $________________________________________________

(1) Must be in denominations of principal amount of $1,000 and any integral
multiple thereof

Certificate Nos. (if available):

      __________________________________________________

Total Principal Amount Represented by Certificate(s):

      $________________________________________________

      All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned.

                                PLEASE SIGN HERE

X __________________________________________________  __________________________

X __________________________________________________  __________________________
  SIGNATURE(s) OF OWNER(s) OR AUTHORIZED SIGNATORY              DATE

Area Code and Telephone Number:_______________________________

                                        2
<PAGE>

      Must be signed by the holder(s) of old bonds as their name(s) appear(s) on
certificates for old bonds or on a security position listing, or by person(s)
authorized to become registered holder(s) by endorsement and documents
transmitted with this Notice of Guaranteed Delivery. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer or other
person acting in a fiduciary or representative capacity, such person must set
forth his or her full title below. If old bonds will be delivered by book-entry
transfer to The Depository Trust Company, provide account number.

                      Please print name(s) and address(es)

Name(s)          _______________________________________________________________

                 _______________________________________________________________

                 _______________________________________________________________

                 _______________________________________________________________

Capacity:        _______________________________________________________________

                 _______________________________________________________________

Address(es):     _______________________________________________________________

                 _______________________________________________________________

                 _______________________________________________________________

Account Number:  _______________________________________________________________

                                    GUARANTEE
                    (NOT TO BE USED FOR SIGNATURE GUARANTEE)

The undersigned, a financial institution (including most banks, savings and loan
associations and brokerage houses) that is a participant in the Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Program or the Stock Exchanges Medallion Program, hereby guarantees
that the undersigned will deliver to the Exchange Agent the certificates
representing the old bonds being tendered hereby or confirmation of book-entry
transfer of such old bonds into the Exchange Agent's account at The Depository
Trust Company, in proper form for transfer, together with any other documents
required by the Letter of Transmittal within three New York Stock Exchange
trading days after the Expiration Date.

Name of Firm__________________________   Authorized Signature___________________

Address_______________________________   Name___________________________________
                                                  (PLEASE TYPE OR PRINT)

                                         Title__________________________________

Area Code &                              Date___________________________________
Telephone No.__________________________

NOTE: DO NOT SEND CERTIFICATES OF OLD BONDS WITH THIS FORM. CERTIFICATES OF OLD
      BONDS SHOULD BE SENT ONLY WITH A COPY OF THE PREVIOUSLY EXECUTED LETTER OF
      TRANSMITTAL.

                                        3

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
