exv99w1

Exhibit 99.1

GLOSSARY

Certain terms used in the text and financial statements are defined below


ABO		Accumulated Benefit Obligation. The liabilities of a pension plan based on service and pay to date. This differs from the Projected Benefit Obligation that is typically disclosed in that it does not reflect expected future salary increases.
AFUDC		Allowance for Funds Used During Construction
ALJ		Administrative Law Judge
AMT		Alternative minimum tax
AOCI		Accumulated Other Comprehensive Income
AOCL		Accumulated Other Comprehensive Loss
APB		Accounting Principles Board
APB Opinion No. 18		APB Opinion No. 18, “The Equity Method of Accounting for Investments in Common Stock”
ARO		Asset retirement obligation
Attorney General		Michigan Attorney General

Bay Harbor		a residential/commercial real estate area located near Petoskey, Michigan. In 2002, CMS Energy sold its interest in Bay Harbor.
bcf		One billion cubic feet of gas
Big Rock		Big Rock Point nuclear power plant, owned by Consumers
Bluewater Pipeline		Bluewater Pipeline, a 24.9-mile pipeline that extends from Marysville, Michigan to Armada, Michigan
Board of Directors		Board of Directors of CMS Energy

CEO		Chief Executive Officer
CFO		Chief Financial Officer
CFTC		Commodity Futures Trading Commission
CKD		Cement Kiln Dust
Clean Air Act		Federal Clean Air Act, as amended
CMS Energy		CMS Energy Corporation, the parent of Consumers and Enterprises

CMS Energy Common Stock or common stock		Common stock of CMS Energy, par value $.01 per share
CMS Electric and Gas		CMS Electric and Gas Company, a subsidiary of Enterprises
CMS ERM		CMS Energy Resource Management Company, formerly CMS MST, a subsidiary of Enterprises
CMS Field Services		CMS Field Services, Inc., formerly a wholly owned subsidiary of CMS Gas Transmission. The sale of this subsidiary closed in July 2003.
CMS Gas Transmission		CMS Gas Transmission Company, a wholly owned subsidiary of Enterprises
CMS Generation		CMS Generation Co., a wholly owned subsidiary of Enterprises
CMS International Ventures		CMS International Ventures LLC, a subsidiary of Enterprises


CMS Midland		Midland Cogeneration Venture Group II, LLC, successor to CMS Midland Inc., formerly a subsidiary of Consumers that had a 49 percent ownership interest in the MCV Partnership
CMS Midland Holdings Company		CMS Midland Holdings Company, a subsidiary of Consumers that has a 46 percent ownership interest in First Midland Limited Partnership and a 35 percent lessor interest in the MCV Facility
CMS MST		CMS Marketing, Services and Trading Company, a wholly owned subsidiary of Enterprises, whose name was changed to CMS ERM effective January 2004
CMS Oil and Gas		CMS Oil and Gas Company, formerly a subsidiary of Enterprises
Consumers		Consumers Energy Company, a subsidiary of CMS Energy
Court of Appeals		Michigan Court of Appeals
CPEE		Companhia Paulista de Energia Eletrica, in which CMS International Ventures owns a 94 percent interest
Customer Choice Act		Customer Choice and Electricity Reliability Act, a Michigan statute enacted in June 2000

DCCP		Defined Company Contribution Plan
DIG		Dearborn Industrial Generation, LLC, an indirect wholly owned subsidiary of CMS Energy
DOE		U.S. Department of Energy
DOJ		U.S. Department of Justice
Dow		The Dow Chemical Company, a non-affiliated company
DTE Energy		DTE Energy Company, a non-affiliated company

EISP		Executive Incentive Separation Plan
EITF		Emerging Issues Task Force
EITF Issue No. 02-03		Issues Involved in Accounting for Derivative Contracts Held for Trading Purposes and Contracts Involved in Energy Trading and Risk Management Activities
Ensenada		The 128 MW natural gas-fired power plant located in Argentina, in which CMS International Ventures owns 100 percent interest
Entergy		Entergy Corporation, a non-affiliated company
Enterprises		CMS Enterprises Company, a subsidiary of CMS Energy
EPA		U. S. Environmental Protection Agency
EPS		Earnings per share
Exchange Act		Securities Exchange Act of 1934, as amended

FASB		Financial Accounting Standards Board
FASB Interpretation No. 46(R)		Revised FASB Interpretation No. 46, Consolidation of Variable Interest Entities
FERC		Federal Energy Regulatory Commission
FIN 48		FASB Interpretation No. 48, Uncertainty in Income Taxes
FMB		First Mortgage Bonds
FMLP		First Midland Limited Partnership, a partnership that holds a lessor interest in the MCV Facility and an indirect subsidiary of Consumers


FSP		FASB Staff Position
FTR		Financial transmission right

GAAP		Generally Accepted Accounting Principles
GasAtacama		GasAtacama Holding Limited, a limited liability partnership that manages GasAtacama S.A., which includes an integrated natural gas pipeline and electric generating plant located in Argentina and Chile and Atacama Finance Company, in which CMS International Ventures owns a 50 percent interest
GCR		Gas cost recovery
Goldfields		A pipeline business located in Australia, in which CMS Energy formerly held a 39.7 percent ownership interest
GVK		GVK Facility, a 250 MW gas fired power plant located in South Central India, in which CMS Generation formerly held a 33 percent interest

IPP		Independent Power Producer
IRS		Internal Revenue Service
ISFSI		Independent Spent Fuel Storage Installation
ITC		Income tax credit

Jorf Lasfar		The 1,356 MW coal-fueled power plant in Morocco, jointly owned by CMS Generation and ABB Energy Ventures, Inc., in which CMS Generation owns a 50 percent interest
Jubail		A 240 MW natural gas cogeneration power plant located in Saudi Arabia, in which CMS Generation owns a 25 percent interest

kWh		Kilowatt-hour (a unit of energy equal to one thousand watt hours)

Loy Yang		The 2,000 MW brown coal fueled Loy Yang A power plant and an associated coal mine in Victoria, Australia, in which CMS Generation formerly held a 50 percent ownership interest
Lucid Energy		Lucid Energy LLC, a non-affiliated company
Ludington		Ludington pumped storage plant, jointly owned by Consumers and Detroit Edison
Marysville		CMS Marysville Gas Liquids Company, a Michigan
		corporation and a former subsidiary of CMS Gas Transmission that held a 100 percent interest in Marysville Fractionation Partnership and a 51 percent interest in St. Clair Underground Storage Partnership
mcf		One thousand cubic feet of gas
MCV Facility		A natural gas-fueled, combined-cycle cogeneration facility operated by the MCV Partnership
MCV GP II		Midland Cogeneration Venture Group II, LLC which is the successor of CMS Midland, Inc.


MCV Partnership		Midland Cogeneration Venture Limited Partnership in which Consumers has a 49 percent interest through CMS Midland, Inc.
MCV PPA		The Power Purchase Agreement between Consumers and the MCV Partnership with a 35-year term commencing in March 1990, as amended, and as interpreted by the Settlement Agreement dated as of January 1, 1999 between the MCV Partnership and Consumers.
MD&A		Management’s Discussion and Analysis
MDEQ		Michigan Department of Environmental Quality
METC		Michigan Electric Transmission Company, LLC which is owned by ITC Holding Corporation, a company that operates electric transmission facilities through a wholly owned subsidiary, including the transmission system within Detroit Edison’s territory
Midwest Energy Market		An energy market developed by the MISO to provide day-ahead and real-time market information and centralized dispatch for market participants
MISO		Midwest Independent Transmission System Operator, Inc.
Moody’s		Moody’s Investors Service, Inc.
MPSC		Michigan Public Service Commission
MRV		Market-Related Value of Plan assets
MSBT		Michigan Single Business Tax
MW		Megawatt (a unit of power equal to one million watts)
MWh		Megawatt-hour (a unit of energy equal to one million watt hours)

NEIL		Nuclear Electric Insurance Limited, an industry mutual insurance company owned by member utility companies
Neyveli		CMS Generation Neyveli Ltd, a 250 MW lignite-fired power station located in Neyveli, Tamil Nadu, India, in which CMS International Ventures holds a 50 percent interest
NMC		Nuclear Management Company LLC, formed in 1999 by Northern States Power Company (now Xcel Energy Inc.), Alliant Energy, Wisconsin Electric Power Company, and Wisconsin Public Service Company to operate and manage nuclear generating facilities owned by the four utilities
NRC		Nuclear Regulatory Commission
NYMEX		New York Mercantile Exchange

OCI		Other Comprehensive Income
OPEB		Postretirement benefit plans other than pensions for retired employees

Palisades		Palisades nuclear power plant, which is owned by Consumers


Panhandle		Panhandle Eastern Pipe Line Company, including its subsidiaries Trunkline, Pan Gas Storage, Panhandle Storage, and Panhandle Holdings. Panhandle was a wholly owned subsidiary of CMS Gas Transmission. The sale of this subsidiary closed in June 2003.
Parmelia		A business located in Australia comprised of a pipeline, processing facilities, and a gas storage facility, a former subsidiary of CMS Gas Transmission
PCB		Polychlorinated biphenyl
Peabody Energy		Peabody Energy Corporation, a non-affiliated company
Pension Plan		The trusteed, non-contributory, defined benefit pension plan of Panhandle, Consumers and CMS Energy
Price Anderson Act		Price Anderson Act, enacted in 1957 as an amendment to the Atomic Energy Act of 1954, as revised and extended over the years. This act stipulates between nuclear licensees and the U.S. government the insurance, financial responsibility, and legal liability for nuclear accidents.
PSCR		Power supply cost recovery
PURPA		Public Utility Regulatory Policies Act of 1978

RCP		Resource Conservation Plan
ROA		Retail Open Access

SAB No. 107		Staff Accounting Bulletin No. 107, Share-Based Payment
SEC		U.S. Securities and Exchange Commission
Section 10d(4) Regulatory Asset		Regulatory asset as described in Section 10d(4) of the Customer Choice Act, as amended
Securitization		A financing method authorized by statute and approved by the MPSC which allows a utility to sell its right to receive a portion of the rate payments received from its customers for the repayment of Securitization bonds issued by a special purpose entity affiliated with such utility
SENECA		Sistema Electrico del Estado Nueva Esparta C.A., a subsidiary of Enterprises
SERP		Supplemental Executive Retirement Plan
SFAS		Statement of Financial Accounting Standards
SFAS No. 5		SFAS No. 5, “Accounting for Contingencies”
SFAS No. 13		SFAS No. 13, “Accounting for Leases”
SFAS No. 71		SFAS No. 71, “Accounting for the Effects of Certain Types of Regulation”
SFAS No. 87		SFAS No. 87, “Employers’ Accounting for Pensions”
SFAS No. 98		SFAS No. 98, “Accounting for Leases”
SFAS No. 106		SFAS No. 106, “Employers’ Accounting for Postretirement Benefits Other Than Pensions”
SFAS No. 109		SFAS No. 109, “Accounting for Income Taxes”
SFAS No. 123(R)		SFAS No. 123 (revised 2004), “Share-Based Payment”
SFAS No. 132(R)		SFAS No. 132 (revised 2003), “Employers’ Disclosures about Pensions and Other Postretirement Benefits”
SFAS No. 133		SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities, as amended and interpreted”


SFAS No. 143		SFAS No. 143, “Accounting for Asset Retirement Obligations”
SFAS No. 144		SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”
SFAS No. 157		SFAS No. 157, “Fair Value Measurement”
SFAS No. 158		SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans – an amendment of FASB Statements No. 87, 88, 106, and 132(R)”
Shuweihat		A power and desalination plant of Shuweihat CMS International Power Company, in which CMS Generation holds a 20 percent interest
SLAP		Scudder Latin American Power Fund
SRLY		Separate Return Limitation Year
Stranded Costs		Costs incurred by utilities in order to serve their customers in a regulated monopoly environment, which may not be recoverable in a competitive environment because of customers leaving their systems and ceasing to pay for their costs. These costs could include owned and purchased generation and regulatory assets.
Superfund		Comprehensive Environmental Response, Compensation and Liability Act

Takoradi		A 200 MW open-cycle combustion turbine crude oil power plant located in Ghana, in which CMS Generation owns a 90 percent interest
TAQA		Abu Dhabi National Energy Company, a subsidiary of Abu Dhabi Water and Electricity Authority, CMS Generation’s partner in the Taweelah and Shuweihat projects
Taweelah		Al Taweelah A2, a power and desalination plant of Emirates CMS Power Company, in which CMS Generation holds a 40 percent interest
TGM		A natural gas transportation and pipeline business located in Argentina, in which CMS International Ventures owns a 20 percent interest
TGN		A natural gas transportation and pipeline business located in Argentina, in which CMS Gas Transmission owns a 23.54 percent interest
TRAC		Terminal Rental Adjustment Clause, a provision of a leasing agreement which permits or requires the rental price to be adjusted upward or downward by reference to the amount realized by the lessor under the agreement upon sale or other disposition of formerly leased property
Trust Preferred Securities		Securities representing an undivided beneficial interest in the assets of statutory business trusts, the interests of which have a preference with respect to certain trust distributions over the interests of either CMS Energy or Consumers, as applicable, as owner of the common beneficial interests of the trusts

Union		Utility Workers Union of America, AFL-CIO


VEBA Trusts		VEBA employees’ beneficiary association trusts accounts established to specifically set aside employer contributed assets to pay for future expenses of the OPEB plan

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INDEX TO FINANCIAL STATEMENTS


CMS Energy Corporation

Exhibit 99.1. Item 6. Selected Financial Information		CMS – 2
Exhibit 99.2 Item 7. Management’s Discussion and Analysis
Executive Overview		CMS – 3
Forward-Looking Statements and Information		CMS – 4
Results of Operations		CMS – 7
Critical Accounting Policies		CMS – 19
Capital Resources and Liquidity		CMS – 30
Outlook		CMS – 34
Implementation of New Accounting Standards		CMS – 44
New Accounting Standards Not Yet Effective		CMS – 44

Exhibit 99.3 Item 8. Financial Statements and Supplementary Data
Consolidated Financial Statements
Consolidated Statements of Income (Loss)		CMS – 46
Consolidated Statements of Cash Flows		CMS – 48
Consolidated Balance Sheets		CMS – 50
Consolidated Statements of Common Stockholders’ Equity		CMS – 52
Notes to Consolidated Financial Statements:
1. Corporate Structure and Accounting Policies		CMS – 53
2. Asset Sales, Impairment Charges and Discontinued Operations		CMS – 59
3. Contingencies		CMS – 65
4. Financings and Capitalization		CMS – 80
5. Earnings Per Share		CMS – 85
6. Financial and Derivative Instruments		CMS – 86
7. Retirement Benefits		CMS – 92
8. Asset Retirement Obligations		CMS – 101
9. Income Taxes		CMS – 103
10. Executive Incentive Compensation		CMS – 107
11. Leases		CMS – 108
12. Property, Plant, and Equipment		CMS – 111
13. Equity Method Investments		CMS – 112
14. Jointly Owned Regulated Utility Facilities		CMS – 115
15. Reportable Segments		CMS – 115
16. Consolidation of Variable Interest Entities		CMS – 117
17. Quarterly Financial and Common Stock Information (Unaudited)		CMS – 120
Reports of Independent Registered Public Accounting Firms		CMS – 123

2006 Consolidated Financial Statements

CMS-1