UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  SCHEDULE 14A

          Proxy Statement Pursuant to Section 14(a) of the Securities
                     Exchange Act of 1934 (Amendment No.  )

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                             CMS Energy Corporation
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SEC 1913 (02-02)




                               [CMS ENERGY LOGO]

                             CMS ENERGY CORPORATION
                    NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
                                  MAY 28, 2004

To Fellow Shareholders of CMS Energy Corporation:

Our annual meeting of shareholders of CMS Energy Corporation (the "Corporation")
will be held on Friday, the 28th day of May 2004, at 10:30 A.M., Eastern
Daylight Saving Time, at the Potter Center, 2111 Emmons Road, Jackson, Michigan
49201. The purposes of the meeting are to:

    (1) Elect eleven members to the Corporation's Board of Directors;


    (2) Consider a proposal to ratify the appointment of independent auditors to
        audit the Corporation's financial statements for the year ending
        December 31, 2004;


    (3) Consider a proposal to approve an amendment to the Corporation's
        Performance Incentive Stock Plan;

    (4) Consider a proposal to permit awards under the Corporation's incentive
        compensation plans and related contractual arrangements to be income tax
        deductible by the Corporation;

    (5) Consider a proposal to amend the Corporation's Restated Articles of
        Incorporation; and

    (6) Transact such other business as may properly come before the meeting.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1 THROUGH 5. The proxy
holders will use their discretion on other matters that may arise at the annual
meeting.

Our annual report to the shareholders for the year 2003, including the Form 10-K
with our financial statements, previously has been furnished to you.

All shareholders are invited to attend our annual meeting. If you were a
shareholder of record at the close of business on April 2, 2004, you are
entitled to vote. Every vote is important. Please vote using a touch-tone
telephone, the Internet, or by signing and returning the enclosed proxy card.
You can help minimize our costs by promptly voting via telephone or the
Internet.

                                         By Order of the Board of Directors

                                         Michael D. VanHemert
                                         Corporate Secretary

CMS Energy Corporation
One Energy Plaza
Jackson, Michigan 49201


April 23, 2004



                                PROXY STATEMENT

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

                               TABLE OF CONTENTS



                                                           
INTRODUCTION
  General...................................................    Page 1
  Proposals Subject To Shareholder Votes....................    Page 2
  Ways To Vote Your Proxy...................................    Page 2
CORPORATE GOVERNANCE
  Background................................................    Page 2
  Director Communication Process............................    Page 3
  Shareholder Recommendation Process........................    Page 3
  Director Independence.....................................    Page 4
  Code of Ethics............................................    Page 4
  Board and Committee Information...........................    Page 5
MANAGEMENT SECURITY OWNERSHIP...............................   Page 12
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.....   Page 13
BUSINESS RELATIONSHIPS......................................   Page 13
COMPENSATION OF DIRECTORS...................................   Page 14
ORGANIZATION AND COMPENSATION COMMITTEE REPORT..............   Page 15
EXECUTIVE COMPENSATION......................................   Page 18
AUDIT COMMITTEE REPORT......................................   Page 22
INDEPENDENT AUDITOR.........................................   Page 23
AUDITOR COMPENSATION........................................   Page 23
DESCRIPTION OF PROPOSALS SUBJECT TO SHAREHOLDER VOTE
  (1) Elect Eleven Members to the Board of Directors........   Page 25
  (2) Ratify the appointment of independent auditors........   Page 27
  (3) Consider approval of an amendment to the Performance
    Incentive Stock Plan....................................   Page 27
  (4) Consider approval of deductibility of incentive
    compensation awards.....................................   Page 30
  (5) Consider adoption of an amendment to the Restated
    Articles of Incorporation...............................   Page 31
FIVE-YEAR CUMULATIVE TOTAL RETURN...........................   Page 33
2005 PROXY STATEMENT INFORMATION............................   Page 33
OTHER MATTERS...............................................   Page 34
Appendix A: Performance Incentive Stock Plan, as amended....  Page A-1




                                PROXY STATEMENT

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

                                  INTRODUCTION

GENERAL

The Board of Directors of CMS Energy Corporation ("CMS" or the "Corporation")
solicits your proxy for our annual meeting of shareholders. Your shares will be
voted as you request if your proxy voting instructions are received prior to the
annual meeting. You may revoke your proxy at any time before it is voted at the
annual meeting.


As of December 31, 2003, the Corporation's only outstanding voting securities
consisted of a total of 161,130,163 shares of Common Stock ($.01 par value).
Each outstanding share is entitled to one vote on all matters that come before
the annual meeting. All shares represented by valid proxies will be voted at the
annual meeting.


We have received a copy of a Schedule 13G filed with the Securities and Exchange
Commission ("SEC") by Lord, Abbett & Co., 90 Hudson Street, Jersey City, New
Jersey 07302. This Schedule 13G indicates that holdings of 14,812,267 shares,
representing 9.2% of the outstanding shares of CMS Common Stock, were acquired
in a fiduciary capacity in the ordinary course of business for investment
purposes. To the knowledge of our management, no other person or entity
currently owns beneficially more than 5% of any class of our outstanding voting
securities.


The presence of the holders of a majority of the shares of CMS Common Stock in
person or by proxy at the annual meeting will constitute a quorum. The
determination of approval of corporate action by the shareholders is based on
votes "for" and "against". In general, abstentions and "broker non-votes" (as
described below) are not counted as "against" votes but are counted in the
determination of a quorum. However, under the rules of the New York Stock
Exchange, Inc. ("NYSE") with respect to Proposal 5 below, abstentions and broker
non-votes will have the same effect as negative votes (even though it may not
have been the intent of the person voting or giving the proxy to vote against
such proposal).



With respect to Proposal 1 below, the election of each director requires
approval from a plurality of the shares voted. On Proposals 2, 3 and 4,
approvals require votes "for" by a majority of the shares voted. Approval of
Proposal 5 requires votes "for" by a majority of issued and outstanding shares
of CMS Common Stock.


With respect to Proposal 3 below, if you hold shares in a brokerage or bank
account, your failure to give voting instructions to your broker or bank will
result in a so-called "broker non-vote" under the NYSE rules (since your broker
is not entitled to vote your shares on this particular proposal unless it
receives instructions from you). Broker non-votes and abstentions are not
considered votes cast and, therefore, will be counted neither "for" nor
"against" this proposal.


The terms "we" and "our" as used in this proxy statement generally refer to CMS
Energy Corporation and its collective affiliates, including its principal
subsidiary Consumers Energy Company ("Consumers" or the "Company"). While
established, operated and regulated as separate legal entities and publicly
traded companies, CMS and Consumers have historically had parallel Boards of
Directors, Committees of the Board, director and executive compensation
arrangements and plans, auditing relationships, as well as significant overlap
in executive management. Thus, in certain contexts in this proxy statement, the
terms "our" and "we" refer to each of CMS and


                                        1



Consumers and satisfy their respective disclosure obligations. In addition, the
disclosures frequently reference "Boards" and "Committees" and similar plural
presentations to reflect these parallel structures of CMS and Consumers.


PROPOSALS SUBJECT TO SHAREHOLDER VOTE

1) Elect eleven members to the Corporation's Board of Directors;

2) Ratify the appointment of independent auditors to audit the Corporation's
   financial statements for the year ending December 31, 2004;

3) Consider a proposal to approve an amendment to the Corporation's Performance
   Incentive Stock Plan;

4) Consider a proposal to permit awards under the Corporation's incentive
   compensation plans and related contractual arrangements to be income tax
   deductible by the Corporation;

5) Consider a proposal to amend the Corporation's Restated Articles of
  Incorporation.

Detailed descriptions of each of these proposals can be found later in this
proxy statement under the heading "DESCRIPTION OF PROPOSALS SUBJECT TO
SHAREHOLDER VOTE."

WAYS TO VOTE YOUR PROXY

PLEASE VOTE USING A TOUCH-TONE TELEPHONE, THE INTERNET, OR BY SIGNING AND
RETURNING THE ENCLOSED PROXY CARD. YOU CAN HELP MINIMIZE OUR COSTS BY PROMPTLY
VOTING VIA TELEPHONE OR THE INTERNET.

                              CORPORATE GOVERNANCE

BACKGROUND


In March of 2003, the CMS and Consumers Boards of Directors adopted Corporate
Governance Principles (the "Principles") that generally formalized long-standing
corporate and Board practices, although with various updated aspects reflecting
developing best practices and SEC and NYSE standards. The Principles detail the
role of the Boards, the selection and role of the Chief Executive Officer, the
composition and meeting procedures of the Boards and their Committees, as well
as Board and Committee compensation and self-evaluation guidelines. At the same
time, the Boards adopted, upon the recommendations of their Governance and
Nominating Committees as well as applicable other Committees, Charters for each
of their standing Committees that detailed their purposes and duties,
composition, meetings, performance evaluations, resources and authority as well
as other aspects of Committee activities. These Principles and the Charters have
been available through our website at www.cmsenergy.com.



In February of 2004, the Governance and Nominating Committees reported to the
Boards the results of the Boards' and all Committees' self-evaluations, as well
as their recommendations for possible responses to the self-evaluations and
informal discussions between individual Board members and the Committees' Chair.
In addition, the Boards and the Committees reviewed the various recent corporate
governance initiatives as well as the Corporation's evolving business model, and
their impact on the Principles, Charters and Boards' composition. As a result of
these reports, recommendations and reviews, the Boards and applicable Committees
refined the Principles and Audit Committee Charters, as well as the Director
Communication and Shareholder Recommendation Processes described below.


                                        2



Also in February of 2004, James J. Duderstadt, President Emeritus of the
University of Michigan, and Kathleen R. Flaherty, former President and Chief
Executive Officer of WinStar International, confirmed to the Governance and
Nominating Committees that they had decided not to seek re-election as
directors. The Boards and the management acknowledge CMS' and Consumers'
gratitude for Dr. Duderstadt's eleven years and Ms. Flaherty's nine years of
dedicated service on the Boards.



In March of 2004, the Governance and Nominating Committees recommended to the
Boards the nomination of Merribel S. Ayres to serve as a director of CMS and
Consumers, effective with her proposed election by shareholders at the May 28,
2004 annual meeting. Ms. Ayres candidacy to join the Boards was initially
recommended to the Committees by their prior Chair, a former non-employee
director. The Boards also approved an amendment and restatement of the
Principles pursuant to the Committees' recommendations.



The Boards and the Governance and Nominating Committees continue to evaluate and
consider various additional changes to the Principles and the Board and
Committee structure and Charters, and all such revisions will be reflected in
the versions of such documents available through our website.


DIRECTOR COMMUNICATION PROCESS


CMS and Consumers shareholders, employees or third parties can communicate on
any topic with the Boards of Directors, Committees of the Boards or an
individual director, including Earl D. Holton, our presiding director at
executive sessions of the Boards, by sending written communications c/o
Corporate Secretary, CMS Energy Corporation or Consumers Energy Company, One
Energy Plaza, Jackson, MI 49201. The Corporate Secretary will review and forward
such communications to the Boards or the appropriate Committees or director.
Further information regarding shareholder, employee or other third-party
communications with the Boards or their Committees or individual members can be
accessed at the Corporation's website.



Any shareholder, employee or third party who wishes to submit a compliance
concern to the Boards or applicable Committees, including complaints regarding
accounting, internal accounting controls or auditing matters to the Audit
Committees, may do so by any of the following means:



- send correspondence or materials addressed to the appropriate party c/o the
  Chief Compliance Officer, CMS Energy Corporation or Consumers Energy Company,
  One Energy Plaza, Jackson, MI 49201;


- send an email or other electronic communication via our external Website
  www.ethicspoint.com, again addressed to the appropriate party; or


- call the CMS and Consumers Compliance Hotlines at either 1-800-CMS-5212 (an
  internally monitored line) or 1-866-ETHICSP (monitored by an external vendor).



All such communications initially will be reviewed by the Chief Compliance
Officer (who reports directly to the Boards) prior to being forwarded to the
Boards or applicable Committees or directors.


SHAREHOLDER RECOMMENDATION PROCESS


Shareholders can submit recommendations of nominees for election to the Boards
of Directors. Shareholders' recommendations will be provided to the Governance
and Nominating Committees for consideration. The recommendations should include
(a) the qualifications of the proposed nominee to serve on the Boards, (b) the
principal occupation and employment of the proposed nominee for the past five
years, (c) each directorship, trustee position or similar position currently
held by the proposed nominee, and (d) a statement from the proposed nominee that
he


                                        3



or she has consented to the submission of the recommendation. Shareholders
should send their written recommendations of nominees c/o the Corporate
Secretary, CMS Energy Corporation or Consumers Energy Company, One Energy Plaza,
Jackson, MI 49201.



Late in 2003, the Corporate Secretary received a self-nomination recommendation
from an individual shareholder. Although this self-nomination did not meet all
of the foregoing requirements, the Governance and Nominating Committees
considered his recommendation at each of their February and March meetings. The
Committees determined that this individual did not meet their criteria for
nominees as detailed later in this proxy statement, and have not nominated him.
This same individual has submitted shareholder proposals for inclusion in each
of the 2003 and this 2004 proxy statement, and in both instances the SEC staff
has concurred in the Corporation's position that these proposals were not
appropriate for inclusion in its proxy material.


DIRECTOR INDEPENDENCE


The Boards affirm the "independent" status of all of their non-employee
directors (in accordance with the listing standards of NYSE) based upon the
following:



- No non-employee director has a material relationship with CMS or Consumers
  (either directly or as a partner, shareholder or officer of an organization
  that has a relationship with CMS or Consumers)



- During the last three years, no non-employee director, or his or her family
  member:



  - received more than $100,000 in direct compensation from CMS or Consumers (in
    excess of payments for Board and Committee service);



  - was affiliated with or employed by the present or former auditors of CMS or
    Consumers;



  - was employed as an executive officer by another company that has an
    interlocking compensation committee with CMS or Consumers;



  - was an officer or employee of a company to which CMS or Consumers made or
    received payments of $1 million, or 2% of the other company's consolidated
    gross revenues; and



  - has been an employee of CMS or Consumers.



In addition to meeting the independent director standards of NYSE as detailed
above, each of Messrs. Monahan and Paquette has been designated by the Boards of
Directors as an "independent director" in accordance with the explicit
requirements of the Michigan Business Corporation Act. These statutory
requirements are even more stringent than the NYSE standards, and include the
limitation that such status is only available to directors who have served for
three or fewer years as such at the company. Independent directors under the
Michigan Act are presumed by law to have a disinterested status that allows the
full board of directors to rely upon their disinterested determinations.


CODE OF ETHICS


CMS has adopted a code of ethics that applies to its Chief Executive Officer,
Chief Financial Officer and Chief Accounting Officer, as well as all other
employees of the Corporation and its affiliates, including Consumers. The code
of ethics is included in our Code of Conduct and Statement of Ethics Handbook,
which can be found on our


                                        4



website at www.cmsenergy.com. Our Code of Conduct and Statement of Ethics,
including the code of ethics, is administered by the Chief Compliance Officer,
who reports directly to the Boards of Directors.


BOARD AND COMMITTEE INFORMATION


The CMS Board of Directors met 16 times and Consumers' Board of Directors met 12
times during 2003. All incumbent directors attended more than 75% of the Board
and assigned committee meetings during 2003. Our Principles state the Boards'
expectation that all Board members attend all scheduled Board and Committee
meetings, as well as the annual meeting of shareholders. All Board members
attended the 2003 annual meeting of shareholders.



The various standing committees of the Boards of Directors are listed below.
Each committee is composed entirely of "independent" directors, as that term is
defined by the NYSE listing standards described above, other than the Executive
Committees of which Kenneth Whipple serves as Chair. Employee directors served
on no other committees during 2003.



On a regularly scheduled basis, the independent directors meet with no employee
director present and may invite such members of management to attend as they
determine appropriate.


                                AUDIT COMMITTEES

Members: William U. Parfet (Chair), Michael T. Monahan, Joseph F. Paquette, Jr.,
         Kenneth L. Way, and John B. Yasinsky.

Meetings during 2003: CMS 16; Consumers 16


Each of the members of the Audit Committees is an independent director, and each
qualifies as an "audit committee financial expert" based upon the following
qualifications:


- Educational background;


- Prior service as chief financial officer and/or chief executive officer
  actively supervising accounting activities;


- Understanding of generally accepted accounting principles and financial
  statements; and

- Membership on various audit committees.


In addition to serving as the Chair of our Audit Committees, Mr. Parfet
presently serves on audit committees of three other public companies. Our Boards
have determined that such simultaneous service will not impair Mr. Parfet's
ability to effectively serve on our Audit Committees.



The primary functions of the Audit Committees are to:


- Assure the integrity of CMS' and Consumers' financial statements and financial
  information, the financial reporting process and the system of internal
  accounting and financial controls;

- Assure CMS' and Consumers' compliance with applicable legal requirements,
  regulatory requirements, and NYSE rules;

- Appoint, compensate and terminate CMS' and Consumers' independent auditors;

                                        5


- Pre-approve all audit and non-audit services provided by the independent
  auditors;

- Assure the independent auditors' qualifications and independence;

- Review the performance of the internal audit function and independent
  auditors;


- Perform their duties in a manner consistent with the Audit Committee Charter
  adopted by the Boards of Directors* and;


- Prepare the Audit Committee report for inclusion in the annual proxy
  statement.


* The Charter was amended and restated in April 2004. The amendment and
  restatement was responsive to the requirements of the Sarbanes-Oxley Act of
  2002, and the corresponding subsequently enacted rules and regulations of the
  SEC, as well as the 2003 revisions to the listing standards of the NYSE. The
  Audit Committee Charter, as so amended and restated, is available on our
  website.


             ENVIRONMENTAL AND CORPORATE RESPONSIBILITY COMMITTEES

Members: Percy A. Pierre (Chair), James J. Duderstadt, Kathleen R. Flaherty,
         Earl D. Holton, Michael T. Monahan, and John B. Yasinsky.

Meetings during 2003: CMS 2 -- Consumers 2

The primary functions of these committees are to:

- Assure compliance with the Corporation's Code of Conduct Handbook and
  Statement of Ethics including approval of any waiver of the provisions
  applicable to directors and executive officers and receipt of periodic reports
  from the Chief Compliance Officer concerning compliance activities relating to
  the Handbook and Statement;

- Make recommendations to the Boards of Directors regarding significant
  environmental matters affecting CMS' and Consumers' operations;

- Advise the Boards on the adoption and evaluation of policies designed to
  maintain CMS' and Consumers' position of corporate responsibility;

- Review and monitor CMS' and Consumers' policies and objectives related to
  equal employment opportunity;

- Review CMS' and Consumers' policies to comply with federal and state laws and
  regulations affecting personnel matters;

- Review CMS' and Consumers' policies related to contributions and support of
  charitable, educational and community organizations; and


- Report and make recommendations to the Boards of Directors related to the
  foregoing.


                      GOVERNANCE AND NOMINATING COMMITTEES

Members: Earl D. Holton (Chair), James J. Duderstadt, Kathleen R. Flaherty,
         Joseph F. Paquette, Jr., and Percy A. Pierre.

Meetings during 2003: CMS 4; Consumers 4

                                        6


The primary functions of these committees are to:


- Develop and recommend to the Boards of Directors such corporate and Board
  governance principles as may be deemed necessary by the Committees to ensure
  that the Corporation effectively protects and enhances shareholder value;


- Monitor the practices of the Boards of Directors to ensure compliance with the
  Corporation's corporate governance principles;

- Evaluate and review the performance of the Boards of Directors as a whole in
  order to increase the overall effectiveness of the Boards of Directors, and
  report the results of their evaluation to the Boards of Directors annually;
  and

- Recommend ways in which the Boards of Directors could improve their
  performance.


- Conduct continuing study of the size, structure, composition and compensation
  of the Boards and any committees thereof;


- Seek possible candidates to fill Board positions, and aid in attracting
  qualified candidates to the Boards;


- Assess, on a regular basis, the personal characteristics and business
  experience needed by the Boards in the context of the current composition of
  the Boards:



  Personal characteristics of candidates to be considered include:


  - Integrity;

  - Strategic -- visionary;

  - Global -- international experience;

  - Availability -- time (number of other boards served on);

  - Overall commitment (energy -- enthusiasm);

  - Independence (regulatory concept as well as independence of thought);

  - Informed judgment;

  - High performance standards;

  - Crisis response;

  - Length of available service;

  - Stock ownership (willing to align with shareholder interest); and

  - Diversity.

  Business experience of candidates to be considered includes:

  - Strong accounting background/knowledge;

  - Current CEO of public company;

                                        7


  - Former CEO of public company;

  - Current COO or CFO of public company;

  - Utility/energy/nuclear power experience;

  - Financial acumen and experience;

  - Unique skills not possessed by other board members;

  - Regulatory experience;

  - Legal experience; and

  - Investor/government relations experience.


- Recommend, prior to the solicitation of proxies, a slate of qualified
  candidates for election to the Boards at any meeting of shareholders at which
  directors are to be elected and, in case of a vacancy on a Board, a candidate
  to fill that vacancy. Such recommendations should consider the
  above-referenced characteristics and experience as well as:


  - The interplay of the candidate's experience with the experience of other
    Board members;


  - Attendance at meetings of directors;


  - A balanced range of business experiences; and

  - Other matters relevant to the appropriate representation of the interests of
    the shareholders in carrying out the Corporation's responsibilities to the
    public;


- Consider the nomination by any shareholder of a candidate for election as a
  director of the Corporation, provided that the shareholder has submitted a
  written request and related information to the Secretary of the Corporation at
  the required time prior to any meeting of shareholders at which directors are
  to be elected, together with the written consent of such person to serve as a
  director;


- Review periodically and recommend to the Board modifications, as appropriate,
  to the tenure policy; and

- Determine from time to time other criteria for selection and retention of
  Board members.

                    ORGANIZATION AND COMPENSATION COMMITTEES

Members: John B. Yasinsky (Chair), Earl D. Holton, Joseph F. Paquette, Jr.,
         William U. Parfet, and Kenneth L. Way.

Meetings during 2003: CMS 7; Consumers 7

The primary functions of these committees are to:

- Annually review the Corporation's executive compensation structure and
  policies, including the establishment and adjustment of executive officers'
  base salaries, annual and long-term incentive targets and incentive payments
  consistent with the achievement of such targets as well as produce an annual
  report on such compensation to shareholders in accordance with the rules and
  regulations of the SEC and other appropriate regulatory agencies;

                                        8


- Review and approve corporate goals and objectives relevant to the Chief
  Executive Officer's compensation, evaluate the Chief Executive Officer's
  performance in view of those goals and objectives, and set the Chief Executive
  Officer's compensation level based on this evaluation;

- Annually determine corporate financial and business goals and target awards
  pursuant to the Corporation's incentive plans, and approve the payment of cash
  performance bonuses to employees in the aggregate, consistent with achievement
  of such goals;

- Approve the grant of stock, stock options and other stock-based awards
  pursuant to the Corporation's incentive plans, and the terms thereof,
  including the vesting schedule, performance goals, exercisability and term, to
  the Corporation's employees, including officers;

- Review and recommend to the Board of Directors incentive compensation plans,
  equity-based plans, and tax qualified retirement and investment plans and
  amendments thereto, with the exception of certain amendments which are
  delegated to specified officers of the Corporation or administrators under the
  terms of the plans, including supplemental retirement plans, change-in-control
  severance agreements, deferred compensation programs, stock award programs,
  employment, separation and management agreements;

- Review and approve management proposals regarding other compensation and
  benefit programs, plans and guidelines;

- Annually review and advise the Board of Directors concerning the Corporation's
  management succession plan, including long-range plans for development and
  selection of key managers and plans for emergency succession in case of
  unexpected disability or departure of a senior executive officer;

- Review organizational and leadership development plans and programs, and
  programs designed to identify, attract and retain high potential employees;

- Perform such other functions as may be allocated to the Committee under the
  terms of the Corporation's employee benefit and executive compensation plans;
  and

- Carry out additional functions and adopt additional policies and procedures as
  may be appropriate in light of changing business, legislative, regulatory,
  legal or other conditions.

                         FINANCE AND PENSION COMMITTEES

Members: Kenneth L. Way (Chair), James J. Duderstadt, Kathleen R. Flaherty,
         Michael T. Monahan, William U. Parfet, and Percy A. Pierre.

Meetings during 2003: CMS 4; Consumers 4


The Finance Committees review and make recommendations to the Boards concerning
the financing and investment plans and policies of the Corporation.


                                        9



The Committees have the authority, acting for and on behalf of the Boards and
consistent with the protection of the interests of investors, to consider and
recommend to the Boards as appropriate:


- Financing plans formulated by management, including those in strategic and
  operating plans;

- Financing terms of acquisitions, divestitures, joint ventures, partnerships,
  or combinations of business interests;

- Short- and long-term financing plans, including the sales or repurchases of
  common and preferred equity and long-term debt;

- Financial policies including cash flow, capital structure, and dividend;

- Risk management policies including foreign exchange management, hedging, and
  insurance; and

- Investment performance, funding, and asset allocation policies for employee
  benefit plans and nuclear decommissioning trusts.

                              EXECUTIVE COMMITTEES

Members: Kenneth Whipple (Chair), Earl D. Holton, William U. Parfet, Percy A.
         Pierre, Kenneth L. Way, and John B. Yasinsky.

Meetings during 2003: CMS 2; Consumers 2

The primary function of these committees is to:


- Exercise the power and authority of the Boards of Directors as may be
  necessary during the intervals between meetings of the Boards, subject to such
  limitations as are provided by law or by resolution of the Boards.


                               SPECIAL COMMITTEES


The standing committees listed above have continuing duties. In addition, the
Boards of Directors have from time to time established special committees to
address specific major issues facing CMS and/or Consumers. Special committees do
not have continuing duties; they exist only until they complete their specified
duties. The most significant current special committee is the Boards' Special
Litigation Committee, as discussed below.


Special Litigation Committee


The CMS Board of Directors established this special committee in December 2002
and confirmed its duties in January 2003. The purpose of the Special Litigation
Committee is to investigate and evaluate the allegations and issues raised by a
shareholder, requesting that we institute a derivative proceeding against
certain of our directors and officers, and to prepare such reports and to take
such other actions in connection with its reasonable investigation as it shall
deem appropriate to make a good faith determination whether the maintenance of
the derivative proceedings is in our best interests, in accordance with Michigan
law.


The Special Litigation Committee was granted the full power and authority of the
Board of Directors with respect to investigating, evaluating and taking action
regarding the shareholder demand and the allegations and issues raised therein,
including without limitation the power and authority to assert claims and to
initiate and pursue litigation on

                                        10


our behalf relating to such matters, to settle or compromise any such claim or
lawsuit, and to seek dismissal of any related derivative proceeding pursuant to
Michigan law. The Special Litigation Committee may make such reports of its
determinations and actions to our Board of Directors or shareholders as it shall
deem appropriate from time to time, but making such reports to the Board shall
be at the option of the Special Litigation Committee, and all determinations
made by the Special Litigation Committee pursuant to its authority shall be
final, shall not be subject to review or approval by the Board of Directors and
shall in all respects be binding. The Board determined Michael T. Monahan and
Joseph F. Paquette, Jr. to be "disinterested directors" under Michigan law and
appointed Messrs. Monahan and Paquette to serve as members of the Special
Litigation Committee. The Board also designated Messrs. Monahan and Paquette as
"independent directors" in accordance with Michigan law. The Special Litigation
Committee was authorized to engage such experts and advisors, including its own
independent legal counsel, as it deemed necessary or desirable in order to
assist it in the discharge of its responsibilities. The Special Litigation
Committee selected the law firm of Jenner & Block to help with its investigation
and evaluation. The Special Litigation Committee has not completed its
investigation and evaluation as of the date of this proxy statement.

                                        11


                         MANAGEMENT SECURITY OWNERSHIP


The following chart shows the beneficial ownership of CMS Common Stock by the
directors and executive officers of both CMS and Consumers:




                                                 Shares
Name                                       Beneficially Owned*
----                                       -------------------
                                        
James J. Duderstadt......................           7,792
Kathleen R. Flaherty.....................           8,504
Earl D. Holton...........................          27,374
David W. Joos............................         294,592
Michael T. Monahan.......................           3,943
Joseph F. Paquette, Jr. .................          23,210
William U. Parfet........................          15,800
Percy A. Pierre..........................           8,215
S. Kinnie Smith, Jr. ....................         221,122
Kenneth L. Way...........................          59,613
Kenneth Whipple..........................         572,954
John B. Yasinsky.........................          16,485
Thomas J. Webb...........................         152,477
Thomas W. Elward.........................          74,932
David A. Mikelonis.......................          42,045
William J. Haener........................          47,307
All directors and executive officers**...       1,915,000



*    All shares shown above are as of March 24, 2004. In addition to the shares
     shown above, Messrs. Joos, Smith, Webb, Elward, Mikelonis, Haener and all
     other executive officers of CMS and Consumers own options to acquire
     473,000; 165,000; 150,000; 146,000; 137,000; 224,500; and 1,023,520 shares,
     respectively. Mr. Whipple has not been granted any options to acquire CMS
     Common Stock. All options identified in this footnote are as of March 24,
     2004.


**   All directors and executive officers includes executive officers of both
     CMS and Consumers; the directors of CMS and Consumers are the same
     individuals, as disclosed earlier in this proxy statement.

                                        12


Shares shown as beneficially owned include:

- Shares to which a person has or shares voting power and/or investment power.

- The number of shares and share equivalents represented by interests in or
  pursuant to the:

  - Employee Savings Plan (our 401(k) plan);

  - Deferred Salary Savings Plan;

  - Performance Incentive Stock Plan;

  - Directors' Deferred Compensation Plan;

  - Salaried Employees' Merit Plan; and

  - Mr. Whipple's employment agreements.


Dr. Duderstadt, Ms. Flaherty, Messrs. Holton, Parfet, Pierre, Smith, Way,
Whipple, and Yasinsky each own 10 shares of Preferred Stock of Consumers. As of
March 24, 2004, the directors and executive officers of CMS and Consumers
together own approximately 1.2% of the outstanding shares of CMS Common Stock.


            SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE


Section 16(a) of the federal securities laws requires our directors and
executive officers, and persons who own more than 10% of CMS or Consumers equity
securities, to file with the SEC reports of beneficial ownership and changes in
such ownership of any of those equity securities or related derivative
securities. To management's knowledge, during the year ended December 31, 2003,
our executive officers and directors made all required Section 16(a) filings on
a timely basis.


                             BUSINESS RELATIONSHIPS


On May 1, 2002, Consumers sold its electric transmission system to Michigan
Transmission Holdings, LLP, a non-affiliated limited partnership whose general
partner is a subsidiary of Trans-Elect, Inc. A Trans-Elect, Inc. subsidiary
provides interstate electric transmission service to Consumers pursuant to
agreements entered into at the time of the sale. The Federal Energy Regulatory
Commission approved the rates and other terms of the service prior to the sale
and they remain subject to the Commission's jurisdiction. From May 15, 2002
until June 30, 2002, S. Kinnie Smith, Jr. served as Vice Chairman of
Trans-Elect, Inc. Mr. Smith had served as a director of Trans-Elect, Inc. since
its organization in 1998. Mr. Smith resigned as Vice Chairman and director of
Trans-Elect, Inc. upon becoming Vice Chairman and a director of CMS and
Consumers, as well as General Counsel of CMS, in July of 2002. Mr. Smith owns
20,000 shares of Convertible Preferred A Stock of Trans-Elect, Inc., or
approximately 10% of the outstanding voting securities of Trans-Elect, Inc. Mr.
Smith also has an option to acquire an additional 250 shares of this security.


Trans-Elect, Inc.'s subsidiary purchased the Consumers electric transmission
system in a competitive bidding process for approximately $290 million in cash.
Consumers provided no financial or credit support for the sale to Trans-Elect,
Inc. As a result of the sale, Consumers experienced an after-tax earnings
increase of approximately $17 million in 2002 due to the recognition of a $26
million gain on the sale. During the calendar year 2003, Consumers paid a total
of $74 million to Trans-Elect, Inc.'s subsidiary for electric transmission
services.

                                        13


                           COMPENSATION OF DIRECTORS


In 2003, directors who were not CMS or Consumers employees received an annual
retainer fee of $30,000, $1,500 for attendance at each Board meeting and $750
for attendance at each committee meeting. Committee chairs received $1,000 for
attendance at each committee meeting. These figures had remained unchanged for
five years, and are relatively low by industry standards according to reports
issued by our independent compensation consultants. In 2004, the annual retainer
and fees for Board and most committee meetings will remain the same; however,
effective January 1, 2004, due to the increasing demands on the Chair and the
members of the Audit Committees as a result of new rules and regulations of the
SEC pursuant to the Sarbanes-Oxley Act of 2002 and revised NYSE listing
standards, the Chair of the Audit Committee will receive an annual retainer fee
of $7,500 and $1,250 for attendance at each Audit Committee meeting, and each
other Audit Committee member will receive an annual retainer fee of $2,000 and
$1,250 for attendance at each Audit Committee meeting. Also effective January 1,
2004, non-employee directors' attendance at special telephonic meetings of the
Board will be compensated at the rate of $750 per meeting, or one-half the
regular Board meeting rate.


In 2003, all directors who were not CMS or Consumers employees were granted 850
restricted shares of our Common Stock with a fair market value at time of grant
of $6,468, except for Messrs. Monahan and Paquette, the Board's newest members,
who received 3,943 restricted shares with a fair market value at the time of
grant of approximately $30,000 pursuant to our commitment at the time they were
recruited to join the Board. These restricted shares must be held for at least
three years from the date of grant. In 2004, all of the non-employee directors,
including the two directors who are not standing for re-election, will be
granted a number of shares of restricted stock with a fair market value at the
time of grant of approximately $30,000. These restricted shares must be held for
at least three years from the date of grant. Directors are reimbursed for
expenses incurred in attending Board or committee meetings. Directors who are
CMS or Consumers employees do not receive retainers or meeting fees for service
on the Board or as a member of any Board committee.


Non-employee directors receive a single retainer fee and restricted share award
for service on the Boards and Audit Committees of both CMS and Consumers, as
well as a single meeting attendance fee for concurrent meetings of the CMS and
Consumer Boards or committees.


Pursuant to the Directors' Deferred Compensation Plan, a CMS or Consumers
director who is not an employee may, at any time prior to a calendar year in
which a retainer and fees are to be earned, or at any time during the year prior
to the month in which a retainer and fees are earned, irrevocably elect to defer
payment for that year, or a portion thereof, through written notice to CMS or
Consumers, of all or half of any of the retainer and fees which would otherwise
be paid to the director, to a time following the director's retirement from the
Board of Directors. Any amount deferred will either (a) accrue interest at the
prime rate or the rate for 10-year Treasury Notes (whichever is greater), (b) be
treated as if it were invested as an optional cash payment in our Stock Purchase
Plan, or (c) be treated as if it were invested in a Standard & Poor's 500 stock
index fund. Accrued amounts will be distributed in a lump sum or in five or ten
annual installments in cash.


Effective with the annual meeting in May of 2004, the Board's current retirement
payments policy will be discontinued. Although current and previously retired
directors' accrued benefits under the policy will be preserved, no further years
of service will be accrued nor will future increases in the cash retainer impact
the grandfathered payouts under this policy. Prior to its discontinuance, the
directors' retirement payments policy provided those directors who retire with
five years of service on the Board, with annual retirement payments equal to the
retainer.


                                        14


These payments continue for a period of time equal to the director's years of
service on the Board. All payments will cease at the death of the retired
director.

All non-employee directors have historically been offered optional life
insurance coverage, business-related travel accident insurance, and optional
health care insurance, and CMS and Consumers paid the premiums associated with
participation by directors. These insurance coverages will not be provided by
the Corporation to new directors, effective with the annual meeting in May of
2004. The imputed income for the life insurance coverage in 2003 was: Messrs.
Duderstadt, $753; Holton, $2,715; Monahan, $726; Paquette, $2,553; Parfet, $663;
Pierre, $726; Whipple, $2,553; Yasinsky, $744; and Ms. Flaherty, $399. The
imputed income for health insurance coverage in 2003 was: Ms. Flaherty, $9,289.

                 ORGANIZATION AND COMPENSATION COMMITTEE REPORT

COMPENSATION PHILOSOPHY


CMS' and Consumers' executive compensation program is directed by our
Organization and Compensation Committees (the "Committee"), which is composed
entirely of independent directors. The Committee is responsible for determining
and administering executive compensation policies and plans as well as reviewing
and recommending to the Board of Directors officer appointments. The Committee
also has the responsibility for approving both annual compensation and
compensation awards under long-term incentive stock programs. In doing so, the
Committee relies to a large degree on incentive compensation including
stock-related awards to attract and retain outstanding officers. In the past, it
has been our philosophy to target salary and long-term incentives at the 50th
percentile of the market, as then defined by the Committee, and to target annual
incentives at the 75th percentile of that same market. It is now the Committee's
intent to modify this philosophy and target salary, annual incentives and
long-term incentives at the 50th percentile of the market (as defined by a
seventeen company peer group of energy companies of comparable business focus
and size to CMS). It is further the Committee's intent to recommend that stock
ownership guidelines be established for officers of CMS and its subsidiaries
ranging from an amount of stock equivalent to base salary for more junior
officers to several multiples of base salary for more senior officers. All of
these programs seek to enhance the Corporation's profitability and, hence, its
shareholder value by aligning the financial interests of CMS' officers with
those of its shareholders.



Direct compensation for Mr. Whipple and the other executive officers consists of
(i) base salary, which is intended to be at the 50th percentile of the amounts
paid to executives with equivalent positions at other energy companies of
comparable size (the aforementioned seventeen company peer group), and (ii)
substantial annual and long-term incentive compensation, also at the 50th
percentile of the seventeen company peer group, that closely ties to our success
in achieving earnings, cash flow, stock appreciation and other performance
goals. The incentive programs are considered variable "at risk" compensation and
are intended to result in above-median compensation only in years when we exceed
our performance goals.


ANNUAL COMPENSATION

The Committee reviews the base salary of Mr. Whipple and the other officers and
approves annual salaries for them based on industry, peer group, and national
surveys, as well as the Committee's collective judgment as to the past and
expected future contributions of each individual.

                                        15



The annual incentive compensation (bonus) payment, if any, is based on our
success in meeting challenging ongoing earnings per share and free cash flow
goals set by the Committee before March 31 of each year. Following the end of
each year, the Committee reviews the results on a corporate basis to determine
the appropriate awards. The maximum payout of the Officer Incentive Compensation
Plan is 200%. Under the Officer Incentive Compensation Plan for 2003, CMS'
performance exceeded 100% of both of the earnings per share goal and the free
cash flow goal, resulting in bonus payments to all eligible employees at a level
of 162% of their individual target awards. (See the "Bonus" column in the
Summary Compensation Table and its footnote 6, related to the deferral of
certain officers' bonus compensation, in the following section entitled
"EXECUTIVE COMPENSATION" for more details.)


LONG-TERM COMPENSATION


The last direct pay element of executive compensation the Committee considers
during each year is long-term incentive awards in the form of stock options and
restricted stock awards under our Performance Incentive Stock Plan, which
previously has been approved by shareholders and is proposed to be materially
amended in Proposal 3 detailed later in this proxy statement. The Committee
believes such awards are desirable in encouraging Common Stock ownership by
executives, thus linking their interests directly to that of other shareholders.
Therefore, in 2003, the Committee decided to grant stock options with an
exercise price equal to the Common Stock market price on the date of the grant
to the officers, including those shown in the following compensation tables.
Options have been granted annually, usually for approximately the same number of
shares for each officer absent a significant change in responsibilities. The
Committee believes long-term incentive awards should be made annually on a
generally consistent basis. In determining awards, the Committee weighed a
number of factors including prior awards and corporate performance. The
Performance Incentive Stock Plan has no provision for the re-pricing of options,
and we are, in the shareholder proposal amending the plan, explicitly
prohibiting such a provision. The Committee also awarded restricted stock that
will vest at the rate of 25% per year after two years, with 100% vested after
five years. It is the Committee's intent to reduce the number of shares granted
that are subject to options in future years and to use restricted stock instead,
as it believes restricted stock awards will be more effective in successful
implementation of our back-to-basics, utility-plus strategy.


OTHER EXECUTIVE BENEFITS

Executive perquisites such as long-term disability insurance coverage and
financial planning advice are provided to officers. Watson Wyatt Worldwide, LLC
has determined that our executive benefits are limited but appropriate in terms
of scope and compared to industry practice.

CHIEF EXECUTIVE OFFICER COMPENSATION


Effective with the execution of Mr. Whipple's September 1, 2003 amended and
restated employment agreement, he will receive an annual salary of $400,000 in
cash and $850,000 in phantom stock units. Mr. Whipple will also be eligible for
a targeted $1 million annual bonus paid in phantom stock units, provided we meet
the cash flow and earnings targets of the annual bonus plan discussed above. In
addition, Mr. Whipple's amended and restated employment agreement also provided
a long-term compensation award of 125,000 restricted phantom stock units in
2003. The Board of Directors may make similar awards in the future at its
discretion. No additional stock options, restricted stock or other similar
benefits are contemplated in Mr. Whipple's amended and restated employment
agreement. Based on a review by the Committee's current compensation consultant,
Mr. Whipple is below the median of the peer group market total direct
compensation (total direct compensation consists of salary, target


                                        16


annual incentive and long-term incentives adjusted to 2004). The comparison
assumes that the stock price of each phantom stock unit grant remains unchanged.
Thus, Mr. Whipple's actual compensation could be less or greater than the
amounts reflected in the peer group comparison, as well as the Summary
Compensation Table that follows this report.

COMPENSATION DEDUCTIBILITY


Section 162(m) of the Internal Revenue Code limits the tax deductibility of
compensation in excess of $1 million paid to a corporation's chief executive
officer and to the other four highest-paid executive officers unless such
compensation qualifies as "performance-based" and is approved by shareholders.
Approval of the Performance Incentive Stock Plan and the Executive Incentive
Compensation Plan (since renamed the Officer Incentive Compensation Plan) by CMS
shareholders in prior years permitted compensation paid under these plans to be
deductible by the Corporation. Incentive awards under the terms of the Officer
Incentive Compensation Plan and awards of stock options under the Performance
Incentive Stock Plan qualify as performance-based compensation. Awards of
restricted stock may qualify as performance-based, if the grant includes
performance-based vesting criteria. As detailed above, Mr. Whipple's amended and
restated employment agreement includes provisions for annual and long-term
incentive compensation awards and grants with performance-based criteria and
other terms substantially similar to, and specifically in lieu of, awards and
grants under the Corporation's incentive compensation plans. Shareholder
approval of the performance criteria and other terms of both incentive plans and
Mr. Whipple's contractual arrangements is being requested this year in Proposal
4 in order to maintain the tax deductibility of the performance-based
compensation paid under such plans and arrangements.


Generally, the Committee attempts to ensure the deductibility of all
compensation paid; however, the Committee may pay nondeductible compensation if
necessary or desirable to achieve the goals of our compensation philosophy.

COMPENSATION CONSULTANT


In connection with its ongoing independent review of executive compensation, the
Committee has over the past year retained each of Watson Wyatt Worldwide, LLC
and Hewitt Associates, both recognized compensation and benefit consultants, to
assist the Committee in evaluating the appropriateness and competitiveness of
the Corporation's compensation policies and programs.



Submitted by the Organization and Compensation Committees: John B. Yasinsky
(Chair), Earl D. Holton, Joseph F. Paquette, Jr., William U. Parfet, and Kenneth
L. Way.


                                        17


                             EXECUTIVE COMPENSATION


The following charts and descriptions contain information concerning annual and
long-term compensation, including the 2004 confirmation of a bonus relating to
the Corporation's 2003 performance under our Officer Incentive Compensation Plan
as well as awards of stock options and restricted stock under our Performance
Incentive Stock Plan. Also disclosed in the Summary Compensation Table and
applicable footnotes, as well as in the following subsection entitled Employment
Agreements, are the substantially similar and related contractual compensation
arrangements under Mr. Whipple's amended and restated employment agreement. The
charts include Mr. Whipple as the Chief Executive Officer and the next three
most highly compensated executive officers in 2003 who are dual officers of CMS
and Consumers, as well as a fifth most highly compensated executive officer for
each of CMS and Consumers and, finally, a former CMS executive officer who
retired during 2003.


                           SUMMARY COMPENSATION TABLE




                                                                               Long-Term Compensation(1)
                                                                         -------------------------------------
                                                                                  Awards             Payouts
                                                                         ------------------------   ----------
                                              Annual Compensation        Restricted    Securities   Long-Term
                                           -------------------------       Stock       Underlying   Incentive     All Other
Name and Principal Position         Year   Salary(2)        Bonus        Awards(3)      Options     Payouts(4)   Compensation
---------------------------         ----   ---------        -----        ----------    ----------   ----------   ------------
                                                                                            
Current Officers
KENNETH WHIPPLE(5)................  2003   $1,156,431(a)  $1,620,000(b)  $1,015,000(c)        0      $     0      $     0
Chairman and CEO, CMS               2002      639,060(d)           0              0           0            0            0
and Consumers                       2001            0              0              0           0            0            0
DAVID W. JOOS.....................  2003      795,000        734,103(6)     635,000(7)  100,000            0            0
President and COO,                  2002      750,000              0        406,000(7)  165,000            0       15,000(8)
CMS and Consumers                   2001      637,500              0              0     100,000       35,907       19,125(8)
S. KINNIE SMITH, JR. .............  2003      630,000        581,742(6)     381,000(7)  100,000            0            0
Vice Chairman of CMS and            2002      300,000              0        263,900(7)   65,000            0        3,000(8)
Consumers; General Counsel of CMS   2001            0              0              0           0            0            0
THOMAS J. WEBB....................  2003      535,000        459,351(6)     381,000(7)  100,000            0            0
Executive Vice President and        2002      208,333              0        203,000(7)   50,000            0            0
Chief Financial Officer, CMS        2001            0              0              0           0            0            0
and Consumers
DAVID A. MIKELONIS................  2003      365,000        266,085(6)      76,200(7)   59,000            0            0
Senior Vice President and           2002      355,000              0         56,840(7)   28,000            0        7,100(8)
General Counsel, Consumers          2001      355,000              0              0      14,000       17,978       10,650(8)
THOMAS W. ELWARD..................  2003      336,000        266,749(6)     127,000(7)   76,000            0            0
President and COO,                  2002      320,040              0         81,200(7)   36,000            0        6,401(8)
CMS Enterprises                     2001      270,000              0              0      14,000       13,453        8,100(8)
Former Officer
WILLIAM J. HAENER.................  2003      530,000        455,058(6)           0           0            0            0
Executive Vice President            2002      530,000              0        178,640(7)   82,500            0       10,600(8)
and COO -- Natural Gas, CMS         2001      509,167              0              0      40,000       26,930       15,275(8)



(1) Aggregate non-performance-based restricted Common Stock held as of December
    31, 2003 by the named officers was: Mr. Whipple, 900 shares, with a year-end
    market value of $7,668; Mr. Joos, 150,000 shares with a
                                        18



    year-end market value of $1,278,000; Mr. Smith, 92,500 shares with a
    year-end market value of $788,100; Mr. Webb, 85,000 shares with a year-end
    market value of $724,200; Mr. Elward, 30,000 shares with a year-end market
    value of $255,600; Mr. Mikelonis, 19,000 shares with a year-end market value
    of $161,880; and Mr. Haener, 22,318 shares with a year-end market value of
    $190,149. No dividends were paid on such restricted stock during 2003.


(2) A portion of the 2003 salary amounts shown include the 2003 merit increases;
    the cash for those portions was deferred and will be paid out in cash or
    Common Stock in the first quarter of 2005 pursuant to the Corporation's
    Salaried Employees' Merit Plan.


(3) Except for the award for Mr. Whipple as detailed below, these 2003
    restricted Common Stock awards were granted as of August 22, 2003. These
    shares vest at a rate of 25% per year beginning August 22, 2005. The 2003
    dollar values shown above are based on the August 22, 2003 grant date
    closing price of $6.35 per share.



(4) These amounts reflect the 2001 market value of CMS Common Stock vesting
    under the Corporation's Performance Incentive Stock Plan for three-year
    performance periods then ended. The 2002 and 2003 tranches of similar
    performance-based Common Stock awards were forfeited at the end of the
    tranches' subsequent three-year performance periods.


(5) All of Mr. Whipple's compensation is paid pursuant to the terms of his
    employment agreement, although each of his annual and long-term incentive
    amounts is administered in conjunction with the applicable provisions of the
    Corporation's Officer Incentive Compensation Plan and Performance Incentive
    Compensation Plan, respectively.


    (a) Mr. Whipple's 2003 salary consisted of $134,933 in cash compensation and
        $1,021,498 in deferred compensation in the form of phantom stock units
        payable in cash. The payout value of the deferred salary will be based
        on the future price of CMS Common Stock.



    (b) Mr. Whipple's bonus consisted of an amount earned with respect to 2003
        but for which payment is deferred into future years in the form of
        phantom stock units payable in cash. The payout value of the deferred
        bonus will be based on the future price of CMS Common Stock when 50% of
        the phantom stock units are cashed out on each of the first and second
        anniversaries of the bonus award.



    (c) Mr. Whipple's 2003 restricted stock award consisted of 125,000
        restricted phantom stock units awarded on October 31, 2003 and payable
        in cash upon vesting at a rate of 25% per year beginning September 1,
        2005. The dollar value of this award upon vesting will be based upon the
        future price of CMS Common Stock. The 2003 dollar value shown is based
        on the grant date closing price of CMS Common Stock of $8.12 per share.
        These phantom stock units were awarded pursuant to the terms of Mr.
        Whipple's employment agreement in lieu of the restricted stock and
        options awarded to other officers under our Performance Incentive Stock
        Plan in 2003. At December 31, 2003, these 125,000 phantom stock units
        had a market value of $1,065,000 at $8.52 per share.



    (d) Mr. Whipple's 2002 salary consisted of $2,125 in cash compensation and
        $636,935 in deferred compensation in the form of phantom stock units
        payable in cash. The payout value of the deferred salary will be based
        on the future price of CMS Common Stock.


(6) Bonuses for 2003 for Messrs. Joos, Smith, Webb and Elward were deferred and
    will be paid out in the first quarter of 2005 consistent with the payouts
    from the Corporation's Salaried Employees' Merit Plan. The 2003 bonuses for
    Messrs. Mikelonis and Haener were paid out in the first quarter of 2004.

                                        19



(7) Messrs. Joos, Smith, Webb, Elward, Mikelonis and Haener were awarded 50,000,
    32,500, 25,000, 10,000, 7,000 and 22,000 restricted shares of CMS Common
    Stock, respectively, in 2002 and 100,000, 60,000, 60,000, 20,000, 12,000 and
    zero restricted shares of CMS Common Stock, respectively, in 2003.


(8) The 2001 and 2002 amounts represent employer matching contribution to the
    Corporation's defined contribution plans. No employer matching contributions
    were made in 2003.

                            EMPLOYMENT ARRANGEMENTS

Mr. Whipple entered into an employment agreement with CMS promptly following his
election as Chairman and Chief Executive Officer at the time of the 2002 annual
meeting of shareholders. His compensation under this original contract was
predominantly in the form of phantom stock units, as detailed in footnote 5(d)
to the Summary Compensation Table above. Effective with the execution of Mr.
Whipple's September 1, 2003 amended and restated employment agreement, his
annual compensation was adjusted, and annual and long-term incentive
compensation contractual arrangements were added, all as detailed in the
Organization and Compensation Committee Report and the Summary Compensation
Table.

Agreements with the executive officers named above, other than Mr. Whipple,
provide for payments equal to three times annual cash compensation if there is a
change of control and adverse change of responsibilities, as well as payments
equal to two times annual cash compensation if employment is terminated by the
company, other than for cause, in the absence of a change of control. CMS and
Consumers also provide long-term disability insurance policies for all executive
officers which would provide payment of up to 60% of compensation in the event
of disability. We do not have a "poison pill" plan and are not considering the
adoption of such a plan.

                             OPTION GRANTS IN 2003



                                  Number of Securities    Percentage of Total    Exercise                   Grant Date
                                       Underlying         Options Granted to     Price Per    Expiration     Present
Name                                Options Granted        Employees in 2003       Share         Date        Value(1)
----                              --------------------    -------------------    ---------    ----------    ----------
                                                                                             
Kenneth Whipple...............                0                     0              $   0                     $      0
David W. Joos.................          100,000                   6.3               6.35       9-21-13        296,000
S. Kinnie Smith, Jr. .........          100,000                   6.3               6.35       9-21-13        296,000
Thomas J. Webb................          100,000                   6.3               6.35       9-21-13        296,000
Thomas W. Elward..............           76,000                   4.8               6.35       9-21-13        224,960
David A. Mikelonis............           59,000                   3.7               6.35       9-21-13        174,640
William J. Haener.............                0                     0                  0             0              0



(1) The present value is based on the Black-Scholes Model, a mathematical
    formula used to value options traded on securities exchanges. The model
    utilizes a number of assumptions, including the exercise price, the
    underlying common stock's volatility using weekly closing prices for a four
    and one half year period prior to grant date, the dividend rate, the term of
    the option, and the level of interest rates equivalent to the yield of
    four-year Treasury Notes. However, the Model does not take into account a
    significant feature of options granted to employees under our Performance
    Incentive Stock Plan, the non-transferability of options awarded. For all
    the options listed above, which were granted on August 22, 2003, the
    volatility was 55.46%, the dividend rate was $0.00 per quarter, and the
    interest rate at the time was 3.02%.


                                        20


        AGGREGATED OPTION EXERCISES IN 2003 AND YEAR-END OPTIONS VALUES



                                                                     Number of Securities     Value of Unexercised
                                     Shares Acquired     Value      Underlying Unexercised    In-the-Money Options
Name                                   On Exercise      Realized     Options at Year End       at Year End(1)(2)
----                                 ---------------    --------    ----------------------    --------------------
                                                                                  
Kenneth Whipple..................           0              $0                    0                  $      0
David W. Joos....................           0               0              473,000                   257,000
S. Kinnie Smith, Jr. ............           0               0              165,000                   243,000
Thomas J. Webb...................           0               0              150,000                   237,000
Thomas W. Elward.................           0               0              146,000                   172,920
David A. Mikelonis...............           0               0              137,000                   133,630
William J. Haener................           0               0              224,500                    17,000


(1) All options listed in this table are exercisable. The named officers have no
    unexercisable options.


(2) Based on the December 31, 2003 closing price of CMS Common Stock as shown in
    the report of the New York Stock Exchange Composite Transactions ($8.52).


                               PENSION PLAN TABLE

The following table shows the aggregate annual pension benefits at normal
retirement date presented on a straight life annuity basis under our qualified
Pension Plan and non-qualified Supplemental Executive Retirement Plan (offset by
a portion of Social Security benefits).



                                   Years of Service
               --------------------------------------------------------
Remuneration      15         20         25          30           35
------------      --         --         --          --           --
                                              
 $  500,000    $157,500   $210,000   $247,500   $  285,000   $  322,500
    800,000     252,000    336,000    396,000      456,000      516,000
  1,100,000     346,500    462,000    544,500      627,000      709,500
  1,400,000     441,000    588,000    693,000      798,000      903,000
  1,700,000     535,500    714,000    891,500      969,000    1,096,500
  2,000,000     630,000    840,000    990,000    1,140,000    1,290,000


"Remuneration" in this table is the average of Salary plus Bonus, as shown in
the Summary Compensation Table, for the five years of highest earnings. The
estimated years of service for each named executive is: Mr. Whipple, 3.56 years;
Mr. Joos, 32.33 years; Mr. Smith, 20.82 years; Mr. Webb, 2.99 years; Mr. Elward
35.00 years; Mr. Mikelonis, 35.00 years; and Mr. Haener, 20.00 years. Under the
Supplemental Executive Retirement Plan, an officer's years of service for
purposes of calculating benefits thereunder are earned at double the period of
actual service during the first ten years of service.

                                        21


       SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS




                                                                          Number of Securities
                                                                         Remaining Available for
                        Number of Securities                              Future Issuance Under
                            to be Issued          Weighted-Average         Equity Compensation
                          upon Exercise of       Exercise Price of          Plans (Excluding
                        Outstanding Options,    Outstanding Options,      Securities Reflected
    Plan Category       Warrants and Rights     Warrants and Rights          in Column (a))
    -------------       --------------------    --------------------     -----------------------
                                (a)                     (b)                        (c)
                                ---                     ---                        ---
                                                               
Equity compensation
  plans approved by
  security holders....       5,785,576                 $21.30                   2,256,247
Equity compensation
  plans not approved
  by security
  holders.............               0                      0                           0
                             ---------                 ------                   ---------
  Total...............       5,785,576                 $21.30                   2,256,247
                             =========                 ======                   =========




The Performance Incentive Stock Plan, prior to the amendment proposed for
shareholder approval as described later in this proxy statement, reserves for
award not more than five percent of CMS Common Stock outstanding on January 1 of
each year, less the number of shares of (i) restricted Common Stock awarded and
(ii) Common Stock subject to options granted under the plan during the
immediately preceding four calendar years. The number of shares of restricted
Common Stock awarded under this plan cannot exceed twenty percent of the
aggregate number of shares reserved for award. Any forfeitures of shares
previously awarded will increase the number of shares available to be awarded
under the plan. At March 24, 2004, awards of up to 2,256,247 shares of CMS
Common Stock may be issued.


                             AUDIT COMMITTEE REPORT


CMS' and Consumers' audit activities are directed by our Audit Committees, which
are composed entirely of independent directors. The Audit Committees are
responsible for overseeing the preparation of external financial reports, the
adequacy of internal audit controls, the internal and external audit process,
the independence and performance of the independent auditors, and compliance
with applicable legal and regulatory requirements.


We have reviewed and discussed with management CMS' and Consumers' audited
financial statements as of and for the year ended December 31, 2003.

We have discussed with the independent auditors of the 2003 financial
statements, Ernst and Young, LLP, the matters required to be discussed by
Statement on Auditing Standards No. 61, Communication with Audit Committees, as
amended, by the Auditing Standards Board of the American Institute of Certified
Public Accountants.

We have received and reviewed the written disclosures and the letter from the
independent auditors required by Independence Standard No. 1, Independence
Discussions with Audit Committees, as amended, by the Independence Standards
Board, and have discussed with Ernst and Young, LLP the auditors' independence.

                                        22


We have considered the provision of all of Ernst and Young, LLP's services to
CMS and Consumers in 2003 and the fees paid for all such services, and have
concluded that all current arrangements are compatible with maintaining the
independence of Ernst and Young, LLP.

Based on the reviews and discussions referred to above, we recommended to the
Boards of Directors that the financial statements referred to above be included
in CMS and Consumers Annual Reports on Form 10-K for the year ended December 31,
2003.

Submitted as of April 2, 2004 by the Audit Committees: William U. Parfet
(Chair), Michael T. Monahan, Joseph F. Paquette, Jr., Kenneth L. Way, and John
B. Yasinsky.

                              INDEPENDENT AUDITOR


Prior to 2002, Arthur Andersen, LLP had served as the independent auditor for
CMS and Consumers for many years. In early 2002, however, the Audit Committees
concluded that the ability of Arthur Andersen to continue as the Corporation's
and Company's independent auditor had been adversely affected by well-publicized
developments involving Arthur Andersen and recommended to the Boards of
Directors the replacement of Arthur Andersen as CMS' and Consumers' independent
auditor. On the recommendation of the Audit Committees, and after a thorough
search, the Boards of Directors on May 24, 2002 appointed Ernst and Young, LLP
to replace Arthur Andersen as the independent auditor for CMS and Consumers for
2002. There were no disagreements between Arthur Andersen and CMS or Consumers
related to accounting principles or practices, financial statement disclosures,
or auditing scope or procedure, and Arthur Andersen's reports on the financial
statements of CMS and Consumers had contained no adverse opinions, disclaimers
of opinion, modifications, or qualifications. The decision to replace Arthur
Andersen was made strictly as a result of the significant difficulties that
Arthur Andersen was encountering in matters totally unrelated to CMS or
Consumers.


                        INDEPENDENT AUDITOR COMPENSATION

                                   Audit Fees

Fees, including expenses, for professional services provided by our independent
auditors in each of the last two fiscal years, in each of the following
categories are:



                                                         Ernst & Young          Arthur Andersen
                                                   -------------------------    ---------------
                                                      2003          2002             2002
                                                      ----          ----             ----
                                                                       
Audit Fees.....................................    $7,052,000    $13,689,000      $  394,000
Audit-Related Fees.............................     1,430,000        130,000       1,727,000
Tax Fees.......................................       216,000             --              --
All Other Fees.................................            --             --              --


Amounts reported above include fees paid by Consumers.

Fees for audit services include fees associated with the annual audit, the
reviews of our quarterly reports on Form 10-Q, comfort letters, required
statutory audits, and fees related to the restatement of our consolidated
financial statements related to prior years.

                                        23


Audit-related fees include fees associated with the work responsive to the
implementation of the Sarbanes-Oxley Act of 2002 and the various rules and
pronouncements flowing from that Act, as well as audits of employee benefit
plans. Tax fees include fees for tax compliance, tax advice, and tax planning.

The Audit Committees have adopted a policy that requires advance approval for
all audit, audit-related, tax services, and other services performed by the
independent auditor. The policy provides for pre-approval by the Audit
Committees of specifically defined audit and non-audit services. Unless the
specific service has been previously pre-approved with respect to that year, the
Audit Committees must approve the permitted service before the independent
auditor is engaged to perform. The Audit Committees have delegated to the Chair
of the Audit Committees authority to approve permitted services, provided that
the Chair reports any decisions to the Committees at their next scheduled
meeting.

                                        24


              DESCRIPTION OF PROPOSALS SUBJECT TO SHAREHOLDER VOTE


PROPOSAL 1: ELECT ELEVEN MEMBERS TO THE CORPORATION'S BOARD OF DIRECTORS



As previously detailed in this proxy statement under the heading "INTRODUCTION",
the nominees for directors are proposed to serve on the parallel Boards of
Directors of each of CMS and Consumers, to hold office until the next annual
meeting or until their successors are elected and qualified. Unless a
shareholder votes to "withhold authority" for the election of directors as
provided in the enclosed proxy card, the returned proxy will be voted for the
listed nominees. The Boards believe that the nominees will be available to
serve, but in the event any nominee is unable to do so, the CMS proxy will be
voted for a substitute nominee designated by the Board, or the number of
directors constituting the full Board will be reduced accordingly.



All of the nominees are presently serving as directors and were previously
elected by shareholders, except for Merribel S. Ayres who is proposed to be
newly elected to the Boards at the annual meeting of shareholders. Two current
members of the Boards, James J. Duderstadt and Kathleen R. Flaherty, previously
had decided not to seek re-election as directors. Thus, effective with the
annual meeting of shareholders on May 28, 2004, the size of the Boards will be
reduced by one to eleven members, absent the unlikely circumstances described at
the end of the preceding paragraph.



MERRIBEL S. AYRES, 52, has served since 1996 as President of Lighthouse Energy
Group, LLC, a firm she founded. Lighthouse provides governmental affairs and
communications expertise, as well as management consulting and business
development services, to a broad spectrum of international clients focused on
energy and environmental matters. Ms. Ayres served from 1988 to 1996 as Chief
Executive Officer of the National Independent Energy Producers, a Washington,
D.C., trade association representing the independent power supply industry. She
is a member of the Aspen Institute Energy Policy Forum, the National Advisory
Council of the National Renewable Energy Laboratory, and the Dean's Alumni
Leadership Council of Harvard University's Kennedy School of Government. She is
proposed to be newly elected as a director of CMS and Consumers at the annual
meeting of shareholders.


EARL D. HOLTON, 70, has served since 1999 as Vice Chairman of Meijer, Inc., a
Grand Rapids, Michigan based operator of food and general merchandise centers.
He served from 1980 to 1999 as President of Meijer, Inc. He is a director of
Meijer, Inc. and Steelcase, Inc. He has been a director of CMS and of Consumers
since 1989 and has served as the presiding director at the executive sessions of
the Boards since his appointment to that position in 2002.

DAVID W. JOOS, 51, has served since 2001 as President and Chief Operating
Officer of CMS and Consumers. He served from 2000 to 2001 as Executive Vice
President and Chief Operating Officer -- Electric of CMS and from 1997 to 2000
as President and Chief Executive Officer -- Electric of Consumers. He is a
director of Steelcase, Inc., the Michigan Colleges Foundation, Michigan Economic
Development Corporation, is a director and Chairman of Nuclear Management Co.
and of the Michigan Manufacturers Association. He has been a director of CMS and
of Consumers since 2001.


MICHAEL T. MONAHAN, 65, has served since 1999 as President of Monahan
Enterprises, LLC, a Bloomfield Hills, Michigan based consulting firm. He was
Chairman of Munder Capital Management, an investment management company, from
October 1999 to December 2000 and Chairman and Chief Executive Officer of Munder
from October 1999 until January 2000. Prior to that, he was President and a
director of Comerica Bank from 1992 to 1999 and President and a director of
Comerica Inc. from 1993 to 1999. He is a director of The Munder Funds, Inc., as
well as a member of the Boards of Trustees of Henry Ford Health Systems, Inc.
and of the Community Foundation for Southeastern Michigan. He has been a
director of CMS and of Consumers since December 2002.


                                        25


JOSEPH F. PAQUETTE, JR., 69, served from 1988 to 1995 as Chairman and Chief
Executive Officer and from 1995 until his retirement in 1997 as Chairman of PECO
Energy, formerly the Philadelphia Electric Company, a major supplier of electric
and gas energy. He is a director of USEC, Inc. and Mercy Health Systems. He has
been a director of CMS and of Consumers since December 2002. He had previously
served as a director of CMS and Consumers and as President of CMS from 1987 to
1988.

WILLIAM U. PARFET, 57, has served since 1999 as Chairman and Chief Executive
Officer of MPI Research, Inc., Mattawan, Michigan, a contract research
laboratory conducting risk assessment toxicology studies. He served from 1995 to
1999 as Co-Chairman of MPI Research. He is a director of Stryker Corporation,
PAREXEL International Corporation, and Monsanto Company. He is also a
commissioner of the Michigan Department of Natural Resources. He has been a
director of CMS and of Consumers since 1991.

PERCY A. PIERRE, 65, has served since 1990 as Professor of Electrical
Engineering at Michigan State University, East Lansing, Michigan. He also served
as Vice President for Research and Graduate Studies at Michigan State University
from 1990 to 1995. Dr. Pierre is a former Assistant Secretary of the Army for
Research, Development and Acquisition. He is also a former President of Prairie
View A&M University. He is a director of Fifth Third Bank (Western Michigan). He
also serves as a member of the Boards of Trustees for the University of Notre
Dame and Hampshire College. He has been a director of CMS and of Consumers since
1990.


S. KINNIE SMITH, JR., 73, has served as Vice Chairman and General Counsel of CMS
and Vice Chairman of Consumers since July of 2002. He served as Senior Counsel
for the law firm Skadden, Arps, Slate, Meagher & Flom from 1996 to 2002. He has
been a director of CMS and of Consumers since August 2002. He had held the
positions of Vice Chairman and President of CMS and Vice Chairman of Consumers
and served as a director of CMS and of Consumers from 1987 to 1996. In May and
June of 2002, he served as Vice Chairman and as a director of Trans-Elect, Inc.,
an owner and operator of interstate electric transmission systems.


KENNETH L. WAY, 64, served from 1988 through 2002 as Chairman of Lear
Corporation, a Southfield, Michigan based supplier of automotive interior
systems to the automotive industry. He remains a director of Lear Corporation.
In addition, he served from 1988 to 2000 as Chief Executive Officer of Lear
Corporation. He is a director of Comerica Inc. and WESCO International, Inc. He
also serves as a member of the Boards of Trustees for Kettering University and
the Henry Ford Health System, Inc. He has been a director of CMS and of
Consumers since 1998.

KENNETH WHIPPLE, 69, has served since May of 2002 as Chairman and Chief
Executive Officer of CMS and Consumers. He served from 1988 until his retirement
in 1999 as Executive Vice President of Ford Motor Company, Dearborn, Michigan, a
world-wide automotive manufacturer, and President of the Ford Financial Services
Group. In addition, he served from 1997 to 1999 as Chairman and Chief Executive
Officer of Ford Motor Credit Company. He had previously served as Chairman and
Chief Executive Officer of Ford of Europe, Inc. from 1986 to 1988. He is a
director of AB Volvo and Korn/Ferry International, as well as a trustee of
certain mutual funds in the JP Morgan family of mutual funds. He has been a
director of CMS and of Consumers since 1993.

JOHN B. YASINSKY, 64, served from 1999 until his retirement in 2000 as Chairman
and Chief Executive Officer and continued as Chairman until February 2001 of
OMNOVA Solutions Inc., a Fairlawn, Ohio based developer, manufacturer, and
marketer of emulsion polymers, specialty chemicals, and building products. He
served from 1995 to 1999 as Chairman, Chief Executive Officer and President of
GenCorp. He is a director of A. Schulman, Inc. He has been a director of CMS and
of Consumers since 1994.

         YOUR BOARD RECOMMENDS A VOTE FOR THE ELECTION OF EACH NOMINEE.

                                        26



PROPOSAL 2: RATIFY THE APPOINTMENT OF INDEPENDENT AUDITORS



The Audit Committees of the Corporation's and Consumers' Boards of Directors
have adopted the following policy:


    The Audit Committee's selection of the Corporation's independent auditor
    shall be submitted to the Corporation's shareholders for their ratification
    at the Corporation's Annual Meeting of Shareholders. If a majority of shares
    voted do not ratify the Audit Committee's selection, the Audit Committee
    will consider the shareholder views when considering its selection of a
    different independent auditor for the Corporation or its continued retention
    of its existing auditor for that year. This policy will be in effect
    commencing with the Corporation's 2004 Annual Meeting of Shareholders.

The Audit Committees have selected Ernst and Young, LLP, independent auditors,
to audit our financial statements for the year 2004. Ernst and Young, LLP also
served as our auditors for the year 2003. A representative of Ernst and Young,
LLP will be present at the annual meeting of shareholders and will have an
opportunity to make a statement and respond to appropriate questions.

The Audit Committee believes it is very important to the Corporation, Consumers
and our shareholders to retain Ernst and Young, LLP as independent auditor for
the balance of the 2004 audit cycle. Continued retention will allow us and Ernst
and Young, LLP to complete the substantial investment of time and money in the
audit process generally, and the Sarbanes-Oxley Act Section 404 internal
controls certification specifically.

Approval of this proposal requires the affirmative vote of the holders of a
majority of shares of Common Stock voting on the proposal.

       YOUR BOARD RECOMMENDS RATIFICATION OF THE APPOINTMENT OF AUDITORS

PROPOSAL 3: PROPOSAL FOR APPROVAL OF AMENDMENT TO THE CORPORATION'S PERFORMANCE
INCENTIVE STOCK PLAN


The Boards of Directors of the Corporation and Consumers, upon recommendation of
their Organization and Compensation Committees (the "Committee") and conditioned
upon shareholder approval, have approved an amendment to the Corporation's
Performance Incentive Stock Plan (the "Plan") that would:



- establish a 5 year term for the Plan (in lieu of the "evergreen" nature of the
  Plan prior to amendment);


- reduce the maximum total shares awarded or subject to options

  - from not more than 5% of the outstanding shares of each class of Common
    Stock of the Corporation on January 1 of any year less the number of shares
    awarded or subject to options granted under the Plan during the previous
    four years (which was the Plan's share limit prior to amendment)


  - to 6,000,000 shares of the outstanding shares of CMS Common Stock during the
    term of the amended Plan;



- explicitly prohibit re-pricing of any options granted under the Plan;


- provide for grants or awards to non-employee Directors and consultants;


- include provisions within the Plan permitting awards of management stock
  purchases, phantom shares and performance units;



- eliminate the limitation on the number of restricted shares that could be
  granted under the Plan;


                                        27



- allow for restoration of options when previously owned shares are used to pay
  the exercise price;


- create flexibility for grants or awards to employees outside the United States
  to comply with applicable laws; and

- increase the number of shares that can be granted to any individual in any one
  year from 100,000 to 250,000.


The Board proposes the approval of the amended terms of the Plan, including the
above-described revisions. A copy of the Plan, including the proposed revisions,
is included as Appendix A to this proxy statement. The Board believes that the
proposed changes to the Plan give the Committee the opportunity to encourage
Common Stock ownership by executives to link their financial interests with
other shareholders. Based upon data provided by the Committee's independent
compensation consultant, we believe this proposal enables us to remain
competitive in our ability to attract executive talent by increasing the number
of restricted shares available for award. At the same time, we will reduce the
total number of shares or options available for award to a level commensurate
with the numbers available under long-term incentive benefit plans of comparable
energy companies.


                              DESCRIPTION OF PLAN


The Plan is administered by the Committee, which is composed entirely of
independent members of the Board. Each officer or other key employee of the
Corporation or its subsidiaries, non-employee Director or consultant is eligible
to participate. As of December 31, 2003 approximately 60 people were
participating in the Plan. The Committee selects the participants, determines
the amount of grants and prescribes the other terms and conditions of each
award.


The Board of Directors may amend, suspend or terminate the Plan, but no
amendment to the Plan that increases the total number of shares available under
the Plan, changes the Plan's eligibility requirements or materially increases
benefits to eligible employees and directors under the Plan may be made without
shareholder approval.


Under the current Plan, the Committee may grant share awards representing a
contingent right to receive shares of our Common Stock ("Restricted Stock"), as
well as incentive stock options ("ISOs") intended to qualify as such under
federal tax law and/or nonqualified stock options ("NQOs"). (ISOs and NQOs are
collectively referred to herein as "Options"). Stock appreciation rights
("SARs") may also be granted in conjunction with ISOs or NQOs. Under the revised
Plan, the Committee also may grant phantom shares that provide a participant
with a right to receive a payment based upon the increase in value of the Common
Stock of the Corporation, or performance units which provide a participant with
a right to a payment based upon the attainment of various goals which are
established at the time of grant. A select group of officers of the Corporation
or a subsidiary in the future may be given the opportunity to receive a portion
of any incentive payment under the Officer's Incentive Compensation Plan in
Common Stock or Restricted Stock under the terms of the management stock
purchase provisions of the Plan. The Committee in the future may also award
additional shares of Common Stock or Restricted Stock to participants who elect
to receive their incentive payment in Common Stock or Restricted Stock.



Under the current Plan, shares awarded or subject to Options may not be more
than 5% of the outstanding shares of each class of our Common Stock on January 1
of any year less the number of shares awarded or subject to Options granted
under the Plan during the previous four years. Restricted Stock grants are
limited to 20% of all awards. Any shares or Options that are forfeited become
available to be granted under the Plan. In effect, the current Plan allows the
granting each year, on average, of 1% of the total outstanding shares. Under the
revised Plan, shares awarded or subject to Options, phantom shares and
performance units may not exceed 6 million shares from June 2004 through May
2009 nor may such grants or awards to any participant exceed 250,000 shares in
any fiscal year.


                                        28



Under the Plan, the exercise price for all Options and SARs is at least 100% of
the fair market value of the related shares on the date of the grant. Options
and SARs terminate as specified in the award, but no later than 10 years after
the date of grant. Transfers of Options and SARs are limited and generally end
upon termination of employment or service other than by death, but the Committee
may agree to extend the Option or SAR. In the event of death, the Option and SAR
may be exercised for up to one year. Under no event may an Option or SAR be
exercised subsequent to its expiration date.



Upon the exercise of an Option, a participant may purchase all or a portion of
the optioned shares by paying cash or surrendering Common Stock already owned by
the participant. The Committee may in the award documentation provide that a
participant using shares to pay the exercise price may receive a restoration
grant at the then fair market value and only for the remaining term of the
initial grant equal to the number of shares used for the purchase. Upon the
exercise of a SAR, the participant will receive an amount equal to the
difference between the exercise price and the fair market value on the exercise
date. Such amount may be paid in cash, Common Stock or partly in each. If a SAR
is granted in conjunction with an Option, exercise of the Option reduces the
number of shares as to which the SAR may be exercised and exercise of the SAR
cancels the Option as to such number of shares.



During the period of restriction relating to a grant of Restricted Stock, the
participant has the right to vote the shares, to receive dividends, when
declared for all shareholders, and to exercise other shareholder rights with
respect to the Restricted Stock, except that the participant may not transfer
the shares. If a participant's employment is terminated during the restriction
period other than by death, all rights to any shares of Restricted Stock will be
forfeited to the Corporation. However, the Committee may, if circumstances
warrant, approve the distribution of such otherwise forfeitable shares.


Phantom shares and performance units are generally governed by the terms of the
grant and may be paid at the Committee's discretion in Common Stock or cash.
Payment upon termination is dependent upon the terms of the grant, the nature of
the termination and will generally be a prorated payment except as the Committee
may otherwise determine.


We believe that under present federal tax laws the grant of Options or SARs will
create no tax consequences for a participant or the Corporation. An optionee
will have no taxable income upon exercising an ISO (except that the alternative
minimum tax may apply), and we will receive no deduction when an ISO is
exercised. After exercise of a NQO or SAR, the participant must generally
recognize ordinary income equal to the difference between the exercise price and
the fair market value of the shares on the date of exercise, and we will be
entitled to a deduction of the same amount. If the participant does not dispose
of shares acquired pursuant to an ISO within two years from the date of grant or
within one year of the transfer of the shares to such participant, any gain or
loss realized on their subsequent disposition will be a capital gain or loss. If
these holding period requirements are not satisfied, the participant will
generally realize ordinary income at the time of disposition in an amount equal
to the lesser of (i) the excess of the fair market value of the shares on the
date of exercise over the option price or (ii) the excess of the amount realized
upon disposition, if any, over the option price, and we will be entitled to a
corresponding deduction. Generally, there will be no tax consequence to the
Corporation from dispositions of shares acquired pursuant to NQOs or SARs.


The grant of awards under the Plan is in the Committee's discretion and,
accordingly, it is not possible to determine amounts that will be received
thereunder in the future. The Committee may award Restricted Stock, phantom
shares and performance units conditioned on the attainment of performance goals
that relate to shareholder return, measured by factors determined by the
Committee as set forth in the award. For example, the performance goals

                                        29



may track business measures such as earnings per share, stock price, total
shareholder return, cash flow, return on equity, return on capital, sales or any
of the other types of goals included in the definition of "Performing Criteria"
in Section 2.1(n) of Appendix A.


Awards under the Plan during 2003 for Messrs. Joos, Smith, Webb, Elward and
Mikelonis are shown in the tables presented earlier in this proxy statement
under the heading "EXECUTIVE COMPENSATION". (As detailed in that same section,
Mr. Whipple has not received any awards under the Plan, but in lieu thereof did
receive a restricted phantom stock unit award pursuant to substantially similar
provisions of his amended and restated employment agreement.) The Restricted
Stock shown had a market value at December 31, 2003 of $852,000; $511,200;
$511,200; $170,400 and $102,240; respectively. The executive officers as a group
and the non-executive officer group of CMS and Consumers were awarded stock
options for 1,004,000 and 589,000 shares, respectively, and Restricted Stock of
384,000 shares with a market value at December 31, 2003 of $3,271,680 and
216,000 shares with a market value of $1,840,320, respectively.


Approval of this proposal requires the affirmative vote of the holders of a
majority of the shares of Common Stock voting on the proposal. If the proposal
is not approved by the shareholders, the Plan will remain in effect in its
current form without the proposed revisions.


         YOUR BOARD RECOMMENDS A VOTE FOR THE APPROVAL OF THE PROPOSAL

PROPOSAL 4: PROPOSAL TO PERMIT AWARDS UNDER THE CORPORATION'S INCENTIVE
COMPENSATION PLANS AND RELATED CONTRACTUAL ARRANGEMENTS TO BE INCOME TAX
DEDUCTIBLE BY THE CORPORATION


Section 162(m) of the Internal Revenue Code limits the tax deductibility of
compensation in excess of $1 million paid to a corporation's chief executive
officer and to the other four highest-paid executive officers unless such
compensation qualifies as "performance-based" and is approved by shareholders.
Approval of the performance criteria related to awards under the Corporation's
Performance Incentive Stock Plan and its Executive Incentive Compensation Plan
(since renamed the Officer's Incentive Compensation Plan) by CMS shareholders in
prior years permitted compensation paid under these plans to be deductible by
the Corporation. Under the tax regulations, the material terms of the
performance goals must be re-approved by shareholders every five years in order
to permit the Corporation to continue to deduct the compensation.



The Organization and Compensation Committees of the Boards of Directors (the
"Committee"), which is entirely composed of independent members of the Board of
Directors, administers the Corporation's and Consumers' incentive compensation
plans and related contractual arrangements; specifically, the Officer's
Incentive Compensation Plan ("OICP"), the Performance Incentive Stock Plan
("PISP") and Mr. Whipple's amended and restated employment agreement (which
contains provisions and terms substantially similar to, and in lieu of, awards
and grants under those plans).



As of January 1, 2004, the Corporation's officers, approximately 30 people, were
eligible to receive incentive compensation based on the performance goals of the
OICP. Payments under the OICP and the incentive plan's performance-based
criteria are described under the "Annual Compensation" section of the
Committee's report in this proxy statement under the heading "ORGANIZATION AND
COMPENSATION COMMITTEE REPORT." Payments are based on the attainment of
performance goals related to the Corporation's ongoing earnings per share and
free cash flow. If the performance goals are met, the award for officers is
based on a percentage of salary depending on salary grade. The maximum amount of
an award for any employee covered by Section 162(m) cannot exceed $2.5 million
in any one year.


                                        30



The PISP is described in Proposal 3. Each officer or other key employee of the
Corporation or its subsidiaries is eligible to participate. As of December 31,
2003, approximately 60 people were participating in the Plan. The Committee
selects the participants, determines the amount of grants and prescribes the
other terms and conditions of each award. Awards of Options qualify as
performance-based compensation. Awards of Restricted Stock may qualify as
performance-based, when the grant includes performance-based vesting criteria.
The Committee may award Restricted Stock conditioned on the attainment of a
performance goal that relates to shareholder return, measured by factors
determined by the Committee as set forth in the award. For example, the
performance goals may track business measures such as earnings per share, stock
price, total shareholder return, cash flow, return on equity, return on capital,
sales or other types of corporate goals as described in Proposal 3. The maximum
total number of shares that can be granted to any individual through Restricted
Stock, Stock Options and Phantom Shares in any one-year is 250,000. The maximum
amount that any individual may receive in Performance Units in any one year is
$2.5 million. The maximum additional award that any one individual may receive
through the management stock purchase provisions of the Plan, if the Committee
in the future determines to utilize those provisions, in any one year is $2.5
million.



Mr. Whipple's amended and restated employment agreement includes provisions for
annual and long-term incentive compensation awards and grants with
performance-based criteria and other terms substantially similar to, and
specifically in lieu of, awards and grants under the OICP and PISP,
respectively. Additional details concerning these related contractual
arrangements are included earlier in this proxy statement under each of the
headings "ORGANIZATION AND COMPENSATION COMMITTEE REPORT" and "EXECUTIVE
COMPENSATION".


The Board of Directors may amend, suspend or terminate the incentive plans,
subject to any requirement of shareholder approval required by applicable law or
regulation.


The Board of Directors recommends that the material terms of the performance
goals of the incentive plans be approved so that bonuses paid under the OICP and
appropriate types of awards under the PISP, as well as the substantially similar
contractual arrangements, will be qualified performance-based compensation under
Section 162(m) and income tax deductible by the Corporation.


Approval of this proposal requires the affirmative vote of the holders of a
majority of shares of Common Stock voting on the proposal.

         YOUR BOARD RECOMMENDS A VOTE FOR THE APPROVAL OF THE PROPOSAL


PROPOSAL 5: PROPOSAL TO ADOPT AN AMENDMENT TO OUR RESTATED ARTICLES OF
INCORPORATION INCREASING THE NUMBER OF AUTHORIZED SHARES OF OUR COMMON STOCK
FROM 250 MILLION SHARES TO 290 MILLION SHARES AND TO RE-DESIGNATE 60 MILLION
SHARES OF OUR AUTHORIZED BUT UNISSUED CLASS G COMMON STOCK INTO 60 MILLION
SHARES OF OUR COMMON STOCK, RESULTING IN A TOTAL OF 350 MILLION AUTHORIZED
SHARES OF OUR COMMON STOCK



The Board of Directors recommends an amendment to our Restated Articles of
Incorporation to increase the number of authorized shares of CMS Common Stock,
par value $.01 per share ("Common Stock"), from 250 million shares to 290
million shares and to re-designate 60 million shares of our authorized but
unissued Class G Common Stock, no par value ("Class G Common Stock"), into 60
million shares of CMS Common Stock.


These two changes would result in a total of 350 million authorized shares of
Common Stock. The authorized number of shares of our preferred stock, par value
$.01 per share, will remain at 10 million. Therefore, as a result of the

                                        31



proposed amendment, our total authorized capital stock will increase from 320
million shares to 360 million shares. Specifically, the Board of Directors
recommends that the first paragraph of Article III of the Corporation's Restated
Articles of Incorporation should be amended to read as follows:


    The total number of shares of all classes of stock which the Corporation
    shall have authority to issue is 360,000,000, of which 10,000,000 shares,
    par value $.01 per share, are of a class designated Preferred Stock
    ("Preferred Stock"), and 350,000,000 shares, par value $.01 per share, are
    of a class designated Common Stock ("Common Stock").


As of April 1, 2004, of the 250 million shares of CMS Common Stock authorized
for issuance:


- approximately 161 million shares were outstanding;

- approximately 58 million shares were reserved for issuance upon conversion of
  our outstanding convertible securities; and


- approximately 21 million shares were reserved for issuance under our employee
  benefit and shareholder stock purchase plans.



That leaves approximately 10 million authorized shares of CMS Common Stock
available for future issuances of any type. The Board of Directors believes that
it is prudent to approve the proposed increase in authorized Common Stock and
re-designation of our Class G Common Stock in order to give us the flexibility
necessary to issue additional shares of CMS Common Stock as needed for general
corporate purposes. In particular, the proposed increase and re-designation are
desirable to make available sufficient shares for possible future stock splits,
stock dividends, employee benefit and shareholder stock purchase plans
issuances, equity financings, acquisitions and other general corporate purposes.



We do not currently have any specific transaction or plan that requires an
increase in the number of authorized shares of CMS Common Stock. Authorized but
unissued shares of CMS Common Stock may be issued at such time, for such
purposes, and for such consideration as the Board of Directors may determine
without the requirement of further action by shareholders, except as required by
applicable corporate law, stock exchange policies or our Restated Articles of
Incorporation.



The adoption of the proposed amendment to the Corporation's Restated Articles of
Incorporation to increase the number of authorized shares of CMS Common Stock
from 250 million shares to 290 million shares and to re-designate the 60 million
shares of currently authorized but unissued shares of our Class G Common Stock
into 60 million shares of CMS Common Stock, resulting in a total of 350 million
authorized shares of CMS Common Stock, requires a majority vote of the
outstanding shares of CMS Common Stock.



The Corporation's Restated Articles of Incorporation previously provided for a
Series of Preferred Stock designated as the "Series A Mandatorily Convertible
Preferred Stock." This series of Preferred Stock was redeemed in January 2002,
and we will eliminate the designation of this series of Preferred Stock from our
Restated Articles of Incorporation in accordance with state law at the time of
our amendment if this proposal is approved. There are at present no shares of
any series of our Preferred Stock issued and outstanding.


              YOUR BOARD RECOMMENDS A VOTE FOR THE ADOPTION OF THE
         PROPOSED AMENDMENT TO OUR RESTATED ARTICLES OF INCORPORATION.

                                        32


                COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
               AMONG CMS, S&P 500 INDEX & DOW JONES UTILITY INDEX

                              [PERFORMANCE GRAPH]



                               INDEXED RETURN
                   ---------------------------------------
COMPANY/INDEX      1998   1999   2000   2001   2002   2003
-------------      ----   ----   ----   ----   ----   ----
                                    
CMS                100     67     73     58     25     22
S & P 500          100    121    110     97     76     97
DOW JONES UTILITY  100     94    142    106     81    105



These cumulative total returns assume reinvestment of dividends (except for CMS
in the 12-month period through December 31, 2003 when we have not paid a
dividend on CMS Common Stock). The calculations also assume the value of the
investment in CMS Common Stock and each index was $100 on December 31, 1998.


                        2005 PROXY STATEMENT INFORMATION


A shareholder who wishes to submit a proposal for consideration at the 2005
annual meeting pursuant to the applicable rules of the SEC must send the
proposal to reach our Corporate Secretary on or before December 24, 2004. In any
event, if we have not received written notice of any matter to be proposed at
that meeting by March 9, 2005, the holders of the proxies may use their
discretionary voting authority on any such matter. The proposals should be
addressed to: Corporate Secretary, CMS Energy Corporation, One Energy Plaza,
Jackson, Michigan 49201.


                                        33


                                 OTHER MATTERS

The Board of Directors knows of no other matters that might be presented to the
meeting except matters incident to the conduct of the meeting. However, if any
other matters (including matters incident to the conduct of the meeting) do come
before the meeting, it is intended that the holders of the proxies will vote
thereon in their discretion.


The cost of solicitation of proxies will be borne by CMS. Proxies may be
solicited by officers and other employees of CMS or its subsidiaries or
affiliates, personally or by telephone, facsimile, Internet, or mail. We have
arranged for Morrow & Co., Inc., 445 Park Avenue, New York, New York 10022, to
solicit proxies in such manner, and it is anticipated that the cost of such
solicitations will not exceed $20,000, plus incidental expenses. We may also
reimburse brokers, dealers, banks, voting trustees or other record holders for
postage and other reasonable expenses of forwarding the proxy material to the
beneficial owners of CMS Common Stock held of record by such brokers, dealers,
banks, voting trustees or other record holders.


In some instances, only one annual report or proxy statement is being delivered
to multiple security holders sharing an address unless we have received contrary
instructions from one or more of the shareholders. A shareholder wishing to
receive a separate annual report or proxy statement can so notify CMS at the
address or telephone number below. Similarly, shareholders currently receiving
multiple copies of these documents can request the elimination of duplicate
documents by contacting our Investor Services Department, One Energy Plaza,
Jackson, Michigan 49201, telephone 517-788-1868.

                                        34


                                   APPENDIX A

                        PERFORMANCE INCENTIVE STOCK PLAN


The CMS Energy Corporation Performance Incentive Stock Plan, first effective
February 3, 1988, is hereby set forth as amended and restated effective June 1,
2004.



                               Article I. Purpose



The CMS Energy Corporation Performance Incentive Stock Plan (hereinafter called
the "Plan") is a Plan to provide incentive compensation to Eligible Persons,
based upon such Eligible Persons' individual contributions to the long-term
growth and profitability of the Corporation, and in order to encourage such
Eligible Persons to identify with shareholder concerns and their current and
continuing interest in the development and financial success of the Corporation.
Because it is expected that the efforts of the key employees, Directors or
advisors selected for participation in the Plan will have a significant impact
on the results of the Corporation's operations in future years, the Plan is
intended to assist the Corporation in attracting and retaining as key employees,
Directors or advisors individuals of superior ability and in motivating their
activities on behalf of the Corporation.



                            Article II. Definitions



 2.1 Definitions: When used in the Plan, the following words and phrases shall
have the following meanings:



     a.  "Beneficiary" means the beneficiary or beneficiaries designated to
         receive the amount, if any, payable under the Plan upon the death of a
         Participant.



     b.  "Board" means the Board of Directors of the Corporation.



     c.  "Committee" means the Organization and Compensation Committee of the
         Board, which shall be comprised in such a manner to comply with the
         requirements, if any, of the New York Stock Exchange or other
         applicable stock markets, Rule 16b-3 (or any successor rule) under the
         Securities Exchange Act of 1934, as amended, and Section 162(m) of the
         Internal Revenue Code of 1986, as amended.



     d.  "Common Stock" means the Common Stock of the Corporation as authorized
         for issuance in its Articles of Incorporation at the time of an award
         or grant under this Plan.



     e.  "Corporation" means CMS Energy Corporation, its successors and assigns,
         and each of its Subsidiaries, or any of them individually.



     f.   "Director" means any person who is a member of the Board of Directors
          of the Corporation or a Subsidiary.



     g.  "Eligible Person" means a key employee, non-employee Director or
         advisor. A key employee must at the end of the fiscal year be a regular
         full-time salaried employee of the Corporation or a Subsidiary, or, to
         the extent the Committee may determine, a person whose services to the
         Corporation terminated before the end of the fiscal year, who, in the
         opinion of the Committee, made a significant contribution to the
         Corporation or a Subsidiary.


                                       A-1



     h.  "Incentive Option" means an option to purchase Common Stock of the
         Corporation which meets the requirements set forth in the Plan and also
         meets the definition of an Incentive Stock Option set forth in Section
         422 of the Internal Revenue Code of 1986, as amended (the "Code").



     i.   "Non-Employee Director" means a member of the Board of Directors of
          the Corporation or a Subsidiary who is not currently an employee of
          the Corporation or a Subsidiary and has not been an employee of the
          Corporation or a Subsidiary within the preceding 3 years.



     j.   "Nonqualified Option" means an option to purchase Common Stock of the
          Corporation which meets the requirements set forth in the Plan but
          does not meet the definition of an Incentive Stock Option set forth in
          Section 422 of the Code.


     k.  "Officers Incentive Compensation Plan" means the incentive compensation
         plan, including any amendments thereto, authorized and approved by the
         Board to provide incentive compensation to the Officers of the
         Corporation or a Subsidiary.

     l.   "Optionee" means any person to whom an option or right has been
          granted or who becomes a holder of an option or right under Article VI
          of the Plan.

     m.  "Participant" means a person to whom a grant or award has been made
         which has not been paid, forfeited, or otherwise terminated or
         satisfied under the Plan, or a person included under the Management
         Stock Purchase Plan.

     n.  "Performance Criteria" are the factors used by the Committee to
         establish goals to track business measures such as net earnings;
         operating earnings or income; earnings growth; net income (absolute or
         competitive growth rates comparative); cash flow (including operating
         cash flow, free cash flow, discounted cash flow return on investment,
         and cash flow in excess of cost of capital); earnings per share; stock
         price (absolute or peer-group comparative); total shareholder return;
         absolute and/or relative return on common shareholders equity; return
         on shareholders equity (absolute or peer-group comparative); absolute
         and/or relative return on capital; absolute and/or relative return on
         assets; economic value added (income in excess of cost of capital);
         customer satisfaction; expense reduction; sales; or ratio of operating
         expenses to operating revenues.

     o.  "Performance Unit" means a contractual right granted to a Participant
         pursuant to Article VIII to receive a designated dollar value equal to
         the value established by the Committee and subject to such terms and
         conditions as are set forth in this Plan and the applicable grant.

     p.  "Phantom Share" means a contractual right granted to a Participant
         pursuant to Article VIII to receive an amount equal to the Appreciation
         Value at such time, and subject to such terms and conditions as are set
         forth in this Plan and the applicable grant.

     q.  "Restricted Common Stock" means Common Stock delivered subject to the
         restrictions described in Article VII.


     r.   "Restricted Stock Unit" means a bookkeeping account established
          pursuant to a matching grant to a Participant, as described in Article
          VIII, that is (a) credited with amounts equal to Shares or some other
          unit of measurement specified in the award, (b) subject to
          restrictions and (c) payable in cash or shares.


     s.  "Shareholders" means the shareholders of the Corporation.

                                       A-2


     t.   "Stock Appreciation Right" shall mean a right, granted in conjunction
          with a Stock Option, to surrender the Stock Option and receive the
          appreciation in value of the optioned shares over the option price.

     u.  "Stock Option" means an option to purchase shares of Common Stock,
         granted pursuant to this Plan.

     v.  "Subsidiary" means a corporation, domestic or foreign, 50 percent or
         more of the voting stock of which is owned directly or indirectly by
         the Corporation.


  Article III. Effective Date. Duration, Scope and Administration of the Plan


 3.1 This Plan shall be effective June 1, 2004, conditioned upon approval of the
     shareholders of the Corporation, and shall continue until May 31, 2009.

 3.2 The Committee shall have full power and authority to construe, interpret
     and administer the Plan. All decisions, actions or interpretations of the
     Committee shall be final, conclusive and binding upon all parties. If any
     person objects to any such interpretation or action formally or informally,
     the expenses of the Committee and its agents and counsel shall be
     chargeable against any amounts otherwise payable under the Plan to or on
     account of the Participant or Optionee.

 3.3 No member of the Committee shall be personally liable by reason of any
     contract or other instrument executed by him or on his behalf in his
     capacity as a member of the Committee nor for any mistake of judgment made
     in good faith, and the Corporation shall indemnify and hold harmless each
     member of the Committee and each other officer, employee or director of the
     Corporation to whom any duty or power relating to the administration or
     interpretation of the Plan may be allocated or delegated, against any cost
     or expense (including counsel fees) or liability (including any sum paid in
     settlement of a claim with the approval of the Board) arising out of any
     act or omission to act in connection with the Plan unless arising out of
     such person's own fraud or bad faith.


                  Article IV. Participation, Awards and Grants


 4.1 Each year the Committee shall designate as Participants and/or Optionees in
     the Plan those Eligible Persons who, in the opinion of the Committee, have
     significantly contributed to the Corporation.

 4.2 Each year, the Committee may award shares of Common Stock, Restricted Stock
     Units, and/or may grant Phantom Shares, Performance Units, Stock Options
     which qualify as "Incentive Stock Options" within the meaning of Section
     422 of the Code or Stock Options which do not qualify as Incentive Stock
     Options and/or Stock Appreciation Rights for use in connection with Stock
     Options to each Eligible Person whom it has designated as an Optionee or
     Participant for such year. No Incentive Stock Option will be granted to an
     Eligible Person who is not a full or part-time employee of the Corporation
     or a subsidiary of the Corporation.


 4.3 Awards of Common Stock or Restricted Stock Units and grants of Stock
     Options (with or without Stock Appreciation Rights), Phantom Shares or
     Performance Units may be made, without amending the Plan, to Eligible
     Persons who are foreign nationals or employed outside the United States or
     both, on such terms and conditions different from those specified in the
     Plan as may, in the judgment of the Committee, be necessary or desirable to
     further the purposes of the Plan or to accommodate differences in local
     law, tax policy or custom. Moreover, the Committee may approve such
     supplements to or alternative versions of the Plan as it may consider
     necessary or appropriate for such purposes without thereby affecting the
     terms of the Plan as in effect for any other purpose; provided, however, no
     such supplement or alternative version shall: (a) increase the


                                       A-3


     number of available shares of Common Stock under Section 5.1; or (b)
     increase the limitations contained in Section 5.3.


                   Article V. Shares Reserved Under the Plan


 5.1 There is hereby reserved for award under this Plan 6 million whole shares
     of Common Stock, less the number of shares awarded, granted or purchased
     under the provisions of this Plan which have not been forfeited. To the
     extent permitted by law or the rules and regulations of any stock exchange
     on which the Common Stock is listed, shares of Common Stock with respect to
     which payment or exercise is in cash as well as any shares or options which
     are forfeited may thereafter again be awarded or made subject to grant
     under the Plan. The number of shares made available for option and sale
     under Article VI of this Plan plus the number of shares awarded under
     Article VII of this Plan plus the number of shares awarded or purchased
     under Article VIII of this Plan will not exceed, at any time, the number of
     shares of Common Stock reserved pursuant to this Article V.


 5.2 If a dividend shall be declared upon the Common Stock payable in shares of
     Common Stock, the number of shares of Common Stock then subject to any such
     option and the number of shares reserved for issuance pursuant to the Plan
     but not yet covered by an option shall be adjusted by adding to each such
     option or share the number of shares which would be distributable thereon
     if such share had been outstanding on the date fixed for determining the
     shareholders entitled to receive such stock dividend. In the event that the
     outstanding shares of the Common Stock shall be changed into or exchanged
     for a different number or kind of shares of stock or other securities of
     CMS Energy Corporation or of another corporation, whether through
     reorganization, recapitalization, stock split-up, combination of shares,
     merger or consolidation or otherwise, then there shall be substituted for
     each share of Common Stock subject to any such option and for each share of
     Common Stock reserved for issuance pursuant to the Plan but not yet covered
     by an option, the number and kind of shares of stock or other securities
     into which each outstanding share of Common Stock shall be so changed or
     for which each such share shall be exchanged. In the event there shall be
     any change, other than as specified above in this Section 5.2, in the
     number or kind of outstanding shares of Common Stock of the Corporation or
     of any stock or other securities into which such Common Stock shall have
     been changed or for which it shall have been exchanged, then if the
     Committee shall in its sole discretion determine that such change equitably
     requires an adjustment in the number or kind of shares theretofore reserved
     for issuance pursuant to the Plan but not yet covered by an option and of
     the shares then subject to an option or options, such adjustment shall be
     made by the Committee and shall be effective and binding for all purposes
     of the Plan and each Stock Option agreement. In the ease of any such
     substitution or adjustment as provided for in this paragraph, the option
     price in each Stock Option agreement for each share covered thereby prior
     to such substitution or adjustment will be the option price for all shares
     of stock or other securities which shall have been substituted for such
     share or to which such share shall have been adjusted pursuant to this
     section. No adjustment or substitution provided for in this Section 5.2
     shall require the Corporation in any Stock Option agreement to sell a
     fractional share, and the total substitution or adjustment with respect to
     each Stock Option agreement shall be limited accordingly.


 5.3 Individual Grant Limit: The combined maximum shares awarded or granted for
     any one Eligible Person for any one year under this Plan, excluding (a) any
     shares or Restricted Share Units purchased or awarded under the Management
     Stock Purchase Plan in Section 8.3 and (b) any Performance Units awarded
     under Section 8.2, will not exceed 250,000 shares of Common Stock.

                                       A-4



            Article VI. Stock Options and Stock Appreciation Rights


 6.1 The Committee may from time to time provide for the option and sale of
     shares of Common Stock, which may consist in whole or in part of the
     authorized and unissued Common Stock of the Corporation.


 6.2 Optionees: The Committee shall determine and designate from time to time,
     in its discretion, those Eligible Persons to whom Stock Options and Stock
     Appreciation Rights are to be granted and who thereby become Optionees
     under the Plan.


 6.3 Allotment of Shares: The Committee shall determine and fix the number of
     shares of Common Stock subject to options to be offered to each Optionee.

 6.4 Option Price: The Committee shall establish the option price at the time
     any option is granted at not less than 100% of the fair market value of the
     stock on the date on which such option is granted; provided, however, that
     with respect to an Incentive Option granted to an employee who at the time
     of the grant owns (after applying the attribution rules of Section 425(d)
     of the Code) more than 10% of the total combined voting stock of the
     Corporation or of any parent or Subsidiary, the option price shall not be
     less than 110% of the fair market value of the stock subject to the
     Incentive Option on the date such option is granted. In no event shall
     Options previously granted under this Plan be re-priced by reducing the
     exercise price thereof, nor shall Options previously granted under this
     Plan be cancelled and replaced by a subsequent re-grant under this Plan of
     Options having an exercise price lower than the options so cancelled.

 6.5 Stock Appreciation Rights: At the discretion of the Committee, any Stock
     Option granted under this Plan may, at the time of such grant, include a
     Stock Appreciation Right. A Stock Appreciation Right shall pertain to, and
     be granted only in conjunction with, a related underlying Stock Option, and
     shall be exercisable only at the time and to the extent the related
     underlying Stock Option is exercisable and only if the fair market value of
     the Common Stock of the Corporation exceeds the Stock Option price in the
     related underlying Stock Option. An Optionee who is granted a Stock
     Appreciation Right may elect to surrender the related underlying Stock
     Option with respect to all or part of the number of shares subject to the
     related underlying Stock Option and exercise in lieu thereof the Stock
     Appreciation Right with respect to the number of shares as to which the
     Stock Option is surrendered.

     The exercise of the underlying Stock Option shall terminate the related
     Stock Appreciation Right to the extent of the number of shares purchased
     upon exercise of the underlying Stock Option. The exercise of a Stock
     Appreciation Right shall terminate the related underlying Stock Option to
     the extent of the number of shares with respect to which the Stock
     Appreciation Right is exercised. Upon exercise of a Stock Appreciation
     Right, an Optionee shall be entitled to receive, without payment to the
     Company (except for applicable withholding taxes), an amount equal to the
     excess of (i) the then aggregate fair market value of the number of shares
     with respect to which the Optionee exercises the Stock Appreciation Right,
     over (ii) the aggregate Stock Option price per share for such number of
     shares. Such amount may be paid by the Corporation, at the election of the
     Optionee, in cash, Common Stock of the Corporation or any combination
     thereof; provided, however, that the Committee shall have sole discretion
     to approve or disapprove an election of an Optionee to receive cash upon
     exercise of a Stock Appreciation Right.

 6.6 Granting and Exercise of Stock Options and Stock Appreciation Rights: The
     granting of Stock Options and Stock Appreciation Rights hereunder shall be
     effected in accordance with determinations made by the Committee pursuant
     to the provisions of the Plan, by execution of instruments in writing in
     form approved by

                                       A-5


     the Committee. The Committee may grant Stock Options that provide for the
     grant of a subsequent restoration Stock Option if the exercise price has
     been paid for by tendering shares to the Company. Any restoration Stock
     Option shall be for the number of shares tendered in exercising the
     predecessor option. The restoration Stock Option exercise price shall be
     the then-current Fair Market Value, and the term of such restoration option
     may not extend beyond the remaining term of the original option.

     Each Stock Option and Stock Appreciation Right granted hereunder shall be
     exercisable at any such time or times or in any such installments as may be
     determined by the Committee at the time of the grant, subject to the
     limitation that for each Incentive Option and related Stock Appreciation
     Right granted, a maximum of $100,000 (based on the price at the date of
     grant) may be exercised per year, plus any unused carry-over from a
     previous year(s). Except as provided in Section 6.10, Stock Options and
     Stock Appreciation Rights may be exercised only while the Optionee is an
     employee, Non-Employee Director or advisor of the Corporation.

     Successive Stock Options and Stock Appreciation Rights may be granted to
     the same Optionee, whether or not the Stock Option(s) and Stock
     Appreciation Right(s) previously granted to such Optionee remain
     unexercised. An Optionee may exercise a Nonqualified Option or related
     Stock Appreciation Right, if then exercisable, notwithstanding that Stock
     Options and Stock Appreciation Rights previously granted to such Optionee
     remain unexercised.

 6.7 Payment of Stock Option Price: At the time of the exercise in whole or in
     part of any Stock Option granted hereunder, payment of the option price in
     full in cash or in Common Stock of the Corporation shall be made by the
     Optionee for all shares so purchased. No Optionee shall have any of the
     rights of a Shareholder of the Corporation under any such Stock Option
     until the actual issuance of shares to said Optionee, and prior to such
     issuance no adjustment shall be made for dividends, distributions or other
     rights in respect of such shares, except as provided in Section 5.2.

 6.8 Nontransferability of Stock Options and Stock Appreciation Rights: No Stock
     Option or Stock Appreciation Right granted under the Plan to an Optionee
     shall be transferable by such Optionee otherwise than by will, pursuant to
     a valid Domestic Relations Order which limits the rights of the alternate
     payee to those available to the Optionee, or by the laws of descent and
     distribution except that the Optionee may transfer to an immediate family
     member or a family trust for estate planning purposes, and such Stock
     Option and Stock Appreciation Right shall be exercisable, during the
     lifetime of the Optionee, only by the Optionee or by a member of such
     Optionee's immediate family or by the family trust.

 6.9 Term of Stock Options and Stock Appreciation Rights: If not sooner
     terminated, each Stock Option and Stock Appreciation Right granted
     hereunder shall expire not more than ten years from the date of the
     granting thereof; provided, that with respect to an Incentive Option and a
     related Stock Appreciation Right granted to an Optionee who, at the time of
     the grant, owns (after applying the attribution rules of Section 425(d) of
     the Code) more than 10% of the total combined voting stock of all classes
     of stock of the Corporation or of any parent or Subsidiary, such Incentive
     Option and Stock Appreciation Right shall expire not more than five years
     after the date of granting thereof.

6.10 Termination of Employment: If the employment of an Optionee by the
     Corporation shall be terminated due to a reason other than the Optionee's
     death, the Committee may, in its discretion, permit the exercise of Stock
     Options and Stock Appreciation Rights granted to such Optionee for a period
     not to exceed one year following such termination of employment or three
     years following termination of employment upon the Optionee's
                                       A-6


     disability as determined by the Committee or retirement in accordance with
     a pension plan of the Corporation; provided, however, that no Incentive
     Option or related Stock Appreciation Right may be exercised after three
     months following an Optionee's termination of employment, unless such
     termination of employment is due to the Optionee's death or disability. If
     the termination is due to the Optionee's disability, the Committee may
     permit the Incentive Option and related Stock Appreciation Right to be
     exercised for one year following the Optionee's termination of employment.
     If the employment of an Optionee by the Corporation shall be terminated due
     to the Optionee's death, any Stock Option, or related Stock Appreciation
     Right, transferred to a family trust or by will or by the laws of descent
     and distribution, may be exercised for one year following the Optionee's
     death. In no event, however, shall a Stock Option or Stock Appreciation
     Right be exercisable subsequent to its expiration date and, furthermore, a
     Stock Option or Stock Appreciation Right may only be exercised after
     termination of an Optionee's employment to the extent exercisable on the
     date of termination of employment. Upon the termination of employment of an
     Optionee by the Corporation, every Stock Option and related Stock
     Appreciation Right shall terminate, except as otherwise specifically
     provided in this Plan. Further, no Stock Option or related Stock
     Appreciation Right may be exercised after such termination of employment,
     except within a time period provided in this Section 6.10.

6.11 Termination of Service: If a Non-Employee Director ceases to be a member of
     the Board for any reason, or if an advisor no longer provides service to
     the Corporation, the Non-Employee Director or advisor may exercise any
     Option or related Stock Appreciation Right for one year following such
     termination of service. In no event, however, shall a Stock Option or Stock
     Appreciation Right be exercisable subsequent to its expiration date and,
     furthermore, a Stock Option or Stock Appreciation Right may only be
     exercised after termination of an Optionee's service to the extent
     exercisable on the date of termination of service. Further, no Stock Option
     or related Stock Appreciation Right may be exercised after such termination
     of service, except within a time period provided in this Section 6.11.

6.12 Investment Purpose: Any shares of Common Stock subject to option under the
     Plan may be made subject to such other restrictions as the Committee deems
     advisable, including without limitation provisions to comply with Federal
     and state securities laws. In making determinations of legal requirements
     the Committee shall rely on an opinion of counsel for the Corporation.

6.13 Withholding Payments: If upon the exercise of a Nonqualified Option and/or
     a Stock Appreciation Right or as a result of a disqualifying disposition
     (within the meaning of Section 422 of the Code) of shares acquired upon
     exercise of an Incentive Option, there shall be payable by the Corporation
     any amount for income tax withholding, either the Corporation shall
     appropriately reduce the amount of stock or cash to be paid to the Optionee
     or the Optionee shall pay such amount to the Corporation to reimburse it
     for such income tax withholding.

6.14 Restrictions on Sale of Shares: If, at the time of exercise of any Stock
     Option or Stock Appreciation Right granted hereunder, the Corporation is
     precluded by any legal, regulatory or contractual restriction from selling
     and/or delivering shares pursuant to the terms of such Stock Option or
     Stock Appreciation Right, the sale and delivery of the shares may be
     delayed until the restrictions are resolved and only cash may be paid upon
     exercise of the Stock Appreciation Right. At any time during such delay,
     the Committee, in its discretion, may permit the Optionee to revoke a Stock
     Option exercise, in which event any corresponding Stock Appreciation Right
     shall be reinstated.

                                       A-7


6.15 Compliance With Rule 16b-3: Notwithstanding any other provision of the Plan
     to the contrary, the administration of the Plan and the grant, exercise and
     terms of Stock Appreciation Rights hereunder shall comply with Rule 16b-3,
     or any successor rule, under the Securities Exchange Act of 1934, as
     amended (the "Exchange Act").


                        Article VII. Restricted Common Stock


 7.1 Awards: The Committee may from time to time award restricted shares of
     Common Stock to any Eligible Person it has designated as a Participant for
     such year. Awards shall be made to Eligible Persons in accordance with such
     rules as the Committee may prescribe. The Committee may also award
     restricted shares of Common Stock conditioned on the attainment of a
     performance goal that relates to Shareholder return, measured by
     Performance Criteria as determined by the Committee as set forth in the
     award.

 7.2 Restrictions:


     a.  Any shares of Common Stock awarded or issued under the Plan may be made
         subject to such other restrictions as the Committee deems advisable,
         including without limitation provisions to comply with Federal and
         state securities laws. In making determinations of legal requirements
         the Committee shall rely on an opinion of counsel for the Corporation.
         The restrictions with respect to the Common Stock awarded will extend
         for such period, or periods, of at least twelve months from and after
         the date of the award, as may be determined for each award by the
         Committee (the Award Period). Notwithstanding the foregoing, the
         restrictions shall terminate upon the death of the Participant or,
         within the discretion of the Committee, upon Participant's retirement
         pursuant to a pension plan of the Corporation on or after Participant's
         62nd birthday, except as may otherwise be determined to be necessary or
         desirable in the opinion of the Committee, to comply with the law or to
         prevent Restricted Common Stock from being subject to Federal income
         tax prior to the termination of restrictions.



     b.  Whenever shares of Common Stock are awarded to a Participant, such
         shares shall be outstanding, and stock certificates shall be issued in
         the name of the Participant, which certificates may bear a legend
         stating that the shares are issued subject to the restrictions set
         forth in the Plan. All certificates issued for shares of Common Stock
         awarded under the Plan shall be deposited for the benefit of the
         Participant with the Secretary of the Corporation as custodian until
         such time as the shares are vested and transferable.



     c.  A Participant who is awarded shares of Common Stock under the Plan
         shall have full voting rights on such shares, whether or not the shares
         are vested or transferable.



     d.  Shares of Common Stock awarded to a Participant under the Plan, whether
         or not vested or transferable, may have full dividend rights as
         determined by the Committee. However, if shares or securities are
         issued as a result of a merger, consolidation or similar event, such
         shares shall be issued in the same manner, and subject to the same
         deposit requirements, vesting provisions and transferability
         restrictions as the shares of Common Stock which have been awarded.



     e.  Deliveries of Restricted Common Stock by the Corporation may consist in
         whole or in part of the authorized and unissued Common Stock of the
         Corporation (at such time or times and in such manner as it may
         determine). The Restricted Common Stock shall be paid and delivered as
         soon as practicable after the award period in accordance with Section
         7.3.


                                       A-8


     f.   The shares may not be sold, exchanged, transferred, pledged,
          hypothecated, or otherwise disposed of by the Participant until their
          release. However, nothing herein shall preclude a Participant from
          making a gift of any shares of Restricted Common Stock to a spouse,
          child, stepchild, grandchild, parent or sibling, or legal dependent of
          the Participant or to a trust of which the beneficiary or
          beneficiaries of the corpus and the income shall be either such a
          person or the Participant; provided that, the Restricted Common Stock
          so given shall remain subject to the restrictions, obligations and
          conditions described in this Article VII.

     g.  If a Participant has received an award pursuant to the provisions of
         the Plan, is employed by the Corporation or remains a Non-Employee
         Director or is an advisor at the end of the award period and the
         performance goals have been met, then the Participant shall be fully
         vested, at the end of the award period, in the shares of Common Stock
         awarded to the Participant for that award period.

     h.  In the event of termination of employment of an employee Participant or
         termination of service of a Non-Employee Director or advisor prior to
         the last day of an award period for any reason other than Participant's
         death, all rights to any shares of Restricted Common Stock held in a
         deposit account with respect to such award, including any additional
         shares delivered with respect to such shares as described in subsection
         7.2d above shall be forfeited to the Corporation. However, the
         Committee may, if the Committee determines that the circumstances
         warrant such action, approve the distribution of all or any part of the
         Restricted Common Stock which would otherwise be forfeited.

 7.3 Distribution of Restricted Common Stock

     a.  Distribution After Award Period: Except as otherwise provided,
         distribution of vested awards of Common Stock shall be made as soon as
         practicable after the last day of the applicable award period in the
         form of full shares of Common Stock, with fractional shares, if any,
         being awarded in cash.

     b.  Distribution After Death of Participant: Upon the death of the
         Participant, either before or after retirement, any shares of
         Restricted Common Stock then held shall, subject to this Article VII,
         be delivered within a reasonable time under the circumstances to
         Participant's Beneficiary or, in the absence of an appropriate
         Beneficiary designation to the Participant's estate, in such one or
         more installments as the Committee may then determine.

 7.4 Designation of Beneficiaries

     If a Participant dies prior to the receipt in full of any award under the
     Plan to which the Participant is entitled, the award shall be distributed
     to the Participant's Beneficiary or, in the absence of a Beneficiary
     designation, to the Participant's estate. The designation of a Beneficiary
     shall be made in writing on a form prescribed by and filed with the
     Committee prior to the Participant's death. If the Committee is in doubt as
     to the right of any person to receive such amount, the Committee may retain
     such amount, without liability for any interest thereon, until the rights
     thereto are determined, or the Committee may pay such amount into any court
     of appropriate jurisdiction and such payment shall be a complete discharge
     of the liability of the Plan and the Corporation therefor.

 7.5 Transferability: Subject to the provision of this Article VII, shares of
     Common Stock awarded to a Participant will become freely transferable by
     the Participant only at the end of the award period established with
     respect to such shares.

                                       A-9



 7.6 Distribution to Person Other Than Employee: If the Committee shall find
     that any person to whom any award is payable under this Article VII of the
     Plan is unable to care for such person's affairs because of illness or
     accident, or is a minor, or has died, then any payment due Participant or
     Participant's estate (unless a prior claim therefor has been made by a duly
     appointed legal representative), may, if the Committee so directs the
     Corporation, be paid to Participant's spouse, a child, a relative, an
     institution maintaining or having custody of such person, or any other
     person deemed by the Committee to be a proper recipient on behalf of such
     person otherwise entitled to payment. Any such payment shall be a complete
     discharge of the liability of the Committee and the Corporation therefor.


 7.7 Restricted Common Stock for employee Participants is intended to constitute
     an unfunded deferred compensation arrangement for a select group of
     management or highly compensated personnel.

 7.8 A forfeiture of shares of Common Stock pursuant to subsection 7.2h of the
     Plan shall effect a complete forfeiture of voting rights, dividend rights
     and all other rights relating to the award or grant as of the date of
     forfeiture.


 7.9 Each distribution of Common Stock under this Article VII of the Plan shall
     be made subject to such federal, state and local tax withholding
     requirements as apply on the distribution date. For this purpose, the
     Committee may provide for the withholding of shares of Common Stock or
     allow a Participant to pay to the Corporation funds sufficient to satisfy
     such withholding requirements.



  Article VIII. Phantom Shares, Performance Units, Restricted Stock Units and
                         Management Stock Purchase Plan


 8.1 Phantom Shares.


     a.  Grants of Phantom Shares. The Committee may from time to time grant
         Phantom Shares, the value of which is determined by reference to a
         share of Common Stock on terms and conditions as the Committee, in its
         discretion, may from time to time determine. Each grant of Phantom
         Shares shall specify the number of Phantom Shares granted, the Initial
         Value of such Phantom shares which shall not be less than 100% of the
         Fair Market Value of the Common Stock as of the date of grant, the
         Valuation Dates, the number of Phantom Shares whose appreciation value
         shall be determined on each such Valuation Date, any applicable vesting
         schedule for such Phantom Shares, and any applicable limitation on
         payment for such Phantom Shares.



     b.  Appreciation Value.


        (i) Valuation Dates; Measurement of Appreciation Value. The Committee
            shall provide for one or more Valuation Dates on which the
            Appreciation Value of the Phantom Shares granted shall be measured
            and fixed, and shall designate the number of such Phantom Shares
            whose Appreciation Value is to be calculated on each such Valuation
            Date.

        (ii) Payment of Appreciation Value. Except as otherwise provided in this
             Section 8.1, the Appreciation Value of a Phantom Share shall be
             paid to a Participant in cash in a lump sum as soon as practicable
             following the Valuation Date applicable to such Phantom Share. The
             Committee may in its discretion, establish and set forth a maximum
             dollar amount payable under the Plan for each Phantom Share
             granted.

                                       A-10


        (iii) The Committee may, in its discretion, provide that Phantom Shares
              shall vest (subject to such terms and conditions as the Committee
              may provide in the award) over such period of time, from the date
              of grant, as may be specified in a vesting schedule contained in
              the grant.

        (iv) Termination. In the event of termination of employment of an
             employee Participant or termination of service of a non-Employee
             Director or advisor prior to one or more Valuation Dates, unless
             the Committee in its discretion determines otherwise, the
             Appreciation Value for any Phantom Share to which the Participant's
             Rights are vested, shall be the lesser of the Appreciation Value as
             of the termination date or the Appreciation Value of such Phantom
             Share calculated as of the originally scheduled Valuation Date
             applicable thereto in accordance with Section 8.1(b)(i). Unless the
             Committee, in its discretion determines otherwise, the Appreciation
             Value so determined for each such vested outstanding Phantom Share
             shall then be payable to the Participant or the Participant's
             estate following the originally scheduled Valuation Date applicable
             thereto in accordance with Section 8.1(b)(ii). Upon a termination
             as described in this Section 8.1(b)(iv), all rights with respect to
             Phantom Shares that are not vested as of such date will be
             relinquished.

 8.2 Performance Units. The Committee may, in its discretion, grant Performance
     Units to Eligible Persons. Each Performance Unit will have an initial value
     that is established by the Committee at the time of grant and credited to a
     bookkeeping account established for the Participant, but no Participant
     shall be granted Performance Units during any one fiscal year with an
     initial value in excess of $2.5 million. The Committee will set performance
     periods and objectives and other terms and conditions of the grant based
     upon Performance Criteria as determined by the Committee that, depending
     upon the extent to which they are met, will determine the value of
     Performance Units that will be paid out to the Participant. The Committee
     may pay earned Performance Units in cash, Common Stock or a combination
     thereof.

     Unless otherwise set forth in the grant, in the event the employment of an
     employee Participant is terminated during a performance period due to
     death, disability or retirement under the provisions of the Pension Plan
     the Participant will receive a prorated payout of Performance Units. In the
     event the employment is terminated for any other reason, then all
     Performance Units will be forfeited. If the service of a Non-Employee
     Director or advisor is terminated during a performance period, the
     Participant will receive a prorated payout of Performance Units.
     Notwithstanding the above, no payouts will be made to the extent that
     objectives other than the duration of the performance period have not been
     met except to the extent that the Committee in its discretion decides to
     waive any such other achievement or objectives.


 8.3 Management Stock Purchase Plan. The Committee may permit select employee
     Participants to elect to receive all or a portion of their incentive
     payment under the Officer's Incentive Compensation Plan in the form of
     cash, shares of Restricted Common Stock, shares of Restricted Stock Units
     or a combination of these and any such election of Restricted Common Stock
     and/or Restricted Stock Units shall be referred to for purposes of this
     Plan as a purchase. The Committee may also award additional shares of
     Restricted Common Stock or Restricted Stock Units to such select
     Participants who elect to receive their incentive payment in the form of
     Common Stock or Restricted Stock Units, provided that the value of all such
     additional Common Stock and Restricted Stock Units awarded to any one
     Participant will not exceed $2.5 million for any fiscal year. Shares of
     Common Stock and Restricted Stock Units will be granted under and governed
     by the terms and conditions of this Plan (other than the limitations with
     respect to maximum shares under Section 5.3) as well as any terms of the
     grant. Each grant will set forth the extent to which the Participant has
     the right to retain unvested Restricted Common Stock or Restricted Stock
     Units after his or her termination of employment with the Corporation or a


                                       A-11


     Subsidiary. These terms will be determined by the Committee in its sole
     discretion, need not be uniform among all grants, and may reflect, among
     other things, distinctions based on the reasons for termination of
     employment.


          Article IX. Amendment, Duration and Termination of the Plan



 9.1 Duration of Plan. No grants or awards may be made under this Plan after May
     31, 2009. Any grant or award effective on or prior to May 31, 2009 will be
     continue to vest and otherwise be effective after the expiration of this
     Plan in accordance with the terms and conditions of this Plan as well as
     any requirements set forth in the grant or award.



 9.2 Right To Amend, Suspend or Terminate Plan: Except as provided in Section
     9.5 below, the Board reserves the right at any time to amend, suspend or
     terminate the Plan in whole or in part and for any reason and without the
     consent of any Optionee, Participant or Beneficiary; provided, that no such
     amendment shall:



     a. Change the Stock Option price or adversely affect any Stock Option or
        Stock Appreciation Right outstanding under the Plan on the effective
        date of such amendment or termination, or



     b. Adversely affect any award or grant then in effect or rights to receive
        any amount to which Participants or Beneficiaries have become entitled
        prior to such amendment, or



     c. Unless approved by the Shareholders of the Corporation, increase the
        aggregate number of shares of Common Stock reserved for award or grant
        under the Plan, change the group of Eligible Persons under the Plan or
        materially increase benefits to Eligible Persons under the Plan.



 9.3 Periodic Review of Plan: In order to assure the continued realization of
     the purposes of the Plan, the Committee shall periodically review the Plan,
     and the Committee may suggest amendments to the Board as it may deem
     appropriate.



 9.4 Amendments May Be Retroactive: Subject to Section 9.1 above, any amendment,
     modification, suspension or termination of any provisions of the Plan may
     be made retroactively.



 9.5 Change in Control: Notwithstanding any other provisions in the Plan, in the
     event of a Change in Control as defined under any written employment
     contract or agreement between the Corporation or a subsidiary and an
     Officer of the Corporation or a subsidiary, awards of Common Stock granted
     under this Plan, as well as grants of any Performance Units, Restricted
     Stock Units and the Appreciation Value of Phantom Shares, shall vest to the
     extent, if any, provided for in the written employment agreement or
     contract or in such separate contractual arrangement relating to such an
     award or grant as may exist from time to time. Notwithstanding any other
     provisions of the Plan, the provisions of this Section 9.5 may not be
     amended after the date a Change in Control occurs.



                         Article X. General Provisions



10.1 Rights to Continued Employment, Award or Option: Nothing contained in the
     Plan or in any grant or award under this Plan shall give any employee the
     right to be retained in the employment of the Corporation or affect the
     right of the Corporation to terminate the employee's employment at any
     time. The adoption of the Plan shall not constitute a contract between the
     Corporation and any employee. No Eligible Person who is an employee


                                       A-12


     shall receive any right to be granted an option, right or award hereunder
     nor shall any such option, right or award be considered as compensation
     under any employee benefit plan of the Corporation.


10.2 Governing Law: The provisions of this Plan and all rights thereunder shall
     be governed by and construed in accordance with the laws of the State of
     Michigan.


IN WITNESS WHEREOF, execution is hereby effected.


ATTEST:


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

                                   Secretary


CMS ENERGY CORPORATION



By:

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

                      Chairman and Chief Executive Officer



                                       A-13


[CMS ENERGY LOGO]

                               COMMON STOCK PROXY
                       SOLICITED BY THE BOARD OF DIRECTORS
                       FOR ANNUAL MEETING OF SHAREHOLDERS

The undersigned appoints KENNETH WHIPPLE and MICHAEL D. VANHEMERT, and each of
them, proxies with full power of substitution, to vote on behalf of the
undersigned at the annual meeting of shareholders of CMS Energy Corporation to
be held at the Potter Center, 2111 Emmons Road, Jackson, Michigan, at 10:30 AM
Eastern Daylight Saving Time on May 28, 2004 and at any adjournment(s) thereof.
Said proxies, and each of them present and acting at the meeting, may vote upon
the matters set forth on the reverse side hereof and with discretionary
authority on all other matters that come before the meeting, all as more fully
set forth in the notice and proxy statement received by the undersigned. The
shares represented hereby will be voted on the proposals as specified. IF THIS
PROXY IS RETURNED SIGNED BUT NOT COMPLETED, IT WILL BE VOTED AS RECOMMENDED BY
THE BOARD OF DIRECTORS ON ALL ITEMS.


YOU DO NOT NEED TO COMPLETE OR             PLEASE VOTE, SIGN AND DATE THIS PROXY
RETURN THIS PROXY IF YOU VOTE USING A      ON THE REVERSE SIDE.  THANK YOU
TELEPHONE OR THE INTERNET                  FOR YOUR PROMPT RESPONSE




                        PLEASE VOTE, SIGN AND DATE BELOW

[ ] TO VOTE AS RECOMMENDED by the Board of Directors on all items, PLEASE MARK
    THIS BOX, SIGN, DATE AND RETURN THIS PROXY. (No additional boxes need to be
    marked. If additional boxes are marked, this box will take precedence.)

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, 3, 4 AND 5.

(1) ELECTION OF    [ ] FOR all nominees listed below (except as indicated below)
DIRECTORS          [ ] WITHHOLD AUTHORITY to vote for all nominees listed below

     (01) Merribel S. Ayres (02) Earl D. Holton, (03) David W. Joos, (04)
     Michael T. Monahan, (05) Joseph F. Paquette, Jr., (06) William U. Parfet,
     (07) Percy A. Pierre, (08) S. Kinnie Smith, Jr., (09) Kenneth L. Way, (10)
     Kenneth Whipple, and (11) John B. Yasinsky.

(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)


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



                                                   For      Against     Abstain
                                                                                  PLEASE SIGN, DATE AND RETURN THIS PROXY.
(2) Ratification of independent auditors           [ ]        [ ]         [ ]

(3) Proposal to amend Performance Incentive        [ ]        [ ]         [ ]
    Stock Plan                                                                    Signed
                                                                                          ---------------------------------

(4) Proposal to approve deductibility of           [ ]        [ ]         [ ]
    incentive awards

(5) Proposal to amend Articles of Incorporation    [ ]        [ ]         [ ]     Dated                                    , 2004
                                                                                          ---------------------------------