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CONSUMERS POWER $1.4 BILLION 'BBB+' SENIOR DEBT AFFIRMED BY FITCH, OFF ALERT -- FITCH FINANCIAL WIRE --

 NEW YORK, July 2 /PRNewswire/ -- Consumers Power Co.'s $1.4 billion 'BBB+' senior debt, $300 million 'BBB+' shelf registration, $26 million 'BBB' debentures, and $163 million 'BBB' preferred stock are affirmed and removed from FitchAlert. The credit trend is improving.
 The action reflects the Michigan Public Service Commission's (MPSC) unanimous approval and subsequent affirmation of a settlement agreement between the MPSC staff and Consumers Power Company (CPC) regarding the pricing of power purchases by CPC from the Midland Cogeneration Venture Partnership (MCV). The order resolves years of litigation and arrests the financial deterioration that caused after-tax losses totalling $262 million prior to the settlement and also establishes a sound framework for improving regulatory relations and financial protection measures going forward.
 The approved settlement order permits Consumers to recover the costs of purchasing 915 mw of capacity with on and off-peak caps starting Jan. 1, 1993 at 3.62 cents per kwh whether or not those deliveries were scheduled on an economic basis. The Purchase Power Agreement (PPA) obligates Consumers to purchase 1,023 mw of MCV capacity in 1993, ramping up to 1,240 megawatts (mw) in 1995 and subsequent years, at a levelized rate of 3.77 cents. The difference between Consumers' obligation under the purchase power agreement (PPA) and the settlement order resulted in a 1992 net after-tax non-operating loss of $343 million.
 The PPA also provides for a fixed and variable energy charge based on Consumers average cost of coal consumed and includes a regulatory out provision that permits Consumers to reduce the fixed energy charges payable to MCV if it is not able to recover these amounts through rates. The recovery of fixed energy charges above the 915 mw of recoverable capacity is currently the subject of an arbitration proceeding. If Consumers is successful, a $67 million writeoff will be reversed and escrowed MCV payments will be refunded to Consumers.
 The combination of a growing service territory, competitive rates, continued deleveraging, equity infusions by CMS Energy, the parent company, and reasonable rate relief provide a realistic opportunity to reduce currently high debt leverage to about 56 percent of capitalization from 64 percent over the next several years and increase pretax interest coverage to approximately 3.0 times (x) from 1.81x in 1992. Additionally, Consumers effected a quasi-reorganization of its equity that permitted resumption of dividends to CMS Energy.
 -0- 7/2/93
 /CONTACT: Stephen Fedun, 212-908-0568, of Fitch/


CO: Consumer Power Co. ST: Ohio IN: UTI SU: RTG

LR -- NY035 -- 8249 07/02/93 15:39 EDT
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Publication:PR Newswire
Date:Jul 2, 1993
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