CONSUMERS ENERGY COMPANY

Transcription

1 Exhibit A-1 (DAW-1) CONSUMERS ENERGY COMPANY NATURAL GAS OPERATIONS DEPRECIATION RATE STUDY AT DECEMBER 31,

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3 CONSUMERS ENERGY COMPANY NATURAL GAS OPERATIONS DEPRECIATION RATE STUDY AT DECEMBER 31, 2007 Table of Contents PURPOSE... 1 STUDY RESULTS... 2 GENERAL DISCUSSION... 3 Definition... 3 Basis of Depreciation Estimates... 3 Survivor Curves... 4 Actuarial Analysis... 6 Judgment... 7 Average Life Group Depreciation... 8 Theoretical Depreciation Reserve... 9 DETAILED DISCUSSION Depreciation Study Process Depreciation Rate Calculation Remaining Life Calculation Life Analysis Salvage Analysis Appendix A Depreciation Rate Calculations Appendix B Depreciation Expense Comparison...95 Appendix C Depreciation Parameter Comparison... 97

4 PURPOSE The purpose of this study is to develop depreciation rates for the depreciable property as recorded on Consumers Energy s books at December 31, The account based depreciation rates were designed to recover the total remaining undepreciated investment, adjusted for net salvage, over the remaining life of Consumers Energy s property on a straight-line basis. Non-depreciable property and property which is amortized such as intangible software were excluded from this study. Consumers Energy provides local gas distribution service to 1.7 million customers in Michigan. Consumers Energy owns transmission mains, distribution mains, underground storage and various other plant assets. Consumers Energy s assets consist of a complex system of high and intermediate pressure transmission, underground storage, and intermediate and low pressure distribution networks located across the service area. There are a number of receipt points or city gates, throughout the system where gas is delivered by the transmission system. Once gas is delivered to the city gate, the pressure is reduced through regulators in order to meet system requirements as determined by pressure and volume needs. Then gas is delivered to customers for burner tip consumption. 1

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6 GENERAL DISCUSSION Definition The term "depreciation" as used in this study is considered in the accounting sense, that is, a system of accounting that distributes the cost of assets, less net salvage (if any), over the estimated useful life of the assets in a systematic and rational manner. It is a process of allocation, not valuation. This expense is systematically allocated to accounting periods over the life of the properties. The amount allocated to any one accounting period does not necessarily represent the loss or decrease in value that will occur during that particular period. The Company accrues depreciation on the basis of the original cost of all depreciable property included in each functional property group. On retirement the full cost of depreciable property, less the net salvage value, is charged to the depreciation reserve. Basis of Depreciation Estimates The straight-line, broad (average) life group, remaining-life depreciation system was employed to calculate annual and accrued depreciation in this study. In this system, the annual depreciation expense for each group is computed by dividing the original cost of the asset less allocated depreciation reserve less estimated net salvage by its respective average life group remaining life. The resulting annual accrual amounts of all depreciable property within a function were accumulated, and the total was divided by the original cost of all functional depreciable property to determine the depreciation rate. The calculated remaining lives and annual depreciation accrual rates were based on attained ages of plant in service and the estimated service life and salvage characteristics of each depreciable group. The computations of the annual depreciation rates are shown in Appendix A. Actuarial analysis was used with each account within a function where sufficient data was available, and judgment was used to some degree on all accounts. 3

7 Survivor Curves To fully understand depreciation projections in a regulated utility setting, there must be a basic understanding of survivor curves. Individual property units within a group do not normally have identical lives or investment amounts. The average life of a group can be determined by first constructing a survivor curve which is plotted as a percentage of the units surviving at each age. A survivor curve represents the percentage of property remaining in service at various age intervals. The Iowa Curves are the result of an extensive investigation of life characteristics of physical property made at Iowa State College Engineering Experiment Station in the first half of the prior century. Through common usage, revalidation and regulatory acceptance, these curves have become a descriptive standard for the life characteristics of industrial property. An example of an Iowa Curve is shown below. 4

8 There are four families in the Iowa Curves that are distinguished by the relation of the age at the retirement mode (largest annual retirement frequency) and the average life. For distributions with the mode age greater than the average life, an "R" designation (i.e., Right modal) is used. The family of R moded curves is shown below. Similarly, an "S" designation (i.e., Symmetric modal) is used for the family whose mode age is symmetric about the average life. An "L" designation (i.e., Left modal) is used for the family whose mode age is less than the average life. A special case of left modal dispersion is the "O" or origin modal curve family. Within each curve family, numerical designations are used to describe the relative magnitude of the retirement frequencies at the mode. A "6" indicates that the retirements are not greatly dispersed from the mode (i.e., high mode frequency) while a "1" indicates a large dispersion about the mode (i.e., low mode frequency). For example, a curve with an average life of 30 years and an "L3" dispersion is a 5

9 moderately dispersed, left modal curve that can be designated as a 30 L3 Curve. An SQ, or square, survivor curve occurs where no dispersion is present (i.e., units of common age retire simultaneously). Most property groups can be closely fitted to one Iowa Curve with a unique average service life. The blending of judgment concerning current conditions and future trends along with the matching of historical data, permits the depreciation analyst to make an informed selection of an account's average life and retirement dispersion pattern. Actuarial Analysis Actuarial analysis (retirement rate method) was used in evaluating historical asset retirement experience where vintage data were available and sufficient retirement activity was present. In actuarial analysis, interval exposures (total property subject to retirement at the beginning of the age interval, regardless of vintage) and age interval retirements are calculated. The complement of the ratio of interval retirements to interval exposures establishes a survivor ratio. The survivor ratio is the fraction of property surviving to the end of the selected age interval, given that it has survived to the beginning of that age interval. Survivor ratios for all of the available age intervals were chained by successive multiplications to establish a series of survivor factors, collectively known as an observed life table. The observed life table shows the experienced mortality characteristic of the account and may be compared to standard mortality curves such as the Iowa Curves. Where data was available, accounts were analyzed using this method. Placement bands were used to illustrate the composite history over a specific era, and experience bands were used to focus on retirement history for all vintages during a set period. The results from these analyses for those accounts which had data sufficient to be analyzed using this method are shown in the Life Analysis section of this report. 6

10 Judgment Any depreciation study requires informed judgment by the analyst conducting the study. A knowledge of the property being studied, company policies and procedures, general trends in technology and industry practice, and a sound basis of understanding depreciation theory are needed to apply this informed judgment. Judgment was used in areas such as survivor curve modeling and selection, depreciation method selection, simulated plant record method analysis, and actuarial analysis. Judgment is not defined as being used in cases where there are specific, significant pieces of information that influence the choice of a life or curve. Those cases would simply be a reflection of specific facts into the analysis. Where there are multiple factors, activities, actions, property characteristics, statistical inconsistencies, implications of applying certain curves, property mix in accounts or a multitude of other considerations that impact the analysis (potentially in various directions), judgment is used to take all of these factors and synthesize them into a general direction or understanding of the characteristics of the property. Individually, no one factor in these cases may have a substantial impact on the analysis, but overall, may shed light on the utilization and characteristics of assets. Judgment may also be defined as deduction, inference, wisdom, common sense, or the ability to make sensible decisions. There is no single correct result from statistical analysis; hence, there is no answer absent judgment. At the very least for example, any analysis requires choosing which bands to place more emphasis. The establishment of appropriate average service lives and retirement dispersions for the Underground Storage, Transmission, Distribution and General accounts requires judgment to incorporate the understanding of the operation of the system with the available accounting information analyzed using the Retirement Rate actuarial methods. The appropriateness of lives and curves depends not only on statistical analyses, but also on how well future retirement patterns will match past retirements. 7

11 Current applications and trends in use of the equipment also need to be factored into life and survivor curve choices in order for appropriate mortality characteristics to be chosen. Average Life Group Depreciation Consumers Energy was authorized to use the average life group ( ALG ) depreciation procedure in MPSC Case Number U At the request of Consumers Energy, this study continues to use the average life group (ALG) depreciation procedure to group the assets within each account. After an average service life and dispersion were selected for each account, those parameters were used to estimate what portion of the surviving investment of each vintage was expected to retire. The depreciation of the group continues until all investment in the vintage group is retired. ALG groups are defined by their respective account dispersion, life, and salvage estimates. A straight-line rate for each ALG group is calculated by computing a composite remaining life for each group across all vintages within the group, dividing the remaining investment to be recovered by the remaining life to find the annual depreciation expense and dividing the annual depreciation expense by the surviving investment. The resultant rate for each ALG group is designed to recover all retirements less net salvage when the last unit retires. The ALG procedure recovers net book cost over the life of each account by averaging many components. 8

12 Theoretical Depreciation Reserve The book depreciation reserve was derived from Company records where the provision for depreciation is maintained on a plant account level. As a point of comparison, a theoretical depreciation reserve model was computed for each account. This study used a reserve model that relied on a prospective concept relating future retirement and accrual patterns for property, given current life and salvage estimates. The theoretical reserve of a group is developed from the estimated remaining life, total life of the property group, and estimated net salvage. The theoretical reserve represents the portion of the group cost that would have been accrued if current forecasts were used throughout the life of the group for future depreciation accruals. The computation involves multiplying the vintage balances within the group by the theoretical reserve ratio for each vintage. The average life group method requires an estimate of dispersion and service life to establish how much of each vintage is expected to be retired in each year until all property within the group is retired. Estimated average service lives and dispersion determine the amount within each average life group. The straight-line remaininglife theoretical reserve ratio at any given age (RR) is calculated as: (Average Remaining Life) RR = 1- * (1- Net Salvage Ratio) (Average Service Life) 9

13 DETAILED DISCUSSION Depreciation Study Process This depreciation study encompassed four distinct phases. The first phase involved data collection and field interviews. The second phase was where the initial data analysis occurred. The third phase was where the information and analysis was evaluated. Once the first three stages were complete, the fourth phase began. This phase involved the calculation of deprecation rates and the documenting the corresponding recommendations. During the Phase I data collection process, historical data was compiled from continuing property records and general ledger systems. Data was validated for accuracy by extracting and comparing to multiple financial system sources. Audit of this data was validated against historical data from prior periods, historical general ledger sources, and field personnel discussions. This data was reviewed extensively to put in the proper format for a depreciation study. Further discussion on data review and adjustment is found in the Salvage Considerations Section of this study. Also as part of the Phase I data collection process, numerous discussions were conducted with engineers and field operations personnel to obtain information that would assist in formulating life and salvage recommendations in this study. One of the most important elements of performing a proper depreciation study is to understand how the Company utilizes assets and the environment of those assets. Interviews with engineering and operations personnel are important ways to allow the analyst to obtain information that is beneficial when evaluating the output from the life and net salvage programs in relation to the Company s actual asset utilization and environment. Information that was gleaned in these discussions is found both in the Detailed Discussion of this study in the life analysis and salvage analysis sections and also in workpapers. 10

14 Phase 2 is where the actuarial analysis is performed. Phase 2 and 3 overlap to a significant degree. The detailed property records information is used in phase 2 to develop observed life tables for life analysis. These tables are visually compared to industry standard tables to determine historical life characteristics. It is possible that the analyst would cycle back to this phase based on the evaluation process performed in phase 3. Net salvage analysis consists of compiling historical salvage and removal data by functional group to determine values and trends in gross salvage and removal cost. This information was then carried forward into phase 3 for the evaluation process. Phase 3 is the evaluation process which synthesizes analysis, interviews, and operational characteristics into a final selection of asset lives and net salvage parameters. The historical analysis from phase 2 is further enhanced by the incorporation of recent or future changes in the characteristics or operations of assets that were revealed in phase 1. Phases 2 and 3 allow the depreciation analyst to validate the asset characteristics as seen in the accounting transactions with actual Company operational experience. Finally, Phase 4 involved the calculation of accrual rates, making recommendations and documenting the conclusions in a final report. The calculation of accrual rates is found in Appendix A. Recommendations for the various accounts are contained within the Detailed Discussion of this report. The depreciation study flow diagram shown as Figure 1 1 documents the steps used in conducting this study. Depreciation Systems, 2 page 289 documents the same basic processes in performing a depreciation study which are: Statistical analysis, evaluation of statistical analysis, discussions with management, forecast assumptions, write logic supporting forecasts and estimation, and write final report. 1 Public Utility Finance & Accounting, A Reader 2 Wolf & Fitch, 1994 Edition 11

15 Figure 1 CONSUMERS ENERGY DEPRECIATION STUDY PROCESS 12

16 Depreciation Rate Calculation Annual depreciation expense amounts for the depreciable accounts of Consumers Energy were calculated by the straight line, average life group, remaining life procedure. With this approach, remaining lives were calculated according to standard ALG group expectancy techniques, using the Iowa Survivor Curves noted in the calculation. For each plant account, the difference between the surviving investment, adjusted for estimated net salvage, and the allocated book depreciation reserve, was divided by the average remaining life to yield the annual depreciation expense. These calculations are shown in Appendix A. Remaining Life Calculation The establishment of appropriate average service lives and retirement dispersions for each account within a functional group was based on engineering judgment that incorporated available accounting information analyzed using the Retirement Rate actuarial methods. After establishment of appropriate average service lives and retirement dispersion, remaining life was computed for each account. Theoretical depreciation reserve with zero net salvage was calculated using theoretical reserve ratios as defined in the theoretical reserve portion of the General Discussion section. The difference between plant balance and theoretical reserve was then spread over the ALG depreciation accruals. 13

17 Life Analysis The retirement rate actuarial analysis method was applied to all accounts for Consumers Energy. For each account, an actuarial retirement rate analysis was made with placement and experience bands of varying width. The historical observed life table was plotted and compared with various Iowa Survivor Curves to obtain the most appropriate match. A selected curve for each account is shown in the Life Analysis Section of this report. The observed life tables for all analyzed placement and experience bands are provided in workpapers. For each account on the overall band (i.e. placement from earliest vintage year which varied for each account through 2007), approved survivor curves from MPSC Cases U & U were used as a starting point. Then using the same average life, various dispersion curves were plotted. Frequently, visual matching would confirm one specific dispersion pattern (i.e. L, S. or R) as an obviously better match than others. The next step would be to determine the most appropriate life using that dispersion pattern. Then, after looking at the overall experience band, different experience bands were plotted and analyzed: in increments of approximately ten years, for instance , , etc. Next placement bands of varying width were plotted with each experience band discussed above. Repeated matching usually pointed to a focus on one dispersion family and small range of service lives. The goal of visual matching was to minimize the differential between the observed life table and Iowa curve in top and mid range of the plots. These results are used in conjunction with all other factors that may influence asset lives. 14

18 Account Underground Storage Rights of Way This account includes the cost of land rights used in connection with underground storage operations. There is approximately $1.4 million in this account. Currently, the approved life for this account is 65 years with an S2 dispersion. Based on the actuarial analysis, this study recommends retaining the 65 year life and moving to an R4 dispersion. 15

19 Account Compressor Station Structure This account consists of compressor station structures associated with underground storage sites. There is approximately $9.1 million in this account. Currently, the approved life for this account is 45 years with an R3 dispersion. Based on the actuarial analysis, this study recommends retaining the 45 year life and moving to an R5 dispersion. An observed life table is graphed for this account with the recommended curve below. 16

20 Account Measuring and Regulating Station Structure This account consists of measuring and regulating station structures used in the underground storage operations. There is approximately $161 thousand in this account. Currently, the approved life for this account is 45 years with an R3 dispersion. There have been no retirements in this account. This study recommends retaining the 45 year life and R3 dispersion. 17

21 Account Other Structures This account consists of small structures and associated assets used in underground storage operations. There is approximately $3.5 million of investment in this account. The currently approved life for this account is 50 years with and R4 dispersion. Based on the actuarial analysis, this study recommends retaining the 50 year life and moving to an R3 dispersion. An observed life table is graphed for this account with the recommended curve below. 18

22 Account Underground Storage Leaseholds and Rights This account consists of leaseholds and rights used in the underground storage operations. There is approximately $6.8 million of investment in this account. The currently approved life for this account is 65 years with an S2 dispersion. There is little retirement activity in this account. This study recommends retaining the 65 year life and S2 dispersion. 19

23 Account Well Construction This account consists of assets created in the construction of well sites used in the underground storage operations. There is approximately $45 million of investment in this account. The currently approved life for this account is 50 years with an R4 dispersion. Based on the actuarial analysis, this study recommends retaining the 50 year life and R4 dispersion. An observed life table is graphed for this account with the recommended curve below. 20

24 Account Well Equipment This account consists of well equipment assets used in the underground storage operations. There is approximately $19 million of investment in this account. The currently approved life for this account is 50 years with an R2.5 dispersion. As bands become more recent, the life moves from an R2.5 dispersion to an R2. Based on the actuarial matching of history, this study recommends moving from the 50 year life to a 48 year life with an R2 dispersion. An observed life table is graphed for this account with the recommended curve below. 21

25 Account 353 Lines This account consists of well lines used in the underground storage operations. There is approximately $33.5 million of investment in this account. The currently approved life for this account is 65 years with an S2 dispersion. Both the 65 S2 and the 65 R2 curves match well in this account. The 65 R2 matches the actual experience of this account better over a larger number of placement and experience bands than the 65 S2. Based on the actuarial matching of history, this study recommends retaining the 65 year life and moving to the R2 dispersion. An observed life table is graphed for this account with the recommended curve below. 22

26 Account 354 Compressor Station Equipment This account consists of compressor station equipment used in the underground storage operations. There is approximately $83 million of investment in this account. The currently approved curve for this account is 40 years with an R3 dispersion. Based on the actuarial matching of history, this study recommends retaining the 40 year life and moving to an R2.5 dispersion. An observed life table is graphed for this account with the recommended curve below. 23

27 Account 355 Measuring and Regulating Station Equipment This account consists of measuring and regulating station equipment used in the underground storage operations. There is approximately $7.3 million of investment in this account. The currently approved life for this account is 45 years with an R2.5 dispersion. The 40 R3 is a significantly better fit for this account than the 45 R2.5. Based on the actuarial matching of history, this study recommends moving from the 45 year life and R2.5 dispersion to a 40 year life with an R3 dispersion. An observed life table is graphed for this account with the recommended curve below. 24

28 Account 356 Purification Equipment This account consists of purification equipment used in the underground storage operations. There is approximately $18.7 million of investment in this account. The currently approved life for this account is 35 years with an R5 dispersion. The 35 R4 is a better fit for this account than the 35 R5. Based on the actuarial matching of history, this study recommends retaining the 35 year life and moving to an R4 dispersion. An observed life table is graphed for this account with the recommended curve below. 25

29 Account 357 Other Equipment This account consists of purification equipment used in the underground storage operations. There is approximately $6.1 million of investment in this account. The currently approved life for this account is 30 years with an R3 dispersion. The 30 R2.5 is a slightly better fit for this account than the 30 R3. Based on the actuarial matching of history, this study recommends retaining the 30 year life and moving to an R2.5 dispersion. An observed life table is graphed for this account with the recommended curve below. 26

30 Account Rights of Way This account includes the cost of land rights used in connection with transmission operations. There is approximately $32.5 million in this account. Currently, the approved life for this account is 75 years with an R3 dispersion. There have been few retirements in this account. This study recommends retaining the 75 year life and R3 dispersion. 27

31 Account 366 Structures and Improvements This account includes the cost of structures and improvements used in connection with distribution operations. There is approximately $11.8 million in this account. Currently, the approved life for this account is 60 years with an R3 dispersion. There have been relatively few retirements in this account. This study recommends retaining the 60 year life and R3 dispersion. An observed life table is graphed for this account below. 28

32 Account 367 Mains This account includes the cost of transmission mains primarily coated and wrapped steel. The currently approved life for this account is 75 years with an R3 dispersion. There is approximately $297.9 million in plant in this account. There is very little retirement experience reflected in the observed life table. Based on the limited experience, a 75 R3 continues to fit the limited experience well. The 75 year average life is slightly on the high side of expectations for the life of transmission mains but it is still within a reasonable range. This study recommends keeping the 75-year life and R3 dispersion. An observed life table is graphed for this account with the 75 R3 curve below. An observed life table is graphed for this account below. 29

33 Account 368 Compressor Station Equipment This account includes the cost of compressor station equipment used in connection with transmission operations. There is approximately $41.6 million in this account. Currently, the approved life for this account is 40 years with an R4 dispersion. The 40 R3 is the best fitting curve across the bands. This study recommends retaining the approved 40 year life and with a move to an R3 dispersion. An observed life table is graphed for this account below. 30

34 Account 369 Measuring and Regulating Station Equipment This account includes the cost of measuring and regulating station equipment used in connection with transmission operations. There is approximately $38.1 million in this account. Currently, the approved life for this account is 55 years with an R2 dispersion. The current life expectations for this account have decreased from the 55 year life. Bands including older activity are reflecting a 43 to 45 year life with bands in the most recent thirty years showing even shorter indications. The best fitting life across most of the bands is a 43 R1.5. This study recommends moving from the approved 55 year life to a 43 year life with the dispersion moving from and R2 to an R1.5. An observed life table is graphed for this account below. 31

35 Account 370 Communication Equipment This account includes the cost of communication equipment used in connection with transmission operations. There is approximately $8.6 million in this account. Currently, the approved life for this account is 15 years with an R4 dispersion. This account is experiencing a slightly shorter life than the current 15 years. The best fitting life is a 13 or 14 year life with an R3 dispersion. Bands over the most recent thirty years slight shortening of life from 14 to 13 years with an R3 dispersion. This study recommends moving from the approved 15 year life to a 13 year life with a change in dispersion from R4 to R3. An observed life table is graphed for this account below. 32

36 Account 371 Other Equipment This account includes the cost of other equipment used in connection with transmission operations. There is approximately $4.8 million in this account. Currently, the approved life for this account is 30 years with an L2 dispersion. The life of the account is shows a slight increase when examining the more recent thirty or forty year bands. This study recommends moving from the approved 30 year life to a 32 year life with a change in dispersion from L2 to L1. An observed life table is graphed for this account below. 33

37 Account Rights of Way This account includes the cost of land rights used in connection with distribution operations. There is approximately $9.0 million in this account. Currently, the approved life for this account is 75 years with an R3 dispersion. There have been few retirements in this account. This study recommends retaining the 75 year life and R3 dispersion. 34

38 Account 375 Structures and Improvements This account includes the cost of structures and improvements used in connection with distribution operations. There is approximately $5.3 million in this account. Currently, the approved life for this account is 50 years with an S1 dispersion. Viewing the full 100 years of placements, a significantly longer life would seem to be indicated. However when viewing bands which comprises nearly all of the investment in the account, a 55 year life with an R4 dispersion is the best fit. Considering that most of the investment is exhibiting a 55 year life, this study recommends moving from the approved 50 year life with an S1 dispersion to a 55 year life and R4 dispersion. An observed life table is graphed for this account with the 55 R4 curve below. 35

39 Account Mains - Bare This account includes the cost of bare steel mains used in connection with distribution operations. There is approximately $3.7 million in this account. Currently, the approved life for this account is 70 years with an R2 dispersion. The 73 year life with an R1.5 dispersion is the best fit across most bands. This study recommends moving from the approved 70 year life with an R2 dispersion to a 73 year life and R1.5 dispersion. An observed life table is graphed for this account below. 36

40 Account Mains Coated and Wrapped This account consists of coated and wrapped distribution mains. There is approximately $378.3 Million of investment in this account. The currently approved life for this account is 75 years with an R3 dispersion. The 80 R3 is a better match for most of the longer placement and experience bands. Although the 75 R3 is matching as well or better on the short experience and placement bands, the small amount of change in the observed life curve for those bands would not recommend choosing the 75 R3 over the more robust 80 R3 curve. Therefore, this study recommends moving from the approved 75 year life with an R3 dispersion to an 80 year life with an R3 dispersion for this account. An observed life table is graphed for this account below. 37

41 Account Mains Cast Iron This account consists of cast iron distribution mains. There is approximately $8.2 Million of investment in this account. The currently approved life for this account is 65 years with an S3 dispersion. Shorter bands give erratic results, so this study relies on the full placement and experience band. Therefore, this study recommends moving from a 65 S3 to 63 year life with a S2 dispersion for this account. An observed life table is graphed for this account below. 38

42 Account Mains - Copper This account consists of copper distribution mains. There is approximately $13 thousand of investment in this account. The currently approved life for this account is 60 years with an R5 dispersion. The 42 R4 is a significantly better match than the 60 R5 for this account. Therefore, this study recommends moving from the approved 60 year life to a 42 year life and retaining the R4 dispersion for this account. An observed life table is graphed for this account below. 39

43 Account Mains - Plastic This account consists of cast iron distribution mains. There is approximately $661.9 Million of investment in this account. The currently approved life for this account is 60 years with an R3 dispersion. The stub curves are short and provide limited information. Indications from various placement and experience bands show a trend to a shorter life. Due to the limited transactional experience, the selection for this account remains a 60 year life while moving to a higher mode dispersion R4, as indicated by the spectrum of placement and experience bands. Therefore, this study recommends retaining the approved 60 year life and moving from an R3 dispersion to an R4 dispersion for this account. An observed life table is graphed for this account below. 40

44 Account 378 Measuring and Regulating Equipment This account consists of measuring and regulating equipment used in distribution operations. There is approximately $45.8 Million of investment in this account. The currently approved life for this account is 50 years with an L0.5 dispersion. The 55 L0.5 is a better match over the longer placement and experience ands, but the 50 L0.5 is a better match over more recent placement and experience bands. Therefore, this study recommends retaining the approved 50 year life with an L0.5 dispersion for this account. An observed life table is graphed for this account below. 41

45 Account Services - Bare This account consists of bare services used in distribution operations. There is approximately $181 thousand of investment in this account. The currently approved life for this account is 42 years with an L0 dispersion. The 30 L0 is a significantly better match than the 42 L0 over all placement and experience bands. Therefore, this study recommends moving from the approved 42 year life to a 30 year life and retaining the approved L0 dispersion for this account. An observed life table is graphed for this account below. 42

46 Account Services Coated and Wrapped This account consists of coated and wrapped services used in distribution operations. There is approximately $69.4 Million of investment in this account. The currently approved life for this account is 56 years with an R0.5 dispersion. The overall band shows a slight increase in life to a 57 R0.5 dispersion for this account. Therefore, this study recommends moving from the approved 56 year life to a 57 year life and retaining the R0.5 dispersion for this account. An observed life table is graphed for this account below. 43

47 Account Services - Copper This account consists of copper services used in distribution operations. There is approximately $25.4 Million of investment in this account. The currently approved life for this account is 53 years with an R1 dispersion. The 53 R1 is the best match in the overall band, but when focusing on the more recent thirty or forty year bands the life shortens to 46 years with an R1 dispersion. Therefore, this study recommends moving from the approved 53 R1 to a 46 year life and R1 dispersion for this account. An observed life table is graphed for this account below. 44

48 Account Services - Plastic This account consists of measuring and regulating equipment used in distribution operations. There is approximately $671.4 Million of investment in this account. The currently approved life for this account is 40 years with an R1.5 dispersion. The 46 R4 is a better match than the 40 R1.5 over all placement and experience bands. Therefore, this study recommends retaining the moving from the approved 40 year life and R1.5 dispersion to a 46 year life and R4 dispersion for this account. An observed life table is graphed for this account below. 45

49 Account 381 Meters This account includes the cost of meters used in measuring gas to residential customers. There is approximately $195.8 million in plant in this account. The current approved life of the meter account is 42 years with an S2 dispersion. Visual matching across many bands also shows that the 41 R2.5 curve is the best fit over all bands. Based on the visual matching, a 41 R2.5 is recommended for this account. An observed life table is graphed for this account with the 41 R2.5 curve below. 46

50 Account 382 Meter and House Regulator Installation This account includes the cost of domestic meter and regulator stations (excluding the meters and regulators). The currently approved life for this account is 52 years with an R2.5 dispersion. There is approximately $189.5 million in plant in this account. Based on visual matching, the 50 R3 is the best fit over the various bands. Therefore, this study recommends moving from the 52 R2.5 to the 50 R3 for this account. An observed life table is graphed for this account below. 47

51 Account 383 House Regulators This account includes the cost of domestic regulators. There is approximately $19.8 million of plant in this account. The currently approved life for this account is 55 years with an R1 dispersion. For the majority of the bands, the 45 R1 is the best fit. Newer bands reflecting experience in the 1970s and 1980s are shortening from the 45 year life. The newer bands (reflecting activity for 1977 and newer regulators) are showing a shorter life of 35 years. This study recommends moving from the 55 year life to a 45 year life while retaining the R1 dispersion. The expectation is that as older regulators retire, the next study will recommend moving closer to the 35 year life being experienced by the newer regulators. An observed life table is graphed for this account below. 48

52 Account Rights of Way This account includes the cost of land rights used in connection with distribution operations. There is approximately $1,500 in this account. Currently, the approved life for this account is 50 years with an R3 dispersion. There have been few retirements in this account. This study recommends retaining the 50 year life and R3 dispersion. 49

53 Account 390 Structures and Improvements This account includes the cost of general structures and improvements used for utility service. There is approximately $27.6 million in this account. The current life for this account is 50 years with an R3 dispersion. A 50 R3 life is indicating in most bands. Dispersion varies from an R3, R2, to an R1.5 in the most recent twenty and thirty year bands. Based on the experience, this study recommends retaining the approved 50 year life and moving to an R1.5 dispersion for this account. An observed life table is graphed for this account below. 50

54 Account Office Furniture and Equipment This account consists of miscellaneous office furniture such as desks, chairs, filing cabinets, and tables used for general utility service. There is approximately $1 million in this account. This account currently has a fixed life for amortization of 15 years. This study recommends retaining the 15 year amortization rate for this account. Account Computer Equipment This account consists of computer equipment used for general utility service. There is approximately $3.8 million in this account. This account currently has a fixed life for amortization of 7 years. This study recommends moving to a five year amortization rate for this account. Account Stores Equipment This account consists of stores equipment used for general utility service. There is approximately $51 thousand in this account. This account currently has a fixed life for amortization of 20 years. This study recommends moving to a 25 year amortization rate for this account. 51

55 Account Tools, Shop, and Garage Equipment This account consists of various items or tools used in shop and garages such as air compressors, grinders, mixers, hoists, and cranes. There is approximately $7.2 million in this account. This account currently has a fixed life for amortization of 20 years. This study recommends retaining the 20 year amortization rate for this account. Account Laboratory Equipment This account consists of laboratory equipment used in general utility service. There is approximately $825 thousand in this account. This account currently has a fixed life for amortization of 15 years. This study recommends retaining the 15 year amortization rate for this account. 52

56 Account Power Operated Equipment This account consists of bulldozers, forklifts, trenchers, and other power operated equipment that cannot be licensed on roadways. The currently approved life for this account is 10 years with an L1 dispersion. There is approximately $3.6 million in plant in this account. Older bands reflect a life of 10 years. The lives bands which represent the experience of the last 15 to 25 years have increasingly shortened. Lives representative of assets in the last 15 years reflect a 7 year life. Since the last 15 years is over twice the life of the assets the 7 year life is more representative of the lives of the assets in the future. Based on the above, this study recommends moving from a 10 year life to a 7 year life moving from an L1 to an L0 dispersion. An observed life table is graphed for this account below. 53

57 Account Communication Equipment This account consists of miscellaneous communication equipment used in general utility service. There is approximately $7.9 million in this account. This account currently has a fixed life for amortization of 15 years. This study recommends retaining the 15 year amortization rate for this account. Account Miscellaneous Equipment This account consists of miscellaneous equipment used in general utility service. There is approximately $404 thousand in this account. This account currently has a fixed life for amortization of 15 years. This study recommends retaining the 15 year amortization rate for this account. 54

58 Salvage Analysis When a capital asset is retired, physically removed from service and finally disposed of, terminal retirement is said to have occurred. The residual value of a terminal retirement is called gross salvage. Net salvage is the difference between the gross salvage (what the asset was sold for) and the removal cost (cost to remove and dispose of the asset). Salvage and removal cost percentages are calculated by dividing the current cost of salvage or removal by the original installed cost of the asset. Some plant assets can experience significant negative removal cost percentages due to the timing of the original addition versus the retirement. For example, a Distribution asset in FERC Account 376 with a current installed cost of $500 (2007) would have had an installed cost of $ in A removal cost of $50 for the asset calculated (incorrectly) on current installed cost would only have a negative10 percent removal cost ($50/$500). However, a correct removal cost calculation would show a negative percent removal cost for that asset ($50/$38.53). Inflation from the time of installation of the asset until the time of its removal must be taken into account in the calculation of the removal cost percentage because the depreciation rate, which includes the removal cost percentage, will be applied to the original installed cost of assets. In 2006 and 2007, Consumers Energy made a substantial effort to catch up on property accounting backlogs in unitization and retirements. These retirements generally reflected retirements that occurred over the last three to five years. The retirement backlogs were referenced back to the year the physical retirement occurred. 3 Using the Handy-Whitman Bulletin No. 167, G-3, line 44, $38.53 = $500 x 46/

59 The net salvage analysis uses the history of the individual accounts to estimate the future net salvage that Consumers Energy can expect in its operations. As a result, the analysis not only looks at the historical experience of Consumers Energy, but also takes into account recent and expected changes in operations that could reasonably lead to different future expectations for net salvage than were experienced in the past. Recent experience is more heavily weighted in making net salvage recommendations than experience several years in the past. Salvage Characteristics For each function, data for retirements, gross salvage, and cost of removal for each functional group adjusted as discussed above was derived from Moving averages, which remove timing differences between retirement and salvage and removal cost, were analyzed over periods varying from one to 10 years. 56

60 Underground Storage Plant Account Rights of Way This account includes any salvage and removal cost related to land rights used in connection with underground storage operations. The currently authorized net salvage for this account is 0 percent. Generally, little or no removal cost is incurred and no salvage is received at the retirement of land rights. The historical data supports a 0% net salvage for these accounts. Therefore, this study recommends retaining the approved 0% net salvage for this account. 2- yr 3- yr 4- yr 5- yr 6- yr Gross Cost of Net Net Net Net Net Net Net Retirements Salvage Removal Salvage Salv. % Salv. % Salv. % Salv. % Salv. % Salv. % Account Underground Storage Land Rights NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA % 0.00% 0.00% 0.00% 0.00% 0.00% NA 0.00% 0.00% 0.00% 0.00% 0.00% NA NA 0.00% 0.00% 0.00% 0.00% NA NA NA 0.00% 0.00% 0.00% NA NA NA NA 0.00% 0.00% NA NA NA NA NA 0.00% , % 0.00% 0.00% 0.00% 0.00% 0.00% % 0.00% 0.00% 0.00% 0.00% 0.00% NA 0.00% 0.00% 0.00% 0.00% 0.00% NA NA 0.00% 0.00% 0.00% 0.00% 57

61 Account Compressor Station Structures This account includes any salvage and removal cost related to structures used in connection with underground storage compressor operations. The currently authorized net salvage for this account is negative 6 percent. Retirements in the years shown are primarily from the retirement of an auxiliary building and the 1998 retirement of a water tank. The small number of retirements in the last three years relative to the total account balance does not give enough indication of the future to change net salvage at this point. Therefore, this study recommends retaining the approved negative 6 percent net salvage for this account. 2- yr 3- yr 4- yr 5- yr Gross Cost of Net Net Net Net Net Net Retirements Salvage Removal Salvage Salv. % Salv. % Salv. % Salv. % Salv. % Account Compressor Station Structures (3,449.00) 3, NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA , % 0.0% 0.0% 0.0% 0.0% , (3,799.00) NA -2.9% -2.9% -2.9% -2.9% NA NA -2.9% -2.9% -2.9% , (1,463.00) NA NA NA -4.0% -4.0% (993.00) NA NA NA NA -4.7% (862.16) NA NA NA NA NA , (6,888.20) NA NA NA NA NA , , (38,792.58) % % % % % , , (8,495.88) -27.2% -73.4% -84.1% -85.4% -86.9% , , (32,415.00) % % % % % 58

62 Account Measuring & Regulating Station Structures This account includes any salvage and removal cost related to structures used in connection with underground storage M&R Station operations. The currently authorized net salvage for this account is negative 6 percent. There has been no activity in this account for the past several years. Therefore, this study recommends retaining the approved negative 6 percent net salvage for this account. 2- yr 3- yr 4- yr 5- yr Gross Cost of Net Net Net Net Net Net Retirements Salvage Removal Salvage Salv. % Salv. % Salv. % Salv. % Salv. % Account M & R Station Structures NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA 59

63 Account Other Storage Structures This account includes any salvage and removal cost related to structures used in connection with other underground storage activities. The currently authorized net salvage for this account is negative 28 percent. A recent positive net salvage for the 2005 sale of a Walker Neer Workover Rig has been excluded from the analysis as a non-reoccurring event. This sale generated approximately $177 thousand. The average net salvage is significantly negative. However, with the lack of retirements shown to support the ongoing salvage and removal cost for other assets, this study recommends retaining the approved negative 28 percent net salvage for this account. 2- yr 3- yr 4- yr 5- yr Gross Cost of Net Net Net Net Net Net Retirements Salvage Removal Salvage Salv. % Salv. % Salv. % Salv. % Salv. % Account Other Structures , , (4,732.00) -93.2% , (667.00) -42.9% -81.4% , (3,386.00) NA % % NA NA % % , , (25,063.00) % % % % % , , (3,219.00) -17.2% -91.0% -91.0% % -99.0% (288.00) NA -18.7% -91.9% -91.9% % , , (1,268.00) -12.6% -15.5% -16.6% -72.6% -72.6% , (15,306.00) NA % % -69.8% % , , (4,148.00) % % % % -78.2% , , (4,873.74) NA % % % % , (13,135.12) NA NA % % % , (14,325.00) NA NA NA % % , , (17,107.84) -22.5% -41.3% -58.6% -65.0% -68.5% , % -19.4% -35.6% -50.5% -56.0% 60

64 Account Leaseholds & Rights This account includes any salvage and removal cost related to leaseholds and rights used in connection with underground storage operations. The currently authorized net salvage rate for this account is 0 percent. No removal cost is incurred and no salvage is received at the retirement of leaseholds and land rights. Therefore, this study recommends retaining the approved 0% net salvage for this account. 2- yr 3- yr 4- yr 5- yr Gross Cost of Net Net Net Net Net Net Retirements Salvage Removal Salvage Salv. % Salv. % Salv. % Salv. % Salv. % Account Leaseholds & Rights NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA 61

65 Accounts & Well Construction & Well Equipment These accounts include any salvage and removal cost related to well construction and well equipment assets used in connection with underground storage operations. These accounts have an authorized net salvage rate of negative 73 percent. In 2007, there was an atypical event where a third party plugged a well to get access to the site. Based on the 10-year average for these accounts of negative 68 percent net salvage, this study recommends moving from the approved negative 73 percent net salvage to a negative 68 percent net salvage for these accounts. 2- yr 3- yr 4- yr 5- yr Gross Cost of Net Net Net Net Net Net Retirements Salvage Removal Salvage Salv. % Salv. % Salv. % Salv. % Salv. % Combined Accounts & Well Construction & Well Equipment , , , (45,100.00) -21.4% , , (5,208.00) -34.3% -22.3% , % -27.8% -21.9% , , (71,265.00) NA % % -53.1% , (34.00) 150, (150,887.00) -64.0% -94.2% -93.0% -89.5% -58.6% , , , (184,010.00) -26.5% -36.0% -43.7% -43.5% -43.4% , , (354,150.00) % -72.1% -70.1% -77.4% -77.2% , , , (194,954.00) -34.5% -88.9% -55.9% -57.1% -61.7% , , (125,104.00) -46.2% -38.3% -75.9% -54.2% -55.5% , , , (129,281.00) % -73.1% -49.2% -83.2% -59.5% , , , (176,068.79) -96.6% % -81.2% -57.1% -85.4% , , , (938,556.87) % % % % -86.4% , , , (392,668.56) % % % % % ,228, , , (441,111.58) -35.9% -63.6% -87.6% -88.3% -91.0% , , , (265,366.00) -31.1% -33.9% -50.8% -70.8% -72.3% 62

66 Account Well Lines This account includes any salvage and removal cost related to well lines used in connection with underground storage operations. The currently authorized net salvage is negative 140 percent. The historical data shows a decrease in the negative net salvage for this account. In certain circumstances in the last couple years, negotiations with third parties have allowed the removal of the well lines for specific wells at cost. This is impacting the realized net salvage and is expected to continue. In addition, Pipeline Integrity Program ( PIP ) costs have been removed from this analysis. The five-year and ten-year ten salvage percentages have been slightly over negative 50 percent. Therefore, this study recommends moving from the approved net salvage of negative 140 percent to the longer-term average of negative 50 percent for this account. 2- yr 3- yr 4- yr 5- yr Gross Cost of Net Net Net Net Net Net Retirements Salvage Removal Salvage Salv. % Salv. % Salv. % Salv. % Salv. % Account 353 Lines , , (92,967.00) -81.1% , (1,145.00) NA -82.1% , , (123,477.00) -88.4% -89.2% -85.6% , , (14,203.00) NA -98.5% -99.4% -91.2% , (296.00) -12.6% % -97.1% -97.9% -90.4% , % -0.5% -26.3% -70.8% -71.4% , (2,273.00) NA -4.3% -4.6% -30.4% -72.0% , , (3,396.00) -4.1% -6.8% -4.1% -4.3% -14.5% , , (54,940.00) % -63.5% -66.0% -41.9% -41.5% , , (33,077.00) -94.0% % -72.0% -73.8% -52.1% , (147,486.24) NA % % % % , , , (69,767.84) -12.0% -37.4% -40.6% -48.9% -43.6% , , , (61,082.70) % -21.8% -46.4% -49.0% -56.9% , , , (32,429.00) -13.1% -34.9% -19.2% -36.6% -38.9% , , (172,861.00) % -80.1% -96.6% -39.2% -56.5% 63

67 Account 354 Compressor Station Equipment This account includes any salvage and removal cost related to compressor station equipment used in connection with underground storage operations. The currently authorized net salvage rate for this account is negative 17 percent. The current 5-year average net salvage for this account is over negative 24 percent, and the ten-year average net salvage is negative 23 percent. Since the pattern remains erratic, this study recommends retaining the approved negative 17 percent net salvage for this account. 2- yr 3- yr 4- yr 5- yr Gross Cost of Net Net Net Net Net Net Retirements Salvage Removal Salvage Salv. % Salv. % Salv. % Salv. % Salv. % Account 354 Compressor Station Equipment , , , % ,186, , (73,650.00) -6.2% -6.2% , , (41,975.00) % -9.5% -9.5% , (281,691.00) NA % -32.8% -32.7% ,304, , (7,932.00) -0.2% -8.8% -10.0% -9.0% -9.0% , , , (164,661.00) -77.3% -4.9% -12.9% -14.0% -12.1% ,359, , (90,251.00) -6.6% -16.2% -5.4% -11.2% -12.0% , , , (24,344.00) -41.7% -8.1% -17.1% -5.8% -11.5% , , (26,666.00) -19.2% -25.9% -9.1% -17.3% -6.2% , , (103,217.00) % -64.2% -59.2% -15.1% -22.3% , , (48,555.51) -28.5% -64.8% -47.9% -47.0% -16.4% , , (111,734.76) -75.0% -50.1% -68.8% -55.6% -54.2% , , (17,192.51) NA -86.5% -55.5% -73.2% -58.9% , , (9,030.76) -3.7% -10.8% -35.2% -33.2% -46.3% , , (157,460.11) -18.1% -15.0% -16.5% -23.4% -24.0% 64

68 Account Measuring & Regulating Equipment This account includes any salvage and removal cost related to measuring and regulating equipment used in connection with underground storage operations. The currently authorized net salvage rate for this account is negative 22 percent. The five-year and ten-year average net salvage percents reflect a negative 17 percent net salvage rate. This study recommends moving from the approved negative 22 percent net salvage to negative 17 percent net salvage for this account. 2- yr 3- yr 4- yr 5- yr Gross Cost of Net Net Net Net Net Net Retirements Salvage Removal Salvage Salv. % Salv. % Salv. % Salv. % Salv. % Account 355 M & R Station Equipment , , , (21,351.00) -56.3% (1,029.00) 1, NA -53.6% NA NA -53.6% NA NA NA -53.6% , , (1,418.00) -11.6% -11.6% -11.6% -3.2% -43.4% , , (5,880.00) -42.8% -28.1% -28.1% -28.1% -24.2% (749.00) NA -48.3% -31.0% -31.0% -31.0% , , (947.00) -2.7% -4.8% -15.3% -14.6% -14.6% , (264.00) -1.1% -2.1% -3.3% -10.8% -10.9% (288.00) NA -2.4% -2.6% -3.8% -11.2% , , (804.20) NA NA -5.9% -3.9% -5.2% , , (48,882.68) -9.2% -9.4% -9.4% -9.1% -8.7% , , , (21,743.60) % -13.3% -13.4% -13.5% -12.9% , , (13,788.85) -4.6% -11.9% -10.2% -10.3% -10.3% , , (62,493.00) % -24.8% -31.7% -17.5% -17.6% 65

69 Account Purification Equipment This account includes any salvage and removal cost related to purification equipment used in connection with underground storage operations. The currently authorized net salvage rate for this account is negative 28 percent. The five year average net salvage rate for this account is negative 28 percent. This study recommends retaining the approved negative 28 percent net salvage rate for this account. 2- yr 3- yr 4- yr 5- yr Gross Cost of Net Net Net Net Net Net Retirements Salvage Removal Salvage Salv. % Salv. % Salv. % Salv. % Salv. % Account 356 Purification Equipment , , , (16,281.00) % , , (2,821.00) -3.5% -19.8% NA -3.5% -19.8% NA NA -3.5% -19.8% , , (111,652.00) % % % % % , , , (16,738.00) -23.3% % % % -76.7% , (13,210.00) NA -41.8% % % % , , , (11,945.00) -27.1% -57.1% -36.2% % % , , (6,252.00) -29.1% -27.8% -47.9% -35.1% % , , (8,018.00) % -60.3% -38.7% -58.2% -40.3% , , (19,880.55) NA % % -68.1% -87.6% , , (34,614.14) -38.6% -60.8% -68.1% -60.7% -51.3% , , , (43,093.80) -18.1% -23.7% -29.8% -32.0% -31.9% , , , (49,660.31) -34.4% -24.3% -27.0% -31.2% -32.8% , % -24.6% -21.1% -24.1% -27.8% 66

70 Account Other Storage Equipment This account includes any salvage and removal cost related to other storage equipment used in connection with underground storage operations. The currently authorized net salvage rate for this account is negative 11 percent. Most of the net salvage percentages of more than four years are close to negative 6 percent. Therefore, this study recommends moving from the approved negative 11 percent net salvage to negative 6 percent net salvage for this account. 2- yr 3- yr 4- yr 5- yr Gross Cost of Net Net Net Net Net Net Retirements Salvage Removal Salvage Salv. % Salv. % Salv. % Salv. % Salv. % Account 357 Underground Storage Other Equipment , , , % , % 9.0% NA 6.3% 9.0% , , , (9,981.00) -3.8% -3.8% -3.6% -2.7% , , (20,027.00) % -11.0% -11.0% -10.7% -9.3% , % % -10.7% -10.7% -10.4% (52.00) NA 1.6% % -10.7% -10.7% NA NA 1.6% % -10.7% NA NA NA 1.6% % (11.00) NA NA NA NA 1.4% (485.84) NA NA NA NA NA , , (12,883.89) -4.8% -4.9% -4.9% -4.9% -4.9% , (5,510.67) % -6.8% -6.9% -6.9% -6.9% , (545.01) -3.9% -40.2% -6.6% -6.8% -6.8% , % -0.7% -7.7% -5.4% -5.6% 67

71 Transmission Plant Account Rights of Way This account includes any salvage and removal cost related to land rights used in connection with transmission operations. The authorized net salvage rate for this account is 0 percent. Generally, little or no removal cost is incurred and no salvage is received at the retirement of land rights. The removal cost in this account will be reassigned to a different account. Therefore, this study recommends retaining the approved 0% net salvage for this account. 2- yr 3- yr 4- yr 5- yr Gross Cost of Net Net Net Net Net Net Retirements Salvage Removal Salvage Salv. % Salv. % Salv. % Salv. % Salv. % Account Transmission Land Rights NA NA NA % 0.0% 0.0% NA 0.0% 0.0% 0.0% NA NA 0.0% 0.0% 0.0% % 0.0% 0.0% 0.0% 0.0% , % 0.0% 0.0% 0.0% 0.0% NA 0.0% 0.0% 0.0% 0.0% NA NA 0.0% 0.0% 0.0% NA NA NA 0.0% 0.0% NA NA NA NA 0.0% NA NA NA NA NA NA NA NA NA NA (83.70) NA NA NA NA NA NA NA NA NA NA 68

72 Account Structures and Improvements This account includes any salvage and removal cost related to structures and improvements used in connection with transmission operations. The authorized net salvage rate for this account is negative 2 percent. The most recent average net salvage percentages are negative 25 percent or higher. Therefore based on the Company s experience, this study recommends moving from the approved negative 2 percent net salvage to a conservative negative 25 percent net salvage for this account. 2- yr 3- yr 4- yr 5- yr Gross Cost of Net Net Net Net Net Net Retirements Salvage Removal Salvage Salv. % Salv. % Salv. % Salv. % Salv. % Account 366 Transmission Structures and Improvements , , (52,041.00) % (24,879.00) 24, NA -62.8% , , , % 178.9% -25.9% , (16.00) -0.1% 34.5% 114.3% -22.0% NA -0.1% 34.5% 114.3% -22.0% , % 0.0% -0.1% 26.6% 88.0% NA 0.0% 0.0% -0.1% 26.6% , % 0.0% 0.0% 0.0% -0.1% , (8,626.00) NA % % -76.7% -76.7% , (6,799.00) NA NA % % % , , , NA NA NA % % , , (3,001.17) -34.3% -21.5% -99.1% % % , , (3,520.16) -69.3% -47.1% -39.0% -88.2% % , , (24,890.18) -12.8% -14.3% -15.1% -14.6% -17.8% , , (24,680.00) % -24.0% -25.1% -25.5% -25.0% 69

73 Account Mains This account includes any salvage and removal cost related to mains used in connection with transmission operations. The authorized net salvage rate for this account is negative 26 percent. The removal cost experienced in 2003 through 2007 included nearly $16 million in Pipeline Integrity ( PI ) Program costs. The table below excludes PI Program costs. Recent years have seen a decline in cost of removal, in large part due to the focus on PI. However, the most recent moving averages of periods 7 years or more are well in excess of the current approved net salvage percent. Until more non-normal PI activity occurs, this study recommends retaining the current approved net salvage of 26 percent. 2- yr 3- yr 4- yr 5- yr Gross Cost of Net Net Net Net Net Net Retirements Salvage Removal Salvage Salv. % Salv. % Salv. % Salv. % Salv. % Account 367 Transmission Mains , , , , % , (8,749.00) % -3.7% , , (7,079.00) % % -8.1% , , % -18.8% -45.2% -6.4% , , , % 7.7% -10.8% -32.6% -5.2% , , , (53,111.00) % % % % % , (69.00) -3.8% % % % % , , (359,169.00) % % % % % , , (228,703.00) % % % % % , , (160,447.00) NA % % % % , , (20,446.00) -29.8% % % % % , , , (63,427.79) -18.5% -20.3% -59.3% -75.3% % , % -11.3% -13.3% -38.7% -55.8% , , (10,079.01) -2.9% -1.8% -8.0% -9.5% -25.8% , , , % -2.2% -1.4% -7.5% -9.0% 70

74 Account Compressor Station Equipment This account includes any salvage and removal cost related to compressor station equipment used in connection with transmission operations. The authorized net salvage rate for this account is negative 1 percent. Significant retirements occurred in the earlier years, whereas more recent years have smaller retirements. For these reasons focus is on the full fifteen year band which yields a the net salvage percent of negative 10 percent This study recommends moving from the approved negative 1 percent net salvage rate to negative 10 percent net salvage for this account. 2- yr 3- yr 4- yr 5- yr Gross Cost of Net Net Net Net Net Net Retirements Salvage Removal Salvage Salv. % Salv. % Salv. % Salv. % Salv. % Account 368 Compressor Station Equipment , , (180,751.00) -33.5% ,599, , , (64,709.00) -4.0% -11.5% (4,812.00) 61, (65,814.00) NA -8.2% -14.6% , , NA NA -2.4% -10.2% , , (16,892.00) -20.4% 91.9% 12.3% -3.2% -10.6% , , , (27,381.00) -38.0% -28.6% 31.4% -11.1% -4.7% ,918, , , (62,572.00) -2.1% -3.0% -3.5% -0.5% -2.6% , (773.00) -0.8% -2.1% -2.9% -3.4% -0.5% NA -0.8% -2.1% -2.9% -3.4% , (8,750.00) NA NA -9.9% -2.4% -3.2% , , (30,418.76) -6.8% -8.8% -8.8% -7.4% -3.0% , , (118,870.53) % -30.5% -32.3% -32.3% -27.1% , , (64,613.96) % % -42.1% -43.9% -43.9% , , (49,118.04) -31.3% -64.7% % -39.6% -40.9% , , , (23,733.15) -19.5% -26.1% -46.2% -75.4% -36.4% 71

75 Account Measuring & Regulating Equipment This account includes any salvage and removal cost related to measuring and regulating station equipment used in connection with transmission operations. The authorized net salvage rate for this account is negative 6 percent. The five year average net salvage is negative 36 percent, and the full fifteen year band average net salvage percent is negative 35 percent. This study recommends moving from the approved negative 6 percent net salvage rate to negative 35 percent net salvage for this account. 2- yr 3- yr 4- yr 5- yr Gross Cost of Net Net Net Net Net Net Retirements Salvage Removal Salvage Salv. % Salv. % Salv. % Salv. % Salv. % Account 369 Measuring and Regulating Equipment , , (9,759.00) -53.1% , , (16,109.00) -38.0% -42.6% , , (13,717.00) -44.7% -40.8% -43.3% , , , (3,004.00) -3.6% -14.6% -21.0% -24.4% , , , (7,110.00) -3.6% -3.6% -7.6% -11.2% -13.3% , , , (62,070.00) % -31.4% -23.8% -25.7% -27.1% , , , (24,627.00) -42.8% % -33.8% -26.8% -28.2% , , (67,611.00) -21.5% -24.8% -39.3% -27.3% -24.3% , , (72,591.00) % -36.7% -37.5% -49.3% -35.5% , % -59.8% -32.2% -33.4% -44.1% , , (54,650.47) -14.7% -12.8% -25.7% -24.1% -25.3% , , (72,589.31) -28.4% -20.3% -18.7% -26.7% -25.1% , , (33,816.65) -52.9% -33.3% -23.3% -21.6% -28.7% ,365, , (509,801.73) -37.3% -38.0% -36.6% -32.6% -31.8% , , , (106,155.90) % -42.2% -42.6% -40.6% -36.1% 72

76 Account Communication Equipment This account includes any salvage and removal cost related to communication equipment used in connection with transmission operations. The authorized net salvage rate for this account is negative 1 percent. The six year average net salvage rate is negative 1.7 percent, and there is consistency in recent bands of a small negative net salvage. This study recommends moving from the approved negative 1 percent net salvage rate to negative 2 percent net salvage for this account. 2- yr 3- yr 4- yr 5- yr Gross Cost of Net Net Net Net Net Net Retirements Salvage Removal Salvage Salv. % Salv. % Salv. % Salv. % Salv. % Account 370 Communication Equipment , , (1,835.00) -6.1% , (1,414.00) NA -10.8% , (549.00) -27.5% -98.2% -11.8% , (24.00) -0.1% -1.7% -5.7% -5.9% , , (1,553.00) -4.9% -2.4% -3.2% -5.3% -5.6% , , (25,609.00) % -77.2% -40.1% -39.7% -41.7% , (784.00) -12.0% % -67.0% -37.6% -37.3% ,717, % 0.0% -1.5% -1.6% -1.6% , (16,054.00) NA -0.9% -1.0% -2.5% -2.5% , (7,830.00) NA NA -1.4% -1.4% -2.9% , , (6,806.13) -0.8% -1.7% -3.5% -1.2% -1.2% , , (15,290.04) -1.6% -1.2% -1.6% -2.5% -1.3% , , (19,036.46) -2.2% -1.9% -1.5% -1.8% -2.4% , (102.27) -0.1% -1.9% -1.8% -1.5% -1.7% , , (6,885.19) NA -6.0% -2.6% -2.1% -1.7% 73

77 Account Other Equipment This account includes any salvage and removal cost related to other equipment used in connection with transmission operations. The authorized net salvage rate for this account is negative 1 percent. This account has experienced very small removal cost in the last three years. This study recommends moving from the approved negative 1 percent net salvage rate to 0 percent net salvage for this account. 2- yr 3- yr 4- yr 5- yr Gross Cost of Net Net Net Net Net Net Retirements Salvage Removal Salvage Salv. % Salv. % Salv. % Salv. % Salv. % Account 371 Other Equipment , , , % , (804.00) -4.2% 0.8% (504.00) NA -6.8% -1.0% , , (5,037.00) -4.2% -4.6% -4.5% -3.6% , , (6,602.00) -93.4% -9.1% -9.5% -8.8% -7.6% NA -93.4% -9.1% -9.5% -8.8% , % 0.0% -54.5% -8.8% -9.1% NA 0.0% 0.0% -54.5% -8.8% (61.00) NA NA 1.2% 1.2% -54.0% (886.00) NA NA NA -16.4% -16.4% , , , , % 15.2% 15.5% 15.5% 12.5% , (1,568.29) NA 11.9% 7.7% 8.0% 8.0% (524.96) NA NA 9.4% 5.2% 5.5% , % -0.2% -0.6% 0.5% 0.3% , % 0.0% -0.1% -0.5% 0.4% 74

78 Distribution Function Account Rights of Way This account includes any salvage and removal cost related to land rights used in connection with distribution operations. Generally, little or no removal cost is incurred and no salvage is received at the retirement of land rights. The historical data also supports a 0% net salvage for these accounts. Therefore, this study recommends retaining the approved 0% net salvage for this account. 2- yr 3- yr 4- yr 5- yr Gross Cost of Net Net Net Net Net Net Retirements Salvage Removal Salvage Salv. % Salv. % Salv. % Salv. % Salv. % Account Rights of Way NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA , % 0.0% 0.0% 0.0% 0.0% NA 0.0% 0.0% 0.0% 0.0% NA NA 0.0% 0.0% 0.0% NA NA NA 0.0% 0.0% NA NA NA NA 0.0% NA NA NA NA NA % 0.0% 0.0% 0.0% 0.0% NA 0.0% 0.0% 0.0% 0.0% NA NA 0.0% 0.0% 0.0% 75

79 Account Structures and Improvements This account consists of any salvage and removal cost related to small structures and associated assets on the distribution system. The Commission has authorized a negative 17 percent net salvage rate for this account. The recent experience reflect a slightly more negative 24 to negative 35 percent net salvage for the three and five year bands, respectively. Since there have only been retirements in recent years during the last four years, the three year band and four year bands are given added weight. Therefore, this study recommends moving from the approved negative 17 percent net salvage to negative 25 percent net salvage. 2- yr 3- yr 4- yr 5- yr Gross Cost of Net Net Net Net Net Net Retirements Salvage Removal Salvage Salv. % Salv. % Salv. % Salv. % Salv. % Account 375 Structures and Improvements , , (6,425.00) -17.7% , , (7,488.00) -9.8% -12.3% , , (16,369.00) % -30.5% -26.4% , , (3,156.00) -19.2% % -28.5% -25.5% , (776.00) -39.1% -21.3% % -28.7% -25.7% , , (4,115.00) -41.8% -41.4% -28.4% -81.6% -29.9% NA -41.8% -41.4% -28.4% -81.6% , (46.00) -1.0% -1.0% -29.2% -30.4% -24.8% , (3,208.00) NA -74.1% -74.1% -51.8% -50.2% , (3,075.00) NA NA % % -73.4% , (1,570.06) NA NA NA % % , , (11,684.83) -66.1% -74.9% -92.3% % -88.7% , , (7,378.36) -80.5% -71.0% -76.8% -88.3% % , , (3,004.57) -6.5% -18.7% -30.1% -32.3% -36.5% , , (4,380.21) -63.7% -13.9% -23.6% -33.0% -35.0% 76

80 Account 376 Mains (Including all Mains types) This account consists of any salvage and removal cost related to Mains of all material types. There are five sub accounts within this account: Mains bare steel, Mains coated & wrapped steel, Mains cast iron, Mains copper, and Mains plastic. The authorized net salvage rate for this account is negative 105 percent. The net salvage experienced in this account has generally been decreasing since 2002 due in part to an accounting effort to better clarify the determination of Operation and Maintenance expense and Removal Cost for this account. The overall net salvage experience of mains is influenced by the younger retirement of plastic mains. The retirement weighted fiveyear average for this account is negative 78 percent, and the retirement weighted three year average is negative 75 percent. Based on this three-year weighted net salvage data, this study recommends changing the net salvage rate to negative 75 percent from the existing negative 105 percent. 2- yr 3- yr 4- yr 5- yr Gross Cost of Net Net Net Net Net Net Retirements Salvage Removal Salvage Salv. % Salv. % Salv. % Salv. % Salv. % Roll-up Account 376 Mains ,974, , ,427, (1,415,143.00) -71.7% , , ,091, (1,086,105.00) % -84.4% ,067, , ,384, (1,379,754.00) % % -96.3% , , ,203, (1,198,532.00) % % % % , , ,078, (1,076,280.00) % % % % % , , , (951,800.00) % % % % % , ,222, (1,222,202.00) % % % % % ,088, ,528, (1,528,325.00) % % % % % ,174, ,663, (1,663,390.00) % % % % % ,304, ,297, (1,297,295.00) -99.5% % % % % ,426, ,189, (1,189,753.68) -83.4% -91.1% % % % ,329, ,087, (1,087,885.51) -81.8% -82.7% -88.1% % % ,372, , ,256, (1,254,993.86) -91.4% -86.7% -85.6% -88.9% -98.3% ,098, , ,265, (1,262,451.82) -60.2% -72.5% -75.1% -77.0% -80.9% ,444, , ,233, (1,205,319.05) -83.5% -69.7% -75.7% -77.0% -78.2% 77

81 Account Measuring & Regulating Station Equipment This account includes any salvage and removal cost related to installed equipment used in regulating gas at entry points to the distribution system. The currently authorized net salvage is negative 25 percent. As shown below, the five year average is a more negative 32 percent. This study recommends moving from the currently approved negative 25 percent net salvage rate to a negative 32 percent net salvage. 2- yr 3- yr 4- yr 5- yr Gross Cost of Net Net Net Net Net Net Retirements Salvage Removal Salvage Salv. % Salv. % Salv. % Salv. % Salv. % Account 378 Measuring and Regulating Equipment , , (52,421.00) -20.3% , , , (67,675.00) -10.6% -13.4% , , , (84,937.00) -53.5% -19.1% -19.4% , , (48,331.00) -13.7% -26.1% -17.4% -18.0% , , , (38,323.00) -32.9% -18.5% -27.4% -18.9% -19.1% , , (24,734.00) -16.5% -23.7% -18.0% -25.3% -18.6% , , , (59,572.00) -41.6% -28.8% -30.0% -22.5% -27.8% , , , (22,366.00) -10.4% -22.8% -21.0% -23.2% -19.8% , , (126,819.00) % -54.6% -50.2% -41.3% -39.8% , , , (96,421.00) % % -82.4% -69.2% -55.8% , , (130,116.03) -74.7% % % -79.6% -70.7% , , (52,088.40) -8.4% -23.0% -34.1% -46.3% -39.2% , , (231,542.69) -70.6% -30.0% -36.9% -44.5% -52.9% , (1,315.57) 68, (70,156.95) -10.1% -29.5% -21.6% -26.7% -31.5% , , , (209,705.01) -64.4% -27.5% -38.0% -28.7% -32.4% 78

82 Account 380 Services (Including all Services types) This account includes any salvage and removal cost related to services related to distribution operations. Service lines are the pipes and accessories leading from the main to the customers premises. The authorized net salvage rate for this account is negative 168 percent. Generally, pipe is abandoned in place. However, removal cost is still incurred even when abandoning the pipe in place. For pipe that is being replaced, activities such as isolating the old pipe, cutting the old pipe, purging or foaming the old pipe and capping the old pipe are charged as removal costs. When the pipe is not being replaced, in addition to the above activities, dispatching a crew, uncovering the pipe, recovering the hole and repairing the surface are additional activities charged to removal cost. One significant adjustment was made to the retirements in this account. In 2000, the Company retired $11.1 million in risers that were inadvertently not retired at the time of a change in property units in the mid 1980s. This $11.1 million was reflected in the year the retirement should have been made. The trend seen in the historical data over the last few years has been toward a less negative removal cost. This is based at least in part on the accounting efforts to better clarify the determination of Operation & Maintenance and Removal Cost in 2000 and As with Mains, the overall net salvage experience of Services is influenced by the younger retirement of newer plastic services. The retirement weighted five-year average for this account is negative 161percent, while the threeyear average is negative 149 percent. The current year net salvage is negative 142 percent. Due to the trend of decreasing net salvage experienced in the last few years, this study recommends projecting this downward trend by moving from the approved negative 168 percent to a negative 130 percent net salvage. 79

83 2- yr 3- yr 4- yr 5- yr Gross Cost of Net Net Net Net Net Net Retirements Salvage Removal Salvage Salv. % Salv. % Salv. % Salv. % Salv. % Roll-up Account 380 Services ,436, , ,894, (4,565,961.00) % ,690, , ,339, (7,132,138.00) % % ,906, , ,783, (6,618,014.00) % % % ,657, , ,746, (6,620,156.00) % % % % ,354, , ,549, (6,533,412.00) % % % % % ,923, , ,721, (6,718,196.00) % % % % % ,290, ,822, (6,822,062.00) % % % % % ,391, ,403, (5,403,603.00) % % % % % ,906, ,261, (4,261,595.00) % % % % % ,668, ,046, (4,046,578.00) % % % % % ,983, ,774, (3,774,711.43) % % % % % ,363, ,167, (4,167,360.62) % % % % % ,600, ,028, (4,028,046.34) % % % % % ,606, , ,951, (3,950,806.62) % % % % % ,754, ,922, (3,922,473.00) % % % % % 80

84 Account Meters This account includes any salvage and removal cost related to meters used in measuring gas to residential customers. The currently authorized net salvage rate is 0 percent. A meter move-out program (moving inside meters to outside locations) over the last several years has increased the level of retirements seen in this account. In the last few years, salvage for meters has been experienced in this account. Over the last five years, the average net salvage has been 15.1 percent. Therefore, this study recommends moving from the approved 0 percent net salvage to a positive 15 percent net salvage for this account. 2- yr 3- yr 4- yr 5- yr Gross Cost of Net Net Net Net Net Net Retirements Salvage Removal Salvage Salv. % Salv. % Salv. % Salv. % Salv. % Account 381 Meters ,074, , , % , , , % 2.0% , , , % 2.3% 1.7% , , , % 0.8% 2.0% 1.6% , % 0.6% 0.5% 1.5% 1.3% , % 0.0% 0.4% 0.5% 1.4% , % 0.0% 0.0% 0.3% 0.3% ,475, % 0.0% 0.0% 0.0% 0.2% ,941, % 0.0% 0.0% 0.0% 0.0% ,552, % 0.0% 0.0% 0.0% 0.0% ,208, , , % 1.0% 0.6% 0.5% 0.5% ,453, , , % 6.4% 4.5% 3.3% 2.7% ,681, , , % 16.3% 10.2% 7.9% 6.2% ,934, , , % 16.7% 15.8% 11.5% 9.5% ,504, , , % 21.0% 20.3% 19.0% 15.1% 81

85 Account Meter Station Installation/ Account House Regulators Account 382 includes any salvage and removal cost related to meter stations (excluding regulators). Account 383 includes any salvage and removal cost related to regulators. Most of the removal cost related to meter installations and house regulators appear to have been charged to the meter installation. For this reason, the two accounts were combined for net salvage analysis. The currently authorized net salvage percents for 382 and 383 are negative 76 percent and negative 4 percent respectively. Net salvage has been consistent over recent years with the three- and five-year average net salvage for this account being a negative 67 percent. This study recommends moving net salvage for both accounts from the current levels to negative 67 percent net salvage for both accounts. 2- yr 3- yr 4- yr 5- yr Gross Cost of Net Net Net Net Net Net Retirements Salvage Removal Salvage Salv. % Salv. % Salv. % Salv. % Salv. % Account 382 and 383 Meter Installations & House Regulators , , , (343,000.00) -45.8% , , , (350,735.00) -63.2% -53.2% , , , (267,559.00) -41.9% -51.8% -49.5% , (2,198.00) 297, (300,080.00) -54.7% -47.8% -52.7% -50.6% , , , (344,394.00) -90.8% -69.4% -58.2% -59.5% -55.9% , , , (230,550.00) -55.1% -72.1% -65.0% -57.5% -58.8% , (595.00) 352, (352,779.00) -66.9% -61.7% -70.0% -65.5% -59.5% , , (540,125.00) -96.8% -82.3% -74.7% -78.0% -72.7% , , (624,932.00) -90.1% -93.1% -85.3% -79.6% -81.2% , , (683,472.00) -82.7% -86.1% -89.0% -84.5% -80.4% , , (907,177.21) -94.3% -88.9% -89.2% -90.6% -87.1% ,310, , (597,221.68) -45.6% -66.2% -70.6% -74.2% -77.1% ,666, , (888,449.68) -53.3% -49.9% -60.7% -64.6% -67.8% ,457, , (997,742.01) -68.4% -60.4% -56.0% -62.8% -65.5% ,588, ,270, (1,270,030.50) -79.9% -74.4% -67.0% -62.3% -66.7% 82

86 GENERAL PLANT Account Rights of Way This account includes any salvage and removal cost related to land rights used in connection with general utility operations. The currently authorized net salvage rate for this account is negative 0 percent. Generally, little or no removal cost is incurred and no salvage is received at the retirement of land rights. Therefore, this study recommends retaining the approved 0% net salvage for this account. 2- yr 3- yr 4- yr 5- yr Gross Cost of Net Net Net Net Net Net Retirements Salvage Removal Salvage Salv. % Salv. % Salv. % Salv. % Salv. % Account Rights of Way NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA 83

87 Account Structures and Improvements This account includes any salvage and removal cost related to structures and improvements used for general utility operations. The currently authorized net salvage rate for this account is negative 10 percent. The large removal cost in 2005 is related to the replacement of service center roofing. With that transaction, the five year average net salvage rate is 85 percent. If that transaction is removed as not typical of the remaining investment, the five-year average net salvage is negative 27 percent. Most of the salvage is interim, not associated with the final demolition of a building. Cost of removal has been exceeding the authorized negative 10 percent over most periods. This study recommends moving from the approved negative 10 percent net salvage rate to negative 25 percent net salvage for this account and reexamining this account in the next depreciation study. 2- yr 3- yr 4- yr 5- yr Gross Cost of Net Net Net Net Net Net Retirements Salvage Removal Salvage Salv. % Salv. % Salv. % Salv. % Salv. % Account 390 General Structures and Improvements , (35,220.00) 35, % , , (76,369.00) -69.1% -21.8% , (78,763.00) NA % -63.5% , (19,808.00) NA NA % -74.0% , (72,255.00) NA NA NA % % , , (444,243.00) % % % % % , (27,685.00) NA % % % % , , (28,089.00) -65.0% % % % % , , (27,306.00) -34.9% -45.6% -68.4% % % , , (70,211.00) % % -92.8% % % , , (8,831.62) -15.4% % -71.1% -69.7% -84.1% , (3,684.57) NA -21.8% % -73.6% -71.6% , , (302,527.52) -89.5% -90.6% -79.7% -94.1% -84.6% , , (77,821.17) -45.7% -74.8% -75.5% -69.4% -79.9% , (122,519.00) % % -98.8% -99.5% -91.0% 84

88 Account Office Furniture and Equipment This account includes any salvage and removal cost related to miscellaneous office furniture such as desks, chairs, filing cabinets, and tables. The currently authorized net salvage rate for this account is 0 percent. The Company received approximately $78.6 thousand in salvage in 2005 for a one-time event. This salvage is not considered representative of ongoing activities and has been excluded from the analysis. The Company has experienced little other net salvage based on recent experience. Therefore this study recommends remaining at the approved 0 percent net salvage rate for this account. 2- yr 3- yr 4- yr 5- yr Gross Cost of Net Net Net Net Net Net Retirements Salvage Removal Salvage Salv. % Salv. % Salv. % Salv. % Salv. % Account 391 Office Furniture and Fixtures % , % 0.0% , % 0.0% 0.0% ,476, , , (5,893.00) -0.4% -0.4% -0.3% -0.3% NA -0.4% -0.4% -0.3% -0.3% , , , % 90.5% -0.1% -0.1% -0.1% NA 90.5% 90.5% -0.1% -0.1% , % 0.0% 3.4% 3.4% -0.1% , % 0.0% 0.0% 3.3% 3.3% NA 0.0% 0.0% 0.0% 3.3% , (129.74) -0.1% -0.1% -0.1% -0.1% -0.1% , % -0.1% -0.1% 0.0% 0.0% , % 0.1% 0.0% 0.0% 0.0% , % 0.0% 0.0% 0.0% 0.0% , % 0.0% 0.0% 0.0% 0.0% 85

89 Account Computer Equipment This account includes any salvage and removal cost related to computer equipment used in general operations. The currently authorized net salvage rate for this account is 0 percent. Some positive net salvage has been received in recent years. The most recent bands of eight years or longer yield a 4 percent net salvage percent. Therefore, this study recommends moving from the approved 0 percent net salvage rate to 4 percent net salvage for this account. 2- yr 3- yr 4- yr 5- yr Gross Cost of Net Net Net Net Net Net Retirements Salvage Removal Salvage Salv. % Salv. % Salv. % Salv. % Salv. % Account Computer Equipment NA , % 0.0% , % 0.0% 0.0% , (389.00) -0.4% -0.3% -0.2% -0.2% , , , % 3.3% 3.2% 2.8% 2.8% NA 4.0% 3.3% 3.2% 2.8% , , (39,228.00) -20.7% -20.7% -2.0% -1.8% -1.8% ,391, , (2,422.00) -0.1% -1.2% -1.2% -0.4% -0.4% , (100.00) -0.1% -0.1% -1.1% -1.1% -0.4% ,797, (65.00) 0.0% 0.0% 0.0% -0.8% -0.8% , , , % 1.2% 1.1% 0.4% -0.2% ,584, , , % 4.3% 2.4% 2.3% 1.2% ,053, , (2,814.02) -0.3% 2.4% 2.8% 1.8% 1.7% ,523, , , % 3.7% 3.8% 4.0% 2.9% , , , % 25.8% 15.4% 11.1% 10.4% 86

90 Account Stores Equipment This account includes any salvage and removal cost related to stores equipment. The currently authorized net salvage rate for this account is 0 percent. The overall fifteen year band experienced a 0 percent net salvage rate. Therefore, this study recommends retaining the approved 0 percent net salvage for this account. 2- yr 3- yr 4- yr 5- yr Gross Cost of Net Net Net Net Net Net Retirements Salvage Removal Salvage Salv. % Salv. % Salv. % Salv. % Salv. % Account 393 Stores Equipment NA , % 0.0% , % 0.0% 0.0% , (399.00) -0.4% -0.3% -0.3% -0.3% , % 0.0% 0.0% 0.0% 0.0% NA 4.0% 0.0% 0.0% 0.0% NA NA 4.0% 0.0% 0.0% , % 0.0% 0.0% 3.5% 0.0% , % 0.0% 0.0% 0.0% 3.1% NA 0.0% 0.0% 0.0% 0.0% NA NA 0.0% 0.0% 0.0% NA NA NA 0.0% 0.0% NA NA NA NA 0.0% NA NA NA NA NA NA NA NA NA NA 87

91 Account Tools, Shop, and Garage Equipment This account includes any salvage and removal cost related to various items or tools used in shop and garages such as air compressors, grinders, mixers, hoists, and cranes. The currently authorized net salvage rate for this account is 0 percent. Except for the non-typical salvage in 2002, the company has been experiencing a positive 3 percent net salvage for this account in the overall fifteen-year band. Therefore, this study recommends moving from the approved 0 percent net salvage to 3 percent net salvage for this account. 2- yr 3- yr 4- yr 5- yr Gross Cost of Net Net Net Net Net Net Retirements Salvage Removal Salvage Salv. % Salv. % Salv. % Salv. % Salv. % Account 394 Tools, Shop, and Garage Equipment % , % 0.1% , % 0.1% 0.1% , , (35,503.00) -5.4% -5.0% -2.6% -2.6% , , , % -5.0% -4.6% -2.5% -2.5% , , , % 34.0% -2.6% -2.4% -1.3% , (472.00) -5.7% 59.5% 28.4% -2.6% -2.4% , (14.00) -0.1% -1.7% 33.4% 21.1% -2.6% , , , % 3.1% 1.4% 26.5% 18.7% , , , % 48.2% 35.0% 30.9% 41.4% , , , % 24.7% 22.7% 19.8% 18.5% , , , % 4.5% 15.6% 14.9% 13.7% , , , % 7.6% 7.3% 16.5% 15.9% , , , % 20.3% 8.9% 8.0% 16.5% , , , % 35.4% 31.0% 17.0% 13.6% 88

92 Account Laboratory Equipment This account includes any salvage and removal cost related to laboratory equipment. The currently authorized net salvage rate for this account is 0 percent. The Company is experiencing a slightly positive 2 percent net salvage in this account for the overall fifteen-year band. Therefore, this study recommends moving from the approved 0 percent net salvage to 2 percent net salvage for this account. 2- yr 3- yr 4- yr 5- yr Gross Cost of Net Net Net Net Net Net Retirements Salvage Removal Salvage Salv. % Salv. % Salv. % Salv. % Salv. % Account 395 Laboratory Equipment NA , % 0.0% NA 0.0% 0.0% , , , (3,428.00) -0.5% -0.5% -0.4% -0.4% NA -0.5% -0.5% -0.4% -0.4% NA NA -0.5% -0.5% -0.4% NA NA NA -0.5% -0.5% NA NA NA NA -0.5% , % 0.0% 0.0% 0.0% 0.0% , % 0.0% 0.0% 0.0% 0.0% , % 1.2% 0.6% 0.6% 0.6% , % 0.5% 0.5% 0.4% 0.4% , , , % 1.7% 1.7% 1.6% 1.5% , , , % 5.7% 3.7% 3.6% 3.6% , , , % 20.0% 14.3% 9.8% 9.6% 89

93 Account Power Operated Equipment This account includes any salvage and removal cost related to bulldozers, forklifts, trenchers, and other power operated equipment that cannot be licensed on roadways. The currently authorized net salvage rate for this account is 0 percent. Based on the net salvage data, this study recommends retaining the approved 0 percent net salvage for this account. 2- yr 3- yr 4- yr 5- yr Gross Cost of Net Net Net Net Net Net Retirements Salvage Removal Salvage Salv. % Salv. % Salv. % Salv. % Salv. % Account 396 Power Operated Equipment , , NA , , % % , , , % % % , (793.00) -0.5% 0.3% 19.6% 35.6% , % -0.5% 0.3% 19.5% 35.4% , % 0.0% -0.5% 0.2% 17.3% NA 0.0% 0.0% -0.5% 0.2% % 0.0% 0.0% 0.0% -0.5% NA 0.0% 0.0% 0.0% 0.0% NA NA 0.0% 0.0% 0.0% NA NA NA 0.0% 0.0% (13.45) NA NA NA NA 35.4% , % 0.0% 0.0% 0.0% 0.0% , % 0.0% 0.0% 0.0% 0.0% , % 0.0% 0.0% 0.0% 0.0% 90

94 Account Communication Equipment This account includes any salvage and removal cost related to miscellaneous communication equipment such as the 800 MHz radio system. The currently authorized net salvage rate for this account is 0 percent. The large retirement in 2001 was related to upgrading the Company s 800 MHz radio system. The average net salvage taking into account experience since 2001 has been approximately 2 percent. The net salvage percent for the six- to ten-year bands are 2% net salvage. Therefore, this study recommends moving from the approved 0% net salvage to 2 % net salvage for this account. 2- yr 3- yr 4- yr 5- yr Gross Cost of Net Net Net Net Net Net Retirements Salvage Removal Salvage Salv. % Salv. % Salv. % Salv. % Salv. % Account 397 Communication Equipment NA , , (14,804.00) -33.4% -33.4% , , (17,367.00) % -55.5% -55.5% , (869.00) -5.7% -63.1% -45.1% -45.1% , , (8,552.00) % -56.2% -88.1% -55.7% -55.7% NA % -56.2% -88.1% -55.7% NA NA % -56.2% -88.1% , % 0.0% 0.0% -44.2% -27.2% ,019, , , , % 2.1% 2.1% 2.1% 2.0% , (6,102.00) NA 2.1% 2.1% 2.1% 2.1% , (6,821.75) NA NA 2.0% 2.0% 2.0% , , , (805.43) -2.7% -25.7% -46.3% 1.9% 1.9% , , , % 3.0% 0.4% -1.9% 2.0% , , , , % 3.7% 3.1% 1.0% -0.9% , , , % 7.8% 5.3% 4.8% 3.2% 91

95 Account Miscellaneous Equipment This account includes any salvage and removal cost related to miscellaneous equipment. The currently authorized net salvage rate for this account is 0 percent. Little salvage or removal cost is expected for these assets. The five and six year average net salvage rates reflect a 7 percent net salvage rate. Therefore, this study recommends moving from the approved 0 percent net salvage rate to a 7 percent net salvage for this account. 2- yr 3- yr 4- yr 5- yr Gross Cost of Net Net Net Net Net Net Retirements Salvage Removal Salvage Salv. % Salv. % Salv. % Salv. % Salv. % Account 398 Miscellaneous Equipment NA , % 0.0% , % 0.0% 0.0% , (71.00) -0.3% -0.3% -0.2% -0.2% NA -0.3% -0.3% -0.2% -0.2% NA NA -0.3% -0.3% -0.2% NA NA NA -0.3% -0.3% NA NA NA NA -0.3% NA NA NA NA NA NA NA NA NA NA , % 0.5% 0.5% 0.5% 0.5% , % 1.1% 1.1% 1.1% 1.1% , % 2.8% 1.1% 1.1% 1.1% , , , % 10.6% 7.5% 3.0% 3.0% , , , % 15.9% 14.8% 12.5% 7.0% 92

96 APPENDIX A Depreciation Rate Calculations 93

97 REVISED Exhibit A-I (DAW-I) Appendix A Case No. U April 2009 Page I of I CONSUMERS ENERGY GAS COMPUTATION OF ACCRUAL RATE AT DECEMBER 31,2007 TRADITIONAL NET SALVAGE Annual Annual Plant In Service Book Depreciation Net Salvage Unaccrued Remaining Accrual Accrual Account 12131/ /2007 Net Salvage % Amount Balance Life Amount Accrual Rate G350.2 Rights of Way 1,428, , % , , % G351.2-Compressor Station Structure 9,052, ,199, % (543,134.05) 5,395, , % G351.~Meas & Reg Station Structure 161, , % (9,679.75) 153, , % G ther Storage Structures 3,471, ,181, % (971,898.80) 2,261, , % G352.1-Leaseholds & Rights 6.841, ,401, % ,440, , % G352.~Weli Construction 44,644, ,216, % (30,358,528.63) 48,786, ,509, % G352.4-Well Equipment 19,016, ,842, % (12, ) 19,104, , % G353.~Lines 33,541, ,689, % (16,770,855.75) 33,623, , % G354.~CompressorStation Equipment 82,604, ,954, % (14,042,791.84) 52,692, ,417, % G355.~Measuring& Regulating Equip 7,301, ,227, % (1,241,273.46) 7,314, , % G356.~PurificationEquipment 18, ,080, % (5,240,224.45) 15,874, , % G357.~OtherStorage Equipment 6,075, , % ( ) 5,870, , % G365.2-Rights of Way 32,496, ,823, % ,673, , % G366.~Structuresand Improvements 11,805, ,725, % (2,951,410.78) 10,031, , % G367.~Mains 297, ,177, % (77, ) 265,217, ,735, % G368.~CompressorStation Equipment 41, ,238, % (4,164,329.62) 22,569, ,109, % G369.~Measuring& Regulating Equip 38,147, ,490, % (13, ) 44,008, ,295, % G370.~CommunicationEquipment 8,582, ,697, % (171,657.09) 5.056, , % G371.~OtherEquipment 4,784, ,284, % ,499, , % G374.2-Rights of Way 8,968, ,382, % ,586, , % G375.~Structuresand Improvements 5, ,584, % (1,335,924.90) 4,095, , % G376.1-Mains - Bare 3,708, ,451, % (2,781,024.22) 1.037, , % G376.2-Mains - C & W 378,312, ,927, % (283,734,172.72) 307,119, ,148, % G376.~Mains - Cast Iron 8,234, ,484, % (6,176,045.15) -73, NA NA G376.4-Mains - Copper % ( ) 3, % G376.5-Mains - Plastic 661, ,474, % (496, ) 858,801, ,957, % G378.~Measuring& Regulating Equip 45,781, ,692, % (14, ) 48,739, ,194, % G380. I-Services - Bare 180, , % (234,729.34) 201, , % G380.2-Services - C & W 69,416, ,025, % (90,242,063.25) 58,633, ,882, % G380.4-Services - Copper 25,382, ,661, % (32,997,597.27) 16,719, , % G380.5-Services - Plastic 671,443, ,3n % (872, ) 1,015,943, ,300, % G381.~Meters 195,756, ,527, % 29,363, ,865, ,387, % G382.~MeterInstallations 189,492, ,819, % (126,959,977.04) 221,633, ,103, % G383.~House Regulators 19,784, ,252, % (13,255,667.85) , , % G389.2-Rights of Way 1, % , % G390.~Structuresand Improvements 27,644, ,549, % (6, ) 19,005, , % Office Fumrture And Equipm Total 1,036, , % , , % Computer Equipment Total 3, ,442, % 151, ,202, , % Stores Equipment Total , % , , % Tools Shop And Garage Equip Total 7,231, ,703, % 216, ,311, , % Laboratory Equipment ToIal 824, , % 16, , , % G396.~PowerOperated Equipment 3,596, , % ,476, , % Communication Equipment Total 7,857, , % 157, ,114, % Miscellaneous Equipment Total 403, , % 28, , , % Total 3,004,383, ,845,603.4~.~-L -2,099,210d ~57,990, n.90

98 APPENDIX B Depreciation Expense Comparison 95

99 CONSUMERS ENERGY COMPANY COMPARISON OF DEPECIATION ACCRUAL RATES BASED ON DEPRECIABLE INVESTMENT AT R VI D Exhibit A-I (DAW-l) Appendix B Case o. U-I5629 Apri12009 Page I of L CHANGE FROM APPROVED PROPOSED APPROVED Annual Annual Annual Accrual Plant in Service Accrual Annual Accrual Accrual Annual Accrual Amount Acct Description 12131/2007 Rate Amount Rate Amount Traditional U.GSTORAGE RIGHTS OF WAY $1,428, % $16, % $19,794.1C $3, COMPRESSOR STA STRUCTURE~ $9,052, % $223, % $240, $17, MEAS'G & REG STA STRUCT $161, % $4, % $3, ($709.09) OTHER STRUCTURES $3,471, % $93, % $89, ($3,534.59) U.G.S.LEASEHOLDS & RIGHTS $6,841, % $79, % $87, $8, WELL CONSTRUCTION $44,644, % $1,593, % $1,509, ($84,022.38) WELL EQUIPMENT $19,016, % $688, % $672, ($16,071.02) 353 LINES $33,541, % $1,261, % $643, ($617,176.41) 354 COMPRESSOR STA EQUIPMENT $82,604, % $2,511, % $2,417, ($93,321 19) 355 MEAS'G & REG STA EQUIP $7,301, % $211,016.4S 308% $224, $13, PURIFICATION EQUIPMENT $18,715, % $705, % $706,339.4" $ OTHER EQUIPMENT $6,075, % $231, % $285, $53, RIGHTS OF WAY $32,496, % $341, % $416, $75, STRUCTURES & IMPROVEMENTS $11,805, % $145, % $253, $108, MAINS $297,932, % $4,320,026.1 ( 1.59% $4,735, $415, COMPRESSOR STA EQUIPMENT $41,643, % $366, % $1,109, $743, MEAS'G & REG STA EQUIP $38,147, % $625,621. 7~ 3.40% $1,295, $670, COMMUNICATION EQUIPMENT $8,582, % $298, % $733, $434, OTHER EQUIPMENT $4,784, % $121, % $110, ($10,840.44) 3742 RIGHTS OF WAY $8,968, % $69, % $115, $46, STRUCTURES & IMPROVEMENTS $5,343, % $35, % $128, $92, MAINS BARE $3,708, % $77, % $38, ($38,269.47) 3762 MAINS- C & W $378,312, % $9,268, % $6,148, ($3,119,747.47) MAINS- CAST IRON $8,234, % $137, NA $0.00 ($137,519.94) MAINS- COPPER $13, % $ % $ $ MAINS- PLASTIC $661,871, % $21,907, % $17,957, ($3,950,562.50) 378 PUMPING & REG EQUIPMENT $45,781, % $883, % $1,194,52296 $310, SERVICES- BARE $180, % $12, % $21,1137E $8, SERVICES- C & W $69,416, % $3,554, % $1,882, ($1,671, ) SERVICES- COPPER $25,382, % $1,393, % $874,579.5/ ($518,934.35) SERVICES- PLASTIC $671,443, % $46,262,461.4! 451% $30300, ($15962,17896) 381 METERS $195,756, % $978,781.0E 1.73% $3,387,50555 $2,408, METER,HSE REG INSTALLATNS $189,492, % $5,703, % $6,103, $400, HOUSE REGULATOR $19,784, % $195,867.3: 4.53% $896,208.2E $700, RIGHTS OF WAY $1, % $37.9( 2.45% $37.1: ($077) 390 STRUCTURES & IMPROVEMENTS $27,644, % $351, % $575, $224, OFFICE FURNITURE & EQUIP $1,036, % $184, % $171, ($12,927.62) COMPUTER EQUIPMENT $3,796, % $182, % $793, $611, STORES EQUIPMENT $50, % $5, % $2,987.2C ($2,706.87) 394 TOOLS,SHOP,GARAGE EQUIP $7,231, % $632, % $456,226.2~ ($175,842.15) 395 LABORATORY EQUIPMENT $824, % $143, % $129,279.5 ($14,314.98) 396 POWER-OPERATED EQUIPMENT $3,596, % $1,020, % $529,457.od ($491,243.92) 397 COMMUNICATION EQUIPMENT $7,857, % $903,559.3! 9.88% $776,243. 7~ ($127,315.66) 398 MISCELLANEOUS EQUIPMENT $403, % $71, % $28,769.oi ($42,834.21) $3,004,383, $107,814, $88,070, ($19,743,77468)

100 APPENDIX C Depreciation Parameter Comparison 97

101 CONSUMERS ENERGY COMPANY Gas Utility Plant Depreciation Rates Depreciation Rates Approved in MPSC Cases U & U Acct Description Plant In Service Approved Depreciation Parameters 2007 Study Parameters Annual Depr Rate Life Iowa Curve Net Salvage Life Iowa Curve Net Salvage Life Change 07 vs Approved U.G.STORAGE RIGHTS OF WAY $1,428, % 65 S2 0.00% 65 R4 0.00% COMPRESSOR STA STRUCTURES $9,052, % 45 R3-6.00% 45 R5-6.00% % MEAS'G & REG STA STRUCT $161, % 45 R3-6.00% 45 R3-6.00% % OTHER STRUCTURES $3,471, % 50 R % 50 R % % U.G.S.LEASEHOLDS & RIGHTS $6,841, % 65 S2 0.00% 65 S2 0.00% % WELL CONSTRUCTION $44,644, % 50 R % 50 R % % WELL EQUIPMENT $19,016, % 50 R % 48 R % (2.00) 5.00% 353 LINES $33,541, % 65 S % 65 R % % 354 COMPRESSOR STA EQUIPMENT $82,604, % 40 R % 40 R % % 355 MEAS'G & REG STA EQUIP $7,301, % 45 R % 40 R % (5.00) 5.00% 356 PURIFICATION EQUIPMENT $18,715, % 35 R % 35 R % % 357 OTHER EQUIPMENT $6,075, % 30 R % 30 R % % RIGHTS OF WAY $32,496, % 75 R3 0.00% 75 R3 0.00% % 366 STRUCTURES & IMPROVEMENTS $11,805, % 60 R3-2.00% 60 R % % 367 MAINS $297,932, % 75 R % 75 R % % 368 COMPRESSOR STA EQUIPMENT $41,643, % 40 R4-1.00% 40 R % % 369 MEAS'G & REG STA EQUIP $38,147, % 55 R2-6.00% 43 R % (12.00) % 370 COMMUNICATION EQUIPMENT $8,582, % 15 R4-1.00% 13 R3-2.00% (2.00) -1.00% 371 OTHER EQUIPMENT $4,784, % 30 L2-1.00% 32 L1 0.0% % RIGHTS OF WAY $8,968, % 75 R3 0.00% 75 R3 0.0% % 375 STRUCTURES & IMPROVEMENTS $5,343, % 50 S % 55 R4-25.0% % MAINS BARE $3,708, % 70 R % 73 R % % MAINS- C & W $378,312, % 75 R % 80 R3-75.0% % MAINS- CAST IRON $8,234, % 65 S % 63 S2-75.0% (2.00) 30.00% MAINS- COPPER $13, % 60 R % 42 R4-75.0% (18.00) 30.00% MAINS- PLASTIC $661,871, % 60 R % 60 R4-75.0% % 378 PUMPING & REG EQUIPMENT $45,781, % 50 L % 50 L % % SERVICES- BARE $180, % 42 L % 30 L % (12.00) 38.00% SERVICES- C & W $69,416, % 56 R % 57 R % % SERVICES- COPPER $25,382, % 53 R % 46 R % (7.00) 38.00% SERVICES- PLASTIC $671,443, % 40 R % 46 R % % 381 METERS $195,756, % 42 S2 0.00% 41 R % (1.00) 15.00% 382 METER,HSE REG INSTALLATNS $189,492, % 52 R % 50 R3-67.0% (2.00) 9.00% 383 HOUSE REGULATOR $19,784, % 55 R1-4.00% 45 R1-67.0% (10.00) % RIGHTS OF WAY $1, % 50 R3 0.00% 50 R3 0.0% % 390 STRUCTURES & IMPROVEMENTS $27,644, % 50 R % 50 R % % 391 OFFICE FURNITURE & EQUIP $1,036, % 15 SQ 0.00% 15 SQ 0.0% % COMPUTER EQUIPMENT $3,796, % 7 SQ 0.00% 5 SQ 4.0% (2.00) 4.00% 393 STORES EQUIPMENT $50, % 20 SQ 0.00% 25 SQ 0.0% % 394 TOOLS,SHOP,GARAGE EQUIP $7,231, % 20 SQ 0.00% 20 SQ 3.0% % 395 LABORATORY EQUIPMENT $824, % 15 SQ 0.00% 15 SQ 2.0% % 396 POWER-OPERATED EQUIPMENT $3,596, % 10 L1 0.00% 7 L0 0.0% (3.00) 0.00% 397 COMMUNICATION EQUIPMENT $7,857, % 15 SQ 0.00% 15 SQ 2.0% % 398 MISCELLANEOUS EQUIPMENT $403, % 15 SQ 0.00% 15 SQ 7.0% % $3,004,383, Net Salvage Appendix C

102 Account G350.2-Rights of Way G351.2-Compressor Station Structure G351.3-Meas & Reg S1ation Structure G ther S10rage Structures G352.1-Leaseholds & Rights G352.3-Well Construction G352.4-Well Equipment G353.o-Unes G354.o-Compressor Station Equipment G355.o-Measuring & Regulating Equip G356.o-Purification Equipment G357.o-0ther Storage EqUipment G365.2-Rights of Way G366.o-Structures and Improvements G367.o-Mains G368.o-Compressor Station Equipment G369.o-Measuring & Regulating Equip G370.o-Communication Equipment G371.o-0ther Equipment G374.2-Rights of Way G375.o-Structures and Improvements G376.1-Mains - Bare G376.2-Mains - C & W G376.3-Mains - Cast Iron G376.4-Mains - Copper G376.5-Mains - Plastic G378.o-Measuring & Regulating Equip G380.1-Services - Bare G380.2-Services - C & W G380.4-Services - Copper G380.5-Services - Plastic G381.o-Meters G382.o-Meter Installations G383.o-House Regulators G389.2-Rights of Way G390.o-Structures and Improvements Office Fumiture And Equipm Total Computer Equipment Total Stores Equipment Total Tools Shop And Garage Equip Total Laboratory EqUipment Total G396.o-Power Operated Equipment Communication Equipment Total Miscellaneous Equipment Total Total Plant In Service 12131/2007 1,428, , ,471, ,841, ,644, ,016, ,541, ,604, ,301, ,715, ,075, ,496, ,805, ,932, ,643, ,147, ,582, ,784, ,968, , ,708, , ,234, , ,871, ,781, , ,416, ,382, ,443, ,756, ,492, ,784, , ,644, , ,796, , ,231, , ,596, ,857, , ,004,383, CONSUMERS ENERGY GAS COMPUTATION OF ACCRUAL RATE AT DECEMBER 31,2007 FIVE-YEAR AVERAGE PERCENTAGE NET SALVAGE Book Depreciation 12131/ , ,199, , ,181, ,401, ,216, ,842, ,689, ,954, ,227, ,080, , ,823, ,725, ,177, ,238, ,490, ,697, ,284, ,382, ,584, ,451, ,927, ,484, , ,474, ,692, , ,025, ,661, ,377,020,68 80,527, ,819, ,252, ,549, , ,442, , ,703,208,26 288,661,43 119,806,57 3,585, , ,845,603, Net Salvage % 0.00% % 0.00% % 0.00% % % % % % % -5.55% 0.00% % -9.02% % % -1.69% 0.00% 0.00% % % % % -78,23% % % % -147,90% % % 15,00% % 0.00% 0.00% % 0.00% 10.47% 0.00% 13.94% 9.61% 0.00% 3.15% 7.01% Net Salvage Amount 0.00 (11,622,163.44) 0.00 (1,943,797.61) 0.00 (32,300,581.56) (13,758,367.63) (18,941,004.48) (19,833,378.35) (1,283,622.79) (5,208,408.80) (337,205.85) 0.00 (2,946,688,53) (26,873,541.70) (15,178,981.45) (12,405,621.22) (145,050.24) (1,868,691.74) (2,900,793.66) (295,953,657.76) (6,442,026.83) (10,268.84) (517,782,433.42) (13,899,257.45) (267,049.76) (102,667,701.19) (37,541,112.59) (993,065,028.86) 29,363, (170,884,339.24) (25,156,298.49) , ,008, , , , ,300,092, Unaccrued Balance 653, ,474, , ,233, ,440, ,729, ,932, ,793,344,33 58,483, ,357, ,842, ,843, ,673, ,026, ,628, ,583, ,062, ,030, ,499, ,586,154,93 4,628, ,157, ,338, , , ,179, ,988, , ,059, ,262, ,131, ,865, ,557, ,531, , ,250, , , , ,520, , ,476, ,024, , Remaining Life REVISED xhibit A-2 (DAW-2) ase No. U Apri12009 Page 1 of 1 Annual Accrual Amount 19, , , , , ,569, , , ,683, , , , , , ,267, , , , , , , ,404, ,176, , , , , , ,313, ,128, , , , ,607, Annual Accrual Accrual Rate 1.39% 8.12% 2.19% 3.70% 1.28% 3.52% 3.69% 2.04% 3.25% 3.10% 3.77% 4.67% 1.28% 2.15% 1.29% 3.97% 3.32% 8.50% 2.30% 1.29% 2.71% 1.17% 1.69% 0.13% 4.25% 2.78% 2.57% 13.57% 3.29% 4.38% 5.05% 1.73% 3.86% 2.37% 2.45% 4.08% 16.53% 16.63% 5.88% 5.37% 13.78% 14.72% 9.66% 7.12%

103 REVISED Exhibit 1\-3 (DAW-3) Case No. U April 2009 Page I of J CONSUMERS ENERGY GAS COMPUTATION OF ACCRUAL RATE AT DECEMBER 31, 2007 FAS 143 NET SALVAGE Annual Annual Plant In service Book Depreciation Gross Salvage FAS 143lype Unaccrued Remaining Accrual FAS '43lype Total Accrual Account 12/31/ /31/2007 Gross Salvage % Amount liability Balance Ute Amount Accretion Accrual Accrual Rate G350.2-Rights of Way 1,428,665,95 775, % , , '0 1.39% G351.2-Compressor Station Structure 9,052, ,199, a.oo k, ,348, ,201,1' , , ,845.'2 4.0'% G351.3-Meas & Reg Station S1.n.IClure 161, % , , % G351.4-Other Storage Structures 3, % , ,737, , , , % G3S2.1-Leaseholds & Rights 6,84', ,401, % , , /0 G352.3-Well ConstruetJon 44,644, ,216, % 3,571, ,841,19'.49 42,704, ,321, ,776, ,098, % G352.4-Well Equipment 19,016, ,842, % 1,521, ,386, ,038, ,5' , , % G353.~ines 33,541, ,689,37' % ,124, ',976, , , /d G354.O-Compressor StatIon Equipment 82,604, ,954, % ,981,' ,636, ,79 2,552, , G3S5.o-Measuring & Regulating Equip 7,301,808.61,,227, d k 146, «6, , ,55 195, , , G3S6.Q-Purificalion Equipment 18,7'5, ,080, % ',122, ,158, ,669, , , , % G357.Q-Other Storage Equipment 6,075, , % , ,850, , , , % G365.2-Rights of way 32,496, ,823, % ,613,318.' ,8< , % G366.D-Strudures and Improvements 11,805, , % ,921, ,001, , , ".4 G367.o-Mains 291,932, ,177, % ,3'9, ,075, ,00 4,286,77'.32 3,338, ,624, % G368.O-Compressor Station Equipmem 41,643, ,238, d k 1,665, ,476,' ,215, ,338, ,397,70 2,006, % G369.Q-Measuring & Regulating Equip 38,147, , % ,495, ,152, ,,064, , ,415, % G370.Q-Communication Equipmenl 8,582, ,691, % , ,088, , , , % G371.0-other Equipment 4,184, ,284, /" , ,465, , , % G374.2-R)ght:5 of way 8,968, ,382,812, % ,586, ,452.'5 115, % G375.o-strudures and Improvements 5.343, ,584, % ,860, , «, , , /" G376.1-Mains - Bare 3,708, ,451, % ,616, ,873, , , , ".41 G376.2-Mams - C & W 318,312, ,927,020.' % ,988, , , ,125, ,574, % G376.3-Mains - Cast Iron 8,234, ,484, % ,632, J317, , , , % G376.4-Mains - Copper , % , , % G376.5-Mains - Plastic 661,811, ,474, % ,348, ,146, ,170,445,39 ',808,7'6.31 9,979,' % G378.o-Measuring & Regulating Equip 45,781,480.4' 11,692, " , ,611, ,242,8< ,272.,8 294, ,231, % G380.1-Services Bare 180, , / ,736, ,703, , , , % G380.2-Services - C & W 69,416, ,025, % ,536, ,928, , ,610, ,503, % G380.4-Services Copper 25,382, % ,244, ,966, , ,184, , % G380.5-Services - Plastic 671,443, ,377, % ,966, , S ,'00, ' :!-41% G381.O-Meters 195,156, ,527,43' % 29,363, ,885, ,381, ,387, % G382.Q-Meter Insta~ations 189,492, ,819, % ,523, ,197, ,420, ,883,668,7' 5,304, % G383.O-J-louse Regulators 19,184, ,252, % , ,616, , , , % G389.2-Rights of way 1, % , ' 37.' "10 G390.G-Struetures and Improvements 27, ,549, % ,570, ,664, , , % Office Fumiture And Equipm Total 1,036, , % , , , % Computer Equipment Total 3.196, ,442, % 15',865.'8 1,202, , , % S10res Equipment Total 50, , % , , , Tools Shop And Garage Equip Total 1,231, ,703, % 2'6, ,311, , , % Laboratory Equipment Total 824, , % 16, , , % G396.o-Power Operated Equipment 3,596, , % ,416, , , % Communication Equipment Total 1, ,585, % 157, ,114, , , % Miscellaneous Equipment Tota! 403, ,81? % , % Total 3,004,383, ,B4.56D3,4 52 ~ 485,450, ,605,568032,55 460J2,5D ,9:[2, ,95

104 REVISED xhibit A-4 (DAW-4) Case No. U April 2009 Page I o[ 1 CONSUMERS ENERGY GAS COMPUTATION OF ACCRUAL RATE AT DECEMBER 31,2007 INFLATION ADJUSTED NET SALVAGE Annual Annual Plant In Service Book Depreciation Net Salvage Unaccrued Remaining Accrual Accrual Account 12/31/ /31/2007 Net Salvage % Amount Balance Life Amount Accrual Rate G350.2-Rights of Way 1,428, , % , , % G351.2-Compressor Station Structure 9,052, ,199, % (543,134.05) 5,395, , % G351.3-Meas & Reg Station Structure 161, , % (9,679.75) 153, , % G351.4-Other Storage S1ructures 3,471, ,181, % (971,898.80) 2,261, , % G352.1-leaseholds & Rights 6,841, ,401, % ,440, , % G352.3-Well Cons1ruction 44,644, ,216, % (28,800,421.79) 47,228, ,461, % G352.4-Well Equipment 19,016, ,842, % (12.267,481.63) 18,441, , % G353.(}.lines 33, ,689, % (16,666,876.44) 33,519, , % G354.(}'Compressor S1ation Equipment 82, , % (20,882,457.51) 59,532, ,731, % G355.(}.Measuring & Regulating Equip 7, ,227, % (1,085,019.04) 7,158, , % G356.(}'Purification Equipment , , % (4,895,866.84) , , % G357.(}.Other Storage Equipment 6,075, , t1% (310,472.42) 5,816, , % G365.2-Rights of Way 32,496, ,823, % ,673, , % G366.(}'Structures and Improvements 11,805, ,725, % (3,102, ) 10,182, , % G367.(}'Mains 297,932, ,177, % (24,132,559.62) 211,887, ,783, % G368.(}'Compressor Sta1ion Equipment , , % (14,425,237.79) 32,830, ,614, % G369.(}.Measuring & Regulating Equip 38, ,490, % (12,470,472.25) 43,127, ,269, % G370.(}'Communication Equipment 8,582, ,697, % (132,175.96) 5,017, , % G371.(}'Other Equipment 4,784, ,284, % ,499, , % G374.2-Rights of Way 8,968, , % ,586, , % G375.(},Structures and Improvements 5,343, ,584, % (1,797,086.17) 4,556, , % G376.1-Mains - Bare 3,708, ,451, % (2, ) 723, , % G376.2-Mains - C & W 378,312, ,927, % (251,728,958.03) 275,114, ,508, % G376.3-Mains - Cast Iron 8,234, , % (5,479,387.26) -770, NA 0.00% G376.4-Mains - Copper 13, , % (8,734.35) % G376.5-Mains - Plastic 661,871, ,474, % (440,409,601.43) 802, , % G378.(}.Measunng & Regulating Equip 45,781, ,692, % (13, ) 48,038, , % G380.1-Services - Bare 180, , % (268,223.41) 234, , % G380.2-Services - C & W 69,416, ,025, % (103,118,911.50) 71,510, ,296, % G380.4-Services - Copper 25,382, ,661, % ( ) 21,427, ,120, % G380.5-Services - Plastic 671,443, ,377, % (997,429,412.02) 1,140,495, , % G381.(}'Meters 195, , % , ,865, ,387, % G382.(}'Meter Installations 189,492, ,819, % (171,869,700.26) 266,542, ,340, % G383.(}'House Regulators 19,784, , % ,531, , % G389.2-Rights of Way 1, % , % G390.(}.Structures and Improvements , ,549, % (25,156,298.49) ,128, % Office Fumrture And Equipm Total 1,036, , % , % Computer Equipment Total 3,796, ,442, % 151, ,202, , % Stores EquipmeGt Total 50, , % , % Tools Shop And Garage Equip Total 7,231, , % 216, , , % laboratory Equipment Total 824, , % 16, , % G396.(}'Power Operated Equipment 3, , % ,476, , % Communication Equipment Total 7,857, ,585, % 157, ,114, , % Miscellaneous Equipment Total 403, , % 28, , , % Total , ,845,603,452,114-2,162,151, c , ,726,433.47

105 I I PROPOSED CONSUMERS ENERGY COMPANY COMPARISON OF DEPECIATION ACCRUAL RATES BASED ON DEPRECIABLE INVESTMENT AT REVISED Exhibit A-5 (DAW-5) Case No. U April 2009 Page I of I I SETTLEMENT METHOD I INFLATION ADJUSTED I APPROVED lraditional U FAS 143 CALCULATION CALCULATION DIFFERENCE FROM CURREN"!: I Annual Accrual Annual Accrual Annual Annual Annual Annual Annual Annual Annual Annual Annual Annual Accrual Amount- Annual Accrual Amount Plant In Service Accrual Annual Accrual Accrual Accrual Accrual Accrual Accrual Accrual Accrual Accrual Amount- Settlement Amount- FAS Inflation Acct Description 12131/2007 Rate Amount Rate Amount Rate Amount Rate Amount Rate Amount Traditional Method 143 Adjusted U.G.STORAGE RIGHTS OF WAY $1,428, % $16, % 519, % 519, % 519, % 519, , , , $3, COMPRESSOR STA STRUCTURE~ $9,052, % 5223, % 5240, % $ % 5362, % 5240, , $511, , , MEAS'G & REG STA STRUCT 5161, % $4, % 53, % 53, % /0 $ ($709.09) ($947.37) ($947.37) ($709.09) OTHER STRUCTURES $3.471, % $93, % $89, % $128, % % 589, ($3,534.59) $ $19, ($ ) U.G.S.LEASEHOLDS & RIGHTS $6,841, % $79, % $ % % $ % $ $8, $8, $8, $8, WELL CONSTRUCTION $44, % $1,593, % $1,509, % $1.569, % 53,098, % $1.461, (584,022.36) ($23,922.08) $1.504, ($132,240.78) WELL EQUIPMENT 519, /, $688, % $672, % $701, % $300, % $648, (516,071.02) (5367,412.75) ($39,426.35) 353 LINES $33,541, % $1.261, % $643, % $ % $ % $642, ($617,176.41) ($575,611.11) ($513,281.31) ($619,167.95) 354 COMPRESSOR STA EQUIPMENT $82, % 52,511, % $2,417, % $2.683, % 53, % $2,731, (593,321.19) 5172, $1,125, $220, MEAS'G & REG STA EQUIP $7,301, % $ % $ % $226, % $224, % $219, $13, $14, $13, $6, PURIFICATION EQUIPMENT $18,715, % $705, % $ % $704, % $548, % $691,017.13' $ ($635.02) ($156,934.37) ($14,541.66) 357 OTHER EQUIPMENT $6, % 5231, % $285, % $ % $306, % $282, $53, $52, $74, $51, RIGHTS OF WAY $32, % $341, % $4 16, % 5416, % $416, % 54 16, $75, $ $75, $75, STRUCTURES & IMPROVEMENTS $11,805, % $145, % 5253, % 5253, % $ % $257, $108, $108, , $112, MAINS $ % $4, % $4,735,716.28,; 1.29% $3.832, % 57,624, ~ 1.27% $3, , ($487,624.77) 53,304, ($536,567.63) 366 COMPRESSOR STA EQUIPMENT $41,643, % $366, " 2.660/0 $1,109, % $1.651, % $2.006, /0 51, $ $1,284, $1,640, $1.247, MEAS'G & REG STA EQUIP $38,147, % $625, % 51,295, % 51, % $1.415, % 51, $ $642, , $644, COMMUNICATION EQUIPMENT 58,582, % $298, % $733, % $729, % $750, % $727, $434, $430, , OTHER EQUIPMENT $4,784, % $121, % 5110, % $110, % $214, % ($10,840.44) ($10,840.44) $93, ($ ) RIGHTS OF WAY $6,968, % $ % 5115, % $115, % 5115, % 5115, $46, $46, $46, $ STRUCTURES & IMPROVEMENTS 55,343, % $ % $128, % $144, % % $142, $92, , $227, $106, MAINS BARE $3,708, % $ % $ % $43, % $402, % $ ($38,269.47) ($ ) $ ($50,018.54) MAIN5- C & W $378,312, % $9,268, % $6,148, % $ % $4.574, % 55, ($3,119,747.47) ($2,875,098.57) ($4,694,103.48) ($3.760,530.65) MAIN5- CAST IRON $8,234, % $137, NA $ % $11, % $323, % ($137,519.94) (5126,477.74) 5186, ($137,519.94) MAIN5- COPPER $13, % $ % $ % % $ % $ $ $ $1, $ MAIN5- PLASTIC $681, % $21, % 517,957, % % $9,979, % $16,786, ($3,950,562.50) (53,503,542.27) (511,928,800.13) ($5,121,395.69) 378 PUMPING & REG EQUIPMENT $45,781, % $ % $1,194, % $1, % $1,231, % $1,177, $310, $292, $347, $293, SERVICE5- BARE $180, % $ % $21, % $24, % $ % 524, $ $ $ $12, SERVICE5- C & W $69, % $ % $ % $2, % $4,503, % $2,296, ($1, ) (51,272,330.19) 5949, ($1,257,841.15) SERVICE5- COPPER $25,362, % $1, % $874, % $1,112, % $3,124, % $ ($518,934.35) ($281,262.86) 51,731, ($ ) SERVICE5- PLASTIC $ , % $ ,51% $30, % $33, 'lo $16,154, % $34,015, ($16,962,178.96) ($12,377,586.34) ($ ) (512, ) 361 METERS $195,756, % % $3.367, % 53,387, %1 $3,387, % $3,387, $2.408, ,408, $2, ,408, METER,HSE REG INSTALLATNS 5189,492, % 55, % $6,103, % $7,313, % $5,304, % $7,340, $400, $1,609, (5399,643.02) $1,636, HOUSE REGULATOR $19,784, % $195, % $896, % $468, % $ % $468, $700, $272, $280, $272, RIGHTS OF WAY $1, % $ % $ % $ % $ % (SO 77) ($0.77) (SO.77) ($0.77) 390 STRUCTURES & IMPROVEMENTS $27,644, % $ % 5575, % 51, % $1.361, % $1.128, $224, , ,010, $777, OFFICE FURNITURE & EQUIP $1, % 5184, % $171, % $171, % $ % $171, (512,927.62) ($12,927.62) ($12,927.62) ($12,927.62) COMPUTER EQUIPMENT $3, % $ % $ % $631, % $793, % $793, $611, $449, $611, $ STORES EQUIPMENT 550, % 55, % $2, % $2, % $2, % $2, (52,706.87) ($2,706.87) ($2,706.87) ($2,706.87) 394 TOOLS,SHOP,GARAGE EQUIP $7,231, % % $456, % $ % 5456, % $456, ($175,842.15) ($243,795.92) ($175,842.15) ($ ) 395 LABORATORY EQUIPMENT $824, % $ % $129, % $113, % $ % $129, ($14,314.98) ($29,930.76) ($14,314.98) ($14,314.98) 396 POWER-DPERATED EQUIPMENT $3,596, % % $529, % $ % % $529, ($491,243.92) ($491,243.92) (5491,243.92) (5491,243.92) 397 COMMUNICATION EQUIPMENT $7,857, % $ % 5776, % $759, % 5776, % $776, ($ ) (5144,361.84) ( ) ($127,315.66) 398 MISCELLANEOUS EQUIPMENT $ % $71, % $ % $28, % $28, % 528, ( ) ($ ) ($ ) ( ) , $107, SR8,070.~7'1 QO \Q m.04s.iij.9s I ~91,726,~3H7 ~ (~19.7~3.77~.68) (SI J.206.8S1901 (S30.769,IJ8631 (S1<; )

106 Asset Depreciation Expense "Purchasing Power" Recovery $500 Initial investment Exhibit A-6 (DAW-6) Case No. U April 2009 Page 1 of 1 Current Value Year Straight-line Depreciation "Purchasing Power" (5.26%) (a) (b) (c) 0 1 $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $ $10.00 $0.77 Total Recovery $ $ Percent Recovery 35%

107 Calculation of Total Cost of Traditional Method Versus "Purchasing Power" Method Current, Future and Nominal Value Exhibit A-7 (DAW-7) Case No. U April 2009 Page 1 of 1 Traditional Removal Cost Purchasing Power (PP) Removal Cost PP Carrying Cost Change (CC) Cumulative PP CC Change Future Value (FV) Traditional RC Current Value (CV) Traditional RC Nominal Value (NV) Traditional RC FV PP RC CV PP RC NV PP RC Year Age + CC + CC + CC (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) (l) (0.02) (0.07) (0.13) (0.19) (0.25) (0.31) (0.38) (0.46) (0.53) (0.61) (0.70) (0.79) (0.88) (0.98) (1.09) (1.20) (1.31) (1.43) (1.56) (1.70) (1.84) (1.99) (2.14) (0.00) Total , , , Increase ("Purchasing Power' versus Traditional) 52% 52% 134% Inflation Rate 5.26% Cost of Capital 10.00% Life 60

108 CONSUMERS ENERGY Correction of ABATE's Proposed Depreciation Rate Exhibit AB-4 REVISED Exhibit A-8 (DAW-8) Case No_ U April 2009 Page 1 of I Account G350.2-Rights of Way G351.2-Compressor Station StnJeture G351.:>Meas & Reg Station StnJClure G ller Storage StnJetures G352.1-Leaseholds & Rights G352.:>Well ConstnJetion G352.4-Well Equipment G353.C>-Lines G354.C>-Compressor Station Equipmenl G355.C>-Measuring & Regulating Equip G356.C>-Puri1lcation Equipment G357.C>-ClIler Storage Equipment G365.2-Rights ofway G366.C>-StnJelures and Improvements G367.C>-Mains G368.C>-Compressor Station Equipment G369.C>-Measuring & Regulating Equip G370.C>-Communication Equipment G371.C>-OlI1er Equipment G374.2-Rights of Way G375.C>-StnJelures and Improvements G376.1-Mains - Bare G376.2-Mains - C & W G376.:>Mains - Cast Iron G376.4-Mains - Copper G376.f>-Mains - Plastic G378.C>-Measuring & Regulating Equip G ervTces - Bare G ervices - C & W G380.4-Services - Copper G380.f>-Services - Plastic G381. C>-Maters G382.C>-Meler Installations G383.C>-House Regutators G389.2-Rights ofway G390.C>-StruClures and Improvements Office Furniture And Equipm Total Computer Equipment Total Stores Equipment TOlal ToO/s Shop And Garage Equip Tolal Laboratory Equipment Total G396.C>-Power Operated Equipment CommunicatiOn Equipment Total Miscellaneous Equipment Total Total Book Annual Annual Book Depreciation Unaccrued RelT\Alning Accrual 15 Yr Net Salvage Annual Accrual Plant In Service Book Depreciation Depreciation Cost of Balance Life Amount Net Salvage In Accrual Accrual Rate 12131/ Llfe Removal Ufe Only Life Only History Life + Salvage Life + Salvage (1) (2) (3) (4) (5)'(1H3) (6f -(7)=(5)/(6) (8) (9)=«8) x 1.026)'10 (10)=(7)+(9)- (11)=(10)/(1) % 9.052, ,526 3,961, , , (6,477) (8,372) % 161,329 17, , , , % 3,471,067 2, , , , (7,168) (9,266) 79, % 6.841,700 3,401,494 3,401, ,440, , , % 44,644,895 26,216, ,622 11, , , ( ) (299,333) 1.236, % ,403 12,842,618 7, , , % ,712 16,689,372 11,126, ,415, (53,958) (69.748) % 82,604,658 43,954,987 37,568,365 6, ,036, , (77,201) (99,792) 2,166, % 7,301,609 1,227, , ,402 6,273.1 IS , (11,839) (15.303) % ,087 8,080,837 5, ,472 12, , (22,278) (28.797) '1/0 6,075, , ,538, , (3.144) (4.064) % 32,496,957 6, ,823, % , ,499 3,780, , , (5,785) (7,478) % 297, , , ,490, , (60.262) (77.896) 3,836, % ,296 23, , , , (41,435) (53,560) 1.103, % 38,147,667 7, ,548,545 1,941, (70,231) (90,783) 1.050, % 8,582,855 3,697,821 3, ,957, , (6.916) (8.940) 727, % 4, , , , (717) (927) % 8, ,382,812 2,382, , , , % , ,067, ,276, (4,845) (6,263) 108, % 3.708,032 5,451,561 3, , (262,476) ( ) 361, % 378,312, ,927, ,815, ,496, , ( ) (655,424) 4,169, % ,484,522 8,276, (361,135) ( ) % 13,126 19, , (290) (374) % 661,871, ,474, , , , ( ) ( ) 10,421, % 45,781,480 11, , , (87,681) ( ) 1.020, % 180, , , , ( ) (382,848) % 69,416, ,025,477 43,924,120 57,101,357 25, ( ) (3,597,834) 4, % 25,382,767 41,661,213 18,113,571 23, , (1, ) (1.662,670) 2,042, % , ,647, , ,174,03586 ( ) (1,127,013) % ,213 80,527, , ,228, , % , , , % , , , ( ) (749,573) % 1, % , , , , (88.326) ( ) % (142) (184) /, ,731 2, , % 50, , % 7.231, , ,845 3, % 824, , tl /tl 3.596, , , , % 7,857,038 3, , , , , % 403, , , , , % 3.004,383, ,6QM53 t.069,oso,~7 776, ,935,332,903 54,077, ( )