ANNUAL OFFICER INCENTIVE COMPENSATION PLAN FOR CMS ENERGY CORPORATION AND ITS SUBSIDIARIES

I.

GENERAL PROVISIONS

(a)

Provide an equitable and competitive level of compensation that will permit CMS Energy Corporation (“Company”) and its subsidiaries to attract, retain and motivate highly competent Officers.

(b)

No payments to Officers in the form of incentive compensation shall be made unless pursuant to a plan approved by the Committee on Compensation and Human Resources of the Board of Directors of CMS Energy (the “Committee”) and after express approval of the Committee.

(a)

“Annual Award” means an annual incentive award granted under the Plan.

(b)

“Base Salary” means the base salary on January 1 of a Performance Year, except as impacted by a Change in Status as defined in Article V. For purposes of the Plan, an Officer’s Base Salary must be subject to annual review and annual approval by the Committee.

(c)

“CMS Energy” means CMS Energy Corporation.

(d)

“Code” means the Internal Revenue Code of 1986, as amended.

(e)

“Code Section 162(m) Employee” means an employee whose compensation is subject to the “Million Dollar Cap” under Code Section 162(m). Generally, this is the CEO and the three highest paid executive officers of the Company (other than the CEO and the CFO).

(f)

“Committee” means the Committee on Compensation and Human Resources of the Board of Directors of CMS Energy Corporation.

(g)

“Company” means CMS Energy Corporation.

(h)

“Deferred Annual Award” means the amount deferred by an Officer pursuant to Section 4.2

(i)

“Disability” means that a participant has terminated employment with the Company or a Subsidiary and is disabled, as that term is defined under Code Section 409A and any applicable regulations.(k) “Leave of Absence” for purposes of this Plan means a leave of absence that has been approved by the Plan Administrator.

(l)

“Officer” means an employee of the Company or a Subsidiary in Salary Grade “E-3” or higher.

(m)

“Payment Event” means the time at which a Deferred Annual Award may be paid pursuant to Section 4.2.

(n)

“Payment Term” means the length of time for payment of a Deferred Annual Award under Section 4.2.

(o)

“Pension Plan” means the Pension Plan for Employees of Consumers Energy and Other CMS Energy Companies.

(p)

“Performance Year” means the calendar year prior to the year in which an Annual Award is made by the Committee.

(q)

“Plan Administrator” means the President and Chief Executive Officer of CMS Energy, under the general direction of the Committee. For purposes of administering Deferred Amounts under Section 4.2, the Plan Administrator is the Benefits Administration Committee appointed by the Chief Executive Officer and the Chief Financial Officer as authorized by the Board of Directors.

(r)

“Retirement” means that a Plan participant is no longer an active employee and qualifies for a retirement benefit other than a deferred vested retirement benefit under the Pension Plan. For a participant ineligible for coverage under the Pension Plan and covered instead under the Defined Company Contribution Plan, retirement occurs when there is a Separation from Service on or after age 55 with 5 or more years of service.

(s)

“Separation from Service” means an Employee retires or otherwise has a separation from service from the Company as defined under Code Section 409A and any applicable regulations. The Plan Administrator will determine, consistent with the requirements of Code Section 409A and any applicable regulations, to what extent a person on a leave of absence, including on paid sick leave pursuant to Company policy, has incurred a Separation from Service.

(t)

“Subsidiary” means any direct or indirect subsidiary of the Company.

1.5

Administration of the Plan .

II.

CORPORATE PERFORMANCE GOALS

III.

ANNUAL AWARD FORMULA

Std Award

Salary

Percentage

Position

Grade

of Base Salary

E-9

100

%

E-8

60

%

E-7

55

%

E-6

50

%

E-5

45

%

E-4

40

%

E-3

35

%

3.2

Annual Awards for Officers will be calculated and made as follows:

In addition, each Annual Award for Officers of Consumers Energy Company will be modified based on the results achieved for the Consumers Energy Annual Employee Incentive Compensation Plan. If the Consumers Energy Annual Employee Incentive Compensation Plan pays out an award for the same Performance Year, then there is no modification of awards under this plan. If however, there is no award under the Consumers Energy Annual Employee Incentive Compensation Plan, then the Annual Award, if any, earned under this plan will be reduced by 25%.

4.1

Cash Annual Award . All Annual Awards for a Performance Year will be paid in cash after certification by the outside auditors of the Company and the Committee that the performance goals have been satisfied, but not later than March 15 ^th of the calendar year following the Performance Year provided that the Annual Award for a particular Performance Year has not been deferred voluntarily pursuant to Section 4.2. The amounts required by law to be withheld for income and employment taxes will be deducted from the Annual Award payments. All Annual Awards become the obligation of the company on whose payroll the Officer is enrolled at the time the Committee makes the Annual Award.

(a)

The payment of all or any portion (rounded to an even multiple of 10%) of a cash Annual Award may be deferred voluntarily at the election of an individual Plan participant. Any such deferral will be net of any applicable FICA or FUTA taxes. A separate irrevocable election must be made prior to the Performance Year. Any Annual Award made by the Committee after termination of employment of a participant or retirement of a participant will be paid in accordance with any deferral election made within the enrollment period.

(i)

Separation from Service for any reason other than d