TEXT-Fitch release on Consumers Energy Co

(The following statement was released by the rating agency)

March 11 - Fitch Ratings has assigned a 'BBB+' rating to Consumers Energy Co.'s (Consumers) issuance of $250 million 5.65% first mortgage bonds (FMBs) due Sept. 15, 2018.

Proceeds from the issuance will be used for general corporate purposes.

The Rating Outlook for Consumers is Stable.

The ratings of Consumers take into account the company's sound electric and gas operations, as well as solid credit metrics, with stable and predictable cash flows. Credit metrics continue to be consistent with Consumers' rating, with the ratios of EBITDA to interest at 4.8 times (x) and funds from operations interest coverage at 4.1x for 2007.

Debt leverage, as measured by the ratio of debt to EBITDA, was 3.4x for the same time period.

The 'BBB+' rating further takes into account Consumers' significant capital expenditure program going forward, which includes the purchase of the Zeeland gas-fired power plant and plans to build a new 800 MW coal plant in Michigan by 2015.

Fitch's rating assumes that Consumers will not embark on any large capital investments without first attaining timely recovery mechanisms for increased expenditures, and will supplement internal funding with a balanced mix of debt and equity. Consumers received regulatory approval for the Zeeland acquisition on an expedited basis.

Rating concerns facing the utility relate to its pending electric and gas rate cases, as well as exposure to the sluggish economy in Michigan. In February 2008, Consumers filed a new gas rate case, requesting a $91 million increase, and an 11% return on equity (ROE).