THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS IS
NOT COMPLETE AND MAY BE CHANGED. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS ARE NOT AN OFFER TO SELL THESE SECURITIES AND THEY ARE NOT SOLICITING
AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
 
                                                          Pursuant to Rule 424B3
                                                      Registration No. 333-51932
 
                  SUBJECT TO COMPLETION, DATED MARCH 28, 2005
 
          PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED SEPTEMBER 21, 2004
 
                                     SHARES
 
                               (CMS ENERGY LOGO)
 
                                  COMMON STOCK
                             ---------------------
 
     We are offering           shares of our common stock. Our common stock is
listed on The New York Stock Exchange under the symbol "CMS." The last reported
sale price on March 24, 2005 was $13.00 per share.
 
     INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING
ON PAGE S-13 OF THIS PROSPECTUS SUPPLEMENT.
 


                                                                          UNDERWRITING
                                                             PRICE TO     DISCOUNTS AND     PROCEEDS
                                                              PUBLIC       COMMISSIONS       TO CMS
                                                           ------------   -------------   ------------
                                                                                 
Per Share................................................  $               $              $
Total....................................................  $               $              $

 
     We have granted the underwriters a 30-day option to purchase up to
          additional shares of our common stock on the same terms and conditions
as set forth above to cover over-allotments, if any.
 
     NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS IS TRUTHFUL OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
 
     The underwriters expect to deliver the shares of common stock to purchasers
on or about April   , 2005.
 
                             ---------------------
 
                          Joint Book-Running Managers
 
CITIGROUP                                                               JPMORGAN
DEUTSCHE BANK SECURITIES                                     WACHOVIA SECURITIES
                             ---------------------
                                  Co-Managers
 
                              GOLDMAN, SACHS & CO.
     KEYBANC CAPITAL MARKETS                        WELLS FARGO SECURITIES
 
            The date of this prospectus supplement is March   , 2005

 
                               TABLE OF CONTENTS
 


                                                              PAGE
                                                              ----
                                                           
                      PROSPECTUS SUPPLEMENT
 
ABOUT THIS PROSPECTUS SUPPLEMENT............................   S-2
WHERE TO FIND MORE INFORMATION..............................   S-3
FORWARD-LOOKING STATEMENTS AND INFORMATION..................   S-5
SUMMARY.....................................................   S-7
RISK FACTORS................................................  S-13
USE OF PROCEEDS.............................................  S-23
PRICE RANGE OF OUR COMMON STOCK AND DIVIDEND POLICY.........  S-24
TRANSFER AGENT..............................................  S-24
MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS FOR NON-U.S.
  STOCKHOLDERS..............................................  S-24
UNDERWRITING................................................  S-27
LEGAL OPINIONS..............................................  S-29
EXPERTS.....................................................  S-29
                            PROSPECTUS
SUMMARY.....................................................     2
WHERE TO FIND MORE INFORMATION..............................     2
CMS ENERGY CORPORATION......................................     4
CMS ENERGY TRUSTS...........................................     4
RISK FACTORS................................................     5
USE OF PROCEEDS.............................................     6
RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO
  COMBINED FIXED CHARGES AND PREFERENCE DIVIDENDS...........     6
DESCRIPTION OF SECURITIES...................................     6
EFFECT OF OBLIGATIONS UNDER THE DEBT SECURITIES AND THE
  GUARANTEES................................................    23
PLAN OF DISTRIBUTION........................................    27
LEGAL OPINIONS..............................................    30
EXPERTS.....................................................    30

 
                             ---------------------
 
     YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO
WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS DOCUMENT MAY ONLY BE USED WHERE IT IS LEGAL
TO SELL THESE SECURITIES. THE INFORMATION IN THIS DOCUMENT MAY ONLY BE ACCURATE
ON THE DATE OF THIS DOCUMENT.
 
                             ---------------------
 
                        ABOUT THIS PROSPECTUS SUPPLEMENT
 
     This document is in two parts. The first part is this prospectus
supplement, which describes the terms of this offering of common stock and also
adds to and updates information contained in the accompanying prospectus and the
documents incorporated by reference into the accompanying prospectus. The second
part is the accompanying prospectus, which contains a description of the
securities registered by us. To the extent there is a conflict between the
information contained or incorporated by reference in this prospectus
supplement, on the one hand, and the information contained in the accompanying
prospectus or any
 
                                       S-2

 
document incorporated by reference therein, on the other hand, the information
in this prospectus supplement shall control.
 
     This prospectus supplement and the accompanying prospectus are part of a
registration statement that we filed with the Securities and Exchange Commission
("SEC") using a "shelf" registration process. Under the registration statement,
we may sell securities, including common stock, up to a dollar amount of
$2,000,000,000, of which this offering is a part.
 
                         WHERE TO FIND MORE INFORMATION
 
     We file reports, proxy statements and other information with the SEC under
File No. 1-9513. Our SEC filings are also available over the Internet at the
SEC's web site at http://www.sec.gov. You may also read and copy any document we
file at the SEC's public reference room at 450 Fifth Street N.W., Room 1024,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for more
information on the public reference rooms and their copy charges. You may also
inspect our SEC reports and other information at The New York Stock Exchange, 20
Broad Street, New York, New York 10005. You can find additional information
about us, including our Annual Report on Form 10-K for the year ended December
31, 2004, on our web site at http://www.cmsenergy.com. The information on this
web site is not a part of this prospectus supplement and accompanying
prospectus.
 
     We have securities listed on The New York Stock Exchange ("NYSE"). You can
inspect and copy reports and other information about us at the NYSE's offices at
20 Broad Street, New York, New York 10005.
 
     We are "incorporating by reference" information into this prospectus
supplement and accompanying prospectus. This means that we are disclosing
important information to you when we refer you to another document that we filed
separately with the SEC. Information incorporated by reference is considered to
be part of this prospectus supplement and accompanying prospectus, unless the
information is updated by information in this prospectus supplement and the
accompanying prospectus. This prospectus supplement and the accompanying
prospectus incorporate by reference the documents listed below. We encourage you
to read these additional documents because these documents contain important
information about us and our finances.
 
     - Annual Report on Form 10-K for the year ended December 31, 2004 filed on
       March 10, 2005
 
     - Current Reports on Form 8-K filed on January 12, 2005, January 14, 2005,
       January 20, 2005 and January 27, 2005 and Current Report on Form 8-K/A
       filed on February 28, 2005
 
     The documents we have filed with the SEC after the date of this prospectus
supplement and accompanying prospectus and prior to the termination of the
offering made by this prospectus supplement and accompanying prospectus are also
incorporated by reference into this prospectus supplement and accompanying
prospectus. Any statement contained in such document will be deemed to be
modified or superseded for purposes of this prospectus supplement and
accompanying prospectus to the extent that a statement contained in this
prospectus supplement and accompanying prospectus or any other subsequently
filed document modifies or supersedes such statement.
 
     This prospectus supplement and the accompanying prospectus do not contain
all of the information found in the offering registration statement including
various exhibits and schedules. We are incorporating by reference the offering
registration statement.
 
     We will provide, upon your oral or written request, a copy of any or all of
the information that has been incorporated by reference into this prospectus
supplement and accompanying prospectus but not delivered with this prospectus
supplement and accompanying prospectus.
 
                                       S-3

 
     You may request copies of these filings, including the registration
statement, at no cost, by writing or telephoning CMS Energy at the following
address:
 
        CMS Energy Corporation
        Attn: Office of the Secretary
        One Energy Plaza
        Jackson, Michigan 49201
        Telephone: (517) 788-0531
 
                                       S-4

 
                   FORWARD-LOOKING STATEMENTS AND INFORMATION
 
     This prospectus supplement and the accompanying prospectus contain
forward-looking statements as defined in Rule 175 under the Securities Act of
1933, as amended (the "SECURITIES ACT") and Rule 3b-6 under the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT") and relevant legal
decisions. Our intention with the use of such words as "may," "could,"
"anticipates," "believes," "estimates," "expects," "intends," "plans" and other
similar words is to identify forward-looking statements that involve risk and
uncertainty. We designed this discussion of potential risks and uncertainties to
highlight important factors that may impact our business and financial outlook.
We have no obligation to update or revise forward-looking statements regardless
of whether new information, future events or any other factors affect the
information contained in the statements. These forward-looking statements are
subject to various factors that could cause our actual results to differ
materially from the results anticipated in these statements. Such factors
include our inability to predict and/or control:
 
     - capital and financial market conditions, including the price of our
       common stock and the effect of such market conditions on our pension
       plan, interest rates and access to the capital markets as well as
       availability of financing to us, to Consumers Energy Company
       ("CONSUMERS"), our wholly owned subsidiary, or to any of our affiliates
       and to the energy industry;
 
     - market perception of the energy industry, us and Consumers or any of our
       affiliates;
 
     - our and Consumers' or any of our affiliates' credit ratings;
 
     - currency fluctuations, transfer restrictions and exchange controls;
 
     - factors affecting utility and diversified energy operations such as
       unusual weather conditions, catastrophic weather-related damage,
       unscheduled generation outages, maintenance or repairs, environmental
       incidents or electric transmission or gas pipeline system constraints;
 
     - international, national, regional and local economic, competitive and
       regulatory policies, conditions and developments;
 
     - adverse regulatory or legal decisions, including those related to
       environmental laws and regulations, and potential environmental
       remediation costs associated with such decisions;
 
     - potentially adverse regulatory treatment and/or regulatory lag concerning
       a number of significant questions presently before the Michigan Public
       Service Commission ("MPSC") relating to the Michigan Customer Choice and
       Electricity Reliability Act of 2000 (the "CUSTOMER CHOICE ACT"),
       including:
 
      - recovery of future stranded costs incurred due to customers choosing
        alternative energy suppliers;
 
      - recovery of Clean Air Act costs and other environmental and
        safety-related expenditures;
 
      - timely recovery of power supply and natural gas supply costs when oil
        prices and other fuel prices are rapidly increasing;
 
      - timely recognition in rates of additional equity investments in
        Consumers; and
 
      - adequate and timely recovery of additional electric and gas rate-based
        expenditures;
 
     - the impact of adverse natural gas prices on the Midland Cogeneration
       Venture Limited Partnership (the "MCV PARTNERSHIP") investment, and
       regulatory decisions that limit our recovery of capacity and fixed energy
       payments;
 
     - federal regulation of electric sales and transmission of electricity,
       including periodic re-examination by federal regulators of the
       market-based sales authorizations under which our subsidiaries
       participate in wholesale power markets without price restrictions;
 
                                       S-5

 
     - energy markets, including the timing and extent of changes in commodity
       prices for oil, coal, natural gas, natural gas liquids, electricity and
       certain related products due to lower or higher demand, shortages,
       transportation problems or other developments;
 
     - potential for the Midwest energy market, an energy market developed by
       the Midwest Independent System Operator to provide day-ahead and
       real-time market information and centralized dispatch for market
       participants, scheduled to begin April 1, 2005, to develop into an active
       energy market in the State of Michigan, which may lead us to account for
       electric capacity and energy contracts with the MCV Partnership and other
       independent power producers as derivatives;
 
     - the generally accepted accounting principles requirement that we utilize
       mark-to-market accounting on certain of our energy commodity contracts
       and interest rate swaps, which may have, in any given period, a
       significant positive or negative effect on earnings that could change
       dramatically or be eliminated in subsequent periods and could add to
       earnings volatility;
 
     - potential disruption, expropriation or interruption of facilities or
       operations due to accidents, war, terrorism or changing political
       conditions and the ability to obtain or maintain insurance coverage for
       such events;
 
     - nuclear power plant performance, decommissioning, policies, procedures,
       incidents and regulation, including the availability of spent nuclear
       fuel storage;
 
     - technological developments in energy production, delivery and usage;
 
     - achievement of capital expenditure and operating expense goals;
 
     - changes in financial or regulatory accounting principles or policies;
 
     - outcome, cost and other effects of legal and administrative proceedings,
       settlements, investigations and claims, including particularly claims,
       damages and fines resulting from round-trip trading and inaccurate
       commodity price reporting, including investigations by the United States
       Department of Justice regarding round-trip trading and price reporting;
 
     - limitations on our ability to influence the development, operation or
       financing of projects in which our subsidiaries have a minority interest;
 
     - disruptions in the normal commercial insurance and surety bond markets
       that may increase costs or reduce traditional insurance coverage,
       particularly terrorism and sabotage insurance and performance bonds;
 
     - the efficient sale of non-strategic or under-performing domestic or
       international assets and discontinuation of certain operations;
 
     - other business or investment considerations that may be disclosed from
       time to time in our or Consumers' SEC filings or in other publicly issued
       written documents;
 
     - other uncertainties that are difficult to predict, and many of which are
       beyond our control; and
 
     - the factors identified under "Risk Factors" beginning on page S-13.
 
     These are important factors, but not necessarily all of the important
factors, that could cause actual results to differ materially from those
expressed in any forward-looking statement made by, or on behalf of, us or our
subsidiaries.
 
                                       S-6

 
                                    SUMMARY
 
     This summary may not contain all the information that may be important to
you. You should read this prospectus supplement and the accompanying prospectus
and the documents incorporated by reference into this prospectus supplement and
the accompanying prospectus in their entirety before making an investment
decision. The terms "CMS," "CMS ENERGY," "OUR," "US" and "WE" as used in this
prospectus supplement and the accompanying prospectus refer to CMS Energy
Corporation and its subsidiaries as a combined entity, except where it is made
clear that such term means only CMS Energy Corporation.
 
     In this document, "BCF" means billion cubic feet and "MW" means megawatts.
 
                             CMS ENERGY CORPORATION
 
     CMS Energy was formed in Michigan in 1987 and is an energy holding company
operating through subsidiaries in the United States and in selected markets
around the world. Its two principal wholly-owned subsidiaries are Consumers and
CMS Enterprises Company ("ENTERPRISES"). Consumers is a public utility that
provides natural gas and/or electricity to almost 6.5 million of Michigan's 10
million residents and serves customers in all 68 counties in Michigan's Lower
Peninsula. Enterprises, through subsidiaries, affiliates and equity investments,
is engaged in diversified energy businesses in the United States and in selected
international markets.
 
     Our assets and services include: electric and natural gas utility
operations; independent power production; natural gas transmission, storage and
processing; and international energy distribution. Our principal businesses are:
 
     - Consumers' electric utility, which owns and operates 30 electric
       generating plants with an aggregate of 6,437 MW of capacity and serves
       1.77 million customers in Michigan's Lower Peninsula;
 
     - Consumers' gas utility, which owns and operates 27,398 miles of
       transmission and distribution lines throughout the Lower Peninsula of
       Michigan, providing natural gas to 1.69 million customers;
 
     - CMS Generation Co., a wholly-owned subsidiary of Enterprises, that has
       ownership interests in operating power plants totaling 8,219 gross MW
       (3,455 net MW) throughout the United States and abroad. The plants are
       located in the U.S., Argentina, Chile, Ghana, India, Jamaica, Morocco and
       the United Arab Emirates. At December 31, 2004, additional plants
       totaling approximately 322 gross MW (69 net MW) were under construction
       or in advanced stages of development. These plants include the Saudi
       Petrochemical Company power plant, which is under construction in the
       Kingdom of Saudi Arabia; and
 
     - CMS Gas Transmission Company, a wholly-owned subsidiary of Enterprises
       that owns an interest in and operates natural gas pipelines in various
       locations in North America (aggregating 265 miles) and South America
       (aggregating 4,331 miles). The pipelines are located in the U.S.,
       Argentina and Chile. It also owns gathering systems and processing
       facilities.
 
     In 2004, we had consolidated operating revenue of approximately $5.5
billion.
 
     Our principal executive offices are located at One Energy Plaza, Jackson,
Michigan 49201 and our telephone number is (517) 788-0531.
 
                                       S-7

 
                              RECENT DEVELOPMENTS
 
  2004 RESULTS OF OPERATION
 


YEARS ENDED DECEMBER 31                                    2004       2003        2002
-----------------------                                   ------     -------     -------
                                                                   IN MILLIONS
                                                          (EXCEPT FOR PER SHARE AMOUNTS)
                                                                        
Net Income (Loss) Available to Common Stockholders......  $ 110      $  (44)     $ (650)
Basic Earnings (Loss) Per Share.........................  $0.65      $(0.30)     $(4.68)
Diluted Earnings (Loss) Per Share.......................  $0.64      $(0.30)     $(4.68)

 


YEARS ENDED DECEMBER 31             2004    2003    CHANGE     2003    2002    CHANGE
-----------------------             -----   -----   ------     -----   -----   ------
                                                       IN MILLIONS
                                                             
Electric Utility..................  $ 223   $ 167    $ 56      $ 167   $ 264    $(97)
Gas Utility.......................     71      38      33         38      46      (8)
Enterprises.......................     19       8      11          8    (419)    427
Corporate Interest and Other......   (197)   (256)     59       (256)   (285)     29
Discontinued Operations...........     (4)     23     (27)        23    (274)    297
Accounting Changes................     (2)    (24)     22        (24)     18     (42)
                                    -----   -----    ----      -----   -----    ----
Net Income (Loss) Available to
  Common Stockholders.............  $ 110   $ (44)   $154      $ (44)  $(650)   $606
                                    =====   =====    ====      =====   =====    ====

 
  2004 COMPARED TO 2003:
 
     For the year ended December 31, 2004, our net income available to common
stockholders was $110 million, compared to a net loss available to common
stockholders of $44 million for the year ended December 31, 2003. The
improvement reflects the increased earnings from our utility due in large part
to rulings from the MPSC. The increase also reflects our continued commitment to
cost management, the continued reduction of debt at our parent company, lower
interest expense from refinanced debt and benefits from recent tax legislation.
This improvement was offset partially by increased impairment charges as we
continued to dispose of certain businesses that are not strategic to us. Net
income was also reduced by an environmental remediation charge related to our
involvement in Bay Harbor. See "Risk Factors -- Risks Related to CMS
Energy -- We cannot predict the outcome of claims regarding our participation in
the development of Bay Harbor or other litigation in which substantial monetary
claims are involved."
 
     Specific increases to net income available to common stockholders are:
 
     - a $56 million increase in net income at our electric utility as favorable
       treatment of depreciation and interest under the Customer Choice Act and
       reduced pension and benefit costs more than offset the effects of milder
       weather, reduced tariff revenues equivalent to the Big Rock point nuclear
       power plant nuclear decommissioning surcharge and customers choosing
       alternative electric suppliers;
 
     - a $56 million net reduction in corporate interest expense;
 
     - a $35 million net gain from the 2004 sales of our Parmelia business and
       our interest in Goldfields, both of which are Australian gas pipeline
       businesses;
 
     - a $33 million increase in net income at our gas utility resulting from
       favorable impacts of MPSC rate orders, reduced pension and benefit costs
       outpacing increased interest costs and the effects of milder weather;
 
     - a $21 million income tax benefit recorded at Enterprises resulting from
       the American Jobs Creation Act of 2004;
 
                                       S-8

 
     - a $20 million net reduction in operating and maintenance expenses at
       Enterprises resulting from a reduction in expenses at CMS Energy Resource
       Management Company (formerly known as CMS Marketing, Services and Trading
       Company) ("CMS MST"), which sold its non-essential business segments and
       moved its headquarters from Houston, Texas to Jackson, Michigan in 2003;
 
     - a $5 million net reduction in debt retirement charges;
 
     - a $22 million reduction in charges related to changes in accounting; and
 
     - the absence in 2004 of a $34 million deferred tax asset valuation reserve
       established in 2003.
 
     These increases were offset partially by:
 
     - a $36 million increase in net asset impairment charges;
 
     - a $29 million net environmental remediation charge associated with our
       involvement in Bay Harbor;
 
     - a $10 million increase in the declaration and payment of CMS Energy
       preferred dividends;
 
     - the absence in 2004 of $30 million of Michigan single business tax
       refunds received in 2003; and
 
     - the absence in 2004 of $23 million in gains in discontinued operations
       recorded in 2003.
 
  2003 COMPARED TO 2002:
 
     For the year ended December 31, 2003, our net loss available to common
stockholders was $44 million, compared to a net loss available to common
stockholders of $650 million for the year ended December 31, 2002. The
improvement reflects the absence of impairment charges from businesses that were
not strategic to us, reduced corporate debt and increased earnings from equity
method investments. These improvements were offset partially by lower earnings
at our electric utility, a net settlement and curtailment loss related to our
employee benefit plans and changes in accounting.
 
     Specific increases to net income available to common stockholders are:
 
     - the absence in 2003 of $379 million of net goodwill impairments
       associated with discontinued operations recorded in 2002;
 
     - a $427 million increase in net income at Enterprises, primarily due to a
       significant reduction in asset impairment charges and increased earnings
       from equity investments;
 
     - $30 million of Michigan single business tax refunds; and
 
     - a $25 million net reduction in corporate interest.
 
     These increases were offset partially by:
 
     - a $97 million reduction in net income from our electric utility due to
       the impact of milder weather on electric deliveries, higher pension
       expense, greater depreciation and amortization expense and customers
       choosing alternative electric suppliers;
 
     - a $48 million net settlement and curtailment charge related to a large
       number of employees retiring and exiting our employee benefit plans;
 
     - a $44 million net loss on the sale of Panhandle Eastern Pipe Line Company
       and its subsidiaries;
 
     - a $34 million deferred tax asset valuation reserve established in 2003;
 
     - a $24 million charge related to changes in accounting primarily due to
       energy trading contracts that did not meet the definition of a
       derivative; and
 
     - an $8 million decrease in net income at our gas utility primarily due to
       increased pension and benefit expense, greater depreciation expense and
       higher average debt levels, offset partially by the favorable impact of
       an MPSC rate order.
 
                                       S-9

 
                                  THE OFFERING
 
Shares offered................             shares of CMS Energy common stock
                                 ($0.01 par value)
 
Over-allotments...............   If the underwriters sell more shares than the
                                 total number set forth above, the underwriters
                                 have an option to buy up to an additional
                                           shares from us to cover such sales.
                                 The underwriters may exercise that option
                                 within 30 days of the date of this prospectus
                                 supplement. If any shares are purchased
                                 pursuant to this option, the underwriters will
                                 severally purchase shares in approximately the
                                 same proportions as set forth in the table
                                 found in "Underwriting."
 
CMS Energy common stock
outstanding as of March 24,
2005 (before giving effect to
this offering)................   195,563,462 shares
 
Pro forma shares of CMS Energy
common stock outstanding after
giving effect to this
offering......................             shares
 
Voting Rights.................   Holders of our common stock are entitled to one
                                 vote for each share of common stock held.
 
Risks.........................   Your investment in our common stock will
                                 involve risks. You should carefully consider
                                 the discussion of risks in "Risk Factors"
                                 beginning on page S-13 of this prospectus
                                 supplement and the other information in this
                                 prospectus supplement and the accompanying
                                 prospectus, including our cautionary statements
                                 regarding "forward-looking statements," before
                                 deciding whether an investment in our common
                                 stock is suitable for you.
 
NYSE Symbol...................   CMS. The shares of common stock offered hereby
                                 have been authorized for listing on NYSE,
                                 subject to official notice of issuance.
 
Use of Proceeds...............   We intend to use the net proceeds of this
                                 offering to make capital infusions into
                                 Consumers and for general corporate purposes.
 
                                       S-10

 
                      SELECTED CONSOLIDATED FINANCIAL DATA
 
     The following selected consolidated financial data for the fiscal years
ended December 31, 2000 through December 31, 2004 have been derived from our
audited consolidated financial statements, which have been audited by Ernst &
Young LLP, independent registered public accounting firm, except for amounts
included from the financial statements of the MCV Partnership and Jorf Lasfar
Energy Company S.C.A. ("JORF LASFAR"). The MCV Partnership is a 49% owned
variable interest entity which has been consolidated in 2004 pursuant to Revised
FASB Interpretation No. 46 and accounted for under the equity method of
accounting through December 31, 2003, and which was audited by another
independent registered public accounting firm (the other auditors for 2001 and
2000 have ceased operations). Jorf Lasfar represents an investment accounted for
under the equity method of accounting, which was audited by another independent
registered public accounting firm. Please refer to our Form 10-K for the fiscal
year ended December 31, 2004, which is incorporated by reference herein. The
financial information set forth below should be read in conjunction with our
consolidated financial statements, related notes and other financial information
that are incorporated by reference herein. See "Where To Find More Information."
 


                                                                           YEAR ENDED DECEMBER 31,
                                                              --------------------------------------------------
                                                               2004      2003       2002       2001       2000
                                                              -------   -------    -------    -------    -------
                                                                             (DOLLARS IN MILLIONS
                                                                          EXCEPT PER SHARE AMOUNTS)
                                                                                          
INCOME STATEMENT DATA:
Operating revenue...........................................  $ 5,472   $ 5,513    $ 8,673    $ 8,006    $ 6,623
Earnings from equity method investees.......................      115       164         92        172        213
Operating expenses..........................................    4,994     5,082      8,690      8,027      6,342
Operating income............................................      593       595         75        151        494
Income (loss) from continuing operations....................      127       (42)      (394)      (327)       (85)
Net income (loss) available to common stockholders..........  $   110   $   (44)   $  (650)   $  (459)   $     5
Earnings per average common share:
Income (loss) from continuing operations
  Basic.....................................................  $  0.68   $ (0.30)   $ (2.84)   $ (2.50)   $ (0.76)
Income (loss) from continuing operations
  Diluted...................................................     0.67     (0.30)     (2.84)     (2.50)     (0.76)
Cumulative effect of change in accounting
  Basic.....................................................    (0.01)    (0.16)      0.13      (0.03)        --
Cumulative effect of change in accounting
  Diluted...................................................    (0.01)    (0.16)      0.13      (0.03)        --
CMS Energy Basic Net Income (Loss) attributable to common
  stock.....................................................     0.65     (0.30)     (4.68)     (3.51)      0.04
CMS Energy Diluted Net Income (Loss) attributable to common
  stock.....................................................     0.64     (0.30)     (4.68)     (3.51)      0.04
Dividends declared per average common share.................  $    --   $    --    $  1.09    $  1.46    $  1.46
BALANCE SHEET DATA:
Cash and cash equivalents at cost, which approximates
  market....................................................  $   669   $   532    $   351    $   123    $   143
Restricted cash.............................................       56       201         38          4         --
Net plant and property(a)...................................    8,636     6,890      6,103      6,703      6,316
Total assets................................................   15,872    13,838     14,781     17,633     17,801
Long-term debt, excluding current maturities(a).............    6,444     6,020      5,357      5,842      6,052
Long-term debt -- related parties, excluding current
  maturities................................................      504       684         --         --         --
Non-current portion of capital and finance lease
  obligations...............................................      315        58        116         71         49
Notes payable...............................................       --        --        458        416        403
Other liabilities...........................................    5,499     5,113      6,807      8,012      7,705
Minority interests..........................................      733        73         38         43         82
Company-obligated mandatorily redeemable trust preferred
  securities of subsidiaries(b).............................       --        --        393        694        694
Company obligated trust preferred securities of Consumers'
  subsidiaries(b)...........................................       --        --        490        520        395
Preferred stock.............................................      261       261         --         --         --
Preferred stock of subsidiary...............................       44        44         44         44         44
Common stockholders' equity.................................    2,072     1,585      1,078      1,991      2,377

 
                                       S-11

 


                                                                           YEAR ENDED DECEMBER 31,
                                                              --------------------------------------------------
                                                               2004      2003       2002       2001       2000
                                                              -------   -------    -------    -------    -------
                                                                            (DOLLARS IN MILLIONS)
                                                                                          
OTHER DATA:
Cash Flow:
Provided by (Used in) operating activities..................  $   398   $  (250)   $   614    $   372    $   600
Provided by (Used in) investing activities..................     (392)      203        829     (1,349)    (1,220)
Provided by (Used in) financing activities..................      (43)      229     (1,223)       967        629
Ratio of earnings to fixed charges(c).......................     1.12        --(d)      --(e)      --(f)      --(g)

 
---------------
 
(a)  Under revised FASB Interpretation No. 46 "Consolidation of Variable
     Interest Entities," we are the primary beneficiary of the MCV Partnership
     and the First Midland Limited Partnership. As a result, we have
     consolidated their assets, liabilities and activities into our financial
     statements for the year ended December 31, 2004. These partnerships had
     third-party obligations totaling $582 million at December 31, 2004.
     Property, plant and equipment serving as collateral for these obligations
     had a carrying value of $1.426 billion at December 31, 2004.
 
(b)  CMS Energy and Consumers each formed various statutory wholly-owned
     business trusts for the sole purpose of issuing preferred securities and
     lending the gross proceeds to the parent companies. The sole assets of the
     trusts are debentures of the parent company with terms similar to those of
     the preferred securities. As a result of the adoption of FASB
     Interpretation No. 46 on December 31, 2003, we deconsolidated the trusts
     that hold the mandatorily redeemable trust preferred securities. Therefore,
     $490 million, previously reported by us as Company-obligated mandatorily
     redeemable trust preferred securities of subsidiaries, plus $16 million
     owed to the trusts and previously eliminated in consolidation, has been
     included in the balance sheet as Long-term debt -- related parties and
     Current portion of long-term debt -- related parties. Additionally, $173
     million, previously reported by us as Company-obligated convertible trust
     preferred securities of subsidiaries, plus $5 million owed to the trusts
     and previously eliminated in consolidation, has been included in the
     balance sheet as Long-term debt -- related parties and Current portion of
     long-term debt -- related parties.
 
(c)  For the purpose of computing the ratio, earnings represents the sum of
     income from continuing operations before income taxes and income from
     equity method investees, net interest charges and preferred dividends of
     subsidiary, the estimated interest portion of lease rentals and distributed
     income of equity method investees.
 
(d)  For the year ended December 31, 2003, fixed charges exceeded earnings by
     $34 million. Earnings as defined include $95 million of asset impairment
     charges.
 
(e)  For the year ended December 31, 2002, fixed charges exceeded earnings by
     $488 million. Earnings as defined include $602 million of asset impairment
     charges.
 
(f)  For the year ended December 31, 2001, fixed charges exceeded earnings by
     $395 million. Earnings as defined include $323 million of asset impairment
     charges.
 
(g)  For the year ended December 31, 2000, fixed charges exceeded earnings by
     $220 million. Earnings as defined include a $329 million pretax impairment
     loss on the Loy Yang investment.
 
                                       S-12

 
                                  RISK FACTORS
 
     Before purchasing any of our securities offered by this prospectus
supplement and the accompanying prospectus, you should carefully consider the
following risk factors, as well as the other information contained or
incorporated by reference in this prospectus supplement and the accompanying
prospectus.
 
RISKS RELATED TO CMS ENERGY
 
  WE HAVE SUBSTANTIAL INDEBTEDNESS THAT COULD LIMIT OUR FINANCIAL FLEXIBILITY.
 
     As of December 31, 2004, we had outstanding approximately $2.6 billion
aggregate principal amount of indebtedness, including approximately $178 million
of subordinated indebtedness relating to our convertible preferred securities
but excluding approximately $5.1 billion of indebtedness of our subsidiaries. In
August 2004, we entered into the Fifth Amended and Restated Credit Agreement in
the amount of approximately $300 million. As of March 15, 2005, there were
approximately $105 million of letters of credit outstanding under the Fifth
Amended and Restated Credit Agreement. We and our subsidiaries may incur
additional indebtedness in the future.
 
     The level of our present and future indebtedness could have several
important effects on our future operations, including, among others:
 
     - a significant portion of our cash flow from operations will be dedicated
       to the payment of principal and interest on our indebtedness and will not
       be available for other purposes;
 
     - covenants contained in our existing debt arrangements require us to meet
       certain financial tests, which may affect our flexibility in planning
       for, and reacting to, changes in our business;
 
     - our ability to obtain additional financing for working capital, capital
       expenditures, acquisitions and general corporate and other purposes may
       be limited;
 
     - we may be at a competitive disadvantage to our competitors that are less
       leveraged; and
 
     - our vulnerability to adverse economic and industry conditions may
       increase.
 
     Our ability to meet our debt service obligations and to reduce our total
indebtedness will be dependent upon our future performance, which will be
subject to general economic conditions, industry cycles and financial, business
and other factors affecting our operations, many of which are beyond our
control. We cannot assure you that our business will continue to generate
sufficient cash flow from operations to service our indebtedness. If we are
unable to generate sufficient cash flow from operations, we may be required to
sell additional assets or obtain additional financings. We also plan to
refinance a substantial amount of our indebtedness prior to its maturity. We
cannot assure you that any such refinancing will be possible or that additional
financing will be available on commercially acceptable terms or at all.
 
     There can be no assurance that the requirements of our existing debt
arrangements or other indebtedness will be met in the future. Failure to comply
with such covenants may result in a default with respect to the related debt and
could lead to acceleration of such debt or any instruments evidencing
indebtedness that contain cross-acceleration or cross-default provisions.
 
     In such a case, there can be no assurance that we would be able to
refinance or otherwise repay such indebtedness.
 
  WE HAVE FINANCING NEEDS AND WE MAY BE UNABLE TO SUCCESSFULLY ACCESS BANK
  FINANCING OR THE CAPITAL MARKETS.
 
     As of December 31, 2004, CMS Energy had approximately $226 million of debt
maturities in 2005 and 2006, excluding debt maturities of Consumers. These
maturities included $151 million of general term notes and $75 million of
Enterprises subsidiary debt. The $151 million of general term notes outstanding
as of December 31, 2004 have been repaid as of the end of February 2005. In
addition, we expect to incur
 
                                       S-13

 
significant costs for capital expenditures, including future environmental
regulation compliance, especially compliance with clean air laws. See "We could
incur significant capital expenditures to comply with environmental standards
and face difficulty in recovering these costs on a current basis" below. As of
December 31, 2004, we had incurred $525 million in capital expenditures to
comply with these regulations and future capital expenditures may total
approximately $277 million between 2005 and 2011. Future legislation could also
require us to make additional cash contributions to our employee pension and
benefit plans. We may also become subject to liquidity demands pursuant to
commercial commitments under guarantees, indemnities and letters of credit.
After giving effect to recent issuances of securities, along with asset sales,
capital markets or bank financing and cash flow from operations, we believe, but
can make no assurance, that we will have sufficient liquidity to meet our debt
maturities through 2006. Management is actively pursuing plans to refinance debt
and to sell assets. There can be no assurances that this business plan will be
successful and failure to achieve its goals could have a material adverse effect
on our liquidity and operations.
 
     We continue to explore financing opportunities to supplement our financial
plan. These potential opportunities include: refinancing our bank credit
facilities; entering into leasing arrangements and/or vendor financing;
refinancing and issuing new capital markets debt, preferred stock and/or common
equity; and negotiating private placement debt. We cannot guarantee the capital
market's acceptance of our securities or predict the impact of factors beyond
our control, such as actions of rating agencies. If we are unable to access bank
financing or the capital markets to incur or refinance indebtedness, there could
be a material adverse effect upon our liquidity and operations.
 
     Consumers accesses debt and other capital from various sources and carries
its own credit ratings. Any downgrade or other event negatively affecting the
credit ratings of Consumers could make its cost of borrowing higher or access to
funding sources more limited, which in turn could increase the need of CMS
Energy to provide liquidity in the form of capital contributions or loans, thus
reducing the liquidity and borrowing availability of the consolidated group and
our ability to access capital on acceptable terms. Further, any adverse
developments relating to Consumers, which provides dividends to us, that result
in a lowering of Consumers' credit ratings could have an adverse effect on our
credit ratings. We cannot assure you that any of our current ratings or those of
our affiliates, including Consumers, will remain in effect for any given period
of time or that a rating will not be lowered or withdrawn entirely by a rating
agency.
 
  WE MAY BE ADVERSELY AFFECTED BY REGULATORY INVESTIGATIONS AND LAWSUITS
  REGARDING "ROUND TRIP" TRADING BY ONE OF OUR SUBSIDIARIES AS WELL AS CIVIL
  LAWSUITS REGARDING PRICING INFORMATION THAT TWO OF OUR AFFILIATES PROVIDED TO
  MARKET PUBLICATIONS.
 
     As a result of round trip trading transactions at CMS MST, we are under
investigation by the United States Department of Justice. We have received
subpoenas from U.S. Attorneys' Offices regarding investigations of those trades.
CMS Energy and Consumers have also been named in numerous securities class
action lawsuits by individuals. The complaints were filed as purported class
actions in the United States District Court for the Eastern District of
Michigan, by shareholders who allege that they purchased CMS Energy's securities
during a purported class period. These cases were later consolidated by the
court. The plaintiffs generally seek unspecified damages based on allegations
that the defendants violated United States securities laws and regulations by
making allegedly false and misleading statements about our business and
financial condition, particularly with respect to revenues and expenses recorded
in connection with round trip trading by CMS MST. CMS Energy, Consumers and the
individual defendants filed motions to dismiss on June 21, 2004. The judge
issued an opinion and order dated January 7, 2005, granting the motion to
dismiss for Consumers and three of the individual defendants, but denying the
motions to dismiss for CMS Energy and the 13 remaining individual defendants.
 
     In March 2004, the SEC approved a cease-and-desist order settling an
administrative action against us relating to round trip trading. The order did
not assess a fine and we neither admitted nor denied the order's findings.
 
                                       S-14

 
     Our Board of Directors has received a demand on behalf of a shareholder of
CMS Energy to commence civil actions (i) to remedy alleged breaches of fiduciary
duties by CMS Energy officers and directors in connection with round trip
trading at CMS MST and (ii) to recover damages sustained by CMS Energy as a
result of insider trades alleged to have been made by certain current and former
officers of CMS Energy and its subsidiaries. In December 2002, two new directors
were appointed to our Board of Directors. A special litigation committee was
formed by the Board of Directors in January 2003 to determine whether it is in
the best interest of CMS Energy to bring the action demanded by the shareholder.
The disinterested members of the Board of Directors appointed the two new
directors to serve on the special litigation committee.
 
     On December 2, 2003, during the continuing review by the special litigation
committee, we were served with a derivative complaint filed by the shareholder
in the Circuit Court of Jackson County, Michigan in furtherance of his demands.
 
     We have notified appropriate regulatory and governmental agencies that some
employees at CMS MST and CMS Field Services, Inc. (now Cantera Gas Company), a
former indirect subsidiary of ours, appeared to have provided inaccurate
information regarding natural gas trades to various energy industry publications
which compile and report index prices. CMS Energy is cooperating with an ongoing
investigation by the United States Department of Justice regarding this matter.
On November 25, 2003, the Commodity Futures Trading Commission ("CFTC") issued a
settlement order regarding this matter. CMS MST and CMS Field Services, Inc.
agreed to pay a fine to the CFTC totaling $16 million. CMS Energy neither
admitted nor denied the findings of the CFTC in the settlement order. The CFTC
filed a civil injunctive action against two former CMS Field Services, Inc.
employees in Oklahoma federal district court on February 1, 2005. The action
alleges the two engaged in reporting false natural gas trade information, and
the action seeks to enjoin such acts, compel compliance with the Commodities
Exchange Act and impose monetary penalties.
 
     We have also been named as a defendant in various gas industry civil
lawsuits regarding inaccurate gas trade reporting that include claims alleging
manipulation of natural gas prices and violations of the Commodities Exchange
Act and federal and state antitrust laws.
 
     We cannot predict the outcome of the United States Department of Justice
investigations and the lawsuits. It is possible that the outcome in one or more
of the investigations or the lawsuits could adversely affect our financial
condition, liquidity or results of operations.
 
  WE MAY BE NEGATIVELY IMPACTED BY THE RESULTS OF AN EMPLOYEE BENEFIT PLAN
  LAWSUIT.
 
     We are a defendant, along with Consumers, CMS MST and certain named and
unnamed officers and directors, in two lawsuits brought as purported class
actions on behalf of participants and beneficiaries of our 401(k) plan. The two
cases, filed in July 2002 in the United States District Court for the Eastern
District of Michigan, were consolidated by the trial judge and an amended and
consolidated complaint has been filed. Plaintiffs allege breaches of fiduciary
duties under the Employee Retirement Income Security Act of 1974 ("ERISA") and
seek restitution on behalf of the plan with respect to a decline in value of the
shares of our common stock held in the plan. The plaintiffs also seek other
equitable relief and legal fees. The judge issued an opinion and order dated
December 27, 2004 conditionally granting plaintiffs' motion for class
certification. A trial date has not been set, but is expected to be no earlier
than late in 2005.
 
     We cannot predict the outcome of the ERISA litigation and it is possible
that an adverse outcome in this lawsuit could adversely affect our financial
condition, liquidity or results of operations.
 
  WE CANNOT PREDICT THE OUTCOME OF CLAIMS REGARDING OUR PARTICIPATION IN THE
  DEVELOPMENT OF BAY HARBOR OR OTHER LITIGATION IN WHICH SUBSTANTIAL MONETARY
  CLAIMS ARE INVOLVED.
 
     Certain subsidiaries of CMS Energy participated in the development of Bay
Harbor, a residential/commercial real estate project on the site of a
discontinued cement and quarry operation near Petoskey, Michigan. As part of the
development, which went forward under an agreement with the
 
                                       S-15

 
Michigan Department of Environmental Quality (the "MDEQ"), a golf course was
constructed over several abandoned cement kiln dust ("CKD") piles, leftover from
the former cement plant operation. Another former CKD area has been converted
into a park. Part of the agreement with the MDEQ required the construction of a
water collection system to recover seep water from one of the CKD piles. In
2002, CMS Energy sold its interests in Bay Harbor, but retained its obligations
under previous environmental indemnifications entered into at the inception of
the project.
 
     From January 2004 to September 2004, the seep collection system was down
for maintenance and/or awaiting permission to restart from the City of Petoskey.
In September 2004, the MDEQ issued a notice of noncompliance ("NON"), after
finding high pH-seep water in Lake Michigan adjacent to the project. The MDEQ
also found higher than acceptable levels of heavy metals, including mercury, in
the seep water.
 
     Coincident with the MDEQ inspections, the United States Environmental
Protection Agency (the "EPA") also assigned an inspector to the site. In
November 2004, the EPA issued a Notice of Potential Liability under the
Comprehensive Environmental Response, Compensation, and Liability Act, and
initiated discussions with the MDEQ, CMS Energy and other parties, toward
arriving at a suitable administrative consent order to address problems at Bay
Harbor.
 
     In February 2005, CMS Energy signed an Administrative Order on Consent
("AOC") with the EPA and the EPA has executed the AOC. Under the AOC, CMS Energy
is generally obligated, among other things, to: (i) engage in measures to
restrict access to seep areas, install methods to interrupt the flow of seep
water to Lake Michigan and take other measures as may be required by the EPA
under an approved plan; (ii) investigate and study the extent of hazardous
substances at the site, evaluate alternatives to address a long-term remedy and
issue a report of the investigation and study; and (iii) within 120 days after
EPA approval of the investigation report, enter into an enforceable agreement
with the MDEQ to address a long-term remedy under certain criteria set forth in
the AOC.
 
     Several parties have issued demand letters to CMS Energy claiming breach of
the indemnification provisions, making requests for payment of their expenses
related to the NON and/or claiming damages to property or personal injury with
regard to the matter. CMS Energy responded to the indemnification claims by
stating that it had not breached its indemnity obligations, it will comply with
the indemnities, it has restarted the seep water collection facility and it has
responded to the NON. CMS Energy will defend vigorously any property damage and
personal injury claims, and has reserved all rights and defenses.
 
     Based on preliminary studies, CMS Energy has identified several remediation
options. The estimated potential capital and near-term expenditures for these
options range from $25 million to $40 million, with continuing yearly operating
and maintenance expenses ranging from $0.8 million to $1.6 million. Final
remediation and resulting claims against third parties for reimbursement of
remediation costs could increase or decrease these amounts. CMS Energy has
recorded a liability for its obligations associated with this matter in the
amount of $45 million, with a resultant charge to its income statement of $29
million, net of deferred income taxes, in the fourth quarter of 2004, reflecting
CMS Energy's current best estimate of both the capital and near-term costs as
well as the present value of continuing future operating costs.
 
     An adverse outcome of this matter could, depending on the size of any
indemnification obligation or liability under environmental laws, have a
potentially significant adverse effect on CMS Energy's financial condition and
liquidity and could negatively impact CMS Energy's financial results. CMS Energy
cannot predict the ultimate cost or outcome of this matter.
 
     In addition to the litigation and proceedings discussed above, CMS Energy
or various of our subsidiaries are parties in other pending litigation in which
substantial monetary damages are sought. These proceedings, certain of which are
described in CMS Energy's Annual Report on Form 10-K for the year ended December
31, 2004 -- Notes to Consolidated Financial Statements -- Note 3, include
arbitration and litigation relating to the Dearborn Industrial Generation
project and claims from various provinces in Argentina for stamp taxes and
associated penalties and interest arising from various gas transportation
transactions. An adverse outcome in one or more of these cases could, depending
on the
 
                                       S-16

 
timing and size of any award and the availability of insurance or reimbursement
from third parties, have an adverse effect on our financial condition, liquidity
or results of operations.
 
  REGULATORY CHANGES AND OTHER DEVELOPMENTS HAVE RESULTED AND WILL CONTINUE TO
  RESULT IN INCREASED COMPETITION IN OUR DOMESTIC ENERGY BUSINESS. GENERALLY,
  INCREASED COMPETITION THREATENS OUR MARKET SHARE IN CERTAIN SEGMENTS OF OUR
  BUSINESS AND CAN REDUCE OUR PROFITABILITY.
 
     Consumers has in the last several years experienced, and expects to
continue to experience, a significant increase in competition for generation
services with the introduction of retail open access in the State of Michigan.
Pursuant to the Customer Choice Act, as of January 1, 2002, all electric
customers have the choice of buying electric generation service from an
alternative electric supplier. We continue to lose industrial and commercial
customers to other electric suppliers. As of March 2005, we had lost 900 MW or
12 percent of our electric generation business to these alternative electric
suppliers. We expect the loss to be in the range of 1,000 MW to 1,200 MW by
year-end 2005. We cannot predict the total amount of electric supply load that
we may lose to competitor suppliers in the future.
 
  ELECTRIC INDUSTRY REGULATION COULD ADVERSELY AFFECT OUR BUSINESS, INCLUDING
  OUR ABILITY TO RECOVER OUR COSTS FROM OUR CUSTOMERS.
 
     Federal and state regulation of electric utilities has changed dramatically
in the last two decades and could continue to change over the next several
years. These changes could adversely affect our business, financial condition
and profitability.
 
     In June 2000, the Michigan Legislature enacted the Customer Choice Act that
became effective June 5, 2000. Pursuant to the Customer Choice Act, residential
rates were reduced by five percent and then capped through at least December 31,
2005. Ultimately, the rate cap could extend until December 31, 2013 depending
upon whether or not Consumers exceeds the market power supply test established
by the legislation (a requirement that Consumers believes itself to be in
compliance with at this time). Under circumstances specified in the Customer
Choice Act, certain costs can be deferred for future recovery after the
expiration of the rate cap period. The rate cap could, however, result in
Consumers being unable to collect customer rates sufficient to recover fully its
cost of conducting business. Some of these costs may be beyond Consumers'
ability to control. In particular, if Consumers needs to purchase power supply
from wholesale suppliers during the period when retail rates are frozen or
capped, the rate restrictions imposed by the Customer Choice Act may make it
impossible for Consumers to recover fully the cost of purchased power and
associated transmission costs through the rates it charges its customers. As a
result, it is not certain that Consumers can maintain its profit margins in its
electric utility business during the period of the rate freeze or rate cap. In
2004, Consumers had a $20 million underrecovery of power supply revenue due to
non-recoverable power supply costs related to capped customers.
 
     Consumers filed an electric rate case with the MPSC in December 2004 for
approximately $320 million in rate increases. A final order from the MPSC in
Consumers' electric rate case is expected in late 2005. We cannot predict the
timing or outcome of the electric rate case.
 
     There are multiple proceedings pending before the Federal Energy Regulatory
Commission ("FERC") involving transmission rates, regional transmission
organizations and standard market design for electric bulk power markets and
transmission. FERC is also reviewing the standards under which electric
utilities are allowed to participate in wholesale power markets without price
restrictions. We cannot predict the impact of these electric
industry-restructuring proceedings on our financial position, liquidity or
results of operations.
 
                                       S-17

 
  PENDING UTILITY LEGISLATION IN MICHIGAN MAY AFFECT US IN WAYS WE CANNOT
  PREDICT.
 
     In July 2004, as a result of legislative hearings, several bills were
introduced into the Michigan Senate that could change the Customer Choice Act.
The proposals include:
 
     - requiring that all rate classes of regulated utilities be based on cost
       of service;
 
     - establishing a defined stranded cost calculation method;
 
     - allowing customers who stay with or switch to alternative electric
       suppliers after December 31, 2005 to return to utility services, and
       requiring them to pay current market rates upon return;
 
     - establishing reliability standards that all electric suppliers must
       follow;
 
     - requiring utilities and alternative electric suppliers to maintain a 15
       percent power reserve margin;
 
     - creating a service charge to fund the Low Income and Energy Efficiency
       Fund;
 
     - giving kindergarten through twelfth-grade schools a discount of 10
       percent to 20 percent on electric rates; and
 
     - authorizing a service charge payable by all customers for meeting Clean
       Air Act requirements.
 
     This legislation was not enacted before the end of the 2003-2004
legislative session. We anticipate that some or all of the bills may be
reintroduced in the 2005-2006 legislative session. Although we do not believe
the terms of the proposed bills, if enacted, would have a material adverse
effect on our business, the final form of any new utility legislation may differ
from the bills proposed in 2004. We cannot predict whether these or other
measures will be enacted into law or their potential effect on us.
 
  OUR ABILITY TO RECOVER CERTAIN REGULATORY ASSETS UNDER SECTION 10D(4) OF THE
  CUSTOMER CHOICE ACT MAY AFFECT OUR FINANCIAL RESULTS.
 
     Section 10d(4) of the Customer Choice Act allows deferred recovery of an
annual return of and on capital expenditures in excess of depreciation levels
and certain other expenses incurred prior to and throughout the current electric
rate freeze and rate cap periods. See "Electric industry regulation could
adversely affect our business, including our ability to recover our costs from
our customers." In October 2004, Consumers filed an application with the MPSC
seeking recovery of $628 million in costs from 2000 through 2005 under Section
10d(4). The request includes capital expenditures in excess of depreciation,
Clean Air Act costs, other expenses related to changes in law or governmental
action incurred during the rate freeze and rate cap periods and associated cost
of money through the period of collection. Of the $628 million, $152 million
relates to the cost of money. In March 2005, the MPSC staff filed testimony
recommending the MPSC approve recovery of approximately $323 million.
 
     As allowed by the Customer Choice Act, in January 2004, Consumers began
accruing and deferring for recovery the 2004 portion of our Section 10d(4)
regulatory assets. In November 2004, the MPSC issued an order in Detroit Edison
Company's general electric rate case which concluded that Detroit Edison
Company's return of and on Clean Air Act costs incurred from June 2000 through
December 2003 are recoverable under Section 10d(4). Based on the precedent set
by this order, Consumers recorded an additional regulatory asset in November
2004 for its return of and on Clean Air Act expenditures incurred from 2000
through 2003. Unless Consumers receives an order from the MPSC to the contrary,
it will continue to record additional accruals. However, certain aspects of
Detroit Edison Company's electric rate case are different from Consumers'
Section 10d(4) regulatory asset filing. At December 31, 2004, Section 10d(4)
regulatory assets totaled $141 million. We cannot predict the amount, if any,
the MPSC will approve as recoverable to Consumers and failure to recover these
regulatory assets could adversely affect our financial condition, results of
operations or cash flows.
 
                                       S-18

 
  PERIODIC REVIEWS OF THE VALUES OF OUR ASSETS COULD RESULT IN ADDITIONAL
  ACCOUNTING CHARGES.
 
     We are required by U.S. generally accepted accounting principles to
periodically review the carrying value of our assets, including those that may
be sold. Market conditions, the operational characteristics of our assets and
other factors could result in our recording additional impairment charges for
our assets, which could have an adverse effect on our stockholders' equity and
our access to additional financing. In addition, we may be required to record
impairment charges and foreign currency translation losses at the time we sell
assets depending on the sale prices we are able to secure and other factors.
 
  WE COULD INCUR SIGNIFICANT CAPITAL EXPENDITURES TO COMPLY WITH ENVIRONMENTAL
  STANDARDS AND FACE DIFFICULTY IN RECOVERING THESE COSTS ON A CURRENT BASIS.
 
     We and our subsidiaries are subject to costly and increasingly stringent
environmental regulations. We expect that the cost of future environmental
compliance, especially compliance with clean air and water laws, will be
significant.
 
     In 1998, the EPA issued regulations requiring the State of Michigan to
further limit nitrogen oxide emissions at our coal-fired electric plants. The
EPA and the State of Michigan regulations require us to make significant capital
expenditures estimated to be $802 million. As of December 31, 2004, Consumers
has incurred $525 million in capital expenditures to comply with the EPA
regulations and anticipates that the remaining $277 million of capital
expenditures will be incurred between 2005 and 2011. Additionally, Consumers
currently expects it will supplement its compliance plan with the purchase of
nitrogen oxide emissions credits for the years 2005 through 2009. The cost of
these credits based on the current market is estimated to average $8 million per
year for 2005-2006 and then decrease after 2006 with Consumers' installation of
emissions control technology; however, the market for nitrogen oxide emissions
credits and their price could change substantially. As new environmental
standards become effective, Consumers will need additional capital expenditures
to comply with the standards.
 
     Based on the Customer Choice Act, beginning January 2004 an annual return
of and on these types of capital expenditures, to the extent they are above
depreciation levels, subject to an MPSC prudency hearing shall be accrued and
deferred for recovery. After notice and hearing, the MPSC shall determine the
amount of reasonable and prudent costs, if any, to be recovered and the recovery
period.
 
     The EPA has recently adopted a Clean Air Interstate Rule that requires
additional coal-fired electric plant emission controls for nitrogen oxides and
sulfur dioxide. The rule involves a two-phase program to reduce emissions of
sulfur dioxide by 71 percent and nitrogen oxides by 63 percent by 2015. The
final rule advanced the proposed year round nitrogen oxide compliance
requirement by one year to 2009. This change will require that Consumers run its
selective catalytic reduction units year round beginning in 2009 and will
require that Consumers purchase additional nitrogen oxide credits beginning in
2009. The EPA issued a final Clean Air Mercury Rule on March 15, 2005. The final
rule did not include a provision to control nickel emissions from oil-fired
power plants. These new rules could potentially require substantial additional
expenditures.
 
     The EPA has alleged that some utilities have incorrectly classified plant
modifications as "routine maintenance" rather than seek modification permits
from the EPA. We have received and responded to information requests from the
EPA on this subject. We believe that we have properly interpreted the
requirements of "routine maintenance." If our interpretation is found to be
incorrect, we may be required to install additional pollution controls at some
or all of our coal-fired electric plants and potentially pay fines.
Additionally, the viability of certain plants remaining in operation could be
called into question.
 
     These and other required environmental expenditures, if not recovered from
customers in Consumers' rates, may require us to seek significant additional
financing to fund such expenditures and could strain our cash resources.
 
                                       S-19

 
  WE RETAIN CONTINGENT LIABILITIES IN CONNECTION WITH OUR ASSET SALES.
 
     The agreements we enter into for the sale of assets customarily include
provisions whereby we are required to:
 
     - retain specified preexisting liabilities such as for taxes and pensions;
 
     - indemnify the buyers against specified risks, including the inaccuracy of
       representations and warranties we make; and
 
     - require payments to the buyers depending on the outcome of post-closing
       adjustments, audits or other reviews.
 
     Many of these contingent liabilities can remain open for extended periods
of time after the sales are closed. Depending on the extent to which the buyers
may ultimately seek to enforce their rights under these contractual provisions,
and the resolution of any disputes we may have concerning them, these
liabilities could have a material adverse effect on our financial condition,
liquidity and results of operations.
 
     We have received a request for indemnification from the purchaser of CMS
Oil and Gas Company, a former subsidiary of CMS. The indemnification claim
relates to the sale by CMS of its oil, gas and methanol projects in Equatorial
Guinea and the claim of the government of Equatorial Guinea that $142 million in
taxes is owed it in connection with that sale. Based on information currently
available, CMS and its tax advisors have concluded that the government's tax
claim is without merit and the purchaser of CMS Oil and Gas Company has
submitted a response to the government rejecting the claim. An adverse outcome
of this claim could have a material adverse effect on our financial condition,
liquidity and results of operations.
 
  OUR REVENUES AND RESULTS OF OPERATIONS ARE SUBJECT TO RISKS THAT ARE BEYOND
  OUR CONTROL, INCLUDING BUT NOT LIMITED TO FUTURE TERRORIST ATTACKS OR RELATED
  ACTS OF WAR.
 
     The cost of repairing damage to our facilities due to storms, natural
disasters, wars, terrorist acts and other catastrophic events, in excess of
reserves established for such repairs, may adversely impact our results of
operations, financial condition and cash flows. The occurrence or risk of
occurrence of future terrorist activity and the high cost or potential
unavailability of insurance to cover such terrorist activity may impact our
results of operations and financial condition in unpredictable ways. These
actions could also result in disruptions of power and fuel markets. In addition,
our natural gas distribution system and pipelines could be directly or
indirectly harmed by future terrorist activity.
 
  WE HAVE MADE SUBSTANTIAL INTERNATIONAL INVESTMENTS THAT ARE SUBJECT TO
  POSSIBLE NATIONALIZATION, EXPROPRIATION OR INABILITY TO CONVERT CURRENCY.
 
     Our investments in selected international markets in electric generating
facilities, natural gas pipelines and electric distribution systems face a
number of risks inherent in acquiring, developing and owning these types of
international facilities. Although we maintain insurance for various risk
exposures, including political risk from possible nationalization, expropriation
or inability to convert currency, we are exposed to some risks that include
local political and economic factors over which we have no control, such as
changes in foreign governmental and regulatory policies (including changes in
industrial regulation and control and changes in taxation), changing political
conditions and international monetary fluctuations. In some cases an investment
may have to be abandoned or disposed of at a loss. These factors could
significantly adversely affect the financial results of the affected subsidiary
and our financial position and results of operations.
 
     International investments of the type we have made are subject to the risk
that they may be expropriated or that the required agreements, licenses, permits
and other approvals may be changed or terminated in violation of their terms.
These kinds of changes could result in a partial or total loss of our
investment.
 
                                       S-20

 
     The local foreign currency may be devalued, the conversion of the currency
may be restricted or prohibited or other actions, such as increases in taxes,
royalties or import duties, may be taken which adversely affect the value and
the recovery of our investment.
 
  OUR OWNERSHIP OF A NUCLEAR GENERATING FACILITY CREATES RISK RELATING TO
  NUCLEAR ENERGY.
 
     Consumers owns the Palisades nuclear power plant and we are, therefore,
subject to the risks of nuclear generation, including the risks associated with
the operation of plant facilities and the storage and disposal of spent fuel and
other radioactive waste. The Nuclear Regulatory Commission ("NRC") has broad
authority under federal law to impose licensing and safety-related requirements
for the operation of nuclear generation facilities. In the event of
non-compliance, the NRC has the authority to impose fines or shut down a unit,
or both, depending upon its assessment of the severity of the situation, until
compliance is achieved. In addition, although we have no reason to anticipate a
serious nuclear incident at Consumers' plant, if an incident did occur, it could
harm our results of operations and financial condition. A major incident at a
nuclear facility anywhere in the world could cause the NRC to limit or prohibit
the operation or licensing of any domestic nuclear unit.
 
  CONSUMERS CURRENTLY UNDERRECOVERS IN ITS RATES ITS PAYMENTS TO THE MCV
  PARTNERSHIP FOR CAPACITY AND ENERGY, AND IS ALSO EXPOSED TO FUTURE CHANGES IN
  THE MCV PARTNERSHIP'S FINANCIAL CONDITION THROUGH ITS EQUITY AND LESSOR
  INVESTMENTS AS WELL AS EARNINGS VOLATILITY RESULTING FROM MCV PARTNERSHIP GAS
  FUEL CONTRACTS.
 
     Consumers' power purchase agreement with the MCV Partnership ("PPA")
expires in 2025. We estimate that Consumers will incur estimated cash
underrecoveries of payments under the PPA aggregating $150 million through 2007.
For availability payments billed by the MCV Partnership after September 15,
2007, and not recovered from customers, Consumers would expect to claim a
"regulatory out" under the PPA which Consumers believes it has the right to do
after satisfying its obligation to "support and defend" full recovery of PPA
charges from customers. The MCV Partnership has indicated that it may take issue
with our exercise of the regulatory out clause after September 2007. The effect
of exercise of the regulatory out clause would be to reduce cash flow to the MCV
Partnership, which could in turn have an adverse effect on Consumers' equity and
lessor interests in the MCV Partnership's facility (the "MCV FACILITY").
 
     Further, under the PPA, energy payments to the MCV Partnership are based on
the cost of coal burned at Consumers' coal plants and costs associated with fuel
inventory, operations and maintenance, and administrative and general expenses
associated with Consumers' coal plants. However, the MCV Partnership's costs of
producing electricity are tied, in large part, to the cost of natural gas.
Because natural gas prices have increased substantially in recent years, while
energy charge payments to the MCV Partnership have not, the MCV Partnership's
financial performance has been impacted negatively.
 
     In January 2005, the MPSC issued an order approving the Resource
Conservation Plan ("RCP"), with modifications. The RCP allows Consumers to
recover the same amount of capacity and fixed energy charges from customers as
approved in prior MPSC orders. However, Consumers is able to dispatch the MCV
Facility on the basis of natural gas market prices, which will reduce the MCV
Facility's annual production of electricity and, as a result, reduce the MCV
Facility's consumption of natural gas by an estimated 30 to 40 bcf annually.
This decrease in the quantity of high-priced natural gas consumed by the MCV
Facility will benefit Consumers' ownership interest in the MCV Partnership.
 
     The substantial MCV Facility fuel cost savings will be used first to offset
fully the cost of replacement power. Second, $5 million annually will be used to
fund a renewable energy program. Remaining savings will be split between the MCV
Partnership and Consumers. Consumers' direct savings will be shared 50 percent
with its customers in 2005 and 70 percent in 2006 and beyond. Consumers' direct
savings from the RCP, after a portion is allocated to customers, will be used to
offset our capacity and fixed energy underrecoveries expense. Since the MPSC has
excluded these underrecoveries from the rate making
 
                                       S-21

 
process, we anticipate that Consumers' savings from the RCP will not affect its
return on equity used in its base rate filings.
 
     In January 2005, Consumers and the MCV Partnership's general partners
accepted the terms of the order and implemented the RCP. The underlying
agreement for the RCP between Consumers and the MCV Partnership extends through
the term of the PPA. However, either party may terminate that agreement under
certain conditions. In February 2005, a group of intervenors in the RCP case
filed an application for rehearing of the MPSC order. The Attorney General also
filed a claim of appeal with the Michigan Court of Appeals. We cannot predict
the outcome of these appeals.
 
     Due to the implementation of the RCP, the MCV Partnership has determined
that a significant portion of its gas fuel contracts no longer qualify as normal
purchases because the contracted gas will not be consumed for electric
production. Accordingly, these contracts will be treated as derivatives and will
be marked-to-market through earnings each quarter, which could increase earnings
volatility. Based on market prices for natural gas as of January 31, 2005, the
accounting for the MCV Partnership's long-term gas contracts, including those
affected by the implementation of the RCP, could result in an estimated $100
million (pretax and before allocation of Consumers' 49% minority ownership
interest) gain recorded to earnings in the first quarter of 2005. This estimated
gain will reverse in subsequent quarters as the contracts settle.
 
     We cannot estimate, at this time, the impact of these issues on Consumers'
future earnings or cash flow from its interest in the MCV Partnership. The
forward price of natural gas for the next 20 years and the MPSC decision in 2007
or later related to Consumers' recovery of capacity payments are the two most
significant variables in the analysis of the MCV Partnership's future financial
performance. Natural gas prices have historically been volatile and presently
there is no consensus in the marketplace on the price or range of prices of
natural gas beyond the next five years. Further, it is not presently possible
for us to predict the actions of the MPSC in 2007 or later. Even with the RCP,
if gas prices continue at present levels or increase, the economics of operating
the MCV Facility may be adverse enough to require Consumers to recognize an
impairment of its investment in the MCV Partnership. For these reasons, at this
time we cannot predict the impact of these issues on Consumers' future earnings
or cash flows or on the value of its equity interest in the MCV Partnership.
 
  CONSUMERS' ENERGY RISK MANAGEMENT STRATEGIES MAY NOT BE EFFECTIVE IN MANAGING
  FUEL AND ELECTRICITY PRICING RISKS, WHICH COULD RESULT IN UNANTICIPATED
  LIABILITIES TO CONSUMERS OR INCREASED VOLATILITY OF ITS EARNINGS.
 
     Consumers is exposed to changes in market prices for natural gas, coal,
electricity and emission credits. Prices for natural gas, coal, electricity and
emission credits may fluctuate substantially over relatively short periods of
time and expose Consumers to commodity price risk. A substantial portion of
Consumers' operating expenses for its plants consists of the costs of obtaining
these commodities. Consumers manages these risks using established policies and
procedures, and it may use various contracts to manage these risks, including
swaps, options, futures and forward contracts. We cannot assure you that these
strategies will be successful in managing Consumers' pricing risk, or that they
will not result in net liabilities to Consumers as a result of future volatility
in these markets.
 
     Natural gas prices in particular have historically been volatile. To manage
market risks associated with the volatility of natural gas prices, the MCV
Partnership maintains a gas hedging program. The MCV Partnership enters into
natural gas futures contracts, option contracts and over-the-counter swap
transactions in order to hedge against unfavorable changes in the market price
of natural gas in future months when gas is expected to be needed. These
financial instruments are being used principally to secure anticipated natural
gas requirements necessary for projected electric and steam sales, and to lock
in sales prices of natural gas previously obtained in order to optimize the MCV
Partnership's existing gas supply, storage and transportation arrangements.
Consumers also routinely enters into contracts to offset its positions, such as
hedging exposure to the risks of demand, market effects of weather and changes
in commodity prices associated with its gas distribution business. Such
positions are taken in conjunction with
 
                                       S-22

 
the gas cost recovery mechanism, which allows Consumers to recover prudently
incurred costs associated with such positions. However, neither Consumers nor
the MCV Partnership always hedges the entire exposure of its operations from
commodity price volatility. Furthermore, the ability to hedge exposure to
commodity price volatility depends on liquid commodity markets. As a result, to
the extent the commodity markets are illiquid, Consumers may not be able to
execute its risk management strategies, which could result in greater open
positions than we would prefer at a given time. To the extent that open
positions exist, fluctuating commodity prices can improve or diminish our
financial results and financial position.
 
     In addition, Consumers currently has a power supply cost recovery mechanism
to recover the increased cost of fuel used to generate electricity from its
industrial and commercial customers, but not from its residential customers.
Therefore, to the extent that Consumers has not hedged its fuel costs, it is
exposed to changes in fuel prices to the extent fuel for its electric generating
facilities must be purchased on the open market in order for Consumers to serve
its residential customers while their rates remain capped.
 
RISKS RELATED TO COMMON STOCK
 
  WE CURRENTLY DO NOT PAY DIVIDENDS ON OUR COMMON STOCK.
 
     We suspended the payment of dividends on our common stock in January 2003
and have no current plans to resume payment of a dividend. Our ability to
declare dividends in the future will depend on a variety of factors, including
improvement in our financial condition and liquidity and the terms of our
financing agreements. We cannot predict when resumption of dividends on our
common stock would occur, and if so the amount of any such dividends that might
be declared.
 
  WE MAY ISSUE ADDITIONAL SHARES OF COMMON STOCK OR SECURITIES CONVERTIBLE OR
  EXCHANGEABLE FOR OUR COMMON STOCK AND THEREBY MATERIALLY AND ADVERSELY AFFECT
  THE PRICE OF OUR COMMON STOCK.
 
     We are not restricted from issuing additional common stock or securities
convertible or exchangeable for our common stock. If we issue additional shares
of common stock or securities convertible or exchangeable for our common stock,
it may materially and adversely affect the price of our common stock.
 
  THE MARKET PRICE OF OUR COMMON STOCK IS VOLATILE.
 
     The market price of our common stock will likely continue to fluctuate in
response to factors including the following, many of which are beyond our
control:
 
     - fluctuations in our operating and financial results;
 
     - changes in financial estimates and recommendations by financial analysts;
 
     - changes in the ratings of our securities and those of Consumers;
 
     - developments related to litigation or regulatory proceedings involving
       us;
 
     - our asset sales and financings; and
 
     - market perception of the energy industry and of us.
 
     In addition, the stock markets in general, including NYSE, are subject to
significant price and trading fluctuations. These fluctuations have resulted in
volatility in the market prices of securities that often has been unrelated or
disproportionate to changes in operating performance. These broad market
fluctuations may affect adversely the market prices of our common stock.
 
                                USE OF PROCEEDS
 
     We intend to use the net proceeds of this offering to make capital
infusions into Consumers and for general corporate purposes.
 
                                       S-23

 
              PRICE RANGE OF OUR COMMON STOCK AND DIVIDEND POLICY
 
     Our common stock is listed on NYSE. The following table sets forth for the
periods indicated the range of high and low intraday sales prices per share of
our common stock as reported on NYSE and the cash dividends declared on the
common stock for the periods indicated.
 


                                                               HIGH     LOW    DIVIDENDS
                                                              ------   -----   ---------
                                                                      
Year Ended December 31, 2003
  First Quarter.............................................  $10.74   $3.41       --
  Second Quarter............................................    8.95    4.58       --
  Third Quarter.............................................    8.04    6.03       --
  Fourth Quarter............................................    8.67    7.40       --
Year Ended December 31, 2004
  First Quarter.............................................    9.59    8.25       --
  Second Quarter............................................    9.43    7.81       --
  Third Quarter.............................................    9.88    8.58       --
  Fourth Quarter............................................   10.65    8.80       --

 
     On March 24, 2005, the last sale price of our common stock as reported on
NYSE was $13.00 per share. On March 24, 2005 there were 57,613 holders of record
of our common stock.
 
     In January 2003, we suspended the payment of dividends on our common stock.
 
                                 TRANSFER AGENT
 
     Our common stock is transferable at our offices located at One Energy
Plaza, Jackson, Michigan 49201. We are the transfer agent and registrar for our
common stock.
 
   MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS FOR NON-U.S. STOCKHOLDERS
 
     This is a general summary of material U.S. federal income and estate tax
considerations with respect to your acquisition, ownership and disposition of
our common stock if you are a beneficial owner of common stock other than:
 
     - a citizen or resident of the United States;
 
     - a corporation, or other entity treated as a corporation for U.S. federal
       income tax purposes, created or organized in, or under the laws of, the
       United States or any political subdivision of the United States;
 
     - an estate, the income of which is subject to U.S. federal income taxation
       regardless of its source; or
 
     - a trust, if a court within the United States is able to exercise primary
       supervision over the administration of the trust and one or more U.S.
       persons have the authority to control all substantial decisions of the
       trust; or a trust that existed on August 20, 1996, was treated as a U.S.
       person on August 19, 1996 and elected to be treated as a U.S. person.
 
     If a partnership holds our common stock, the U.S. federal income tax
treatment of a partner in the partnership generally will depend upon the status
of the partner and the activities of the partnership. If you are a partner of a
partnership holding our common stock, you should consult your tax advisor
regarding the U.S. federal income tax consequences to you of the acquisition,
ownership and disposition of our common stock.
 
     This summary does not address all of the U.S. federal income and estate tax
considerations that may be relevant to you in light of your particular
circumstances or if you are a beneficial owner subject to special treatment
under U.S. income tax laws, including a former U.S. citizen or resident.
 
                                       S-24

 
     This summary does not discuss any aspect of state, local or non-U.S.
taxation. This summary is based on current provisions of the Internal Revenue
Code of 1986, as amended (the "CODE"), Treasury regulations, judicial opinions,
published positions of the U.S. Internal Revenue Service ("IRS") and other
applicable authorities, all of which are subject to change, possibly with
retroactive effect. This summary is not intended, and should not be construed,
as tax advice.
 
     We urge prospective non-U.S. investors to consult their tax advisors
regarding the U.S. federal, state, local and non-U.S. income and other tax
considerations with respect to acquiring, holding and disposing of shares of our
common stock.
 
DIVIDENDS
 
     In general, any distributions we make to you with respect to your shares of
our common stock that constitute dividends for U.S. federal income tax purposes
will be subject to U.S. withholding tax at a rate of 30% of the gross amount,
unless you are eligible for a reduced rate of withholding tax under an
applicable income tax treaty and you provide proper certification of your
eligibility for such reduced rate (usually on an IRS Form W-8BEN). A
distribution will constitute a dividend for U.S. federal income tax purposes to
the extent paid from our current or accumulated earnings and profits as
determined under the Code. Any distribution not constituting a dividend will be
treated first as reducing your basis in your shares of our common stock and, to
the extent it exceeds your basis, as gain from the disposition of your shares of
our common stock.
 
     If you are not entitled to benefits under an applicable tax treaty,
dividends we pay to you that are effectively connected with your conduct of a
trade or business within the United States, or, if you are entitled to benefits
under an applicable tax treaty, dividends that are effectively connected with
such a trade or business and also attributable to a U.S. permanent establishment
maintained by you, generally will not be subject to U.S. withholding tax if you
comply with applicable certification and disclosure requirements. Instead, such
dividends generally will be subject to U.S. federal income tax, net of certain
deductions, at the same rates applicable to U.S. persons. If you are a
corporation, effectively connected income may also be subject to a "branch
profits tax" at a rate of 30%, or a lower rate specified by an applicable income
tax treaty. Dividends that are effectively connected with your conduct of a
trade or business but that under an applicable income tax treaty are not
attributable to a U.S. permanent establishment maintained by you may be eligible
for a reduced rate of U.S. withholding tax under such treaty, provided you
comply with certification and disclosure requirements necessary to obtain treaty
benefits.
 
     If you are eligible for a reduced rate of U.S. withholding tax under an
applicable income tax treaty, you may obtain a refund of any excess amounts
withheld by filing an appropriate claim for refund with the IRS.
 
SALE OR OTHER DISPOSITION OF OUR COMMON STOCK
 
     You generally will not be subject to U.S. federal income tax on any gain
realized upon the sale or other disposition of your shares of our common stock
unless:
 
     - the gain is effectively connected with your conduct of a trade or
       business within the United States and, if you are entitled to benefits
       under an applicable income tax treaty, is attributable to a U.S.
       permanent establishment maintained by you;
 
     - you are an individual, you hold your shares of our common stock as
       capital assets, you are present in the United States for 183 days or more
       in the taxable year of disposition and you meet other conditions, and you
       are not eligible for relief under an applicable income tax treaty; or
 
     - our common stock constitutes a U.S. real property interest within the
       meaning of the Foreign Investment in Real Property Tax Act ("FIRPTA").
       Our common stock will constitute a U.S. real property interest for FIRPTA
       if we are or have been a "U.S. real property holding corporation" for
       U.S. federal income tax purposes. We do not believe that we are, have
       been or will become a "U.S. real property holding corporation" for U.S.
       federal income tax purposes. Even if we were a U.S. real property holding
       corporation for FIRPTA, gain arising from a disposition of our common
       stock
 
                                       S-25

 
       still would not be subject to FIRPTA tax if our common stock is
       considered regularly traded under applicable Treasury regulations on an
       established securities market, such as NYSE, and you do not own, actually
       or constructively, more than 5% of the total fair market value of our
       common stock at any time during the five year period ending on the date
       of disposition.
 
     Gain that is effectively connected with your conduct of a trade or business
within the United States generally will be subject to U.S. federal income tax,
net of certain deductions, at the same rates applicable to U.S. persons. If you
are a corporation, the branch profits tax, as discussed above, also may apply to
such effectively connected gain. If the gain from the sale or disposition of
your shares is effectively connected with your conduct of a trade or business in
the United States but under an applicable income tax treaty is not attributable
to a permanent establishment maintained by you in the United States, your gain
may be exempt from U.S. tax under the treaty. If you are described in the second
bullet point above, you generally will be subject to U.S. tax at a rate of 30%
on the gain realized, although the gain may be offset by some U.S. source
capital losses realized during the same taxable year.
 
INFORMATION REPORTING AND BACKUP WITHHOLDING
 
     We must report annually to the IRS and to you the amount of dividends or
other distributions we pay to you and the tax withheld from those payments.
These reporting requirements apply regardless of whether withholding was reduced
or eliminated by any applicable income tax treaty. Copies of the information
returns reporting those dividends and amounts withheld may also be made
available to the tax authorities in the country in which you reside pursuant to
the provisions of an applicable income tax treaty or exchange of information
treaty.
 
     The United States imposes a backup withholding tax on dividends and certain
other types of payments to U.S. persons currently at a rate of 28% of the gross
amount. You will not be subject to backup withholding tax on dividends you
receive on your shares of our common stock if you provide proper certification
(usually on an IRS Form W-8BEN) of your status as a non-U.S. person or if you
are a corporation or one of several types of entities and organizations that
qualify for an exemption.
 
     Information reporting and backup withholding generally are not required
with respect to the amount of any proceeds from the sale of your shares of our
common stock outside the United States through a foreign office of a foreign
broker that does not have certain specified connections to the United States.
However, if you sell your shares of our common stock through a U.S. broker or
the U.S. office of a foreign broker, the broker will be required to report to
the IRS the amount of proceeds paid to you and also backup withhold at a rate of
28% of that amount unless you provide appropriate certification (usually on an
IRS Form W-8BEN) to the broker of your status as a non-U.S. person or you are a
corporation or one of several types of entities and organizations that qualify
for exemption. If the appropriate certification is not provided, the amount of
proceeds paid to you will be subject to information reporting, and may be
subject to backup withholding, if you sell your shares of our common stock
outside the United States through the non-U.S. office of a U.S. broker or a
foreign broker deriving more than a specified percentage of its income from U.S.
sources or having certain other connections to the United States.
 
     Any amounts withheld with respect to your shares of our common stock under
the backup withholding rules will be refunded to you or credited against your
U.S. federal income tax liability, if any, by the IRS if the required
information is furnished in a timely manner.
 
ESTATE TAX
 
     Shares of our common stock owned or treated as owned by an individual who
is not a citizen or resident, as specifically defined for U.S. federal estate
tax purposes, of the United States at the time of his or her death will be
subject to U.S. federal estate tax unless an applicable estate tax treaty
provides otherwise.
 
                                       S-26

 
                                  UNDERWRITING
 
     Citigroup Global Markets Inc., J.P. Morgan Securities Inc., Deutsche Bank
Securities Inc. and Wachovia Capital Markets, LLC are acting as joint
book-running managers of the offering and are acting as representatives of the
underwriters named below. Subject to the terms and conditions stated in the
underwriting agreement dated March   , 2005, each underwriter named below has
agreed to purchase, and we have agreed to sell to that underwriter, the number
of shares of the common stock set forth opposite the underwriter's name.
 


                                                              NUMBER OF
UNDERWRITERS                                                   SHARES
------------                                                  ---------
                                                           
Citigroup Global Markets Inc. ..............................
J.P. Morgan Securities Inc. ................................
Deutsche Bank Securities Inc. ..............................
Wachovia Capital Markets, LLC...............................
Goldman, Sachs & Co. .......................................
KeyBanc Capital Markets, a division of McDonald Investments
  Inc. .....................................................
Wells Fargo Securities, LLC.................................
  Total.....................................................

 
     The underwriting agreement provides that the obligations of the
underwriters to purchase the common stock are subject to approval of legal
matters by counsel and to other conditions. The underwriters are obligated to
purchase and accept delivery of all shares of common stock if any shares are
purchased, other than those shares covered by the underwriters' over-allotment
option described below.
 
    The underwriters propose to offer some of the shares of common stock
directly to the public initially at the public offering price set forth on the
cover page of this prospectus supplement and some of the shares to dealers
initially at the public offering price less a concession not to exceed $    per
share. The underwriters may allow, and dealers may reallow, a concession not to
exceed $    per share on sales to other dealers. After the initial public
offering, the public offering price and discount to broker/dealers may be
changed by the underwriters.
 
     We estimate that our out of pocket expenses for this offering will be
approximately $325,000.
 
     If the underwriters sell more shares than the total number set forth in the
table above, the underwriters have an option to buy up to an additional
          shares from us to cover such sales. The underwriters may exercise that
option within 30 days of the date of this prospectus supplement. If any shares
are purchased pursuant to this option, the underwriters will severally purchase
shares in approximately the same proportions as set forth in the table above.
 
     We, our executive officers and directors have agreed that, for a period of
60 days from the date of this prospectus supplement, we will not and they will
not, without the prior written consent of Citigroup Global Markets Inc., J.P.
Morgan Securities Inc., Deutsche Bank Securities Inc. and Wachovia Capital
Markets, LLC:
 
     - offer, pledge, sell or contract to sell any common stock;
 
     - sell any option or contract to purchase any common stock;
 
     - purchase any option or contract to sell any common stock;
 
     - grant any option, right or warrant to sell any common stock;
 
     - lend or otherwise dispose of or transfer any common stock;
 
     - file a registration related to the common stock; or
 
     - enter into any swap or other agreement or transaction that transfers, in
       whole or in part, the economic consequence of ownership or common stock
       whether any such swap or transaction is to be settled by delivery of
       common stock, in cash or otherwise;
 
                                       S-27

 
provided that we may issue shares of our common stock upon conversion or
settlement of any warrants outstanding, the 7 3/4% Convertible Trust Preferred
Securities, 3.375% Convertible Senior Notes Due 2023, 4.50% Cumulative
Convertible Preferred Stock or 2.875% Convertible Senior Notes due 2024 in
accordance with their respective terms, and under any continuous equity program,
stock purchase plan, performance incentive stock plan, employee stock ownership
plan, employee savings and incentive plan or charitable foundation donation.
 
     Each underwriter has represented, warranted and agreed that:
 
     - it has not offered or sold and, prior to the expiry of a period of six
       months from the closing date, will not offer or sell any shares included
       in this offering to persons in the United Kingdom except to persons whose
       ordinary activities involve them in acquiring, holding, managing or
       disposing of investments (as principal or agent) for the purposes of
       their businesses or otherwise in circumstances which have not resulted
       and will not result in an offer to the public in the United Kingdom
       within the meaning of the Public Offers of Securities Regulations 1995;
 
     - it has only communicated and caused to be communicated and will only
       communicate or cause to be communicated any invitation or inducement to
       engage in investment activity (within the meaning of section 21 of the
       Financial Services and Markets Act 2000 ("FSMA")) received by it in
       connection with the issue or sale of any shares included in this offering
       in circumstances in which section 21(1) of the FSMA does not apply to us;
 
     - it has complied and will comply with all applicable provisions of the
       FSMA with respect to anything done by it in relation to the shares
       included in this offering in, from or otherwise involving the United
       Kingdom; and
 
     - the offer in The Netherlands of the shares included in this offering is
       exclusively limited to persons who trade or invest in securities in the
       conduct of a profession or business (which include banks, stockbrokers,
       insurance companies, pension funds, other institutional investors and
       finance companies and treasury departments of large enterprises).
 
     We have agreed to indemnify the underwriters against liabilities under the
Securities Act, or contribute to payments that the underwriters may be required
to make in that respect.
 
     In connection with the offering, the underwriters may engage in stabilizing
transactions, over-allotment transactions, syndicate covering transactions and
penalty bids in accordance with Regulation M under the Exchange Act.
 
     - Stabilizing transactions permit bids to purchase the underlying security
       so long as the stabilizing bids do not exceed a specified maximum.
 
     - Over-allotment involves sales by the underwriters of shares in excess of
       the number of shares the underwriters are obligated to purchase, which
       creates a syndicate short position. The short position may be either a
       covered short position or a naked short position. In a covered short
       position, the number of shares over-allotted by the underwriters is not
       greater than the number of shares that they may purchase in the
       over-allotment option. In a naked short position, the number of shares
       involved is greater than the number of shares in the over-allotment
       option. The underwriters may close out any short position by either
       exercising their over-allotment option and/or purchasing shares in the
       open market.
 
     - Syndicate covering transactions involve purchases of the common stock in
       the open market after the distribution has been completed in order to
       cover syndicate short positions. In determining the source of shares to
       close out the short position, the underwriters will consider, among other
       things, the price of shares available for purchase in the open market as
       compared to the price at which they may purchase shares through the
       over-allotment option. If the underwriters sell more shares than could be
       covered by the over-allotment option, a naked short position, the
       position can only be closed out by buying shares in the open market. A
       naked short position is more likely to be created
 
                                       S-28

 
       if the underwriters are concerned that there could be downward pressure
       on the price of the shares in the open market after pricing that could
       adversely affect investors who purchase in the offering.
 
     - Penalty bids permit the underwriters to reclaim a selling concession from
       a syndicate member when the common stock sold originally by the syndicate
       member is purchased in a stabilizing or syndicate covering transaction to
       cover short positions.
 
     These stabilizing transactions and syndicate covering transactions may have
the effect of raising or maintaining the market price of our common stock or
preventing or retarding a decline in the market price of the common stock. As a
result, the price of our common stock may be higher than the price that might
otherwise exist in the open market. These transactions, if commenced, may be
discontinued at any time.
 
     Certain of the underwriters or their affiliates have on a number of
occasions provided investment, commercial banking and financial advisory
services to us, Consumers and our affiliates, for which they have received
customary fees. The underwriters may, from time to time, engage in transactions
with and perform services for us in the ordinary course of their business.
 
                                 LEGAL OPINIONS
 
     Robert C. Shrosbree, Assistant General Counsel for CMS Energy, will render
opinions as to the legality of the common stock for CMS Energy.
 
     Pillsbury Winthrop LLP will pass upon certain legal matters with respect to
the offering of the common stock for the underwriters.
 
                                    EXPERTS
 
     The consolidated financial statements of CMS Energy appearing in CMS
Energy's Annual Report (Form 10-K) for the year ended December 31, 2004
(including a schedule appearing therein), and CMS Energy's management's
assessment of the effectiveness of internal control over financial reporting as
of December 31, 2004 included therein, have been audited by Ernst & Young LLP,
independent registered public accounting firm, as set forth in its reports
thereon, included therein, and incorporated herein by reference, which are based
in part on the reports of PricewaterhouseCoopers LLP, independent registered
public accounting firm for the MCV Partnership, and Price Waterhouse,
independent accountants for Jorf Lasfar. Such consolidated financial statements
and management's assessment have been incorporated herein by reference in
reliance upon such reports given on the authority of such firms as experts in
accounting and auditing.
 
     The financial statements of Jorf Lasfar as of December 31, 2004 and 2003
and for each of the three years in the period ended December 31, 2004
incorporated herein by reference have been so included in reliance on the report
of Price Waterhouse, independent accountants for Jorf Lasfar, given on the
authority of said firm as experts in auditing and accounting.
 
     The audited financial statements and management's assessment of the
effectiveness of internal control over financial reporting (which is included in
Management's Report on Internal Control over Financial Reporting) of the MCV
Partnership for years ended December 31, 2004 and 2003, not separately presented
or incorporated by reference into this prospectus supplement, have been audited
by PricewaterhouseCoopers LLP, an independent registered public accounting firm,
whose report thereon appears herein. Such financial statements and management's
assessment of the effectiveness of internal control over financial reporting, to
the extent they have been included in the financial statements and management's
assessment of the effectiveness of internal control over financial reporting of
CMS, have been so included in reliance on the report of such independent
registered public accounting firm given on the authority of said firm as experts
in auditing and accounting.
 
                                       S-29

 
                             CMS ENERGY CORPORATION
 
                            CMS ENERGY COMMON STOCK
                               SENIOR DEBENTURES
                            SUBORDINATED DEBENTURES
                            STOCK PURCHASE CONTRACTS
                              STOCK PURCHASE UNITS
                                   GUARANTEES
                                      AND
                              CMS ENERGY TRUST IV
                               CMS ENERGY TRUST V
                           TRUST PREFERRED SECURITIES
                  GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
                             CMS ENERGY CORPORATION
 
                         OFFERING PRICE: $2,000,000,000
                             ---------------------
 
     We may offer, from time to time:
 
     - shares of CMS Energy Common Stock,
 
     - unsecured senior or subordinated debt securities consisting of
       debentures, convertible debentures, notes and other unsecured evidence of
       indebtedness,
 
     - stock purchase contracts to purchase CMS Energy Common Stock,
 
     - stock purchase units, each representing ownership of a stock purchase
       contract and unsecured senior or subordinated debt securities or trust
       preferred securities or debt obligations of third parties, including U.S.
       Treasury Securities, securing the holder's obligation to purchase the CMS
       Energy Common Stock under the stock purchase contract, or any combination
       of the above, and
 
     - guarantees of CMS Energy with respect to Trust Preferred Securities of
       CMS Energy Trusts IV and V.
 
     For each type of security listed above, the amount, price and terms will be
determined at or prior to the time of sale.
 
     CMS Energy Trust IV and CMS Energy Trust V, which are Delaware business
trusts, may offer trust preferred securities. The trust preferred securities
represent preferred undivided beneficial interests in the assets of CMS Energy
Trust IV and CMS Energy Trust V in amounts, at prices and on terms to be
determined at or prior to the time of sale.
 
     We will provide the specific terms of these securities in an accompanying
prospectus supplement or supplements. You should read this prospectus and the
accompanying prospectus supplement or supplements carefully before you invest.
 
            THESE SECURITIES INVOLVE RISK. SEE "RISK FACTORS" ON PAGE 5.
 
     CMS Energy Common Stock is traded on the New York Stock Exchange under the
symbol "CMS." CMS Energy Common Stock sold pursuant to a prospectus supplement
or supplements accompanying this prospectus will also be listed for trading on
the New York Stock Exchange, subject to official notice of issuance.
 
     NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
 
     We intend to sell these securities through underwriters, dealers, agents or
directly to a limited number of purchasers. The names of, and any securities to
be purchased by or through, these parties, the compensation of these parties and
other special terms in connection with the offering and sale of these securities
will be provided in the related prospectus supplement or supplements.
 
     This prospectus may not be used to consummate sales of any of these
securities unless accompanied by a prospectus supplement.
 
               The date of this prospectus is September 21, 2004.

 
     NO PERSON IS AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT, AND ANY INFORMATION
OR REPRESENTATION NOT CONTAINED OR INCORPORATED HEREIN MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY CMS ENERGY OR ANY UNDERWRITER, DEALER OR AGENT.
THIS PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL
OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES
TO WHICH THEY RELATE OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT
NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION CONTAINED OR INCORPORATED HEREIN OR THEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
 
                               TABLE OF CONTENTS
 


                                                              PAGE
                                                              ----
                                                           
Summary.....................................................    2
Where to Find More Information..............................    2
CMS Energy Corporation......................................    4
CMS Energy Trusts...........................................    4
Risk Factors................................................    5
Use of Proceeds.............................................    6
Ratio of Earnings to Fixed Changes and Ratio of Earnings to
  Combined Fixed Changes and Preference Dividends...........    6
Description of Securities...................................    6
Effect of Obligations Under the Debt Securities and the
  Guarantees................................................   23
Plan of Distribution........................................   27
Legal Opinions..............................................   30
Experts.....................................................   30

 
                                    SUMMARY
 
     This prospectus is part of a registration statement on Form S-3 that we
filed with the Securities and Exchange Commission utilizing a "shelf"
registration process. Under this shelf process, we may sell any combination of
securities described in this prospectus in one or more offerings, up to a total
dollar amount of $2,000,000,000. This prospectus provides you with a general
description of the securities we may offer. Each time we sell securities, we
will provide a prospectus supplement containing specific information about the
terms of that offering. The prospectus supplement may also add, update or change
information contained in this prospectus. You should read both this prospectus
and any prospectus supplement together with additional information described
below under the heading "Where To Find More Information."
 
                         WHERE TO FIND MORE INFORMATION
 
     We file reports, proxy statements and other information with the SEC under
File No. 1-9513. Our SEC filings are also available over the Internet at the
SEC's web site at http://www.sec.gov. You may also read and copy any document we
file at the SEC's public reference room at 450 Fifth Street N.W., Room 1024,
Washington D.C. 20549. Please call the SEC at 1-800-SEC-0330 for more
information on
 
                                        2

 
the public reference rooms and their copy charges. You may also inspect our SEC
reports and other information at the New York Stock Exchange, 20 Broad Street,
New York, New York 10005. You can find additional information about us,
including our Annual Report on Form 10-K/A for the year ended December 31, 2003
and our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2004 and
June 30, 2004, on our Web site at http://www.cmsenergy.com. The information on
this Web site is not a part of this prospectus.
 
     We have securities listed on the New York Stock Exchange. You can inspect
and copy reports and other information about us at the NYSE's offices at 20
Broad Street, New York, New York 10005.
 
     We have not included separate financial statements of the Trusts. We and
the Trusts do not consider that such financial statements would be material to
holders of Trust Preferred Securities because each Trust is a newly organized
special purpose entity, has no operating history and no independent operations.
The Trusts are not currently involved in and don't anticipate being involved in
any activity other than as described under "CMS Energy Trusts." Further, we
believe that financial statements of the Trusts are not material to the holders
of the Trust Preferred Securities since we will guarantee the Trust Preferred
Securities. Holders of the Trust Preferred Securities, with respect to the
payment of distributions and amounts upon liquidation, dissolution and
winding-up, are at least in the same position vis-a-vis the assets of CMS Energy
Corporation ("CMS Energy") as a preferred stockholder of CMS Energy. We
beneficially own all of the undivided beneficial interests in the assets of the
Trusts (other than the beneficial interests represented by the Trust Preferred
Securities). See "CMS Energy Trusts," "Description of Securities -- Trust
Preferred Securities" and "Effect of Obligations Under the Debt Securities And
the Guarantees -- The Guarantees." In future filings under the Exchange Act,
there will be an audited footnote to our annual financial statements stating
that the Trusts are wholly-owned by CMS Energy, that the sole assets of the
Trusts are the Senior Debentures or the Subordinated Debentures of CMS Energy
having a specified aggregate principal amount, and, considered together, the
back-up undertakings, including the Guarantees, constitute a full and
unconditional guarantee by CMS Energy of the Trusts' obligations under the Trust
Preferred Securities issued by the Trusts.
 
     We are "incorporating by reference" information into this registration
statement. This means that we are disclosing important information to you when
we refer you to another document that we filed separately with the SEC.
Information incorporated by reference is considered to be part of this
prospectus, unless the information is updated by information in this prospectus.
This prospectus incorporates by reference the documents listed below. We
encourage you to read these additional documents because these documents contain
important information about us and our finances.
 


              SEC FILINGS
           (FILE NO. 1-9513)                                     PERIOD/DATE
---------------------------------------   ---------------------------------------------------------
                                       
- Annual Report on Form 10-K/A            Year ended December 31, 2003
- Quarterly Reports on Form 10-Q          Quarters ended March 31, 2004 and June 30, 2004
- Current Reports on Form 8-K             Filed January 22, 2004, March 8, 2004, April 14, 2004,
                                          June 3, 2004, August 20, 2004, August 31, 2004 and
                                          September 1, 2004

 
     The documents we have filed with the SEC after the date of this prospectus
and prior to the termination of the offering made by this prospectus are also
incorporated by reference into this prospectus. Any statement contained in such
document will be deemed to be modified or superseded for purposes of this
prospectus to the extent that a statement contained in this prospectus or any
other subsequently filed document modifies or supersedes such statement.
 
     This prospectus, which is part of the offering registration statement, does
not contain all of the information found in the offering registration statement
including various exhibits and schedules. We are incorporating by reference the
offering registration statement.
 
     We will provide, upon your oral or written request, a copy of any or all of
the information that has been incorporated by reference into the prospectus but
not delivered with the prospectus.
 
                                        3

 
     You may request copies of these filings, including the registration
statement, at no cost, by writing or telephoning CMS Energy at the following
address:
 
     CMS Energy Corporation
     Attn: Office of the Secretary
     One Energy Plaza
     Jackson, Michigan 49201
     Telephone: (517) 788-0531
 
     You should rely only on the information contained in or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
information that is different from this information.
 
                             CMS ENERGY CORPORATION
 
     We are an integrated energy company with a business strategy focused
primarily in Michigan. We are the parent holding company of Consumers Energy
Company ("Consumers") and CMS Enterprises Company ("Enterprises"). Consumers is
a combination electric and gas utility company serving Michigan's Lower
Peninsula. Enterprises, through various subsidiaries and equity investments, is
engaged in domestic and international diversified energy businesses including:
independent power production and natural gas transmission, storage and
processing. We manage our businesses by the nature of services each provides and
operate principally in three business segments: electric utility, gas utility,
and enterprises.
 
                               CMS ENERGY TRUSTS
 
     CMS Energy Trust IV and CMS Energy Trust V are statutory business trusts
formed under the Delaware Business Trust Act (the "Trust Act") (each, a "Trust"
and collectively, the "Trusts") pursuant to: (i) a trust agreement executed by
CMS Energy, as sponsor, and the trustees of the Trusts (the "CMS Trustees"); and
(ii) the filing of a certificate of trust with the Secretary of State of the
State of Delaware. At the time of public issuance of Trust Preferred Securities,
each trust agreement will be amended and restated in its entirety (as so amended
and restated, the "Trust Agreement") and will be qualified as an indenture under
the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). CMS
Energy will directly or indirectly acquire common securities of each Trust (the
"Common Securities" and, together with the Trust Preferred Securities, the
"Trust Securities") in an aggregate liquidation amount equal to approximately 3%
for the total capital of the Trust. Each Trust exists for the exclusive purposes
of:
 
     - issuing the Trust Preferred Securities and Common Securities representing
       undivided beneficial interests in the assets of the Trust;
 
     - investing the gross proceeds of the Trust Securities in the Senior
       Debentures or Subordinated Debentures; and
 
     - engaging in only those other activities necessary or incidental thereto.
       Each Trust has a term of approximately 30 years, but may terminate
       earlier as provided in the Trust Agreement.
 
     The undivided common beneficial interests in the Trust will be owned by CMS
Energy. The proceeds from the offering of the Trust Preferred Securities and the
sale of the Common Securities may be contributed by the Trust to purchase from
CMS Energy Senior Debentures or Subordinated Debentures in an aggregate
principal amount equal to the aggregate liquidation preference of the Trust
Securities, bearing interest at an annual rate equal to the annual distribution
rate of such Trust Securities and having certain redemption terms which
correspond to the redemption terms for the Trust Securities. The Senior
Debentures will rank on an equal basis with all other unsecured debt of CMS
Energy except subordinated debt. The Subordinated Debentures will rank
subordinate in right of payment to all of CMS Energy's Senior Indebtedness (as
defined herein). Distributions on the Trust Securities may not be made unless
the Trust receives corresponding interest payments on the Senior Debentures or
the Subordinated Debentures from CMS Energy. CMS Energy will irrevocably
guarantee, on a senior or subordinated basis, as
                                        4

 
applicable, and to the extent set forth therein, with respect to each of the
Trust Securities, the payment of distributions, the redemption price, including
all accrued or deferred and unpaid distributions, and payment on liquidation,
but only to the extent of funds on hand. Each Guarantee will be unsecured and
will be either equal to or subordinate to, as applicable, all Senior
Indebtedness, of CMS Energy. Upon the occurrence of certain events (subject to
the conditions to be described in an accompanying prospectus supplement) the
Trust may be liquidated and the holders of the Trust Securities could receive
Senior Debentures or Subordinated Debentures in lieu of any liquidating cash
distribution.
 
     Pursuant to the Trust Agreement, the number of CMS Trustees will initially
be three. Two of the CMS Trustees (the "Administrative Trustees") will be
persons who are employees or officers of or who are affiliated with CMS Energy.
The third trustee will be a financial institution that is unaffiliated with CMS
Energy, which trustee will serve as property trustee under the Trust Agreement
and as indenture trustee for the purposes of compliance with the provisions of
the Trust Indenture Act (the "Property Trustee"). Initially, either The Bank of
New York, a New York banking corporation, or J.P. Morgan Trust Company, N.A, a
national banking association, will be the Property Trustee until removed or
replaced by the holder of the Common Securities. For the purpose of compliance
with the provisions of the Trust Indenture Act, The Bank of New York or J.P.
Morgan Trust Company, N.A. will also act as trustee (each a "Guarantee Trustee"
and collectively the "Guarantee Trustees"). The Bank of New York (Delaware) will
act as the Delaware Trustee for the purposes of the Trust Act, until removed or
replaced by the holder of the Common Securities. See "Effect of Obligations
Under the Debt Securities And the Guarantees -- The Guarantees."
 
     Each Property Trustee will hold title to the applicable Debt Securities for
the benefit of the holders of the Trust Securities and each Property Trustee
will have the power to exercise all rights, powers and privileges under the
applicable indentures (as defined herein) as the holder of the Debt Securities.
In addition, each Property Trustee will maintain exclusive control of a
segregated non-interest bearing bank account (the "Property Account") to hold
all payments made in respect of the Debt Securities for the benefit of the
holders of the Trust Securities. Each Property Trustee will make payments of
distributions and payments on liquidation, redemption and otherwise to the
holders of the Trust Securities out of funds from the Property Account. The
Guarantee Trustees will hold the Guarantees for the benefit of the holders of
the Trust Securities. CMS Energy, as the direct or indirect holder of all the
Common Securities, will have the right to appoint, remove or replace any CMS
Trustee and to increase or decrease the number of CMS Trustees; provided, that
the number of CMS Trustees shall be at least three, a majority of which shall be
Administrative Trustees. CMS Energy will pay all fees and expenses related to
the Trusts and the offering of the Trust Securities.
 
     The rights of the holders of the Trust Preferred Securities, including
economic rights, rights to information and voting rights, are set forth in the
Trust Agreement, the Trust Act and the Trust Indenture Act.
 
     The trustee in the State of Delaware is The Bank of New York (Delaware),
White Clay Center, Route 273, Newark, Delaware 19711.
 
     The principal place of business of each Trust shall be c/o CMS Energy
Corporation, One Energy Plaza, Jackson, Michigan 49201.
 
                                  RISK FACTORS
 
     Before acquiring any of the securities that may be offered hereby, you
should carefully consider the risks discussed in the section of our Form 10-Q,
filed August 6, 2004, for the quarter year ended June 30, 2004, entitled
"Forward-Looking Statements and Risk Factors," which is incorporated in this
document by reference. You should also consider the risk factors listed in the
accompanying prospectus supplement or supplements and you should read this
prospectus and the accompanying prospectus supplement or supplements carefully
before you invest.
 
                                        5

 
                                USE OF PROCEEDS
 
     The proceeds received by each of the Trusts from the sale of its Trust
Preferred Securities or the Common Securities will be invested in the Senior
Debentures or the Subordinated Debentures. As will be more specifically set
forth in the applicable prospectus supplement, we will use such borrowed amounts
and the net proceeds from the sale of CMS Energy Common Stock, Stock Purchase
Contracts, Stock Purchase Units and any Senior Debentures or Subordinated
Debentures offered hereby for our general corporate purposes, including capital
expenditures, investment in subsidiaries, working capital and repayment of debt.
 
   RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO COMBINED FIXED
                        CHARGES AND PREFERENCE DIVIDENDS
 
     The ratio of earnings to fixed charges and the ratio of earnings to
combined fixed charges and preferred stock dividends for the six months ended
June 30, 2004 and each of the years ended December 31, 1999 through 2003 is as
follows:
 


                                                       YEAR ENDED DECEMBER 31,
                                SIX MONTHS ENDED   --------------------------------
                                 JUNE 30, 2004     2003   2002   2001   2000   1999
                                ----------------   ----   ----   ----   ----   ----
                                                             
Ratio of earnings to fixed
  charges.....................       --(1)         --(2)  --(3)  --(4)  --(5)  1.33
Ratio of earnings to combined
  fixed charges and preference
  dividends...................       --(1)         --(2)  --(6)  --(7)  --(8)  1.28

 
---------------
 
(1) For the six months ended June 30, 2004, fixed charges exceeded earnings by
    $47 million. Earnings as defined include $125 million of asset impairment
    charges.
 
(2) For the year ended December 31, 2003, fixed charges exceeded earnings by $59
    million. Earnings as defined include $95 million of asset impairment
    charges.
 
(3) For the year ended December 31, 2002, fixed charges exceeded earnings by
    $475 million. Earnings as defined include $602 million of asset impairment
    charges.
 
(4) For the year ended December 31, 2001, fixed charges exceeded earnings by
    $393 million. Earnings as defined include $323 million of asset impairment
    charges.
 
(5) For the year ended December 31, 2000, fixed charges exceeded earnings by
    $225 million. Earnings as defined include a $329 million pretax impairment
    loss on the Loy Yang investment.
 
(6) For the year ended December 31, 2002, fixed charges exceeded earnings by
    $472 million. Earnings as defined include $602 million of asset impairment
    charges.
 
(7) For the year ended December 31, 2001, fixed charges exceeded earnings by
    $392 million. Earnings as defined include $323 million of asset impairment
    charges.
 
(8) For the year ended December 31, 2000, fixed charges exceeded earnings by
    $224 million. Earnings as defined include a $329 million pretax impairment
    loss on the Loy Yang investment.
 
     For the purpose of computing these ratios, earnings represent sum of income
from continuing operations before income taxes, net interest charges and the
estimated interest portion of lease rentals and distributed income of equity
method investees.
 
                           DESCRIPTION OF SECURITIES
 
INTRODUCTION
 
     Specific terms of the shares of Common Stock, par value $.01 per share
("CMS Energy Common Stock"), unsecured senior debt securities (the "Senior
Debentures") and unsecured subordinated debt securities (the "Subordinated
Debentures") (individually a "Debt Security" and collectively the "Debt
 
                                        6

 
Securities") consisting of debentures, convertible debentures, notes and other
unsecured evidence of indebtedness, Stock Purchase Contracts (the "Stock
Purchase Contracts") to purchase CMS Energy Common Stock, Stock Purchase Units
(the "Stock Purchase Units"), each representing ownership of a Stock Purchase
Contract and Debt Securities, or Trust Preferred Securities or debt obligations
of third parties, including U.S. Treasury Securities, securing the holder's
obligation to purchase the CMS Energy Common Stock under the Stock Purchase
Contract, or any combination of the foregoing, irrevocable guarantees
(individually a "Guarantee" and collectively "Guarantees") of CMS Energy, on a
senior or subordinated basis as applicable, and to the extent set forth therein,
with respect to each of the Trust Securities, the payment of distributions, the
redemption price, including all accrued or deferred and unpaid distributions,
and payment on liquidation, but only to the extent of fund on hand, and trust
preferred securities (the "Trust Preferred Securities") representing preferred
undivided beneficial interests in the assets of the Trust, in respect of which
this prospectus is being delivered (collectively, the "Offered Securities"),
will be set forth in an accompanying prospectus supplement or supplements,
together with the terms of the offering of the Offered Securities, the initial
price thereof and the net proceeds from the sale thereof. The prospectus
supplement will set forth with regard to the particular Offered Securities,
without limitation, the following: (i) in the case of Debt Securities, the
designation, aggregate principal amount, denomination, maturity, premium, if
any, any exchange, conversion, redemption or sinking fund provisions, interest
rate (which may be fixed or variable), the time or method of calculating
interest payments, the right of CMS Energy, if any, to defer payment or interest
on the Debt Securities and the maximum length of such deferral, put options, if
any, public offering price, ranking, any listing on a securities exchange and
other specific terms of the offering; (ii) in the case of CMS Energy Common
Stock, the designation, number of shares, public offering price and other
specific terms of the Offering, from the sale thereof; (iii) in the case of
Trust Preferred Securities, the designation, number of shares, liquidation
preference per security, initial public offering price, any listing on a
securities exchange, dividend rate (or method of calculation thereof), dates on
which dividends shall be payable and dates from which dividends shall accrue,
any voting rights, any redemption, exchange, conversion or sinking fund
provisions and any other rights, preferences, privileges, limitations or
restrictions relating to a specific series of the Trust Preferred Securities
including a description of the Guarantee (as defined herein), as the case may
be; and (iv) in the case of Stock Purchase Units, the specific terms of the
Stock Purchase Contracts and any Debt Securities, Trust Preferred Securities, or
debt obligations of third parties securing the holders obligation to purchase
CMS Energy Common Stock under the Stock Purchase Contracts, and the terms of the
offering and sale thereof.
 
CAPITAL STOCK
 
     The following summary of certain rights of the holders of CMS Energy
capital stock does not purport to be complete and is qualified in its entirety
by express reference to the Restated Articles of Incorporation of CMS Energy
(the "Articles of Incorporation") and the By-Laws of CMS Energy, which are
incorporated into this prospectus by reference. See "Where You Can Find More
Information." A copy of the By-laws has been previously filed with the SEC. The
Articles of Incorporation are available on our website at
http://www.cmsenergy.com.
 
     The authorized capital stock of CMS Energy consists of:
 
     - 350 million shares of CMS Energy Common Stock; and
 
     - 10 million shares of CMS Energy Preferred Stock, par value $0.01 per
       share ("Preferred Stock").
 
     As of August 31, 2004, we had 5,000,000 shares of 4.50% Cumulative
Convertible Preferred Stock and 161,819,124 shares of CMS Energy Common Stock
issued and outstanding.
 
                                        7

 
COMMON STOCK
 
  DIVIDEND RIGHTS AND POLICY; RESTRICTIONS ON DIVIDENDS
 
     Dividends on the common stock are paid at the discretion of the Board of
Directors based primarily upon the earnings and financial condition of CMS
Energy. Dividends are payable out of the assets of CMS Energy legally available
therefore.
 
     In January 2003, the Board of Directors suspended the payment of CMS Energy
Common Stock dividends.
 
     CMS Energy is a holding company and its assets consist primarily of
investments in its subsidiaries. As a holding company with no significant
operations of its own, the principal sources of its funds are dependent
primarily upon the earnings of its subsidiaries (in particular, Consumers),
borrowings and sales of equity. CMS Energy's ability to pay dividends on CMS
Energy Common Stock, is dependent primarily upon the earnings and cash flows of
its subsidiaries and the distribution or other payment of such earnings to CMS
Energy in the form of dividends, loans or advances and repayment of loans and
advances from CMS Energy. Accordingly, the ability of CMS Energy to pay
dividends on its capital stock will depend on the earnings, financial
requirements, contractual restrictions of the subsidiaries of CMS Energy (in
particular, Consumers) and other factors. CMS Energy's subsidiaries are separate
and distinct legal entities and have no obligation, contingent or otherwise, to
pay any amounts on the capital stock of CMS Energy or to make any funds
available therefor, whether by dividends, loans or other payments.
 
     Dividends on capital stock of CMS Energy are limited by Michigan law to
legally available assets of CMS Energy. Distributions on CMS Energy Common Stock
may be subject to the rights of the holders, if any, of the Preferred Stock,
including the currently issued and outstanding 4.50% Cumulative Convertible
Preferred Stock. As long as the 4.50% Cumulative Convertible Preferred Stock is
outstanding, CMS Energy may not pay dividends on the CMS Energy Common Stock
unless certain conditions are met including, but not limited to, that dividends
on the 4.50% Cumulative Convertible Preferred Stock have been paid. See
"Preferred Stock -- Dividends".
 
     CMS Energy is subject to the following contractual restrictions on its
ability to pay dividends:
 
CMS ENERGY'S SENIOR SECURED CREDIT FACILITY
 
     Under the terms of our Fifth Amended and Restated Senior Credit Agreement
we have agreed that we will not, and will not permit certain of our
subsidiaries, directly or indirectly, to:
 
     - declare or pay any dividend, payment or other distribution of assets,
       properties, cash, rights, obligations or securities on account of any
       shares of any class of CMS Energy Common Stock or the capital stock or
       other ownership interests of certain subsidiaries (other than stock
       splits and dividends payable solely in our non-convertible equity
       securities (other than Redeemable Stock or Exchangeable Stock (as such
       terms are defined in the senior debt indenture on August 3, 2004)) and
       dividends and distributions made to us or certain of our subsidiaries);
       or
 
     - purchase, redeem, retire or otherwise acquire for value any such capital
       stock or other ownership interests;
 
unless other than (i) pursuant to the terms of any class of our capital stock
issued and outstanding (and as in effect on August 3, 2004), any purchase or
redemption of our capital stock made by exchange for, or out of the proceeds of
the substantially concurrent sale of, our capital stock (other than Redeemable
Stock or Exchangeable Stock (as such terms are defined in the senior debt
indenture on August 3, 2004)) and (ii) payments made by us or certain
subsidiaries pursuant to our tax sharing agreement and (iii) after January 1,
2005 payments not to exceed certain amounts for any twelve-month period so long
as a certain amount of liquidity is held by CMS Energy.
 
                                        8

 
SENIOR DEBT INDENTURE
 
     Under the terms of the senior debt indenture we have the following issued
and outstanding securities: 7 5/8% Senior Unsecured Notes Due 2004,
X-TRAS(SM)Pass-Through Trust I Certificates Due 2005, 9.875% Senior Notes Due
2007, 7.5% Senior Notes Due 2009, 8.9% Senior Notes Due 2008, 8.5% Senior Notes
Due 2011, 3.375% Convertible Senior Notes Due 2023 and 7.75% Senior Notes Due
2010. So long as any of such notes issued thereunder are outstanding and until
those notes are rated BBB -- or above (or an equivalent rating) by S&P and one
other rating agency, at which time we will be permanently released from the
provisions of this limitation, we have agreed that we will not, and will not
permit any of our restricted subsidiaries, directly or indirectly, to:
 
     - declare or pay any dividend or make any distribution on our capital stock
       to the direct or indirect holders of our capital stock (except dividends
       or distributions payable solely in our non-convertible capital stock (as
       defined in the senior debt indenture) or in options, warrants or other
       rights to purchase such non-convertible capital stock and except
       dividends or other distributions payable to us or one of our
       subsidiaries);
 
     - purchase, redeem or otherwise acquire or retire for value any of our
       capital stock; or
 
     - purchase, repurchase, redeem, defease or otherwise acquire or retire for
       value, prior to the schedule maturity or scheduled repayment thereof, any
       of our subordinated indebtedness (each, for purposes of the senior debt
       indenture, a "restricted payment"),
 
if at the time of any restricted payment described above (1) an event of default
under the senior debt indenture (or event that with the lapse of time or giving
of notice would constitute an event of default) has occurred and is continuing,
or would occur as a result of the restricted payment, or (2) after giving effect
to any restricted payment described above, the aggregate amount of all
restricted payments made since May 6, 1997 would exceed the sum of:
 
     - $100 million;
 
     - 100% of our consolidated net income from May 6, 1997 to the end of the
       most recent fiscal quarter ending at least 45 days prior to the date of
       the restricted payment (or, in the case of a deficit, minus 100% of the
       deficit); and
 
     - the aggregate net proceeds we have received for any issuance or sale of,
       or contribution with respect to, our capital stock subsequent to May 6,
       1997.
 
GENERAL TERM NOTE INDENTURE
 
     Similarly, the indenture, dated as of January 15, 1994, as amended and
supplemented, between us and JPMorgan Chase Bank, as trustee, pursuant to which
we have issued our General Term Notes, Series D, Series E and Series F, provides
that so long as any general term notes issued thereunder are outstanding and
until the notes are rated BBB -- or above (or an equivalent rating) by S&P and
one other rating agency, at which time we will be permanently released from the
provisions of this limitation, we have agreed that we will not, and will not
permit any of our restricted subsidiaries, directly or indirectly, to:
 
     - declare or pay any dividend or make any distribution on our capital stock
       to the direct or indirect holders of our capital stock (except dividends
       or distributions payable solely in our non-convertible capital stock (as
       defined in such indenture) or in options, warrants or other rights to
       purchase such non-convertible capital stock and except dividends or other
       distributions payable to us or one of our subsidiaries); or
 
     - purchase, redeem or otherwise acquire or retire for value any of our
       capital stock (each, a "restricted payment");
 
if at the time of any restricted payment described above (1) an event of default
under such indenture (or event that with the lapse of time or giving of notice
would constitute an event of default) has occurred and is continuing, or would
occur as a result of the restricted payment, or (2) after giving effect to any
                                        9

 
restricted payment described above, the aggregate amount of all restricted
payments made since September 30, 1993 would exceed the sum of:
 
     - $120 million;
 
     - 100% of our consolidated net income from September 30, 1993 to the end of
       the most recent fiscal quarter ending at least 45 days prior to the date
       of the restricted payment (or, in the case of a deficit, minus 100% of
       the deficit); and
 
     - the aggregate net proceeds we have received for any issuance or sale of,
       or contribution with respect to, our capital stock subsequent to
       September 30, 1993.
 
     The provisions described above do not prohibit (1) dividends or other
distributions in respect of capital stock issued in connection with the
acquisition of any business or assets by us where the payment of such dividends
or distributions are payable solely from the net earnings of such business or
assets, (2) any purchase or redemption of capital stock made by exchange for, or
out of the proceeds of the substantially concurrent sale of, our capital stock
(other than certain redeemable stock or exchangeable stock), (3) dividends paid
within 60 days after the date of declaration thereof if at the date of
declaration such dividends would have complied with the limitations described
above or (4) payments pursuant to the tax sharing agreement among us and our
subsidiaries.
 
  TRUST PREFERRED SECURITIES
 
     In June 1997, a CMS Energy affiliated trust issued $172.5 million of 7 3/4%
Convertible Quarterly Income Preferred Securities. The preferred securities are
convertible at the option of the holder into shares of CMS Energy Common Stock
at an initial conversion rate of 1.2255 shares of CMS Energy Common Stock for
each preferred security (equivalent to a purchase price of $40.80 per share of
CMS Energy Common Stock), subject to certain adjustments. We may, at our option,
cause the conversion rights of the holders of the preferred securities to expire
upon certain conditions.
 
     Under the terms of the indenture, dated June 1, 1997, between us and The
Bank of New York, as trustee, as amended and supplemented, and the guarantee
agreement dated June 20, 1997 between us and The Bank of New York relating to
the preferred securities of CMS Energy Trust I pursuant to which the preferred
securities and the related 7 3/4% Convertible Subordinated Debentures due 2027
were issued, we have agreed that we will not, and will not cause any of our
subsidiaries to, declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of our
capital stock, if at such time:
 
     - an event has occurred, of which we have actual knowledge, that with the
       giving of notice or the lapse of time, or both, would constitute an event
       of default and in respect of which we have not taken reasonable steps to
       cure;
 
     - we are in default with respect to the payment of any obligations under
       the relevant guarantee agreement; or
 
     - we have given notice of our selection of an extension period as provided
       in such indenture with respect to the subordinated debentures and have
       not rescinded such notice, or such extension period (or any extension
       thereof) is continuing.
 
  DIVIDEND RESTRICTIONS UNDER MICHIGAN LAW
 
     Michigan law prohibits payment of a dividend or a repurchase of capital
stock if, after giving it effect, a corporation would not be able to pay its
debts as they become due in the usual course of business, or its total assets
would be less than the sum of its total liabilities plus, unless the Articles of
Incorporation provide otherwise, the amount that would be needed, if the
corporation were to be dissolved at the time of the distribution, to satisfy the
preferential rights upon dissolution of shareholders whose preferential rights
are superior to those receiving the distribution (including the rights of
holders of preferred stock, if any).
 
                                        10

 
  VOTING RIGHTS
 
     Each holder of CMS Energy Common Stock is entitled to one vote for each
share of CMS Energy Common Stock held by such holder on each matter voted upon
by the shareholders. Such right to vote is not cumulative. A majority of the
votes cast by the holders of shares entitled to vote thereon is sufficient for
the adoption of any question presented, except that certain provisions of the
Articles of Incorporation relating to special shareholder meetings, the removal,
indemnification and liability of the Board of Directors and the requirements for
amending these provisions may not be amended, altered, changed or repealed
unless such amendment, alteration, change or repeal is approved by the
affirmative vote of at least 75% of the outstanding shares entitled to vote
thereon.
 
     Under Michigan law, the approval of the holders of a majority of the
outstanding shares of CMS Energy Common Stock would be necessary for
authorizing, effecting or validating the merger or consolidation of CMS Energy
into or with any other corporation if such merger or consolidation would
adversely affect the powers or special rights of such CMS Energy Common Stock,
and to authorize any amendment to the Articles of Incorporation that would
increase or decrease the aggregate number of authorized shares of CMS Energy
Common Stock or alter or change the powers, preferences or special rights of the
shares of CMS Energy Common Stock so as to affect them adversely. The Articles
of Incorporation also provide that unless the vote or consent of a greater
number of shares shall then be required by law, the vote or consent of the
holders of a majority of the shares of CMS Energy Common Stock then outstanding
will be necessary for authorizing, effecting or validating the merger or
consolidation of CMS Energy into or with any other entity if such merger or
consolidation would adversely affect the powers or special rights of the CMS
Energy Common Stock, either directly by amendment to the Articles of
Incorporation or indirectly by requiring the holders of the CMS Energy Common
Stock to accept or retain, in such merger or consolidation, anything other than
(i) shares of such class or (ii) shares of the surviving or resulting
corporation, having, in either case, powers and special rights identical to
those of such commons stock prior to such merger or consolidation. The effect of
these provisions may be to permit the holders of a majority of the outstanding
shares of CMS Energy Common Stock to block any such merger or amendment which
would adversely affect the powers or special rights of holders of such shares of
CMS Energy Common Stock.
 
  PREEMPTIVE RIGHTS
 
     The Articles of Incorporation provide that holders of CMS Energy Common
Stock will have no preemptive rights to subscribe for or purchase any additional
shares of the capital stock of CMS Energy of any class now or hereafter
authorized, or Preferred Stock, bonds, debentures, or other obligations or
rights or options convertible into or exchangeable for or entitling the holder
or owner to subscribe for or purchase any shares of capital stock, or any rights
to exchange shares issued for shares to be issued.
 
  LIQUIDATION RIGHTS
 
     In the event of the dissolution, liquidation or winding up of CMS Energy,
whether voluntary or involuntary, after payment or provision for payment of the
debts and other liabilities of CMS Energy and after there shall have been paid
or set apart for the holders of Preferred Stock the full preferential amounts
(including any accumulated and unpaid dividends) to which they are entitled, the
holders of CMS Energy Common Stock will be entitled to receive, on a per share
basis, the assets of CMS Energy remaining for distribution to the holders of CMS
Energy Common Stock. Neither the merger or consolidation of CMS Energy into or
with any other corporation, nor the merger or consolidation of any other
corporation into or with CMS Energy nor any sale, transfer or lease of all or
any part of the assets of CMS Energy, shall be deemed to be a dissolution,
liquidation or winding up for the purposes of this provision.
 
     Because CMS Energy has subsidiaries which have debt obligations and other
liabilities of their own, CMS Energy's rights and the rights of its creditors
and its stockholders to participate in the distribution of assets of any
subsidiary upon the latter's liquidation or recapitalization will be subject to
prior claims of
 
                                        11

 
the subsidiary's creditors, except to the extent that CMS Energy may itself be a
creditor with recognized claims against the subsidiary.
 
  SUBDIVISION OR COMBINATION
 
     If CMS Energy subdivides (by stock split, stock dividend or otherwise) or
combines (by reverse stock split or otherwise), the voting and liquidation
rights of shares of CMS Energy Common Stock will be appropriately adjusted so as
to avoid any dilution in aggregate voting or liquidation rights.
 
  EXCHANGES
 
     The Articles of Incorporation do not provide for either the mandatory or
optional exchange or redemption of CMS Energy Common Stock.
 
  TRANSFER AGENT AND REGISTRAR
 
     CMS Energy Common Stock is transferable at Consumers Energy Company, One
Energy Plaza, Jackson, Michigan 49201. CMS Energy is the registrar and transfer
agent for CMS Energy Common Stock.
 
PREFERRED STOCK
 
     The authorized Preferred Stock may be issued without the approval of the
holders of CMS Energy Common Stock in one or more series, from time to time,
with each such series to have such designation, powers, preferences and
relative, participating, optional or other special rights, voting rights, if
any, and qualifications, limitations or restrictions thereof, as shall be stated
in a resolution providing for the issue of any such series adopted by CMS
Energy's Board of Directors. The Articles of Incorporation provide that holders
of Preferred Stock will not have any preemptive rights to subscribe for or
purchase any additional shares of the capital stock of CMS Energy of any class
now or hereafter authorized, or any Preferred Stock, bonds, debentures or other
obligations or rights or options convertible into or exchangeable for or
entitling the holder or owner to subscribe for or purchase any shares of capital
stock. The future issuance of Preferred Stock may have the effect of delaying,
deterring or preventing a change in control of CMS Energy.
 
  4.50% CUMULATIVE CONVERTIBLE PREFERRED STOCK
 
     The Articles of Incorporation establish one series of preferred stock
designated as "4.50% Cumulative Convertible Preferred Stock" consisting of
5,000,000 shares with a liquidation preference of $50.00 per share (the
"Cumulative Convertible Preferred Stock"). The Cumulative Convertible Preferred
Stock ranks prior to any series of our CMS Energy Common Stock as to the payment
of dividends and distribution of assets upon dissolution, liquidation or winding
up of CMS Energy, and is convertible into shares of CMS Energy Common Stock. The
holders of the Cumulative Convertible Preferred Stock have no preemptive rights.
 
  DIVIDENDS
 
     Holders of shares of Cumulative Convertible Preferred Stock will be
entitled to receive, when, as and if declared by our board of directors out of
funds legally available for payment, cumulative cash dividends at the rate per
annum of 4.50% per share on the liquidation preference thereof of $50.00 per
share (equivalent to $2.25 per annum per share). Dividends on the Cumulative
Convertible Preferred Stock will be payable quarterly on March 1, June 1,
September 1 and December 1 of each year at such annual rate, and shall
accumulate from the most recent date as to which dividends shall have been paid
or, if no dividends have been paid, from the issue date of the Cumulative
Convertible Preferred Stock, whether or not in any dividend period or periods
there have been funds legally available for the payment of such dividends.
Accumulated unpaid dividends accrue and cumulate dividends at the annual rate of
4.50%.
 
                                        12

 
     As long as any Cumulative Convertible Preferred Stock is outstanding, we
may not pay dividends or distributions on, or purchase, redeem or otherwise
acquire, subject to certain exceptions, shares of the CMS Energy Common Stock
unless all accumulated and unpaid dividends on the Cumulative Convertible
Preferred Stock have been paid or set aside for payment.
 
  LIQUIDATION PREFERENCE
 
     In the event of our voluntary or involuntary liquidation, winding-up or
dissolution, holders of Cumulative Convertible Preferred Stock will be entitled
to receive and to be paid out of our assets available for distribution to our
stockholders, before any payment or distribution is made to holders of junior
stock (including CMS Energy Common Stock), a liquidation preference in the
amount of $50.00 per share of Cumulative Convertible Preferred Stock, plus
accumulated and unpaid dividends on the shares to the date fixed for
liquidation, winding-up or dissolution. If, upon our voluntary or involuntary
liquidation, winding-up or dissolution, the amounts payable with respect to the
liquidation preference of the Cumulative Convertible Preferred Stock and all
parity stock are not paid in full, the holders of the Cumulative Convertible
Preferred Stock and the parity stock will share equally and ratably in any
distribution of our assets in proportion to the full liquidation preference and
accumulated and unpaid dividends to which they are entitled.
 
  VOTING RIGHTS
 
     Except as required by Michigan law and our Articles of Incorporation, the
holders of Cumulative Convertible Preferred Stock have no voting rights unless
dividends payable on the Cumulative Convertible Preferred Stock are in arrears
for six or more quarterly periods (whether or not consecutive). In that event,
the holders of the Cumulative Convertible Preferred Stock, voting as a single
class with the shares of any other preferred stock or preference securities
having similar voting rights that are exercisable, will be entitled at the next
regular or special meeting of our stockholders to elect two additional directors
(or one director if fewer than six directors comprise our board prior to
appointment) and the number of directors that comprise our board will be
increased by the number of directors so elected. These voting rights and the
terms of the directors so elected will continue until such time as the dividend
arrearage on the Cumulative Convertible Preferred Stock has been paid in full.
 
  REDEMPTION
 
     We cannot redeem shares of the Cumulative Convertible Preferred Stock.
 
  MANDATORY CONVERSION
 
     On or after December 5, 2008, we may, at our option, cause the Cumulative
Convertible Preferred Stock to be automatically converted into that number of
shares of CMS Energy Common Stock for each share of Cumulative Convertible
Preferred Stock equal to $50.00 (the liquidation preference) divided by the
applicable conversion rate. We may exercise our conversion right only if, for 20
trading days within any period of 30 consecutive trading days (including the
last trading day of such 30-day period), the closing price of the CMS Energy
Common Stock exceeds 130% of the then prevailing conversion price of the
Cumulative Convertible Preferred Stock.
 
  CONVERSION RIGHTS
 
     A holder of record of Cumulative Convertible Preferred Stock may convert
its shares of Cumulative Convertible Preferred Stock at any time into shares of
CMS Energy Common Stock under any of the following circumstances:
 
     - during any calendar quarter (and only during such calendar quarter) if
       the last reported sale price of CMS Energy Common Stock for at least 20
       trading days during the period of 30 consecutive trading days ending on
       the last trading day of the previous calendar quarter is greater than or
       equal to 120% of the conversion price per share of CMS Energy Common
       Stock on such last trading day;
                                        13

 
     - upon the occurrence of specified corporate transactions; and
 
     - subject to certain exceptions, during the five business day period
       immediately following any ten consecutive trading-day period in which the
       trading price per share of Cumulative Convertible Preferred Stock for
       each day of that period was less than 95% of the product of the closing
       sale price of CMS Energy Common Stock and the applicable conversion rate
       of such share of Cumulative Convertible Preferred Stock; provided,
       however, a holder may not convert its shares of Cumulative Convertible
       Preferred Stock if the average closing sale price of CMS Energy Common
       Stock for such ten consecutive trading-day period was between the then
       current conversion price on the Cumulative Convertible Preferred Stock
       and 120% of the then applicable conversion price on the Cumulative
       Convertible Preferred Stock.
 
     For each share of Cumulative Convertible Preferred Stock surrendered for
conversion, holders will receive 5.0541 shares of CMS Energy Common Stock. This
represents an initial conversion price of $9.893 per share of CMS Energy Common
Stock. The conversion rate may be adjusted for certain reasons, but it will not
be adjusted for accumulated and unpaid dividends on the Preferred Stock.
 
PRIMARY SOURCE OF FUNDS OF CMS ENERGY; RESTRICTIONS ON SOURCES OF DIVIDENDS
 
     The ability of CMS Energy to pay (i) dividends on its capital stock and
(ii) its indebtedness, including the Debt Securities, depends and will depend
substantially upon timely receipt of sufficient dividends or other distributions
from its subsidiaries, in particular Consumers and Enterprises. Each of
Consumers' and Enterprises' ability to pay dividends on its common stock depends
upon its revenues, earnings and other factors. Consumers' revenues and earnings
will depend substantially upon rates authorized by the MPSC.
 
     Consumers' Restated Articles of Incorporation ("Articles") provide two
restrictions on its payment of dividends on its common stock. First, prior to
the payment of any common stock dividend, Consumers must reserve retained
earnings after giving effect to such dividend payment of at least (i) $7.50 per
share on all then outstanding shares of its preferred stock, (ii) in respect to
its Class A Preferred Stock, 7.5% of the aggregate amount established by its
Board of Directors to be payable on the shares of each series thereof in the
event of involuntary liquidation of Consumers and (iii) $7.50 per share on all
then outstanding shares of all other stock over which its preferred stock and
Class A Preferred Stock do not have preference as to the payment of dividends
and as to assets. Second, dividend payments during the 12 month period ending
with the month the proposed payment is to be paid are limited to: (i) 50% of net
income available for the payment of dividends during the base period, if the
ratio of common stock and surplus to total capitalization and surplus for 12
consecutive calendar months within the 14 calendar months immediately preceding
the proposed dividend payment (the "base period"), adjusted to reflect the
proposed dividend, is less than 20%; and (ii) 75% of net income available for
the payment of dividends during the base period if the ratio of common stock and
surplus to total capitalization and surplus for the base period, adjusted to
reflect the proposed dividend, is at least 20% but less than 25%.
 
     In addition, Consumers' indenture dated as of January 1, 1996, between
Consumers and The Bank of New York, as trustee (the "Preferred Securities
Indenture"), and certain preferred securities guarantees by Consumers dated
January 23, 1996, September 11, 1997 and October 25, 1999 (collectively, the
"Consumers Preferred Securities Guarantees"), in connection with which the 8.36%
Trust Originated Preferred Securities of Consumers Power Company Financing I,
the 8.20% Trust Originated Preferred Securities of Consumers Energy Company
Financing II, the 9 1/4% Trust Originated Preferred Securities of Consumers
Energy Company Financing III and the 9.00% Trust Preferred Securities of
Consumers Energy Company Financing IV (collectively, the "Consumers Trust
Preferred Securities") were issued, provide that Consumers shall not declare or
pay any dividend on, make any distributions with respect to, or redeem, purchase
or make a liquidation payment with respect to, any of its capital stock if (i)
there shall have occurred any event that would constitute an event of default
under the Preferred Securities Indenture or the trust agreements pursuant to
which the Consumers Trust Preferred Securities were issued, (ii) a default has
occurred with respect to its payment of any obligations under the Consumers
Preferred
 
                                        14

 
Securities Guarantees or certain Consumers common stock guarantees or (iii) it
gives notice of its election to extend the interest payment period on the
subordinated notes issued under the Preferred Securities Indenture, at any time
for up to 20 consecutive quarters, provided, however, Consumers may declare and
pay stock dividends where the dividend stock is the same stock as that on which
the dividend is being paid.
 
     Consumers' ability to pay dividends is also restricted by several existing
loan agreements. The loan agreements are:
 
     - The Amended and Restated Credit Agreement dated as of August 3, 2004
       among Consumers, Bank One, N.A., as agent, and the financial institutions
       named therein; and
 
     - Term Loan Agreement dated as of November 7, 2003 among Consumers, Bank
       One, N.A., as agent, and the financial institutions named therein.
 
     Pursuant to these loan agreements, so long as there exists no event of
default under these agreements, Consumers may pay dividends in an aggregate
amount not to exceed $300 million during any calendar year.
 
     On June 2, 2003, the MPSC issued a financing order authorizing the issuance
of $554 million of securitization bonds. The order would prohibit Consumers from
paying any extraordinary dividends to us until further order of the MPSC.
Pursuant to the order, extraordinary dividends are considered any amount over
and above Consumers' earnings. The order also directed that the securitization
charges be designed such that retail open access customers would pay a
significantly smaller charge than would full service customers. On July 1, 2003,
Consumers filed a petition for rehearing and clarification of certain portions
of the order with the MPSC, including the portion dealing with the design of the
securitization charges. In December 2003, the MPSC issued its order on rehearing
which rejected our requests for rehearing and clarification and remanded the
proceeding to the administrative law judge for additional proceedings.
 
     In December 2003, the MPSC issued an order granting interim gas rate relief
in the amount of $19.34 million annually. In connection with this rate relief,
Consumers agreed to limit its dividends to CMS Energy to a maximum of $190
million annually during the period in which Consumers receives the interim
relief. The MPSC stated in its order that it was not determining at that time
whether dividend restrictions should continue after the issuance of a final
order.
 
     Consumers' Articles also prohibit the payment of cash dividends on its
common stock if Consumers is in arrears on preferred stock dividend payments.
 
     In addition, Michigan law prohibits payment of a dividend if, after giving
it effect, Consumers or Enterprises would not be able to pay its debts as they
become due in the usual course of business, or its total assets would be less
than the sum of its total liabilities plus, unless the Articles permit
otherwise, the amount that would be needed, if Consumers or Enterprises were to
be dissolved at the time of the distribution, to satisfy the preferential rights
upon dissolution of shareholders whose preferential rights are superior to those
receiving the distribution. Currently, it is Consumers' policy to pay annual
dividends equal to 80% of its annual consolidated net income. Consumers' Board
of Directors reserves the right to change this policy at any time.
 
DEBT SECURITIES
 
     The Debt Securities offered by this prospectus will be unsecured
obligations of CMS Energy and will be either senior or subordinated debt. Senior
Debentures will be issued under a senior debt indenture and Subordinated
Debentures will be issued under a subordinated debt indenture. The senior debt
indenture and the subordinated debt indenture are sometimes referred to in this
prospectus individually as an "indenture" and collectively as the "indentures."
 
     The following briefly summarizes the material provisions of the indentures
and the Debt Securities. You should read the more detailed provisions of the
applicable indenture, including the defined terms, for provisions that may be
important to you. You should also read the particular terms of a series of Debt
                                        15

 
Securities, which will be described in more detail in the applicable prospectus
supplement. Copies of the indentures may be obtained from CMS Energy or the
applicable trustee.
 
     Unless otherwise provided in the applicable prospectus supplement, the
trustee under the senior debt indenture will be J.P. Morgan Trust Company, N.A
and the trustee under the subordinated debt indenture will be The Bank of New
York.
 
GENERAL
 
     The indentures provide that Debt Securities of CMS Energy may be issued in
one or more series, with different terms, in each case as authorized from time
to time by CMS Energy.
 
     Federal income tax consequences and other special considerations applicable
to any Debt Securities issued by CMS Energy at a discount will be described in
the applicable prospectus supplement.
 
     Because CMS Energy is a holding company, the claims of creditors of CMS
Energy's subsidiaries will have a priority over CMS Energy's equity rights and
the rights of CMS Energy's creditors, including the holders of Debt Securities,
to participate in the assets of the subsidiary upon the subsidiary's
liquidation.
 
     The applicable prospectus supplement relating to any series of Debt
Securities will describe the following terms, where applicable:
 
     - the title of the Debt Securities;
 
     - whether the Debt Securities will be senior or subordinated debt;
 
     - the total principal amount of the Debt Securities;
 
     - the percentage of the principal amount at which the Debt Securities will
       be sold and, if applicable, the method of determining the price;
 
     - the maturity date or dates;
 
     - the interest rate or the method of computing the interest rate;
 
     - the date or dates from which any interest will accrue, or how such date
       or dates will be determined, and the interest payment date or dates and
       any related record dates;
 
     - the location where payments on the Debt Securities will be made;
 
     - the terms and conditions on which the Debt Securities may be redeemed at
       the option of CMS Energy;
 
     - any obligation of CMS Energy to redeem, purchase or repay the Debt
       Securities at the option of a holder upon the happening of any event and
       the terms and conditions of redemption, purchase or repayment;
 
     - any provisions for the discharge of CMS Energy's obligations relating to
       the Debt Securities by deposit of funds or United States government
       obligations;
 
     - whether the Debt Securities are to trade in book-entry form and the terms
       and any conditions for exchanging the global security in whole or in part
       for paper certificates;
 
     - any material provisions of the applicable indenture described in this
       prospectus that do not apply to the Debt Securities;
 
     - any additional amounts with respect to the Debt Securities that CMS
       Energy will pay to a non-United States person because of any tax,
       assessment or governmental charge withheld or deducted and, if so, any
       option of CMS Energy to redeem the Debt Securities rather than paying
       these additional amounts; and
 
     - any other specific terms of the Debt Securities.
 
                                        16

 
CONCERNING THE TRUSTEES
 
     Each of J.P. Morgan Trust Company, N.A, the trustee under the senior debt
indenture, and The Bank of New York, the trustee under the subordinated debt
indenture, is one of a number of banks with which CMS Energy and its
subsidiaries maintain ordinary banking relationships, including credit
facilities.
 
EXCHANGE AND TRANSFER
 
     Debt Securities may be presented for exchange and registered Debt
Securities may be presented for registration of transfer at the offices and
subject to the restrictions set forth therein and in the applicable prospectus
supplement without service charge, but upon payment of any taxes or other
governmental charges due in connection therewith, subject to any limitations
contained in the applicable indenture. Debt Securities in bearer form and the
coupons appertaining thereto, if any, will be transferable by delivery.
 
PAYMENT
 
     Distributions on the Debt Securities in registered form will be made at the
office or agency of the applicable trustee in the Borough of Manhattan, the City
of New York or its other designated office. However, at the option of CMS
Energy, payment of any interest may be made by check or by wire transfer.
Payment of any interest due on Debt Securities in registered form will be made
to the persons in whose name the Debt Securities are registered at the close of
business on the record date for such interest payments. Payments made in any
other manner will be specified in the prospectus supplement.
 
EVENTS OF DEFAULT
 
     Each indenture provides that events of default regarding any series of Debt
Securities will be:
 
     - failure to pay required interest on any Debt Security of such series for
       30 days;
 
     - failure to pay principal other than a scheduled installment payment or
       premium, if any, on any Debt Security of such series when due;
 
     - failure to make any required scheduled installment payment for 30 days on
       Debt Securities of such series;
 
     - failure to perform for 90 days after notice any other covenant in the
       relevant indenture other than a covenant included in the relevant
       indenture solely for the benefit of a series of Debt Securities other
       than such series;
 
     - certain events of bankruptcy or insolvency, whether voluntary or not; or
 
     - entry of final judgments against CMS Energy or Consumers for more than
       $25,000,000 which remain undischarged or unbonded for 60 days or a
       default resulting in the acceleration of indebtedness of CMS Energy or
       Consumers of more than $25,000,000, and the acceleration has not been
       rescinded or annulled within 10 days after written notice of such default
       as provided in the applicable indenture.
 
     Additional events of default may be prescribed for the benefit of the
holders of a particular series of Debt Securities and will be described in the
prospectus supplement relating to those Debt Securities.
 
     If an event of default regarding Debt Securities of any series issued under
the indentures should occur and be continuing, either the trustee or the holders
of 25% in the principal amount of outstanding Debt Securities of such series may
declare each Debt Security of that series due and payable.
 
     Holders of a majority in principal amount of the outstanding Debt
Securities of any series will be entitled to control certain actions of the
trustee under the indentures and to waive past defaults regarding such series.
The trustee generally will not be requested, ordered or directed by any of the
holders of Debt Securities, unless one or more of such holders shall have
offered to the trustee reasonable security or indemnity.
 
                                        17

 
     Before any holder of any series of Debt Securities may institute action for
any remedy, except payment on such holder's Debt Security when due, the holders
of not less than 25% in principal amount of the Debt Securities of that series
outstanding must request the trustee to take action. Holders must also offer and
give the satisfactory security and indemnity against liabilities incurred by the
trustee for taking such action.
 
     CMS Energy is required to annually furnish the relevant trustee a statement
as to CMS Energy's compliance with all conditions and covenants under the
applicable indenture. Each indenture provides that the relevant trustee may
withhold notice to the holders of the Debt Securities of any series of any
default affecting such series, except payment on holders' Debt Securities when
due, if it considers withholding notice to be in the interests of the holders of
the Debt Securities of such series.
 
CONSOLIDATION, MERGER OR SALE OF ASSETS
 
     Each indenture provides that CMS Energy may consolidate with or merge into,
or sell, lease or convey its property as an entirety or substantially as an
entirety to, any other corporation if the new corporation assumes the
obligations of CMS Energy under the Debt Securities and the indentures and is
organized and existing under the laws of the United States of America, any U.S.
state or the District of Columbia.
 
MODIFICATION OF THE INDENTURE
 
     Each indenture permits CMS Energy and the relevant trustee to enter into
supplemental indentures without the consent of the holders of the Debt
Securities to establish the form and terms of any series of securities under the
indentures.
 
     Each indenture also permits CMS Energy and the relevant trustee, with the
consent of the holders of at least a majority in total principal amount of the
Debt Securities of all series then outstanding and affected (voting as one
class), to change in any manner the provisions of the applicable indenture or
modify in any manner the rights of the holders of the Debt Securities of each
such affected series. CMS Energy and the relevant trustee may not, without the
consent of the holder of each Debt Security affected, enter into any
supplemental indenture to:
 
     - change the time of payment of the principal;
 
     - reduce the principal amount of such Debt Security;
 
     - reduce the rate or change the time of payment of interest on such Debt
       Security;
 
     - reduce the amount payable on any securities issued originally at a
       discount upon acceleration or provable in bankruptcy; or
 
     - impair the right to institute suit for the enforcement of any payment on
       any Debt Security when due.
 
     In addition, no such modification may reduce the percentage in principal
amount of the Debt Securities of the affected series, the consent of whose
holders is required for any such modification or for any waiver provided for in
the applicable indenture.
 
     Prior to the acceleration of the maturity of any Debt Security, the
holders, voting as one class, of a majority in total principal amount of the
Debt Securities with respect to which a default or event of default shall have
occurred and be continuing may on behalf of the holders of all such affected
Debt Securities waive any past default or event of default and its consequences,
except a default or an event of default in respect of a covenant or provision of
the applicable indenture or of any Debt Security which cannot be modified or
amended without the consent of the holder of each Debt Security affected.
 
                                        18

 
DEFEASANCE, COVENANT DEFEASANCE AND DISCHARGE
 
     Each indenture provides that, at the option of CMS Energy:
 
     - CMS Energy will be discharged from all obligations in respect of the Debt
       Securities of a particular series then outstanding (except for certain
       obligations to register the transfer of or exchange the Debt Securities
       of such series, to replace stolen, lost or mutilated Debt Securities of
       such series, to maintain paying agencies and to maintain the trust
       described below); or
 
     - CMS Energy need not comply with certain restrictive covenants of the
       relevant indenture (including those described under "Consolidation,
       Merger or Sale of Assets").
 
     If CMS Energy in each case irrevocably deposits in trust with the relevant
trustee money, and/or securities backed by the full faith and credit of the
United States which, through the payment of the principal thereof and the
interest thereon in accordance with their terms, will provide money in an amount
sufficient to pay all the principal and interest on the Debt Securities of such
series on the stated maturities of such Debt Securities in accordance with the
terms thereof.
 
     To exercise this option, CMS Energy is required to deliver to the relevant
trustee an opinion of independent counsel to the effect that:
 
     - the exercise of such option would not cause the holders of the Debt
       Securities of such series to recognize income, gain or loss for United
       States federal income tax purposes as a result of such defeasance, and
       such holders will be subject to United States federal income tax on the
       same amounts, in the same manner and at the same times as would have been
       the case if such defeasance had not occurred; and
 
     - in the case of a discharge as described above, such opinion is to be
       accompanied by a private letter ruling to the same effect received from
       the Internal Revenue Service, a revenue ruling to such effect pertaining
       to a comparable form of transaction published by the Internal Revenue
       Service or appropriate evidence that since the date of the applicable
       indenture there has been a change in the applicable federal income tax
       law.
 
     In the event:
 
     - CMS Energy exercises its option to effect a covenant defeasance with
       respect to the Debt Securities of any series as described above,
 
     - the Debt Securities of such series are thereafter declared due and
       payable because of the occurrence of any event of default other than an
       event of default caused by failing to comply with the covenants which are
       defeased,
 
     - the amount of money and securities on deposit with the relevant trustee
       would be insufficient to pay amounts due on the Debt Securities of such
       series at the time of the acceleration resulting from such event of
       default,
 
     CMS Energy would remain liable for such amounts.
 
GOVERNING LAW
 
     Each indenture and the Debt Securities will be governed by, and construed
in accordance with, the laws of the State of Michigan unless the laws of another
jurisdiction shall mandatorily apply.
 
SENIOR DEBENTURES
 
     The Senior Debentures will be issued under the senior debt indenture and
will rank on an equal basis with all other unsecured debt of CMS Energy except
subordinated debt.
 
                                        19

 
SUBORDINATED DEBENTURES
 
     The Subordinated Debentures will be issued under the subordinated debt
indenture and will rank subordinated and junior in right of payment, to the
extent set forth in the subordinated debt indenture, to all "Senior
Indebtedness" (as defined below) of CMS Energy.
 
     If CMS Energy defaults in the payment of any distributions on any Senior
Indebtedness when it becomes due and payable after any applicable grace period,
then, unless and until the default is cured or waived or ceases to exist, CMS
Energy cannot make a payment on account of or redeem or otherwise acquire the
Subordinated Debentures. The subordinated debt indenture provisions described in
this paragraph, however, do not prevent CMS Energy from making sinking fund
payments in Subordinated Debentures acquired prior to the maturity of Senior
Indebtedness or, in the case of default, prior to such default and notice
thereof. If there is any insolvency, bankruptcy, liquidation or other similar
proceeding relating to CMS Energy, its creditors or its property, then all
Senior Indebtedness must be paid in full before any payment may be made to any
holders of Subordinated Debentures. Holders of Subordinated Debentures must
return and deliver any payments received by them, other than in a plan of
reorganization or through a defeasance trust as described above, directly to the
holders of Senior Indebtedness until all Senior Indebtedness is paid in full.
 
     "Senior Indebtedness" means distributions on the following, whether
outstanding on the date of execution of the subordinated debt indenture or
thereafter incurred, created or assumed:
 
     - indebtedness of CMS Energy for money borrowed by CMS Energy or evidenced
       by debentures (other than the Subordinated Debentures), notes, bankers'
       acceptances or other corporate debt securities or similar instruments
       issued by CMS Energy;
 
     - obligations of CMS Energy with respect to letters of credit;
 
     - all indebtedness of others of the type referred to in the two preceding
       clauses assumed by or guaranteed in any manner by CMS Energy or in effect
       guaranteed by CMS Energy; or
 
     - renewals, extensions or refundings of any of the indebtedness referred to
       in the preceding three clauses unless, in the case of any particular
       indebtedness, renewal, extension or refunding, under the express
       provisions of the instrument creating or evidencing the same or the
       assumption or guarantee of the same, or pursuant to which the same is
       outstanding, such indebtedness or such renewal, extension or refunding
       thereof is not superior in right of payment to the subordinated debt
       securities.
 
     The subordinated debt indenture does not limit the total amount of Senior
Indebtedness that may be issued.
 
CERTAIN COVENANTS
 
     If Debt Securities are issued to a Trust or a trustee of such Trust in
connection with the issuance of Trust Preferred Securities by such Trust, CMS
Energy will covenant that it will not, and it will not cause any of its
subsidiaries to, (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any of
CMS Energy's capital stock or (ii) make any payment of principal, interest or
premium, if any, on or repay or repurchase or redeem any debt securities
(including guarantees of indebtedness for money borrowed) of CMS Energy that
rank pari passu (in the case of Subordinated Debentures) with or junior (in the
case of Senior and Subordinated Debentures) to that Debt Security (other than
(a) any dividend, redemption, liquidation, interest, principal or guarantee
payment by CMS Energy where the payment is made by way of securities (including
capital stock) that rank pari passu with or junior to the securities on which
such dividend, redemption, interest, principal or guarantee payment is being
made, (b) payments under the Guarantees, (c) purchases of CMS Energy Common
Stock related to the issuance of CMS Energy Common Stock under any of CMS
Energy's benefit plans for its directors, officers or employees, (d) as a result
of a reclassification of CMS Energy's capital stock or the exchange or
conversion of one series or class of CMS
 
                                        20

 
Energy's capital stock for another series or class of CMS Energy's capital stock
and (e) the purchase of fractional interests in shares of CMS Energy's capital
stock pursuant to the conversion or exchange provisions of such capital stock or
the security being converted or exchanged) if at such time (i) there shall have
occurred any event of which CMS Energy has actual knowledge that (a) with the
giving of notice or the lapse of time, or both, would constitute an event of
default under the indentures and (b) in respect of which CMS Energy shall not
have taken reasonable steps to cure, (ii) CMS Energy shall be in default with
respect to its payment of any obligations under the Guarantees or (iii) CMS
Energy shall have given notice of its selection of an Extension Period as
provided in the indentures with respect to the Debt Securities and shall not
have rescinded such notice, or such Extension Period, or any extension thereof,
shall be continuing. CMS Energy will also covenant (i) for so long as Trust
Preferred Securities are outstanding, not to convert the Debt Securities except
pursuant to a notice of conversion delivered to the Conversion Agent (as defined
in the indentures) by a holder of Trust Preferred Securities, (ii) to maintain
directly or indirectly 100% ownership of the Common Securities, provided that
certain successor which are permitted pursuant to the indentures may succeed to
CMS Energy's ownership of the Common Securities, (iii) not to voluntarily
terminate, wind-up or liquidate such Trust, except (a) in connection with a
distribution of the Debt Securities to the holders of the Trust Preferred
Securities in liquidation of such Trust or (b) in connection with certain
mergers, consolidations or amalgamations permitted by the Trust Agreement, (iv)
to maintain the reservation for issuance of the number of shares of CMS Energy
Common Stock that would be required from time to time upon the conversion of all
the Debt Securities then outstanding, (v) to use its reasonable efforts,
consistent with the terms and provisions of the Trust Agreement, to cause such
Trust to remain classified as a grantor trust and not as an association taxable
as a corporation for United States federal income tax purposes and (vi) to
deliver shares of CMS Energy Common Stock upon an election by the holders of the
Trust Preferred Securities to convert such Trust Preferred Securities into CMS
Energy Common Stock.
 
     As part of the Guarantees, CMS Energy will agree that it will honor all
obligations described therein relating to the conversion or exchange of the
Trust Preferred Securities into or for CMS Energy Common Stock, Senior
Debentures or Subordinated Debentures.
 
CONVERSION RIGHTS
 
     If the prospectus supplement provides, the Holders of Debt Securities may
convert such Debt Securities into CMS Energy Common Stock, as defined herein
(see "Description of Securities -- Common Stock"), at the option of the Holders
at the principal amount thereof, or of such portion thereof, at any time during
the period specified in the prospectus supplement, at the conversion price or
conversion rate specified in the prospectus supplement; except that, with
respect to any Debt Securities (or portion thereof) called for redemption, such
conversion right shall terminate at the close of business on the fifteenth day
prior to the date fixed for redemption of such Debt Security, unless CMS Energy
shall default in payment of the amount due upon redemption thereof.
 
     The conversion privilege and conversion price or conversion rate will be
adjusted in certain events, including if CMS Energy:
 
     - pays a dividend or makes a distribution in shares of CMS Energy Common
       Stock;
 
     - subdivides its outstanding shares of CMS Energy Common Stock into a
       greater number of shares;
 
     - combines its outstanding shares of CMS Energy Common Stock into a smaller
       number of shares;
 
     - pays a dividend or makes a distribution on its CMS Energy Common Stock
       other than in shares of its CMS Energy Common Stock;
 
     - issues by reclassification of its shares of CMS Energy Common Stock any
       shares of its capital stock;
 
     - issues any rights or warrants to all holders of shares of its CMS Energy
       Common Stock entitling them (for a period expiring within 45 days, or
       such other period as may be specified in the
 
                                        21

 
       prospectus supplement) to purchase shares of CMS Energy Common Stock (or
       Convertible Securities as defined in the indentures) at a price per share
       less than the Average Market Price (as defined in the indentures) per
       share for such CMS Energy Common Stock; or
 
     - distributes to all holders of shares of its CMS Energy Common Stock any
       assets or Debt Securities or any rights or warrants to purchase
       securities, provided that no adjustment shall be made under the last two
       bullet points above if the adjusted conversion price would be higher
       than, or the adjusted conversion rate would be less than, the conversion
       price or conversion rate, as the case may be, in effect prior to such
       adjustment.
 
     CMS Energy may reduce the conversion price or increase the conversion rate,
temporarily or otherwise, by any amount but in no event shall such adjusted
conversion price or conversion rate result in shares of CMS Energy Common Stock
being issuable upon conversion of the Debt Securities if converted at the time
of such adjustment at an effective conversion price per share less than the par
value of the CMS Energy Common Stock at the time such adjustment is made. No
adjustments in the conversion price or conversion rate need be made unless the
adjustment would require an increase or decrease of at least one percent (1%) in
the initial conversion price or conversion rate. Any adjustment which is not
made shall be carried forward and taken into account in any subsequent
adjustment. The foregoing conversion provisions may be modified to the extent
set forth in the prospectus supplement.
 
TRUST PREFERRED SECURITIES
 
  GENERAL
 
     Each Trust may issue, from time to time, Trust Preferred Securities having
terms described in the applicable prospectus supplement. The Trust Agreement of
each Trust will authorize the establishment of no more than one series of Trust
Preferred Securities, having such terms, including distributions, redemption,
voting, liquidation rights and such other preferred, deferred or other special
rights or such rights or restrictions as shall be set forth therein or otherwise
established by the relevant Trust Trustees. Reference is made to the prospectus
supplement relating to the Trust Preferred Securities for specific terms,
including:
 
     - the distinctive designation and the number of Trust Preferred Securities
       to be offered which will represent undivided beneficial interests in the
       assets of the Trust;
 
     - the annual distribution rate and the dates or date upon which such
       distributions will be paid, provided, however distributions on the Trust
       Preferred Securities will be paid quarterly in arrears to holders of
       Trust Preferred Securities as of a record date on which the Trust
       Preferred Securities are outstanding;
 
     - whether holders' can convert the Trust Preferred Securities into shares
       of CMS Energy Common Stock;
 
     - whether distributions on Trust Preferred Securities would be deferred
       during any deferral of interest payments on the Debt Securities,
       provided, however that no such deferral, including extensions, if any,
       may exceed 20 consecutive quarters nor extend beyond the stated maturity
       date of the Debt Securities, and at the end of any such deferrals, CMS
       Energy shall make all interest payments then accrued or deferred and
       unpaid (including any compounded interest);
 
     - the amount of any liquidation preference;
 
     - the obligation, if any, of the Trust to redeem Trust Preferred Securities
       through the exercise of CMS Energy of an option on the corresponding Debt
       Securities and the price or prices at which, the period or periods within
       which and the terms and conditions upon which Trust Preferred Securities
       shall be purchased or redeemed, in whole or in part, pursuant to such
       obligation;
 
     - the period or periods within which and the terms and conditions, if any,
       including the price or prices or the rate or rates of conversion or
       exchange and the terms and conditions of any
 
                                        22

 
       adjustments thereof, upon which the Trust Preferred Securities shall be
       convertible or exchangeable at the option of the holder of the Trust
       Preferred Securities or other property or cash;
 
     - the voting rights, if any, of the Trust Preferred Securities in addition
       to those required by law and in the Trust Agreement, or set forth under a
       Guarantee (as defined below);
 
     - the additional payments, if any, which the Trust will pay as a
       distribution as necessary so that the net amounts reserved by the Trust
       and distributable to the holders of the Trust Preferred Securities, after
       all taxes, duties, assessments or governmental charges of whatever nature
       (other than withholding taxes) have been paid will not be less than the
       amount that would have been reserved and distributed by the Trust, and
       the amount the holders of the Trust Preferred Securities would have
       reserved, had no such taxes, duties, assessments or governmental charges
       been imposed;
 
     - the terms and conditions, if any, upon which the Debt Securities may be
       distributed to holders of Trust Preferred Securities; and
 
     - any other relative rights, powers, preferences, privileges, limitations
       or restrictions of the Trust Preferred Securities not inconsistent with
       the Trust Agreement or applicable law. All Trust Preferred Securities
       offered hereby will be irrevocably guaranteed by CMS Energy, on a senior
       or subordinated basis, as applicable, and to the extent set forth below
       under "The Guarantees." Any applicable federal income tax considerations
       applicable to any offering of the Trust Preferred Securities will be
       described in the prospectus supplement relating thereto. The aggregate
       number of Trust Preferred Securities which the Trust shall have authority
       to issue will be pursuant to the terms of the Trust Agreement.
 
                EFFECT OF OBLIGATIONS UNDER THE DEBT SECURITIES
                               AND THE GUARANTEES
 
     As set forth in the Trust Agreement, the sole purpose of the Trust is to
issue the Trust Securities evidencing undivided beneficial interests in the
assets of each of the Trusts, and to invest the proceeds from such issuance and
sale to acquire directly the Debt Securities from CMS Energy.
 
     As long as payments of interest and other payments are made when due on the
Debt Securities, such payments will be sufficient to cover distributions and
payments due on the Trust Securities because of the following factors:
 
     - the aggregate principal amount of Debt Securities will be equal to the
       sums of the aggregate stated liquidation amount of the Trust Securities;
 
     - the interest rate and the interest and other payment dates on the Debt
       Securities will match the distribution rate and distribution and other
       payment dates for the Trust Securities;
 
     - CMS Energy shall pay all, and the Trust shall not be obligated to pay,
       directly or indirectly, all costs, expenses, debt and obligations of the
       Trust (other than with respect to the Trust Securities); and
 
     - the Trust Agreement further provides that CMS Energy Trustees shall not
       take or cause or permit the Trust to, among other things, engage in any
       activity that is not consistent with the purposes of the Trust.
 
     Payments of distributions (to the extent funds therefore are available) and
other payments due on the Trust Preferred Securities (to the extent funds
therefor are available) are guaranteed by CMS Energy as and to the extent set
forth under "The Guarantees" below. If CMS Energy does not make interest
payments on the Debt Securities purchased by the Trust, it is expected that the
Trust will not have sufficient funds to pay distributions on the Trust Preferred
Securities. The Guarantees do not apply to any payment of distributions unless
and until the Trust has sufficient funds for the payment of distributions and
other payments on the Trust Preferred Securities only if and to the extent that
CMS Energy has made a payment of interest or principal on the Debt Securities
held by the Trust as its sole asset. The Guarantees,
                                        23

 
when taken together with CMS Energy's obligations under the Debt Securities and
the Indenture and its obligations under the Trust Agreement, including its
obligations to pay costs, expenses, debts and liabilities of the Trust (other
than with respect to the Trust securities), provide a full and unconditional
guarantee of amounts on the Trust Preferred Securities.
 
     If CMS Energy fails to make interest or other payments on the Debt
Securities when due (taking account of any extension period), the Trust
Agreement provides a mechanism whereby the holders of the Trust Preferred
Securities may direct a Property Trustee to enforce its rights under the Debt
Securities. If a Property Trustee fails to enforce its rights under the Debt
Securities, a holder of Trust Preferred Securities may institute a legal
proceeding against CMS Energy to enforce a Property Trustee's rights under the
Debt Securities without first instituting any legal proceeding against a
Property Trustee or any other person or entity. Notwithstanding the foregoing,
if an event of default has occurred and is continuing under the Trust Agreement,
and such event is attributable to the failure of CMS Energy to pay interest or
principal on the Debt Securities on the date such interest or principal is
otherwise payable (or in the case of redemption on the redemption date), then a
holder of Trust Preferred Securities may institute legal proceedings directly
against CMS Energy to obtain payment. If CMS Energy fails to make payments under
the Guarantees, the Guarantees provide a mechanism whereby the holders of the
Trust Preferred Securities may direct a Guarantee Trustee to enforce its rights
thereunder. Any holder of Trust Preferred Securities may institute a legal
proceeding directly against CMS Energy to enforce a Guarantee Trustee's rights
under a Guarantee without first instituting a legal proceeding against the
Trust, the Guarantee Trustee, or any other person or entity.
 
THE GUARANTEES
 
     Set forth below is a summary of information concerning the Guarantees which
will be executed and delivered by CMS Energy for the benefit of the holders,
from time to time, of the Trust Preferred Securities. Each Guarantee will be
qualified as an indenture under the Trust Indenture Act of 1939. Either The Bank
of New York, or J.P. Morgan Trust Company, N.A, each an independent trustee,
will act as indenture trustee under the Guarantees for the purpose of compliance
with the provisions of the Trust Indenture Act of 1939. This summary does not
purport to be complete and is subject in all respects to the provisions of, and
is qualified in its entirety by reference to, the Guarantees, which is filed as
an exhibit to the Registration Statement of which this prospectus forms a part.
 
GENERAL
 
     CMS Energy will irrevocably agree to pay in full, on a senior or
subordinated basis, as applicable, to the extent set forth herein, the Guarantee
Payments (as defined below) to the holders of the Trust Preferred Securities, as
and when due, regardless of any defense, right of set-off or counterclaim that
the Trust may have or assert other than the defense of payment. The following
payments with respect to the Trust Preferred Securities, to the extent not paid
by or on behalf of the Trust (the "Guarantee Payments"), will be subject to a
Guarantee: (i) any accumulated and unpaid distributions required to be paid on
the Trust Preferred Securities, to the extent that the Trust has funds on hand
available therefor at such time; (ii) the redemption price with respect to any
Trust Preferred Securities called for redemption to the extent that the Trust
has funds on hand available therefor at such time; or (iii) upon a voluntary or
involuntary dissolution, winding up or liquidation of the Trust (unless the Debt
Securities are distributed to holders of the Trust Preferred Securities), the
lesser of (a) the liquidation distribution, to the extent that the Trust has
funds on hand available therefor at such time, and (b) the amount of assets of
the Trust remaining available for distribution to holders of Trust Preferred
Securities. CMS Energy's obligation to make a Guarantee Payment may be satisfied
by direct payment of the required amounts of CMS Energy to the holders of the
Trust Preferred Securities or by causing the Trust to pay such amount to such
holders.
 
     Such Guarantees will be irrevocable guarantees, on a senior or subordinated
basis, as applicable, of the Trust's obligations under the Trust Preferred
Securities, but will apply only to the extent that the Trust has funds
sufficient to make such payments, and are not guarantees of collection. If CMS
Energy does not
                                        24

 
make interest payments on the Debt Securities held by the Trust, the Trust will
not be able to pay distributions on the Trust Preferred Securities and will not
have funds legally available therefor.
 
     CMS Energy has, through the Guarantees, the Trust Agreements, the Senior
Debentures, the Subordinated Debentures, the indentures and the Expense
Agreement, taken together, fully, irrevocably and unconditionally guaranteed all
of the Trust's obligations under the Trust Preferred Securities. No single
document standing alone or operating in conjunction with fewer than all of the
other documents constitutes such guarantee. It is only the combined operation of
these documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the Trust's obligations under the Trust Preferred
Securities.
 
     CMS Energy has also agreed separately to irrevocably and unconditionally
guarantee the obligations of the Trust with respect to the Common Securities to
the same extent as the Guarantees, except that upon the occurrence and during
the continuation of a Trust Agreement Event of Default, holders of Trust
Preferred Securities shall have priority over holders of Common Securities with
respect to distributions and payments on liquidation, redemption or otherwise.
 
CERTAIN COVENANTS OF CMS ENERGY
 
     CMS Energy will covenant in each Guarantee that if and so long as (i) the
Trust is the holder of all the Debt Securities, (ii) a Tax Event (as defined in
the Guarantee) in respect of the Trust has occurred and is continuing and (iii)
CMS Energy has elected, and has not revoked such election, to pay Additional
Sums (as defined in the Guarantee) in respect of the Trust Preferred Securities
and Common Securities, CMS Energy will pay to the Trust such Additional Sums.
CMS Energy will also covenant that it will not, and it will not cause any of its
subsidiaries to (i) declare or pay any dividends or distributions on, or redeem,
purchase, acquire, or make a liquidation payment with respect to, any of CMS
Energy's capital stock or (ii) make any payment of principal, interest or
premium, if any, on or repay or repurchase or redeem any debt securities
(including guarantees of indebtedness for money borrowed) of CMS Energy that
rank pari passu (in the case of Subordinated Debentures with or junior in the
case of the Senior and Subordinated Debentures) to the Debt Securities (other
than (a) any dividend, redemption, liquidation, interest, principal or guarantee
payment by CMS Energy where the payment is made by way of securities (including
capital stock) that rank pari passu with or junior to the securities on which
such dividend, redemption, interest, principal or guarantee payment is being
made, (b) payments under the Guarantees, (c) purchases of CMS Energy Common
Stock related to the issuance of CMS Energy Common Stock under any of CMS
Energy's benefit plans for its directors, officers or employees, (d) as a result
of a reclassification of CMS Energy's capital stock or the exchange or
conversion of one series or class of CMS Energy's capital stock for another
series or class of CMS Energy's capital stock and (e) the purchase of fractional
interests in shares of CMS Energy's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged) if at such time (i) there shall have occurred any event of which CMS
Energy has actual knowledge that (a) with the giving of notice or the lapse of
time, or both, would constitute an event of default and (b) in respect of which
CMS Energy shall not have taken reasonable steps to cure, (ii) CMS Energy shall
be in default with respect to its payment of any obligations under the Guarantee
or (iii) CMS Energy shall have given notice of its selection of an Extension
Period as provided in the indentures with respect to the Debt Securities and
shall not have rescinded such notice, or such Extension Period, or any extension
thereof, shall be continuing. CMS Energy also will covenant to (i) for so long
as Trust Preferred Securities are outstanding, not convert Debt Securities
except pursuant to a notice of conversion delivered to the Conversion Agent by a
holder of Trust Preferred Securities, (ii) maintain directly or indirectly 100%
ownership of the Common Securities, provided that certain successors which are
permitted pursuant to the indentures may succeed to CMS Energy's ownership of
the Common Securities, (iii) not voluntarily terminate, wind-up or liquidate the
Trust, except (a) in connection with a distribution of the Debt Securities to
the holders of the Trust Preferred Securities in liquidation of the Trust or (b)
in connection with certain mergers, consolidations or amalgamations permitted by
the Trust Agreement, (iv) maintain the reservation for issuance of the number of
shares of CMS Energy Common Stock that would be required from time to time upon
the
 
                                        25

 
conversion of all the Debt Securities then outstanding, (v) use its reasonable
efforts, consistent with the terms and provisions of the Trust Agreement, to
cause the Trust to remain classified as a grantor trust and not as an
association taxable as a corporation for United States federal income tax
purposes and (vi) deliver shares of CMS Energy Commo n Stock upon an election by
the holders of the Trust Preferred Securities to convert such Trust Preferred
Securities into CMS Energy Common Stock.
 
     As part of the Guarantees, CMS Energy will agree that it will honor all
obligations described therein relating to the conversion or exchange of the
Trust Preferred Securities into or for CMS Energy Common Stock, Senior
Debentures or Subordinated Debentures.
 
AMENDMENTS AND ASSIGNMENT
 
     Except with respect to any changes which do not materially adversely affect
the rights of holders of the Trust Preferred Securities (in which case no vote
will be required), the Guarantees may not be amended without the prior approval
of the holders of not less than a majority in aggregate liquidation amount of
such outstanding Trust Preferred Securities. All guarantees and agreements
contained in the Guarantees shall bind the successors, assigns, receivers,
trustees and representatives of CMS Energy and shall inure to the benefit of the
holders of the Trust Preferred Securities then outstanding.
 
TERMINATION OF THE GUARANTEES
 
     The Guarantees will terminate and be of no further force and effect upon
full payment of the redemption price of the Trust Preferred Securities, upon
full payment of the amounts payable upon liquidation of the Trust, upon the
distribution, if any, of CMS Energy Common Stock to the holders of Trust
Preferred Securities in respect of the conversion of all such holders' Trust
Preferred Securities into CMS Energy Common Stock or upon distribution of the
Debt Securities to the holders of the Trust Preferred Securities in exchange for
all of the Trust Preferred Securities. The Guarantees will continue to be
effective or will be reinstated, as the case may be, if at any time any holder
of Trust Preferred Securities must restore payment of any sums paid under such
Trust Preferred Securities or the Guarantees.
 
EVENTS OF DEFAULT
 
     An event of default under a Guarantee will occur upon the failure of CMS
Energy to perform any of its payment or other obligations thereunder. The
holders of a majority in aggregate liquidation amount of the Trust Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to a Guarantee Trustee in respect of a
Guarantee or to direct the exercise of any trust or power conferred upon a
Guarantee Trustee under the Guarantees.
 
     If a Guarantee Trustee fails to enforce a Guarantee, any holder of the
Trust Preferred Securities may institute a legal proceeding directly against CMS
Energy to enforce its rights under such Guarantee without first instituting a
legal proceeding against the Trust, the Guarantee Trustee or any other person or
entity. In addition, any record holder of Trust Preferred Securities shall have
the right, which is absolute and unconditional, to proceed directly against CMS
 
     Energy to obtain Guarantee Payments, without first waiting to determine if
the Guarantee Trustee has enforced a Guarantee or instituting a legal proceeding
against the Trust, the Guarantee Trustee or any other person or entity. CMS
Energy has waived any right or remedy to require that any action be brought just
against the Trust, or any other person or entity before proceeding directly
against CMS Energy.
 
     CMS Energy, as guarantor, is required to file annually with each Guarantee
Trustee a certificate as to whether or not CMS Energy is in compliance with all
the conditions and covenants applicable to it under the Guarantees.
 
                                        26

 
STATUS OF THE GUARANTEES
 
     The Guarantees will constitute unsecured obligations of CMS Energy and will
rank equal to or subordinate and junior in right of payment to all other
liabilities of CMS Energy, as applicable. The Guarantees will rank pari passu
with or senior to, as applicable, any guarantee now or hereafter entered into by
CMS Energy in respect of any preferred or preference stock of any affiliate of
CMS Energy.
 
     The Guarantees will constitute a guarantee of payment and not of collection
which means that the guaranteed party may institute a legal proceeding directly
against the Guarantor to enforce its rights under the Guarantee without first
instituting a legal proceeding against any other person or entity. The
Guarantees will be held for the benefit of the holders of the Trust Preferred
Securities. The Guarantees will not be discharged except by payment of the
Guarantee Payments in full to the extent not paid by the Trust or upon
distribution of the Debt Securities to the holders of the Trust Preferred
Securities. The Guarantees do not place a limitation on the amount of additional
indebtedness that may be incurred by CMS Energy or any of its subsidiaries.
 
DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS
 
     CMS Energy may issue Stock Purchase Contracts, representing contracts
obligating holders to purchase from CMS Energy, and CMS Energy to sell to the
holders, a specified number of shares of CMS Energy Common Stock at a future
date or dates. The price per share of CMS Energy Common Stock may be fixed at
the time the Stock Purchase Contracts are issued or may be determined by
reference to a specific formula set forth in the Stock Purchase Contracts. The
Stock Purchase Contracts may be issued separately or as part of Stock Purchase
Units consisting of a Stock Purchase Contract and Senior Debentures,
Subordinated Debentures, Trust Preferred Securities or debt obligations of third
parties, including U.S. Treasury securities, securing the holders' obligations
to purchase the Common Stock under the Stock Purchase Contracts. The Stock
Purchase Contracts may require CMS Energy to make periodic payments to the
holders of the Stock Purchase Units or visa versa, and such payments may be
unsecured or refunded on some basis. The Stock Purchase Contracts may require
holders to secure their obligations thereunder in a specified manner.
 
     The applicable prospectus supplement will describe the terms of any Stock
Purchase Contracts or Stock Purchase Units. The description in the prospectus
supplement will not purport to be complete and will be qualified in its entirety
by reference to the Stock Purchase Contracts, and, if applicable, collateral
arrangements and depositary arrangements, relating to such Stock Purchase
Contracts or Stock Purchase Units.
 
                              PLAN OF DISTRIBUTION
 
     CMS Energy and/or the Trusts may sell the Offered Securities: (i) through
the solicitation of proposals of underwriters or dealers to purchase the Offered
Securities; (ii) through underwriters or dealers on a negotiated basis; (iii)
directly to a limited number of purchasers or to a single purchaser; or (iv)
through agents. The prospectus supplement with respect to any Offered Securities
will set forth the terms of such offering, including the name or names of any
underwriters, dealers or agents; the purchase price of the Offered Securities
and the proceeds to CMS Energy and/or the Trust from such sale; any underwriting
discounts and commissions and other items constituting underwriters'
compensation; any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers and any securities exchange on which
such Offered Securities may be listed. Any initial public offering price,
discounts or concessions allowed or reallowed or paid to dealers may be changed
from time to time.
 
     If underwriters are used in the sale, the Offered Securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
The Offered Securities may be offered to the public either through underwriting
syndicates represented by one or more managing underwriters or directly by one
or more firms acting as underwriters. The underwriter or
 
                                        27

 
underwriters with respect to a particular underwritten offering of Offered
Securities will be named in the prospectus supplement relating to such offering
and, if an underwriting syndicate is used, the managing underwriter or
underwriters will be set forth on the cover of such prospectus supplement.
Unless otherwise set forth in the prospectus supplement relating thereto, the
obligations of the underwriters to purchase the Offered Securities will be
subject to certain conditions precedent, and the underwriters will be obligated
to purchase all the Offered Securities if any are purchased.
 
     CMS Energy and/or the Trusts may sell Offered Securities to dealers as
principals. The dealers may then resell such Offered Securities to the public at
varying prices to be determined by such dealers at the time of resale. The names
of the dealers and the terms of the transaction will be set forth in the
prospectus supplement relating thereto.
 
     The Offered Securities may be sold directly by CMS Energy and/or the Trusts
to institutional investors or others, who may be deemed to be underwriters
within the meaning of the Securities Act with respect to any resale thereof. The
terms of any such sales will be described in the prospectus supplement relating
thereto.
 
     The CMS Energy Common Stock may be offered other than through the
facilities of a national securities exchange and other than to or through a
market maker other than on an exchange.
 
     Agents, dealers and underwriters may be entitled under agreements with CMS
Energy and/or the Trusts to indemnification by CMS Energy and/or the Trusts
against certain civil liabilities, including liabilities under the Securities
Act, or to contribution with respect to payments which such agents, dealers or
underwriters may be required to make in respect thereof. Agents, dealers and
underwriters may be customers of, engage in transactions with, or perform
services for CMS Energy and/or the Trusts in the ordinary course of business.
 
     The Offered Securities may also be offered and sold, if so indicated in the
applicable prospectus supplement, in connection with a remarketing upon their
purchase, in accordance with a redemption or repayment pursuant to their terms,
or otherwise, by one or more firms ("remarketing firms"), acting as principals
for their own accounts or as agents for CMS Energy and/or the Trusts. Any
remarketing firm will be identified and the terms of its agreement, if any, with
its compensation will be described in the applicable prospectus supplement.
Remarketing firms may be deemed to be underwriters, as such term is defined in
the Securities Act, in connection with the Offered Securities remarketed
thereby. Remarketing firms may be entitled under agreements which may be entered
into with CMS Energy and/or the Trusts to indemnification or contribution by CMS
Energy and/or the Trusts against certain civil liabilities, including
liabilities under the Securities Act, and may be customers of, engage in
transactions or perform services for CMS Energy and its subsidiaries in the
ordinary course of business.
 
     The Offered Securities may or may not be listed on a national securities
exchange. Reference is made to the prospectus supplement with regard to such
matter. No assurance can be given that there will be a market for any of the
Offered Securities.
 
     We may engage J.P. Morgan Securities Inc. ("JPMS") or Brinson Patrick
Securities Corporation ("Brinson") (JPMS and Brinson collectively, the "Agents")
to act as agent or principal for offerings from time to time of shares of CMS
Energy Common Stock in one or more placements pursuant to the terms of a
distribution agreement between us and either JPMS or Brinson. The terms of sales
to or through the Agents pursuant to a distribution agreement will be set out in
more detail in a prospectus supplement to this prospectus. When acting as agent,
the Agents will use commercially reasonable efforts to sell the shares pursuant
to the terms agreed to with us, including the number of shares to be offered in
the placement and any minimum price below which sales may not be made. The
Agents, in their capacity as agent or principal, could arrange for or make sales
in privately negotiated transactions, at the market in the existing trading
market for CMS Energy Common Stock, including sales made to or through a market
maker or through an electronic communications network, or in any other manner
that may be deemed to be an "at-the-market offering" as defined in Rule 415
promulgated under the Securities Act and/or any other method permitted by law.
 
                                        28

 
     CMS Energy Common Stock sold through the Agents in any at-the-market
offerings will be sold at prices related to the prevailing market price for such
securities, and therefore exact figures regarding proceeds which will be raised
or commissions to be paid are impossible to determine. We will report at least
quarterly the number of shares of CMS Energy Common Stock sold to or through the
Agents in at-the-market offerings, the net proceeds to us and the compensation
paid by us to the Agents in connection with such sales of CMS Energy Common
Stock. Pursuant to the terms of a distribution agreement with the Agents or any
other distribution agreement we may enter into, we also may agree to sell, and
the relevant underwriters or agents may agree to solicit offers to purchase,
blocks of CMS Energy Common Stock or other securities. The total number of
shares that we may sell in at-the-market offerings will be disclosed in a
prospectus supplement to this prospectus.
 
     In connection with the offering of the securities, certain underwriters and
selling group members and their respective affiliates, may engage in
transactions that stabilize, maintain or otherwise affect the market price of
the applicable securities. These transactions may include stabilization
transactions effected in accordance with Rule 104 of Regulation M promulgated by
the SEC pursuant to which these persons may bid for or purchase securities for
the purpose of stabilizing their market price.
 
     If indicated in the applicable prospectus supplement, we will authorize
underwriters, dealers or agents to solicit offers by institutional investors to
purchase securities from us pursuant to contracts providing for payment and
delivery at a future date. In all cases, these purchasers must be approved by
us. Unless otherwise set forth in the applicable prospectus supplement, the
obligations of any purchaser under any of these contracts will not be subject to
any conditions, except that the purchase of the securities must not at the time
of delivery be prohibited under the laws of any jurisdiction to which that
purchaser is subject and if securities also are being sold to underwriters, we
must have sold to these underwriters the securities not subject to delayed
delivery. Underwriters and other agents will not have any responsibility in
respect of the validity or performance of these contracts.
 
     Under the securities laws of some states, the securities registered by the
registration statement that includes this prospectus may be sold in those states
only through registered or licensed brokers or dealers. Any person participating
in the distribution of the securities registered under the registration
statement that includes this prospectus will be subject to applicable provisions
of the Securities Exchange Act of 1934, and the applicable rules and regulations
of the SEC, including, among others, Regulation M noted above, which may limit
the timing of purchases and sales of any of the securities by any such person.
Furthermore, Regulation M may restrict the ability of any person engaged in the
distribution of the securities to engage in market-making activities with
respect to the securities. These restrictions may affect the marketability of
the securities and the ability of any person or entity to engage in
market-making activities with respect to the securities.
 
     We may enter into derivative transactions with third parties, or sell
securities not covered by this prospectus to third parties in privately
negotiated transactions. If the applicable prospectus supplement indicates, in
connection with those derivatives, the third parties may sell securities covered
by this prospectus and the applicable prospectus supplement, including in short
sale transactions. If so, the third parties may use securities pledged by us or
borrowed from us or others to settle those sales or to close out any related
open borrowings of stock, and may use securities received from us in settlement
of those derivatives to close out any related open borrowings of stock. The
third parties in such sale transactions will be underwriters and, if not
identified in this prospectus, will be identified in the applicable prospectus
supplement (or a post-effective amendment).
 
     We or one of our affiliates may loan or pledge securities to a financial
institution or other third party that in turn may sell the securities using this
prospectus. Such financial institution or third party may transfer its short
position to investors in our securities or in connection with a simultaneous
offering of other securities offered by this prospectus or otherwise.
 
                                        29

 
                                 LEGAL OPINIONS
 
     Opinions as to the legality of certain of the Offered Securities will be
rendered for CMS Energy by Robert C. Shrosbree, Esq., Assistant General Counsel
for CMS Energy. Certain matters of Delaware law relating to the validity of the
Trust Preferred Securities will be passed upon on behalf of the Trusts by
Skadden, Arps, Slate, Meagher & Flom LLP, special Delaware counsel to the
Trusts. Certain United States Federal income taxation matters may be passed upon
for CMS Energy and the Trust by either Theodore Vogel, tax counsel for CMS
Energy, or by special tax counsel to CMS Energy and of the Trust, who will be
named in the prospectus supplement. Certain legal matters with respect to
Offered Securities will be passed upon by counsel for any underwriters, dealers
or agents, each of whom will be named in the related prospectus supplement.
 
                                    EXPERTS
 
     The consolidated financial statements and schedule of CMS Energy appearing
in its Annual Report (Form 10-K/A) for the year ended December 31, 2003, have
been audited by Ernst & Young LLP, independent registered public accounting
firm, as set forth in their report thereon included therein and incorporated
herein by reference which are based in part on the reports of Price Waterhouse,
independent accountants, for Jorf Lasfar and the reports of
PricewaterhouseCoopers LLP, independent registered public accounting firm, for
2003 and 2002 and Arthur Andersen LLP, (who have ceased operations) for 2001 for
the MCV Partnership. Such consolidated financial statements and schedule are
incorporated herein by reference in reliance upon such reports given on the
authority of such firms as experts in accounting and auditing.
 
     The financial statements of Emirates CMS Power Company PJSC appearing in
CMS's Annual Report (Form 10-K/A) for the year ended December 31, 2003, have
been audited by Ernst & Young, independent registered public accounting firm, as
set forth in their report thereon included therein and incorporated herein by
reference. Such financial statements are incorporated herein by reference in
reliance upon such report given on the authority of such firm as experts in
accounting and auditing.
 
     The financial statements of Jorf Lasfar as of December 31, 2003 and 2002
and for each of the three years in the period ended December 31, 2003
incorporated by reference in this prospectus and registration statement have
been so included in reliance on the report of Price Waterhouse, independent
accountants for Jorf Lasfar, given on the authority of said firm as experts in
auditing and accounting.
 
     The consolidated financial statements of the MCV Partnership as of and for
the years ended December 31, 2003 and 2002 incorporated by reference in this
prospectus and registration statement have been so included in reliance on the
report of PricewaterhouseCoopers LLP, independent registered public accounting
firm, given on the authority of said firm as experts in auditing and accounting.
 
     The audited consolidated financial statements of the MCV Partnership for
the year ended December 31, 2001, incorporated by reference in this prospectus
and registration statement, have been audited by Arthur Andersen LLP,
independent accountants. Arthur Andersen LLP has not consented to the inclusion
of their report on the financial statements of the MCV Partnership for the year
ended December 31, 2001 in this prospectus, and we have dispensed with the
requirement to file their consent in reliance upon Rule 437a of the Securities
Act of 1933. Because Arthur Andersen LLP has not consented to the incorporation
by reference of their report in this prospectus, you will not be able to recover
against Arthur Andersen LLP under Section 11 of the Securities Act of 1933 for
any untrue statements of a material fact contained in the financial statements
audited by Arthur Andersen LLP or any omissions to state a material fact
required to be stated therein.
 
                                        30

 
                                            Shares
 
                             CMS ENERGY CORPORATION
                                  COMMON STOCK
 
                                   (CMS LOGO)
 
                            ------------------------
 
                             PROSPECTUS SUPPLEMENT
 
                                MARCH    , 2005
 
                           -------------------------
 
                          Joint Book-Running Managers
 
                                   CITIGROUP
                                    JPMORGAN
                            DEUTSCHE BANK SECURITIES
                              WACHOVIA SECURITIES
 
                                  Co-Managers
 
                              GOLDMAN, SACHS & CO.
                            KEYBANC CAPITAL MARKETS
                             WELLS FARGO SECURITIES