Moody’s drops rating outlook of CMS Energy Corp. to stable

New York, May 16, 2002 — Moody’s Investors Service has revised the ratings outlook for CMS Energy Corporation (sr. unsecured Ba3) to stable from positive after the energy company admitted it had been involved in “round-trip” energy trades with Reliant and Dynegy.

This action follows the company’s announcement that its energy marketing unit, CMS-Marketing, Services and Trading (CMS-MST), had engaged in “round trip” electricity trades with both Reliant Energy Services, Inc. and Dynegy Power Marketing, Inc. involving the simultaneous purchases and sales at the same price in order to boost overall trading volumes. As these trades had no margin associated with them, the trades did not impact on the company’s earnings, cash flow, or financial condition.

While the contribution from CMS-MST to CMS Energy’s operating net income is expected to be less than 15% in 2002, event risks associated with an ongoing Securities and Exchange Commission investigation and the increased risk associated with potential litigation make it highly improbable that an upgrade in the company’s rating will occur in light of these current circumstances. It is Moody’s intention to reevaluate the company’s rating outlook when the current situation clarifies itself.

CMS Energy Corporation, headquartered in Dearborn, Michigan, has annual sales of $10 billion and assets of $16 billion throughout the U.S. and in selected foreign markets. CMS-MST is an energy marketing, services and trading company focused principally on regional natural gas and electricity markets.


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