CONSUMERS ENERGY CO — Notice of Amendment

120190014M_Closure Letter_08132020_text.pdf, page 1Official PDFOVERNIGHT EXPRESS DELIVERY August 13, 2020 Mr. Gregory Salisbury Vice President, Gas Engineering and Supply Consumers Energy Co. 1945 W. Parnall Road Jackson, MI 49201 CPF 1-2019-0014M Dear Mr. Salisbury: From May 7-9, 2019, a representative of the Pipeline and Hazardous Materials Safety Administration (PHMSA), pursuant to Chapter 601 of 49 United States Code (U.S.C.) inspected Consumers Energy Co.’s (Consumers) procedures for Underground Natural Gas Storage in Jackson, Michigan. As a result of the inspection, Consumers was issued a Notice of Amendment on November 7, 2019, which proposed amendment of your procedures. Consumers submitted its amended procedures on December 6, 2019, January 22,, 2020, March 31, 2020, with the final amendment provided on July 6th, 2020. My staff reviewed the amended procedures, and it appears that the inadequacies outlined in this Notice of Amendment have been corrected. This letter is to inform you no further action is necessary and this case is now closed. Thank you for your cooperation. Sincerely, Robert Burrough Director, Eastern Region Pipeline and Hazardous Materials Safety Administration#

120190014M_Notice of Amendment_11072019_text.pdf, page 1Official PDFNOTICE OF AMENDMENT OVERNIGHT EXPRESS DELIVERY November 7, 2019 Ms. Mary Polkovich VP Energy Delivery Consumers Energy Co. 1945 W. Parnall Road Jackson, MI 49201 CPF 1-2019-0014M Dear Ms. Polkovich: From May 7-9, 2019, a representative of the Pipeline and Hazardous Materials Safety Administration (PHMSA), pursuant to Chapter 601 of 49 United States Code (U.S.C.), inspected Consumers Energy Co’s (Consumers) procedures for Underground Natural Gas Storage in Jackson, Michigan. On the basis of the inspection, PHMSA has identified the apparent inadequacies found within Consumers’ plans or procedures, as described below: 1. § 192.12 Underground natural gas storage facilities. (a) …. (e) Operators of underground gas storage facilities must establish and follow written procedures for operations, maintenance, and emergencies implementing the requirements of API RP 1170 and API RP 1171, as required under this section, including the effective dates as applicable, and incorporate such procedures into their written procedures for operations, maintenance, and emergencies established pursuant to § 192.605.#

120190014M_Notice of Amendment_11072019_text.pdf, page 2CPF 1-2019-0014M Consumers’ written procedures for implementing the requirements of API RP 1171 were inadequate. Specifically, Consumers’ Storage Integrity Management Program (SIMP), Section 2.1.8 did not include assessing plugged and abandoned third party wells in accordance with API RP 1171, Section 8.3.2 Data Sources (Section 8.3.2). Section 8.3.2 states in part: The operator shall use available information such as performance data collected through the field history, operations and maintenance (O&M) activities, geotechnical data such as well logs, engineering data, and completion reports to determine susceptibility to threat and hazard-related events and to assess threat and hazard interaction. At the time of the inspection, Consumers’ SIMP failed to address plugged and abandoned third- party wells. 2. § 192.12 Underground natural gas storage facilities. (a) …. (e) Operators of underground gas storage facilities must establish and follow written procedures for operations, maintenance, and emergencies implementing the requirements of API RP 1170 and API RP 1171, as required under this section, including the effective dates as applicable, and incorporate such procedures into their written procedures for operations, maintenance, and emergencies established pursuant to § 192.605. Consumers’ written procedures for implementing the requirements of API RP 1171 were inadequate. Specifically, Consumers did not assess threat and hazard interaction in their SIMP or in their Risk Model, as required by API RP 1171, Section 8.3.2. Section 8.3.2 states in part: The operator shall use available information such as performance data collected through the field history, operations and maintenance (O&M) activities, geotechnical data such as well logs, engineering data, and completion reports to determine susceptibility to threat and hazard-related events and to assess threat and hazard interaction. At the time of the inspection, Consumers’ procedures failed to address the threat and hazard interaction requirement of API RP 1171, Section 8.3.2. 3. § 192.12 Underground natural gas storage facilities. (a) …. (e) Operators of underground gas storage facilities must establish and follow written procedures for operations, maintenance, and emergencies implementing the requirements of API RP 1170 and API RP 1171, as required under this section, including the effective dates as applicable, and incorporate such procedures into their written procedures for operations, maintenance, and emergencies established pursuant to § 192.605. 120190014M_Notice of Amendment_11072019_text Page 2 of 4#

120190014M_Notice of Amendment_11072019_text.pdf, page 3CPF 1-2019-0014M 4. Consumers’ written procedures for implementing the requirements of API RP 1171 were inadequate. Specifically, Consumers failed to establish procedures for monitoring all annular gas by measuring and recording annular pressure and/or annular gas flow, or procedures for addressing integrity where the well annulus cannot be monitored, in accordance with API RP 1171, Section 9.3.2 Well Integrity Monitoring (Section 9.3.2). Section 9.3.2 states in part: The operator shall monitor for presence of annular gas by measuring and recording annular pressure and/or annular gas flow. The operator shall evaluate each annular gas occurrence that exceeds operator- or regulatory-defined threshold levels determined from well integrity evaluation and from risk assessment. At the time of the inspection, Consumers procedures failed to address the requirement of API RP 1171, Section 9.3.2, including monitoring all annular gas and evaluating each annular gas occurrence that exceeds operator defined thresholds. § 192.12 Underground natural gas storage facilities. (a) …. (e) Operators of underground gas storage facilities must establish and follow written procedures for operations, maintenance, and emergencies implementing the requirements of API RP 1170 and API RP 1171, as required under this section, including the effective dates as applicable, and incorporate such procedures into their written procedures for operations, maintenance, and emergencies established pursuant to § 192.605. Consumers’ written procedures for implementing the requirements of API RP 1171 were inadequate. Specifically, Consumers did not address equipment failures in their emergency plan, as required by API RP 1171, Section 10.6.1 Emergency Preparedness/Emergency Response Plan (Section 10.6.1). Section 10.6.1 states in part (emphasis added): For site security and safety, the operator shall develop and implement a structured emergency preparedness/response plan in order to address accidental releases, equipment failures, natural disasters, and third-party emergencies. At the time of the inspection, Consumers’ emergency procedures failed to address equipment failures in accordance with API RP 1171, Section 10.6.1. Response to this Notice This Notice is provided pursuant to 49 U.S.C. § 60108(a) and 49 C.F.R. § 190.206. Enclosed as part of this Notice is a document entitled Response Options for Pipeline Operators in Enforcement Proceedings. Please refer to this document and note the response options. Be advised that all material you submit in response to this enforcement action is subject to being made publicly available. If you believe that any portion of your responsive material qualifies for confidential 120190014M_Notice of Amendment_11072019_text Page 3 of 4#

120190014M_Notice of Amendment_11072019_text.pdf, page 4CPF 1-2019-0014M treatment under 5 U.S.C. 552(b), along with the complete original document you must provide a second copy of the document with the portions you believe qualify for confidential treatment redacted and an explanation of why you believe the redacted information qualifies for confidential treatment under 5 U.S.C. 552(b). Following the receipt of this Notice, you have 30 days to submit written comments, revised procedures, or a request for a hearing under §190.211. If you do not respond within 30 days of receipt of this Notice, this constitutes a waiver of your right to contest the allegations in this Notice and authorizes the Associate Administrator for Pipeline Safety to find facts as alleged in this Notice without further notice to you and to issue an Order Directing Amendment. If your plans or procedures are found inadequate as alleged in this Notice, you may be ordered to amend your plans or procedures to correct the inadequacies (49 C.F.R. § 190.206). If you are not contesting this Notice, we propose that you submit your amended procedures to my office within 30 days of receipt of this Notice. This period may be extended by written request for good cause. Once the inadequacies identified herein have been addressed in your amended procedures, this enforcement action will be closed. It is requested (not mandated) that Consumers Energy Co maintain documentation of the safety improvement costs associated with fulfilling this Notice of Amendment (preparation/revision of plans, procedures) and submit the total to Robert Burrough, Director, PHMSA Eastern Region, 840 Bear Tavern Road, Suite 300, West Trenton, NJ 08628. Please refer to CPF 1-2019-0014M on each document you submit, and whenever possible provide a signed PDF copy in electronic format. Smaller files may be emailed to robert.burrough@dot.gov. Larger files should be sent on USB flash drive accompanied by the original paper copy to the Eastern Region Office. Additionally, if you choose to respond to this (or any other case), please ensure that any response letter pertains solely to one CPF case number. Sincerely, Robert Burrough Director, Eastern Region Pipeline and Hazardous Materials Safety Administration Enclosure: Response Options for Pipeline Operators in Enforcement Proceedings 120190014M_Notice of Amendment_11072019_text Page 4 of 4#

120190014M_Operator Respone to Notice_12062019.pdf, page 1Official PDFConsumers Energy Count on Us A CMS ENERGY COMPANY December 6, 2019 Mr. Robert Burrough Director, Eastern Region 840 Bear Tavern Road, Suite 300 Pipeline and Hazardous Materials Safety Administration West Trenton, NJ 08628 RE: Consumers Energy Co. Notice of Amendment: CPF 1-2019-0014M Mr. Burrough: On November 7, 2019 Consumers Energy Co. (Consumers Energy) received the Notice of Amendment NOA is a result of the May 7-9, 2019 inspection of Consumers Energy's procedures for Functional (NOA), CPF 1-2019-0014M, issued by the Pipeline and Hazardous Materials Safety Administration. The Integrity of Underground Natural Gas Storage in Jackson, Michigan. Consumers Energy has elected not to contest the allegations set forth in the NOA and will be revising their procedures. Consumers Energy requests that Staff consider the following: Item #1 A. Consumers Energy will update the Storage Integrity Management Program (SIMP) Manual, Chapter 2.1.8 - Consumers Energy Plug & Abandon Wells to include assessment of third party plugged and abandoned wells. Action item to be completed by 3/31/2020. Item #2 A. Consumers Energy will update the Storage Integrity Management Program (SIMP) Manual, Chapter 2.2 - Threat and Hazard Identification to include a requirement to 3/31/2020 perform a threat and hazard interaction assessment. Action item to be completed by B. In addition, the Probability of Failure (POF) equation within the SIMP Risk Assessment Model will be updated to include an interacting threat multiplier to account for wells susceptible to high bacteria or hydrogen sulfide and water production. Action item to be completed by 7/31/2020.#

120190014M_Operator Respone to Notice_12062019.pdf, page 2Item #3 A. On 06/03/2019, Consumers Energy implemented Gas Storage Procedure - Annular Casing Pressure Management Plan (STR-OPS-27) to address the requirements set forth in API RP 1171, Section 9.3.2 – Well Integrity Monitoring (see attachment A – STR- OPS-27). B. Gas Storage Procedure - Annular Casing Pressure Management Plan (STR-OPS-27) provides guidance for annular casing pressure and/or flow monitoring, including data collection, monitoring frequencies, evaluation and validation, diagnostic threshold determination, maximum allowable wellhead operating pressure determination, and reporting for gas storage well operations. C. On 06/03/2019, Consumers Energy also implemented Gas Storage Procedure - Annulus Bleed Down/Build Up Test (STR-OPS-28) to provide diagnostic testing instructions for wells exceeding the thresholds established in the Annular Casing Pressure Management Plan (see attachment B – STR-OPS-28). Item #4 A. A cross functional team with multiple stakeholders including Operations, Engineering, Emergency Management, and Compliance has been assembled to address equipment failures and incorporate the appropriate emergency response within the Consumers Energy Gas Emergency Action Plans. Action item to be completed by 3/31/2020. Consumers Energy considers the actions outlined above to satisfactorily address the NOA (CPF 1-2019- 0014M) dated November 7, 2019. Upon action plan completion Consumers Energy will submit updated procedures in conjunction with additional correspondence to resolve the NOA (CPF 1-2019-0014M) dated November 7, 2019. Please contact me if you have any questions or comments. Thank you, Beth L. Fields PE Director of Gas Compliance & Records Consumers Energy P23-400 1945 W. Parnall Rd Jackson, MI 49201 517-788-2269 office 517-745-4845 cell Beth.Fields@cmsenergy.com Enclosures: • Attachment A – STR-OPS-27 • Attachment B – STR-OPS-28 2#

120190014M_Operator Respone to Notice_12062019.pdf, page 3CC: GRochow JFBrossoit GSalisbury MPalkovich LWells HBowers MVanderHeuvel PWolven SHinshaw RWBeach SJorgensen LDouglas GIsham CGeorgopoulos JHarrington RBielenda VSprague PWaggener MBonatham KNguyen AHutton JPionk CKing MSkillman CBuhler HWashingtonIII JFoley SWatson KSinger DChislea, MPSC LOrganek, EGLE CWashabaugh - PHMSA lara-mpsc-operations@michigan.gov PO Box: CE Regulatory Services 3#