-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RF2i4J/Yogs+wh7MD+EwOkIcgHDZkk5IopUOQEBHa7uZ0bBFMjFtbbd0f+GhVnPW qBcBf1qfdJQlHlQ3oQNKdA== 0000950123-09-039236.txt : 20090828 0000950123-09-039236.hdr.sgml : 20090828 20090828124518 ACCESSION NUMBER: 0000950123-09-039236 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 28 CONFORMED PERIOD OF REPORT: 20090630 FILED AS OF DATE: 20090828 DATE AS OF CHANGE: 20090828 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DTE ENERGY CO CENTRAL INDEX KEY: 0000936340 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 383217752 STATE OF INCORPORATION: MI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-11607 FILM NUMBER: 091042289 BUSINESS ADDRESS: STREET 1: ONE ENERGY PLAZA CITY: DETROIT STATE: MI ZIP: 48226 BUSINESS PHONE: 3132354000 MAIL ADDRESS: STREET 1: ONE ENERGY PLAZA CITY: DETROIT STATE: MI ZIP: 48226 FORMER COMPANY: FORMER CONFORMED NAME: DTE HOLDINGS INC DATE OF NAME CHANGE: 19950127 10-Q/A 1 k48141xbe10vqza.htm 10-Q/A e10vqza
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q/A
(Amendment No. 1)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period ended June 30, 2009
Commission file number 1-11607
DTE ENERGY COMPANY
(Exact name of registrant as specified in its charter)
     
Michigan
(State or other jurisdiction of
incorporation or organization)
  38-3217752
(I.R.S. Employer
Identification No.)
     
One Energy Plaza, Detroit, Michigan
(Address of principal executive offices)
  48226-1279
(Zip Code)
313-235-4000
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes þ     No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes o     No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
             
Large accelerated filer þ   Accelerated filer o   Non-accelerated filer o
(Do not check if a smaller reporting company)
  Smaller reporting company o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o     No þ
At June 30, 2009, 164,472,648 shares of DTE Energy’s common stock were outstanding, substantially all of which were held by non-affiliates.
 
 

 


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     Explanatory Note
     The sole purpose of this amendment on Form 10-Q/A to DTE Energy Company’s quarterly report on Form 10-Q for the period ended June 30, 2009, filed with the Securities and Exchange Commission on July 31, 2009 (“the Form 10-Q”), is to furnish Exhibit 101 to the Form 10-Q, as required by Rule 405 of Regulation S-T.
     No other changes have been made to the Form 10-Q. This Form 10-Q/A speaks as of the original filing date of the Form 10-Q, does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update in any way disclosures made in the Form 10-Q.
     Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.
Item 6 Exhibits.
     
Exhibit    
Number   Description
 
   
Exhibits filed herewith:
 
   
*12-43
  Computation of Ratio of Earnings to Fixed Charges.
 
   
*31-51
  Chief Executive Officer Section 302 Form 10-Q Certification.
 
   
*31-52
  Chief Financial Officer Section 302 Form 10-Q Certification.
 
   
*32-51
  Chief Executive Officer Section 906 Form 10-Q Certification.
 
   
*32-52
  Chief Financial Officer Section 906 Form 10-Q Certification.
 
   
101.INS
  XBRL Instance Document
 
   
101.SCH
  XBRL Taxonomy Extension Schema
 
   
101.CAL
  XBRL Taxonomy Extension Calculation Linkbase
 
   
101.DEF
  XBRL Taxonomy Extension Definition Database
 
   
101.LAB
  XBRL Taxonomy Extension Label Linkbase
 
   
101.PRE
  XBRL Taxonomy Extension Presentation Linkbase
 
*   Filed Previously

1


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Item 6 Exhibits.
SIGNATURE
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT


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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
         
  DTE ENERGY COMPANY
(Registrant)
 
 
Date: August 28, 2009  /s/ PETER B. OLEKSIAK    
  Peter B. Oleksiak   
  Vice President and Controller and
Chief Accounting Officer 
 
 

2

EX-101.INS 2 dte-20090630.xml EX-101 INSTANCE DOCUMENT 0000936340 us-gaap:CommonStockMember 2009-01-01 2009-06-30 0000936340 us-gaap:RetainedEarningsMember 2009-06-30 0000936340 us-gaap:NoncontrollingInterestMember 2009-06-30 0000936340 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2009-06-30 0000936340 us-gaap:RetainedEarningsMember 2008-12-31 0000936340 us-gaap:NoncontrollingInterestMember 2008-12-31 0000936340 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2008-12-31 0000936340 us-gaap:NoncontrollingInterestMember 2009-01-01 2009-06-30 0000936340 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2009-01-01 2009-06-30 0000936340 us-gaap:RetainedEarningsMember 2009-01-01 2009-06-30 0000936340 us-gaap:CommonStockMember 2009-06-30 0000936340 us-gaap:CommonStockMember 2008-12-31 0000936340 2009-04-01 2009-06-30 0000936340 2008-04-01 2008-06-30 0000936340 2008-06-30 0000936340 2007-12-31 0000936340 2008-12-31 0000936340 2008-01-01 2008-06-30 0000936340 2009-06-30 0000936340 2009-01-01 2009-06-30 iso4217:USD xbrli:shares xbrli:shares iso4217:USD <!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --> <html> <head></head> <body> <!-- Begin Block Tagged Note 1 - us-gaap:SignificantAccountingPoliciesTextBlock--> <!-- XBRL,ns --> <div style="font-family: 'Times New Roman',Times,serif"> <div align="left"> </div> <div align="center" style="font-size: 10pt; margin-top: 0pt"><font style="font-variant: SMALL-CAPS"><b></b></font> <font style="font-variant: SMALL-CAPS"><b></b></font> </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE 1 &#8212; GENERAL</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The Company is a diversified energy company. It is the parent company of Detroit Edison and MichCon, regulated electric and gas utilities engaged primarily in the business of providing electricity and natural gas sales, distribution and storage services throughout southeastern Michigan. The Company also operates four energy-related non-utility segments with operations throughout the United States. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">These Consolidated Financial Statements should be read in conjunction with the Notes to Consolidated Financial Statements included in the 2008 Annual Report on Form 10-K. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The accompanying Consolidated Financial Statements are prepared using accounting principles generally accepted in the United States of America. 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Financial results for this interim period are not necessarily indicative of results that may be expected for any other interim period or for the fiscal year ending December&#160;31, 2009. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Certain prior year amounts have been reclassified to reflect current year classifications. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Asset Retirement Obligations</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The Company records asset retirement obligations in accordance with SFAS No.&#160;143, <i>Accounting for Asset Retirement Obligations </i>and FASB Interpretation Number (FIN)&#160;47, <i>Accounting for Conditional Asset Retirement Obligations, an interpretation of FASB Statement No.&#160;143</i>. The Company has a legal retirement obligation for the decommissioning costs for its Fermi 1 and Fermi 2 nuclear plants. To a lesser extent, the Company has legal retirement obligations for gas production facilities, gas gathering facilities and various other operations. The Company has conditional retirement obligations for gas pipeline retirement costs and disposal of asbestos at certain of its power plants. To a lesser extent, the Company has conditional retirement obligations at certain service centers, compressor and gate stations, and disposal costs for PCB contained within transformers and circuit breakers. The Company recognizes such obligations as liabilities at fair market value when they are incurred, which generally is at the time the associated assets are placed in service. 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The Company defers such differences under SFAS No.&#160;71, <i>Accounting for the Effects of Certain Types of Regulation</i>. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">A reconciliation of the asset retirement obligations for the six months ended June&#160;30, 2009 follows: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%"> <!-- Begin Table Head --> <tr valign="bottom"> <td width="88%">&#160;</td> <td width="5%">&#160;</td> <td width="1%">&#160;</td> <td width="5%">&#160;</td> <td width="1%">&#160;</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td align="left">(in Millions)</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> </tr> <!-- End Table Head --> <!-- Begin Table Body --> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Asset retirement obligations at January&#160;1, 2009 </div></td> <td>&#160;</td> <td align="left">$</td> <td align="right">1,361</td> <td>&#160;</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Accretion </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">44</td> <td>&#160;</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Liabilities settled </div></td> <td>&#160;</td> <td nowrap="nowrap" align="left">&#160;</td> <td align="right">(4</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Revision in estimated cash flows </div></td> <td>&#160;</td> <td nowrap="nowrap" align="left">&#160;</td> <td align="right">(4</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">&#160; </div></td> <td>&#160;</td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000">&#160;</td> <td>&#160;</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Asset retirement obligations at June&#160;30, 2009 </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">1,397</td> <td>&#160;</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Less amount included in current liabilities </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">19</td> <td>&#160;</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">&#160; </div></td> <td>&#160;</td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000">&#160;</td> <td>&#160;</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">&#160; </div></td> <td>&#160;</td> <td align="left">$</td> <td align="right">1,378</td> <td>&#160;</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">&#160; </div></td> <td>&#160;</td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000">&#160;</td> <td>&#160;</td> </tr> <!-- End Table Body --> </table> </div> <!-- Folio --> <!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">Approximately $1.2&#160;billion of the asset retirement obligations represent nuclear decommissioning liabilities that are funded through a surcharge to electric customers over the life of the Fermi 2 nuclear power plant. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Goodwill</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">We performed our annual goodwill impairment test on October&#160;1, 2008 and determined that the estimated fair value of our reporting units exceeded their carrying value, and no impairment existed. In the period from October&#160;1, 2008 to March&#160;31, 2009, DTE Energy&#8217;s stock price declined 31&#160;percent and at March&#160;31, 2009 was approximately 26&#160;percent below its book value per share of $37.29. We deemed the lengthening duration and severity of the decline in DTE Energy&#8217;s stock price to be a triggering event to test for potential goodwill impairment for the first quarter. In performing Step 1 of the impairment test, we compared the fair value of the reporting unit to its carrying value including goodwill. If the carrying value including goodwill were to exceed the fair value of a reporting unit, Step 2 of the test would be performed. Step 2 of the impairment test requires the carrying value of goodwill to be reduced to its fair value, if lower, as of the test date. 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margin-top: 6pt">In connection with maintaining certain traded risk management positions, the Company may be required to post cash collateral with its clearing agent. As a result, the Company entered into a demand financing agreement for up to $120&#160;million with its clearing agent in lieu of posting additional cash collateral (a non-cash transaction). There was approximately $27&#160;million outstanding under this facility at June&#160;30, 2009 and approximately $26&#160;million outstanding as of December&#160;31, 2008. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Subsequent Events</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The Company has evaluated subsequent events through July&#160;31, 2009, the date that these financial statements were issued. </div> <!-- Folio --> <!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif"> </div> </body> </html> <!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --> <html> <head></head> <body> <!-- Begin Block Tagged Note 2 - us-gaap:ScheduleOfNewAccountingPronouncementsAndChangesInAccountingPrinciplesTextBlock--> <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><font style="font-variant: SMALL-CAPS"><b>NOTE 2 &#8212; NEW ACCOUNTING PRONOUNCEMENTS</b></font> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><b><i>Fair Value Accounting</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In September&#160;2006, the FASB issued SFAS No.&#160;157, <i>Fair Value Measurements</i>. SFAS No.&#160;157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. It emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Fair value measurement should be determined based on the assumptions that market participants would use in pricing an asset or liability. Effective January&#160;1, 2008, the Company adopted SFAS No.&#160;157. As permitted by FASB Staff Position FAS No.&#160;157-2, the Company elected to defer the effective date of SFAS No.&#160;157 as it pertains to measurement and disclosures about the fair value of non-financial assets and liabilities made on a nonrecurring basis. The Company has adopted the recognition provisions for non-financial assets and liabilities as of January&#160;1, 2009. See Note 3 for further disclosures. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In April&#160;2009, the FASB issued three FSPs intended to provide additional application guidance and enhance disclosures regarding fair value measurements and impairments of securities. 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The FSP provides application guidance on measuring fair value when the volume and level of activity has significantly decreased and identifying transactions that are not orderly. The FSP also emphasizes that an entity cannot presume that an observable transaction price is not orderly even when there has been a significant decline in the volume and level of activity.</td> </tr> <tr> <td style="font-size: 6pt">&#160;</td> </tr> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="2%" style="background: transparent">&#160;</td> <td width="3%" nowrap="nowrap" align="left"><b>&#8226;</b></td> <td width="1%">&#160;</td> <td>FSP FAS 115-2 and FAS 124-2, <i>Recognition and Presentation of Other-Than-Temporary Impairments, </i>is intended to bring greater consistency to the timing of impairment recognition, and provide greater clarity to investors about the credit and noncredit components of impaired debt securities that are not expected to be sold.</td> </tr> </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The Company adopted these FSPs in the second quarter of 2009. The adoption of these FSPs did not have a significant impact on DTE Energy&#8217;s consolidated financial statements. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In June&#160;2008, the FASB issued FSP EITF 03-6-1, <i>Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities. </i>This FSP addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing earnings per share (EPS)&#160;under the two-class method described in paragraphs 60 and 61 of SFAS No.&#160;128, <i>Earnings Per Share. </i>Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of EPS pursuant to the two-class method. Stock awards granted by the Company under its stock-based compensation plan qualify as a participating security. This FSP is effective for financial statements issued for fiscal years and interim periods beginning after December&#160;15, 2008 and will be applied retrospectively. The Company adopted the requirements of the FSP effective January&#160;1, 2009. See Note 6 for further disclosure. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Noncontrolling Interests in Consolidated Financial Statements</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In December&#160;2007, the FASB issued SFAS No.&#160;160, <i>Noncontrolling Interests in Consolidated Financial</i><i> Statements &#8212; an Amendment of ARB No.&#160;51. </i>This Statement establishes accounting and reporting standards for the noncontrolling interests in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. SFAS No.&#160;160 is effective for fiscal years, and interim periods within those years, beginning on or after December&#160;15, 2008. This Statement shall be applied prospectively as of the beginning of the fiscal year in which this Statement is initially applied, except for the presentation and disclosure requirements which shall be applied retrospectively for all periods presented. The Company adopted SFAS No.&#160;160 as of January&#160;1, 2009. Adoption of SFAS No.&#160;160 did not have a material effect on the Company&#8217;s consolidated financial statements. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Disclosures about Derivative Instruments and Guarantees</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In March&#160;2008, the FASB issued SFAS No.&#160;161, <i>Disclosures about Derivative Instruments and Hedging</i><i> Activities &#8212; an amendment of FASB Statement No.&#160;133</i>. This statement requires enhanced disclosures about an entity&#8217;s derivative and hedging activities and thereby improves the transparency of financial reporting. Entities are required to provide enhanced disclosures about (a)&#160;how and why an entity uses derivative instruments, (b)&#160;how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and (c)&#160;how derivative instruments and related hedged items affect an entity&#8217;s financial position, financial performance, and cash flows. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">SFAS No.&#160;161 is effective for financial statements issued for fiscal years and interim periods beginning after November&#160;15, 2008, with early application encouraged. Comparative disclosures for earlier periods at initial adoption are encouraged but not required. The Company adopted SFAS No. 161 effective January&#160;1, 2009. See Note 3. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Subsequent Events</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In May&#160;2009, the FASB issued SFAS No.&#160;165, <i>Subsequent Events</i>. This statement provides guidance on management&#8217;s assessment of subsequent events. The new standard clarifies that management must evaluate, as of each reporting period, events or transactions that occur after the balance sheet date &#8220;through the date that the financial statements are issued or are available to be issued.&#8221; Management must perform its assessment for both interim and annual financial reporting periods. SFAS No.&#160;165 does not significantly change the Company&#8217;s practice for evaluating such events. SFAS No.&#160;165 is effective prospectively for interim and annual periods ending after June&#160;15, 2009 and requires disclosure of the date subsequent events are evaluated through. The Company adopted SFAS No.&#160;165 during the quarter ended June&#160;30, 2009. See Note 1. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Transfers of Financial Assets</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In June&#160;2009, the FASB issued SFAS No.&#160;166, <i>Accounting for Transfers of Financial Assets &#8212; an amendment of FASB No.&#160;140. </i>This statement amends the derecognition guidance in SFAS No.&#160;140 and reflects the FASB&#8217;s response to issues entities have encountered when applying SFAS No.&#160;140. In addition, SFAS No.&#160;166 addresses concerns expressed by the SEC, members of Congress, and financial statement users about the accounting and disclosures required by SFAS No.&#160;140 in the wake of the subprime mortgage crisis and the deterioration in the global credit markets. SFAS No.&#160;166 is effective for financial asset transfers occurring after the beginning of an entity&#8217;s first fiscal year that begins after November&#160;15, 2009. Early adoption is prohibited. SFAS No.&#160;166 must be applied prospectively to transfers of financial assets occurring on or after its effective date. Accordingly, transferors should not reevaluate historical transfers of financial assets under the derecognition criteria in SFAS No.&#160;166. The adoption of SFAS No.&#160;166 will not have a material impact on DTE Energy&#8217;s consolidated financial statements. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Variable Interest Entities (VIE)</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In June&#160;2009, the FASB issued SFAS No.&#160;167, <i>Amendments to FASB Interpretation No.&#160;46(R). </i>This statement, amends the consolidation guidance that applies to VIEs and affects the overall consolidation analysis under Interpretation 46(R). The amendments to the consolidation guidance affect all entities and enterprises currently within the scope of Interpretation 46(R), as well as qualifying special purpose entities that are currently outside the scope of Interpretation 46(R). Accordingly, the Company will need to reconsider its previous Interpretation 46(R) conclusions, including (1)&#160;whether an entity is a VIE, (2)&#160;whether the enterprise is the VIE&#8217;s primary beneficiary, and (3)&#160;what type of financial statement disclosures are required. SFAS No.&#160;167 is effective as of the beginning of the first fiscal year that begins after November&#160;15, 2009. Early adoption is prohibited. The Company is currently assessing the impact of SFAS No.&#160;167 on DTE Energy&#8217;s consolidated financial statements. </div> <!-- Folio --> <!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>FASB Accounting Standards Codification&#8482; (Codification)</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In June&#160;2009, the FASB voted to approve that on July&#160;1, 2009, the Codification will become the single source of authoritative nongovernmental U.S. GAAP. The Codification is a reorganization of current GAAP into a topical format that eliminates the current GAAP hierarchy and establishes two levels of guidance &#8212; authoritative and nonauthoritative. According to the FASB, all &#8220;non-grandfathered, non-SEC accounting literature&#8221; that is not included in the Codification would be considered nonauthoritative. The FASB has indicated that the Codification does not change current GAAP. Instead, the proposed changes aim to (1)&#160;reduce the time and effort it takes for users to research accounting questions and (2)&#160;improve the usability of current accounting standards. The Codification is effective for interim and annual periods ending after September&#160;15, 2009. </div> </div> </body> </html> <!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --> <html> <head></head> <body> <!-- Begin Block Tagged Note 3 - us-gaap:FairValueDisclosuresTextBlock--> <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><font style="font-variant: SMALL-CAPS"><b>NOTE 3 &#8212;FINANCIAL AND OTHER DERIVATIVE INSTRUMENTS AND FAIR VALUE </b></font> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><b>Financial and Other Derivative Instruments</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The Company complies with SFAS No.&#160;133, <i>Accounting for Derivative Instruments and Hedging Activities</i>, as amended and interpreted. Under SFAS No.&#160;133, all derivatives are recognized on the Consolidated Statement of Financial Position at their fair value unless they qualify for certain scope exceptions, including normal purchases and normal sales exception. Further, derivatives that qualify and are designated for hedge accounting are classified as either hedges of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge), or as hedges of the fair value of a recognized asset or liability or of an unrecognized firm commitment (fair value hedge). For cash flow hedges, the portion of the derivative gain or loss that is effective in offsetting the change in the value of the underlying exposure is deferred in Accumulated other comprehensive income and later reclassified into earnings when the underlying transaction occurs. For fair value hedges, changes in fair values for both the derivative and the underlying hedged exposure are recognized in earnings each period. Gains and losses from the ineffective portion of any hedge are recognized in earnings immediately. For derivatives that do not qualify or are not designated for hedge accounting, changes in the fair value are recognized in earnings each period. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The Company&#8217;s primary market risk exposure is associated with commodity prices, credit, interest rates and foreign currency. The Company has risk management policies to monitor and manage market risks. The Company uses derivative instruments to manage some of the exposure. The Company uses derivative instruments for trading purposes in its Energy Trading segment and the coal marketing activities of its Power and Industrial Projects segment. Contracts the Company typically classifies as derivative instruments include power, gas, certain coal and oil forwards, futures, options and swaps, and foreign currency contracts. Items it does not generally account for as derivatives include proprietary gas inventory, gas storage and transportation arrangements, and gas and oil reserves. The fair value of all derivatives is included in Derivative assets or liabilities on the Consolidated Statements of Financial Position. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Utility Operations</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><i>Detroit Edison </i>&#8212; Detroit Edison generates, purchases, distributes and sells electricity. Detroit Edison uses forward energy and capacity contracts to manage changes in the price of electricity and fuel. Substantially all of these contracts meet the normal purchases and sales exemption and are therefore accounted for under the accrual method. 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The segment also engages in coal marketing which includes the marketing and trading of physical coal and coal financial instruments, and forward contracts for the purchase and sale of emissions allowances. Certain of these physical and financial coal contracts and contracts for the purchase and sale of emission allowances are derivatives and are accounted for by recording changes in fair value to earnings. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><i>Unconventional Gas Production </i>&#8212; The Unconventional Gas Production business is engaged in unconventional gas project development and production. The Company uses derivative contracts to manage changes in the price of natural gas. These derivatives are designated as cash flow hedges. Amounts recorded in Accumulated other comprehensive income will be reclassified to earnings as the related production affects earnings through 2010. Management estimates reclassifying an after-tax gain of approximately $2&#160;million to earnings within the next twelve months. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><i>Energy Trading &#8212; Commodity Price Risk &#8212; </i>Energy Trading markets and trades wholesale electricity and natural gas physical products and energy financial instruments, and provides risk management services utilizing energy commodity derivative instruments. Forwards, futures, options and swap agreements are used to manage exposure to the risk of market price and volume fluctuations in its operations. 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<td>&#160;</td> <td colspan="3" align="center">Derivative liabilities</td> <td>&#160;</td> <td nowrap="nowrap" align="left">&#160;</td> <td align="right">(52</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">&#160; </div></td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="border-right: 2px solid #000000">&#160;</td> <td>&#160;</td> <td colspan="3" align="center"></td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Oil </div></td> <td>&#160;</td> <td colspan="3" align="center">Derivative assets</td> <td>&#160;</td> <td>&#160;</td> <td align="right">35</td> <td>&#160;</td> <td style="border-right: 2px solid #000000">&#160;</td> <td>&#160;</td> <td colspan="3" align="center">Derivative liabilities</td> <td>&#160;</td> <td nowrap="nowrap" 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These contracts contain provisions which allow the counterparties to request that the Company post cash or letters of credit as collateral in the event that DTE Energy&#8217;s credit rating is downgraded below investment grade. Certain of these provisions (known as &#8220;hard triggers&#8221;) state specific circumstances under which the Company can be asked to post collateral upon the occurrence of a credit downgrade, while other provisions (known as &#8220;soft triggers&#8221;) are not as specific. For contracts with soft triggers, it is difficult to estimate the amount of collateral which may be requested by counterparties and/or which the Company may ultimately be required to post. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The amount of such collateral which could be requested fluctuates based on commodity prices (primarily gas, power and coal) and the provisions and maturities of the underlying transactions. 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Fair value is a market-based measurement that is determined based on inputs, which refer broadly to assumptions that market participants&#8217; use in pricing assets or liabilities. These inputs can be readily observable, market corroborated or generally unobservable inputs. The Company makes certain assumptions it believes that market participants would use in pricing assets or liabilities, including assumptions about risk, and the risks inherent in the inputs to valuation techniques. Credit risk of the Company and its counterparties is incorporated in the valuation of assets and liabilities through the use of credit reserves, the impact of which is immaterial for the three and six months ended June&#160;30, 2009. 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Assessing the significance of a particular input may require judgment considering factors specific to the asset or liability, and may affect the valuation of the asset or liability and its placement within the fair value hierarchy. 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Non-exchange-traded fixed income securities are valued based upon quotations available from brokers or pricing services. For non-exchange traded fixed income securities, the trustees receive prices from pricing services. A primary price source is identified by asset type, class or issue for each security. The trustees monitor prices supplied by pricing services and may use a supplemental price source or change the primary price source of a given security if the trustees challenge an assigned price and determine that another price source is considered to be preferable. DTE Energy has obtained an understanding of how these prices are derived, including the nature and observability of the inputs used in deriving such prices. Additionally, DTE Energy selectively corroborates the fair values of securities by comparison of market-based price sources. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Derivative Assets and Liabilities</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Derivative assets and liabilities are comprised of physical and financial derivative contracts, including futures, forwards, options and swaps that are both exchange-traded and over-the-counter traded contracts. Various inputs are used to value derivatives depending on the type of contract and availability of market data. Exchange-traded derivative contracts are valued using quoted prices in active markets. DTE Energy considers the following criteria in determining whether a market is considered active: frequency in which pricing information is updated, variability in pricing between sources or over time and the availability of public information. Other derivative contracts are valued based upon a variety of inputs including commodity market prices, broker quotes, interest rates, credit ratings, default rates, market-based seasonality and basis differential factors. DTE Energy monitors the prices that are supplied by brokers and pricing services and may use a supplemental price source or change the primary price source of an index if prices become unavailable or another price source is determined to be more representative of fair value. DTE Energy has obtained an understanding of how these prices are derived. Additionally, DTE Energy selectively corroborates the fair value of its transactions by comparison of market-based price sources. 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Changes in the fair value of Fermi 2 nuclear decommissioning investments are recorded as adjustments to regulatory assets or liabilities, due to a recovery mechanism from customers. The Company&#8217;s investments are reviewed for impairment each reporting period. 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On July&#160;16, 2009, the MPSC issued an order requiring Detroit Edison to implement the increase by applying the rate design reflected in its January&#160;26, 2009 application. Detroit Edison expects the impact of this self-implemented increase would be significantly offset by its plan to begin reducing its PSCR factor beginning August&#160;1, 2009. This increase will remain in place until a final order is issued by the MPSC, which is expected in January&#160;2010. If the final rate case order provides for lower rates than we have self-implemented, we must refund the difference with interest. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Cost-Based Tariffs for Schools</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In January&#160;2009, Detroit Edison filed a required application that included two new cost-based tariffs for schools, universities and community colleges. The filing is in compliance with Public Act 286 which required utilities to file tariffs that ensure that eligible educational institutions are charged retail electric rates that reflect the actual cost of providing service to those customers. In February&#160;2009, an MPSC order consolidated this proceeding with the January&#160;26, 2009 electric rate case filing. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Renewable Energy Plan</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In March&#160;2009, Detroit Edison filed its Renewable Energy Plan with the MPSC as required under 2008 PA 295. The Renewable Energy Plan application requests authority to recover approximately $35 million of additional revenue in 2009. The proposed revenue increase is necessary in order to properly implement Detroit Edison&#8217;s 20-year renewable energy plan to achieve compliance with 2008 PA 295, to deliver new, cleaner, renewable electric generation demanded by customers, to further diversify Detroit Edison&#8217;s and the State of Michigan&#8217;s sources of electric supply, and to strive toward achieving state and national goals of increasing energy independence. An MPSC order was issued June&#160;2, 2009 approving the renewable energy plan and customer surcharges beginning in September&#160;2009. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Energy Optimization Plans</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In March&#160;2009, Detroit Edison and MichCon filed Energy Optimization Plans with the MPSC as required under 2008 PA 295. The Energy Optimization Plan applications are designed to help each customer class reduce their electric and gas usage by: (1)&#160;building customer awareness of energy efficiency options and (2)&#160;offering a diverse set of programs and participation options that result in energy savings for each customer class. Detroit Edison&#8217;s Energy Optimization Plan application proposes energy optimization expenditures for the period 2009-2011 of $134&#160;million and further requests approval of surcharges that are designed to recover these costs. MichCon&#8217;s Energy Optimization Plan application proposes energy optimization expenditures for the period 2009-2011 of $55&#160;million and further requests approval of surcharges that are designed to recover these costs. An MPSC order was issued June&#160;2, 2009 approving the Energy Optimization Plans of $117&#160;million and $48&#160;million for Detroit Edison and MichCon, respectively. The surcharges to recover these costs were implemented effective June&#160;3, 2009. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Power Supply Cost Recovery Proceedings</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><i>2008 Plan Year &#8212; </i>In September&#160;2007, Detroit Edison filed its 2008 PSCR plan case seeking approval of a levelized PSCR factor of 9.23 mills/kWh above the amount included in base rates for all PSCR customers. Also included in the filing was a request for approval of the Company&#8217;s emission compliance strategy which included pre-purchases of emission allowances as well as a request for pre-approval of a contract for capacity and energy associated with a renewable (wind)&#160;energy project. On January&#160;31, 2008, Detroit Edison filed a revised PSCR plan case seeking approval of a levelized PSCR factor of 11.22 mills/kWh above the amount included in base rates for all PSCR customers. The revised filing supports a 2008 power supply expense forecast of $1.4&#160;billion and includes $43&#160;million for the recovery of a projected 2007 PSCR under-collection. On July&#160;29, 2008, the MPSC issued a temporary order approving Detroit Edison&#8217;s request to increase the PSCR factor to 11.22 mills/kWh. In January&#160;2009, the MPSC approved the Company&#8217;s 2008 PSCR plan and authorized the Company to charge a maximum PSCR factor of 11.22 mills/kWh for 2008. The Company filed its 2008 PSCR reconciliation case in March&#160;2009. The filing requests recovery of a $19&#160;million PSCR under-collection. In addition, the filing requests authorization to refund its total 2005 PSCR under-collection surcharge at year-end 2008 of $10 million, including interest, to all commercial and industrial customers. Included in the 2008 PSCR reconciliation filing was the Company&#8217;s 2008 pension expense mechanism reconciliation that reflects a $50&#160;million over-collection. The Company expects an order in this proceeding in the second quarter of 2010. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><i>2009 Plan Year </i>&#8212; In September&#160;2008, Detroit Edison filed its 2009 PSCR plan case seeking approval of a levelized PSCR factor of 17.67 mills/kWh above the amount included in base rates for residential customers and a levelized PSCR factor of 17.29 mills/kWh above the amount included in base rates for commercial and industrial customers. The Company is supporting a total power supply expense forecast of $1.73&#160;billion. The plan also includes approximately $69&#160;million for the recovery of its projected 2008 PSCR under-collection from all customers and approximately $12 million for the refund of its 2005 PSCR reconciliation surcharge over-collection to commercial and industrial customers only. Also included in the filing is a request for approval of the Company&#8217;s expense associated with the use of urea in the selective catalytic reduction units at Monroe power plant as well as a request for approval of a contract for capacity and energy associated with a renewable (wind)&#160;energy project. The Company&#8217;s PSCR Plan will allow the Company to recover its reasonably and prudently incurred power supply expense including, fuel costs, purchased and net interchange power costs, nitrogen oxide and sulfur dioxide emission allowance costs, transmission costs and MISO costs. The Company self-implemented a PSCR factor of 11.64 mills/kWh above the amount included in base rates for residential customers and a PSCR factor of 11.22 mills/kWh above the amount included in base rates for commercial and industrial customers on bills rendered in January&#160;2009. Subsequently, as a result of the December&#160;23, 2008 MPSC order in the 2007 Detroit Edison rate case, the Company implemented a PSCR factor of 3.18 mills/kWh below the amount included in base rates for residential customers and a PSCR factor of 3.60 mills/kWh below the amount included in base rates for commercial and industrial customers for service rendered effective January&#160;14, 2009. The Company will self-implement a PSCR factor of 10.18 mills/kWh below the amount included in base rates for residential customers and a PSCR factor of 10.46 mills/kWh below the amount included in base rates for commercial and industrial customers for bills rendered effective August&#160;1, 2009. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Gas Rate Case Filings</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><i>2003 Gas Rate Case / Motion for Commission Decision and Remand for Control Premium Recovery &#8212;</i> MichCon filed a motion with the MPSC on June&#160;1, 2009 requesting a decision on remand from the Court of Appeals for MichCon&#8217;s control premium recovery. This motion concerns the control premium that DTE Energy paid to acquire MCN. DTE Energy apportioned the control premium primarily between its Detroit Edison and MichCon subsidiaries. The MPSC denied MichCon&#8217;s request to recover its $25 million portion of the control premium in its 2003 rate case. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><i>2009 Gas Rate Case </i>- MichCon filed a general rate case on June&#160;9, 2009 based on a 2008 historical test year. The filing with the MPSC requested a $193&#160;million, or 11.5&#160;percent average increase in MichCon&#8217;s annual revenues for a 2010 projected test year. The requested $193&#160;million increase in revenues is required to recover the increased costs associated with the revenue requirement associated with increased investments in net plant and working capital, the impact of high levels of uncollectible expense and the cost of natural gas theft primarily due to economic conditions in Michigan, sales reductions due to customer conservation and the trend of warmer weather on MichCon&#8217;s market, and increasing operating costs, largely due to inflation. </div> <!-- Folio --> <!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">In addition, MichCon&#8217;s filing made, among other requests, the following proposals: </div> <div style="margin-top: 6pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="2%" style="background: transparent">&#160;</td> <td width="3%" nowrap="nowrap" align="left"><b>&#8226;</b></td> <td width="1%">&#160;</td> <td>Implementation of a Lost Gas and Company Use &#8212; Expense True-up Mechanism;</td> </tr> <tr> <td style="font-size: 6pt">&#160;</td> </tr> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="2%" style="background: transparent">&#160;</td> <td width="3%" nowrap="nowrap" align="left"><b>&#8226;</b></td> <td width="1%">&#160;</td> <td>Continued application of an uncollectible expense true-up mechanism based on a $70&#160;million expense level of uncollectible expenses; and,</td> </tr> <tr> <td style="font-size: 6pt">&#160;</td> </tr> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="2%" style="background: transparent">&#160;</td> <td width="3%" nowrap="nowrap" align="left"><b>&#8226;</b></td> <td width="1%">&#160;</td> <td>Implementation of a revenue decoupling mechanism.</td> </tr> </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Pursuant to the October&#160;2008 Michigan legislation, and the settlement in MichCon&#8217;s last base gas sale case, MichCon anticipates self-implementing a rate increase on January&#160;1, 2010. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Uncollectible Expense True-Up Mechanism (UETM)&#160;and Report of Safety and Training-Related Expenditures</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><i>2007 UETM </i>&#8212; In March&#160;2008, MichCon filed an application with the MPSC for approval of its UETM for 2007 requesting approximately $34&#160;million consisting of $33&#160;million of costs related to 2007 uncollectible expense and associated carrying charges and $1&#160;million of under-collections for the 2005 UETM. The March&#160;2008 application included a report of MichCon&#8217;s 2007 annual safety and training-related expenses, which showed no refund was necessary because actual expenditures exceeded the amount included in base rates. An MPSC order was issued in December&#160;2008 approving the collection of $34&#160;million requested in the March&#160;2008 filing. MichCon was authorized to implement the new UETM monthly surcharge for service rendered on and after January&#160;1, 2009. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><i>2008 UETM </i>&#8212; In March&#160;2009, MichCon filed an application with the MPSC for approval of its UETM for 2008 requesting approximately $87&#160;million consisting of $83&#160;million of costs related to 2008 uncollectible expense and associated carrying charges and $4&#160;million of under-collections for the 2006 UETM. The March&#160;2009 application included a report of MichCon&#8217;s 2008 annual safety and training-related expenses, which showed no refund was necessary because actual expenditures exceeded the amount included in base rates. An order is expected in this case in the fourth quarter of 2009. In May&#160;2009, the Michigan Supreme Court denied the Attorney General&#8217;s leave to appeal the Court of Appeal&#8217;s decision that the MPSC had statutory authority to approve a UETM in a general rate case. In response to this denial, the Attorney General withdrew as an intervenor in this case. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Gas Cost Recovery Proceedings</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><i>2007-2008 Plan Year / Base Gas Sale Consolidated </i>&#8212;In June&#160;2008, MichCon filed its GCR reconciliation for the 2007-2008 GCR year. The filing supported a total under-recovery, including interest through March&#160;2008, of $10&#160;million. In June&#160;2009, the parties filed a settlement agreement including MichCon&#8217;s under-recovery, as filed, plus interest. The MPSC issued an order approving the settlement agreement on July&#160;1, 2009. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><i>2008 &#8212; 2009 Plan Year GCR Reconciliation </i>&#8212;In June&#160;2009, MichCon filed its GCR reconciliation case for the 2008 &#8212; 2009 GCR year. The filing includes a $5&#160;million overrecovery that has already been rolled into the 2009 &#8212; 2010 GCR plan year. An MPSC order in this case is expected in 2010. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><i>2009-2010 Plan Year &#8212; </i>In December&#160;2008, MichCon filed its GCR plan case for the 2009-2010 GCR plan year. MichCon filed for a maximum GCR factor of $8.46 per Mcf, adjustable by a contingent mechanism. In April&#160;2009, MichCon, MPSC Staff and Intervenors filed a partial settlement agreement in the case establishing the fixed price purchase guidelines MichCon filed in its case are reasonable and prudent for MichCon to use until an MPSC order is issued establishing otherwise. On April&#160;30, 2009, the MPSC issued an order approving the partial settlement agreement. An MPSC order in this case is expected in 2009. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><i>2009 Proposed Base Gas Sale </i>&#8212; In July&#160;2008, MichCon filed an application with the MPSC requesting permission to sell an additional 4 Bcf of base gas that will become available for sale as a result of better than expected operations at its storage fields. In February&#160;2009, a settlement agreement was filed with the MPSC, which will allow MichCon to sell and retain the profits of 2 Bcf of base gas, with the remaining 2 Bcf to be used for the benefit of GCR/GCC customers as colder-than-normal weather protection. The settlement also included a provision that MichCon was subject to a moratorium on a general rate case filing until June&#160;2009. An MPSC order was issued March&#160;5, 2009 approving the settlement. </div> <!-- Folio --> <!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Other</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In July&#160;2007, the State of Michigan Court of Appeals published its decision with respect to an appeal by Detroit Edison and others of certain provisions of a November&#160;2004 MPSC order, including reversing the MPSC&#8217;s denial of recovery of merger control premium costs. In its published decision, the Court of Appeals held that Detroit Edison is entitled to recover its allocated share of the merger control premium and remanded this matter to the MPSC for further proceedings to establish the precise amount and timing of this recovery. In September&#160;2007, the Court of Appeals remanded to the MPSC, for reconsideration, the MichCon recovery of merger control premium costs. Other parties filed requests for leave to appeal to the Michigan Supreme Court from the Court of Appeals decision and in September&#160;2008, the Michigan Supreme Court granted the requests to address the merger control premium as well as the recovery of transmission costs through the PSCR. On May&#160;1, 2009, the Michigan Supreme Court issued an order reversing the Court of Appeals decision with respect to recovery of the merger control premium, and reinstated the MPSC&#8217;s decision excluding the control premium costs from Detroit Edison&#8217;s general rates. The Court affirmed the lower court&#8217;s decision upholding the right of Detroit Edison to recover electric transmission costs through the Company&#8217;s PSCR clause. The Company requested rehearing of the Supreme Court order on the merger premium and the Michigan Attorney General requested rehearing of the transmission portion of the order. On June&#160;26, 2009, the Michigan Supreme Court denied both requests for rehearing. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The Company is unable to predict the outcome of the unresolved regulatory matters discussed herein. Resolution of these matters is dependent upon future MPSC orders and appeals, which may materially impact the financial position, results of operations and cash flows of the Company. </div> <!-- Folio --> <!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif"> </div> </body> </html> <!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --> <html> <head></head> <body> <!-- Begin Block Tagged Note 6 - us-gaap:EarningsPerShareTextBlock--> <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><font style="font-variant: SMALL-CAPS"><b>NOTE 6 &#8212; COMMON STOCK AND EARNINGS PER SHARE</b></font> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The Company reports both basic and diluted earnings per share. 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margin-top: 6pt">Options to purchase approximately 5&#160;million and 2&#160;million shares of common stock as of June&#160;30, 2009 and 2008, respectively, were not included in the computation of diluted earnings per share because the options&#8217; exercise price was greater than the average market price of the common shares, thus making these options anti-dilutive. </div> <!-- Folio --> <!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif"> </div> </body> </html> <!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --> <html> <head></head> <body> <!-- Begin Block Tagged Note 7 - us-gaap:LongTermDebtTextBlock--> <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><font style="font-variant: SMALL-CAPS"><b>NOTE 7 &#8212; LONG-TERM DEBT</b></font> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><b>Debt Issuances</b> </div> <div align="left" style="font-size: 10pt; 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margin-top: 12pt"><font style="font-variant: SMALL-CAPS"><b>NOTE 8 &#8212; SHORT-TERM CREDIT ARRANGEMENTS AND BORROWINGS</b></font> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">DTE Energy and its wholly-owned subsidiaries, Detroit Edison and MichCon, have entered into revolving credit facilities with similar terms. The five-year and two-year revolving credit facilities are with a syndicate of banks and may be used for general corporate borrowings, but are intended to provide liquidity support for each of the companies&#8217; commercial paper programs. Borrowings under the facilities are available at prevailing short-term interest rates. Additionally, DTE Energy, Detroit Edison and MichCon have various other bank loans and facilities. The above agreements require the Company to maintain a debt to total capitalization ratio of no more than 0.65 to 1. DTE Energy, Detroit Edison and MichCon are in compliance with this financial covenant. The availability under these combined facilities at June&#160;30, 2009 is shown in the following table: </div> <!-- Folio --> <!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif"> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%"> <!-- Begin Table Head --> <tr valign="bottom"> <td width="52%">&#160;</td> <td width="5%">&#160;</td> <td width="1%">&#160;</td> <td width="5%">&#160;</td> <td width="1%">&#160;</td> <td width="5%">&#160;</td> <td width="1%">&#160;</td> <td width="5%">&#160;</td> <td width="1%">&#160;</td> <td width="5%">&#160;</td> <td width="1%">&#160;</td> <td width="5%">&#160;</td> <td width="1%">&#160;</td> <td width="5%">&#160;</td> <td width="1%">&#160;</td> <td width="5%">&#160;</td> <td width="1%">&#160;</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left" style="border-bottom: 0px solid #000000"><b>(in Millions)</b></td> <td>&#160;</td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>DTE Energy</b></td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Detroit Edison</b></td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>MichCon</b></td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Total</b></td> <td>&#160;</td> </tr> <!-- End Table Head --> <!-- Begin Table Body --> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; 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margin-top: 6pt">The Company has other outstanding letters of credit which are not included in the above described facilities totaling approximately $16&#160;million which are used for various corporate purposes. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In April&#160;2009, the Company completed an early renewal of $975&#160;million of its syndicated revolving credit facilities before their scheduled expiration in October&#160;2009. The new $1&#160;billion two-year facility will expire in April&#160;2011 and has similar covenants to the prior facility. A new two-year $50&#160;million credit facility was completed in April&#160;2009 and a new one-year $70&#160;million credit facility was completed in June&#160;2009. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In conjunction with maintaining certain exchange traded risk management positions, the Company may be required to post cash collateral with its clearing agent. At June&#160;30, 2009, the Company had a demand financing agreement for up to $120&#160;million with its clearing agent. In addition to the amounts shown above, the amount outstanding under this agreement was $27&#160;million and $26&#160;million at June&#160;30, 2009 and December&#160;31, 2008, respectively. </div> </div> </body> </html> <!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --> <html> <head></head> <body> <!-- Begin Block Tagged Note 9 - us-gaap:CommitmentsAndContingenciesDisclosureTextBlock--> <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><font style="font-variant: SMALL-CAPS"><b>NOTE 9 &#8212; COMMITMENTS AND CONTINGENCIES</b></font> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><b><i>Environmental</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><i>Electric Utility</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><i>Air </i>&#8212; Detroit Edison is subject to EPA ozone transport and acid rain regulations that limit power plant emissions of sulfur dioxide and nitrogen oxides. Since 2005, EPA and the State of Michigan issued additional emission reduction regulations relating to ozone, fine particulate, regional haze and mercury air pollution. The new rules will lead to additional controls on fossil-fueled power plants to reduce nitrogen oxide, sulfur dioxide and mercury emissions. To comply with these requirements, Detroit Edison has spent approximately $1.4&#160;billion through 2008. The Company estimates Detroit Edison&#8217;s future undiscounted capital expenditures at up to approximately $100 million in 2009 and up to approximately $2.3&#160;billion of additional capital expenditures through 2019 based on current regulations. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In July&#160;2009, DTE Energy received a Notice of Violation/Finding of Violation (NOV/FOV) from the EPA alleging, among other things, that five Detroit Edison power plants violated New Source Review standards, Prevention of Significant Deterioration requirements, and Title V operating permit requirements under the Clean Air Act. We are in the process of preparing our response to the NOV/FOV, but we believe that the plants identified by the EPA have complied with applicable regulations. Depending upon the outcome of our discussions with the EPA regarding the NOV/FOV, the EPA could bring legal action against Detroit Edison. We could also be required to install additional pollution control equipment at some or all of the power plants in question, engage in Supplemental Environmental Programs, and/or pay fines. We cannot predict the financial impact or outcome of this matter, or the timing of its resolution. </div> <!-- Folio --> <!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt"><i>Global Climate Change &#8212; </i>Proposals for voluntary initiatives and mandatory controls are being discussed in the United States to reduce greenhouse gases such as carbon dioxide, a by-product of burning fossil fuels. On June&#160;26, 2009, the U.S. House of Representatives passed the American Clean Energy and Security Act (ACESA). The bill has yet to be taken up by the U.S. Senate. The ACESA includes a cap and trade program that would start in 2012 and provides for costs for emissions of greenhouse gases (e.g. carbon dioxide). Meanwhile, the EPA is beginning to implement regulatory action under the Clean Air Act to address climate change. There may be further legislative and or regulatory action to address the issue of changes in climate that may result from the build-up of greenhouse gases in the atmosphere. If passed, legislative or regulatory actions as currently being discussed could have a material impact on our operations and financial position and the rates we charge our customers. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><i>Water </i>&#8212; In response to an EPA regulation, Detroit Edison is required to examine alternatives for reducing the environmental impacts of the cooling water intake structures at several of its facilities. Based on the results of the studies to be conducted over the next several years, Detroit Edison may be required to install additional control technologies to reduce the impacts of the water intakes. Initially, it was estimated that Detroit Edison could incur up to approximately $55&#160;million over the four to six years subsequent to 2008 in additional capital expenditures to comply with these requirements. However, a January&#160;2007 circuit court decision remanded back to the EPA several provisions of the federal regulation that may result in a delay in compliance dates. The decision also raised the possibility that Detroit Edison may have to install cooling towers at some facilities at a cost substantially greater than was initially estimated for other mitigative technologies. In 2008, the Supreme Court agreed to review the remanded cost-benefit analysis provision of the rule. In April&#160;2009, the Supreme Court ruled that a cost-benefit analysis is a permissible provision of the rule. Concurrently, the EPA continues to develop a revised rule, which is expected to be published later in 2009. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><i>Contaminated Sites </i>&#8212; Detroit Edison conducted remedial investigations at contaminated sites, including three former manufactured gas plant (MGP)&#160;sites, the area surrounding an ash landfill and several underground and aboveground storage tank locations. The findings of these investigations indicated that the estimated cost to remediate these sites is expected to be incurred over the next several years. At June&#160;30, 2009 and December&#160;31, 2008, the Company had $11&#160;million and $12&#160;million, respectively, accrued for remediation. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Gas Utility</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><i>Contaminated Sites </i>&#8212; Prior to the construction of major interstate natural gas pipelines, gas for heating and other uses was manufactured locally from processes involving coal, coke or oil. Gas Utility owns, or previously owned, 15 such former MGP sites. Investigations have revealed contamination related to the by-products of gas manufacturing at each site. In addition to the MGP sites, the Company is also in the process of cleaning up other contaminated sites. Cleanup activities associated with these sites will be conducted over the next several years. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The MPSC has established a cost deferral and rate recovery mechanism for investigation and remediation costs incurred at former MGP sites. Accordingly, Gas Utility recognizes a liability and corresponding regulatory asset for estimated investigation and remediation costs at former MGP sites. As of June&#160;30, 2009 and December&#160;31, 2008, the Company had approximately $36&#160;million and $38 million, respectively, accrued for remediation. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Any significant change in assumptions, such as remediation techniques, nature and extent of contamination and regulatory requirements, could impact the estimate of remedial action costs for the sites and affect the Company&#8217;s financial position and cash flows. However, the Company anticipates the cost deferral and rate recovery mechanism approved by the MPSC will prevent environmental costs from having a material adverse impact on our results of operations. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Non-Utility</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The Company&#8217;s non-utility affiliates are subject to a number of environmental laws and regulations dealing with the protection of the environment from various pollutants. The Company has completed the installation of new environmental equipment at our coke battery facility in Michigan. The Michigan coke battery facility received and responded to information requests from the EPA resulting in the issuance of a notice of violation regarding potential maximum achievable control technologies and new source review violations. The EPA is in the process of reviewing the Company&#8217;s position of demonstrated compliance and has not initiated escalated enforcement. At this time, the Company cannot predict the impact of this issue. Furthermore, the Company is in the process of settling historical air violations at its coke battery facility located in Pennsylvania. At this time, the Company cannot predict the impact of this settlement. The Company is investigating wastewater treatment technologies for the coke battery facility located in Pennsylvania. This investigation may result in capital expenditures to meet regulatory requirements. The Company&#8217;s non-utility affiliates are substantially in compliance with all environmental requirements, other than as noted above. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Guarantees</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In certain limited circumstances, the Company enters into contractual guarantees. The Company may guarantee another entity&#8217;s obligation in the event it fails to perform. The Company may provide guarantees in certain indemnification agreements. Finally, the Company may provide indirect guarantees for the indebtedness of others. Below are the details of specific material guarantees the Company currently provides. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Millennium Pipeline Project Guarantee</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The Company owns a 26&#160;percent equity interest in the Millennium Pipeline Project (Millennium). Millennium is accounted for under the equity method. Millennium began commercial operations in December&#160;2008. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">On August&#160;29, 2007, Millennium entered into a borrowing facility to finance the construction costs of the project. The total facility amounts to $800&#160;million and is guaranteed by the project partners, based upon their respective ownership percentages. The facility expires on August&#160;29, 2010 and was fully drawn as of June&#160;30, 2009. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The Company has agreed to guarantee 26&#160;percent of the borrowing facility and in the event of default by Millennium the maximum potential amount of future payments under this guarantee is approximately $210&#160;million. The guarantee includes DTE Energy&#8217;s revolving credit facility&#8217;s covenant and default provisions by reference. Related to this facility, the Company has also agreed to guarantee 26&#160;percent of Millennium&#8217;s forward-starting interest rate swaps with a notional amount of $420&#160;million. The Company&#8217;s exposure on the forward-starting interest rate swaps varies with changes in Treasury rates and credit swap spreads and was approximately $12&#160;million pre-tax at June 30, 2009. Because the Company is unable to accurately anticipate changes in Treasury rates and credit swap spreads, it is unable to estimate its maximum exposure under its share of Millennium&#8217;s forward-starting interest rate swaps. An incremental 0.25&#160;percent decrease in the forward interest rate swap rates will increase its exposure by approximately $3&#160;million. There are no recourse provisions or collateral that would enable the Company to recover any amounts paid under the guarantees, other than its share of project assets. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Other Guarantees</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In January&#160;2003, the Company sold the steam heating business of Detroit Edison to Thermal Ventures II, LP. Under the terms of sale, Detroit Edison guaranteed bank loans of $13&#160;million that Thermal Ventures II, LP used for capital improvements to the steam heating system. At June&#160;30, 2009, the Company had reserves of $13&#160;million related to the bank loan guarantee. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The Company&#8217;s other guarantees are not individually material with maximum potential payments totaling $10&#160;million at June&#160;30, 2009. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The Company is periodically required to obtain performance surety bonds in support of obligations to various governmental entities and other companies in connection with its operations. As of June 30, 2009, the Company had approximately $12&#160;million of performance bonds outstanding. In the event that such bonds are called for nonperformance, the Company would be obligated to reimburse the issuer of the performance bond. The Company is released from the performance bonds as the contractual performance is completed and does not believe that a material amount of any currently outstanding performance bonds will be called. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Labor Contracts</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">There are several bargaining units for the Company&#8217;s union employees. The majority of our union employees are under contracts that expire in June and October&#160;2010 and August&#160;2012. </div> <!-- Folio --> <!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Purchase Commitments</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Detroit Edison has an Energy Purchase Agreement to purchase electricity from the Greater Detroit Resource Recovery Authority (GDRRA). The term of the Energy Purchase Agreement for the purchase of electricity runs through June&#160;2024. The Company estimates electric purchase commitments from 2009 through 2024 will not exceed $300&#160;million in the aggregate. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">As of June&#160;30, 2009, the Company was party to numerous long-term purchase commitments relating to a variety of goods and services required for the Company&#8217;s business. These agreements primarily consist of fuel supply commitments and energy trading contracts. The Company estimates that these commitments will be approximately $5.9&#160;billion from 2009 through 2051. The Company also estimates that 2009 capital expenditures will be approximately $1.1&#160;billion. 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<td>&#160;</td> <td colspan="3" align="center">Derivative liabilities</td> <td>&#160;</td> <td nowrap="nowrap" align="left">&#160;</td> <td align="right">(52</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">&#160; </div></td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="border-right: 2px solid #000000">&#160;</td> <td>&#160;</td> <td colspan="3" align="center"></td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Oil </div></td> <td>&#160;</td> <td colspan="3" align="center">Derivative assets</td> <td>&#160;</td> <td>&#160;</td> <td align="right">35</td> <td>&#160;</td> <td style="border-right: 2px solid #000000">&#160;</td> <td>&#160;</td> <td colspan="3" align="center">Derivative liabilities</td> <td>&#160;</td> <td nowrap="nowrap" 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These contracts contain provisions which allow the counterparties to request that the Company post cash or letters of credit as collateral in the event that DTE Energy&#8217;s credit rating is downgraded below investment grade. Certain of these provisions (known as &#8220;hard triggers&#8221;) state specific circumstances under which the Company can be asked to post collateral upon the occurrence of a credit downgrade, while other provisions (known as &#8220;soft triggers&#8221;) are not as specific. For contracts with soft triggers, it is difficult to estimate the amount of collateral which may be requested by counterparties and/or which the Company may ultimately be required to post. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The amount of such collateral which could be requested fluctuates based on commodity prices (primarily gas, power and coal) and the provisions and maturities of the underlying transactions. 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Fair value is a market-based measurement that is determined based on inputs, which refer broadly to assumptions that market participants&#8217; use in pricing assets or liabilities. These inputs can be readily observable, market corroborated or generally unobservable inputs. The Company makes certain assumptions it believes that market participants would use in pricing assets or liabilities, including assumptions about risk, and the risks inherent in the inputs to valuation techniques. Credit risk of the Company and its counterparties is incorporated in the valuation of assets and liabilities through the use of credit reserves, the impact of which is immaterial for the three and six months ended June&#160;30, 2009. 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Assessing the significance of a particular input may require judgment considering factors specific to the asset or liability, and may affect the valuation of the asset or liability and its placement within the fair value hierarchy. 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Non-exchange-traded fixed income securities are valued based upon quotations available from brokers or pricing services. For non-exchange traded fixed income securities, the trustees receive prices from pricing services. A primary price source is identified by asset type, class or issue for each security. The trustees monitor prices supplied by pricing services and may use a supplemental price source or change the primary price source of a given security if the trustees challenge an assigned price and determine that another price source is considered to be preferable. DTE Energy has obtained an understanding of how these prices are derived, including the nature and observability of the inputs used in deriving such prices. Additionally, DTE Energy selectively corroborates the fair values of securities by comparison of market-based price sources. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Derivative Assets and Liabilities</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Derivative assets and liabilities are comprised of physical and financial derivative contracts, including futures, forwards, options and swaps that are both exchange-traded and over-the-counter traded contracts. Various inputs are used to value derivatives depending on the type of contract and availability of market data. Exchange-traded derivative contracts are valued using quoted prices in active markets. DTE Energy considers the following criteria in determining whether a market is considered active: frequency in which pricing information is updated, variability in pricing between sources or over time and the availability of public information. Other derivative contracts are valued based upon a variety of inputs including commodity market prices, broker quotes, interest rates, credit ratings, default rates, market-based seasonality and basis differential factors. DTE Energy monitors the prices that are supplied by brokers and pricing services and may use a supplemental price source or change the primary price source of an index if prices become unavailable or another price source is determined to be more representative of fair value. DTE Energy has obtained an understanding of how these prices are derived. Additionally, DTE Energy selectively corroborates the fair value of its transactions by comparison of market-based price sources. 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Changes in the fair value of Fermi 2 nuclear decommissioning investments are recorded as adjustments to regulatory assets or liabilities, due to a recovery mechanism from customers. The Company&#8217;s investments are reviewed for impairment each reporting period. 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SFAS No.&#160;157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. It emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Fair value measurement should be determined based on the assumptions that market participants would use in pricing an asset or liability. Effective January&#160;1, 2008, the Company adopted SFAS No.&#160;157. As permitted by FASB Staff Position FAS No.&#160;157-2, the Company elected to defer the effective date of SFAS No.&#160;157 as it pertains to measurement and disclosures about the fair value of non-financial assets and liabilities made on a nonrecurring basis. The Company has adopted the recognition provisions for non-financial assets and liabilities as of January&#160;1, 2009. See Note 3 for further disclosures. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In April&#160;2009, the FASB issued three FSPs intended to provide additional application guidance and enhance disclosures regarding fair value measurements and impairments of securities. 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The FSP provides application guidance on measuring fair value when the volume and level of activity has significantly decreased and identifying transactions that are not orderly. 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The adoption of these FSPs did not have a significant impact on DTE Energy&#8217;s consolidated financial statements. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In June&#160;2008, the FASB issued FSP EITF 03-6-1, <i>Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities. </i>This FSP addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing earnings per share (EPS)&#160;under the two-class method described in paragraphs 60 and 61 of SFAS No.&#160;128, <i>Earnings Per Share. </i>Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of EPS pursuant to the two-class method. Stock awards granted by the Company under its stock-based compensation plan qualify as a participating security. This FSP is effective for financial statements issued for fiscal years and interim periods beginning after December&#160;15, 2008 and will be applied retrospectively. The Company adopted the requirements of the FSP effective January&#160;1, 2009. See Note 6 for further disclosure. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Noncontrolling Interests in Consolidated Financial Statements</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In December&#160;2007, the FASB issued SFAS No.&#160;160, <i>Noncontrolling Interests in Consolidated Financial</i><i> Statements &#8212; an Amendment of ARB No.&#160;51. </i>This Statement establishes accounting and reporting standards for the noncontrolling interests in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. SFAS No.&#160;160 is effective for fiscal years, and interim periods within those years, beginning on or after December&#160;15, 2008. This Statement shall be applied prospectively as of the beginning of the fiscal year in which this Statement is initially applied, except for the presentation and disclosure requirements which shall be applied retrospectively for all periods presented. The Company adopted SFAS No.&#160;160 as of January&#160;1, 2009. Adoption of SFAS No.&#160;160 did not have a material effect on the Company&#8217;s consolidated financial statements. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Disclosures about Derivative Instruments and Guarantees</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In March&#160;2008, the FASB issued SFAS No.&#160;161, <i>Disclosures about Derivative Instruments and Hedging</i><i> Activities &#8212; an amendment of FASB Statement No.&#160;133</i>. This statement requires enhanced disclosures about an entity&#8217;s derivative and hedging activities and thereby improves the transparency of financial reporting. Entities are required to provide enhanced disclosures about (a)&#160;how and why an entity uses derivative instruments, (b)&#160;how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and (c)&#160;how derivative instruments and related hedged items affect an entity&#8217;s financial position, financial performance, and cash flows. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">SFAS No.&#160;161 is effective for financial statements issued for fiscal years and interim periods beginning after November&#160;15, 2008, with early application encouraged. Comparative disclosures for earlier periods at initial adoption are encouraged but not required. The Company adopted SFAS No. 161 effective January&#160;1, 2009. See Note 3. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Subsequent Events</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In May&#160;2009, the FASB issued SFAS No.&#160;165, <i>Subsequent Events</i>. This statement provides guidance on management&#8217;s assessment of subsequent events. The new standard clarifies that management must evaluate, as of each reporting period, events or transactions that occur after the balance sheet date &#8220;through the date that the financial statements are issued or are available to be issued.&#8221; Management must perform its assessment for both interim and annual financial reporting periods. SFAS No.&#160;165 does not significantly change the Company&#8217;s practice for evaluating such events. SFAS No.&#160;165 is effective prospectively for interim and annual periods ending after June&#160;15, 2009 and requires disclosure of the date subsequent events are evaluated through. The Company adopted SFAS No.&#160;165 during the quarter ended June&#160;30, 2009. See Note 1. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Transfers of Financial Assets</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In June&#160;2009, the FASB issued SFAS No.&#160;166, <i>Accounting for Transfers of Financial Assets &#8212; an amendment of FASB No.&#160;140. </i>This statement amends the derecognition guidance in SFAS No.&#160;140 and reflects the FASB&#8217;s response to issues entities have encountered when applying SFAS No.&#160;140. In addition, SFAS No.&#160;166 addresses concerns expressed by the SEC, members of Congress, and financial statement users about the accounting and disclosures required by SFAS No.&#160;140 in the wake of the subprime mortgage crisis and the deterioration in the global credit markets. SFAS No.&#160;166 is effective for financial asset transfers occurring after the beginning of an entity&#8217;s first fiscal year that begins after November&#160;15, 2009. Early adoption is prohibited. SFAS No.&#160;166 must be applied prospectively to transfers of financial assets occurring on or after its effective date. Accordingly, transferors should not reevaluate historical transfers of financial assets under the derecognition criteria in SFAS No.&#160;166. The adoption of SFAS No.&#160;166 will not have a material impact on DTE Energy&#8217;s consolidated financial statements. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Variable Interest Entities (VIE)</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In June&#160;2009, the FASB issued SFAS No.&#160;167, <i>Amendments to FASB Interpretation No.&#160;46(R). </i>This statement, amends the consolidation guidance that applies to VIEs and affects the overall consolidation analysis under Interpretation 46(R). The amendments to the consolidation guidance affect all entities and enterprises currently within the scope of Interpretation 46(R), as well as qualifying special purpose entities that are currently outside the scope of Interpretation 46(R). Accordingly, the Company will need to reconsider its previous Interpretation 46(R) conclusions, including (1)&#160;whether an entity is a VIE, (2)&#160;whether the enterprise is the VIE&#8217;s primary beneficiary, and (3)&#160;what type of financial statement disclosures are required. SFAS No.&#160;167 is effective as of the beginning of the first fiscal year that begins after November&#160;15, 2009. Early adoption is prohibited. 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The Company recognized a gain of $128&#160;million ($80&#160;million after-tax) on the sale in the six months ended June&#160;30, 2008. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Synthetic Fuel Business</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Due to the expiration of synfuel production tax credits in 2007, the Synthetic Fuel business ceased operations and was classified as a discontinued operation as of December&#160;31, 2007. The favorable impact of reserve adjustments for the final phase-out percentage of approximately $16&#160;million, the final settlement of other miscellaneous assets and liabilities and related tax impacts resulted in net income of $12&#160;million for the first six months of 2008. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The Company has provided certain guarantees and indemnities in conjunction with the sales of interests in its synfuel facilities. 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margin-top: 12pt"><font style="font-variant: SMALL-CAPS"><b>NOTE 7 &#8212; LONG-TERM DEBT</b></font> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><b>Debt Issuances</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In 2009, the Company has issued or remarketed the following long-term debt: </div> <div align="left" style="font-size: 10pt; margin-top: 12pt">(in Millions) </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%"> <!-- Begin Table Head --> <tr valign="bottom"> <td width="7%">&#160;</td> <td width="5%">&#160;</td> <td width="7%">&#160;</td> <td width="5%">&#160;</td> <td width="40%">&#160;</td> <td width="5%">&#160;</td> <td width="1%">&#160;</td> <td width="5%">&#160;</td> <td width="1%">&#160;</td> <td width="5%">&#160;</td> <td width="1%">&#160;</td> <td width="5%">&#160;</td> <td width="1%">&#160;</td> <td width="5%">&#160;</td> <td width="1%">&#160;</td> <td width="5%">&#160;</td> <td width="1%">&#160;</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="LEFT"><b>Company</b></td> <td>&#160;</td> <td nowrap="nowrap" align="center"><b>Month Issued</b></td> <td>&#160;</td> <td nowrap="nowrap" align="center"><b>Type</b></td> <td>&#160;</td> <td nowrap="nowrap" align="center" colspan="2"><b>Interest Rate</b></td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="center" colspan="2"><b>Maturity</b></td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="center" colspan="2"><b>Amount</b></td> <td>&#160;</td> </tr> <!-- End Table Head --> <!-- Begin Table Body --> <tr style="font-size: 1px"> <td colspan="17" valign="top" align="left" style="border-top: 1px solid #000000">&#160;</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td align="left" valign="top" nowrap="nowrap">Detroit Edison</td> <td>&#160;</td> <td align="center" valign="bottom">April</td> <td>&#160;</td> <td> <div style="margin-left:15px; 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No authoritative reference available. false 13 5 us-gaap_IncreaseDecreaseInOtherOperatingLiabilities us-gaap true debit duration monetary No definition available. false false false false false false false false false 1 false true 0 0 false false 2 false true 30000000 30 false false No definition available. No authoritative reference available. false 14 5 us-gaap_IncreaseDecreaseInOperatingCapital us-gaap true credit duration monetary No definition available. false false false false false false false false false 1 false true 475000000 475 false false 2 false true 771000000 771 false false No definition available. No authoritative reference available. true 15 4 us-gaap_NetCashProvidedByUsedInOperatingActivities us-gaap true na duration monetary No definition available. false false false false false false false false false 1 false true 1301000000 1301 false false 2 false true 1535000000 1535 false false No definition available. No authoritative reference available. true 16 3 us-gaap_NetCashProvidedByUsedInInvestingActivitiesAbstract us-gaap true na duration string No definition available. false false false false false true false false false 1 false false 0 0 false false 2 false false 0 0 false false No definition available. false 17 4 dte_PaymentsToAcquirePropertyPlantAndEquipmentUtility dte false credit duration monetary Payments to acquire property, plant and equiment for utility assets. false false false false false false false false false 1 false true -581000000 -581 false false 2 false true -544000000 -544 false false Payments to acquire property, plant and equiment for utility assets. No authoritative reference available. false 18 4 dte_PaymentsToAcquirePropertyPlantAndEquipmentNonUtility dte false credit duration monetary Payments to acquire property, plant and equipment for non-utility assets. false false false false false false false false false 1 false true -32000000 -32 false false 2 false true -110000000 -110 false false Payments to acquire property, plant and equipment for non-utility assets. No authoritative reference available. false 19 4 dte_ProceedsFromSaleOfInterestsInSynfuelProjects dte false debit duration monetary Proceeds from sale of synthetic fuel business. false false false false false false false false false 1 false true 0 0 false false 2 false true 82000000 82 false false Proceeds from sale of synthetic fuel business. No authoritative reference available. false 20 4 dte_RefundsToSynfuelPartners dte false credit duration monetary Refunds to partners involved with synthetic fuel activities. false false false false false false false false false 1 false true 0 0 false false 2 false true -96000000 -96 false false Refunds to partners involved with synthetic fuel activities. No authoritative reference available. false 21 4 us-gaap_ProceedsFromSaleOfOilAndGasPropertyAndEquipment us-gaap true debit duration monetary No definition available. false false false false false false false false false 1 false true 0 0 false false 2 false true 253000000 253 false false No definition available. No authoritative reference available. false 22 4 us-gaap_ProceedsFromSaleOfOtherProductiveAssets us-gaap true debit duration monetary No definition available. false false false false false false false false false 1 false true 32000000 32 false false 2 false true 16000000 16 false false No definition available. No authoritative reference available. false 23 4 us-gaap_IncreaseDecreaseInRestrictedCash us-gaap true credit duration monetary No definition available. false false false false false false false false false 1 false true 17000000 17 false false 2 false true 54000000 54 false false No definition available. No authoritative reference available. false 24 4 us-gaap_ProceedsFromSaleOfAvailableForSaleSecurities us-gaap true debit duration monetary No definition available. false false false false false false false false false 1 false true 182000000 182 false false 2 false true 106000000 106 false false No definition available. No authoritative reference available. false 25 4 us-gaap_PaymentsToAcquireAvailableForSaleSecurities us-gaap true credit duration monetary No definition available. false false false false false false false false false 1 false true -190000000 -190 false false 2 false true -124000000 -124 false false No definition available. No authoritative reference available. false 26 4 us-gaap_PaymentsForProceedsFromOtherInvestingActivities us-gaap true credit duration monetary No definition available. false false false false false false false false false 1 false true -38000000 -38 false false 2 false true -89000000 -89 false false No definition available. No authoritative reference available. true 27 4 us-gaap_NetCashProvidedByUsedInInvestingActivities us-gaap true debit duration monetary No definition available. false false false false false false false false false 1 false true -610000000 -610 false false 2 false true -452000000 -452 false false No definition available. No authoritative reference available. true 28 3 us-gaap_NetCashProvidedByUsedInFinancingActivitiesAbstract us-gaap true na duration string No definition available. false false false false false true false false false 1 false false 0 0 false false 2 false false 0 0 false false No definition available. false 29 4 us-gaap_ProceedsFromIssuanceOfLongTermDebt us-gaap true debit duration monetary No definition available. false false false false false false false false false 1 false true 363000000 363 false false 2 false true 798000000 798 false false No definition available. No authoritative reference available. false 30 4 us-gaap_RepaymentsOfLongTermDebt us-gaap true credit duration monetary No definition available. false false false false false false false false false 1 false true -355000000 -355 false false 2 false true -154000000 -154 false false No definition available. No authoritative reference available. false 31 4 dte_RepurchaseOfLongTermDebt dte false debit duration monetary Tax exempt bonds repurchased following conversion from an auction rate mode to a weekly rate mode. false false false false false false false false false 1 false true 0 0 false false 2 false true -238000000 -238 false false Tax exempt bonds repurchased following conversion from an auction rate mode to a weekly rate mode. No authoritative reference available. false 32 4 us-gaap_ProceedsFromRepaymentsOfShortTermDebt us-gaap true debit duration monetary No definition available. false false false false false false false false false 1 false true -575000000 -575 false false 2 false true -984000000 -984 false false No definition available. No authoritative reference available. false 33 4 us-gaap_ProceedsFromIssuanceOfCommonStock us-gaap true debit duration monetary No definition available. false false false false false false false false false 1 false true 18000000 18 false false 2 false true 0 0 false false No definition available. No authoritative reference available. false 34 4 us-gaap_PaymentsForRepurchaseOfCommonStock us-gaap true credit duration monetary No definition available. false false false false false false false false false 1 false true 0 0 false false 2 false true -16000000 -16 false false No definition available. No authoritative reference available. false 35 4 us-gaap_PaymentsOfDividendsCommonStock us-gaap true credit duration monetary No definition available. false false false false false false false false false 1 false true -173000000 -173 false false 2 false true -172000000 -172 false false No definition available. No authoritative reference available. false 36 4 us-gaap_ProceedsFromPaymentsForOtherFinancingActivities us-gaap true debit duration monetary No definition available. false false false false false false false false false 1 false true -13000000 -13 false false 2 false true -6000000 -6 false false No definition available. No authoritative reference available. true 37 4 us-gaap_NetCashProvidedByUsedInFinancingActivities us-gaap true debit duration monetary No definition available. false false false false false false false false false 1 false true -735000000 -735 false false 2 false true -772000000 -772 false false No definition available. No authoritative reference available. true 38 3 us-gaap_CashAndCashEquivalentsPeriodIncreaseDecrease us-gaap true na duration monetary No definition available. false false false false false false false false false 1 false true -44000000 -44 false false 2 false true 311000000 311 false false No definition available. 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No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. Regulatory Matters. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. Tax exempt bonds repurchased following conversion from an auction rate mode to a weekly rate mode. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. 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No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. Payments to acquire property, plant and equipment for non-utility assets. No authoritative reference available. No authoritative reference available. No authoritative reference available. Refunds to partners involved with synthetic fuel activities. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. 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Payments to acquire property, plant and equiment for utility assets. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. Remaining liabilities of third party transportation capacity contracts that are being amortized over their remaining term.These contracts were previously accounted for using mark-to-market treatment that was discontinued due to a change in FERC policy. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. 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XML 22 R13.xml IDEA: Regulatory Matters 1.0.0.3 false Regulatory Matters false 1 $ false false Shares Standard http://www.xbrl.org/2003/instance shares xbrli 0 USD Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 USDEPS Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares xbrli 0 2 0 dte_RegulatoryMattersAbstract dte false na duration string Regulatory Matters. false false false false false true false false false 1 false false 0 0 false false Regulatory Matters. false 3 1 dte_RegulatoryMattersTextBlock dte false na duration string Regulatory Matters. false false false false false false false false false 1 false false 0 0 <!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --> <html> <head></head> <body> <!-- Begin Block Tagged Note 5 - dte:RegulatoryMattersTextBlock--> <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE 5 &#8212; REGULATORY MATTERS</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><b><i>2009 Electric Rate Case Filing</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Detroit Edison filed a general rate case on January&#160;26, 2009 based on a twelve months ended June 2008 historical test year. The filing with the MPSC requested a $378&#160;million, or 8.1&#160;percent average increase in Detroit Edison&#8217;s annual revenues for the twelve months ended June&#160;30, 2010 projected test year. The requested $378&#160;million increase in revenues is required to recover the increased costs associated with environmental compliance, operation and maintenance of the Company&#8217;s electric distribution system and generation plants, customer uncollectible accounts, inflation, the capital costs of plant additions and the reduction in territory sales. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In addition, Detroit Edison&#8217;s filing made, among other requests, the following proposals: </div> <div style="margin-top: 6pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="2%" style="background: transparent">&#160;</td> <td width="3%" nowrap="nowrap" align="left"><b>&#8226;</b></td> <td width="1%">&#160;</td> <td>Continued progress toward correcting the existing rate structure to more accurately reflect the actual cost of providing service to business customers;</td> </tr> </table> </div> <!-- Folio --> <!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif"> <div style="margin-top: 6pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="2%" style="background: transparent">&#160;</td> <td width="3%" nowrap="nowrap" align="left"><b>&#8226;</b></td> <td width="1%">&#160;</td> <td>Continued application of an adjustment mechanism to enable the Company to address the costs associated with retail electric customers migrating to and from Detroit Edison&#8217;s full service retail electric tariff service;</td> </tr> <tr> <td style="font-size: 6pt">&#160;</td> </tr> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="2%" style="background: transparent">&#160;</td> <td width="3%" nowrap="nowrap" align="left"><b>&#8226;</b></td> <td width="1%">&#160;</td> <td>Application of an uncollectible expense true-up mechanism based on the $87&#160;million expense level of uncollectible expenses that occurred during the 12&#160;month period ended June 2008;</td> </tr> <tr> <td style="font-size: 6pt">&#160;</td> </tr> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="2%" style="background: transparent">&#160;</td> <td width="3%" nowrap="nowrap" align="left"><b>&#8226;</b></td> <td width="1%">&#160;</td> <td>Continued application of the storm restoration expense recovery mechanism and modification to the line clearance expense recovery mechanism; and</td> </tr> <tr> <td style="font-size: 6pt">&#160;</td> </tr> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="2%" style="background: transparent">&#160;</td> <td width="3%" nowrap="nowrap" align="left"><b>&#8226;</b></td> <td width="1%">&#160;</td> <td>Implementation of a revenue decoupling mechanism.</td> </tr> </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Pursuant to an MPSC order issued May&#160;26, 2009, Detroit Edison filed proposed tariffs on June&#160;26, 2009 to implement $280&#160;million of its requested annual increase on July&#160;26, 2009. On July&#160;16, 2009, the MPSC issued an order requiring Detroit Edison to implement the increase by applying the rate design reflected in its January&#160;26, 2009 application. Detroit Edison expects the impact of this self-implemented increase would be significantly offset by its plan to begin reducing its PSCR factor beginning August&#160;1, 2009. This increase will remain in place until a final order is issued by the MPSC, which is expected in January&#160;2010. If the final rate case order provides for lower rates than we have self-implemented, we must refund the difference with interest. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Cost-Based Tariffs for Schools</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In January&#160;2009, Detroit Edison filed a required application that included two new cost-based tariffs for schools, universities and community colleges. 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The proposed revenue increase is necessary in order to properly implement Detroit Edison&#8217;s 20-year renewable energy plan to achieve compliance with 2008 PA 295, to deliver new, cleaner, renewable electric generation demanded by customers, to further diversify Detroit Edison&#8217;s and the State of Michigan&#8217;s sources of electric supply, and to strive toward achieving state and national goals of increasing energy independence. An MPSC order was issued June&#160;2, 2009 approving the renewable energy plan and customer surcharges beginning in September&#160;2009. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Energy Optimization Plans</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In March&#160;2009, Detroit Edison and MichCon filed Energy Optimization Plans with the MPSC as required under 2008 PA 295. 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The surcharges to recover these costs were implemented effective June&#160;3, 2009. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Power Supply Cost Recovery Proceedings</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><i>2008 Plan Year &#8212; </i>In September&#160;2007, Detroit Edison filed its 2008 PSCR plan case seeking approval of a levelized PSCR factor of 9.23 mills/kWh above the amount included in base rates for all PSCR customers. Also included in the filing was a request for approval of the Company&#8217;s emission compliance strategy which included pre-purchases of emission allowances as well as a request for pre-approval of a contract for capacity and energy associated with a renewable (wind)&#160;energy project. On January&#160;31, 2008, Detroit Edison filed a revised PSCR plan case seeking approval of a levelized PSCR factor of 11.22 mills/kWh above the amount included in base rates for all PSCR customers. The revised filing supports a 2008 power supply expense forecast of $1.4&#160;billion and includes $43&#160;million for the recovery of a projected 2007 PSCR under-collection. On July&#160;29, 2008, the MPSC issued a temporary order approving Detroit Edison&#8217;s request to increase the PSCR factor to 11.22 mills/kWh. In January&#160;2009, the MPSC approved the Company&#8217;s 2008 PSCR plan and authorized the Company to charge a maximum PSCR factor of 11.22 mills/kWh for 2008. The Company filed its 2008 PSCR reconciliation case in March&#160;2009. The filing requests recovery of a $19&#160;million PSCR under-collection. In addition, the filing requests authorization to refund its total 2005 PSCR under-collection surcharge at year-end 2008 of $10 million, including interest, to all commercial and industrial customers. Included in the 2008 PSCR reconciliation filing was the Company&#8217;s 2008 pension expense mechanism reconciliation that reflects a $50&#160;million over-collection. The Company expects an order in this proceeding in the second quarter of 2010. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><i>2009 Plan Year </i>&#8212; In September&#160;2008, Detroit Edison filed its 2009 PSCR plan case seeking approval of a levelized PSCR factor of 17.67 mills/kWh above the amount included in base rates for residential customers and a levelized PSCR factor of 17.29 mills/kWh above the amount included in base rates for commercial and industrial customers. The Company is supporting a total power supply expense forecast of $1.73&#160;billion. The plan also includes approximately $69&#160;million for the recovery of its projected 2008 PSCR under-collection from all customers and approximately $12 million for the refund of its 2005 PSCR reconciliation surcharge over-collection to commercial and industrial customers only. Also included in the filing is a request for approval of the Company&#8217;s expense associated with the use of urea in the selective catalytic reduction units at Monroe power plant as well as a request for approval of a contract for capacity and energy associated with a renewable (wind)&#160;energy project. The Company&#8217;s PSCR Plan will allow the Company to recover its reasonably and prudently incurred power supply expense including, fuel costs, purchased and net interchange power costs, nitrogen oxide and sulfur dioxide emission allowance costs, transmission costs and MISO costs. The Company self-implemented a PSCR factor of 11.64 mills/kWh above the amount included in base rates for residential customers and a PSCR factor of 11.22 mills/kWh above the amount included in base rates for commercial and industrial customers on bills rendered in January&#160;2009. Subsequently, as a result of the December&#160;23, 2008 MPSC order in the 2007 Detroit Edison rate case, the Company implemented a PSCR factor of 3.18 mills/kWh below the amount included in base rates for residential customers and a PSCR factor of 3.60 mills/kWh below the amount included in base rates for commercial and industrial customers for service rendered effective January&#160;14, 2009. The Company will self-implement a PSCR factor of 10.18 mills/kWh below the amount included in base rates for residential customers and a PSCR factor of 10.46 mills/kWh below the amount included in base rates for commercial and industrial customers for bills rendered effective August&#160;1, 2009. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Gas Rate Case Filings</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><i>2003 Gas Rate Case / Motion for Commission Decision and Remand for Control Premium Recovery &#8212;</i> MichCon filed a motion with the MPSC on June&#160;1, 2009 requesting a decision on remand from the Court of Appeals for MichCon&#8217;s control premium recovery. This motion concerns the control premium that DTE Energy paid to acquire MCN. DTE Energy apportioned the control premium primarily between its Detroit Edison and MichCon subsidiaries. The MPSC denied MichCon&#8217;s request to recover its $25 million portion of the control premium in its 2003 rate case. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><i>2009 Gas Rate Case </i>- MichCon filed a general rate case on June&#160;9, 2009 based on a 2008 historical test year. The filing with the MPSC requested a $193&#160;million, or 11.5&#160;percent average increase in MichCon&#8217;s annual revenues for a 2010 projected test year. The requested $193&#160;million increase in revenues is required to recover the increased costs associated with the revenue requirement associated with increased investments in net plant and working capital, the impact of high levels of uncollectible expense and the cost of natural gas theft primarily due to economic conditions in Michigan, sales reductions due to customer conservation and the trend of warmer weather on MichCon&#8217;s market, and increasing operating costs, largely due to inflation. </div> <!-- Folio --> <!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">In addition, MichCon&#8217;s filing made, among other requests, the following proposals: </div> <div style="margin-top: 6pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="2%" style="background: transparent">&#160;</td> <td width="3%" nowrap="nowrap" align="left"><b>&#8226;</b></td> <td width="1%">&#160;</td> <td>Implementation of a Lost Gas and Company Use &#8212; Expense True-up Mechanism;</td> </tr> <tr> <td style="font-size: 6pt">&#160;</td> </tr> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="2%" style="background: transparent">&#160;</td> <td width="3%" nowrap="nowrap" align="left"><b>&#8226;</b></td> <td width="1%">&#160;</td> <td>Continued application of an uncollectible expense true-up mechanism based on a $70&#160;million expense level of uncollectible expenses; and,</td> </tr> <tr> <td style="font-size: 6pt">&#160;</td> </tr> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="2%" style="background: transparent">&#160;</td> <td width="3%" nowrap="nowrap" align="left"><b>&#8226;</b></td> <td width="1%">&#160;</td> <td>Implementation of a revenue decoupling mechanism.</td> </tr> </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Pursuant to the October&#160;2008 Michigan legislation, and the settlement in MichCon&#8217;s last base gas sale case, MichCon anticipates self-implementing a rate increase on January&#160;1, 2010. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Uncollectible Expense True-Up Mechanism (UETM)&#160;and Report of Safety and Training-Related Expenditures</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><i>2007 UETM </i>&#8212; In March&#160;2008, MichCon filed an application with the MPSC for approval of its UETM for 2007 requesting approximately $34&#160;million consisting of $33&#160;million of costs related to 2007 uncollectible expense and associated carrying charges and $1&#160;million of under-collections for the 2005 UETM. The March&#160;2008 application included a report of MichCon&#8217;s 2007 annual safety and training-related expenses, which showed no refund was necessary because actual expenditures exceeded the amount included in base rates. An MPSC order was issued in December&#160;2008 approving the collection of $34&#160;million requested in the March&#160;2008 filing. MichCon was authorized to implement the new UETM monthly surcharge for service rendered on and after January&#160;1, 2009. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><i>2008 UETM </i>&#8212; In March&#160;2009, MichCon filed an application with the MPSC for approval of its UETM for 2008 requesting approximately $87&#160;million consisting of $83&#160;million of costs related to 2008 uncollectible expense and associated carrying charges and $4&#160;million of under-collections for the 2006 UETM. The March&#160;2009 application included a report of MichCon&#8217;s 2008 annual safety and training-related expenses, which showed no refund was necessary because actual expenditures exceeded the amount included in base rates. An order is expected in this case in the fourth quarter of 2009. In May&#160;2009, the Michigan Supreme Court denied the Attorney General&#8217;s leave to appeal the Court of Appeal&#8217;s decision that the MPSC had statutory authority to approve a UETM in a general rate case. In response to this denial, the Attorney General withdrew as an intervenor in this case. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Gas Cost Recovery Proceedings</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><i>2007-2008 Plan Year / Base Gas Sale Consolidated </i>&#8212;In June&#160;2008, MichCon filed its GCR reconciliation for the 2007-2008 GCR year. The filing supported a total under-recovery, including interest through March&#160;2008, of $10&#160;million. In June&#160;2009, the parties filed a settlement agreement including MichCon&#8217;s under-recovery, as filed, plus interest. The MPSC issued an order approving the settlement agreement on July&#160;1, 2009. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><i>2008 &#8212; 2009 Plan Year GCR Reconciliation </i>&#8212;In June&#160;2009, MichCon filed its GCR reconciliation case for the 2008 &#8212; 2009 GCR year. The filing includes a $5&#160;million overrecovery that has already been rolled into the 2009 &#8212; 2010 GCR plan year. An MPSC order in this case is expected in 2010. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><i>2009-2010 Plan Year &#8212; </i>In December&#160;2008, MichCon filed its GCR plan case for the 2009-2010 GCR plan year. MichCon filed for a maximum GCR factor of $8.46 per Mcf, adjustable by a contingent mechanism. In April&#160;2009, MichCon, MPSC Staff and Intervenors filed a partial settlement agreement in the case establishing the fixed price purchase guidelines MichCon filed in its case are reasonable and prudent for MichCon to use until an MPSC order is issued establishing otherwise. On April&#160;30, 2009, the MPSC issued an order approving the partial settlement agreement. An MPSC order in this case is expected in 2009. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><i>2009 Proposed Base Gas Sale </i>&#8212; In July&#160;2008, MichCon filed an application with the MPSC requesting permission to sell an additional 4 Bcf of base gas that will become available for sale as a result of better than expected operations at its storage fields. In February&#160;2009, a settlement agreement was filed with the MPSC, which will allow MichCon to sell and retain the profits of 2 Bcf of base gas, with the remaining 2 Bcf to be used for the benefit of GCR/GCC customers as colder-than-normal weather protection. The settlement also included a provision that MichCon was subject to a moratorium on a general rate case filing until June&#160;2009. An MPSC order was issued March&#160;5, 2009 approving the settlement. </div> <!-- Folio --> <!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Other</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In July&#160;2007, the State of Michigan Court of Appeals published its decision with respect to an appeal by Detroit Edison and others of certain provisions of a November&#160;2004 MPSC order, including reversing the MPSC&#8217;s denial of recovery of merger control premium costs. In its published decision, the Court of Appeals held that Detroit Edison is entitled to recover its allocated share of the merger control premium and remanded this matter to the MPSC for further proceedings to establish the precise amount and timing of this recovery. In September&#160;2007, the Court of Appeals remanded to the MPSC, for reconsideration, the MichCon recovery of merger control premium costs. Other parties filed requests for leave to appeal to the Michigan Supreme Court from the Court of Appeals decision and in September&#160;2008, the Michigan Supreme Court granted the requests to address the merger control premium as well as the recovery of transmission costs through the PSCR. On May&#160;1, 2009, the Michigan Supreme Court issued an order reversing the Court of Appeals decision with respect to recovery of the merger control premium, and reinstated the MPSC&#8217;s decision excluding the control premium costs from Detroit Edison&#8217;s general rates. The Court affirmed the lower court&#8217;s decision upholding the right of Detroit Edison to recover electric transmission costs through the Company&#8217;s PSCR clause. The Company requested rehearing of the Supreme Court order on the merger premium and the Michigan Attorney General requested rehearing of the transmission portion of the order. On June&#160;26, 2009, the Michigan Supreme Court denied both requests for rehearing. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The Company is unable to predict the outcome of the unresolved regulatory matters discussed herein. Resolution of these matters is dependent upon future MPSC orders and appeals, which may materially impact the financial position, results of operations and cash flows of the Company. </div> <!-- Folio --> <!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif"> </div> </body> </html> <!-- Begin Block Tagged Note 5 - dte:RegulatoryMattersTextBlock--> NOTE 5 &#8212; REGULATORY MATTERS 2009 Electric Rate Case Filing false false Regulatory Matters. 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No authoritative reference available. false 21 3 us-gaap_IncomeLossFromContinuingOperationsBeforeIncomeTaxesDomestic us-gaap true credit duration monetary No definition available. false false false false false false false false false 1 false true 111000000 111 false false 2 false true 48000000 48 false false 3 false true 387000000 387 false false 4 false true 365000000 365 false false No definition available. No authoritative reference available. false 22 3 us-gaap_IncomeTaxExpenseBenefit us-gaap true debit duration monetary No definition available. false false false false false false false false false 1 false true 27000000 27 false false 2 false true 18000000 18 false false 3 false true 124000000 124 false false 4 false true 134000000 134 false false No definition available. No authoritative reference available. false 23 3 us-gaap_IncomeLossFromContinuingOperationsIncludingPortionAttributableToNoncontrollingInterest us-gaap true credit duration monetary No definition available. false false false false false false false false false 1 false true 84000000 84 false false 2 false true 30000000 30 false false 3 false true 263000000 263 false false 4 false true 231000000 231 false false No definition available. No authoritative reference available. false 24 3 us-gaap_DiscontinuedOperationIncomeLossFromDiscontinuedOperationDuringPhaseOutPeriodNetOfTax us-gaap true credit duration monetary No definition available. false false false false false false false false false 1 false true 0 0 false false 2 false true 2000000 2 false false 3 false true 0 0 false false 4 false true 14000000 14 false false No definition available. No authoritative reference available. false 25 3 us-gaap_ProfitLoss us-gaap true credit duration monetary No definition available. false false false false false false false false false 1 false true 84000000 84 false false 2 false true 32000000 32 false false 3 false true 263000000 263 false false 4 false true 245000000 245 false false No definition available. No authoritative reference available. false 26 3 us-gaap_MinorityInterestInNetIncomeLossOfConsolidatedEntitiesAbstract us-gaap true na duration string No definition available. false false false false false true false false false 1 false false 0 0 false false 2 false false 0 0 false false 3 false false 0 0 false false 4 false false 0 0 false false No definition available. false 27 4 us-gaap_IncomeLossFromContinuingOperationsAttributableToNoncontrollingEntity us-gaap true debit duration monetary No definition available. false false false false false false false false false 1 false true 1000000 1 false false 2 false true 2000000 2 false false 3 false true 2000000 2 false false 4 false true 3000000 3 false false No definition available. No authoritative reference available. false 28 4 us-gaap_IncomeLossFromDiscontinuedOperationsNetOfTaxAttributableToNoncontrollingInterest us-gaap true debit duration monetary No definition available. false false false false false false false false false 1 false true 0 0 false false 2 false true 2000000 2 false false 3 false true 0 0 false false 4 false true 2000000 2 false false No definition available. No authoritative reference available. true 29 4 us-gaap_NetIncomeLossAttributableToNoncontrollingInterest us-gaap true debit duration monetary No definition available. false false false false false false false false false 1 false true 1000000 1 false false 2 false true 4000000 4 false false 3 false true 2000000 2 false false 4 false true 5000000 5 false false No definition available. No authoritative reference available. false 30 3 us-gaap_NetIncomeLoss us-gaap true credit duration monetary No definition available. false false false false false false false false false 1 true true 83000000 83 false false 2 true true 28000000 28 false false 3 true true 261000000 261 false false 4 true true 240000000 240 false false No definition available. No authoritative reference available. true 31 3 us-gaap_EarningsPerShareBasicAbstract us-gaap true na duration string No definition available. false false false false false true false false false 1 false false 0 0 false false 2 false false 0 0 false false 3 false false 0 0 false false 4 false false 0 0 false false No definition available. false 32 4 us-gaap_IncomeLossFromContinuingOperationsPerBasicShare us-gaap true na duration decimal No definition available. false false false false false false false false true 1 true true 0.51 0.51 false false 2 true true 0.17 0.17 false false 3 true true 1.59 1.59 false false 4 true true 1.4 1.4 false false No definition available. No authoritative reference available. false 33 4 us-gaap_IncomeLossFromDiscontinuedOperationsNetOfTaxPerBasicShare us-gaap true na duration decimal No definition available. false false false false false false false false true 1 true true 0 0 false false 2 true true 0 0 false false 3 true true 0 0 false false 4 true true 0.07 0.07 false false No definition available. No authoritative reference available. true 34 4 us-gaap_EarningsPerShareBasic us-gaap true na duration decimal No definition available. false false false false false false false false true 1 true true 0.51 0.51 false false 2 true true 0.17 0.17 false false 3 true true 1.59 1.59 false false 4 true true 1.47 1.47 false false No definition available. No authoritative reference available. false 35 3 us-gaap_EarningsPerShareDilutedAbstract us-gaap true na duration string No definition available. false false false false false true false false false 1 false false 0 0 false false 2 false false 0 0 false false 3 false false 0 0 false false 4 false false 0 0 false false No definition available. false 36 4 us-gaap_IncomeLossFromContinuingOperationsPerDilutedShare us-gaap true na duration decimal No definition available. false false false false false false false false true 1 true true 0.51 0.51 false false 2 true true 0.17 0.17 false false 3 true true 1.59 1.59 false false 4 true true 1.4 1.4 false false No definition available. No authoritative reference available. false 37 4 us-gaap_IncomeLossFromDiscontinuedOperationsNetOfTaxPerDilutedShare us-gaap true na duration decimal No definition available. false false false false false false false false true 1 true true 0 0 false false 2 true true 0 0 false false 3 true true 0 0 false false 4 true true 0.07 0.07 false false No definition available. No authoritative reference available. true 38 4 us-gaap_EarningsPerShareDiluted us-gaap true na duration decimal No definition available. false false false false false false false false true 1 true true 0.51 0.51 false false 2 true true 0.17 0.17 false false 3 true true 1.59 1.59 false false 4 true true 1.47 1.47 false false No definition available. No authoritative reference available. false 39 3 dte_WeightedAverageCommonSharesOutstanding dte false na duration string Weighted Average Common Shares Outstanding. false false false false false true false false false 1 false false 0 0 false false 2 false false 0 0 false false 3 false false 0 0 false false 4 false false 0 0 false false Weighted Average Common Shares Outstanding. false 40 4 us-gaap_WeightedAverageNumberOfSharesOutstandingBasic us-gaap true na duration shares No definition available. false false false false false false false false false 1 false true 164000000 164 false false 2 false true 163000000 163 false false 3 false true 164000000 164 false false 4 false true 163000000 163 false false No definition available. No authoritative reference available. false 41 4 us-gaap_WeightedAverageNumberOfDilutedSharesOutstanding us-gaap true na duration shares No definition available. false false false false false false false false false 1 false true 164000000 164 false false 2 false true 163000000 163 false false 3 false true 164000000 164 false false 4 false true 163000000 163 false false No definition available. No authoritative reference available. false 42 3 us-gaap_CommonStockDividendsPerShareDeclared us-gaap true na duration decimal No definition available. false false false false false false false false true 1 true true 0.53 0.53 false false 2 true true 0.53 0.53 false false 3 true true 1.06 1.06 false false 4 true true 1.06 1.06 false false No definition available. No authoritative reference available. false false 4 38 false Millions Millions Hundreds false true XML 25 FilingSummary.xml IDEA: XBRL DOCUMENT 1.0.0.3 true Sheet 00 - Document - Document and Company Information Document and Company Information R1.xml false Sheet 01 - Statement - Consolidated Statement of Operations Consolidated Statement of Operations R2.xml false Sheet 02 - Statement - Consolidated Statement of Financial Position Consolidated Statement of Financial Position R3.xml false Sheet 021 - Statement - Consolidated Statement of Financial Position (Parenthetical) Consolidated Statement of Financial Position (Parenthetical) R4.xml false Sheet 03 - Statement - Consolidated Statements of Cash Flows Consolidated Statements of Cash Flows R5.xml false Sheet 04 - Statement - Consolidated Statements of Changes in Shareholders Equity Consolidated Statements of Changes in Shareholders Equity R6.xml false Sheet 05 - Statement - Consolidated Statements of Comprehensive Income Consolidated 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No authoritative reference available. true false 2 13 false Millions UnKnown UnKnown false true XML 28 R17.xml IDEA: Commitments And Contingencies 1.0.0.3 false Commitments And Contingencies false 1 $ false false Shares Standard http://www.xbrl.org/2003/instance shares xbrli 0 USD Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 USDEPS Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares xbrli 0 2 0 dte_CommitmentsAndContingenciesAbstract dte false na duration string Commitments And Contingencies. false false false false false true false false false 1 false false 0 0 false false Commitments And Contingencies. false 3 1 us-gaap_CommitmentsAndContingenciesDisclosureTextBlock us-gaap true na duration string No definition available. false false false false false false false false false 1 false false 0 0 <!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --> <html> <head></head> <body> <!-- Begin Block Tagged Note 9 - us-gaap:CommitmentsAndContingenciesDisclosureTextBlock--> <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><font style="font-variant: SMALL-CAPS"><b>NOTE 9 &#8212; COMMITMENTS AND CONTINGENCIES</b></font> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><b><i>Environmental</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><i>Electric Utility</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><i>Air </i>&#8212; Detroit Edison is subject to EPA ozone transport and acid rain regulations that limit power plant emissions of sulfur dioxide and nitrogen oxides. Since 2005, EPA and the State of Michigan issued additional emission reduction regulations relating to ozone, fine particulate, regional haze and mercury air pollution. The new rules will lead to additional controls on fossil-fueled power plants to reduce nitrogen oxide, sulfur dioxide and mercury emissions. To comply with these requirements, Detroit Edison has spent approximately $1.4&#160;billion through 2008. The Company estimates Detroit Edison&#8217;s future undiscounted capital expenditures at up to approximately $100 million in 2009 and up to approximately $2.3&#160;billion of additional capital expenditures through 2019 based on current regulations. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In July&#160;2009, DTE Energy received a Notice of Violation/Finding of Violation (NOV/FOV) from the EPA alleging, among other things, that five Detroit Edison power plants violated New Source Review standards, Prevention of Significant Deterioration requirements, and Title V operating permit requirements under the Clean Air Act. We are in the process of preparing our response to the NOV/FOV, but we believe that the plants identified by the EPA have complied with applicable regulations. Depending upon the outcome of our discussions with the EPA regarding the NOV/FOV, the EPA could bring legal action against Detroit Edison. We could also be required to install additional pollution control equipment at some or all of the power plants in question, engage in Supplemental Environmental Programs, and/or pay fines. We cannot predict the financial impact or outcome of this matter, or the timing of its resolution. </div> <!-- Folio --> <!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt"><i>Global Climate Change &#8212; </i>Proposals for voluntary initiatives and mandatory controls are being discussed in the United States to reduce greenhouse gases such as carbon dioxide, a by-product of burning fossil fuels. On June&#160;26, 2009, the U.S. House of Representatives passed the American Clean Energy and Security Act (ACESA). The bill has yet to be taken up by the U.S. Senate. The ACESA includes a cap and trade program that would start in 2012 and provides for costs for emissions of greenhouse gases (e.g. carbon dioxide). Meanwhile, the EPA is beginning to implement regulatory action under the Clean Air Act to address climate change. There may be further legislative and or regulatory action to address the issue of changes in climate that may result from the build-up of greenhouse gases in the atmosphere. If passed, legislative or regulatory actions as currently being discussed could have a material impact on our operations and financial position and the rates we charge our customers. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><i>Water </i>&#8212; In response to an EPA regulation, Detroit Edison is required to examine alternatives for reducing the environmental impacts of the cooling water intake structures at several of its facilities. Based on the results of the studies to be conducted over the next several years, Detroit Edison may be required to install additional control technologies to reduce the impacts of the water intakes. Initially, it was estimated that Detroit Edison could incur up to approximately $55&#160;million over the four to six years subsequent to 2008 in additional capital expenditures to comply with these requirements. However, a January&#160;2007 circuit court decision remanded back to the EPA several provisions of the federal regulation that may result in a delay in compliance dates. The decision also raised the possibility that Detroit Edison may have to install cooling towers at some facilities at a cost substantially greater than was initially estimated for other mitigative technologies. In 2008, the Supreme Court agreed to review the remanded cost-benefit analysis provision of the rule. In April&#160;2009, the Supreme Court ruled that a cost-benefit analysis is a permissible provision of the rule. Concurrently, the EPA continues to develop a revised rule, which is expected to be published later in 2009. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><i>Contaminated Sites </i>&#8212; Detroit Edison conducted remedial investigations at contaminated sites, including three former manufactured gas plant (MGP)&#160;sites, the area surrounding an ash landfill and several underground and aboveground storage tank locations. The findings of these investigations indicated that the estimated cost to remediate these sites is expected to be incurred over the next several years. At June&#160;30, 2009 and December&#160;31, 2008, the Company had $11&#160;million and $12&#160;million, respectively, accrued for remediation. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Gas Utility</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><i>Contaminated Sites </i>&#8212; Prior to the construction of major interstate natural gas pipelines, gas for heating and other uses was manufactured locally from processes involving coal, coke or oil. Gas Utility owns, or previously owned, 15 such former MGP sites. Investigations have revealed contamination related to the by-products of gas manufacturing at each site. In addition to the MGP sites, the Company is also in the process of cleaning up other contaminated sites. Cleanup activities associated with these sites will be conducted over the next several years. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The MPSC has established a cost deferral and rate recovery mechanism for investigation and remediation costs incurred at former MGP sites. Accordingly, Gas Utility recognizes a liability and corresponding regulatory asset for estimated investigation and remediation costs at former MGP sites. As of June&#160;30, 2009 and December&#160;31, 2008, the Company had approximately $36&#160;million and $38 million, respectively, accrued for remediation. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Any significant change in assumptions, such as remediation techniques, nature and extent of contamination and regulatory requirements, could impact the estimate of remedial action costs for the sites and affect the Company&#8217;s financial position and cash flows. However, the Company anticipates the cost deferral and rate recovery mechanism approved by the MPSC will prevent environmental costs from having a material adverse impact on our results of operations. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Non-Utility</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The Company&#8217;s non-utility affiliates are subject to a number of environmental laws and regulations dealing with the protection of the environment from various pollutants. The Company has completed the installation of new environmental equipment at our coke battery facility in Michigan. The Michigan coke battery facility received and responded to information requests from the EPA resulting in the issuance of a notice of violation regarding potential maximum achievable control technologies and new source review violations. The EPA is in the process of reviewing the Company&#8217;s position of demonstrated compliance and has not initiated escalated enforcement. At this time, the Company cannot predict the impact of this issue. Furthermore, the Company is in the process of settling historical air violations at its coke battery facility located in Pennsylvania. At this time, the Company cannot predict the impact of this settlement. The Company is investigating wastewater treatment technologies for the coke battery facility located in Pennsylvania. This investigation may result in capital expenditures to meet regulatory requirements. The Company&#8217;s non-utility affiliates are substantially in compliance with all environmental requirements, other than as noted above. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Guarantees</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In certain limited circumstances, the Company enters into contractual guarantees. The Company may guarantee another entity&#8217;s obligation in the event it fails to perform. The Company may provide guarantees in certain indemnification agreements. Finally, the Company may provide indirect guarantees for the indebtedness of others. Below are the details of specific material guarantees the Company currently provides. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Millennium Pipeline Project Guarantee</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The Company owns a 26&#160;percent equity interest in the Millennium Pipeline Project (Millennium). Millennium is accounted for under the equity method. Millennium began commercial operations in December&#160;2008. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">On August&#160;29, 2007, Millennium entered into a borrowing facility to finance the construction costs of the project. The total facility amounts to $800&#160;million and is guaranteed by the project partners, based upon their respective ownership percentages. The facility expires on August&#160;29, 2010 and was fully drawn as of June&#160;30, 2009. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The Company has agreed to guarantee 26&#160;percent of the borrowing facility and in the event of default by Millennium the maximum potential amount of future payments under this guarantee is approximately $210&#160;million. The guarantee includes DTE Energy&#8217;s revolving credit facility&#8217;s covenant and default provisions by reference. Related to this facility, the Company has also agreed to guarantee 26&#160;percent of Millennium&#8217;s forward-starting interest rate swaps with a notional amount of $420&#160;million. The Company&#8217;s exposure on the forward-starting interest rate swaps varies with changes in Treasury rates and credit swap spreads and was approximately $12&#160;million pre-tax at June 30, 2009. Because the Company is unable to accurately anticipate changes in Treasury rates and credit swap spreads, it is unable to estimate its maximum exposure under its share of Millennium&#8217;s forward-starting interest rate swaps. An incremental 0.25&#160;percent decrease in the forward interest rate swap rates will increase its exposure by approximately $3&#160;million. There are no recourse provisions or collateral that would enable the Company to recover any amounts paid under the guarantees, other than its share of project assets. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Other Guarantees</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In January&#160;2003, the Company sold the steam heating business of Detroit Edison to Thermal Ventures II, LP. Under the terms of sale, Detroit Edison guaranteed bank loans of $13&#160;million that Thermal Ventures II, LP used for capital improvements to the steam heating system. At June&#160;30, 2009, the Company had reserves of $13&#160;million related to the bank loan guarantee. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The Company&#8217;s other guarantees are not individually material with maximum potential payments totaling $10&#160;million at June&#160;30, 2009. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The Company is periodically required to obtain performance surety bonds in support of obligations to various governmental entities and other companies in connection with its operations. As of June 30, 2009, the Company had approximately $12&#160;million of performance bonds outstanding. In the event that such bonds are called for nonperformance, the Company would be obligated to reimburse the issuer of the performance bond. The Company is released from the performance bonds as the contractual performance is completed and does not believe that a material amount of any currently outstanding performance bonds will be called. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Labor Contracts</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">There are several bargaining units for the Company&#8217;s union employees. The majority of our union employees are under contracts that expire in June and October&#160;2010 and August&#160;2012. </div> <!-- Folio --> <!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Purchase Commitments</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Detroit Edison has an Energy Purchase Agreement to purchase electricity from the Greater Detroit Resource Recovery Authority (GDRRA). The term of the Energy Purchase Agreement for the purchase of electricity runs through June&#160;2024. The Company estimates electric purchase commitments from 2009 through 2024 will not exceed $300&#160;million in the aggregate. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">As of June&#160;30, 2009, the Company was party to numerous long-term purchase commitments relating to a variety of goods and services required for the Company&#8217;s business. These agreements primarily consist of fuel supply commitments and energy trading contracts. The Company estimates that these commitments will be approximately $5.9&#160;billion from 2009 through 2051. The Company also estimates that 2009 capital expenditures will be approximately $1.1&#160;billion. The Company has made certain commitments in connection with expected capital expenditures. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Bankruptcies</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The Company purchases and sells electricity, gas, coal, coke and other energy products from and to numerous companies operating in the steel, automotive, energy, retail, financial and other industries. Certain of its customers have filed for bankruptcy protection under Chapter&#160;11 of the U.S. Bankruptcy Code. The Company regularly reviews contingent matters relating to these customers and its purchase and sale contracts and records provisions for amounts considered at risk of probable loss. The Company believes its accrued amounts are adequate for probable loss. The final resolution of these matters may have a material effect on its consolidated financial statements. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The Company&#8217;s utilities and certain non-utility businesses provide services to the domestic automotive industry, including General Motors Corporation (GM), Ford Motor Company (Ford) and Chrysler LLC (Chrysler) and many of their vendors and suppliers. Chrysler filed for bankruptcy protection on April&#160;30, 2009. We have reserved approximately $9.3&#160;million of pre-petition accounts receivable related to Chrysler as of June&#160;30, 2009. GM filed for bankruptcy protection on June&#160;1, 2009. We have reserved or written off approximately $6.6&#160;million of pre-petition accounts and notes receivable related to GM as of June&#160;30, 2009. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The Company&#8217;s Power and Industrial Projects segment has long-term contracts with GM to provide onsite energy services at certain of its manufacturing and administrative facilities. The long-term contracts provide for full recovery of its investment in the event of early termination. At June 30, 2009, the book value of long-lived assets used in the servicing of these facilities was approximately $69&#160;million. Certain of these long-lived assets have been funded by non-recourse financing totaling approximately $57&#160;million at June&#160;30, 2009. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The Company&#8217;s Power and Industrial Projects segment also has an equity investment of approximately $52&#160;million in an entity which provides onsite services to Chrysler manufacturing facilities. Chrysler&#8217;s performance under the long-term contracts for services is guaranteed by Daimler North America Corporation (Daimler), a subsidiary of Daimler AG. The long-term contracts and the supporting Daimler guarantee provide for full recovery of the Company&#8217;s investment in the event of early termination or default. Chrysler has announced the closure of one site that is under a long-term service contract with the Company. Through June&#160;30, 2009, to the extent that Chrysler has not been performing in accordance with its contracts, Daimler has been performing under its guarantee. Therefore, the Company believes that it will recover its investment in the event of a facility closure or a Chrysler default. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In the second quarter of 2009, the Company determined that the GM and Chrysler bankruptcy filings were triggering events to assess certain automotive-related long-lived assets for impairment. As of June&#160;30, 2009, the Company performed an impairment analysis on our long-lived assets in accordance with SFAS No.&#160;144, <i>Accounting for the Impairment or Disposal of Long-Lived Assets</i>. Based on its undiscounted cash flow projections and fair value calculations, the Company determined that it did not have an impairment loss at June&#160;30, 2009. We have also determined that we do not have an other than temporary decline in our Chrysler-related equity investment as described in APB 18, <i>The Equity Method of Accounting for Investments in Common Stock</i>. The Company&#8217;s assumptions and conclusions may change in the future and we could have an impairment loss if certain facilities are not utilized as currently anticipated. </div> <!-- Folio --> <!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Other Contingencies</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The Company is involved in certain legal, regulatory, administrative and environmental proceedings before various courts, arbitration panels and governmental agencies concerning claims arising in the ordinary course of business. These proceedings include certain contract disputes, additional environmental reviews and investigations, audits, inquiries from various regulators, and pending judicial matters. The Company cannot predict the final disposition of such proceedings. The Company regularly reviews legal matters and records provisions for claims it can estimate and are considered probable of loss. The resolution of these pending proceedings is not expected to have a material effect on the Company&#8217;s operations or financial statements in the periods they are resolved. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">See Note 3 and 5 for a discussion of contingencies related to derivatives and regulatory matters<b>.</b> </div> </div> </body> </html> <!-- Begin Block Tagged Note 9 - us-gaap:CommitmentsAndContingenciesDisclosureTextBlock--> NOTE 9 &#8212; COMMITMENTS AND CONTINGENCIES false false No definition available. 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