DTE Energy 2007 Annual Report Download - page 11

MICHIGAN CONSOLIDATED GAS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1– SIGNIFICANT ACCOUNTING POLICIES
Corporate Structure
Michigan Consolidated Gas Company (MichCon) is a Michigan corporation organized in 1898. MichCon is an indirect, wholly-owned
subsidiary of DTE Enterprises, Inc., and indirectly a wholly-owned subsidiary of DTE Energy Company. MichCon is a public utility
subject to regulation by the Michigan Public Service Commission (MPSC). MichCon is engaged in the purchase, storage,
transmission, distribution and sale of natural gas to approximately 1.3 million customers throughout Michigan. MichCon also has
subsidiaries involved in the gathering and transmission of natural gas in northern Michigan.
References in this report to “we”, “us”, “our” or “Company” are to MichCon.
Principles of Consolidation
We consolidate all majority owned subsidiaries and investments in entities in which we have controlling influence. Non-majority
owned investments are accounted for using the equity method when the Company is able to influence the operating policies of the
investee. Non-majority owned investments include investments in limited liability companies, partnerships or joint ventures. When we
do not influence the operating policies of an investee, the cost method is used. We eliminate all intercompany balances and
transactions.
For entities that are considered variable interest entities, we apply the provisions of Financial Accounting Standards Board (FASB)
Interpretation No. (FIN) 46-R, Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51.
Basis of Presentation
The accompanying Consolidated Financial Statements are prepared using accounting principles generally accepted in the United
States of America. These accounting principles require us to use estimates and assumptions that impact reported amounts of assets,
liabilities, revenues, expenses and the disclosure of contingent assets and liabilities. Actual results may differ from our estimates.
We reclassified certain prior year balances to match the current year’ s financial statement presentation.
Revenues
Revenues from the transportation and storage of natural gas are recognized as services are provided. We record revenues for gas
services provided but unbilled at the end of each month. Our accrued revenues include a component for the cost of gas sold that is
recoverable through the gas cost recovery (GCR) mechanism and certain other transactions that may create revenue refund obligations
to GCR customers. MichCon presents its revenue net of any revenue refund obligations to GCR customers. Annual GCR proceedings
before the MPSC permit MichCon to recover prudent and reasonable supply costs. Any over collection or under collection of costs,
including interest, will be reflected in future rates. See Note 4.
Comprehensive Income (Loss)
Comprehensive income (loss) is the change in common shareholder’ s equity during a period from transactions and events from non-
owner sources, including net income. As shown in the following table, amounts recorded to other comprehensive income (loss) at
December 31, 2007 include unrealized gains and losses from derivatives accounted for as cash flow hedges.
(in Millions)
Net
Unrealized
Losses on
Derivatives
Accumulated
Other
Comprehensive
Loss
Beginning balance $ (1) $ (1)
Current — period change — —
Ending balance $ (1) $ (1)
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