DTE Energy 2007 Annual Report Download - page 24

at former MGP sites. During 2007, we spent approximately $2 million investigating and remediating these former MGP sites. We
accrued an additional $1 million in remediation liabilities to increase the reserve balance to $33 million as of December 31, 2007, with
a corresponding increase in the regulatory asset.
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’ s financial position and cash
flows. However, we anticipate 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.
Labor Contracts
There are several bargaining units for our represented employees. In October 2007, a new three-year agreement was ratified by our
represented employees.
Purchase Commitments
As of December 31, 2007, we were party to numerous long-term purchase commitments relating to a variety of goods and services
required for our business. These agreements primarily consist of long-term gas purchase and transportation agreements. We estimate
that these commitments will be approximately $1.4 billion through 2051. We also estimate that 2008 capital expenditures will be
approximately $214 million. We have made certain commitments in connection with expected capital expenditures.
Bankruptcies
We sell gas and gas transportation and storage services to numerous companies operating in the steel, automotive, energy, retail and
other industries. Certain of our customers have filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code. We
regularly review contingent matters relating to these customers and our sale contracts and we record provisions for amounts
considered at risk of probable loss. We believe our previously accrued amounts are adequate for probable losses. The final resolution
of these matters is not expected to have a material effect on our consolidated financial statements.
Other Contingencies
We are involved in certain legal, regulatory, administrative and environmental proceedings before various courts, arbitration panels
and governmental agencies concerning matters arising in the ordinary course of business. These proceedings include certain contract
disputes, environmental reviews and investigations, audits, inquiries from various regulators, and pending judicial matters. We cannot
predict the final disposition of such proceedings. We regularly review legal matters and record provisions for claims that are
considered probable of loss. The resolution of pending proceedings is not expected to have a material effect on our operations or
financial statements in the period they are resolved.
See Note 4 for a discussion of contingencies related to Regulatory Matters.
NOTE 11 – RETIREMENT BENEFITS AND TRUSTEED ASSETS
Adoption of SFAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans
In September 2006, the FASB issued SFAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement
Plans — an Amendment of FASB Statements No. 87, 88, 106, and 132(R). SFAS No. 158 requires companies to (1) recognize the over
funded or under funded status of defined benefit pension and defined benefit other postretirement plans in its financial statements, (2)
recognize as a component of other comprehensive income, net of tax, the actuarial gains or losses and the prior service costs or credits
that arise during the period but are not immediately recognized as components of net periodic benefit cost, (3) recognize adjustments
to other comprehensive income when the actuarial gains or losses, prior service costs or credits, and transition assets or obligations are
recognized as components of net periodic benefit cost, (4) measure postretirement benefit plan assets and plan obligations as of the
date of the employer’ s statement of financial position, and (5) disclose additional information in the notes to financial statements about
certain effects on net periodic benefit cost in the upcoming fiscal year that arise from delayed recognition of the actuarial gains and
losses and the prior service cost and credits.
22