DTE Energy 2008 Annual Report Download - page 11

M ICHIGAN C ONSOLIDATED G AS C OMPANY
N
OTES TO C ONSOLIDATED F INANCIAL S TATEMENTS
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 1.2 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.
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.
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.
Revenues
Revenues from the sale, delivery 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) include unrealized
gains and losses from derivatives accounted for as cash flow hedges.
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Net Accumulated
Unrealized Other
Gains on Benefit Comprehensive
(in Millions) Derivatives Obligations Loss
December 31, 2007 $(1) $ — $ (1)
Current period change — (1) (1)
December 31, 2008 $(1) $ (1) $ (2)