DTE Energy 2008 Annual Report Download - page 27

that additional loans were necessary to continue operations in the short term. Further plant closures, bankruptcies or a federal government
mandated restructuring program could have a significant impact on our results. As the circumstances surrounding the viability of these entities
are dynamic and uncertain, we continue to monitor developments as they occur.
Other Contingencies
We are 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. We cannot predict
the final disposition of such proceedings. We regularly review legal matters and record provisions for claims that we can estimate and are
considered probable of loss. The resolution of these 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 12 — 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 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.
The requirement to recognize the funded status of a postretirement benefit plan and the related disclosure requirements was effective for fiscal
years ending after December 15, 2006. The Company adopted this requirement as of December 31, 2006. In 2008, as required by SFAS 158,
the Company changed the measurement date of its pension and postretirement benefit plans from November 30 to December 31. As a result,
the Company recognized an adjustment of $3 million ($2 million after-tax) and $4 million to retained earnings and regulatory liabilities,
respectively, which represents approximately one month of pension and postretirement benefit costs for the period December 1, 2007 to
December 31, 2008.
MichCon received approval from the MPSC to record the impact of the adoption of the SFAS No. 158 provisions related to the funded status as
a regulatory asset or liability since the traditional rate setting process allows for the recovery of pension and other postretirement plan costs.
Measurement Date
All amounts and balances reported in the following tables as of December 31, 2008 and December 31, 2007 are based on measurement dates of
December 31, 2008 and November 30, 2007, respectively.
Pension Plan Benefits
MichCon participates in various plans that provide pension and other postretirement benefits for DTE Energy and its affiliates. MichCon is
allocated net periodic benefit costs (credits) for its share of the amounts of the combined plans. In prior years, MichCon served as the plan
sponsor for a pension plan for represented employees that changed in 2008 to be sponsored by DTE Energy Corporate Services, LLC (LLC), a
subsidiary of DTE Energy, which also became the plan sponsor for all plans of DTE Energy and its affiliates. The changes in plan sponsorship
did not change the pension cost or contributions allocated to MichCon, or the benefits of plan participants. Disclosures in the following tables
of benefit obligations and plan assets, components of net periodic benefit cost (credit), and changes in benefit obligations and assets include
amounts allocated to MichCon for all plans. In conjunction with the plan sponsorship changes, prior period disclosures have been expanded to
be consistent with the current disclosures. Subsequent to the change in plan sponsorship, MichCon records regulatory assets or liabilities for its
allocations of all plans, including amounts for the funded status previously recorded by the plan sponsor.
The Company’s policy is to fund pension cost by contributing amounts consistent with the Pension Protection Act of 2006 provisions and
additional amounts we deem appropriate. We did not make a contribution to the pension plan in 2008 and we do not expect to make a
contribution in 2009.
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