DTE Energy 2009 Annual Report Download - page 21

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NOTE 8 — RESTRUCTURING
Performance Excellence Process
In 2005, MichCon initiated a company-wide review of its operations called the Performance Excellence Process. The Company began
a series of focused improvement initiatives within MichCon and associated corporate support functions.
MichCon incurred costs to achieve (CTA) restructuring expense for employee severance and other costs. Other costs include project
management and consultant support. The Company cannot defer CTA costs at this time because a regulatory recovery mechanism has
not been established by the MPSC. MichCon is seeking a recovery mechanism in its rate case filed in June 2009.
Amounts expensed are recorded in Operation and maintenance expense on the Consolidated Statements of Operations. Costs incurred
in 2008 and 2007 are as follows:
Employee
Severance Costs
Other Costs
Total Cost
2008
2007
2008
2007
2008
2007
(in Millions)
Cost incurred
$ —
$ 3
$ 7
$ 6
$ 7
$ 9
NOTE 9 — REGULATORY MATTERS
Regulation
MichCon’ s business is subject to the regulatory jurisdiction of the MPSC, which issues orders pertaining to rates, recovery of certain
costs, including the costs of regulatory assets, conditions of service, accounting and operating-related matters. MichCon’ s MPSC-
approved rates charged to customers have historically been designed to allow for the recovery of costs, plus an authorized rate of
return on our investments. MichCon operates natural gas transportation and storage facilities in Michigan as intrastate facilities
regulated by the MPSC and provides intrastate transportation and storage services pursuant to an MPSC-approved tariff. MichCon
also provides interstate transportation and storage services in accordance with an Operating Statement on file with the FERC. We are
subject to the requirements of other regulatory agencies with respect to safety, the environment and health.
Regulatory Assets and Liabilities
MichCon is required to record regulatory assets and liabilities for certain transactions that would have been treated as revenue or
expense in non-regulated businesses. Continued applicability of regulatory accounting treatment requires that rates be designed to
recover specific costs of providing regulated services and be charged to and collected from customers. Future regulatory changes or
changes in the competitive environment could result in the discontinuance of this accounting treatment for regulatory assets and
liabilities for our business and may require the write-off of the portion of any regulatory asset or liability that was no longer probable
of recovery through regulated rates. Management believes that currently available facts support the continued use of regulatory assets
and liabilities and that all regulatory assets and liabilities are recoverable or refundable in the current rate environment.