DTE Energy 2009 Annual Report Download - page 24

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In 2007, the MPSC ordered Michigan utilities to file depreciation studies using the current method, an approach that considers the
time value of money and an inflation adjusted method proposed by the Company that removes excess escalation. In compliance with
the MPSC order MichCon filed its ordered depreciation studies in November 2008. The various required depreciation studies indicate
composite depreciation rates from 2.07% to 2.55%. The Company has proposed no change to its current composite depreciation rate.
The Company expects an order in this proceeding in 2010.
GCR Proceedings
The GCR process is designed to allow the Company to recover all of its gas supply costs if incurred under reasonable and prudent
policies and practices. The MPSC reviews these costs, policies and practices for prudence in annual plan and reconciliation filings.
The following table summarizes MichCon’ s GCR reconciliation filing currently pending with the MPSC:
GCR Year
Date Filed
Net Over
(Under)-recovery
GCR Cost of Gas Sold
Description of Net
Over (Under)
Recovery
2008-2009
June 2009
$5.4 million
$1.2 billion
The total amount reflects an overrecovery of
$5.9 million, less $0.5 million in accrued interest
due from customers
2009-2010 Plan Year — In December 2008, MichCon filed its GCR plan case for the 2009-2010 GCR plan year. The MPSC issued an
order in this case on November 12, 2009 authorizing a gas cost recovery factor of $8.46 per Mcf.
2010-2011 Plan Year — In December 2009, MichCon filed its GCR plan case for the 2010-2011 GCR plan year. MichCon filed for a
maximum GCR factor of $7.06 per Mcf, adjustable by a contingent mechanism.
2009 Base Gas Sale — In July 2008, MichCon filed an application with the MPSC requesting permission to sell an additional 4 Bcf of
base gas that will become available for sale as a result of better than expected operations at its storage fields. In February 2009, a
settlement agreement was filed with the MPSC, which will allow MichCon to sell and retain the profits of 2 Bcf of base gas, with the
remaining 2 Bcf to be used for the benefit of GCR customers as colder-than-normal weather protection. An MPSC order was issued
March 5, 2009 approving the settlement. MichCon sold 2 Bcf of base gas in December 2009 at a pre-tax gain of $9 million.
2007-2008 Plan Year /Base Gas Sale Consolidated — In August 2006, MichCon filed an application with the MPSC requesting
permission to sell base gas that would become accessible with storage facilities upgrades. In August 2007, a settlement agreement in
this proceeding was reached by all intervening parties that provided for a sharing with customers of the proceeds from the sale of base
gas. In addition, the agreement provided for a rate case filing moratorium until January 1, 2009, unless certain unanticipated changes
occur that impact income by more than $5 million. The settlement agreement was approved by the MPSC in August 2007. Under the
settlement terms, MichCon delivered 13.4 Bcf of this gas to its customers through 2007 at a savings to market-priced supplies of
approximately $41 million. This settlement also provided for MichCon to retain the proceeds from the sale of 3.6 Bcf of base gas, of
which MichCon sold 0.75 Bcf of base gas in 2007 at a pre-tax gain of $5 million and 2.84 Bcf in December 2008 at a pre-tax gain of
$22 million.
Merger Control Premium Costs
In September 2007, the Court of Appeals remanded to the MPSC, for reconsideration, the MichCon recovery of merger control
premium costs. On September 29, 2009, the MPSC granted MichCon’s June 1, 2009 Motion for Commission’ s Decision and Remand
for Control Premium Recovery but denied MichCon’ s requested rate relief by reaffirming the MPSC’ s denial of recovery of
MichCon’s portion of the control premium in MichCon’ s last rate case. The above actions did not have an impact on the Company’ s
consolidated financial statements.