DTE Energy 2010 Annual Report Download - page 12

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MICHIGAN CONSOLIDATED GAS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 — BASIS OF PRESENTATION
Corporate Structure
MichCon is a Michigan corporation organized in 1898. MichCon is an indirect, wholly-owned subsidiary of DTE Energy. MichCon is
a public utility subject to regulation by the MPSC and the FERC. MichCon is engaged in the purchase, storage, transportation,
gathering, distribution and sale of natural gas to approximately 1.2 million customers throughout Michigan and the sale of storage and
transportation capacity.
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 management to use estimates and assumptions that impact reported amounts of
assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Actual results may differ from the
Company’ s estimates.
Certain prior year balances were reclassified to match the current year’ s financial statement presentation.
Principles of Consolidation
The Company consolidates all majority owned subsidiaries and investments in entities in which it has 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 the Company does not influence the operating policies of an investee, the cost method is used. The Company eliminates all
intercompany balances and transactions.
Effective January 1, 2010, the Company adopted the provisions of ASU 2009-17, Amendments to FASB Interpretation 46(R). ASU
2009-17 changed the methodology for determining the primary beneficiary of a VIE from a quantitative risk and rewards-based model
to a qualitative determination. There is no grandfathering of previous consolidation conclusions. As a result, the Company re-
evaluated all prior VIE and primary beneficiary determinations. The requirements of ASU 2009-17 were adopted on a prospective
basis.
The Company evaluates whether an entity is a VIE whenever reconsideration events occur. The Company consolidates VIEs for
which it is the primary beneficiary. If the Company is not the primary beneficiary and an ownership interest is held, the VIE is
accounted for under the equity method of accounting. When assessing the determination of the primary beneficiary, the Company
considers all relevant facts and circumstances, including: the power, through voting or similar rights, to direct the activities of the VIE
that most significantly impact the VIE’ s economic performance and the obligation to absorb the expected losses and/or the right to
receive the expected returns of the VIE. The Company performs ongoing reassessments of all VIEs to determine if the primary
beneficiary status has changed.
NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES
Revenues
Revenues from the sale, delivery and storage of natural gas are recognized as services are provided. MichCon records revenues for gas
provided but unbilled at the end of each month. Rates for MichCon include provisions to adjust billings for fluctuations in cost of
natural gas and certain other costs. Revenues are adjusted for differences between actual costs and the amounts billed in current rates.