DTE Energy 2010 Annual Report Download - page 20

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18
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.
The following are the balances of the regulatory assets and liabilities as of December 31:
(in Millions)
Assets
Recoverable pension and postretirement costs
2010
2009
Pension
$ 413
$ 409
Postretirement costs
152
150
Recoverable uncollectible expense
90
134
Deferred income taxes – Michigan Business Tax
64
64
Deferred environmental costs
41
40
Unamortized loss on reacquired debt
30
32
Cost to achieve Performance Excellence Process
19
—
Other
11
1
820
830
Less amount included in current assets
(42)
(53)
$ 778
$ 777
Liabilities
Asset removal costs
$ 347
$ 349
Negative pension offset
129
133
Refundable income taxes
77
88
Deferred income taxes — Michigan Business Tax
56
56
Refundable self implemented rates
26
—
Accrued GCR refund
8
25
Other
5
—
648
651
Less amount included in current liabilities and other liabilities
(34)
(25)
$ 614
$ 626
As noted below, regulatory assets for which costs have been incurred have been included (or are expected to be included, for costs
incurred subsequent to the most recently approved rate case) in MichCon’s rate base, thereby providing a return on invested costs.
Certain regulatory assets do not result from cash expenditures and therefore do not represent investments included in rate base or have
offsetting liabilities that reduce rate base.
ASSETS
• Recoverable pension and postretirement costs — The Company recognizes actuarial gains or losses and prior service costs that
arise during the period but that are not immediately recognized as components of net periodic benefit costs as a regulatory asset
since the traditional rate setting process allows for the recovery of pension and postretirement costs. The asset will reverse as the
deferred items are recognized as benefit expenses in net income. (1)
• Recoverable uncollectible expense — Receivable for the MPSC approved uncollectible expense tracking mechanism that tracks
the difference in the fluctuation in uncollectible accounts and amounts recognized pursuant to the MPSC authorization.