DTE Energy 2010 Annual Report Download - page 27

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25
Lessor —MichCon leases a portion of its pipeline system to the Vector Pipeline through a capital lease contract that expires in 2020,
with renewal options extending for five years. The components of the net investment in the capital lease at December 31, 2010, are as
follows:
(in Millions)
2011 ........................................................................................................................................................................................
2012 ........................................................................................................................................................................................
2013 ........................................................................................................................................................................................
2014 ........................................................................................................................................................................................
2015 ........................................................................................................................................................................................
Thereafter ................................................................................................................................................................................
Total minimum future lease receipts .......................................................................................................................................
Residual value of leased pipeline ............................................................................................................................................
Less unearned income .............................................................................................................................................................
Net investment in capital lease................................................................................................................................................
Less current portion ................................................................................................................................................................
NOTE 14 — COMMITMENTS AND CONTINGENCIES
Environmental Matters
Contaminated Sites — Prior to the construction of major interstate natural gas pipelines, gas for heating and other uses was
manufactured locally from processes involving coal, coke or oil. The facilities, which produced gas, have been designated as
manufactured gas plant (MGP) sites. MichCon owns, or previously owned, 14 former MGP sites. Investigations have revealed
contamination related to the by-products of gas manufacturing at each site. In addition to the MGP sites, the Company is also in the
process of cleaning up other contaminated sites. Cleanup activities associated with these sites will be conducted over the next several
years.
The MPSC has established a cost deferral and rate recovery mechanism for investigation and remediation costs incurred at former
MGP sites. Accordingly, MichCon recognizes a liability and corresponding regulatory asset for estimated investigation and
remediation costs at former MGP sites. As of December 31, 2010 and December 31, 2009, the Company had $36 million, accrued for
remediation.
Any significant change in assumptions, such as remediation techniques, nature and extent of contamination and regulatory
requirements, could impact the estimate of remedial action costs for the sites and affect the Company’ s financial position and cash
flows. The Company anticipates the cost amortization methodology approved by the MPSC for MichCon, which allows MichCon to
amortize the MGP costs over a ten-year period beginning with the year subsequent to the year the MGP costs were incurred, will
prevent environmental costs from having a material adverse impact on the Company’ s results of operations.
Labor Contracts
There are several bargaining units for the Company’ s represented employees. The majority of our represented employees are under a
contract that expires in October 2013.
Purchase Commitments
As of December 31, 2010, the Company was party to numerous long-term purchase commitments relating to a variety of goods and
services required for its business. These agreements primarily consist of long-term gas purchase and transportation agreements. The
Company estimates that these commitments will be approximately $1.3 billion through 2051. MichCon also estimates that 2011
capital expenditures will be approximately $180 million. The Company has made certain commitments in connection with expected
capital expenditures.