DTE Energy 2010 Annual Report Download - page 5

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3
Operation and maintenance expense decreased $38 million in 2010 and $53 million in 2009. The decrease in 2010 is primarily due
to reduced uncollectible expenses of $35 million and the deferral of $32 million of previously expensed CTA restructuring expenses,
partially offset by higher maintenance expenses of $11 million, increased energy optimization expenses of $9 million, higher
employee benefit-related expenses of $3 million and expense of $3 million for contributions to the Low Income Energy Efficiency
Fund. The decrease in 2009 was primarily due to $33 million of reduced uncollectible expenses, $15 million of lower employee
benefit-related expenses, $14 million from continuous improvement initiatives and other cost reductions resulting in lower contract
labor and outside services expense, information technology and other staff expenses, partially offset by higher health care expenses of
$8 million and $4 million of energy optimization expenses. See Note 9 of Notes to Consolidated Financial Statements in Item 8 of this
report.
Depreciation and amortization expense decreased $17 million in 2010 due to the March 2010 MPSC order that reduced MichCon’ s
depreciation rates effective April 1, 2010.
Asset (gains) losses, net decreased $30 million due to 2009 gains on the sale of base gas and the sale of certain gathering and
processing assets.
Outlook — We continue to move forward in our efforts to improve the operating performance and cash flow of MichCon.
Unfavorable economic trends have resulted in a decrease in the number of customers in our service territory, increased customer
conservation and continued high levels of theft and uncollectible accounts receivable. The MPSC has provided for an uncollectible
expense tracking mechanism which assists in mitigating the impacts of economic conditions in our service territory and a revenue
decoupling mechanism that addresses changes in average customer usage due to general economic conditions and conservation. These
and other tracking mechanisms and surcharges are expected to result in lower earnings volatility in the future. Looking forward, we
face additional issues, such as volatility in gas prices, investment returns and changes in discount rate assumptions in benefit plans and
health care costs. We expect to continue an intense focus on our continuous improvement efforts to improve productivity, minimize
lost and stolen gas, and decrease our costs while improving customer satisfaction with consideration of customer rate affordability.