DTE Energy 2011 Annual Report Download - page 18

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A reconciliation of the asset retirement obligation for 2011 follows:
(in Millions)
Asset retirement obligations at January 1, 2011
Accretion
Revision in estimated cash flows
Liabilities settled
Asset retirement obligations at December 31, 2011
$ 118
7
(1)
(7)
$ 117
NOTE 7 — RESTRUCTURING
Restructuring Costs
In 2005, the Company initiated a company-wide review of its operations called the Performance Excellence Process. In
September 2006, the MPSC issued an order approving a settlement agreement that allowed MichCon, commencing in 2006, to
defer the incremental CTA. Further, the order provided for MichCon to amortize the CTA deferrals over a ten-year period
beginning with the year subsequent to the year the CTA was deferred. The September 2006 order did not provide a regulatory
recovery mechanism for MichCon, therefore MichCon expensed CTA incurred during the period 2006 through 2008. The June
2010 MPSC order provided for MichCon's recovery of the regulatory unamortized balance of CTA. At June 30, 2010, MichCon
deferred and recognized in income approximately $32 million ($20 million after-tax) of previously expensed CTA. The non-
pension component of CTA of approximately $21 million is included in Regulatory assets. The pension component of CTA of
approximately $11 million is included in Regulatory liabilities. MichCon amortized approximately $3 million and $2 million of
deferred CTA costs in 2011 and 2010, respectively. Amounts expensed are recorded in Operation and maintenance expense on
the Consolidated Statements of Operations. Deferred amounts are recorded in Regulatory assets and Regulatory liabilities on
the Consolidated Statements of Financial Position. See Note 8.
NOTE 8 — REGULATORY MATTERS
Regulation
MichCon is subject to the regulatory jurisdiction of the MPSC, which issues orders pertaining to rates, recovery of certain
costs, including the costs of regulatory assets, conditions of service, accounting and operating-related matters. MichCon's
MPSC-approved rates charged to customers have historically been designed to allow for the recovery of costs, plus an
authorized rate of return on our investments. MichCon operates natural gas storage and transportation facilities in Michigan as
intrastate facilities regulated by the MPSC and provides intrastate storage and transportation services pursuant to an MPSC-
approved tariff.
MichCon also provides interstate storage and transportation services in accordance with an Operating Statement on file with the
FERC. The FERC's jurisdiction is limited and extends to the rates, non-discriminatory requirements and terms and conditions
applicable to storage and transportation provided by MichCon in interstate markets. FERC granted MichCon authority to
provide storage and related services in interstate commerce at market-based rates. MichCon provides transportation services in
interstate commerce at cost-based rates approved by the MPSC and filed with the FERC.
We are subject to the requirements of other regulatory agencies with respect to safety, the environment and health.
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 some or all of our businesses 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 balances and a brief description of the regulatory assets and liabilities as of December 31: