DTE Energy 2011 Annual Report Download - page 25

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23
lease obligations, hedge agreements and guarantees of third parties’ debt, but excluding contingent obligations, nonrecourse and
junior subordinated debt and, except for calculations at the end of the second quarter, certain MichCon short-term debt.
“Capitalization” means the sum of (a) total funded debt plus (b) “consolidated net worth,” which is equal to consolidated total
stockholders’ equity of the Company and its consolidated subsidiaries (excluding pension effects under certain FASB
statements), as determined in accordance with accounting principles generally accepted in the United States of America. At
December 31, 2011, the total funded debt to total capitalization ratio for MichCon is 0.45 to 1 and is in compliance with this
financial covenant. Should MichCon have delinquent obligations of at least $50 million to any creditor, such delinquency will
be considered a default under its credit agreement.
At December 31, 2011, the Company had outstanding commercial paper of $185 million, resulting in net availability under the
combined facilities of $215 million. At December 31, 2010, the Company had outstanding commercial paper of $150 million.
The weighted average interest rates for short-term borrowings were 0.5% and 0.4% at December 31, 2011 and 2010,
respectively.
NOTE 12 — OPERATING LEASES
Lessee - MichCon leases various assets under operating lease arrangements expiring at various dates through 2025. Some
leases contain renewal options. Future minimum lease payments under non-cancelable leases at December 31, 2011 were:
(in Millions)
2012
2013
Total minimum lease payments
Operating
Leases
$ 1
1
$ 2
Rental expense for operating leases was $1 million in 2011, 2010 and 2009.
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. DTE Energy owns a 40% interest in the Vector Pipeline. The components
of the net investment in the capital lease at December 31, 2011, are as follows:
(in Millions)
2012
2013
2014
2015
2016
Thereafter
Total minimum future lease receipts
Residual value of leased pipeline
Less unearned income
Net investment in capital lease
Less current portion
$ 9
9
9
9
9
35
80
40
(50)
70
(2)
$ 68
NOTE 13 — 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