DTE Energy 2011 Annual Report Download - page 26

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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, 2011 and December 31, 2010, 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 represented employees are under
a contract that expires in October 2013.
Purchase Commitments
As of December 31, 2011, 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 $1.2 billion through 2051. MichCon also
estimates that 2012 capital expenditures will be approximately $215 million. The Company has made certain commitments in
connection with expected capital expenditures.
Bankruptcies
The Company purchases and sells gas and gas storage and transportation services from and to governmental entities and
numerous companies operating in the steel, automotive, energy, retail and other industries. Certain of its customers have filed
for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code. The Company regularly reviews contingent matters
relating to these customers and its purchase and sale contracts and it records provisions for amounts considered at risk of
probable loss. The Company believes its previously accrued amounts are adequate for probable loss. The final resolution of
these matters may have a material effect on its consolidated financial statements.
Other Contingencies
The Company is involved in certain other legal, regulatory, administrative and environmental proceedings before various
courts, arbitration panels and governmental agencies concerning claims arising in the ordinary course of business. These
proceedings include certain contract disputes, additional environmental reviews and investigations, audits, inquiries from
various regulators, and pending judicial matters. The Company cannot predict the final disposition of such proceedings. The
Company regularly reviews legal matters and records provisions for claims that it can estimate and are considered probable of
loss. The resolution of these pending proceedings is not expected to have a material effect on its operations or financial
statements in the periods they are resolved. See Note 8 for a discussion of contingencies related to Regulatory Matters.
NOTE 14 — RETIREMENT BENEFITS AND TRUSTEED ASSETS
Pension Plan Benefits
MichCon participates in various plans that provide pension and other postretirement benefits for DTE Energy and its affiliates.
The plans are sponsored by DTE Energy Corporate Services, LLC (LLC), a subsidiary of DTE Energy. MichCon is allocated
net periodic benefit costs (credits) for its share of the amounts of the combined plans.
The Company's policy is to fund pension costs by contributing amounts consistent with the Pension Protection Act of 2006
provisions and additional amounts it deems appropriate. The Company did not make a contribution to its pension plans in 2011.
At the discretion of management, and depending on financial market conditions, the Company anticipates making a
contribution of $40 million in 2012.
The MPSC approved the deferral of the non-capitalized portion of the Company's negative pension expense. In 2011 and 2010,