DTE Energy 2012 Annual Report Download - page 34

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Table of Contents




Operating Revenues 
$1,129
$1,144
Operation and Maintenance 
1,025
978
Depreciation and Amortization 
60
60
Taxes other than Income 
10
14
Asset (Gains) and Losses, Reserves and Impairments, Net 
(12)
(14)
Operating Income (Loss) 
46
106
Other (Income) and Deductions 
(10)
13
Income Taxes
Expense
17
36
Production Tax Credits 
(6)
(33)

11
3
Net Income 
45
90
Noncontrolling interest
7
5
Net Income Attributable to DTE Energy Company 
$38
$85
Operating revenues increased $694 million in 2012 and decreased $15 million in 2011. The 2012 increase is primarily due to a $740 million increase
associated with higher volumes from REF projects, of which $554 million represents affiliate transactions, and a $30 million increase due to the newly
acquired on-site projects, partially offset by a $44 million decrease primarily due to lower volumes associated with the steel business, and a $28 million
decrease in coal transportation and marketing services business. The 2011 decrease is primarily due to $166 million of lower coal transportation and
marketing services related to an expired rail transportation contract at significantly below market rates, $21 million of lower volumes associated with the coal
blending business and a $20 million decrease from the sale of our rail services business in 2010, partially offset by a $92 million increase related to REF
projects, of which $90 million represents affiliate transactions, a $74 million increase in coke demand and pricing, and a $26 million increase in new on-site
energy services projects.
Operation and maintenance expense increased $763 million in 2012 and increased $47 million in 2011. The 2012 increase is primarily due to a $770
million increase associated with higher volumes from REF projects, of which $562 million represents affiliate transactions, a $25 million increase due to the
newly acquired on-site projects and a $11 million customer settlement, partially offset by a $20 million decrease primarily due to lower volumes associated
with the steel business and a $26 million decrease in coal transportation and marketing services business. The 2011 increase is due primarily to a $103
million increase in coal costs, a $93 million increase related to REF projects, of which $91 million represents affiliate transactions, and a $25 million
increase in new on-site energy services projects, partially offset by $127 million lower coal transportation and marketing services related to the expired rail
transportation contract, a $19 million decrease from the sale of our rail services business in 2010, $17 million lower volumes primarily associated with the
coal blending business and $11 million of lower coke battery operating costs.
Asset (gains) and losses, reserves and impairments, net decreased by $7 million in 2012 and decreased by $2 million in 2011. The 2012 decrease
was due to a $3 million loss on the sale of assets associated with our coal transloading terminal and $3 million of impairments related to non-strategic assets.
The 2011 decrease was due to an asset impairment related to our landfill gas recovery business of $11 million, partially offset by installment gains of $9
million from the sale of a coke battery.
Other (income) and deductions were higher by $34 million in 2012 and higher by $23 million in 2011. The increase in 2012 and 2011 were due
primarily to gains recognized in connection with sale of membership interest in REF facilities (treated as sales of tax credits for financial reporting purposes).
The increase in 2011 also included $12 million of gains on the extinguishment of debt related to our landfill gas recovery business.
Production tax credits increased by $38 million in 2012 primarily due to tax credits earned from REF projects. The decrease of $27 million in 2011
was due primarily to the expiration of steel industry fuels credits as of December 31, 2010, partially offset by tax credits earned from REF projects.
Outlook - The Company has constructed and placed in service nine REF facilities including three facilities located at third party owned coal-fired power
plants. The Company has sold membership interests in two of the facilities. We continue to optimize these facilities by seeking tax investors for facilities
operating at DTE Electric and other utility sites. Additionally, we intend to relocate three underutilized facilities, located at DTE Electric sites, to alternative
coal-fired power plants which may provide increased production and emission reduction opportunities in 2013 and future years. One of the underutilized
facilities is currently being relocated to a third party owned coal-fired power plant. The proceeds from executed and planned sales of membership interests in
the REF facilities are expected to be received by the Company on an installment basis, and the
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