DTE Energy 2012 Annual Report Download - page 59

Table of Contents
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Corporate Structure
DTE Energy owns the following businesses:
•DTE Electric, an electric utility engaged in the generation, purchase, distribution and sale of electricity to approximately 2.1 million customers in
southeastern Michigan;
•DTE Gas, a natural gas utility engaged in the purchase, storage, transportation, distribution and sale of natural gas to approximately 1.2 million
customers throughout Michigan and the sale of storage and transportation capacity; and
•Other businesses involved in 1) natural gas pipelines, gathering and storage; 2) power and industrial projects; and 3) energy marketing and
trading operations.
DTE Electric and DTE Gas are regulated by the MPSC. Certain activities of DTE Electric and DTE Gas, as well as various other aspects of businesses
under DTE Energy are regulated by the FERC. In addition, the Company is regulated by other federal and state regulatory agencies including the NRC, the
EPA and the MDEQ.
References in this Report to “Company” or “DTE” are to DTE Energy and its subsidiaries, collectively.
Basis of Presentation
The accompanying Consolidated Financial Statements are prepared using accounting principles generally accepted in the United States of America.
These accounting principles require management to use estimates and assumptions that impact reported amounts of assets, liabilities, revenues and expenses,
and the disclosure of contingent assets and liabilities. Actual results may differ from the Company’s estimates.
Certain prior year balances were reclassified to match the current year’s financial statement presentation.
Principles of Consolidation
The Company consolidates all majority-owned subsidiaries and investments in entities in which it has controlling influence. Non-majority owned
investments are accounted for using the equity method when the Company is able to influence the operating policies of the investee. Non-majority owned
investments include investments in limited liability companies, partnerships or joint ventures. When the Company does not influence the operating policies of
an investee, the cost method is used. These consolidated financial statements also reflect the Company's proportionate interests in certain jointly owned utility
plant. The Company eliminates all intercompany balances and transactions.
The Company evaluates whether an entity is a VIE whenever reconsideration events occur. The Company consolidates VIEs for which it is the primary
beneficiary. If the Company is not the primary beneficiary and an ownership interest is held, the VIE is accounted for under the equity method of accounting.
When assessing the determination of the primary beneficiary, the Company considers all relevant facts and circumstances, including: the power, through
voting or similar rights, to direct the activities of the VIE that most significantly impact the VIE's economic performance and the obligation to absorb the
expected losses and/or the right to receive the expected returns of the VIE. The Company performs ongoing reassessments of all VIEs to determine if the
primary beneficiary status has changed.
Legal entities within the Company's Power and Industrial Projects segment enter into long-term contractual arrangements with customers to supply
energy-related products or services, which includes arrangements related to entities acquired in 2012. See Note 6. The entities are generally designed to pass-
through the commodity risk associated with these contracts to the customers, with the Company retaining operational and customer default risk. These entities
generally are VIEs. In addition, the Company has interests in certain VIEs that we share control of all significant activities for those entities with our partners,
and therefore are accounted for under the equity method.
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