DTE Energy 2012 Annual Report Download - page 63

Table of Contents
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Natural gas inventory of $37 million and $52 million as of December 31, 2012 and 2011, respectively, at DTE Gas is determined using the last-in,
first-out (LIFO) method. At December 31, 2012, the replacement cost of gas remaining in storage exceeded the LIFO cost by $ 113 million. At December 31,
2011, the replacement cost of gas remaining in storage exceeded the LIFO cost by $ 95 million.
Property, Retirement and Maintenance, and Depreciation, Depletion and Amortization
Property is stated at cost and includes construction-related labor, materials, overheads and, for utility property, an allowance for funds used during
construction (AFUDC). The cost of utility properties retired is charged to accumulated depreciation. Expenditures for maintenance and repairs are charged to
expense when incurred, except for Fermi 2.
Utility property at DTE Electric and DTE Gas is depreciated over its estimated useful life using straight-line rates approved by the MPSC.
Non-utility property is depreciated over its estimated useful life using the straight-line and units of production methods.
Depreciation, depletion and amortization expense also includes the amortization of certain regulatory assets.
Approximately $12 million and $23 million of expenses related to Fermi 2 refueling outages were accrued at December 31, 2012 and December 31,
2011, respectively. Amounts are accrued on a pro-rata basis, generally over an 18-month period, that coincides with scheduled refueling outages at Fermi 2.
This accrual of outage costs matches the regulatory recovery of these costs in rates set by the MPSC. See Note 11.
The cost of nuclear fuel is capitalized. The amortization of nuclear fuel is included within Fuel, purchased power, and gas in the Consolidated
Statements of Operations and is recorded using the units-of-production method.
Long-Lived Assets
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be
recoverable. If the carrying amount of the asset exceeds the expected discounted future cash flows generated by the asset, an impairment loss is recognized
resulting in the asset being written down to its estimated fair value. Assets to be disposed of are reported at the lower of the carrying amount or fair value, less
costs to sell.
Intangible Assets
The Company has certain intangible assets relating to emission allowances, renewable energy credits and non-utility contracts. Summary of intangible
assets as of December 31, 2012 and 2011:



Emission allowances  
$10
Renewable energy credits 
39
Contract intangible assets 
65

114
Less accumulated amortization 
28
Intangible assets, net 
$86
Less current intangible assets 
$13

$ 73
Emission allowances and renewable energy credits are charged to expense, using average cost, as the allowances and credits are consumed in the
operation of the business. The Company amortizes contract intangible assets on a straight-line basis over the expected period of benefit, ranging from 3 to 28
years. Intangible assets amortization expense was $ 6 million in 2012, $5 million in 2011 and $4 million in 2010. Amortization expense of intangible assets is
estimated to be $13 million annually for 2013 through 2017.
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