DTE Energy 2012 Annual Report Download - page 93

Table of Contents
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CAIR in place. The EPA's petition seeking a rehearing of the U.S. Court of Appeals' decision regarding the CSAPR was denied on January 24, 2013. The
Electric Generating Unit Maximum Achievable Control Technology (EGU MACT) Rule was finalized on December 16, 2011. The EGU MACT requires
reductions of mercury and other hazardous air pollutants beginning in 2015. Because these rules were recently finalized and technologies to comply are still
being tested, it is not possible to quantify the impact of these rulemakings.
In July 2009, DTE Energy received a Notice of Violation/Finding of Violation (NOV/FOV) from the EPA alleging, among other things, that five DTE
Electric power plants violated New Source Performance standards, Prevention of Significant Deterioration requirements, and operating permit requirements
under the Clean Air Act. An additional NOV/FOV was received in June 2010 related to a recent project and outage at Unit 2 of the Monroe Power Plant.
On August 5, 2010, the U. S. Department of Justice, at the request of the EPA, brought a civil suit in the U.S. District Court for the Eastern District of
Michigan against DTE Energy and DTE Electric, related to the June 2010 NOV/FOV and the outage work performed at Unit 2 of the Monroe Power Plant, but
not relating to the July 2009 NOV/FOV. Among other relief, the EPA requested the court to require DTE Electric to install and operate the best available control
technology at Unit 2 of the Monroe Power Plant. Further, the EPA requested the court to issue a preliminary injunction to require DTE Electric to (i) begin the
process of obtaining the necessary permits for the Monroe Unit 2 modification and (ii) offset the pollution from Monroe Unit 2 through emissions reductions
from DTE Electric's fleet of coal-fired power plants until the new control equipment is operating.
On August 23, 2011, the U.S. District judge granted DTE Energy's motion for summary judgment in the civil case, dismissing the case and entering
judgment in favor of DTE Energy. On October 20, 2011, the EPA caused to be filed a Notice of Appeal. Oral arguments took place on November 27, 2012 in
the appeal of the August 2011 summary judgment before a three-judge panel of the Sixth Circuit Court of Appeals in Cincinnati, Ohio. A decision in this
appeal is expected in early 2013. DTE Energy and DTE Electric believe that the plants identified by the EPA, including Unit 2 of the Monroe Power Plant,
have complied with all applicable federal environmental regulations. Depending upon the outcome of discussions with the EPA regarding the NOV/FOV and
the result of the appeals process, the Company could also be required to install additional pollution control equipment at some or all of the power plants in
question, implement early retirement of facilities where control equipment is not economical, engage in supplemental environmental programs, and/or pay
fines. The Company cannot predict the financial impact or outcome of this matter, or the timing of its resolution.
On November 9, 2012, the Sierra Club filed a Notice of Intent to Sue DTE Electric for Violations of the Clean Air Act at the St. Clair, Belle River, and
Trenton Channel power plants. The notice cites 1,330 total exceedances of the 6-minute opacity standard at nine electric generating units over a five-year
period. The Sierra Club obtained the opacity exceedance data from excess emission reports that are submitted every quarter by DTE Electric to the MDEQ. No
enforcement actions have been initiated by the MDEQ over this five-year period as a result of the reported opacity exceedances. The Company will develop a
strategy for responding to the petition from the Sierra Club that is expected in early 2013.
Water - In response to an EPA regulation, DTE Electric would be required to examine alternatives for reducing the environmental impacts of the cooling
water intake structures at several of its facilities. Based on the results of completed studies and expected future studies, DTE Electric may be required to install
technologies to reduce the impacts of the water intake structures. The initial rule published in 2004 was subsequently remanded and a proposed rule published
in 2011. The proposed rule specified an eight year compliance timeline. In July 2012, the EPA announced that a notice of its final action on the rule will be
issued June 2013. The EPA has also issued an information collection request to begin a review of steam electric effluent guidelines. It is not possible at this time
to quantify the impacts of these developing requirements.
Contaminated and Other 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. DTE
Electric conducted remedial investigations at contaminated sites, including three former MGP sites. The 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 in the process of cleaning up other contaminated sites,
including the area surrounding an ash landfill, electrical distribution substations, electric generating power plants, and underground and aboveground storage
tank locations. The findings of these investigations indicated that the estimated cost to remediate these sites is expected to be incurred over the next several
years. At December 31, 2012 and 2011, the Company had $ 9 million and $8 million, respectively, 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.
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