DTE Energy 2014 Annual Report Download - page 68

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A reconciliation of the asset retirement obligations for 2014 follows:
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Asset retirement obligations at December 31, 2013 $ 1,827
Accretion 112
Liabilities incurred 11
Liabilities settled (12)
Revision in estimated cash flows 24
Asset retirement obligations at December 31, 2014 $ 1,962
Approximately $1.7 billion of the asset retirement obligations represent nuclear decommissioning liabilities that are funded through a surcharge to
electric customers over the life of the Fermi 2 nuclear plant. The NRC has jurisdiction over the decommissioning of nuclear power plants and requires
minimum decommissioning funding based upon a formula. The MPSC and FERC regulate the recovery of costs of decommissioning nuclear power plants
and both require the use of external trust funds to finance the decommissioning of Fermi 2. Rates approved by the MPSC provide for the recovery of
decommissioning costs of Fermi 2 and the disposal of low-level radioactive waste. DTE Electric is continuing to fund FERC jurisdictional amounts for
decommissioning even though explicit provisions are not included in FERC rates. The Company believes the MPSC and FERC collections will be adequate
to fund the estimated cost of decommissioning. The decommissioning assets, anticipated earnings thereon and future revenues from decommissioning
collections will be used to decommission Fermi 2. The Company expects the liabilities to be reduced to zero at the conclusion of the decommissioning
activities. If amounts remain in the trust funds for Fermi 2 following the completion of the decommissioning activities, those amounts will be disbursed based
on rulings by the MPSC and FERC.
A portion of the funds recovered through the Fermi 2 decommissioning surcharge and deposited in external trust accounts is designated for the removal
of non-radioactive assets and returning the site to greenfield. This removal and greenfielding is not considered a legal liability. Therefore, it is not included
in the asset retirement obligation, but is reflected as the Nuclear decommissioning liability. The decommissioning of Fermi 1 is funded by DTE Electric.
Contributions to the Fermi 1 trust are discretionary. For additional discussion of Nuclear decommissioning trust fund assets see Note 11 to the Consolidated
Financial Statements, "Fair Value".
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DTE Electric and DTE Gas are subject to the regulatory jurisdiction of the MPSC, which issues orders pertaining to rates, recovery of certain costs,
including the costs of generating facilities and regulatory assets, conditions of service, accounting and operating-related matters. DTE Electric is also
regulated by the FERC with respect to financing authorization and wholesale electric activities. Regulation results in differences in the application of
generally accepted accounting principles between regulated and non-regulated businesses.
The Company is unable to predict the outcome of the unresolved regulatory matters discussed herein. Resolution of these matters is dependent upon
future MPSC orders and appeals, which may materially impact the financial position, results of operations and cash flows of the Company.
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DTE Electric and DTE Gas are required to record regulatory assets and liabilities for certain transactions that would have been treated as revenue or
expense in non-regulated businesses. Continued applicability of regulatory accounting treatment requires that rates be designed to recover specific costs of
providing regulated services and be charged to and collected from customers. Future regulatory changes or changes in the competitive environment could
result in the discontinuance of this accounting treatment for regulatory assets and liabilities for some or all of our businesses and may require the write-off of
the portion of any regulatory asset or liability that was no longer probable of recovery through regulated rates. Management believes that currently available
facts support the continued use of regulatory assets and liabilities and that all regulatory assets and liabilities are recoverable or refundable in the current
regulatory environment.
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