DTE Energy 2014 Annual Report Download - page 72




In July 2014, DTE Electric filed an application for accounting authority to defer certain costs associated with implementing Customer360, which is an
integrated software application that enables improved interface among customer service, billing, meter reading, credit and collections, device management,
account management, and retail access. The estimated implementation cost of Customer360 is approximately $215 million and DTE Electric proposed an
amortization period of 15 years. On September 26, 2014, the MPSC approved the accounting request.

In September 2012, the MPSC approved DTE Electric's accounting application to defer for future amortization the gain resulting from the reversal of
the Company's $127 million regulatory liability associated with the operation of the RDM. The approved application provided for the amortization of the
regulatory liability to income, at a monthly rate of approximately $10.6 million, beginning January 2014. On April 1, 2014, the MPSC approved DTE
Electric's accounting application to suspend the amortization of the RDM regulatory liability as of June 30, 2014 and to complete the amortization over the
period January 2015 to June 2015. If DTE Electric's base rates are increased prior to July 1, 2015, the Company will cease amortization and refund to
customers the remaining unamortized balance of the regulatory liability.

On July 19, 2013, DTE Electric filed its TRM application proposing a transitional tariff option for certain former PLD customers and a modified line
extension provision. The application also proposed a recovery mechanism for the deferred net incremental revenue requirement associated with the
transition. The net incremental revenue requirement includes costs to install meters and attach customers; system and customer facility upgrades and repairs;
and the difference between DTE Electric's tariff rates and any transitional rates approved in the future. On May 13, 2014, the MPSC approved the TRM as
requested and also ordered DTE Electric to include in the TRM the PLD transmission delivery service costs incurred while DTE Electric is temporarily
relying upon PLD to operate and maintain PLD's system during the system conversion period. The meter installation phase of the transition was completed in
June 2014. On July 1, 2014, former PLD customers became customers of DTE Electric.

The PSCR process is designed to allow DTE Electric to recover all of its power supply costs if incurred under reasonable and prudent policies and
practices. DTE Electric's power supply costs include fuel and related transportation costs, purchased and net interchange power costs, nitrogen oxide and
sulfur dioxide emission allowances costs, urea costs, transmission costs and MISO costs. The MPSC reviews these costs, policies and practices for prudence in
annual plan and reconciliation filings.
2012 PSCR Year — In March 2013, DTE Electric filed the 2012 PSCR reconciliation calculating a net under-recovery of approximately $87 million
that includes an under-recovery of approximately $148 million for the 2011 PSCR year. The reconciliation includes purchased power costs related to the
manual shutdown of our Fermi 2 nuclear power plant in June 2012 caused by the failure of one of the plant's two non-safety related feed-water pumps. The
plant was restarted on July 30, 2012, which restored production to approximately 68% of full capacity. In September 2013, the repair to the plant was
completed and production was returned to full capacity. DTE Electric was able to purchase sufficient power from MISO to continue to provide uninterrupted
service to our customers. Certain intervenors in the reconciliation case have challenged the recovery of up to $32 million of the Fermi 2 related purchased
power costs. Resolution of this matter is expected in 2015.

In November 2014, DTE Gas filed an application with the MPSC for approval of an increased IRM surcharge to recover an additional $47 million of
annual capital expenditures in 2016 and 2017 for its gas main renewal program. Resolution of this matter is anticipated in 2015.
69