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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): NOVEMBER 4, 1997
COMMISSION EXACT NAME OF REGISTRANT AS I.R.S. EMPLOYER
FILE NUMBER SPECIFIED IN ITS CHARTER IDENTIFICATION NO.
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1-11607 DTE ENERGY COMPANY
(A MICHIGAN CORPORATION) 38-3217752
2000 2ND AVENUE
DETROIT, MICHIGAN 48226-1279
313-235-4000
1-2198 THE DETROIT EDISON COMPANY
(A MICHIGAN CORPORATION) 38-0478650
2000 2ND AVENUE
DETROIT, MICHIGAN 48226-1279
313-235-8000
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ITEM 5. OTHER EVENTS.
The Detroit Edison Company has been voluntarily participating in a
number of Michigan Public Service Commission ("MPSC" or "Commission")
proceedings considering various proposals for the restructuring of the electric
utility industry in Michigan. A December 19, 1996 MPSC Staff Report provided
the basis for Detroit Edison's participation in these proceedings. The MPSC
Staff Report provided, among other things, for a competitive electric utility
environment in Michigan while (1) permitting Detroit Edison to recover costs
that would be stranded due to the transition to competition, (2) freezing
Detroit Edison's base electric rates and suspending the Power Supply Cost
Recovery ("PSCR") Clause during the phase-in period to full competition and (3)
providing access to Detroit Edison's retail customers only to those electric
suppliers allowing Detroit Edison reciprocal access on a comparable basis for
the sale of retail electric energy.
In a June 5, 1997 Order, the MPSC directed that Michigan utilities make
filings covering (1) the details of a direct access program and related
tariffs and (2) a stranded cost recovery true-up mechanism. In addition, the
June 5, 1997, Order directed that bids for allocated, phased-in direct access
capacity be submitted during the period November 1-20, 1997. Detroit Edison has
filed a timely appeal of the June 5, 1997, Order. The Commission subsequently
convened contested case proceedings dealing
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with 1) direct access tariffs, 2) true-up mechanisms, 3) PSCR suspension and 4)
performance-based ratemaking.
On October 29, 1997, the MPSC issued a series of Orders, with one of
the three MPSC Commissioners dissenting, providing for a competitive direct
access program for Consumers Energy Company and Detroit Edison. The principles
adopted in the October 29, 1997 MPSC Orders differ significantly from the
competitive electric industry framework envisioned by the December 19, 1996
MPSC Staff Report.
While suspending the November 1-20, 1997 capacity bids, the
MPSC directed that commencing in 1998, 450 MW of Detroit Edison's load will be
available for open access service, with an additional 225 MW to be made
available in each of the years 1999, 2000 and 200l. Although ordering access
to Detroit Edison's retail load, the MPSC reduced the reciprocity provisions of
the December 19, 1996 MPSC Staff Report. During the phase-in period to full
competition, which is scheduled for 2002, reciprocity is to be required only of
utilities and utility affiliates, with greater reciprocity provisions mandated
following full implementation of competition.
Detroit Edison was denied implementation of pre-securitization and
securitization surcharges, as well as a stranded cost transition surcharge.
Instead, a minimum bid level was established for direct access sales and, at a
later date, a single cost-based transition charge on all sales effective
January 1, 2002 will be established by the Commission. Also, the nuclear
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fuel storage and nuclear site security surcharges requested by Detroit Edison
were denied.
Further proceedings were ordered regarding rates, terms and conditions
of standby service. In addition, the MPSC Orders failed to provide a
definitive stranded-cost recovery true-up mechanism. Rather, the MPSC
contemplates an annual proceeding for true-up based upon the actual price paid
by direct access customers. Detroit Edison's request for suspension of the
PSCR was effectively denied. Instead, the MPSC ruled that the PSCR would
continue until such time as 5% of the Detroit Edison load was taking direct
access service from non-affiliate power suppliers. At that time, Detroit Edison
can file for suspension pending Commission notification of the amount of direct
access load and level of PSCR costs to be included in base rates.
Commissioner John Shea filed dissenting opinions in all of the October
29, 1997 Orders, indicating that in the Orders the utilities' voluntary
programs "have mutated into a MANDATORY direct access service program upon
terms and conditions far different from the plan proposed in the MPSC Staff
Report..." Commissioner Shea also questioned the Commission's authority to
issue the Orders and indicated that the Orders "fail to articulate why it is in
the public interest" to require a direct access program.
Detroit Edison anticipates that it and various other parties will file
timely appeals of the MPSC's October 29, 1997 Orders. Detroit Edison
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believes that the MPSC lacks the authority to require Detroit Edison to
implement a direct access program and that the Orders are confiscatory in that
they do not provide a definitive basis for Detroit Edison to recover its
potentially stranded costs, substantially all of which costs were fully
litigated in previous rate proceedings before the MPSC.
Detroit Edison anticipates that Michigan legislation consistent with
the guidelines of the December 1996 MPSC Staff Report will be introduced in the
near future.
Detroit Edison is the principal subsidiary of DTE Energy Company.
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrants have duly caused this report to be signed on their behalf by
the undersigned, hereunto duly authorized.
DTE ENERGY COMPANY
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(Registrant)
By: /s/ David E. Meador
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David E. Meador
Vice President and Controller
THE DETROIT EDISON COMPANY
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(Registrant)
By: /s/ David E. Meador
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David E. Meador
Vice President and Controller
Date: November 4, 1997
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