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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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): JUNE 11, 1997
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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.
As discussed in Item 7 - Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital Resources, Michigan
Public Service Commission of the Annual Report on Form 10-K for the year ended
December 31, 1996 and Item 5 - Other Events of the March 13, 1997 Current
Report on Form 8-K of DTE Energy Company ("DTE Energy") and The Detroit Edison
Company ("Detroit Edison"), the Michigan Public Service Commission ("MPSC" or
"Commission") has been conducting proceedings in conjunction with its review of
the December 19, 1996 MPSC Staff Report on Electric Industry Restructuring. In
an Opinion and Order dated June 5, 1997, with one Commissioner dissenting, the
MPSC stated that certain modifications should be made to the MPSC Staff Report
and indicated that its Order was intended "to provide a reasoned framework to
assist the [Michigan] Legislature in its deliberations" on electric industry
restructuring. The Order also contains an implementation schedule for the
various matters covered by the Order.
In the Order, the MPSC addressed, among other things, the following
matters relating to Detroit Edison's participation in the proposed industry
restructuring:
1. The Commission adopted the MPSC Staff recommendation that direct
customer access be subject to a phase-in of approximately 2 1/2% annually
of load (225 Megawatts) during the period 1997 through 2001, but
indicated that all customers will be eligible for direct access by 2002,
as opposed to 2004 as recommended by the MPSC Staff. Bids for initial
direct access for each of the years 1998 through 2001 may be submitted
during the period
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November 1 through November 20, 1997 and the 2 1/2% blocks will be
allocated by a bid process to be established. Hearings will be conducted
to establish a 1997 bidding procedure.
2. The Commission adopted the MPSC Staff's stranded cost recovery
methodology, indicating that it would apply a prudence standard for such
costs, but noted that "Nuclear capital costs and regulatory assets that
are currently reflected in rates will be included in stranded costs for
direct access customers." Detroit Edison was ordered to file a proposal
by July 7, 1997 for the establishment of a "true-up mechanism" in the
application of stranded cost recovery; the Order states that December 31,
2007 will be the last day for the collection of stranded costs.
3. The Commission recognized that securitization is "a potential tool for
reducing electric rates," but indicated that "legislation is required
before securitization can be implemented."
4. The Commission noted that the MPSC Staff Report endorsed performance
based regulation ("PBR"), but indicated that, while it was interested in
considering PBR, specific proposals would have to be submitted for
review.
5. The potential suspension of the power supply cost recovery clause was
determined to be an issue that would be handled on a case-by-case basis.
6. The Commission recognized that a rate freeze was potentially
inconsistent with a 1988 rate case settlement providing for the rate
phase-in of Detroit Edison's Fermi 2 power plant; a separate proceeding
was ordered to address this issue.
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7. The Commission scheduled the filing of revised direct access tariff
sheets addressing the matters covered in the Order by June 19, 1997; the
Commission indicated that it would exercise its authority to approve the
tariffs on an interim basis after review for consistency with the terms
of the Order, with hearings at a later date to resolve "remaining tariff
disputes."
8. The Commission indicated that it did not presently know the appropriate
standard to implement for standby service; interested parties will be
given an opportunity to develop this issue during the course of tariff
hearings.
9. The Commission recognized that reciprocity is an important issue to
both utilities and customers in the developing competitive electric
markets; with this in mind, the Commission indicated that reciprocity
from all utilities that wish to supply power directly or through an
affiliate would be required during the phase-in period, but there would
not be such a requirement for unaffiliated marketers or brokers during
phase-in; all electric suppliers will be subject to full reciprocity when
full direct access is implemented.
10. The Commission directed the MPSC Staff to conduct public meetings to
determine the proper direction to take with respect to market power
issues and the development of an independent system operator, with a
final report to be filed with the Commission within one year.
Detroit Edison, DTE Energy's principal subsidiary, is continuing to study
the Order and expects to follow the procedural schedule outlined in the Order.
While Detroit Edison continues to support the development of competitive
electric markets and intends to participate in the hearings directed by the
Order, it believes
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that a final restructuring plan may not be in place by the end of calendar year
1997.
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SIGNATURES
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: June 11, 1997
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