This request will have no immediate impact on residential customer rates, which are capped at current levels through the end of 2005.
On Aug. 14, failures in the regional power transmission grid caused nine of Detroit Edison's power plants to trip offline, which left virtually all of its 2.1 million customers without power. Given the critical nature of electricity, Detroit Edison pursued every option available to bring power back as soon as possible. Over a period of approximately 36 hours, nearly all of the company's customers had their electricity restored. The company estimates that the financial impact of the blackout (excluding net lost revenue of US$10 million which Detroit Edison is not seeking to recover) was in the range of $35 million to $40 million pre-tax ($23 million to $26 million after-tax, or $0.14 to $0.16 per share).
Detroit Edison intends to file an application with the Michigan Public Service Commission (MPSC) in the near future, seeking to defer these costs and permission to include the costs in customer rates after the expiration of the current rate freeze. Based on the assumption that it will receive the requested treatment of its costs, the company is not altering its 2003 operating earnings guidance, currently at $3.10 - $3.30 per share, as a result of the costs of the blackout.
"Given the extraordinary circumstances of the blackout, in which Detroit Edison was responsible for both bringing southeastern Michigan's power plants back online and maintaining the integrity of the distribution grid, our employees did a remarkable job of completely restoring the system in a limited time frame," said Anthony F. Earley, DTE Energy chairman and CEO. "This crisis highlights the need to maintain operationally and financially strong utilities in Michigan."
