Significant Accounting Policies (Notes)

6 Months Ended

Jun. 30, 2012

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

SIGNIFICANT ACCOUNTING POLICIES

Intangible Assets

The Company has certain intangible assets relating to emission allowances, renewable energy credits and non-utility contracts. Summary of intangible assets as of June 30, 2012 and December 31, 2011 (in millions):

	June 30, 2012		December 31, 2011
Emission allowances	$	8	$	10
Renewable energy credits	42		39
Contract intangible assets	64		65
	114		114
Less accumulated amortization	29		28
Intangible assets, net	85		86
Less current intangible assets	18		13
	$	67	$	73

Emission allowances and renewable energy credits are charged to expense, using average cost, as the allowances and credits are consumed in the operation of the business. The Company amortizes contract intangible assets on a straight-line basis over the expected period of benefit, ranging from 3 to 20 years.

Income Taxes

The Company's effective tax rate from continuing operations for the three and six months ended June 30, 2012 is 32 percent and 32 percent, respectively, as compared to a negative 14 percent and 17 percent for the three and six months ended June 30, 2011, respectively. The increase in the effective tax rate in 2012 is due primarily to the recognition of an $88 million income tax benefit due to the enactment of the Michigan Corporate Income Tax in the second quarter of 2011.

The Company had $3 million and $4 million of unrecognized tax benefits at June 30, 2012 and at December 31, 2011, respectively, that, if recognized, would favorably impact its effective tax rate. In 2012, the Company settled a federal tax audit for the 2009 and 2010 tax years and, as a result, the unrecognized tax benefit decreased by $30 million. The Company does not anticipate any material changes to the unrecognized tax benefits within the next twelve months.

Offsetting Amounts Related to Certain Contracts

The Company offsets the fair value of derivative instruments with cash collateral received or paid for those derivative instruments executed with the same counterparty under a master netting agreement, which reduces the Company’s total assets and total liabilities. As of June 30, 2012 , the total cash collateral received, net of cash collateral posted, was $11 million. There was no collateral related to unrealized positions to net against derivative assets and liabilities as of June 30, 2012. As of June 30, 2012, the Company recorded cash collateral paid of $6 million and cash collateral received of $17 million not related to unrealized derivative positions. These amounts are included in accounts receivable and accounts payable and are recorded net by counterparty.