Company: DTK
Filing Date: 2025-10-30
Form Type: 10-Q
Source: 0000936340-25-000223
Chunk: 104

Company: DTE ENERGY CO
Filing Date: 2025-10-30
Form: 10-Q
Item: Part I, Item 1
Chunk 104
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ed Storage plant ("Ludington"), entered into a 2010 engineering, procurement, and construction agreement with Toshiba International Corporation ("TIC"), under which TIC contracted to perform a major overhaul and upgrade of Ludington.  TIC later assigned the contract and all its obligations to Toshiba America Energy Systems ("TAES").  TAES' work under the contract was incomplete, defective, and non-conforming.  DTE Electric and Consumers repeatedly documented TAES' failures to perform under the contract and demanded that TAES provide a comprehensive plan to resolve those matters, including adherence to its warranty commitments and other contractual obligations.  DTE Electric and Consumers engaged in extensive efforts to resolve these issues with TAES, including a formal demand to TAES' parent, Toshiba Corporation ("Toshiba"), under a parent guaranty it provided.  TAES did not provide a comprehensive plan or otherwise met its performance obligations.  As a result of TAES' defaults, DTE Electric and Consumers terminated the contract.  In order to enforce their rights under the contract and parent guaranty, and to pursue appropriate damages, DTE Electric and Consumers filed a complaint against TAES and Toshiba in the U.S. District Court for the Eastern District of Michigan in 2022.  TAES and Toshiba filed a motion to dismiss the complaint, along with an answer and counterclaims seeking approximately $15 million in damages related to payments allegedly owed under the parties' contract.  The motion to dismiss the complaint was denied.  DTE Electric believes the outstanding counterclaims are without merit, but would be liable for 49% of the damages if approved.  The parties are engaged in ongoing litigation pursuant to a court-ordered schedule.  Trial is currently scheduled to begin in the fourth quarter of 2025.  DTE Electric cannot predict the financial impact or outcome of this matter.In 2023, the MPSC approved a jointly-filed request by DTE Electric and Consumers for authority to defer as a regulatory asset the costs associated with repairing or replacing the defective work performed by TAES while the litigation with TAES and Toshiba moves forward.  DTE Electric currently estimates its share of these repair and replacement costs ranges from $350 million to $400 million.  Such costs will be offset by any potential litigation proceeds received from TAES or Toshiba.  DTE Electric and Consumers will have the opportunity to seek recovery and ratemaking treatment for amounts recorded as a regulatory asset following resolution of the litigation, including amounts not recovered from TAES