Orr to shut down Detroit Lighting Department, services to DTE - New York News

Orr to shut down Detroit Lighting Department, move services to DTE

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PRESS RELEASE FROM THE OFFICE OF KEVYN ORR:

DETROIT, June 27, 2013 – The City of Detroit's Emergency Manager Kevyn Orr announced today that his office has sent a notice to DTE Energy Company (NYSE: DTE) indicating that Detroit's Public Lighting Department (PLD) intends to wind down its electricity distribution and transmission services. 

As part of this winding down process, the Emergency Manager has requested DTE to cooperate with PLD to ensure that all current PLD customers will be serviced by DTE following the exit by PLD from electricity distribution and transmission operations.   With today's announcement, the Emergency Manager has authorized DTE to provide electrical service to customers of PLD as part of this winding down process.

DTE, which currently provides electricity to the City of Detroit through a wholesale power purchase agreement, has agreed, in principle, to accept PLD's current customers to its system, but, as part of the arrangement, PLD's assets will not be transferred to DTE due to the current condition of PLD's electricity distribution and transmission grid.

This wind down is expected to take place in multiple phases.  First, in the next six to nine months, DTE will replace all current PLD electricity meters.  Following that replacement process, all current PLD customers will become DTE customers.  Over the next five to seven years, DTE will then construct and expand its own transmission and distribution grid to directly service former PLD customers using DTE's grid, and PLD will de-commission its current equipment.  During that five- to seven-year period, PLD will continue to operate its existing grid until such time as DTE has connected those customers to its own grid, and DTE has agreed in principle to reimburse PLD for the cost of PLD's operations.  The move is designed to improve the reliability of electric service for Detroit's 700,000 residents and to achieve significant cost savings that the City can reinvest to improve the delivery of basic services to its citizens, while still ensuring that all current PLD customers are provided the electricity they need.

PLD has been responsible for distributing power to approximately 115 customers at 1,400 sites throughout the Detroit metropolitan area. Most of the customers currently on the city electric grid are businesses and institutions such as Wayne State University, Detroit Public Schools, Joe Louis Arena, Cobo Hall and the Detroit Institute of Arts.  The electric system has been a significant financial burden for Detroit, operating at an average annual loss of approximately $150 million over the past five years.

"The 100-year-old PLD system has not received any investment in nearly a decade, and the City of Detroit has been operating it at a loss for some time," Orr said.  "Detroit's residents and businesses will see a significant improvement in their electric service once current PLD customers have been fully transitioned to DTE, a professional company with significant expertise operating municipal utilities.  Exiting the electric business and letting a recognized expert such as DTE run it is a sensible course of action to take.  We expect this move to improve the reliability of Detroit's electric service and provide the City with greater financial flexibility to invest in essential services for its 700,000 residents."

About DTE

DTE Energy (NYSE:DTE) is a Detroit-based diversified energy company involved in the development and management of energy-related businesses and services nationwide. Its operating units include an electric utility serving 2.1 million customers in Southeastern Michigan and a natural gas utility serving 1.2 million customers in Michigan. The DTE Energy portfolio also includes non-utility energy businesses focused on power and industrial projects and energy trading.

 

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