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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period ended ~~June~~September 30, 2019

☐ TRANSITION REPORT PURSUANT TO SECTION 12 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 1-11607

DTE Energy Company



Michigan		38-3217752
(State or other jurisdiction of incorporation or organization)		(I.R.S Employer Identification No.)

Commission File Number: 1-2198

DTE Electric Company



Michigan		38-0478650
(State or other jurisdiction of incorporation or organization)		(I.R.S Employer Identification No.)

Registrants address of principal executive offices: One Energy Plaza, Detroit, Michigan 48226-1279

Registrants telephone number, including area code: (313) 235-4000

Securities registered pursuant to Section 12(b) of the Act:



Title of Each Class	Trading Symbol(s)	Name of Exchange on which Registered
Common stock, without par value	DTE	New York Stock Exchange

2012 Series C 5.25% Junior Subordinated Debentures due 2062	DTQ	New York Stock Exchange

2016 Series B 5.375% Junior Subordinated Debentures due 2076	DTJ	New York Stock Exchange

2016 Series F 6.00% Junior Subordinated Debentures due 2076	DTY	New York Stock Exchange

2017 Series E 5.25% Junior Subordinated Debentures due 2077	DTW	~~New York Stock Exchange~~

~~6.50% Corporate Units~~	~~DTV~~	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.



DTE Energy Company (DTE Energy)	Yes	☒	No	☐	DTE Electric Company (DTE Electric)	Yes	☒	No	☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).



DTE Energy	Yes	☒	No	☐	DTE Electric	Yes	☒	No	☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.



DTE Energy	Large accelerated filer	Accelerated filer	Non-accelerated filer	Smaller reporting company	Emerging growth company
	☒	☐	☐	☐	☐

DTE Electric	Large accelerated filer	Accelerated filer	Non-accelerated filer	Smaller reporting company	Emerging growth company
	☐	☐	☒	☐	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).



DTE Energy	Yes	☐	No	☒	DTE Electric	Yes	☐	No	☒

Number of shares of Common Stock outstanding at ~~June~~September 30, 2019:



Registrant	Description	Shares
DTE Energy	Common Stock, without par value	~~183,301,732~~183,396,510

DTE Electric	Common Stock, $10 par value, ~~directly~~ owned by DTE Energy	138,632,324

This combined Form 10-Q is filed separately by two registrants: DTE Energy and DTE Electric. Information contained herein relating to any individual registrant is filed by such registrant solely on its own behalf. DTE Electric makes no representation as to information relating exclusively to DTE Energy.

DTE Electric, aan indirect wholly-owned subsidiary of DTE Energy, meets the conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q and is therefore filing this form with the reduced disclosure format specified in General Instructions H(2) of Form 10-Q.

TABLE OF CONTENTS



		Page
	Definitions	1
	Filing Format	3
	Forward-Looking Statements	3
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements
	DTE Energy Consolidated Financial Statements (Unaudited)	5
	DTE Electric Consolidated Financial Statements (Unaudited)	13
	Combined Notes to Consolidated Financial Statements (Unaudited)	19
	Note 1 — Organization and Basis of Presentation	19
	Note 2 — Significant Accounting Policies	22
	Note 3 — New Accounting Pronouncements	24
	Note 4 — ~~Revenue~~Acquisitions	26
	Note 5 — ~~Regulatory Matters~~Revenue	2827
	Note 6 — ~~Earnings Per Share~~Regulatory Matters	29
	Note 7 — ~~Fair Value~~Earnings Per Share	30
	Note 8 — ~~Financial and Other Derivative Instruments~~Fair Value	3731
	Note 9 — ~~Long-Term Debt~~Financial and Other Derivative Instruments	4238
	Note 10 — ~~Short-Term Credit Arrangements and Borrowings~~Long-Term Debt	4243
	Note 11 — ~~Leases~~Short-Term Credit Arrangements and Borrowings	43
	Note 12 — ~~Commitments and Contingencies~~Leases	4944
	Note 13 — ~~Retirement Benefits~~Commitments and ~~Trusteed Assets~~Contingencies	5450
	Note 14 — Retirement Benefits and Trusteed Assets	55
	Note 15 — Segment and Related Information	5657
	Note 16 — Subsequent Event	59
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	5859
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	7374
Item 4.	Controls and Procedures	7677
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	7778
Item 1A.	Risk Factors	7778
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	7778
Item 6.	Exhibits	7879
	Signatures	7980

DEFINITIONS



AFUDC		Allowance for Funds Used During Construction

AGS		Appalachia Gathering System is a midstream natural gas asset located in Pennsylvania and West Virginia. DTE Energy purchased 100% of AGS in October 2016, and this asset is part of DTE Energy's Gas Storage and Pipelines segment.

ASU		Accounting Standards Update issued by the FASB

CAD		Canadian Dollar (C$)

CCR		Coal Combustion Residuals

CFTC		U.S. Commodity Futures Trading Commission

DTE Electric		DTE Electric Company ~~(a direct~~(an indirect wholly-owned subsidiary of DTE Energy) and subsidiary companies

DTE Energy		DTE Energy Company, directly or indirectly the parent of DTE Electric, DTE Gas, and numerous non-utility subsidiaries

DTE Gas		DTE Gas Company (an indirect wholly-owned subsidiary of DTE Energy) and subsidiary companies

EGLE		Michigan Department of Environment, Great Lakes, and Energy, formerly known as Michigan Department of Environmental Quality

EGU		Electric Generating Unit

ELG		Effluent Limitations Guidelines

EPA		U.S. Environmental Protection Agency

Equity units		DTE Energy's 2016 equity units issued in October 2016, which were used to finance the October 1, 2016 Gas Storage and Pipelines acquisition

FASB		Financial Accounting Standards Board

FERC		Federal Energy Regulatory Commission

FOV		Finding of Violation

FTRs		Financial Transmission Rights are financial instruments that entitle the holder to receive payments related to costs incurred for congestion on the transmission grid.

GCR		A Gas Cost Recovery mechanism authorized by the MPSC that allows DTE Gas to recover through rates its natural gas costs.

GHGs		Greenhouse gases

Green Bonds		A financing option to fund projects that have a positive environmental impact based upon a specified set of criteria. The proceeds are required to be used for eligible green expenditures.

~~MDEQ~~		~~Michigan Department of Environmental Quality~~

MGP		Manufactured Gas Plant

MPSC		Michigan Public Service Commission

MTM		Mark-to-market

NAV		Net Asset Value

NEXUS		NEXUS Gas Transmission, LLC, a joint venture in which DTE Energy own a 50% partnership interest.

Non-utility		An entity that is not a public utility. Its conditions of service, prices of goods and services, and other operating related matters are not directly regulated by the MPSC.

NOV		Notice of Violation

NO_X		Nitrogen Oxides

NRC		U.S. Nuclear Regulatory Commission

~~PG&E~~		~~Pacific Gas and Electric Corporation~~

DEFINITIONS



PG&E		Pacific Gas and Electric Corporation

Production tax credits		Tax credits as authorized under Sections 45K and 45 of the Internal Revenue Code that are designed to stimulate investment in and development of alternate fuel sources. The amount of a production tax credit can vary each year as determined by the Internal Revenue Service.

PSCR		A Power Supply Cost Recovery mechanism authorized by the MPSC that allows DTE Electric to recover through rates its fuel, fuel-related, and purchased power costs.

RDM		A Revenue Decoupling Mechanism authorized by the MPSC that is designed to minimize the impact on revenues of changes in average customer usage.

REC		Renewable Energy Credit

REF		Reduced Emissions Fuel

Registrants		DTE Energy and DTE Electric

Retail access		Michigan legislation provided customers the option of access to alternative suppliers for electricity and natural gas.

RNG		Renewable Natural Gas

SEC		Securities and Exchange Commission

SGG		Stonewall Gas Gathering is a midstream natural gas asset located in West Virginia. DTE Energy purchased 55% of SGG in October 2016, and an additional 30% in May 2019, bringing its ownership to 85%. SGG is part of DTE Energy's Gas Storage and Pipelines segment.

SO₂		Sulfur Dioxide

TCJA		Tax Cuts and Jobs Act of 2017

TCJA rate reduction liability		Due to the change in the corporate tax rate, from January 1, 2018 to June 30, 2018 for DTE Gas and from January 1, 2018 to July 31, 2018 for DTE Electric, the utilities reduced revenue and recorded an offsetting regulatory liability.

Topic 606		FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, as amended

Topic 840		FASB issued ASC 840, Leases

Topic 842		FASB issued ASU No. 2016-02, Leases, as amended, which replaced Topic 840

TRM		A Transitional Reconciliation Mechanism authorized by the MPSC that allows DTE Electric to recover through rates the deferred net incremental revenue requirement associated with the transition of City of Detroit's Public Lighting Department customers to DTE Electric's distribution system.

USD		United States Dollar ($)

VIE		Variable Interest Entity



Units of Measurement

Bcf		Billion cubic feet of natural gas

BTU		British thermal unit, heat value (energy content) of fuel

MMBtu		One million BTU

MWh		Megawatt-hour of electricity

FILING FORMAT

This combined Form 10-Q is separately filed by DTE Energy and DTE Electric. Information in this combined Form 10-Q relating to each individual Registrant is filed by such Registrant on its own behalf. DTE Electric makes no representation regarding information relating to any other companies affiliated with DTE Energy other than its own subsidiaries. Neither DTE Energy, nor any of DTE Energy’s other subsidiaries (other than DTE Electric), has any obligation in respect of DTE Electric's debt securities, and holders of such debt securities should not consider the financial resources or results of operations of DTE Energy nor any of DTE Energy’s other subsidiaries (other than DTE Electric and its own subsidiaries (in relevant circumstances)) in making a decision with respect to DTE Electric's debt securities. Similarly, none of DTE Electric nor any other subsidiary of DTE Energy has any obligation in respect to debt securities of DTE Energy. This combined Form 10-Q should be read in its entirety. No one section of this combined Form 10-Q deals with all aspects of the subject matter of this combined Form 10-Q. This combined Form 10-Q should be read in conjunction with the Consolidated Financial Statements and Combined Notes to Consolidated Financial Statements and with Management's Discussion and Analysis included in the combined DTE Energy and DTE Electric 2018 Annual Report on Form 10-K.

FORWARD-LOOKING STATEMENTS

Certain information presented herein includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, and businesses of the Registrants. Words such as "anticipate," "believe," "expect," "may," "could," "projected," "aspiration," "plans," and "goals" signify forward-looking statements. Forward-looking statements are not guarantees of future results and conditions, but rather are subject to numerous assumptions, risks, and uncertainties that may cause actual future results to be materially different from those contemplated, projected, estimated, or budgeted. Many factors may impact forward-looking statements of the Registrants including, but not limited to, the following:

impact of regulation by the EPA, the FERC, the MPSC, the NRC, and for DTE Energy, the CFTC, as well as other applicable governmental proceedings and regulations, including any associated impact on rate structures;

the amount and timing of cost recovery allowed as a result of regulatory proceedings, related appeals, or new legislation, including legislative amendments and retail access programs;

economic conditions and population changes in the Registrants' geographic area resulting in changes in demand, customer conservation, and thefts of electricity and, for DTE Energy, natural gas;

the operational failure of electric or gas distribution systems or infrastructure;

impact of volatility of prices in the oil and gas markets on DTE Energy's gas storage and pipelines operations;

impact of volatility in prices in the international steel markets on DTE Energy's power and industrial projects operations;

the risk of a major safety incident;

environmental issues, laws, regulations, and the increasing costs of remediation and compliance, including actual and potential new federal and state requirements;

the cost of protecting assets against, or damage due to, cyber incidents and terrorism;

health, safety, financial, environmental, and regulatory risks associated with ownership and operation of nuclear facilities;

volatility in the short-term natural gas storage markets impacting third-party storage revenues related to DTE Energy;

volatility in commodity markets, deviations in weather, and related risks impacting the results of DTE Energy's energy trading operations;

changes in the cost and availability of coal and other raw materials, purchased power, and natural gas;

advances in technology that produce power, store power, or reduce power consumption;

changes in the financial condition of significant customers and strategic partners;

the potential for losses on investments, including nuclear decommissioning and benefit plan assets and the related increases in future expense and contributions;

access to capital markets and the results of other financing efforts which can be affected by credit agency ratings;

instability in capital markets which could impact availability of short and long-term financing;

the timing and extent of changes in interest rates;

the level of borrowings;

the potential for increased costs or delays in completion of significant capital projects;

changes in, and application of, federal, state, and local tax laws and their interpretations, including the Internal Revenue Code, regulations, rulings, court proceedings, and audits;

the effects of weather and other natural phenomena on operations and sales to customers, and purchases from suppliers;

unplanned outages;

employee relations and the impact of collective bargaining agreements;

the availability, cost, coverage, and terms of insurance and stability of insurance providers;

cost reduction efforts and the maximization of plant and distribution system performance;

the effects of competition;

changes in and application of accounting standards and financial reporting regulations;

changes in federal or state laws and their interpretation with respect to regulation, energy policy, and other business issues;

contract disputes, binding arbitration, litigation, and related appeals; and

the risks discussed in the Registrants' public filings with the Securities and Exchange Commission.

New factors emerge from time to time. The Registrants cannot predict what factors may arise or how such factors may cause results to differ materially from those contained in any forward-looking statement. Any forward-looking statements speak only as of the date on which such statements are made. The Registrants undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events.

Part I — Financial Information

Item 1. Financial Statements

DTE Energy Company

Consolidated Statements of Operations (Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018			2019			2018			2019			2018
	(In millions, except per share amounts)												(In millions, except per share amounts)
Operating Revenues
Utility operations	$	1,417		$	1,514		$	3,281		$	3,254		$	1,656		$	1,669		$	4,937		$	4,923
Non-utility operations	1,471			1,645			3,121			3,658			1,463			1,881			4,584			5,539
	2,888			3,159			6,402			6,912			3,119			3,550			9,521			10,462

Operating Expenses
Fuel, purchased power, and gas — utility	360			434			942			987			400			453			1,342			1,440
Fuel, purchased power, and gas — non-utility	1,258			1,443			2,643			3,216			1,257			1,682			3,900			4,898
Operation and maintenance	560			583			1,151			1,117			588			604			1,739			1,721
Depreciation and amortization	305			272			601			553			322			273			923			826
Taxes other than income	92			97			210			208			101			99			311			307
Asset (gains) losses and impairments, net	13			1			13			(2		)	1			10			14			8
	2,588			2,830			5,560			6,079			2,669			3,121			8,229			9,200
Operating Income	300			329			842			833			450			429			1,292			1,262

Other (Income) and Deductions
Interest expense	154			135			306			270			162			142			468			412
Interest income	(3		)	(3		)	(7		)	(6		)	(4		)	(3		)	(11		)	(9		)
Non-operating retirement benefits, net	10			9			19			18			9			9			28			27
Other income	(73		)	(82		)	(161		)	(163		)	(98		)	(99		)	(259		)	(262		)
Other expenses	12			15			23			40			17			11			40			51
	100			74			180			159			86			60			266			219
Income Before Income Taxes	200			255			662			674			364			369			1,026			1,043

Income Tax Expense	21			19			75			87			47			34			122			121

Net Income	179			236			587			587			317			335			904			922

Less: Net Income (Loss) Attributable to Noncontrolling Interests	(3		)	2			4			(8		)	(2		)	1			2			(7		)

Net Income Attributable to DTE Energy Company	$	182		$	234		$	583		$	595		$	319		$	334		$	902		$	929

Basic Earnings per Common Share
Net Income Attributable to DTE Energy Company	$	0.99		$	1.29		$	3.19		$	3.29		$	1.74		$	1.84		$	4.93		$	5.13

Diluted Earnings per Common Share
Net Income Attributable to DTE Energy Company	$	0.99		$	1.29		$	3.18		$	3.29		$	1.73		$	1.84		$	4.91		$	5.13

Weighted Average Common Shares Outstanding
Basic	183			181			183			180			183			182			183			181
Diluted	184			181			183			180			184			182			184			181

See Combined Notes to Consolidated Financial Statements (Unaudited)

DTE Energy Company

Consolidated Statements of Comprehensive Income (Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended September 30,					Nine Months Ended September 30,
	2019			2018			2019			2018			2019			2018		2019			2018
	(In millions)												(In millions)
Net Income	$	179		$	236		$	587		$	587		$	317		$	335	$	904		$	922

Other comprehensive income (loss), net of tax:
Benefit obligations, net of taxes of $1, $1, $2 and $2, respectively	3			3			7			5
Net unrealized losses on derivatives during the period, net of taxes of $(2), $—, $(3), and $—, respectively	(6		)	—			(9		)	—
Benefit obligations, net of taxes of $2, $—, $4 and $2, respectively													4			2		11			7
Net unrealized gains (losses) on derivatives during the period, net of taxes of $(1), $—, $(4), and $—, respectively													(4		)	1		(13		)	1
Foreign currency translation	—			(1		)	1			(1		)	—			—		1			(1		)
Other comprehensive income (loss)	(3		)	2			(1		)	4			—			3		(1		)	7

Comprehensive income	176			238			586			591			317			338		903			929
Less: Comprehensive income (loss) attributable to noncontrolling interests	(3		)	2			4			(8		)	(2		)	1		2			(7		)
Comprehensive Income Attributable to DTE Energy Company	$	179		$	236		$	582		$	599		$	319		$	337	$	901		$	936

See Combined Notes to Consolidated Financial Statements (Unaudited)

DTE Energy Company

Consolidated Statements of Financial Position (Unaudited)


	June 30,			December 31,			September 30,			December 31,
	2019			2018			2019			2018
	(In millions)						(In millions)
ASSETS
Current Assets
Cash and cash equivalents	$	62		$	71		$	76		$	71
Restricted cash	—			5			—			5
Accounts receivable (less allowance for doubtful accounts of $91 for both periods)
Accounts receivable (less allowance for doubtful accounts of $93 and $91, respectively)
Customer	1,436			1,789			1,453			1,789
Other	93			108			264			108
Inventories
Fuel and gas	334			406			413			406
Materials and supplies	431			405			393			405
Derivative assets	113			102			75			102
Regulatory assets	79			153			22			153
Prepaid property tax							153			70
Other	178			221			136			151
	2,726			3,260			2,985			3,260
Investments
Nuclear decommissioning trust funds	1,561			1,378			1,577			1,378
Investments in equity method investees	1,758			1,771			1,839			1,771
Other	247			219			253			219
	3,566			3,368			3,669			3,368
Property
Property, plant, and equipment	32,834			31,810			33,473			31,810
Accumulated depreciation and amortization	(10,537		)	(10,160		)	(9,715		)	(10,160		)
	22,297			21,650			23,758			21,650
Other Assets
Goodwill	2,293			2,293			2,293			2,293
Regulatory assets	4,508			4,568			4,057			4,568
Intangible assets	837			849			940			849
Notes receivable	168			64			193			64
Derivative assets	46			31			36			31
Prepaid postretirement costs	83			45			74			45
Operating lease right-of-use assets	142			—			145			—
Other	185			160			195			160
	8,262			8,010			7,933			8,010
Total Assets	$	36,851		$	36,288		$	38,345		$	36,288

See Combined Notes to Consolidated Financial Statements (Unaudited)

DTE Energy Company

Consolidated Statements of Financial Position (Unaudited) — (Continued)


	June 30,			December 31,			September 30,			December 31,
	2019			2018			2019			2018
	(In millions, except shares)						(In millions, except shares)
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	1,051		$	1,329		$	1,033		$	1,329
Accrued interest	141			127			153			127
Dividends payable	346			172			173			172
Short-term borrowings	3			609			724			609
Current portion long-term debt, including finance leases	1,498			1,499			1,206			1,499
Derivative liabilities	94			67			68			67
Gas inventory equalization	45			—
Regulatory liabilities	37			126			55			126
Operating lease liabilities	34			—			34			—
Other	405			509			419			509
	3,654			4,438			3,865			4,438
Long-Term Debt (net of current portion)
Mortgage bonds, notes, and other	12,418			10,982			12,708			10,982
Junior subordinated debentures	1,146			1,145			1,146			1,145
Finance lease liabilities	5			7			4			7
	13,569			12,134			13,858			12,134
Other Liabilities
Deferred income taxes	2,063			1,975			2,257			1,975
Regulatory liabilities	2,880			2,922			3,313			2,922
Asset retirement obligations	2,531			2,469			2,576			2,469
Unamortized investment tax credit	136			138			163			138
Derivative liabilities	68			89			74			89
Accrued pension liability	715			837			658			837
Nuclear decommissioning	231			205			235			205
Operating lease liabilities	102			—			105			—
Other	333			364			337			364
	9,059			8,999			9,718			8,999
Commitments and Contingencies (Notes 5 and 12)
Commitments and Contingencies (Notes 6 and 13)

Equity
Common stock (No par value, 400,000,000 shares authorized, and 183,301,732 and 181,925,281 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively)	4,344			4,245
Common stock (No par value, 400,000,000 shares authorized, and 183,396,510 and 181,925,281 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively)							4,370			4,245
Retained earnings	6,198			6,112			6,516			6,112
Accumulated other comprehensive loss	(146		)	(120		)	(146		)	(120		)
Total DTE Energy Company Equity	10,396			10,237			10,740			10,237
Noncontrolling interests	173			480			164			480
Total Equity	10,569			10,717			10,904			10,717
Total Liabilities and Equity	$	36,851		$	36,288		$	38,345		$	36,288

See Combined Notes to Consolidated Financial Statements (Unaudited)

DTE Energy Company

Consolidated Statements of Cash Flows (Unaudited)


	Six Months Ended June 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
	(In millions)						(In millions)
Operating Activities
Net Income	$	587		$	587		$	904		$	922
Adjustments to reconcile Net Income to Net cash from operating activities:
Depreciation and amortization	601			553			923			826
Nuclear fuel amortization	30			25			45			39
Allowance for equity funds used during construction	(13		)	(13		)	(18		)	(20		)
Deferred income taxes	80			80			285			118
Equity earnings of equity method investees	(43		)	(53		)	(77		)	(99		)
Dividends from equity method investees	89			34			129			48
Asset (gains) losses and impairments, net	13			—			14			11
Changes in assets and liabilities:
Accounts receivable, net	369			20			188			85
Inventories	46			104			5			11
Prepaid postretirement benefit costs	(38		)	(9		)	(29		)	(45		)
Accounts payable	(247		)	(34		)	(291		)	9
Gas inventory equalization	45			37
Accrued pension liability	(122		)	(197		)	(179		)	(205		)
Accrued postretirement liability	—			(61		)	—			(61		)
Derivative assets and liabilities	(20		)	(8		)	8			24
Regulatory assets and liabilities	142			230			203			283
Other current and noncurrent assets and liabilities	(152		)	138			(209		)	101
Net cash from operating activities	1,367			1,433			1,901			2,047
Investing Activities
Plant and equipment expenditures — utility	(1,294		)	(1,027		)	(1,982		)	(1,562		)
Plant and equipment expenditures — non-utility	(102		)	(130		)	(177		)	(217		)
Acquisition, net of cash acquired							(174		)	—
Proceeds from sale of nuclear decommissioning trust fund assets	396			616			594			810
Investment in nuclear decommissioning trust funds	(399		)	(613		)	(599		)	(810		)
Distributions from equity method investees	5			5			9			8
Contributions to equity method investees	(38		)	(233		)	(128		)	(545		)
Notes receivable	(62		)	5			(81		)	—
Other	(20		)	(3		)	(20		)	(20		)
Net cash used for investing activities	(1,514		)	(1,380		)	(2,558		)	(2,336		)
Financing Activities
Issuance of long-term debt, net of issuance costs	1,438			520			1,433			1,433
Redemption of long-term debt	—			(102		)	—			(105		)
Short-term borrowings, net	(606		)	(147		)	115			(544		)
Issuance of common stock	—			6			—			7
Dividends paid on common stock	(345		)	(309		)	(518		)	(459		)
Contributions from noncontrolling interests, principally REF entities	17			22			23			43
Distributions to noncontrolling interests	(31		)	(17		)	(44		)	(31		)
Purchases of noncontrolling interest, principally SGG	(300		)	—			(300		)	—
Other	(40		)	(29		)	(52		)	(40		)
Net cash from (used for) financing activities	133			(56		)
Net Decrease in Cash, Cash Equivalents, and Restricted Cash	(14		)	(3		)
Net cash from financing activities							657			304
Net Increase in Cash, Cash Equivalents, and Restricted Cash							—			15
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	76			89			76			89
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	62		$	86		$	76		$	104

Supplemental disclosure of non-cash investing and financing activities
Plant and equipment expenditures in accounts payable	$	270		$	216		$	292		$	275

See Combined Notes to Consolidated Financial Statements (Unaudited)

DTE Energy Company

Consolidated Statements of Changes in Equity (Unaudited)


					Retained Earnings				Accumulated Other Comprehensive Income (Loss)				Noncontrolling Interests														Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interests
	Common Stock											Common Stock
	Shares	Amount						Total				Shares					Amount							Total
	(Dollars in millions, shares in thousands)																			(Dollars in millions, shares in thousands)
Balance, December 31, 2018	181,925	$	4,245					$			6,112						$	(120	)		$	480			$	10,717		181,925		$	4,245		$	6,112			$	(120	)	$	480	$	10,717
Implementation of ASU 2018-02	—	—						25						(25		)		—				—			—			—			25			(25		)		—			—
Net Income	—	—			401					—				7				408			—			—				401			—			7				408
Dividends declared on common stock ($0.945 per Common Share)	—	—			(173		)		—				—				(173		)	—			—				(173		)	—			—				(173		)
Contribution of common stock to pension plan	815	100			—				—				—				100			815			100				—			—			—				100
Other comprehensive income, net of tax	—	—			—				2				—				2			—			—				—			2			—				2
Stock-based compensation, net distributions to noncontrolling interests, and other	472	(21		)	(1		)		—				(12		)		(34		)	472			(21		)		(1		)	—			(12		)		(34		)
Balance, March 31, 2019	183,212	$	4,324		$	6,364			$	(143	)		$	475			$	11,020		183,212			$	4,324			$	6,364		$	(143	)	$	475			$	11,020
Net Income (Loss)	—	—			182				—				(3		)		179			—			—				182			—			(3		)		179
Dividends declared on common stock ($1.89 per Common Share)	—	—			(347		)		—				—				(347		)	—			—				(347		)	—			—				(347		)
Other comprehensive loss, net of tax	—	—			—				(3		)		—				(3		)	—			—				—			(3		)	—				(3		)
Purchase of noncontrolling interests, principally SGG	—	(3		)	—				—				(297		)		(300		)	—			(3		)		—			—			(297		)		(300		)
Stock-based compensation, net distributions to noncontrolling interests, and other	90	23			(1		)		—				(2		)		20			90			23				(1		)	—			(2		)		20
Balance, June 30, 2019	183,302	$	4,344		$	6,198			$	(146	)		$	173			$	10,569		183,302			$	4,344			$	6,198		$	(146	)	$	173			$	10,569
Net Income (Loss)																				—			—				319			—			(2		)		317
Stock-based compensation, net distributions to noncontrolling interests, and other																				95			26				(1		)	—			(7		)		18
Balance, September 30, 2019																				183,397			$	4,370			$	6,516		$	(146	)	$	164			$	10,904

See Combined Notes to Consolidated Financial Statements (Unaudited)

DTE Energy Company

Consolidated Statements of Changes in Equity (Unaudited) — (Continued)


					Retained Earnings				Accumulated Other Comprehensive Income (Loss)				Noncontrolling Interests														Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interests
	Common Stock											Common Stock
	Shares	Amount						Total				Shares					Amount							Total
	(Dollars in millions, shares in thousands)																			(Dollars in millions, shares in thousands)
Balance, December 31, 2017	179,387	$	3,989					$			5,643						$	(120	)		$	478			$	9,990		179,387		$	3,989		$	5,643			$	(120	)	$	478	$	9,990
Implementation of ASU 2016-01	—	—						5						(5		)		—				—			—			—			5			(5		)		—			—
Net Income (Loss)	—	—			361					—				(10		)		351			—			—				361			—			(10		)		351
Dividends declared on common stock ($0.88 per Common Share)	—	—			(160		)		—				—				(160		)	—			—				(160		)	—			—				(160		)
Contribution of common stock to pension plan	1,751	175			—				—				—				175			1,751			175				—			—			—				175
Other comprehensive income, net of tax	—	—			—				2				—				2			—			—				—			2			—				2
Stock-based compensation, net contributions from noncontrolling interests, and other	345	(1		)	(1		)		—				7				5			345			(1		)		(1		)	—			7				5
Balance, March 31, 2018	181,483	$	4,163		$	5,848			$	(123	)		$	475			$	10,363		181,483			$	4,163			$	5,848		$	(123	)	$	475			$	10,363
Net Income (Loss)	—	—			234				—				2				236			—			—				234			—			2				236
Dividends declared on common stock ($1.77 per Common Share)	—	—			(321		)		—				—				(321		)	—			—				(321		)	—			—				(321		)
Issuance of common stock	160	16			—				—				—				16			160			16				—			—			—				16
Other comprehensive income, net of tax	—	—			—				2				—				2			—			—				—			2			—				2
Stock-based compensation, net distributions to noncontrolling interests, and other	130	26			(1		)		—				(3		)		22			130			26				(1		)	—			(3		)		22
Balance, June 30, 2018	181,773	$	4,205		$	5,760			$	(121	)		$	474			$	10,318		181,773			$	4,205			$	5,760		$	(121	)	$	474			$	10,318
Net Income																				—			—				334			—			1				335
Issuance of common stock																				95			10				—			—			—				10
Other comprehensive income, net of tax																				—			—				—			3			—				3
Stock-based compensation, net distributions to noncontrolling interests, and other																				57			17				(1		)	—			8				24
Balance, September 30, 2018																				181,925			$	4,232			$	6,093		$	(118	)	$	483			$	10,690

See Combined Notes to Consolidated Financial Statements (Unaudited)

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DTE Electric Company

Consolidated Statements of Operations (Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018			2019			2018			2019			2018
	(In millions)												(In millions)
Operating Revenues — Utility operations	$	1,190		$	1,276		$	2,425		$	2,481		$	1,519		$	1,521		$	3,944		$	4,002

Operating Expenses
Fuel and purchased power — utility	322			386			668			725			399			438			1,067			1,163
Operation and maintenance	334			345			692			665			356			360			1,048			1,025
Depreciation and amortization	229			202			450			414			244			202			694			616
Taxes other than income	69			74			153			155			80			77			233			232
Asset (gains) losses and impairments, net	13			—			13			—			—			—			13			—
	967			1,007			1,976			1,959			1,079			1,077			3,055			3,036
Operating Income	223			269			449			522			440			444			889			966

Other (Income) and Deductions
Interest expense	78			69			154			137			80			73			234			210
Interest income	—			—			(1		)	—			—			—			(1		)	—
Non-operating retirement benefits, net													—			(1		)	—			(1		)
Other income	(25		)	(22		)	(58		)	(49		)	(20		)	(23		)	(78		)	(72		)
Other expenses	12			15			20			40			14			9			34			49
	65			62			115			128			74			58			189			186
Income Before Income Taxes	158			207			334			394			366			386			700			780

Income Tax Expense	25			44			54			91			59			81			113			172

Net Income	$	133		$	163		$	280		$	303		$	307		$	305		$	587		$	608

See Combined Notes to Consolidated Financial Statements (Unaudited)

DTE Electric Company

Consolidated Statements of Comprehensive Income (Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018		2019		2018		2019		2018
	(In millions)								(In millions)
Net Income	$	133	$	163	$	280	$	303	$	307	$	305	$	587	$	608
Other comprehensive income	—		—		—		—		—		—		—		—
Comprehensive Income	$	133	$	163	$	280	$	303	$	307	$	305	$	587	$	608

See Combined Notes to Consolidated Financial Statements (Unaudited)

DTE Electric Company

Consolidated Statements of Financial Position (Unaudited)


	June 30,			December 31,			September 30,			December 31,
	2019			2018			2019			2018
	(In millions)						(In millions)
ASSETS
Current Assets
Cash and cash equivalents	$	9		$	18		$	26		$	18
Accounts receivable (less allowance for doubtful accounts of $47 and $53, respectively)
Accounts receivable (less allowance for doubtful accounts of $48 and $53, respectively)
Customer	715			750			779			750
Affiliates	5			11			1			11
Other	42			54			62			54
Inventories
Fuel	179			171			180			171
Materials and supplies	283			279			284			279
Regulatory assets	78			148			22			148
Prepaid property tax							116			47
Other	89			89			35			42
	1,400			1,520			1,505			1,520
Investments
Nuclear decommissioning trust funds	1,561			1,378			1,577			1,378
Other	36			34			36			34
	1,597			1,412			1,613			1,412
Property
Property, plant, and equipment	23,537			22,747			23,917			22,747
Accumulated depreciation and amortization	(7,574		)	(7,310		)	(6,697		)	(7,310		)
	15,963			15,437			17,220			15,437
Other Assets
Regulatory assets	3,787			3,829			3,340			3,829
Intangible assets	22			21			21			21
Prepaid postretirement costs — affiliates	189			189			189			189
Operating lease right-of-use assets	67			—			64			—
Other	152			121			159			121
	4,217			4,160			3,773			4,160
Total Assets	$	23,177		$	22,529		$	24,111		$	22,529

See Combined Notes to Consolidated Financial Statements (Unaudited)

DTE Electric Company

Consolidated Statements of Financial Position (Unaudited) — (Continued)


	June 30,		December 31,		September 30,		December 31,
	2019		2018		2019		2018
	(In millions, except shares)				(In millions, except shares)
LIABILITIES AND SHAREHOLDER’S EQUITY
Current Liabilities
Accounts payable
Affiliates	$	56	$	71	$	81	$	71
Other	421		441		403		441
Accrued interest	84		74		81		74
Current portion long-term debt, including finance leases	3		4		336		4
Regulatory liabilities	28		98		28		98
Short-term borrowings
Affiliates	295		101		97		101
Other	—		149		382		149
Operating lease liabilities	13		—		13		—
Other	138		139		154		139
	1,038		1,077		1,575		1,077
Long-Term Debt (net of current portion)
Mortgage bonds, notes, and other	7,178		6,538		6,847		6,538
Finance lease liabilities	5		7		4		7
	7,183		6,545		6,851		6,545
Other Liabilities
Deferred income taxes	2,294		2,246		2,311		2,246
Regulatory liabilities	2,140		2,171		2,606		2,171
Asset retirement obligations	2,329		2,271		2,361		2,271
Unamortized investment tax credit	135		137		162		137
Nuclear decommissioning	231		205		235		205
Accrued pension liability — affiliates	613		718		611		718
Accrued postretirement liability — affiliates	254		278		262		278
Operating lease liabilities	48		—		45		—
Other	86		88		82		88
	8,130		8,114		8,675		8,114
Commitments and Contingencies (Notes 5 and 12)
Commitments and Contingencies (Notes 6 and 13)

Shareholder’s Equity
Common stock ($10 par value, 400,000,000 shares authorized, and 138,632,324 shares issued and outstanding for both periods)	4,631		4,631		4,631		4,631
Retained earnings	2,195		2,162		2,379		2,162
Total Shareholder’s Equity	6,826		6,793		7,010		6,793
Total Liabilities and Shareholder’s Equity	$	23,177	$	22,529	$	24,111	$	22,529

See Combined Notes to Consolidated Financial Statements (Unaudited)

DTE Electric Company

Consolidated Statements of Cash Flows (Unaudited)


	Six Months Ended June 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
	(In millions)						(In millions)
Operating Activities
Net Income	$	280		$	303		$	587		$	608
Adjustments to reconcile Net Income to Net cash from operating activities:
Depreciation and amortization	450			414			694			616
Nuclear fuel amortization	30			25			45			39
Allowance for equity funds used during construction	(12		)	(9		)	(17		)	(14		)
Deferred income taxes	38			91			66			156
Asset (gains) losses and impairments, net	13			—			13			—
Changes in assets and liabilities:
Accounts receivable, net	53			(86		)	(20		)	(89		)
Inventories	(12		)	24			(14		)	43
Accounts payable	(13		)	(2		)	(15		)	18
Accrued pension liability — affiliates	(105		)	(182		)	(107		)	(185		)
Accrued postretirement liability — affiliates	(24		)	(47		)	(16		)	(71		)
Regulatory assets and liabilities	137			158			178			195
Other current and noncurrent assets and liabilities	(169		)	(4		)	(237		)	(71		)
Net cash from operating activities	666			685			1,157			1,245
Investing Activities
Plant and equipment expenditures	(1,073		)	(825		)	(1,611		)	(1,248		)
Notes receivable, including affiliates	(5		)	—
Proceeds from sale of nuclear decommissioning trust fund assets	396			616			594			810
Investment in nuclear decommissioning trust funds	(399		)	(613		)	(599		)	(810		)
Other	(19		)	(4		)	(19		)	(7		)
Net cash used for investing activities	(1,100		)	(826		)	(1,635		)	(1,255		)
Financing Activities
Issuance of long-term debt, net of issuance costs	643			520			643			520
Short-term borrowings, net — affiliate	194			(41		)	(4		)	27
Short-term borrowings, net — other	(149		)	(108		)	233			(187		)
Dividends paid on common stock	(247		)	(230		)	(370		)	(346		)
Other	(16		)	(7		)	(16		)	(7		)
Net cash from financing activities	425			134			486			7
Net Decrease in Cash and Cash Equivalents	(9		)	(7		)
Net Increase (Decrease) in Cash and Cash Equivalents							8			(3		)
Cash and Cash Equivalents at Beginning of Period	18			15			18			15
Cash and Cash Equivalents at End of Period	$	9		$	8		$	26		$	12

Supplemental disclosure of non-cash investing and financing activities
Plant and equipment expenditures in accounts payable	$	159		$	117		$	168		$	152

See Combined Notes to Consolidated Financial Statements (Unaudited)

DTE Electric Company

Consolidated Statements of Changes in Shareholder's Equity (Unaudited)


				Additional Paid-in Capital				Retained Earnings													Additional Paid-in Capital			Retained Earnings
	Common Stock										Common Stock
	Shares	Amount					Total				Shares			Amount						Total
	(Dollars in millions, shares in thousands)														(Dollars in millions, shares in thousands)
Balance, December 31, 2018	138,632	$	1,386			$	3,245					$	2,162			$	6,793		138,632			$	1,386		$	3,245		$	2,162	$	6,793
Net Income	—	—				—						147				147			—			—			—			147		147
Dividends declared on common stock	—	—		—				(124		)		(124		)	—			—			—			(124		)	(124		)
Balance, March 31, 2019	138,632	1,386		3,245				2,185				6,816			138,632			1,386			3,245			2,185			6,816
Net Income	—	—		—				133				133			—			—			—			133			133
Dividends declared on common stock	—	—		—				(123		)		(123		)	—			—			—			(123		)	(123		)
Balance, June 30, 2019	138,632	$	1,386	$	3,245			$	2,195			$	6,826		138,632			$	1,386		$	3,245		$	2,195		$	6,826
Net Income															—			—			—			307			307
Dividends declared on common stock															—			—			—			(123		)	(123		)
Balance, September 30, 2019															138,632			$	1,386		$	3,245		$	2,379		$	7,010


				Additional Paid-in Capital			Retained Earnings				Accumulated Other Comprehensive Income												Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)
	Common Stock									Common Stock
	Shares	Amount				Total				Shares			Amount							Total
	(Dollars in millions, shares in thousands)															(Dollars in millions, shares in thousands)
Balance, December 31, 2017	138,632	$	1,386			$			2,920				$	1,956			$	3			$	6,265		138,632	$	1,386		$	2,920	$	1,956			$	3	$	6,265
Implementation of ASU 2016-01	—	—				—						3		(3		)		—			—			—		—			3		(3		)		—
Net Income	—	—		—				140				—		140			—			—				—		140			—		140
Dividends declared on common stock	—	—		—			(115		)		—		(115		)	—			—				—		(115		)	—		(115		)
Balance, March 31, 2018	138,632	1,386		2,920			1,984				—		6,290			138,632			1,386				2,920		1,984			—		6,290
Net Income	—	—		—			163				—		163			—			—				—		163			—		163
Dividends declared on common stock	—	—		—			(115		)		—		(115		)	—			—				—		(115		)	—		(115		)
Balance, June 30, 2018	138,632	$	1,386	$	2,920		$	2,032			$	—	$	6,338		138,632			$	1,386			$	2,920	$	2,032		$	—	$	6,338
Net Income																—			—				—		305			—		305
Dividends declared on common stock																—			—				—		(116		)	—		(116		)
Balance, September 30, 2018																138,632			$	1,386			$	2,920	$	2,221		$	—	$	6,527

See Combined Notes to Consolidated Financial Statements (Unaudited)

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements (Unaudited)

Index of Combined Notes to Consolidated Financial Statements (Unaudited)

The Combined Notes to Consolidated Financial Statements (Unaudited) are a combined presentation for DTE Energy and DTE Electric. The following list indicates the Registrant(s) to which each note applies:



Note 1	Organization and Basis of Presentation	DTE Energy and DTE Electric
Note 2	Significant Accounting Policies	DTE Energy and DTE Electric
Note 3	New Accounting Pronouncements	DTE Energy and DTE Electric
Note 4	Acquisitions	DTE Energy
Note 5	Revenue	DTE Energy and DTE Electric
Note 56	Regulatory Matters	DTE Energy and DTE Electric
Note 67	Earnings per Share	DTE Energy
Note 78	Fair Value	DTE Energy and DTE Electric
Note 89	Financial and Other Derivative Instruments	DTE Energy and DTE Electric
Note 910	Long-Term Debt	DTE Energy and DTE Electric
Note 1011	Short-Term Credit Arrangements and Borrowings	DTE Energy and DTE Electric
Note 1112	Leases	DTE Energy and DTE Electric
Note 1213	Commitments and Contingencies	DTE Energy and DTE Electric
Note 1314	Retirement Benefits and Trusteed Assets	DTE Energy and DTE Electric
Note 1415	Segment and Related Information	DTE Energy
Note 16	Subsequent Event	DTE Energy

NOTE 1 — ORGANIZATION AND BASIS OF PRESENTATION

Corporate Structure

DTE Energy owns the following businesses:

DTE Electric is a public utility engaged in the generation, purchase, distribution, and sale of electricity to approximately 2.2 million customers in southeastern Michigan;

DTE Gas is a public utility engaged in the purchase, storage, transportation, distribution, and sale of natural gas to approximately 1.3 million customers throughout Michigan and the sale of storage and transportation capacity; and

Other businesses primarily involved in 1) services related to the gathering, transportation, and storage of natural gas; 2) power and industrial projects; and 3) energy marketing and trading operations.

DTE Electric and DTE Gas are regulated by the MPSC. Certain activities of DTE Electric and DTE Gas, as well as various other aspects of businesses under DTE Energy, are regulated by the FERC. In addition, the Registrants are regulated by other federal and state regulatory agencies including the NRC, the EPA, ~~the MDEQ,~~EGLE, and for DTE Energy, the CFTC.

Basis of Presentation

The Consolidated Financial Statements should be read in conjunction with the Combined Notes to Consolidated Financial Statements included in the combined DTE Energy and DTE Electric 2018 Annual Report on Form 10-K.

The accompanying Consolidated Financial Statements of the Registrants are prepared using accounting principles generally accepted in the United States of America. These accounting principles require management to use estimates and assumptions that impact reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Actual results may differ from the Registrants' estimates.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

The Consolidated Financial Statements are unaudited but, in the Registrants' opinions, include all adjustments necessary to present a fair statement of the results for the interim periods. All adjustments are of a normal recurring nature, except as otherwise disclosed in these Consolidated Financial Statements and Combined Notes to Consolidated Financial Statements. Financial results for this interim period are not necessarily indicative of results that may be expected for any other interim period or for the fiscal year ending December 31, 2019.

~~DTE Energy Company — DTE Electric Company~~

~~Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)~~

The information in these combined notes relates to each of the Registrants as noted in the Index of Combined Notes to Consolidated Financial Statements. However, DTE Electric does not make any representation as to information related solely to DTE Energy or the subsidiaries of DTE Energy other than itself.

Certain prior year balances for the Registrants were reclassified to match the current year's Consolidated Financial Statements presentation.

Principles of Consolidation

The Registrants consolidate all majority-owned subsidiaries and investments in entities in which they have controlling influence. Non-majority owned investments are accounted for using the equity method when the Registrants are able to significantly influence the operating policies of the investee. When the Registrants do not influence the operating policies of an investee, the cost method is used. These Consolidated Financial Statements also reflect the Registrants' proportionate interests in certain jointly-owned utility plants. The Registrants eliminate all intercompany balances and transactions.

The Registrants evaluate whether an entity is a VIE whenever reconsideration events occur. The Registrants consolidate VIEs for which they are the primary beneficiary. If a Registrant is not the primary beneficiary and an ownership interest is held, the VIE is accounted for under the equity method of accounting. When assessing the determination of the primary beneficiary, a Registrant considers all relevant facts and circumstances, including: the power, through voting or similar rights, to direct the activities of the VIE that most significantly impact the VIE's economic performance and the obligation to absorb the expected losses and/or the right to receive the expected returns of the VIE. The Registrants perform ongoing reassessments of all VIEs to determine if the primary beneficiary status has changed.

Legal entities within DTE Energy's Power and Industrial Projects segment enter into long-term contractual arrangements with customers to supply energy-related products or services. The entities are generally designed to pass-through the commodity risk associated with these contracts to the customers, with DTE Energy retaining operational and customer default risk. These entities generally are VIEs and consolidated when DTE Energy is the primary beneficiary. In addition, DTE Energy has interests in certain VIEs through which control of all significant activities is shared with partners, and therefore are generally accounted for under the equity method.

DTE Energy currently owns an 85% interest in SGG, which owns and operates midstream natural gas assets. SGG has contracts through which certain construction risk is designed to pass-through to the customers, with DTE Energy retaining operational and customer default risk. SGG is a VIE with DTE Energy as the primary beneficiary.

The Registrants have variable interests in NEXUS, which include DTE Energy's 50% ownership interest and DTE Electric's transportation services contract. NEXUS is a joint venture which owns a 256-mile pipeline to transport Utica and Marcellus shale gas to Ohio, Michigan, and Ontario market centers. NEXUS also owns Generation Pipeline, LLC, a 23-mile regulated pipeline system located in northern Ohio, which was acquired in September 2019. Refer to Note 4, "Acquisitions," for additional information. NEXUS is a VIE as it has insufficient equity at risk to finance its activities. The Registrants are not the primary beneficiaries, as the power to direct significant activities is shared between the owners of the equity interests. DTE Energy accounts for its ownership interest in NEXUS under the equity method.

The Registrants hold ownership interests in certain limited partnerships. The limited partnerships include investment funds which support regional development and economic growth, as well as, an operational business providing energy-related products. These entities are generally VIEs as a result of certain characteristics of the limited partnership voting rights. The ownership interests are accounted for under the equity method as the Registrants are not the primary beneficiaries.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

DTE Energy has variable interests in VIEs through certain of its long-term purchase and sale contracts. DTE Electric has variable interests in VIEs through certain of its long-term purchase contracts. As of ~~June~~September 30, 2019, the carrying amount of assets and liabilities in DTE Energy's Consolidated Statements of Financial Position that relate to its variable interests under long-term purchase and sale contracts are predominantly related to working capital accounts and generally represent the amounts owed by or to DTE Energy for the deliveries associated with the current billing cycle under the contracts. As of ~~June~~September 30, 2019, the carrying amount of assets and liabilities in DTE Electric's Consolidated Statements of Financial Position that relate to its variable interests under long-term purchase contracts are predominantly related to working capital accounts and generally represent the amounts owed by DTE Electric for the deliveries associated with the current billing cycle under the contracts. The Registrants have not provided any significant form of financial support associated with these long-term contracts. There is no0 significant potential exposure to loss as a result of DTE Energy's variable interests through these long-term purchase and sale contracts. In addition, there is no0 significant potential exposure to loss as a result of DTE Electric's variable interests through these long-term purchase contracts.

~~DTE Energy Company — DTE Electric Company~~

~~Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)~~

The maximum risk exposure for consolidated VIEs is reflected on the Registrants' Consolidated Statements of Financial Position and, for DTE Energy, in Note 1213 to the Consolidated Financial Statements, "Commitments and Contingencies," related to the REF guarantees and indemnities. For non-consolidated VIEs, the maximum risk exposure of the Registrants is generally limited to their investment, notes receivable, future funding commitments, and amounts which DTE Energy has guaranteed. See Note 1213 to the Consolidated Financial Statements, "Commitments and Contingencies," for further discussion of the NEXUS guarantee arrangements.

The following table summarizes the major Consolidated Statements of Financial Position items for consolidated VIEs as of ~~June~~September 30, 2019 and December 31, 2018. All assets and liabilities of a consolidated VIE are presented where it has been determined that a consolidated VIE has either (1) assets that can be used only to settle obligations of the VIE or (2) liabilities for which creditors do not have recourse to the general credit of the primary beneficiary. VIEs, in which DTE Energy holds a majority voting interest and is the primary beneficiary, that meet the definition of a business and whose assets can be used for purposes other than the settlement of the VIE's obligations have been excluded from the table below.

Amounts for DTE Energy's consolidated VIEs are as follows:


	June 30, 2019						December 31, 2018						September 30, 2019						December 31, 2018
	SGG^(a)		Other		Total		SGG^(a)		Other		Total		SGG^(a)		Other		Total		SGG^(a)		Other		Total
	(In millions)												(In millions)
ASSETS
Cash and cash equivalents	$	18	$	14	$	32	$	25	$	14	$	39	$	20	$	12	$	32	$	25	$	14	$	39
Restricted cash	—		—		—		—		5		5		—		—		—		—		5		5
Accounts receivable	10		38		48		9		37		46		10		27		37		9		37		46
Inventories	—		84		84		1		92		93		—		97		97		1		92		93
Property, plant, and equipment, net	400		40		440		395		46		441		406		36		442		395		46		441
Goodwill	25		—		25		25		—		25		25		—		25		25		—		25
Intangible assets	550		—		550		557		—		557		546		—		546		557		—		557
Other current and long-term assets	2		1		3		3		—		3		1		—		1		3		—		3
	$	1,005	$	177	$	1,182	$	1,015	$	194	$	1,209	$	1,008	$	172	$	1,180	$	1,015	$	194	$	1,209

LIABILITIES
Accounts payable and accrued current liabilities	$	5	$	25	$	30	$	3	$	31	$	34	$	5	$	18	$	23	$	3	$	31	$	34
Other current and long-term liabilities	9		9		18		9		10		19		6		7		13		9		10		19
	$	14	$	34	$	48	$	12	$	41	$	53	$	11	$	25	$	36	$	12	$	41	$	53

(a)Amounts shown are 100% of SGG's assets and liabilities, of which DTE Energy owns 85% at ~~June~~September 30, 2019 and 55% at December 31, 2018.

~~Amounts for DTE Energy's non-consolidated VIEs are as follows:~~

June 30, 2019 December 31, 2018
(In millions)
Investments in equity method investees $ 1,402
$ 1,425
Notes receivable $ 26
$ 15
Future funding commitments $ 51
$ 55

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

Amounts for DTE Energy's non-consolidated VIEs are as follows:



	September 30, 2019		December 31, 2018
	(In millions)
Investments in equity method investees	$	1,487	$	1,425
Notes receivable	$	26	$	15
Future funding commitments	$	55	$	55

NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES

Other Income

The following is a summary of DTE Energy's Other income:


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018		2019		2018		2019		2018
	(In millions)								(In millions)
Income from REF entities	$	29	$	25	$	56	$	48	$	40	$	27	$	96	$	75
Equity earnings of equity method investees	20		32		43		53		34		46		77		99
Gains from equity securities	7		1		24		1		3		5		27		6
Contract services	6		12		14		32		7		11		21		43
Allowance for equity funds used during construction	6		6		13		13		5		7		18		20
Other	5		6		11		16		9		3		20		19
	$	73	$	82	$	161	$	163	$	98	$	99	$	259	$	262

The following is a summary of DTE Electric's Other income:


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018		2019		2018		2019		2018
	(In millions)								(In millions)
Gains from equity securities allocated from DTE Energy	$	7	$	1	$	24	$	1	$	3	$	5	$	27	$	6
Contract services	8		13		16		33		7		11		23		44
Allowance for equity funds used during construction	6		4		12		9		5		5		17		14
Other	4		4		6		6		5		2		11		8
	$	25	$	22	$	58	$	49	$	20	$	23	$	78	$	72

Changes in Accumulated Other Comprehensive Income (Loss)

Comprehensive income (loss) is the change in common shareholders' equity during a period from transactions and events from non-owner sources, including Net Income. The amounts recorded to Accumulated other comprehensive income (loss) for DTE Energy include changes in benefit obligations, consisting of deferred actuarial losses and prior service costs, unrealized gains and losses from derivatives accounted for as cash flow hedges, DTE Energy's interest in other comprehensive income of equity investees which comprise the net unrealized gains and losses on investments, and foreign currency translation adjustments. DTE Energy releases income tax effects from accumulated other comprehensive income when the circumstances upon which they are premised cease to exist.

Changes in Accumulated other comprehensive income (loss) are presented in DTE Energy's Consolidated Statements of Changes in Equity and DTE Electric's Consolidated Statements of Changes in Shareholder's Equity. For further discussion regarding changes in Accumulated other comprehensive income (loss), see Note 3 to the Consolidated Financial Statements, "New Accounting Pronouncements." For the three and ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, reclassifications out of Accumulated other comprehensive income (loss) not relating to the adoption of new accounting pronouncements for DTE Energy were not material.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

Income Taxes

The ~~2019 estimated annual~~interim effective tax rates ~~for DTE Energy and DTE Electric~~of the Registrants are ~~12% and 16%, respectively.~~ as follows:



	Effective Tax Rate
	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
DTE Energy	13	%	9	%	12	%	12	%
DTE Electric	16	%	21	%	16	%	22	%

These tax rates are affected by estimated annual permanent items, including AFUDC equity, production tax credits, and other flow-through items, as well as discrete items that may occur in any given period, but are not consistent from period to period.

The ~~interim effective tax rate of the Registrants are as follows:~~

Effective Tax Rate
Three Months Ended June 30, Six Months Ended June 30,
2019 2018 2019 2018
DTE Energy 11 % 7 % 11 % 13 %
DTE Electric 16 % 21 % 16 % 23 %

~~The~~ 4% increase in DTE Energy's effective tax rate for the three months ended ~~June~~September 30, 2019 was primarily due to ~~lower~~a decrease in annual production tax credits, ~~of 7% in 2019,~~ partially offset by the amortization of the TCJA regulatory liability ~~of 3%~~ in ~~2019. The 2% decrease~~2019 and the $20 million valuation allowance for the AMT credit carryover in 2018. There was 0 change in DTE Energy's effective tax rate for the ~~six~~nine months ended ~~June~~September 30, ~~2019~~2019. This was primarily due to a decrease in annual production tax credits, offset by the amortization of the TCJA regulatory liability ~~of 3%~~ in 2019, ~~and~~true-up adjustments to the remeasurement of deferred taxes in 2018 of $21 million, ~~that impacted~~and the ~~effective tax rate by 3%. The decrease~~$20 million valuation allowance for the AMT credit carryover in ~~the effective tax rate was partially offset by lower production tax credits of 4% in 2019.~~2018.

The 5% and 7%6% decrease in DTE Electric's effective tax rate for the three and ~~six~~nine months ended ~~June~~September 30, 2019, respectively, was primarily due to the amortization of the TCJA regulatory liability of 4% and higher production tax credits of 1% in 2019. The additional 1% decrease for the nine months ended September 30, 2019 was due to the remeasurement of deferred taxes in 2018 of ~~$8 million impacted the effective tax rate by 2% for the six months ended June 30, 2019.~~$7 million.

DTE Energy's total amount of unrecognized tax benefits as of ~~June~~September 30, 2019 was $8 million, which if recognized, would favorably impact its effective tax rate. DTE Electric's total amount of unrecognized tax benefits as of ~~June~~September 30, 2019 was $10 million, which if recognized, would favorably impact its effective tax rate. The Registrants do not anticipate any material changes to the unrecognized tax benefits in the next twelve months.

DTE Electric had income tax ~~receivables~~payables of $9$13 million with DTE Energy at ~~June~~September 30, 2019 and income tax receivables with DTE Energy of $8 million at December 31, 2018.

Unrecognized Compensation Costs

As of ~~June~~September 30, 2019, DTE Energy had ~~$104~~$88 million of total unrecognized compensation cost related to non-vested stock incentive plan arrangements. That cost is expected to be recognized over a weighted-average period of ~~1.54~~1.30 years.

Allocated Stock-Based Compensation

DTE Electric received an allocation of costs from DTE Energy associated with stock-based compensation of ~~$11~~$9 million and $8$11 million for the three months ended ~~June~~September 30, 2019 and 2018, respectively, while such allocation was ~~$24~~$33 million and ~~$17~~$27 million for the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, respectively.

Cash, Cash Equivalents, and Restricted Cash

Cash and cash equivalents include cash on hand, cash in banks, and temporary investments purchased with remaining maturities of three months or less. Restricted cash consists of funds held to satisfy requirements of certain debt and DTE Energy partnership operating agreements. Restricted cash designated for interest and principal payments within one year is classified as a Current Asset.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

Intangible Assets

The Registrants have certain Intangible assets as shown below:



		September 30, 2019							December 31, 2018
	Useful Lives	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Gross Carrying Value		Accumulated Amortization			Net Carrying Value
		(In millions)
Intangible assets subject to amortization
Customer relationships	25 to 40 years^(a)	$	779	$	(58	)	$	721	$	779	$	(44	)	$	735
Contract intangibles	6 to 26 years	270		(72		)	198		159		(66		)	93
		1,049		(130		)	919		938		(110		)	828

DTE Electric renewable energy credits	(b)	20		—			20		20		—			20
DTE Electric emission allowances	(b)	1		—			1		1		—			1
		21		—			21		21		—			21
Long-term intangible assets
DTE Electric		$	21	$	—		$	21	$	21	$	—		$	21
DTE Energy		$	1,070	$	(130	)	$	940	$	959	$	(110	)	$	849


(a)	The useful lives of the customer relationship intangible assets are based on the number of years in which the assets are expected to economically contribute to the business. The expected economic benefit incorporates existing customer contracts and expected renewal rates based on the estimated volume and production lives of gas resources in the region.


(b)	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 following table summarizes DTE Energy's estimated customer relationship and contract intangible amortization expense expected to be recognized during each year through 2024:



	Remaining
	2019		2020		2021		2022		2023		2024
	(In millions)
Estimated amortization expense	$	9	$	35	$	34	$	34	$	34	$	34

DTE Energy amortizes customer relationship and contract intangible assets on a straight-line basis over the expected period of benefit. DTE Energy's Intangible assets amortization expense was $7 million for the three months ended September 30, 2019 and 2018, while amortization expense was $21 million and $20 million for the nine months ended September 30, 2019 and 2018, respectively.

NOTE 3 — NEW ACCOUNTING PRONOUNCEMENTS

Recently Adopted Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), as amended. This guidance requires a lessee to account for leases as finance or operating leases and disclose key information about leasing arrangements. Both types of leases will result in the lessee recognizing a right-of-use asset and a corresponding lease liability on its balance sheet, with differing methodology for income statement recognition, depending on the lease classification. The Registrants adopted the standard on January 1, 2019 using the prospective approach. The standard provides a number of transition practical expedients of which the Registrants elected the package of three expedients that must be taken together, allowing entities to not reassess whether an agreement is a lease, to carryforward the existing lease classification, and to not reassess initial direct costs associated with existing leases; but did not elect to apply hindsight in determining lease term and impairment of the right-of-use assets. The Registrants also elected to not evaluate land easements under the new guidance at adoption if they were not previously accounted for as leases. These practical expedients apply to leases that commenced prior to January 1, 2019.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

At adoption of the new standard, the Registrants recognized on the Consolidated Statements of Financial Position, right-of-use assets and lease liabilities for certain operating leases of approximately $137 million and $130 million, respectively, for DTE Energy and approximately $74 million and $67 million, respectively, for DTE Electric as of January 1, 2019. The right-of-use lease assets include $9 million of prepaid lease costs that have been reclassified from Other assets, current and noncurrent, and $2 million of deferred lease costs that have been reclassified from Other liabilities, current and noncurrent, for the Registrants. The adoption of the ASU did not have a significant impact on the Registrants' Consolidated Statements of Operations but required additional disclosures for leases. See Note 1112 to the Consolidated Financial Statements, "Leases."

In February 2018, the FASB issued ASU No. 2018-02, Income Statement — Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The amendments in this update allow a reclassification from accumulated other comprehensive income to retained earnings from stranded tax effects resulting from the TCJA. The amendments in this update also require entities to disclose their accounting policy for releasing income tax effects from accumulated other comprehensive income. The Registrants adopted the standard effective January 1, 2019. Upon adoption, DTE Energy reclassified $25 million of income tax effects from Accumulated other comprehensive income (loss) to Retained Earnings.

Recently Issued Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, as amended. The amendments in this update replace the incurred loss impairment methodology in current generally accepted accounting principles with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information, including forecasts, to develop credit loss estimates. The ASU requires entities to use the new methodology to measure impairment of financial instruments, including accounts receivable, and may result in earlier recognition of credit losses than under current generally accepted accounting principles. Entities will apply the new guidance as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. The ASU is effective for the Registrants beginning after December 15, 2019, and interim periods therein. Early adoption is permitted. The Registrants anticipate adopting the ASU on its effective date. The Registrants are currently assessing the impact of this standard on their Consolidated Financial Statements.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurements (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this update modify the disclosure requirements on fair value measurements in Topic 820. The ASU is effective for the Registrants for fiscal years beginning after December 15, 2019, and interim periods therein. Early adoption is permitted. The Registrants anticipate adopting the ASU on its effective date. The Registrants are currently assessing the impact of this standard on their Consolidated Financial Statements.

In August 2018, the FASB issued ASU No. 2018-14, Compensation — Retirement Benefits — Defined Benefit Plans (Subtopic 715-20): Disclosure Framework — Changes to the Disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. The amendments in this update modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. The ASU is effective for the Registrants for fiscal years ending after December 15, 2020. Early adoption is permitted. The Registrants anticipate adopting the ASU on its effective date. The Registrants are currently assessing the impact of this standard on their Consolidated Financial Statements.

~~DTE Energy Company — DTE Electric Company~~

~~Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)~~

In August 2018, the FASB issued ASU No. 2018-15, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract. The amendments in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). The ASU is effective for the Registrants for fiscal years beginning after December 15, 2019, and interim periods therein. Early adoption is permitted. The Registrants anticipate adopting the ASU on its effective date. The ASU may be applied using either a retrospective or prospective approach. The Registrants are currently evaluating the transition methods and assessing the impact of this standard on their Consolidated Financial Statements.

In October 2018, the FASB issued ASU No. 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities. The amendments in this update modify the requirements for determining whether a decision-making fee is a variable interest and require reporting entities to consider indirect interests held through related parties under common control on a proportional basis. The ASU is effective for the Registrants for fiscal years beginning after December 15, 2019, and interim periods therein. Early adoption is permitted. The Registrants anticipate adopting the ASU on its effective date. The Registrants are currently assessing the impact of this standard on their Consolidated Financial Statements.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

NOTE 4 — ACQUISITIONS

Electric Segment Acquisition

Effective September 12, 2019, DTE Energy closed on the purchase of an 89 MW renewable energy project located in Michigan from Heritage Sustainable Energy in support of renewable energy goals. Direct transaction costs primarily related to advisory fees were immaterial and are included in Operation and maintenance in DTE Energy's Consolidated Statements of Operations. The consideration paid for the entity acquired was approximately $174 million in cash.

The acquisition was accounted for using the acquisition method of accounting for business combinations. Accordingly, the cost was allocated to the underlying net assets based on their respective fair values as shown below:



	(In millions)
Contract intangibles	$	111
Property, plant, and equipment, net	59
Working capital	4
Total	$	174

The intangible assets recorded pertain to existing customer contracts and were estimated by applying the income approach, based on discounted projected cash flows attributable to the existing agreements. The contract intangible assets are amortized on a straight line basis with useful lives ranging from 11 years to 14 years, which is based on the remaining number of years the assets are expected to economically contribute to the business. The pro forma financial information has not been presented for DTE Energy because the effects of the acquisition were not material to the Consolidated Statements of Operations.

Concurrent with the above acquisition, DTE Energy entered into a separate purchase and sale agreement with Heritage Sustainable Energy to acquire an additional renewable energy project for approximately $30 million. This transaction is expected to close in early January 2020.

Gas Storage and Pipelines Segment Acquisition

Effective September 20, 2019, NEXUS closed on the purchase of Generation Pipeline, LLC, a pipeline system regulated by the Public Utilities Commission of Ohio. The 23-mile pipeline system supplies gas to industrial customers in the Toledo, OH area, has existing interconnects with ANR Pipeline Company and Panhandle Eastern Pipeline Company, and is located four miles from NEXUS. Total consideration paid for the acquired entity was approximately $163 million, of which DTE Energy's portion was 50%. DTE Energy accounts for its ownership interest in NEXUS under the equity method, which will now include equity in earnings related to Generation Pipeline, LLC.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

NOTE 45 — REVENUE

Disaggregation of Revenue

The following is a summary of revenues disaggregated by segment for DTE Energy:


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018		2019		2018		2019		2018
	(In millions)								(In millions)
Electric^(a)
Residential	$	494	$	584	$	1,047	$	1,170	$	791	$	773	$	1,839	$	1,943
Commercial	423		446		843		875		515		495		1,358		1,370
Industrial	158		178		322		354		175		173		497		527
Other^(b)	115		68		213		82		39		80		251		162
Total Electric operating revenues^(c)	$	1,190	$	1,276	$	2,425	$	2,481	$	1,520	$	1,521	$	3,945	$	4,002

Gas
Gas sales	$	163	$	180	$	640	$	637	$	87	$	89	$	727	$	726
End User Transportation	42		49		122		134		35		34		157		168
Intermediate Transportation	15		11		41		29		15		9		57		38
Other^(b)	23		15		85		5		18		32		102		37
Total Gas operating revenues^(d)	$	243	$	255	$	888	$	805	$	155	$	164	$	1,043	$	969

Other segment operating revenues
Gas Storage and Pipelines^(e)	$	121	$	122	$	237	$	241	$	126	$	122	$	363	$	363
Power and Industrial Projects^(f)	$	402	$	538	$	790	$	1,105	$	406	$	612	$	1,196	$	1,717
Energy Trading^(g)	$	1,113	$	1,164	$	2,414	$	2,662	$	1,105	$	1,332	$	3,519	$	3,994


(a)	Revenues under the Electric segment generally represent those of DTE Electric.


(b)	Includes revenue adjustments related to various regulatory mechanisms.


(c)	Includes $5 million and $4$6 million of other revenues outside the scope of Topic 606 for the three months ended ~~June~~September 30, 2019 and 2018, respectively, and $8$14 million and $9$15 million for the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, respectively.

(d)

Includes ~~$1 million and~~ $4 million under Alternative Revenue Programs for the ~~three and six~~nine months ended ~~June~~September 30, ~~2018, respectively, and~~2018. Also includes $2 million of other revenues for the three months ended ~~June~~September 30, 2019 and 2018 and $4$6 million for the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, which are both outside the scope of Topic 606.


(e)	Includes revenues outside the scope of Topic 606 primarily related to $2 million and $4$7 million of contracts accounted for as leases for the three and ~~six~~nine months ended ~~June~~September 30, 2019, respectively.


(f)	Includes revenues outside the scope of Topic 606 primarily related to ~~$30~~$33 million and ~~$28~~$37 million of contracts accounted for as leases for the three months ended ~~June~~September 30, 2019 and 2018, respectively, and ~~$61~~$94 million and ~~$56~~$93 million for the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, respectively.


(g)	Includes revenues outside the scope of Topic 606 primarily related to ~~$879~~$791 million and ~~$937 million~~$1.1 billion of derivatives for the three months ended ~~June~~September 30, 2019 and 2018, respectively, and ~~$1.8~~$2.6 billion and ~~$2.1~~$3.2 billion of derivatives for the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, respectively.

Deferred Revenue

The following is a summary of deferred revenue activity:


	DTE Energy			DTE Energy
	(In millions)			(In millions)
Beginning Balance, January 1, 2019	$	74		$	74
Increases due to cash received or receivable, excluding amounts recognized as revenue during the period	35			41
Revenue recognized that was included in the deferred revenue balance at the beginning of the period	(26		)	(50		)
Ending Balance, June 30, 2019	$	83
Ending Balance, September 30, 2019				$	65

The deferred revenues at DTE Energy generally represent amounts paid by or receivable from customers for which the associated performance obligation has not yet been satisfied.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

Deferred revenues include amounts associated with REC performance obligations under certain wholesale full requirements power contracts. Deferred revenues associated with RECs are recognized as revenue when control of the RECs has transferred.

Other performance obligations associated with deferred revenues include providing products and services related to customer prepayments. Deferred revenues associated with these products and services are recognized when control has transferred to the customer.

The following table represents deferred revenue amounts for DTE Energy that are expected to be recognized as revenue in future periods:


	DTE Energy		DTE Energy
	(In millions)		(In millions)
2019	$	48	$	9
2020	5		25
2021	5		6
2022	7		7
2023	3		6
2024 and thereafter	15		12
	$	83	$	65

Transaction Price Allocated to the Remaining Performance Obligations

In accordance with optional exemptions available under Topic 606, the Registrants did not disclose the value of unsatisfied performance obligations for (1) contracts with an original expected length of one year or less, (2) with the exception of fixed consideration, contracts for which revenue is recognized at the amount to which the Registrants have the right to invoice for goods provided and services performed, and (3) contracts for which variable consideration relates entirely to an unsatisfied performance obligation.

Such contracts consist of varying types of performance obligations across the segments, including the supply and delivery of energy related products and services. Contracts with variable volumes and/or variable pricing, including those with pricing provisions tied to a consumer price or other index, have also been excluded as the related consideration under the contract is variable at inception of the contract. Contract lengths vary from cancelable to multi-year.

The Registrants expect to recognize revenue for the following amounts related to fixed consideration associated with remaining performance obligations in each of the future periods noted:


	DTE Energy		DTE Electric		DTE Energy		DTE Electric
	(In millions)				(In millions)
2019	$	111	$	5	$	52	$	3
2020	305		—		290		—
2021	249		—		269		—
2022	191		—		206		—
2023	133		—		142		—
2024 and thereafter	645		—		648		—
	$	1,634	$	5	$	1,607	$	3

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

Other Matters

The following table represents expenses recognized for estimated uncollectible accounts receivable:


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018		2019		2018		2019		2018
	(In millions)								(In millions)
DTE Energy	$	24	$	31	$	53	$	56	$	28	$	39	$	81	$	95
DTE Electric	$	14	$	17	$	30	$	31	$	17	$	26	$	47	$	57

NOTE 56 — REGULATORY MATTERS

2018 Electric Rate Case Filing

DTE Electric filed a rate case with the MPSC on July 6, 2018 requesting an increase in base rates of $328 million based on a projected twelve-month period ending April 30, 2020. The requested increase in base rates was primarily due to an increase in net plant resulting from infrastructure investments, depreciation expense, as requested in the 2016 DTE Electric Depreciation Case Filing, and reliability improvement projects. The rate filing also requested an increase in return on equity from 10.0% to 10.5% and included projected changes in sales, operation and maintenance expenses, and working capital. In addition, the rate filing requested an Infrastructure Recovery Mechanism to recover the incremental revenue requirement associated with certain distribution, fossil generation, and nuclear generation capital expenditures through 2022. Finally, as noted in the 2017 Tax Reform section below, DTE Electric proposed an amortization schedule for Calculation C in this filing. On February 1, 2019, DTE Electric reduced its initial requested increase in base rates to $248.6 million, primarily reflecting the reduction in requested depreciation expense resulting from the MPSC's approval of new depreciation rates. On May 2, 2019, the MPSC issued an order approving an annual revenue increase of $125 million for services rendered on or after May 9, 2019. The MPSC authorized a return on equity of 10.0%. In addition, the order approved the proposed amortization schedule for Calculation C but denied the requested Infrastructure Recovery Mechanism.

2019 Electric Rate Case Filing

DTE Electric filed a rate case with the MPSC on July 8, 2019 requesting an increase in base rates of $351 million based on a projected twelve-month period ending April 30, 2021. The requested increase in base rates is primarily due to an increase in net plant resulting from infrastructure and generation investments. The rate filing also requests an increase in return on equity from 10.0% to 10.5% and includes projected changes in sales and operating and maintenance expenses. A final MPSC order in this case is expected by May 2020.

2016 DTE Electric Depreciation Case Filing

DTE Electric filed a depreciation case with the MPSC on November 1, 2016 requesting an increase in depreciation rates for plant in service balances as of December 31, 2015. The MPSC issued an order on December 6, 2018 authorizing DTE Electric to increase its composite depreciation rate from 3.06% to 3.72%. The new rates are effective for service rendered on or after May 9, 2019, per the final order in DTE Electric's 2018 rate case issued on May 2, 2019.

2017 Tax Reform

On December 27, 2017, the MPSC issued an order to consider changes in the rates of all Michigan rate-regulated utilities to reflect the effects of the federal TCJA. On January 19, 2018, DTE Electric and DTE Gas filed information with the MPSC regarding the potential change in revenue requirements due to the TCJA effective January 1, 2018 and outlined their recommended method to flow the current and deferred tax benefits of those impacts to ratepayers.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

On February 22, 2018, the MPSC issued an order in this case requiring utilities, including DTE Electric and DTE Gas, to follow a 3-step approach of credits and calculations. In 2018, MPSC orders for the first two steps, Credit A and Credit B, were issued for DTE Electric and DTE Gas. The third step is to perform Calculation C to address all remaining issues relative to the new tax law, which is primarily the remeasurement of deferred taxes and how the amounts deferred as Regulatory liabilities will flow to ratepayers. DTE Gas filed its Calculation C case on November 16, 2018 to reduce the annual revenue requirement by $12 million related to the amortization of deferred tax ~~remeasurement and a final~~remeasurement. On August 20, 2019, the MPSC issued an order in this case ~~is expected~~approving a $13 million reduction to DTE Gas' annual revenue requirement. This reduction in revenue will be offset by ~~August 2019.~~a corresponding reduction in income tax expense within the Consolidated Statements of Operations. DTE Electric proposed an amortization schedule for Calculation C in its general rate case filed July 6, 2018, which was approved by the MPSC in the May 2, 2019 rate order.

NOTE 67 — EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the net income, adjusted for income allocated to participating securities, by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflect the dilution that would occur if any potentially dilutive instruments were exercised or converted into common shares. DTE Energy’s participating securities are restricted shares under the stock incentive program that contain rights to receive non-forfeitable dividends. Equity units, performance shares, and stock options do not receive cash dividends; as such, these awards are not considered participating securities.

The following is a reconciliation of DTE Energy's basic and diluted income per share calculation:


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018		2019		2018		2019		2018
	(In millions, except per share amounts)								(In millions, except per share amounts)
Basic Earnings per Share
Net Income Attributable to DTE Energy Company	$	182	$	234	$	583	$	595	$	319	$	334	$	902	$	929
Less: Allocation of earnings to net restricted stock awards	—		—		1		1		1		1		2		2
Net income available to common shareholders — basic	$	182	$	234	$	582	$	594	$	318	$	333	$	900	$	927

Average number of common shares outstanding — basic	183		181		183		180		183		182		183		181
Basic Earnings per Common Share	$	0.99	$	1.29	$	3.19	$	3.29	$	1.74	$	1.84	$	4.93	$	5.13

Diluted Earnings per Share
Net Income Attributable to DTE Energy Company	$	182	$	234	$	583	$	595	$	319	$	334	$	902	$	929
Less: Allocation of earnings to net restricted stock awards	—		—		1		1		1		1		2		2
Net income available to common shareholders — diluted	$	182	$	234	$	582	$	594	$	318	$	333	$	900	$	927

Average number of common shares outstanding — basic	183		181		183		180		183		182		183		181
Incremental shares attributable to:
Average dilutive equity units, performance share awards, and stock options	1		—		—		—		1		—		1		—
Average number of common shares outstanding — diluted	184		181		183		180		184		182		184		181
Diluted Earnings per Common Share^(a)	$	0.99	$	1.29	$	3.18	$	3.29	$	1.73	$	1.84	$	4.91	$	5.13

_______________________________________


(a)	The 2016 Equity Units excluded from the calculation of diluted EPS were approximately ~~6.6~~6.2 million for the three ~~and six~~ months ended ~~June~~September 30, 2018 and 6.4 million for the nine months ended September 30, 2018 as the dilutive stock price threshold was not met.

On October 1, 2019, DTE Energy issued approximately 5.87 million shares of common stock under the stock purchase contracts associated with DTE Energy's 2016 Series C Equity Units for $675 million. Refer to Note 10 to the Consolidated Financial Statements, "Long-Term Debt" for additional information.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

NOTE 78 — FAIR VALUE

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in a principal or most advantageous market. Fair value is a market-based measurement that is determined based on inputs, which refer broadly to assumptions that market participants use in pricing assets or liabilities. These inputs can be readily observable, market corroborated, or generally unobservable inputs. The Registrants make certain assumptions they believe that market participants would use in pricing assets or liabilities, including assumptions about risk, and the risks inherent in the inputs to valuation techniques. Credit risk of the Registrants and their counterparties is incorporated in the valuation of assets and liabilities through the use of credit reserves, the impact of which was immaterial at ~~June~~September 30, 2019 and December 31, 2018. The Registrants believe they use valuation techniques that maximize the use of observable market-based inputs and minimize the use of unobservable inputs.

A fair value hierarchy has been established that prioritizes the inputs to valuation techniques used to measure fair value in three broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). In some cases, the inputs used to measure fair value might fall in different levels of the fair value hierarchy. All assets and liabilities are required to be classified in their entirety based on the lowest level of input that is significant to the fair value measurement in its entirety. Assessing the significance of a particular input may require judgment considering factors specific to the asset or liability and may affect the valuation of the asset or liability and its placement within the fair value hierarchy. The Registrants classify fair value balances based on the fair value hierarchy defined as follows:


•	Level 1 — Consists of unadjusted quoted prices in active markets for identical assets or liabilities that the Registrants have the ability to access as of the reporting date.


•	Level 2 — Consists of inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data.


•	Level 3 — Consists of unobservable inputs for assets or liabilities whose fair value is estimated based on internally developed models or methodologies using inputs that are generally less readily observable and supported by little, if any, market activity at the measurement date. Unobservable inputs are developed based on the best available information and subject to cost-benefit constraints.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

The following table presents assets and liabilities for DTE Energy measured and recorded at fair value on a recurring basis^(a):


	June 30, 2019																	December 31, 2018																	September 30, 2019																	December 31, 2018
	Level 1			Level 2			Level 3			Other^(b)		Netting^(c)			Net Balance			Level 1			Level 2			Level 3			Other^(b)		Netting^(c)			Net Balance			Level 1			Level 2			Level 3			Other^(b)		Netting^(c)			Net Balance			Level 1			Level 2			Level 3			Other^(b)		Netting^(c)			Net Balance
	(In millions)																																		(In millions)
Assets
Cash equivalents^(d)	$	26		$	—		$	—		$	—	$	—		$	26		$	16		$	2		$	—		$	—	$	—		$	18		$	21		$	—		$	—		$	—	$	—		$	21		$	16		$	2		$	—		$	—	$	—		$	18
Nuclear decommissioning trusts
Equity securities	988			—			—			—		—			988			851			—			—			—		—			851			990			—			—			—		—			990			851			—			—			—		—			851
Fixed income securities	9			523			—			—		—			532			12			490			—			—		—			502			9			535			—			—		—			544			12			490			—			—		—			502
Private equity and other	—			—			—			32		—			32			—			—			—			20		—			20			—			—			—			34		—			34			—			—			—			20		—			20
Cash equivalents	9			—			—			—		—			9			5			—			—			—		—			5			9			—			—			—		—			9			5			—			—			—		—			5
Other investments^(e)
Equity securities	128			—			—			—		—			128			110			—			—			—		—			110			130			—			—			—		—			130			110			—			—			—		—			110
Fixed income securities	75			—			—			—		—			75			69			—			—			—		—			69			78			—			—			—		—			78			69			—			—			—		—			69
Cash equivalents	4			—			—			—		—			4			4			—			—			—		—			4			4			—			—			—		—			4			4			—			—			—		—			4
Derivative assets
Commodity contracts
Natural gas	97			78			60			—		(170		)	65			199			87			63			—		(277		)	72			109			90			54			—		(189		)	64			199			87			63			—		(277		)	72
Electricity	—			239			81			—		(236		)	84			—			247			56			—		(252		)	51			—			128			36			—		(124		)	40			—			247			56			—		(252		)	51
Other	—			—			9			—		—			9			—			—			7			—		(1		)	6			5			—			5			—		(5		)	5			—			—			7			—		(1		)	6
Foreign currency exchange contracts	—			1			—			—		—			1			—			4			—			—		—			4			—			2			—			—		—			2			—			4			—			—		—			4
Total derivative assets	97			318			150			—		(406		)	159			199			338			126			—		(530		)	133			114			220			95			—		(318		)	111			199			338			126			—		(530		)	133
Total	$	1,336		$	841		$	150		$	32	$	(406	)	$	1,953		$	1,266		$	830		$	126		$	20	$	(530	)	$	1,712		$	1,355		$	755		$	95		$	34	$	(318	)	$	1,921		$	1,266		$	830		$	126		$	20	$	(530	)	$	1,712

Liabilities
Derivative liabilities
Commodity contracts
Natural gas	$	(119	)	$	(47	)	$	(70	)	$	—	$	170		$	(66	)	$	(197	)	$	(71	)	$	(112	)	$	—	$	272		$	(108	)	$	(130	)	$	(72	)	$	(95	)	$	—	$	189		$	(108	)	$	(197	)	$	(71	)	$	(112	)	$	—	$	272		$	(108	)
Electricity	—			(250		)	(71		)	—		240			(81		)	—			(227		)	(58		)	—		240			(45		)	—			(127		)	(28		)	—		124			(31		)	—			(227		)	(58		)	—		240			(45		)
Other	—			—			—			—		—			—			—			(1		)	—			—		1			—			(7		)	(1		)	—			—		5			(3		)	—			(1		)	—			—		1			—
Interest rate contracts	—			(15		)	—			—		—			(15		)	—			(3		)	—			—		—			(3		)	—			—			—			—		—			—			—			(3		)	—			—		—			(3		)
Total derivative liabilities	(119		)	(312		)	(141		)	—		410			(162		)	(197		)	(302		)	(170		)	—		513			(156		)	(137		)	(200		)	(123		)	—		318			(142		)	(197		)	(302		)	(170		)	—		513			(156		)
Total	$	(119	)	$	(312	)	$	(141	)	$	—	$	410		$	(162	)	$	(197	)	$	(302	)	$	(170	)	$	—	$	513		$	(156	)	$	(137	)	$	(200	)	$	(123	)	$	—	$	318		$	(142	)	$	(197	)	$	(302	)	$	(170	)	$	—	$	513		$	(156	)
Net Assets (Liabilities) at end of period	$	1,217		$	529		$	9		$	32	$	4		$	1,791		$	1,069		$	528		$	(44	)	$	20	$	(17	)	$	1,556		$	1,218		$	555		$	(28	)	$	34	$	—		$	1,779		$	1,069		$	528		$	(44	)	$	20	$	(17	)	$	1,556
Assets
Current	$	122		$	249		$	104		$	—	$	(336	)	$	139		$	212		$	273		$	96		$	—	$	(461	)	$	120		$	130		$	175		$	62		$	—	$	(271	)	$	96		$	212		$	273		$	96		$	—	$	(461	)	$	120
Noncurrent	1,214			592			46			32		(70		)	1,814			1,054			557			30			20		(69		)	1,592			1,225			580			33			34		(47		)	1,825			1,054			557			30			20		(69		)	1,592
Total Assets	$	1,336		$	841		$	150		$	32	$	(406	)	$	1,953		$	1,266		$	830		$	126		$	20	$	(530	)	$	1,712		$	1,355		$	755		$	95		$	34	$	(318	)	$	1,921		$	1,266		$	830		$	126		$	20	$	(530	)	$	1,712
Liabilities
Current	$	(111	)	$	(251	)	$	(72	)	$	—	$	340		$	(94	)	$	(191	)	$	(251	)	$	(76	)	$	—	$	451		$	(67	)	$	(123	)	$	(163	)	$	(53	)	$	—	$	271		$	(68	)	$	(191	)	$	(251	)	$	(76	)	$	—	$	451		$	(67	)
Noncurrent	(8		)	(61		)	(69		)	—		70			(68		)	(6		)	(51		)	(94		)	—		62			(89		)	(14		)	(37		)	(70		)	—		47			(74		)	(6		)	(51		)	(94		)	—		62			(89		)
Total Liabilities	$	(119	)	$	(312	)	$	(141	)	$	—	$	410		$	(162	)	$	(197	)	$	(302	)	$	(170	)	$	—	$	513		$	(156	)	$	(137	)	$	(200	)	$	(123	)	$	—	$	318		$	(142	)	$	(197	)	$	(302	)	$	(170	)	$	—	$	513		$	(156	)
Net Assets (Liabilities) at end of period	$	1,217		$	529		$	9		$	32	$	4		$	1,791		$	1,069		$	528		$	(44	)	$	20	$	(17	)	$	1,556		$	1,218		$	555		$	(28	)	$	34	$	—		$	1,779		$	1,069		$	528		$	(44	)	$	20	$	(17	)	$	1,556


(a)	See footnotes on following page.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)


(b)	Amounts represent assets valued at NAV as a practical expedient for fair value.


(c)	Amounts represent the impact of master netting agreements that allow DTE Energy to net gain and loss positions and cash collateral held or placed with the same counterparties.

(d)

At ~~June~~September 30, 2019, the ~~$26~~$21 million consisted of ~~$15~~$10 million and $11 million of cash equivalents included in Cash and cash equivalents and Other investments on DTE Energy's Consolidated Statements of Financial Position, respectively. At December 31, 2018, the $18 million consisted of $3 million, $5 million and $10 million of cash equivalents included in Cash and cash equivalents, Restricted cash, and Other investments on DTE Energy's Consolidated Statements of Financial Position, respectively.


(e)	Excludes cash surrender value of life insurance investments.

The following table presents assets for DTE Electric measured and recorded at fair value on a recurring basis as of:


	June 30, 2019										December 31, 2018										September 30, 2019										December 31, 2018
	Level 1		Level 2		Level 3		Other^(a)		Net Balance		Level 1		Level 2		Level 3		Other^(a)		Net Balance		Level 1		Level 2		Level 3		Other^(a)		Net Balance		Level 1		Level 2		Level 3		Other^(a)		Net Balance
	(In millions)																				(In millions)
Assets
Cash equivalents^(b)	$	11	$	—	$	—	$	—	$	11	$	8	$	2	$	—	$	—	$	10	$	11	$	—	$	—	$	—	$	11	$	8	$	2	$	—	$	—	$	10
Nuclear decommissioning trusts
Equity securities	988		—		—		—		988		851		—		—		—		851		990		—		—		—		990		851		—		—		—		851
Fixed income securities	9		523		—		—		532		12		490		—		—		502		9		535		—		—		544		12		490		—		—		502
Private equity and other	—		—		—		32		32		—		—		—		20		20		—		—		—		34		34		—		—		—		20		20
Cash equivalents	9		—		—		—		9		5		—		—		—		5		9		—		—		—		9		5		—		—		—		5
Other investments
Equity securities	11		—		—		—		11		10		—		—		—		10		12		—		—		—		12		10		—		—		—		10
Derivative assets — FTRs	—		—		9		—		9		—		—		6		—		6		—		—		5		—		5		—		—		6		—		6
Total	$	1,028	$	523	$	9	$	32	$	1,592	$	886	$	492	$	6	$	20	$	1,404	$	1,031	$	535	$	5	$	34	$	1,605	$	886	$	492	$	6	$	20	$	1,404

Assets
Current	$	11	$	—	$	9	$	—	$	20	$	8	$	2	$	6	$	—	$	16	$	11	$	—	$	5	$	—	$	16	$	8	$	2	$	6	$	—	$	16
Noncurrent	1,017		523		—		32		1,572		878		490		—		20		1,388		1,020		535		—		34		1,589		878		490		—		20		1,388
Total Assets	$	1,028	$	523	$	9	$	32	$	1,592	$	886	$	492	$	6	$	20	$	1,404	$	1,031	$	535	$	5	$	34	$	1,605	$	886	$	492	$	6	$	20	$	1,404


(a)	Amounts represent assets valued at NAV as a practical expedient for fair value.


(b)	At ~~June~~September 30, 2019, the $11 million consisted of cash equivalents included in Other investments on DTE Electric's Consolidated Statements of Financial Position. At December 31, 2018, the $10 million consisted of cash equivalents included in Other investments on DTE Electric's Consolidated Statements of Financial Position.

Cash Equivalents

Cash equivalents include investments with maturities of three months or less when purchased. The cash equivalents shown in the fair value table are comprised of short-term investments and money market funds.

Nuclear Decommissioning Trusts and Other Investments

The nuclear decommissioning trusts and other investments hold debt and equity securities directly and indirectly through commingled funds. Exchange-traded debt and equity securities held directly are valued using quoted market prices in actively traded markets. Commingled funds that hold exchange-traded equity or debt securities are valued based on stated NAVs. Non-exchange-traded fixed income securities are valued based upon quotations available from brokers or pricing services. Other assets such as private equity investments are classified as NAV assets. A primary price source is identified by asset type, class, or issue for each security. The trustee monitors prices supplied by pricing services and may use a supplemental price source or change the primary price source of a given security if the trustee determines that another price source is considered preferable. The Registrants have obtained an understanding of how these prices are derived, including the nature and observability of the inputs used in deriving such prices.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

Derivative Assets and Liabilities

Derivative assets and liabilities are comprised of physical and financial derivative contracts, including futures, forwards, options, and swaps that are both exchange-traded and over-the-counter traded contracts. Various inputs are used to value derivatives depending on the type of contract and availability of market data. Exchange-traded derivative contracts are valued using quoted prices in active markets. The Registrants consider the following criteria in determining whether a market is considered active: frequency in which pricing information is updated, variability in pricing between sources or over time, and the availability of public information. Other derivative contracts are valued based upon a variety of inputs including commodity market prices, broker quotes, interest rates, credit ratings, default rates, market-based seasonality, and basis differential factors. The Registrants monitor the prices that are supplied by brokers and pricing services and may use a supplemental price source or change the primary price source of an index if prices become unavailable or another price source is determined to be more representative of fair value. The Registrants have obtained an understanding of how these prices are derived. Additionally, the Registrants selectively corroborate the fair value of their transactions by comparison of market-based price sources. Mathematical valuation models are used for derivatives for which external market data is not readily observable, such as contracts which extend beyond the actively traded reporting period. The Registrants have established a Risk Management Committee whose responsibilities include directly or indirectly ensuring all valuation methods are applied in accordance with predefined policies. The development and maintenance of the Registrants' forward price curves has been assigned to DTE Energy's Risk Management Department, which is separate and distinct from the trading functions within DTE Energy.

The following table presents the fair value reconciliation of Level 3 assets and liabilities measured at fair value on a recurring basis for DTE Energy:


	Three Months Ended June 30, 2019												Three Months Ended June 30, 2018												Three Months Ended September 30, 2019												Three Months Ended September 30, 2018
	Natural Gas			Electricity			Other			Total			Natural Gas			Electricity			Other			Total			Natural Gas			Electricity			Other			Total			Natural Gas			Electricity			Other			Total
	(In millions)																								(In millions)
Net Assets (Liabilities) as of March 31	$	(10	)	$	(25	)	$	2		$	(33	)	$	(10	)	$	(13	)	$	4		$	(19	)
Net Assets (Liabilities) as of June 30																									$	(10	)	$	10		$	9		$	9		$	(25	)	$	(13	)	$	15		$	(23	)
Transfers into Level 3 from Level 2	1			—			—			1			—			—			—			—			—			—			—			—			—			—			—			—
Transfers from Level 3 into Level 2	—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Total gains (losses)
Included in earnings	(1		)	41			—			40			(28		)	18			1			(9		)	(35		)	37			—			2			(30		)	21			—			(9		)
Recorded in Regulatory liabilities	—			—			9			9			—			—			15			15			—			—			(3		)	(3		)	—			—			(8		)	(8		)
Purchases, issuances, and settlements
Settlements	—			(6		)	(2		)	(8		)	13			(18		)	(5		)	(10		)	4			(39		)	(1		)	(36		)	9			(18		)	(1		)	(10		)
Net Assets (Liabilities) as of June 30	$	(10	)	$	10		$	9		$	9		$	(25	)	$	(13	)	$	15		$	(23	)
The amount of total gains (losses) included in Net Income attributed to the change in unrealized gains (losses) related to assets and liabilities held at June 30, 2019 and 2018 and reflected in Operating Revenues — Non-utility operations and Fuel, purchased power, and gas — non-utility in DTE Energy's Consolidated Statements of Operations	$	(1	)	$	38		$	(4	)	$	33		$	(20	)	$	4		$	(2	)	$	(18	)
Net Assets (Liabilities) as of September 30																									$	(41	)	$	8		$	5		$	(28	)	$	(46	)	$	(10	)	$	6		$	(50	)
The amount of total gains (losses) included in Net Income attributed to the change in unrealized gains (losses) related to assets and liabilities held at September 30, 2019 and 2018 and reflected in Operating Revenues — Non-utility operations and Fuel, purchased power, and gas — non-utility in DTE Energy's Consolidated Statements of Operations																									$	(36	)	$	15		$	(1	)	$	(22	)	$	(31	)	$	10		$	(1	)	$	(22	)

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)


	Six Months Ended June 30, 2019												Six Months Ended June 30, 2018												Nine Months Ended September 30, 2019												Nine Months Ended September 30, 2018
	Natural Gas			Electricity			Other			Total			Natural Gas			Electricity			Other			Total			Natural Gas			Electricity			Other			Total			Natural Gas			Electricity			Other			Total
	(In millions)																								(In millions)
Net Assets (Liabilities) as of December 31	$	(49	)	$	(2	)	$	7		$	(44	)	$	(29	)	$	12		$	8		$	(9	)	$	(49	)	$	(2	)	$	7		$	(44	)	$	(29	)	$	12		$	8		$	(9	)
Transfers into Level 3 from Level 2	—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Transfers from Level 3 into Level 2	—			—			—			—			(3		)	—			—			(3		)	—			—			—			—			(3		)	—			—			(3		)
Total gains (losses)
Included in earnings	31			10			(1		)	40			(98		)	4			1			(93		)	(4		)	47			(1		)	42			(128		)	25			1			(102		)
Recorded in Regulatory liabilities	—			—			7			7			—			—			15			15			—			—			3			3			—			—			6			6
Purchases, issuances, and settlements
Settlements	8			2			(4		)	6			105			(29		)	(9		)	67			12			(37		)	(4		)	(29		)	114			(47		)	(9		)	58
Net Assets (Liabilities) as of June 30	$	(10	)	$	10		$	9		$	9		$	(25	)	$	(13	)	$	15		$	(23	)
The amount of total gains (losses) included in Net Income attributed to the change in unrealized gains (losses) related to assets and liabilities held at June 30, 2019 and 2018 and reflected in Operating Revenues — Non-utility operations and Fuel, purchased power, and gas — non-utility in DTE Energy's Consolidated Statements of Operations	$	16		$	17		$	(5	)	$	28		$	(78	)	$	(6	)	$	(2	)	$	(86	)
Net Assets (Liabilities) as of September 30																									$	(41	)	$	8		$	5		$	(28	)	$	(46	)	$	(10	)	$	6		$	(50	)
The amount of total gains (losses) included in Net Income attributed to the change in unrealized gains (losses) related to assets and liabilities held at September 30, 2019 and 2018 and reflected in Operating Revenues — Non-utility operations and Fuel, purchased power, and gas — non-utility in DTE Energy's Consolidated Statements of Operations																									$	(20	)	$	32		$	(6	)	$	6		$	(109	)	$	4		$	(3	)	$	(108	)

The following table presents the fair value reconciliation of Level 3 assets and liabilities measured at fair value on a recurring basis for DTE Electric:


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018			2019			2018			2019			2018
	(In millions)												(In millions)
Net Assets as of beginning of period	$	2		$	5		$	6		$	9		$	9		$	15		$	6		$	9
Change in fair value recorded in Regulatory liabilities	9			15			7			15			(3		)	(8		)	3			6
Purchases, issuances, and settlements
Settlements	(2		)	(5		)	(4		)	(9		)	(1		)	(1		)	(4		)	(9		)
Net Assets as of June 30	$	9		$	15		$	9		$	15
The amount of total gains (losses) included in Regulatory liabilities attributed to the change in unrealized gains (losses) related to assets held at June 30, 2019 and 2018 and reflected in DTE Electric's Consolidated Statements of Financial Position	$	9		$	15		$	9		$	15
Net Assets as of September 30													$	5		$	6		$	5		$	6
The amount of total gains (losses) included in Regulatory liabilities attributed to the change in unrealized gains (losses) related to assets held at September 30, 2019 and 2018 and reflected in DTE Electric's Consolidated Statements of Financial Position													$	(1	)	$	(2	)	$	5		$	6

Derivatives are transferred between levels primarily due to changes in the source data used to construct price curves as a result of changes in market liquidity. Transfers in and transfers out are reflected as if they had occurred at the beginning of the period.

There were no transfers between Levels 1 and 2 for the Registrants during the three and ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, and there were no transfers from or into Level 3 for DTE Electric during the same periods.

The following tables present the unobservable inputs related to DTE Energy's Level 3 assets and liabilities:


	June 30, 2019																	September 30, 2019
Commodity Contracts	Derivative Assets		Derivative Liabilities			Valuation Techniques	Unobservable Input	Range							Weighted Average			Derivative Assets		Derivative Liabilities			Valuation Techniques	Unobservable Input	Range							Weighted Average
	(In millions)																	(In millions)
Natural Gas	$	60	$	(70	)	Discounted Cash Flow	Forward basis price (per MMBtu)	$	(1.33	)	—	$	5.95	/MMBtu	$	(0.08	)/MMBtu	$	54	$	(95	)	Discounted Cash Flow	Forward basis price (per MMBtu)	$	(1.55	)	—	$	6.17	/MMBtu	$	(0.09	)/MMBtu
Electricity	$	81	$	(71	)	Discounted Cash Flow	Forward basis price (per MWh)	$	(13	)	—	$	7	/MWh	$	—		$	36	$	(28	)	Discounted Cash Flow	Forward basis price (per MWh)	$	(13	)	—	$	7	/MWh	$	—

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)



	December 31, 2018
Commodity Contracts	Derivative Assets		Derivative Liabilities			Valuation Techniques	Unobservable Input	Range							Weighted Average
	(In millions)
Natural Gas	$	63	$	(112	)	Discounted Cash Flow	Forward basis price (per MMBtu)	$	(2.15	)	—	$	5.59	/MMBtu	$	(0.10	)/MMBtu
Electricity	$	56	$	(58	)	Discounted Cash Flow	Forward basis price (per MWh)	$	(7	)	—	$	9	/MWh	$	1	/MWh

The unobservable inputs used in the fair value measurement of the electricity and natural gas commodity types consist of inputs that are less observable due in part to lack of available broker quotes, supported by little, if any, market activity at the measurement date or are based on internally developed models. Certain basis prices (i.e., the difference in pricing between two locations) included in the valuation of natural gas and electricity contracts were deemed unobservable.

The inputs listed above would have a direct impact on the fair values of the above security types if they were adjusted. A significant increase (decrease) in the basis price would result in a higher (lower) fair value for long positions, with offsetting impacts to short positions.

Fair Value of Financial Instruments

The following table presents the carrying amount and fair value of financial instruments for DTE Energy:


	June 30, 2019								December 31, 2018								September 30, 2019								December 31, 2018
	Carrying		Fair Value						Carrying		Fair Value						Carrying		Fair Value						Carrying		Fair Value
	Amount		Level 1		Level 2		Level 3		Amount		Level 1		Level 2		Level 3		Amount		Level 1		Level 2		Level 3		Amount		Level 1		Level 2		Level 3
	(In millions)																(In millions)
Notes receivable^(a), excluding lessor finance leases	$	153	$	—	$	—	$	153	$	40	$	—	$	—	$	40	$	178	$	—	$	—	$	178	$	40	$	—	$	—	$	40
Dividends payable	$	346	$	346	$	—	$	—	$	172	$	172	$	—	$	—	$	173	$	173	$	—	$	—	$	172	$	172	$	—	$	—
Short-term borrowings	$	3	$	—	$	3	$	—	$	609	$	—	$	609	$	—	$	724	$	—	$	724	$	—	$	609	$	—	$	609	$	—
Notes payable — Other^(b), excluding lessee finance leases	$	29	$	—	$	—	$	29	$	41	$	—	$	—	$	41	$	27	$	—	$	—	$	27	$	41	$	—	$	—	$	41
Long-term debt^(c)	$	15,058	$	1,989	$	12,915	$	1,385	$	13,622	$	1,796	$	10,712	$	1,317	$	15,056	$	1,277	$	14,216	$	1,138	$	13,622	$	1,796	$	10,712	$	1,317


(a)	Current portion included in Current Assets — Other on DTE Energy's Consolidated Statements of Financial Position.


(b)	Included in Current Liabilities — Other and Other Liabilities — Other on DTE Energy's Consolidated Statements of Financial Position.


(c)	Includes debt due within one year, unamortized debt discounts, and issuance costs. Excludes finance lease obligations.

The following table presents the carrying amount and fair value of financial instruments for DTE Electric:


	June 30, 2019								December 31, 2018								September 30, 2019								December 31, 2018
	Carrying		Fair Value						Carrying		Fair Value						Carrying		Fair Value						Carrying		Fair Value
	Amount		Level 1		Level 2		Level 3		Amount		Level 1		Level 2		Level 3		Amount		Level 1		Level 2		Level 3		Amount		Level 1		Level 2		Level 3
	(In millions)																(In millions)
Notes receivable — Other^(a), excluding lessor finance leases	$	10	$	—	$	—	$	10	$	6	$	—	$	—	$	6	$	14	$	—	$	—	$	14	$	6	$	—	$	—	$	6
Short-term borrowings — affiliates	$	295	$	—	$	—	$	295	$	101	$	—	$	—	$	101	$	97	$	—	$	—	$	97	$	101	$	—	$	—	$	101
Short-term borrowings — other	$	—	$	—	$	—	$	—	$	149	$	—	$	149	$	—	$	382	$	—	$	382	$	—	$	149	$	—	$	149	$	—
Notes payable — Other^(b), excluding lessee finance leases	$	23	$	—	$	—	$	23	$	21	$	—	$	—	$	21	$	23	$	—	$	—	$	23	$	21	$	—	$	—	$	21
Long-term debt^(c)	$	7,178	$	—	$	7,749	$	167	$	6,538	$	—	$	6,552	$	161	$	7,179	$	—	$	7,996	$	176	$	6,538	$	—	$	6,552	$	161


(a)	Included in Current Assets — Other on DTE Electric's Consolidated Statements of Financial Position.


(b)	Included in Current Liabilities — Other and Other Liabilities — Other on DTE Electric's Consolidated Statements of Financial Position.


(c)	Includes debt due within one year, unamortized debt discounts, and issuance costs. Excludes finance lease obligations.

For further fair value information on financial and derivative instruments, see Note 89 to the Consolidated Financial Statements, "Financial and Other Derivative Instruments."

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

Nuclear Decommissioning Trust Funds

DTE Electric has a legal obligation to decommission its nuclear power plants following the expiration of its operating licenses. This obligation is reflected as an Asset retirement obligation on DTE Electric's Consolidated Statements of Financial Position. Rates approved by the MPSC provide for the recovery of decommissioning costs of Fermi 2 and the disposal of low-level radioactive waste.

The following table summarizes DTE Electric's fair value of the nuclear decommissioning trust fund assets:


	June 30, 2019		December 31, 2018		September 30, 2019		December 31, 2018
	(In millions)				(In millions)
Fermi 2	$	1,553	$	1,372	$	1,567	$	1,372
Fermi 1	3		3		3		3
Low-level radioactive waste	5		3		7		3
	$	1,561	$	1,378	$	1,577	$	1,378

The costs of securities sold are determined on the basis of specific identification. The following table sets forth DTE Electric's gains and losses and proceeds from the sale of securities by the nuclear decommissioning trust funds:


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018			2019			2018			2019				2018
	(In millions)												(In millions)
Realized gains	$	17		$	19		$	28		$	42		$	15		$	10		$	43			$	52
Realized losses	$	(10	)	$	(6	)	$	(17	)	$	(15	)	$	(8	)	$	(7	)	$	(25	)	��	$	(22	)
Proceeds from sale of securities	$	220		$	280		$	396		$	616		$	198		$	194		$	594			$	810

Realized gains and losses from the sale of securities and unrealized gains and losses incurred by the Fermi 2 trust are recorded to the Regulatory asset and Nuclear decommissioning liability. Realized gains and losses from the sale of securities and unrealized gains and losses on the low-level radioactive waste funds are recorded to the Nuclear decommissioning liability.

The following table sets forth DTE Electric's fair value and unrealized gains and losses for the nuclear decommissioning trust funds:


	June 30, 2019							December 31, 2018							September 30, 2019							December 31, 2018
	Fair Value		Unrealized Gains		Unrealized Losses			Fair Value		Unrealized Gains		Unrealized Losses			Fair Value		Unrealized Gains		Unrealized Losses			Fair Value		Unrealized Gains		Unrealized Losses
	(In millions)														(In millions)
Equity securities	$	988	$	335	$	(49	)	$	851	$	235	$	(79	)	$	990	$	335	$	(53	)	$	851	$	235	$	(79	)
Fixed income securities	532		21		(1		)	502		7		(8		)	544		27		(1		)	502		7		(8		)
Private equity and other	32		—		—			20		—		—			34		—		—			20		—		—
Cash equivalents	9		—		—			5		—		—			9		—		—			5		—		—
	$	1,561	$	356	$	(50	)	$	1,378	$	242	$	(87	)	$	1,577	$	362	$	(54	)	$	1,378	$	242	$	(87	)

The following table summarizes the fair value of the fixed income securities held in nuclear decommissioning trust funds by contractual maturity:


	June 30, 2019		September 30, 2019
	(In millions)		(In millions)
Due within one year	$	17	$	23
Due after one through five years	103		98
Due after five through ten years	110		108
Due after ten years	302		315
	$	532	$	544

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

Other Securities

At ~~June~~September 30, 2019 and December 31, 2018, the Registrants' securities, included in Other investments on the Consolidated Statements of Financial Position, were comprised primarily of money market and equity securities. For the three months ended ~~June~~September 30, 2019 and 2018, gains related to equity securities were $7$3 million and $1$5 million, respectively. For the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, gains related to equity securities were ~~$24~~$27 million and ~~losses related to equity securities held at June 30, 2018 were $1~~$4 million, ~~for the Registrants.~~respectively. Gains or losses related to the Rabbi Trust assets are allocated from DTE Energy to DTE Electric.

NOTE 89 — FINANCIAL AND OTHER DERIVATIVE INSTRUMENTS

The Registrants recognize all derivatives at their fair value as Derivative assets or liabilities on their respective Consolidated Statements of Financial Position unless they qualify for certain scope exceptions, including the normal purchases and normal sales exception. Further, derivatives that qualify and are designated for hedge accounting are classified as either hedges of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge); or as hedges of the fair value of a recognized asset or liability or of an unrecognized firm commitment (fair value hedge). For cash flow hedges, the portion of the derivative gain or loss that is effective in offsetting the change in the value of the underlying exposure is deferred in Accumulated other comprehensive income (loss) and later reclassified into earnings when the underlying transaction occurs. Gains or losses from the ineffective portion of cash flow hedges are recognized in earnings immediately. For fair value hedges, changes in fair values for the derivative and hedged item are recognized in earnings each period. For derivatives that do not qualify or are not designated for hedge accounting, changes in fair value are recognized in earnings each period.

The Registrants' primary market risk exposure is associated with commodity prices, credit, and interest rates. The Registrants have risk management policies to monitor and manage market risks. The Registrants use derivative instruments to manage some of the exposure. DTE Energy uses derivative instruments for trading purposes in its Energy Trading segment. Contracts classified as derivative instruments include electricity, natural gas, oil, certain coal forwards, futures, options, swaps, and foreign currency exchange contracts. Items not classified as derivatives include natural gas inventory, pipeline transportation contracts, renewable energy credits, and natural gas storage assets.

DTE Electric — DTE Electric generates, purchases, distributes, and sells electricity. DTE Electric uses forward contracts to manage changes in the price of electricity and fuel. Substantially all of these contracts meet the normal purchases and normal sales exception and are therefore accounted for under the accrual method. Other derivative contracts are MTM and recoverable through the PSCR mechanism when settled. This results in the deferral of unrealized gains and losses as Regulatory assets or liabilities until realized.

DTE Gas — DTE Gas purchases, stores, transports, distributes, and sells natural gas and sells storage and transportation capacity. DTE Gas has fixed-priced contracts for portions of its expected natural gas supply requirements through March 2022. Substantially all of these contracts meet the normal purchases and normal sales exception and are therefore accounted for under the accrual method. DTE Gas may also sell forward transportation and storage capacity contracts. Forward transportation and storage contracts are generally not derivatives and are therefore accounted for under the accrual method.

Gas Storage and Pipelines — This segment is primarily engaged in services related to the gathering, transportation, and storage of natural gas. Primarily fixed-priced contracts are used in the marketing and management of transportation and storage services. Generally, these contracts are not derivatives and are therefore accounted for under the accrual method.

Power and Industrial Projects — This segment manages and operates energy and pulverized coal projects, a coke battery, reduced emissions fuel projects, renewable gas recovery, and power generation assets. Primarily fixed-price contracts are used in the marketing and management of the segment assets. These contracts are generally not derivatives and are therefore accounted for under the accrual method.

Energy Trading — Commodity Price Risk — Energy Trading markets and trades electricity, natural gas physical products, and energy financial instruments, and provides energy and asset management services utilizing energy commodity derivative instruments. Forwards, futures, options, and swap agreements are used to manage exposure to the risk of market price and volume fluctuations in its operations. These derivatives are accounted for by recording changes in fair value to earnings unless hedge accounting criteria are met.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

Energy Trading — Foreign Currency Exchange Risk — Energy Trading has foreign currency exchange forward contracts to economically hedge fixed Canadian dollar commitments existing under natural gas and power purchase and sale contracts and natural gas transportation contracts. Energy Trading enters into these contracts to mitigate price volatility with respect to fluctuations of the Canadian dollar relative to the U.S. dollar. These derivatives are accounted for by recording changes in fair value to earnings unless hedge accounting criteria are met.

Corporate and Other — Interest Rate Risk — DTE Energy may use interest rate swaps, treasury locks, and other derivatives to hedge the risk associated with interest rate market volatility.

Credit Risk — DTE Energy maintains credit policies that significantly minimize overall credit risk. These policies include an evaluation of potential customers’ and counterparties’ financial condition, including the viability of underlying productive assets, credit rating, collateral requirements, or other credit enhancements such as letters of credit or guarantees. DTE Energy generally uses standardized agreements that allow the netting of positive and negative transactions associated with a single counterparty. DTE Energy maintains a provision for credit losses based on factors surrounding the credit risk of its customers, historical trends, and other information. Based on DTE Energy's credit policies and its ~~June~~September 30, 2019 provision for credit losses, DTE Energy’s exposure to counterparty nonperformance is not expected to have a material adverse effect on DTE Energy's Consolidated Financial Statements.

Derivative Activities

DTE Energy manages its MTM risk on a portfolio basis based upon the delivery period of its contracts and the individual components of the risks within each contract. Accordingly, it records and manages the energy purchase and sale obligations under its contracts in separate components based on the commodity (e.g. electricity or natural gas), the product (e.g. electricity for delivery during peak or off-peak hours), the delivery location (e.g. by region), the risk profile (e.g. forward or option), and the delivery period (e.g. by month and year). The following describes the categories of activities represented by their operating characteristics and key risks:

•

Asset Optimization — Represents derivative activity associated with assets owned and contracted by DTE Energy, including forward natural gas purchases and sales, natural gas transportation, and storage capacity. Changes in the value of derivatives in this category typically economically offset changes in the value of underlying non-derivative positions, which do not qualify for fair value accounting. The difference in accounting treatment of derivatives in this category and the underlying non-derivative positions can result in significant earnings volatility.


•	Marketing and Origination — Represents derivative activity transacted by originating substantially hedged positions with wholesale energy marketers, producers, end-users, utilities, retail aggregators, and alternative energy suppliers.


•	Fundamentals Based Trading — Represents derivative activity transacted with the intent of taking a view, capturing market price changes, or putting capital at risk. This activity is speculative in nature as opposed to hedging an existing exposure.


•	Other — Includes derivative activity at DTE Electric related to FTRs. Changes in the value of derivative contracts at DTE Electric are recorded as Derivative assets or liabilities, with an offset to Regulatory assets or liabilities as the settlement value of these contracts will be included in the PSCR mechanism when realized.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

The following table presents the fair value of derivative instruments for DTE Energy:


	June 30, 2019					December 31, 2018					September 30, 2019					December 31, 2018
	Derivative Assets		Derivative Liabilities			Derivative Assets		Derivative Liabilities			Derivative Assets		Derivative Liabilities			Derivative Assets		Derivative Liabilities
	(In millions)										(In millions)
Derivatives designated as hedging instruments
Interest rate contracts	$	—	$	(15	)	$	—	$	(3	)	$	—	$	—		$	—	$	(3	)
Derivatives not designated as hedging instruments
Commodity contracts
Natural gas	$	235	$	(236	)	$	349	$	(380	)	$	253	$	(297	)	$	349	$	(380	)
Electricity	320		(321		)	303		(285		)	164		(155		)	303		(285		)
Other	9		—			7		(1		)	10		(8		)	7		(1		)
Foreign currency exchange contracts	1		—			4		—			2		—			4		—
Total derivatives not designated as hedging instruments	$	565	$	(557	)	$	663	$	(666	)	$	429	$	(460	)	$	663	$	(666	)

Current	$	449	$	(434	)	$	563	$	(518	)	$	346	$	(339	)	$	563	$	(518	)
Noncurrent	116		(138		)	100		(151		)	83		(121		)	100		(151		)
Total derivatives	$	565	$	(572	)	$	663	$	(669	)	$	429	$	(460	)	$	663	$	(669	)

The following table presents the fair value of derivative instruments for DTE Electric:


	June 30, 2019		December 31, 2018		September 30, 2019		December 31, 2018
	(In millions)				(In millions)
FTRs — Other current assets	$	9	$	6	$	5	$	6
Total derivatives not designated as hedging instruments	$	9	$	6	$	5	$	6

Certain of DTE Energy's derivative positions are subject to netting arrangements which provide for offsetting of asset and liability positions as well as related cash collateral. Such netting arrangements generally do not have restrictions. Under such netting arrangements, DTE Energy offsets the fair value of derivative instruments with cash collateral received or paid for those contracts executed with the same counterparty, which reduces DTE Energy's Total Assets and Liabilities. Cash collateral is allocated between the fair value of derivative instruments and customer accounts receivable and payable with the same counterparty on a pro-rata basis to the extent there is exposure. Any cash collateral remaining, after the exposure is netted to zero, is reflected in Accounts receivable and Accounts payable as collateral paid or received, respectively.

DTE Energy also provides and receives collateral in the form of letters of credit which can be offset against net Derivative assets and liabilities as well as Accounts receivable and payable. DTE Energy had issued letters of credit of $5$2 million and $4 million outstanding at ~~June~~September 30, 2019 and December 31, 2018, respectively, which could be used to offset net Derivative liabilities. Letters of credit received from third parties which could be used to offset net Derivative assets were $2$6 million and $8 million at ~~June~~September 30, 2019 and December 31, 2018, respectively. Such balances of letters of credit are excluded from the tables below and are not netted with the recognized assets and liabilities in DTE Energy's Consolidated Statements of Financial Position.

For contracts with certain clearing agents, the fair value of derivative instruments is netted against realized positions with the net balance reflected as either 1) a Derivative asset or liability or 2) an Account receivable or payable. Other than certain clearing agents, Accounts receivable and Accounts payable that are subject to netting arrangements have not been offset against the fair value of Derivative assets and liabilities.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

The following table presents net cash collateral offsetting arrangements for DTE Energy:


	June 30, 2019			December 31, 2018			September 30, 2019			December 31, 2018
	(In millions)						(In millions)
Cash collateral netted against Derivative assets	$	—		$	(17	)	$	—		$	(17	)
Cash collateral netted against Derivative liabilities	4			—
Cash collateral recorded in Accounts receivable^(a)	12			10			9			10
Cash collateral recorded in Accounts payable^(a)	(3		)	(6		)	(6		)	(6		)
Total net cash collateral posted (received)	$	13		$	(13	)	$	3		$	(13	)


(a)	Amounts are recorded net by counterparty.

The following table presents the netting offsets of Derivative assets and liabilities for DTE Energy:


	June 30, 2019									December 31, 2018									September 30, 2019									December 31, 2018
	Gross Amounts of Recognized Assets (Liabilities)			Gross Amounts Offset in the Consolidated Statements of Financial Position			Net Amounts of Assets (Liabilities) Presented in the Consolidated Statements of Financial Position			Gross Amounts of Recognized Assets (Liabilities)			Gross Amounts Offset in the Consolidated Statements of Financial Position			Net Amounts of Assets (Liabilities) Presented in the Consolidated Statements of Financial Position			Gross Amounts of Recognized Assets (Liabilities)			Gross Amounts Offset in the Consolidated Statements of Financial Position			Net Amounts of Assets (Liabilities) Presented in the Consolidated Statements of Financial Position			Gross Amounts of Recognized Assets (Liabilities)			Gross Amounts Offset in the Consolidated Statements of Financial Position			Net Amounts of Assets (Liabilities) Presented in the Consolidated Statements of Financial Position
	(In millions)																		(In millions)
Derivative assets
Commodity contracts
Natural gas	$	235		$	(170	)	$	65		$	349		$	(277	)	$	72		$	253		$	(189	)	$	64		$	349		$	(277	)	$	72
Electricity	320			(236		)	84			303			(252		)	51			164			(124		)	40			303			(252		)	51
Other	9			—			9			7			(1		)	6			10			(5		)	5			7			(1		)	6
Foreign currency exchange contracts	1			—			1			4			—			4			2			—			2			4			—			4
Total derivative assets	$	565		$	(406	)	$	159		$	663		$	(530	)	$	133		$	429		$	(318	)	$	111		$	663		$	(530	)	$	133

Derivative liabilities
Commodity contracts
Natural gas	$	(236	)	$	170		$	(66	)	$	(380	)	$	272		$	(108	)	$	(297	)	$	189		$	(108	)	$	(380	)	$	272		$	(108	)
Electricity	(321		)	240			(81		)	(285		)	240			(45		)	(155		)	124			(31		)	(285		)	240			(45		)
Other	—			—			—			(1		)	1			—			(8		)	5			(3		)	(1		)	1			—
Interest rate contracts	(15		)	—			(15		)	(3		)	—			(3		)	—			—			—			(3		)	—			(3		)
Total derivative liabilities	$	(572	)	$	410		$	(162	)	$	(669	)	$	513		$	(156	)	$	(460	)	$	318		$	(142	)	$	(669	)	$	513		$	(156	)

The following table presents the netting offsets of Derivative assets and liabilities showing the reconciliation of derivative instruments to DTE Energy's Consolidated Statements of Financial Position:


	June 30, 2019												December 31, 2018												September 30, 2019												December 31, 2018
	Derivative Assets						Derivative Liabilities						Derivative Assets						Derivative Liabilities						Derivative Assets						Derivative Liabilities						Derivative Assets						Derivative Liabilities
	Current			Noncurrent			Current			Noncurrent			Current			Noncurrent			Current			Noncurrent			Current			Noncurrent			Current			Noncurrent			Current			Noncurrent			Current			Noncurrent
	(In millions)																								(In millions)
Total fair value of derivatives	$	449		$	116		$	(434	)	$	(138	)	$	563		$	100		$	(518	)	$	(151	)	$	346		$	83		$	(339	)	$	(121	)	$	563		$	100		$	(518	)	$	(151	)
Counterparty netting	(336		)	(70		)	336			70			(451		)	(62		)	451			62			(271		)	(47		)	271			47			(451		)	(62		)	451			62
Collateral adjustment	—			—			4			—			(10		)	(7		)	—			—			—			—			—			—			(10		)	(7		)	—			—
Total derivatives as reported	$	113		$	46		$	(94	)	$	(68	)	$	102		$	31		$	(67	)	$	(89	)	$	75		$	36		$	(68	)	$	(74	)	$	102		$	31		$	(67	)	$	(89	)

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

The effect of derivatives not designated as hedging instruments on DTE Energy's Consolidated Statements of Operations is as follows:


		Location of Gain (Loss) Recognized in Income on Derivatives	Gain (Loss) Recognized in Income on Derivatives for the Three Months Ended June 30,						Gain (Loss) Recognized in Income on Derivatives for the Six Months Ended June 30,							Location of Gain (Loss) Recognized in Income on Derivatives	Gain (Loss) Recognized in Income on Derivatives for the Three Months Ended September 30,						Gain (Loss) Recognized in Income on Derivatives for the Nine Months Ended September 30,
		Location of Gain (Loss) Recognized in Income on Derivatives	2019			2018			2019			2018				Location of Gain (Loss) Recognized in Income on Derivatives	2019			2018			2019			2018
			(In millions)														(In millions)
Commodity contracts	Commodity contracts														Commodity contracts
Natural gas		Operating Revenues — Non-utility operations	$	24		$	(48	)	$	9		$	(158	)		Operating Revenues — Non-utility operations	$	(5	)	$	(29	)	$	4		$	(51	)
Natural gas		Fuel, purchased power, and gas — non-utility	(30		)	16			40			68				Fuel, purchased power, and gas — non-utility	(47		)	(6		)	(7		)	(74		)
Electricity		Operating Revenues — Non-utility operations	16			28			(33		)	11				Operating Revenues — Non-utility operations	54			26			21			37
Other		Operating Revenues — Non-utility operations	(1		)	2			—			1				Operating Revenues — Non-utility operations	(11		)	—			(11		)	1
Foreign currency exchange contracts		Operating Revenues — Non-utility operations	(2		)	2			(3		)	4				Operating Revenues — Non-utility operations	1			(2		)	(2		)	2
Total			$	7		$	—		$	13		$	(74	)			$	(8	)	$	(11	)	$	5		$	(85	)

Revenues and energy costs related to trading contracts are presented on a net basis in DTE Energy's Consolidated Statements of Operations. Commodity derivatives used for trading purposes, and financial non-trading commodity derivatives, are accounted for using the MTM method with unrealized and realized gains and losses recorded in Operating Revenues — Non-utility operations. Non-trading physical commodity sale and purchase derivative contracts are generally accounted for using the MTM method with unrealized and realized gains and losses for sales recorded in Operating Revenues — Non-utility operations and purchases recorded in Fuel, purchased power, and gas — non-utility.

The following represents the cumulative gross volume of DTE Energy's derivative contracts outstanding as of ~~June~~September 30, 2019:



Commodity		Number of Units
Natural gas (MMBtu)		~~1,986,388,951~~2,018,659,087
Electricity (MWh)		~~33,786,455~~30,880,332
Foreign currency exchange (CAD)		~~91,380,922~~79,292,076

Various subsidiaries of DTE Energy have entered into contracts which contain ratings triggers and are guaranteed by DTE Energy. These contracts contain provisions which allow the counterparties to require that DTE Energy post cash or letters of credit as collateral in the event that DTE Energy’s credit rating is downgraded below investment grade. Certain of these provisions (known as "hard triggers") state specific circumstances under which DTE Energy can be required to post collateral upon the occurrence of a credit downgrade, while other provisions (known as "soft triggers") are not as specific. For contracts with soft triggers, it is difficult to estimate the amount of collateral which may be requested by counterparties and/or which DTE Energy may ultimately be required to post. The amount of such collateral which could be requested fluctuates based on commodity prices (primarily natural gas, power, and coal) and the provisions and maturities of the underlying transactions. As of ~~June~~September 30, 2019, DTE Energy's contractual obligation to post collateral in the form of cash or letters of credit in the event of a downgrade to below investment grade, under both hard trigger and soft trigger provisions, was ~~$541~~$517 million.

As of ~~June~~September 30, 2019, DTE Energy had ~~$493~~$364 million of derivatives in net liability positions, for which hard triggers exist. There is ~~$4 million~~0 of collateral that has been posted against such liabilities, including cash and letters of credit. Associated derivative net asset positions for which contractual offset exists were ~~$395~~$304 million. The net remaining amount of ~~$94~~$60 million is derived from the ~~$541~~$517 million noted above.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

NOTE 910 — LONG-TERM DEBT

Debt Issuances

In 2019, the following debt was issued:



Company	Month	Type	Interest Rate	Maturity Date	Amount
					(In millions)
DTE Electric	February	Mortgage Bonds^(a)	3.95%	2049	$	650
DTE Energy	June	Senior Notes^(b)	2.60%	2022	300
DTE Energy	June	Senior Notes^(b)	3.40%	2029	500
					$	1,450


(a)	Bonds were issued as Green Bonds and the proceeds will be used to finance expenditures for solar and wind energy, payments under power purchase agreements for solar and wind energy, and energy optimization programs.


(b)	Proceeds were used for the repayment of short-term borrowings and general corporate purposes.

In ~~June~~October 2019, DTE Gas ~~agreed to issue~~issued $140 million of 2.95% First Mortgage Bonds due October 1, 2029 and $140 million of 3.72% First Mortgage Bonds due October 1, 2049 to a group of institutional investors in a private placement transaction. ~~The bond issuances are expected to occur in October 2019.~~ Proceeds ~~will be~~were used for the repayment of short-term borrowings and for general corporate purposes.

Additionally in October 2019, the following securities were redeemed at maturity: $400 million DTE Energy 2016 Series D 1.5% Senior Notes and $120 million DTE Gas 2004 Series E 5.0% Senior Notes.

Remarketable Senior Notes

In August 2019, DTE Energy remarketed the $675 million 2016 Series C 1.5% RSNs due 2024 pursuant to the terms of the 2016 Equity Units. As a result of the remarketing, the interest rate was reset to 2.529%, payable semi-annually at the new rate beginning October 1, 2019. At September 30, 2019, these securities are included in Mortgage, bonds, notes and other within DTE Energy's Consolidated Statements of Financial Position. DTE Energy did not receive any proceeds for the remarketing. All proceeds belonged to the investors holding the related 2016 Equity Units and were temporarily used to purchase a portfolio of treasury securities. The securities were released on behalf of investors to complete the related stock purchase contracts settlement date of October 1, 2019 to pay the purchase price to DTE Energy for the issuance of approximately 5.87 million shares of common stock.

NOTE 1011 — SHORT-TERM CREDIT ARRANGEMENTS AND BORROWINGS

DTE Energy, DTE Electric, and DTE Gas have unsecured revolving credit agreements that can be used for general corporate borrowings, but are intended to provide liquidity support for each of the companies’ commercial paper programs. Borrowings under the revolvers are available at prevailing short-term interest rates. Additionally, DTE Energy has other facilities to support letter of credit issuance.

The agreements require DTE Energy, DTE Electric, and DTE Gas to maintain a total funded debt to capitalization ratio of no more than 0.65 to 1. In the agreements, "total funded debt" means all indebtedness of each respective company and their consolidated subsidiaries, including capital lease obligations, hedge agreements, and guarantees of third parties’ debt, but excluding contingent obligations, nonrecourse and junior subordinated debt, and certain equity-linked securities and, except for calculations at the end of the second quarter, certain DTE Gas short-term debt. "Capitalization" means the sum of (a) total funded debt plus (b) "consolidated net worth," which is equal to consolidated total equity of each respective company and their consolidated subsidiaries (excluding pension effects under certain FASB statements), as determined in accordance with accounting principles generally accepted in the United States of America. At ~~June~~September 30, 2019, the total funded debt to total capitalization ratios for DTE Energy, DTE Electric, and DTE Gas were 0.57 to 1, ~~0.51~~0.52 to 1, and ~~0.47~~0.46 to 1, respectively, and were in compliance with this financial covenant.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

The availability under the facilities in place at ~~June~~September 30, 2019 is shown in the following table:


	DTE Energy		DTE Electric		DTE Gas		Total		DTE Energy		DTE Electric		DTE Gas		Total
	(In millions)								(In millions)
Unsecured letter of credit facility, expiring in February 2021	$	150	$	—	$	—	$	150	$	150	$	—	$	—	$	150
Unsecured letter of credit facility, expiring in September 2019	70		—		—		70
Unsecured letter of credit facility, expiring in August 2021									110		—		—		110
Unsecured revolving credit facility, expiring April 2024	1,500		500		300		2,300		1,500		500		300		2,300
	1,720		500		300		2,520		1,760		500		300		2,560
Amounts outstanding at June 30, 2019
Amounts outstanding at September 30, 2019
Commercial paper issuances	—		—		3		3		110		382		232		724
Letters of credit	179		—		—		179		191		—		—		191
	179		—		3		182		301		382		232		915
Net availability at June 30, 2019	$	1,541	$	500	$	297	$	2,338
Net availability at September 30, 2019									$	1,459	$	118	$	68	$	1,645

In August 2019, DTE Energy increased its $70 million letter of credit facility to $110 million. The facility's maturity date was amended from September 2019 to August 2021.

DTE Energy has $9 million of other outstanding letters of credit which are used for various corporate purposes and are not included in the facilities described above.

In conjunction with maintaining certain exchange traded risk management positions, DTE Energy may be required to post collateral with its clearing agent. DTE Energy has a demand financing agreement for up to $100 million with its clearing agent. The agreement, as amended, also allows for up to $50 million of additional margin financing provided that DTE Energy posts a letter of credit for the incremental amount and allows the right of setoff with posted collateral. At ~~June~~September 30, 2019, the capacity under this facility was $150 million. The amount outstanding under this agreement was ~~$107~~$94 million and $93 million at ~~June~~September 30, 2019 and December 31, 2018, respectively, and was fully offset by the posted collateral.

NOTE 1112 — LEASES

Disclosures related to the ~~six~~nine months ended ~~June~~September 30, 2019 are presented as required under Topic 842. Prior period disclosures for the year ended December 31, 2018 are presented under Topic 840. The Registrants have elected to use a practical expedient provided by Topic 842 whereby comparative disclosures for prior periods are allowed to be presented under Topic 840. Prior period disclosures under Topic 840 have been provided on an annual basis. As a result, the disclosures presented under Topic 842 and Topic 840 will not be fully comparable in specific disclosure requirements or time period.

Lessee

Topic 842 — Leases at DTE Energy are primarily comprised of various forms of equipment, computer hardware, coal railcars, production facilities, buildings, and certain easement leases with terms ranging from approximately 2 to 40 years. Leases at DTE Electric are primarily comprised of various forms of equipment, computer hardware, coal railcars, and certain easement leases with terms ranging from approximately 2 to 40 years.

A lease is deemed to exist when the Registrants have the right to control the use of identified property, plant or equipment, as conveyed through a contract, for a certain period of time and consideration paid. The right to control is deemed to occur when the Registrants have the right to obtain substantially all of the economic benefits of the identified assets and the right to direct the use of such assets.

Lease liabilities are determined utilizing a discount rate to determine the present values of lease payments. Topic 842 requires the use of the rate implicit in the lease when it is readily determinable. When the rate implicit in the lease is not readily determinable, the incremental borrowing rate is used. The Registrants have determined their respective incremental borrowing rates based upon the rate of interest that would have been paid on a collateralized basis over similar tenors to that of the leases. The incremental borrowing rates for DTE Electric and DTE Gas have been determined utilizing respective secured borrowing rates for first mortgage bonds with like tenors of remaining lease terms. Incremental borrowing rates for non-utility entities have been determined utilizing an implied secured borrowing rate based upon an unsecured rate for a similar tenor of remaining lease terms, which is then adjusted for the estimated impact of collateral.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

Certain leases of the Registrants contain escalation clauses whereby the payments are adjusted for consumer price or labor indices. DTE Energy has leases with non-index based escalation clauses for fixed dollar or percentage increases. DTE Electric has leases with non-index based escalation clauses for fixed dollar increases. DTE Energy also has leases with variable payments based upon usage of, or revenues associated with, the leased assets. DTE Electric also has leases with variable payments based upon the usage of the leased assets.

Certain leases of easements and coal railcars contain provisions whereby the Registrants have the option to terminate the lease agreement by giving notice of such termination during the time frames specified in the respective lease. The Registrants have considered such provisions in the determination of the lease term when it is reasonably certain that the lease would be terminated.

The Registrants have certain leases which contain purchase options. Based upon the nature of the leased property and terms of the purchase options, the Registrants have determined it is not reasonably certain that such purchase options will be utilized. Thus, the impact of the purchase options has not been included in the determination of right-of-use assets and lease liabilities for the subject leases.

The Registrants have certain leases which contain renewal options. Where the renewal options were deemed reasonably certain to occur, the impacts of such options were included in the determination of the right of use assets and lease liabilities.

The Registrants have agreements with lease and non-lease components, which are generally accounted for separately. Consideration in a lease is allocated between lease and non-lease components based upon the estimated relative standalone prices. The Registrants have certain coal railcar leases for which non-lease and lease components are accounted for as a single lease component, as permitted under Topic 842.

The components of lease cost for DTE Energy were as follows:


	Three Months Ended June 30,		Six Months Ended June 30,		Three Months Ended September 30,		Nine Months Ended September 30,
	2019		2019		2019		2019
	(In millions)				(In millions)
Operating lease cost	$	10	$	21	$	10	$	31
Finance lease cost:
Amortization of right-of-use assets	2		3		—		3
Interest of lease liabilities	—		—		—		—
Total finance lease cost	2		3		—		3
Variable lease cost	1		6		2		8
Short-term lease cost	3		5		2		7
	$	16	$	35	$	14	$	49

The components of lease cost for DTE Electric were as follows:


	Three Months Ended June 30,		Six Months Ended June 30,		Three Months Ended September 30,		Nine Months Ended September 30,
	2019		2019		2019		2019
	(In millions)				(In millions)
Operating lease cost	$	4	$	8	$	5	$	13
Finance lease cost:
Amortization of right-of-use assets	2		3		—		3
Interest of lease liabilities	—		—		—		—
Total finance lease cost	2		3		—		3
Variable lease cost	—		—		—		—
Short-term lease cost	—		1		1		2
	$	6	$	12	$	6	$	18

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

The Registrants have elected not to apply the recognition requirements of Topic 842 to leases with a term of 12 months or less. DTE Energy and DTE Electric record operating, variable, and short-term lease costs as Operating Expenses on the Consolidated Statements of Operations, except for certain amounts that may be capitalized to other assets.

Other information related to leases ~~for the six months ended June 30, 2019~~ were as follows:


	DTE Energy		DTE Electric		DTE Energy		DTE Electric
	2019		2019		Nine Months Ended September 30, 2019
	(In millions)				(In millions)
Supplemental Cash Flows Information
Cash paid for amounts included in the measurement of these liabilities:
Operating cash flows from finance leases	$	3	$	3	$	4	$	4
Operating cash flows from operating leases	$	19	$	7	$	30	$	11
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	22	$	1	$	37	$	2

Weighted Average Remaining Lease Term
Operating leases	9.9 years		10.4 years		9.7 years		10.6 years
Finance leases	2.5 years		2.5 years		2.3 years		2.3 years

Weighted Average Discount Rate
Operating leases	3.8%		3.7%		3.7%		3.7%
Finance leases	3.1%		3.1%		3.1%		3.1%

The Registrants' future minimum lease payments under leases for remaining periods as of ~~June~~September 30, 2019 were as follows:


	DTE Energy					DTE Electric					DTE Energy					DTE Electric
	Operating Leases			Finance Leases		Operating Leases			Finance Leases		Operating Leases			Finance Leases		Operating Leases			Finance Leases
	(In millions)										(In millions)
2019	$	21		$	2	$	9		$	2	$	10		$	1	$	4		$	1
2020	32			4		12			4		35			4		13			4
2021	23			3		11			3		26			3		11			3
2022	16			—		7			—		19			—		7			—
2023	13			—		6			—		16			—		6			—
2024 and thereafter	61			—		30			—		62			—		30			—
Total future minimum lease payments	166			9		75			9		168			8		71			8
Imputed interest	(30		)	—		(14		)	—		(30		)	—		(13		)	—
	$	136		$	9	$	61		$	9	$	138		$	8	$	58		$	8

Finance leases reported on the Consolidated Statement of Financial Position were as follows:


	DTE Energy		DTE Electric		DTE Energy		DTE Electric
	June 30, 2019				September 30, 2019
	(In millions)				(In millions)
Right-of-use assets, within Property, plant, and equipment, net	$	9	$	9	$	8	$	8
Current lease liabilities, within Current Liabilities — Other	$	3	$	3	$	3	$	3

Topic 840 — The following disclosures are presented under Topic 840 for the year ended December 31, 2018.

The Registrants lease various assets under operating leases, including coal railcars, office buildings, a warehouse, computers, vehicles, and other equipment. The lease arrangements expire at various dates through 2051 and 2046 for DTE Energy and DTE Electric, respectively.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

The Registrants' future minimum lease payments under non-cancelable operating leases at December 31, 2018 were as follows:



	DTE Energy		DTE Electric
	(In millions)
2019	$	42	$	17
2020	30		12
2021	18		10
2022	11		7
2023	8		5
2024 and thereafter	45		29
	$	154	$	80

Lessor

Topic 842 — DTE Energy leases a portion of its pipeline system to the Vector Pipeline through a 20-year finance lease contract that expires in 2020, with renewal options extending for five years each. DTE Energy owns a 40% interest in the Vector Pipeline. In addition, DTE Energy has an energy services agreement that expires in 2026, of which a portion is accounted for as a finance lease.

DTE Energy also leases various assets under operating leases for a pipeline, energy facilities and related equipment. Such leases are comprised of both fixed payments and variable payments which are contingent on volumes, with terms ranging from 3 to 24 years. Generally, the operating leases do not have renewal provisions or options to purchase the assets at the end of the lease. The operating leases generally do not have termination for convenience provisions. Termination may be allowed under specific circumstances stated in the lease contract, such as under an event of default.

Certain of the finance and operating leases have lease terms that extend to the end of the estimated economic life of the leased assets, thereby resulting in no residual value. Any remaining residual values under the finance and operating leases are expected to be recovered through rates, renewals or new lease contracts. Residual values have been determined using the estimated economic life of the leased assets. The finance and operating leases do not contain residual value guarantees.

Certain of the operating leases have both lease and non-lease components. The lease and non-lease components are allocated based upon estimated relative standalone selling prices.

A lease is deemed to exist when the Registrants have provided other parties with the right to control the use of identified property, plant or equipment, as conveyed through a contract, for a certain period of time and consideration received. The right to control is deemed to occur when the Registrants have provided other parties with the right to obtain substantially all of the economic benefits of the identified assets and the right to direct the use of such assets.

DTE Energy’s lease income associated with operating leases was as follows:


	Three Months Ended June 30,		Six Months Ended June 30,		Three Months Ended September 30,		Nine Months Ended September 30,
	2019		2019		2019		2019
	(In millions)				(In millions)
Fixed payments	$	17	$	34	$	17	$	51
Variable payments	25		52		40		92
	$	42	$	86	$	57	$	143

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

DTE Energy’s minimum future rental revenues under operating leases for remaining periods as of ~~June~~September 30, 2019 were:


	DTE Energy		DTE Energy
	(In millions)		(In millions)
2019	$	33	$	16
2020	66		66
2021	64		64
2022	22		22
2023	22		22
2024 and thereafter	216		216
	$	423	$	406

Depreciation expense associated with DTE Energy's property under operating leases was $5$7 million and ~~$13~~$20 million for the three and ~~six~~nine months ended ~~June~~September 30, 2019, respectively.

Property under operating leases for DTE Energy was as follows:


	DTE Energy		DTE Energy
	June 30, 2019		September 30, 2019
	(In millions)		(In millions)
Gross property under operating leases	$	443	$	444
Accumulated amortization of property under operating leases	$	160	$	166

The components of DTE Energy’s net investment in finance leases for remaining periods were as follows:


	DTE Energy		DTE Energy
	June 30, 2019		September 30, 2019
	(In millions)		(In millions)
2019	$	5	$	3
2020	9		9
2021	—		—
2022	—		—
2023	—		—
2024 and thereafter	1		1
Total minimum future lease receipts	15		13
Residual value of leased pipeline	40		40
Less unearned income	7		6
Net investment in finance lease	48		47
Less current portion	5		5
	$	43	$	42

Interest income recognized under finance leases was $1$2 million and $24 million for the three and ~~six~~nine months ended ~~June~~September 30, 2019, respectively.

~~Topic 840~~ ~~— DTE Energy leases various assets under operating leases for energy facilities and related equipment.~~

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

Topic 840 — DTE Energy leases various assets under operating leases for energy facilities and related equipment.

DTE Energy’s minimum future rental revenues under non-cancelable operating leases as of December 31, 2018 were:



	DTE Energy
	(In millions)
2019	$	66
2020	66
2021	64
2022	20
2023	20
2024 and thereafter	196
	$	432

The amounts listed above do not include contingent rentals associated with the leased assets. DTE Energy had contingent rental revenues of $107 million, $91 million, and $101 million in 2018, 2017, and 2016, respectively.

DTE Energy leases a portion of its pipeline system to the Vector Pipeline through a capital lease contract that expires in 2020, with renewal options extending for five years. DTE Energy owns a 40% interest in the Vector Pipeline. In addition, DTE Energy has ~~two~~2 energy services agreements, for which a portion of are accounted for as capital leases. These agreements expire in 2019 and 2026.

The components of DTE Energy’s net investment in capital leases at December 31, 2018 were as follows:



	DTE Energy
	(In millions)
2019	$	10
2020	9
2021	—
2022	—
2023	—
2024 and thereafter	1
Total minimum future lease receipts	20
Residual value of leased pipeline	40
Less unearned income	9
Net investment in capital lease	51
Less current portion	5
	$	46

Property under operating leases for DTE Energy as of December 31, 2018 were as follows:



	DTE Energy
	(In millions)
Gross property under operating leases	$	447
Accumulated amortization of property under operating leases	$	148

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

NOTE 1213 — COMMITMENTS AND CONTINGENCIES

Environmental

DTE Electric

Air — DTE Electric is subject to the EPA ozone and fine particulate transport and acid rain regulations that limit power plant emissions of SO₂ and NO_X. The EPA and the State of Michigan have also issued emission reduction regulations relating to ozone, fine particulate, regional haze, mercury, and other air pollution. These rules have led to controls on fossil-fueled power plants to reduce SO₂, NO_X, mercury, and other emissions. Additional rulemakings may occur over the next few years which could require additional controls for SO₂, NO_X, and other hazardous air pollutants.

The EPA proposed revised air quality standards for ground level ozone in November 2014 and specifically requested comments on the form and level of the ozone standards. The standards were finalized in October 2015. The State of Michigan recommended to the EPA in October 2016 which areas of the state are not attaining the new standard. On April 30, 2018, the EPA finalized the State of Michigan's recommended marginal non-attainment designation for southeast Michigan. The State is required to develop and implement a plan to address the southeast Michigan ozone non-attainment area by 2021. The Registrants cannot predict the financial impact of the State's plan to address the ozone non-attainment area at this time.

In July 2009, the Registrants received a NOV/FOV from the EPA alleging, among other things, that ~~five~~5 DTE Electric power plants violated New Source Performance standards, Prevention of Significant Deterioration requirements, and operating permit requirements under the Clean Air Act. In June 2010, the EPA issued a NOV/FOV making similar allegations related to a project and outage at Unit 2 of the Monroe Power Plant. In March 2013, DTE Energy received a supplemental NOV from the EPA relating to the July 2009 NOV/FOV. The supplemental NOV alleged additional violations relating to the New Source Review provisions under the Clean Air Act, among other things.

In August 2010, the U.S. Department of Justice, at the request of the EPA, brought a civil suit in the U.S. District Court for the Eastern District of Michigan against DTE Energy and DTE Electric, related to the June 2010 NOV/FOV and the outage work performed at Unit 2 of the Monroe Power Plant. In August 2011, the U.S. District Court judge granted DTE Energy's motion for summary judgment in the civil case, dismissing the case and entering judgment in favor of DTE Energy and DTE Electric. In October 2011, the EPA filed a Notice of Appeal to the Court of Appeals for the Sixth Circuit. In March 2013, the Court of Appeals remanded the case to the U.S. District Court for review of the procedural component of the New Source Review notification requirements. In September 2013, the EPA filed a motion seeking leave to amend their complaint regarding the June 2010 NOV/FOV adding additional claims related to outage work performed at the Trenton Channel and Belle River Power Plants as well as additional claims related to work performed at the Monroe Power Plant. In March 2014, the U.S. District Court judge again granted DTE Energy's motion for summary judgment dismissing the civil case related to Monroe Unit 2. In April 2014, the U.S. District Court judge granted motions filed by the EPA and the Sierra Club to amend their New Source Review complaint adding additional claims for Monroe Units 1, 2, and 3, Belle River Units 1 and 2, and Trenton Channel Unit 9. In October 2014, the EPA and the U.S. Department of Justice filed a notice of appeal of the U.S. District Court judge's dismissal of the Monroe Unit 2 case. The amended New Source Review claims were all stayed pending resolution of the appeal by the Court of Appeals for the Sixth Circuit. On January 10, 2017, a divided panel of the Court reversed the decision of the U.S. District Court. On May 8, 2017, DTE Energy and DTE Electric filed a motion to stay the mandate pending filing of a petition for writ of certiorari with the U.S. Supreme Court. The Sixth Circuit granted the motion on May 16, 2017, staying the claims in the U.S. District Court until the U.S. Supreme Court disposes of the case. DTE Electric and DTE Energy filed a petition for writ of certiorari on July 31, 2017. On December 11, 2017, the U.S. Supreme Court denied certiorari. As a result of the Supreme Court electing not to review the matter, the case was sent back to the U.S. District Court for further proceedings and on June 14, 2018 the case was stayed pending settlement negotiations. The proceedings at the District Court remain stayed while the parties discuss potential resolution of the matter.

The Registrants believe that the plants and generating units identified by the EPA and the Sierra Club have complied with all applicable federal environmental regulations. Depending upon the outcome of the litigation and further discussions with the EPA regarding the ~~two~~2 NOVs/FOVs, DTE Electric could be required to install additional pollution control equipment at some or all of the power plants in question, implement early retirement of facilities where control equipment is not economical, engage in supplemental environmental programs, and/or pay fines. The Registrants do not expect the outcome for this matter to have a material impact on their Consolidated Financial Statements.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

The EPA has implemented regulatory actions under the Clean Air Act to address emissions of GHGs from the utility sector and other sectors of the economy. Among these actions, in 2015 the EPA finalized performance standards for emissions of carbon dioxide from new and existing fossil-fuel fired EGUs. The performance standards for existing EGUs, known as the EPA Clean Power Plan, were challenged by petitioners and stayed by the U.S. Supreme Court in February 2016 pending final review by the courts. On October 10, 2017, the EPA, under a new administration, proposed to rescind the Clean Power Plan, and in August 2018, the EPA proposed revised emission guidelines for GHGs from existing EGUs. On June 19, 2019, the EPA Administrator officially repealed the Clean Power Plan and finalized its replacement, named the Affordable Clean Energy (ACE) rule. These final rules do not impact DTE Energy's revised ~~goal~~commitment to reduce carbon emissions 32% by the early 2020s, 50% by 2030, and 80% by 2040, or its goal of net 0 emissions by 2050 for DTE Electric, from the 2005 carbon emissions levels.

In addition to the GHG standards for existing EGUs, in December 2018, the EPA issued proposed revisions to the carbon dioxide performance standards for new, modified, or reconstructed fossil-fuel fired EGUs. The carbon standards for new sources are not expected to have a material impact on DTE Electric, since DTE Electric has no plans to build new coal-fired generation and any potential new gas generation will be able to comply with the standards.

Pending or future legislation or other regulatory actions could have a material impact on DTE Electric's operations and financial position and the rates charged to its customers. Impacts include expenditures for environmental equipment beyond what is currently planned, financing costs related to additional capital expenditures, the purchase of emission credits from market sources, higher costs of purchased power, and the retirement of facilities where control equipment is not economical. DTE Electric would seek to recover these incremental costs through increased rates charged to its utility customers, as authorized by the MPSC.

To comply with air pollution requirements, DTE Electric spent approximately $2.4 billion through 2018. DTE Electric does not anticipate additional capital expenditures for air pollution requirements through 2025.

Water — In response to an EPA regulation, DTE Electric was required to examine alternatives for reducing the environmental impacts of the cooling water intake structures at several of its facilities. Based on the results of completed studies and expected future studies, DTE Electric may be required to install technologies to reduce the impacts of the water intake structures. A final rule became effective in October 2014. The final rule requires studies to be completed and submitted as part of the National Pollutant Discharge Elimination System (NPDES) permit application process to determine the type of technology needed to reduce impacts to fish. DTE Electric has initiated the process of completing the required studies. Final compliance for the installation of any required technology will be determined by the state on a case by case, site specific basis. DTE Electric is currently evaluating the compliance options and working with the State of Michigan on evaluating whether any controls are needed. These evaluations/studies may require modifications to some existing intake structures. It is not possible to quantify the impact of this rulemaking at this time.

Contaminated and Other Sites — Prior to the construction of major interstate natural gas pipelines, gas for heating and other uses was manufactured locally from processes involving coal, coke, or oil. The facilities, which produced gas, have been designated as MGP sites. DTE Electric conducted remedial investigations at contaminated sites, including ~~three~~3 former MGP sites. The investigations have revealed contamination related to the by-products of gas manufacturing at each MGP site. In addition to the MGP sites, DTE Electric is also in the process of cleaning up other contaminated sites, including the area surrounding an ash landfill, electrical distribution substations, electric generating power plants, and underground and aboveground storage tank locations. The findings of these investigations indicated that the estimated cost to remediate these sites is expected to be incurred over the next several years. At ~~June~~September 30, 2019 and December 31, 2018, DTE Electric had $8 million and $7 million, respectively, accrued for remediation. Any change in assumptions, such as remediation techniques, nature and extent of contamination, and regulatory requirements, could impact the estimate of remedial action costs for the sites and affect DTE Electric’s financial position and cash flows. DTE Electric believes the likelihood of a material change to the accrued amount is remote based on current knowledge of the conditions at each site.

Coal Combustion Residuals and Effluent Limitations Guidelines — A final EPA rule for the disposal of coal combustion residuals, commonly known as coal ash, became effective in October 2015, and was revised in October 2016 and July 2018. Additionally, D.C. District Court Decisions on August 21, 2018 and March 19, 2019 may affect the timing of closure of coal ash impoundments that are not lined with an engineered liner system. In late 2019, the EPA is expected to affirmatively undertake rulemaking to implement the D.C. District Court's decisions that will determine any changes to DTE Electric's plans in the operation and closure of coal ash impoundments.

~~At the State level, legislation was signed by the Governor in December 2018. The bill provides for a CCR program to be regulated in Michigan once approval is requested and received from the EPA.~~

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

At the State level, legislation was signed by the Governor in December 2018 and provides for further regulation of the CCR program in Michigan. Additionally, the bill provides the basis of a CCR program that EGLE will submit to the EPA for approval to fully regulate the CCR program in Michigan in lieu of a Federal permit program.

DTE Electric owns and operates ~~three~~3 permitted engineered coal ash storage facilities to dispose of coal ash from coal-fired power plants and operates a number of smaller impoundments at its power plants. CCR obligations vary based on plant life, but include the installation of monitoring wells, compliance with groundwater standards, and the closure of landfills and basins at the end of the useful life of the associated power plant ~~or as~~unless closure is triggered by a ~~basin becomes inactive.~~specific CCR rule requirement. Under the current CCR rules and uncertainty regarding the outcome of the D.C. District Court decision to remand portions of the rule to the EPA, capital costs and timing associated with the building of new CCR facilities or retirement of existing CCR facilities are being evaluated.

In November 2015, the EPA finalized the ELG Rule for the steam electric power generating industry which requires additional controls to be installed between 2018 and 2023. Compliance schedules for individual facilities and individual waste streams are determined through issuance of new National Pollutant Discharge Elimination System (NPDES) permits by the State of Michigan. The State of Michigan has issued a NPDES permit for the Belle River Power Plant establishing a compliance deadline of December 31, 2021. No new permits that would require ELG compliance have been issued for other facilities, consequently no compliance timelines have been established.

On April 12, 2017, the EPA granted a petition for reconsideration of the ELG Rule. The EPA also signed an administrative stay of the ELG Rule’s compliance deadlines for fly ash transport water, bottom ash transport water, and flue gas desulfurization (FGD) wastewater, among others. On June 6, 2017, the EPA published in the Federal Register a proposed rule (Postponement Rule) to postpone certain applicable deadlines within the 2015 ELG rule. The Postponement Rule was published on September 18, 2017. The Postponement Rule nullified the administrative stay but also extended the earliest compliance deadlines for only FGD wastewater and bottom ash transport water until November 1, 2020 in order for the EPA to propose and finalize a new ruling. The ELG compliance requirements and final deadlines for bottom ash transport water and FGD wastewater, and total ELG related compliance costs will not be known until the EPA completes its reconsideration of the ELG Rule expected by the end of ~~2019.~~2020.

DTE Gas

Contaminated and Other Sites — DTE Gas owns or previously owned, 14 former MGP sites. Investigations have revealed contamination related to the by-products of gas manufacturing at each site. Cleanup of ~~seven~~8 of the MGP sites is complete, and the sites are closed. DTE Gas has also completed partial closure of ~~seven~~4 additional sites. Cleanup activities associated with the remaining sites will continue over the next several years. The MPSC has established a cost deferral and rate recovery mechanism for investigation and remediation costs incurred at former MGP sites. In addition to the MGP sites, DTE Gas is also in the process of cleaning up other contaminated sites, including gate stations, gas pipeline releases, and underground storage tank locations. As of ~~June~~September 30, 2019 and December 31, 2018, DTE Gas had ~~$27 million and~~ $25 million ~~respectively,~~ accrued for remediation. Any change in assumptions, such as remediation techniques, nature and extent of contamination, and regulatory requirements, could impact the estimate of remedial action costs for the sites and affect DTE Gas' financial position and cash flows. DTE Gas anticipates the cost amortization methodology approved by the MPSC, which allows for amortization of the MGP costs over a ten-year period beginning with the year subsequent to the year the MGP costs were incurred, will prevent environmental costs from having a material adverse impact on DTE Gas' results of operations.

Non-utility

DTE Energy's non-utility businesses are subject to a number of environmental laws and regulations dealing with the protection of the environment from various pollutants.

In March 2019, the EPA issued a finding of violation to EES Coke, the Michigan coke battery facility that is a wholly-owned subsidiary of DTE Energy, alleging that the 2008 and 2014 permits issued by ~~the Michigan Department of Environment, Great Lakes, and Energy (formerly known as the Michigan Department of Environmental Quality)~~EGLE did not comply with the Clean Air Act. ~~DTE Energy is currently evaluating~~EES Coke evaluated the EPA's alleged violations and ~~cannot predict~~believes that the permits approved by EGLE complied with the Clean Air Act. Discussions with the EPA are ongoing. At the present time, DTE Energy does not believe this will have a material financial ~~impact or outcome of this matter.~~impact.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

Other

In 2010, the EPA finalized a new one-hour SO₂ ambient air quality standard that requires states to submit plans and associated timelines for non-attainment areas that demonstrate attainment with the new SO₂ standard in phases. Phase 1 addresses non-attainment areas designated based on ambient monitoring data. Phase 2 addresses non-attainment areas with large sources of SO₂ and modeled concentrations exceeding the National Ambient Air Quality Standards for SO₂. Phase 3 addresses smaller sources of SO₂ with modeled or monitored exceedances of the new SO₂ standard.

~~DTE Energy Company — DTE Electric Company~~

~~Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)~~

Michigan's Phase 1 non-attainment area includes DTE Energy facilities in southwest Detroit and areas of Wayne County. Modeling runs by ~~the MDEQ~~EGLE suggest that emission reductions may be required by significant sources of SO₂ emissions in these areas, including DTE Electric power plants and DTE Energy's Michigan coke battery facility. As part of the state implementation plan process, DTE Energy has worked with ~~the MDEQ~~EGLE to develop air permits reflecting significant SO₂ emission reductions that, in combination with other non-DTE Energy sources' emission reduction strategies, will help the state attain the standard and sustain its attainment. Since several non-DTE Energy sources are also part of the proposed compliance plan, DTE Energy is unable to determine the full impact of the final required emissions reductions at this time.

Michigan's Phase 2 non-attainment area includes DTE Electric facilities in St. Clair County. State implementation plan (SIP) submittal and EPA approval describing the control strategy and timeline for demonstrating compliance with the new SO₂ standard is the next step in the process and is expected to be completed by the end of 2019. DTE Energy is currently working with ~~the MDEQ~~EGLE to develop the required SIP. DTE Energy is unable to determine the full impact of the SIP strategy.

Synthetic Fuel Guarantees

DTE Energy discontinued the operations of its synthetic fuel production facilities throughout the United States as of December 31, 2007. DTE Energy provided certain guarantees and indemnities in conjunction with the sales of interests in its synfuel facilities. The guarantees cover potential commercial, environmental, oil price, and tax-related obligations that will survive until 90 days after expiration of all applicable statutes of limitations. DTE Energy estimates that its maximum potential liability under these guarantees at ~~June~~September 30, 2019 was approximately $400 million. Payment under these guarantees are considered remote.

REF Guarantees

DTE Energy has provided certain guarantees and indemnities in conjunction with the sales of interests in or lease of its REF facilities. The guarantees cover potential commercial, environmental, and tax-related obligations that will survive until 90 days after expiration of all applicable statutes of limitations. DTE Energy estimates that its maximum potential liability under these guarantees at ~~June~~September 30, 2019 was ~~$476~~$491 million. Payments under these guarantees are considered remote.

NEXUS Guarantees

NEXUS entered into certain 15-year capacity agreements for the transportation of natural gas with DTE Gas and Texas Eastern Transmission, LP, an unrelated third party. Pursuant to the terms of those agreements, in December 2016, DTE Energy executed separate guarantee agreements with DTE Gas and Texas Eastern Transmission, LP, with maximum potential payments totaling $242 million and $377 million at ~~June~~September 30, 2019, respectively; each representing 50% of all payment obligations due and payable by NEXUS. Each guarantee terminates at the earlier of (i) such time as all of the guaranteed obligations have been fully performed, or (ii) two months following the end of the primary term of the capacity agreements. In October 2018, NEXUS Pipeline was placed in service. The amount of each guarantee decreases annually as payments are made by NEXUS to each of the aforementioned counterparties.

NEXUS also entered into certain 15-year capacity agreements for the transportation of natural gas with Vector, an equity method investee of DTE Energy. Pursuant to the terms of those agreements, in October 2018, DTE Energy executed a guarantee agreement with Vector, with a maximum potential payment totaling $7 million at ~~June~~September 30, 2019, representing 50% of the first-year payment obligations due and payable by NEXUS. The guarantee terminates at the earlier of (i) such time as all of the guaranteed obligations have been fully performed or (ii) 15 years from the date DTE Energy entered into the guarantee.

In conjunction with the execution of an agreement under which NEXUS agreed to purchase Generation Pipeline, LLC, in January 2019, DTE Energy executed a guarantee agreement with the sellers of Generation Pipeline. The maximum potential payment, which represents a portion of the purchase price due and payable by NEXUS at the completion of the closing of the acquisition, totals $15 million at June 30, 2019. The guarantee terminates upon any of the following events: (i) all NEXUS obligations under the purchase agreement have been paid in full; (ii) the completion of the closing, or (iii) the termination of the purchase agreement by NEXUS in accordance with its terms.

Should NEXUS fail to perform under the terms of these agreements, DTE Energy is required to perform on its behalf. Payments under these guarantees are considered remote.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

Other Guarantees

In certain limited circumstances, the Registrants enter into contractual guarantees. The Registrants may guarantee another entity’s obligation in the event it fails to perform and may provide guarantees in certain indemnification agreements. Finally, the Registrants may provide indirect guarantees for the indebtedness of others. DTE Energy’s guarantees are not individually material with maximum potential payments totaling $56 million at ~~June~~September 30, 2019. Payments under these guarantees are considered remote.

DTE Energy is periodically required to obtain performance surety bonds in support of obligations to various governmental entities and other companies in connection with its operations. As of ~~June~~September 30, 2019, DTE Energy had ~~$77~~$108 million of performance bonds outstanding. In the event that such bonds are called for nonperformance, DTE Energy would be obligated to reimburse the issuer of the performance bond. DTE Energy is released from the performance bonds as the contractual performance is completed and does not believe that a material amount of any currently outstanding performance bonds will be called.

Vector Line of Credit

OnIn July 5, 2019, DTE Energy, as lender, entered into a revolving term credit facility with Vector, as borrower, in the amount of C$70 ~~million CAD.~~million. The credit facility was executed in response to the passage of Canadian regulations requiring oil and gas pipelines to demonstrate their financial ability to respond to a catastrophic event and exists for the sole purpose of satisfying these regulations. Vector may only draw upon the facility if the funds are required to respond to a catastrophic event. ~~As the agreement was entered into subsequent to June 30, 2019, there is no~~The maximum potential ~~liability~~payments under the line of credit at ~~June~~September 30, ~~2019.~~2019 is $53 million. The funding of a loan under the terms of the credit facility is considered remote.

Labor Contracts

There are several bargaining units for DTE Energy subsidiaries' approximate 5,200 represented employees, including DTE Electric's approximate 2,800 represented employees. The majority of the represented employees are under contracts that expire in 2020 and 2021.

Purchase Commitments

Utility capital expenditures, expenditures for non-utility businesses, and contributions to equity method investees will be approximately ~~$3.9~~$5.9 billion and $2.2 billion in 2019 for DTE Energy and DTE Electric, respectively. The Registrants have made certain commitments in connection with the estimated 2019 annual capital expenditures and contributions to equity method investees.

Bankruptcies

DTE Energy's Power and Industrial Projects segment holds ownership interests in, and operates, ~~five~~5 generating plants that sell electric output from renewable sources under long-term power purchase agreements with PG&E. PG&E filed for Chapter 11 bankruptcy protection on January 29, 2019. As of ~~June~~September 30, 2019, PG&E's account is substantially current and outstanding accounts receivable from PG&E are not material. Therefore, DTE Energy determined no reserve was necessary.

As of ~~June~~September 30, 2019, the book value of long-lived assets used in producing electric output for sale to PG&E was approximately ~~$103~~$102 million. The Power and Industrial Projects segment also has equity investments, including a note receivable, of approximately ~~$73~~$72 million in entities that sell power to PG&E. In January 2019, following the bankruptcy filing, DTE Energy performed an impairment analysis on its long-lived assets. Based on its undiscounted cash flow projections, DTE Energy determined it did ~~not~~0t have an impairment loss as of December 31, 2018. DTE Energy also determined there was ~~not~~0t an other-than-temporary decline in its equity investments. There were no other new events occurring during the ~~six~~nine months ended ~~June~~September 30, 2019, that would negatively impact the assumptions made within the December 31, 2018 impairment analysis. Therefore, no triggering events were identified. DTE Energy's assumptions and conclusions may change, and it could have impairment losses if any of the terms of the contracts are not honored by PG&E or the contracts are rejected through the bankruptcy process.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

Other Contingencies

The Registrants are involved in certain other legal, regulatory, administrative, and environmental proceedings before various courts, arbitration panels, and governmental agencies concerning claims arising in the ordinary course of business. These proceedings include certain contract disputes, additional environmental reviews and investigations, audits, inquiries from various regulators, and pending judicial matters. The Registrants cannot predict the final disposition of such proceedings. The Registrants regularly review legal matters and record provisions for claims that they can estimate and are considered probable of loss. The resolution of these pending proceedings is not expected to have a material effect on the Registrants' Consolidated Financial Statements in the periods they are resolved.

For a discussion of contingencies related to regulatory matters and derivatives, see Notes 56 and 89 to the Consolidated Financial Statements, "Regulatory Matters" and "Financial and Other Derivative Instruments," respectively.

NOTE 1314 — RETIREMENT BENEFITS AND TRUSTEED ASSETS

The following tables detail the components of net periodic benefit costs (credits) for pension benefits and other postretirement benefits for DTE Energy:


	Pension Benefits						Other Postretirement Benefits						Pension Benefits						Other Postretirement Benefits
	Three Months Ended June 30,												Three Months Ended September 30,
	2019			2018			2019			2018			2019			2018			2019			2018
	(In millions)												(In millions)
Service cost	$	21		$	25		$	6		$	7		$	21		$	24		$	5		$	6
Interest cost	54			50			17			17			55			51			18			18
Expected return on plan assets	(81		)	(83		)	(31		)	(35		)	(82		)	(82		)	(30		)	(36		)
Amortization of:
Net actuarial loss	34			45			3			2			33			43			3			3
Prior service credit	—			—			(2		)	—			—			—			(3		)	—
Net periodic benefit cost (credit)	$	28		$	37		$	(7	)	$	(9	)	$	27		$	36		$	(7	)	$	(9	)


	Pension Benefits						Other Postretirement Benefits						Pension Benefits						Other Postretirement Benefits
	Six Months Ended June 30,												Nine Months Ended September 30,
	2019			2018			2019			2018			2019			2018			2019			2018
	(In millions)												(In millions)
Service cost	$	42		$	50		$	11		$	14		$	63		$	74		$	16		$	20
Interest cost	109			100			35			34			164			151			53			52
Expected return on plan assets	(162		)	(165		)	(62		)	(71		)	(244		)	(247		)	(92		)	(107		)
Amortization of:
Net actuarial loss	66			89			6			5			99			132			9			8
Prior service credit	—			—			(4		)	—			—			—			(7		)	—
Net periodic benefit cost (credit)	$	55		$	74		$	(14	)	$	(18	)	$	82		$	110		$	(21	)	$	(27	)

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

DTE Electric participates in various plans that provide pension and other postretirement benefits for DTE Energy and its affiliates. The plans are sponsored by DTE Energy's subsidiary, DTE Energy Corporate Services, LLC. DTE Electric accounts for its participation in DTE Energy's qualified and nonqualified pension plans by applying multiemployer accounting. DTE Electric accounts for its participation in other postretirement benefit plans by applying multiple-employer accounting. Within multiemployer and multiple-employer plans, participants pool plan assets for investment purposes and to reduce the cost of plan administration. The primary difference between plan types is assets contributed in multiemployer plans can be used to provide benefits for all participating employers, while assets contributed within a multiple-employer plan are restricted for use by the contributing employer. As a result of multiemployer accounting treatment, capitalized costs associated with these plans are reflected in Property, plant, and equipment in DTE Electric's Consolidated Statements of Financial Position. The same capitalized costs are reflected as Regulatory assets and liabilities in DTE Energy's Consolidated Statements of Financial Position. In addition, the service cost and non-service cost components are presented in Operation and maintenance in DTE Electric's Consolidated Statements of Operations. The same non-service cost components are presented in Other (Income) and Deductions — Non-operating retirement benefits, net in DTE Energy's Consolidated Statements of Operations. Plan participants of all plans are solely DTE Energy and affiliate participants.

DTE Energy's subsidiaries are responsible for their share of qualified and nonqualified pension benefit costs. DTE Electric's allocated portion of pension benefit costs included in capital expenditures and operating and maintenance expense were ~~$22~~$23 million and $30 million for the three months ended ~~June~~September 30, 2019 and 2018, respectively, and ~~$45~~$68 million and ~~$60~~$90 million for the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, respectively. These amounts include recognized contractual termination benefit charges, curtailment gains, and settlement charges.

The following tables detail the components of net periodic benefit costs (credits) for other postretirement benefits for DTE Electric:


	Other Postretirement Benefits						Other Postretirement Benefits
	Three Months Ended June 30,						Three Months Ended September 30,
	2019			2018			2019			2018
	(In millions)						(In millions)
Service cost	$	4		$	5		$	4		$	5
Interest cost	14			14			13			13
Expected return on plan assets	(21		)	(25		)	(21		)	(25		)
Amortization of:
Net actuarial loss	1			2			1			3
Prior service credit	(3		)	—			(1		)	—
Net periodic benefit credit	$	(5	)	$	(4	)	$	(4	)	$	(4	)


	Other Postretirement Benefits						Other Postretirement Benefits
	Six Months Ended June 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
	(In millions)						(In millions)
Service cost	$	8		$	10		$	12		$	15
Interest cost	27			27			40			40
Expected return on plan assets	(42		)	(49		)	(63		)	(74		)
Amortization of:
Net actuarial loss	2			4			3			7
Prior service credit	(4		)	—			(5		)	—
Net periodic benefit credit	$	(9	)	$	(8	)	$	(13	)	$	(12	)

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

Pension and Other Postretirement Contributions

During 2019, DTE Energy contributed the following amounts of DTE Energy common stock to the DTE Energy Company Affiliates Employee Benefit Plans Master Trust:


Date	Number of Shares	Price per Share	Amount		Number of Shares	Price per Share		Amount
			(In millions)					(In millions)
March 5, 2019	814,597	$122.76	$	100	814,597	$	122.76	$	100

The above contribution was made on behalf of DTE Electric, for which DTE Electric paid DTE Energy cash consideration of $100 million in March 2019. ~~At the discretion of management and depending upon financial market conditions,~~ DTE Energy ~~anticipates making up to an additional~~made cash contributions of $50 million ~~in contributions~~ to the qualified pension plans in the first nine months of 2019. DTE Energy does ~~not~~0t anticipate making any additional contributions to ~~the~~its pension or other postretirement benefit plans in 2019.

NOTE 1415 — SEGMENT AND RELATED INFORMATION

DTE Energy sets strategic goals, allocates resources, and evaluates performance based on the following structure:

Electric segment consists principally of DTE Electric, which is engaged in the generation, purchase, distribution, and sale of electricity to approximately 2.2 million residential, commercial, and industrial customers in southeastern Michigan.

Gas segment consists principally of DTE Gas, which is engaged in the purchase, storage, transportation, distribution, and sale of natural gas to approximately 1.3 million residential, commercial, and industrial customers throughout Michigan and the sale of storage and transportation capacity.

Gas Storage and Pipelines is primarily engaged in services related to the gathering, transportation, and storage of natural gas.

Power and Industrial Projects is comprised primarily of projects that deliver energy and utility-type products and services to industrial, commercial, and institutional customers, produce reduced emissions fuel, and sell electricity and pipeline-quality gas from renewable energy projects.

Energy Trading consists of energy marketing and trading operations.

Corporate and Other includes various holding company activities, holds certain non-utility debt, and holds energy-related investments.

The federal income tax provisions or benefits of DTE Energy’s subsidiaries are determined on an individual company basis and recognize the tax benefit of tax credits and net operating losses, if applicable. The state and local income tax provisions of the utility subsidiaries are determined on an individual company basis and recognize the tax benefit of various tax credits and net operating losses, if applicable. The subsidiaries record federal, state, and local income taxes payable to or receivable from DTE Energy based on the federal, state, and local tax provisions of each company.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

Inter-segment billing for goods and services exchanged between segments is based upon tariffed or market-based prices of the provider and primarily consists of the sale of reduced emissions fuel, power sales, and natural gas sales in the following segments:


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018		2019		2018		2019		2018
	(In millions)								(In millions)
Electric	$	13	$	13	$	27	$	26	$	16	$	13	$	43	$	39
Gas	3		4		5		6		3		3		8		9
Gas Storage and Pipelines	3		14		6		22		11		7		17		29
Power and Industrial Projects	157		162		302		317		160		171		462		488
Energy Trading	5		5		12		12		4		6		16		18
Corporate and Other	—		—		1		1		1		1		2		2
	$	181	$	198	$	353	$	384	$	195	$	201	$	548	$	585

Financial data of DTE Energy's business segments follows:


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018			2019			2018			2019			2018
	(In millions)												(In millions)
Operating Revenues — Utility operations
Electric	$	1,190		$	1,276		$	2,425		$	2,481		$	1,520		$	1,521		$	3,945		$	4,002
Gas	243			255			888			805			155			164			1,043			969
Operating Revenues — Non-utility operations
Gas Storage and Pipelines	121			122			237			241			126			122			363			363
Power and Industrial Projects	402			538			790			1,105			406			612			1,196			1,717
Energy Trading	1,113			1,164			2,414			2,662			1,105			1,332			3,519			3,994
Corporate and Other	—			2			1			2			2			—			3			2
Reconciliation and Eliminations	(181		)	(198		)	(353		)	(384		)	(195		)	(201		)	(548		)	(585		)
Total	$	2,888		$	3,159		$	6,402		$	6,912		$	3,119		$	3,550		$	9,521		$	10,462


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018			2019			2018			2019			2018
	(In millions)												(In millions)
Net Income (Loss) Attributable to DTE Energy by Segment:
Electric	$	133		$	163		$	280		$	303		$	307		$	305		$	587		$	608
Gas	8			14			159			118			(38		)	(30		)	121			88
Gas Storage and Pipelines	50			60			98			122			60			66			158			188
Power and Industrial Projects	29			43			55			88			49			58			104			146
Energy Trading	(6		)	(5		)	26			26			(14		)	(13		)	12			13
Corporate and Other	(32		)	(41		)	(35		)	(62		)	(45		)	(52		)	(80		)	(114		)
Net Income Attributable to DTE Energy Company	$	182		$	234		$	583		$	595		$	319		$	334		$	902		$	929

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

NOTE 16 — SUBSEQUENT EVENT

During October 2019, DTE Energy entered into an agreement with Momentum Midstream and Indigo Natural Resources to purchase midstream natural gas assets in support of its strategy to continue to grow and earn competitive returns for shareholders. The agreement calls for DTE Energy to acquire 100 percent of M5 Louisiana Gathering, LLC and its wholly owned subsidiaries which provide natural gas gathering and other midstream services to producers, primarily in Louisiana. The acquisition has an estimated purchase price of $2.65 billion and is expected to close in December 2019, subject to customary closing conditions. The purchase price includes $2.25 billion to be paid in cash upon closing, plus an estimated $400 million milestone payment upon completion of a gathering pipeline in the second half of 2020. These assets will be a part of DTE Energy’s non-utility Gas Storage and Pipelines business. The acquisition will be financed through the issuance of Equity Units, common stock, and Senior Notes.

Upon closing, DTE Energy will obtain control over and apply acquisition accounting to the acquired entities, including disclosure of amounts recognized for the major classes of assets and liabilities acquired. DTE Energy will include all required information within the combined DTE Energy and DTE Electric Annual Report on Form 10-K for the year ending December 31, 2019.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following combined discussion is separately filed by DTE Energy and DTE Electric. However, DTE Electric does not make any representations as to information related solely to DTE Energy or the subsidiaries of DTE Energy other than itself.

EXECUTIVE OVERVIEW

DTE Energy is a diversified energy company and is the parent company of DTE Electric and DTE Gas, regulated electric and natural gas utilities engaged primarily in the business of providing electricity and natural gas sales, distribution, and storage services throughout Michigan. DTE Energy operates three energy-related non-utility segments with operations throughout the United States.

The following table summarizes DTE Energy's financial results:


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018		2019		2018		2019		2018
	(In millions, except per share amounts)								(In millions, except per share amounts)
Net Income Attributable to DTE Energy Company	$	182	$	234	$	583	$	595	$	319	$	334	$	902	$	929
Diluted Earnings per Common Share	$	0.99	$	1.29	$	3.18	$	3.29	$	1.73	$	1.84	$	4.91	$	5.13

The decrease in Net Income for the ~~second~~third quarter was primarily due to lower earnings in the ~~Electric,~~ Gas, Gas Storage and Pipelines, and Power and Industrial Projects segments, partially offset by higher earnings in the Electric and Corporate and Other ~~segment.~~segments. The decrease in Net Income for the ~~six-month~~nine-month period was primarily due to lower earnings in the Electric, Gas Storage and Pipelines, and Power and Industrial Projects segments, partially offset by higher earnings in the Gas and Corporate and Other segments.

Please see detailed explanations of segment performance in the following "Results of Operations" section.

DTE Energy's strategy is to achieve long-term earnings growth, a strong balance sheet, and an attractive dividend yield.

DTE Energy's utilities are investing capital to improve customer reliability through investments in base infrastructure and new generation, and to comply with environmental requirements. DTE Energy expects that planned significant capital investments will result in earnings growth. DTE Energy is focused on executing plans to achieve operational excellence and customer satisfaction with a focus on customer affordability. DTE Energy operates in a constructive regulatory environment and has solid relationships with its regulators.

In March 2019, DTE Energy announced updated plans for accelerating its reduction of carbon emissions to 32% by the early 2020s, at least 50% by 2030, and 80% by 2040 from the 2005 carbon emissions levels. In September 2019, DTE Energy expanded on its commitment by announcing a net zero carbon emissions goal by 2050 for DTE Electric. To achieve ~~this~~the reduction goals in the near term, DTE Energy will transition away from coal-powered sources and incorporate more renewable energy, energy waste reduction projects, demand response, and natural gas fueled generation. DTE Energy has already begun the transition in the way it produces power through the continued retirement of its aging coal-fired plants. Refer to the "Capital Investments" section below for further discussion.

DTE Energy has significant investments in non-utility businesses. DTE Energy employs disciplined investment criteria when assessing growth opportunities that leverage its assets, skills, and expertise, and provides diversity in earnings and geography. Specifically, DTE Energy invests in targeted energy markets with attractive competitive dynamics where meaningful scale is in alignment with its risk profile. DTE Energy expects growth opportunities in the Gas Storage and Pipelines and Power and Industrial Projects segments.

A key priority for DTE Energy is to maintain a strong balance sheet which facilitates access to capital markets and reasonably priced short-term and long-term financing. Near-term growth will be funded through internally generated cash flows and the issuance of debt and equity. DTE Energy has an enterprise risk management program that, among other things, is designed to monitor and manage exposure to earnings and cash flow volatility related to commodity price changes, interest rates, and counterparty credit risk.

CAPITAL INVESTMENTS

DTE Energy's utility businesses require significant capital investments to maintain and improve the electric generation and electric and natural gas distribution infrastructure and to comply with environmental regulations and renewable energy requirements.

DTE Electric's capital investments over the 2019-2023 period are estimated at $11.3 billion comprised of $4.0 billion for capital replacements and other projects, $4.6 billion for distribution infrastructure, and $2.7 billion for new generation. DTE Electric has retired five coal-fired generation units at the Trenton Channel, River Rouge, and St. Clair facilities and has announced plans to retire its remaining twelve coal-fired generating units. Six of these coal-fired generating units will be retired through 2022 at the Trenton Channel, River Rouge, and St. Clair facilities. The remaining coal-fired generating units at the Belle River and Monroe facilities are expected to be retired by 2040. The retired facilities will be replaced with renewables, energy waste reduction, demand response, and natural gas fueled generation.

DTE Gas' capital investments over the 2019-2023 period are estimated at $2.5 billion comprised of $1.2 billion for base infrastructure, and $1.3 billion for gas main renewal, meter move out, and pipeline integrity programs. DTE Gas plans to seek regulatory approval for capital expenditures consistent with ratemaking treatment.

DTE Energy's non-utility businesses' capital investments are primarily for expansion, growth, and ongoing maintenance. Gas Storage and Pipelines' capital investments over the 2019-2023 period are estimated at $4.0 billion to $5.0 billion for gathering and pipeline investments and expansions. Power and Industrial Projects' capital investments over the 2019-2023 period are estimated at $1.0 billion to $1.4 billion for industrial energy services and RNG projects.

ENVIRONMENTAL MATTERS

The Registrants are subject to extensive environmental ~~regulation.~~regulations. Additional costs may result as the effects of various substances on the environment are studied and governmental regulations are developed and implemented. Actual costs to comply could vary substantially. The Registrants expect to continue recovering environmental costs related to utility operations through rates charged to customers, as authorized by the MPSC.

Increased costs for energy produced from traditional coal-based sources due to recent, pending, and future regulatory initiatives, could also increase the economic viability of energy produced from renewable, natural gas fueled generation, and/or nuclear sources, energy waste reduction initiatives, and the potential development of market-based trading of carbon instruments which could provide new business opportunities for DTE Energy's utility and non-utility segments. At the present time, it is not possible to quantify the financial impacts of these climate related regulatory initiatives on the Registrants or their customers.

For further discussion of environmental matters, see Note 1213 to the Consolidated Financial Statements, "Commitments and Contingencies."

OUTLOOK

The next few years will be a period of rapid change for DTE Energy and for the energy industry. DTE Energy's strong utility base, combined with its integrated non-utility operations, position it well for long-term growth.

Looking forward, DTE Energy will focus on several areas that are expected to improve future performance:

electric and gas customer satisfaction;

electric distribution system reliability;

new electric generation;

gas distribution system renewal;

rate competitiveness and affordability;

regulatory stability and investment recovery for the electric and gas utilities;

employee safety and engagement;

cost structure optimization across all business segments;

cash, capital, and liquidity to maintain or improve financial strength; and

investments that integrate assets and leverage skills and expertise.

DTE Energy will continue to pursue opportunities to grow its businesses in a disciplined manner if it can secure opportunities that meet its strategic, financial, and risk criteria.

RESULTS OF OPERATIONS

Management’s Discussion and Analysis of Financial Condition and Results of Operations includes financial information prepared in accordance with GAAP, as well as the non-GAAP financial measures, Utility Margin and Non-utility Margin, discussed below, which DTE Energy uses as measures of its operational performance. Generally, a non-GAAP financial measure is a numerical measure of financial performance, financial position or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP.

DTE Energy uses Utility Margin and Non-utility Margin, non-GAAP financial measures, to assess its performance by reportable segment.

Utility Margin includes electric and gas Operating Revenues net of Fuel, purchased power, and gas expenses. The utilities’ fuel, purchased power, and natural gas supply are passed through to customers, and therefore, result in changes to the utilities’ revenues that are comparable to changes in such expenses. As such, DTE Energy believes Utility Margin provides a meaningful basis for evaluating the utilities’ operations across periods, as it excludes the revenue effect of fluctuations in these expenses.

The Non-utility Margin relates to the Power and Industrial Projects and Energy Trading segments. For the Power and Industrial Projects segment, Non-utility Margin primarily includes Operating Revenues net of Fuel, purchased power, and gas expenses. Operating Revenues include sales of refined coal to third parties and the affiliated Electric utility, metallurgical coke and related by-products, petroleum coke, renewable natural gas, and electricity, as well as rental income and revenues from utility-type consulting, management, and operational services. For the Energy Trading segment, Non-utility Margin includes revenue and realized and unrealized gains and losses from physical and financial power and gas marketing, optimization, and trading activities, net of Purchased power and gas related to these activities. DTE Energy evaluates its operating performance of these non-utility businesses using the measure of Operating Revenues net of Fuel, purchased power, and gas expenses.

Utility Margin and Non-utility Margin are not measures calculated in accordance with GAAP and should be viewed as a supplement to and not a substitute for the results of operations presented in accordance with GAAP. Utility Margin and Non-utility Margin do not intend to represent operating income, the most comparable GAAP measure, as an indicator of operating performance and are not necessarily comparable to similarly titled measures reported by other companies.

The following sections provide a detailed discussion of the operating performance and future outlook of DTE Energy's segments. Segment information, described below, includes intercompany revenues and expenses, and other income and deductions that are eliminated in the Consolidated Financial Statements.


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018			2019			2018			2019			2018
	(In millions)												(In millions)
Net Income (Loss) Attributable to DTE Energy by Segment
Electric	$	133		$	163		$	280		$	303		$	307		$	305		$	587		$	608
Gas	8			14			159			118			(38		)	(30		)	121			88
Gas Storage and Pipelines	50			60			98			122			60			66			158			188
Power and Industrial Projects	29			43			55			88			49			58			104			146
Energy Trading	(6		)	(5		)	26			26			(14		)	(13		)	12			13
Corporate and Other	(32		)	(41		)	(35		)	(62		)	(45		)	(52		)	(80		)	(114		)
Net Income Attributable to DTE Energy Company	$	182		$	234		$	583		$	595		$	319		$	334		$	902		$	929

ELECTRIC

The Results of Operations discussion for DTE Electric is presented in a reduced disclosure format in accordance with General Instruction H(2) of Form 10-Q.

The Electric segment consists principally of DTE Electric. Electric results are discussed below:


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018		2019		2018		2019		2018
	(In millions)								(In millions)
Operating Revenues — Utility operations	$	1,190	$	1,276	$	2,425	$	2,481	$	1,520	$	1,521	$	3,945	$	4,002
Fuel and purchased power — utility	322		386		668		725		399		438		1,067		1,163
Utility Margin	868		890		1,757		1,756		1,121		1,083		2,878		2,839
Operation and maintenance	330		337		682		649		351		352		1,033		1,001
Depreciation and amortization	229		202		450		414		244		201		694		615
Taxes other than income	69		74		153		155		80		77		233		232
Asset (gains) losses and impairments, net	13		—		13		—		—		—		13		—
Operating Income	227		277		459		538		446		453		905		991
Other (Income) and Deductions	69		70		125		144		80		67		205		211
Income Tax Expense	25		44		54		91		59		81		113		172
Net Income Attributable to DTE Energy Company	$	133	$	163	$	280	$	303	$	307	$	305	$	587	$	608

See DTE Electric's Consolidated Statements of Operations for a complete view of its results. ~~For an explanation of differences~~Differences between the Electric segment and DTE Electric's Consolidated Statements of Operations ~~refer~~are primarily due to the classification of certain benefit costs. Refer to Note 1314 to the Consolidated Financial Statements, "Retirement Benefits and Trusteed ~~Assets."~~Assets" for additional information.

Utility Margin ~~decreased $22~~increased $38 million and ~~increased $1~~$39 million in the three and ~~six~~nine months ended ~~June~~September 30, 2019, respectively. Revenues associated with certain mechanisms and surcharges are offset by related expenses elsewhere in the Registrants' Consolidated Statements of Operations.

The following table details changes in various Utility Margin components relative to the comparable prior period:

Three Months Six Months
(In millions)
Implementation of new rates $ 37
$ 45
Base sales (8 ) (4 )
Regulatory mechanism — TRM (6 ) (8 )
Weather (61 ) (53 )
Regulatory mechanisms and other 16
21
Increase (decrease) in Utility Margin $ (22 ) $ 1



	Three Months			Nine Months
	(In millions)
Implementation of new rates	$	69		$	114
Base sales	(3		)	(7		)
Regulatory mechanism — TRM	1			(7		)
Weather	(48		)	(101		)
Regulatory mechanisms and other	19			40
Increase in Utility Margin	$	38		$	39


	Three Months Ended June 30,		Six Months Ended June 30,		Three Months Ended September 30,		Nine Months Ended September 30,
	2019	2018	2019	2018	2019	2018	2019	2018
	(In thousands of MWh)				(In thousands of MWh)
DTE Electric Sales
Residential	3,209	3,682	6,897	7,359	4,682	5,028	11,579	12,387
Commercial	4,068	4,352	8,145	8,382	4,802	4,836	12,947	13,218
Industrial	2,498	2,648	4,958	5,252	2,555	2,641	7,513	7,893
Other	48	51	111	108	51	49	162	157
	9,823	10,733	20,111	21,101	12,090	12,554	32,201	33,655
Interconnection sales^(a)	711	812	1,741	1,894	784	629	2,525	2,523
Total DTE Electric Sales	10,534	11,545	21,852	22,995	12,874	13,183	34,726	36,178

DTE Electric Deliveries
Retail and wholesale	9,823	10,733	20,111	21,101	12,090	12,554	32,201	33,655
Electric retail access, including self-generators^(b)	1,114	1,215	2,234	2,357	1,282	1,277	3,516	3,634
Total DTE Electric Sales and Deliveries	10,937	11,948	22,345	23,458	13,372	13,831	35,717	37,289


(a)	Represents power that is not distributed by DTE Electric.


(b)	Represents deliveries for self-generators that have purchased power from alternative energy suppliers to supplement their power requirements.

Operation and maintenance expense decreased $7$1 million and increased ~~$33~~$32 million in the three and ~~six~~nine months ended ~~June~~September 30, 2019, respectively. The decrease in the ~~second~~third quarter was primarily due to ~~the deferral~~increased distribution operations expense of ~~previously accrued expenses for the new customer billing system approved~~$10 million and increased generation expense of $3 million, offset by lower uncollectible expense of $7 million and insurance proceeds of $6 million received in ~~the 2018 rate order received on May 2,~~ 2019 ~~of $11 million.~~relating to a 2016 fire at a generation facility. The increase in the ~~six-month~~nine-month period was primarily due to increased distribution operations expense of ~~$12~~$20 million ~~insurance proceeds from a 2016 fire at a~~and increased generation ~~facility received in 2018 of $8 million, an increase in energy waste reduction~~ expense of $6 million, an increase in renewable energy expense of $4 million, and higher customer service expense of $8 million, partially offset by the deferral of previously accrued expenses for the new customer billing system approved in the 2018 rate order received on May 2, 2019 of $11$5 million.

Depreciation and amortization expense increased ~~$27~~$43 million and ~~$36~~$79 million in the three and ~~six~~nine months ended ~~June~~September 30, 2019, respectively. The increase in the ~~second~~third quarter was primarily due to ana $44 million increase ~~of $32 million in~~resulting from a higher depreciable base and ~~the~~ change in ~~deprecation~~depreciation rates effective in May ~~2019, partially offset by a decrease of $5 million associated with the TRM.~~2019. The increase in the ~~six-month~~nine-month period was primarily due to ana $91 million increase ~~of $47 million in~~resulting from a higher depreciable base and ~~the~~ change in ~~deprecation~~depreciation rates effective in May 2019, partially offset by a decrease of $9 million associated with the TRM.

Asset (gains) losses and impairments, netincreased $13 million for ~~both~~ the ~~three and six~~nine months ended ~~June~~September 30, 2019. The increase was due to previously recorded capital expenditures of $13 million that were disallowed in the May 2, 2019 rate order.

Other (Income) and Deductions ~~decreased $1~~increased $13 million and ~~$19~~decreased $6 million in the three and ~~six~~nine months ended ~~June~~September 30, 2019, respectively. The ~~decrease~~increase in the ~~second~~third quarter was primarily due to increased debt expense of $7 million and lower investment earnings of ~~$6 million, lower non-operating retirement benefits of $3 million, increased AFUDC equity on increased plant base of~~ $1 ~~million, partially offset by increased debt expense of $9~~ million. The decrease in the ~~six-month~~nine-month period was primarily due to increased investment earnings of ~~$25~~$24 million and lower non-operating retirement benefits of ~~$6 million, increased AFUDC equity on increased plant base of $3~~$9 million, partially offset by increased debt expense of ~~$17~~$24 million.

Income Tax Expense decreased ~~$19~~$22 million and ~~$37~~$59 million in the three and ~~six~~nine months ended ~~June~~September 30, 2019, respectively. The decrease in the ~~second~~third quarter was primarily due to lower earnings and amortization of the TCJA regulatory liability. The decrease in the ~~six-month~~nine-month period was primarily due to lower earnings, amortization of the TCJA regulatory liability, and $8$7 million of true-up adjustments for the remeasurement of deferred tax assets and liabilities in 2018.

Outlook — DTE Electric will continue to move forward in its efforts to achieve operational excellence, sustain strong cash flows, and earn its authorized return on equity. DTE Electric expects that planned significant capital investments will result in earnings growth. DTE Electric will maintain a strong focus on customers by increasing reliability and satisfaction while keeping customer rate increases affordable. Looking forward, additional factors may impact earnings such as weather, the outcome of regulatory proceedings, benefit plan design changes, investment returns and changes in discount rate assumptions in benefit plans and health care costs, uncertainty of legislative or regulatory actions regarding climate change, and effects of energy waste reduction programs.

GAS

The Gas segment consists principally of DTE Gas. Gas results are discussed below:


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,						Nine Months Ended September 30,
	2019		2018		2019		2018		2019			2018			2019		2018
	(In millions)								(In millions)
Operating Revenues — Utility operations	$	243	$	255	$	888	$	805	$	155		$	164		$	1,043	$	969
Cost of gas — utility	43		53		284		273		3			18			287		291
Utility Margin	200		202		604		532		152			146			756		678
Operation and maintenance	118		122		246		233		130			124			376		357
Depreciation and amortization	34		31		69		63		37			32			106		95
Taxes other than income	19		18		43		39		17			15			60		54
Operating Income	29		31		246		197
Operating Income (Loss)									(32		)	(25		)	214		172
Other (Income) and Deductions	17		13		33		27		19			12			52		39
Income Tax Expense	4		4		54		52
Net Income Attributable to DTE Energy Company	$	8	$	14	$	159	$	118
Income Tax Expense (Benefit)									(13		)	(7		)	41		45
Net Income (Loss) Attributable to DTE Energy Company									$	(38	)	$	(30	)	$	121	$	88

Utility Margin ~~decreased $2~~increased $6 million and ~~increased $72~~$78 million in the three and ~~six~~nine months ended ~~June~~September 30, 2019, respectively. Revenues associated with certain mechanisms and surcharges are offset by related expenses elsewhere in DTE Energy's Consolidated Statements of Operations.

The following table details changes in various Utility Margin components relative to the comparable prior period:


	Three Months			Six Months		Three Months			Nine Months
	(In millions)					(In millions)
Implementation of new rates	$	6		$	29	$	4		$	33
Midstream storage and transportation revenues						6			19
Weather	(4		)	14		(2		)	12
Midstream storage and transportation revenues	4			13
Regulatory mechanism — RDM	1			4		—			4
TCJA rate reduction liability	(12		)	2		—			2
Other regulatory mechanisms and other	3			10		(2		)	8
Increase (decrease) in Utility Margin	$	(2	)	$	72
Increase in Utility Margin						$	6		$	78

Three Months Ended June 30, Six Months Ended June 30,
2019 2018 2019 2018
(In Bcf)
Gas Markets
Gas sales 19
21
88
83
End-user transportation 38
45
96
104
57
66
184
187
Intermediate transportation 106
62
233
134
Total Gas sales 163
128
417
321



	Three Months Ended September 30,		Nine Months Ended September 30,
	2019	2018	2019	2018
	(In Bcf)
Gas Markets
Gas sales	7	8	95	91
End-user transportation	41	34	137	138
	48	42	232	229
Intermediate transportation	132	78	365	212
Total Gas sales	180	120	597	441

Operation and maintenance expense ~~decreased $4~~increased $6 million and ~~increased $13~~$19 million in the three and ~~six~~nine months ended ~~June~~September 30, 2019, respectively. The ~~decrease~~increase in the ~~second~~third quarter was primarily due to ~~the deferral of previously accrued expenses for the new customer billing system of $6 million, partially offset by~~ higher gas operations expense of $2$6 million. The increase in the ~~six-month~~nine-month period was primarily due to higher gas operations expense of ~~$10~~$14 million ~~one-time benefits expense reimbursement of $3 million in 2018,~~ and ~~an increase in~~ energy waste reduction expense ~~and other expense~~ of ~~$6 million, partially offset by the deferral of previously accrued expenses for the new customer billing system of $6~~$3 million.

Depreciation and amortization expense increased $3$5 million and $6$11 million in the three and ~~six~~nine months ended ~~June~~September 30, 2019, respectively. The increase in both periods was primarily due to higher depreciable base.

~~Income Tax Expense~~ Other (Income) and Deductionsincreased $2$7 million and $13 million in the ~~six~~three and nine months ended ~~June~~September 30, ~~2019.~~2019, respectively. The increase in the ~~six-month~~third quarter was primarily due to higher interest expense of $3 million and lower AFUDC earnings of $2 million The increase in the nine-month period was primarily due to higher interest expense of $8 million and lower AFUDC earnings ~~partially offset by $8~~of $4 million.

Income Tax Expense (Benefit) decreased $6 million and $4 million in the three and nine months ended September 30, 2019. The decrease in the third quarter was primarily due to lower earnings. The decrease in the nine-month period was primarily due to $10 million of true-up adjustments for the remeasurement of deferred tax assets and liabilities in ~~2018.~~2018, partially offset by higher earnings.

Outlook — DTE Gas will continue to move forward in its efforts to achieve operational excellence, sustain strong cash flows, and earn its authorized return on equity. DTE Gas expects that planned significant infrastructure capital investments will result in earnings growth. Looking forward, additional factors may impact earnings such as weather, the outcome of regulatory proceedings, benefit plan design changes, and investment returns and changes in discount rate assumptions in benefit plans and health care costs. DTE Gas expects to continue its efforts to improve productivity and decrease costs while improving customer satisfaction with consideration of customer rate affordability.

DTE Gas filed its Calculation C case with the MPSC on November 16, 2018 to reduce the annual revenue requirement by $12 million related to the amortization of deferred tax remeasurement. Calculation C addresses all remaining issues relative to the enactment of the TCJA, which is primarily the remeasurement of deferred taxes and how the amounts deferred as Regulatory liabilities will flow to ratepayers. A final MPSC order in this case is expected by August 2019. Refer to Note 5 to the Consolidated Financial Statements, "Regulatory Matters" for additional information.

GAS STORAGE AND PIPELINES

The Gas Storage and Pipelines segment consists of the non-utility gas pipelines and storage businesses. Gas Storage and Pipelines results are discussed below:


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018			2019			2018			2019			2018
	(In millions)												(In millions)
Operating Revenues — Non-utility operations	$	121		$	122		$	237		$	241		$	126		$	122		$	363		$	363
Cost of gas — Non-utility	1			9			1			13			9			6			10			19
Operation and maintenance	25			23			50			46			26			25			76			71
Depreciation and amortization	22			19			44			39			22			22			66			61
Taxes other than income	2			2			5			5			1			2			6			7
Asset (gains) losses and impairments, net	—			—			—			(2		)	1			1			1			(1		)
Operating Income	71			69			137			140			67			66			204			206
Other (Income) and Deductions	(3		)	(16		)	(9		)	(33		)	(17		)	(23		)	(26		)	(56		)
Income Tax Expense	19			17			37			36			21			16			58			52
Net Income	55			68			109			137			63			73			172			210
Less: Net Income Attributable to Noncontrolling Interests	5			8			11			15			3			7			14			22
Net Income Attributable to DTE Energy Company	$	50		$	60		$	98		$	122		$	60		$	66		$	158		$	188

Operating Revenues — Non-utility operations ~~decreased $1 million and~~increased $4 million in the three ~~and six~~ months ended ~~June~~September 30, ~~2019, respectively.~~2019. The ~~decrease in both periods~~increase was primarily due to ~~lower~~higher gathering revenue and higher physical sales of gas from AGS customers for resale to optimize available transportation capacity, ~~and~~partially offset by lower storage revenue. For the nine months ended September 30, 2019, revenue ~~partially offset by~~increased due to higher pipeline and gathering revenue, which was offset by lower physical sales of gas from AGS customers and lower storage revenue.

Cost of gas — Non-utility ~~decreased $8~~increased $3 million and ~~$12~~decreased $9 million in the three and ~~six~~nine months ended ~~June~~September 30, 2019, respectively. The ~~decrease~~change in both periods was primarily due to ~~lower~~ physical ~~purchase~~purchases of gas from AGS ~~customers for resale to optimize available transportation capacity.~~customers.

Other (Income) and Deductions decreased ~~$13~~$6 million and ~~$24~~$30 million in the three and ~~six~~nine months ended ~~June~~September 30, 2019, respectively. The decrease in both periods was primarily due to decreased earnings from pipeline ~~investments and higher interest expense.~~investments.

Net Income Attributable to Noncontrolling Interests decreased $3$4 million and $4$8 million in the three and ~~six~~nine months ended ~~June~~September 30, 2019, respectively. The decrease in both periods was primarily due to the ~~May 2019 purchase~~acquisition of an additional 30% ownership interest in ~~SGG.~~SGG in 2019.

Outlook — During October 2019, DTE Energy entered into an agreement with Momentum Midstream and Indigo Natural Resources to purchase midstream natural gas assets in support of its strategy to continue to grow and earn competitive returns for shareholders. The agreement calls for DTE Energy to acquire 100 percent of M5 Louisiana Gathering, LLC and its wholly owned subsidiaries which provide natural gas gathering and other midstream services to producers, primarily in Louisiana. The acquisition has an estimated purchase price of $2.65 billion and is expected to close in December 2019, subject to customary closing conditions. The purchase price includes $2.25 billion to be paid in cash upon closing, plus an estimated $400 million milestone payment upon completion of a gathering pipeline in the second half of 2020. These assets will be a part of DTE Energy’s non-utility Gas Storage and Pipelines business. See Note 16 to the Consolidated Financial Statements, “Subsequent Event”, for more information on the acquisition.

DTE Energy believes its long-term agreements with producers and the quality of the natural gas reserves in the Marcellus/Utica ~~region~~and Haynesville shale regions soundly position the ~~gathering systems~~business for future ~~revenues.~~

The NEXUS Pipeline provides a transportation path for Appalachian Basin shale gas, including Utica and Marcellus shale gas, directly to consuming markets in northern Ohio, southeastern Michigan, and Dawn Ontario. DTE Energy owns a 50% partnership interest in the NEXUS Pipeline.

On January 11, 2019, NEXUS signed an agreement to purchase Generation Pipeline, LLC, a public utility regulated by the Public Utilities Commission of Ohio. This 23-mile pipeline system supplies gas to industrial customers in the Toledo, OH area, has existing interconnects with ANR Pipeline Company and Panhandle Eastern Pipeline Company, and is located 4 miles away from NEXUS. The transaction is expected to close in 2019 upon regulatory approvals.

AGS and SGG provide a platform for midstream growth and access to further investment opportunities in the Appalachian basin, an additional connection to the NEXUS Pipeline which should drive incremental volumes on the NEXUS Pipeline, and producer relationships that may lead to more partnering opportunities.growth.

Gas Storage and Pipelines expects to maintain its steady growth by developing an asset portfolio with multiple growth platforms through investment in new projects and expansions. Gas Storage and Pipelines will continue to look for additional investment opportunities and other gathering, transportation, and storage ~~and pipeline projects at favorable prices.~~projects.

POWER AND INDUSTRIAL PROJECTS

The Power and Industrial Projects segment is comprised primarily of projects that deliver energy and utility-type products and services to industrial, commercial, and institutional customers, produce reduced emissions fuel, and sell electricity and pipeline-quality gas from renewable energy projects. Power and Industrial Projects results are discussed below:

Three Months Ended June 30, Six Months Ended June 30,
2019 2018 2019 2018
(In millions)
Operating Revenues — Non-utility operations $ 402
$ 538
$ 790
$ 1,105
Fuel, purchased power, and gas — non-utility 320
464
624
962
Non-utility Margin 82
74
166
143
Operation and maintenance 83
90
164
172
Depreciation and amortization 17
17
34
33
Taxes other than income 2
3
6
7
Operating Loss (20 ) (36 ) (38 ) (69 )
Other (Income) and Deductions (26 ) (23 ) (53 ) (41 )
Income Taxes
Expense (Benefit) 3
(2 ) 6
(2 )
Production Tax Credits (18 ) (48 ) (39 ) (91 )
(15 ) (50 ) (33 ) (93 )
Net Income 21
37
48
65
Less: Net Loss Attributable to Noncontrolling Interests (8 ) (6 ) (7 ) (23 )
Net Income Attributable to DTE Energy Company $ 29
$ 43
$ 55
$ 88



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
	(In millions)
Operating Revenues — Non-utility operations	$	406		$	612		$	1,196		$	1,717
Fuel, purchased power, and gas — non-utility	321			532			945			1,494
Non-utility Margin	85			80			251			223
Operation and maintenance	77			88			241			260
Depreciation and amortization	17			17			51			50
Taxes other than income	2			3			8			10
Asset (gains) losses and impairments, net	—			9			—			9
Operating Loss	(11		)	(37		)	(49		)	(106		)
Other (Income) and Deductions	(39		)	(27		)	(92		)	(68		)
Income Taxes
Expense (Benefit)	9			(1		)	15			(3		)
Production Tax Credits	(25		)	(61		)	(64		)	(152		)
	(16		)	(62		)	(49		)	(155		)
Net Income	44			52			92			117
Less: Net Loss Attributable to Noncontrolling Interests	(5		)	(6		)	(12		)	(29		)
Net Income Attributable to DTE Energy Company	$	49		$	58		$	104		$	146

Operating Revenues — Non-utility operations decreased ~~$136~~$206 million and ~~$315~~$521 million in the three and ~~six~~nine months ended ~~June~~September 30, 2019, respectively. The decrease in both periods was due to the following:


	Three Months			Six Months			Three Months			Nine Months
	(In millions)						(In millions)
Higher demand and prices in the Steel business	$	—		$	8
Lower demand in the Steel business	(3		)	—
Higher prices in the Steel business							$	8		$	16
Expired contract in the Renewables business							(4		)	(7		)
Lower revenue due to sale of membership interests in three projects and project terminations in the REF business	(135		)	(330		)	(204		)	(534		)
Other	2			7			(6		)	4
	$	(136	)	$	(315	)	$	(206	)	$	(521	)

Non-utility Margin increased $8$5 million and ~~$23~~$28 million in the three and ~~six~~nine months ended ~~June~~September 30, 2019, respectively. The following table details changes in Non-utility margin relative to the comparable prior periods:


	Three Months		Six Months		Three Months			Nine Months
	(In millions)				(In millions)
Higher due to sale of membership interests in three projects and project terminations in the REF business	$	4	$	11	$	8		$	19
Higher prices in the Steel business	2		7		4			11
Expired contract in the Renewables business					(4		)	(7		)
Other	2		5		(3		)	5
	$	8	$	23	$	5		$	28

Operation and maintenance expense decreased $7$11 million and $8$19 million in the three and ~~six~~nine months ended ~~June~~September 30, 2019, respectively. The decrease in the ~~second~~third quarter ~~and six-month~~was primarily due to the sale of membership interests in the REF business. The decrease in the nine-month period was primarily due to $32 million associated with the sale of membership interests in the REF business, partially offset by ~~increasing~~$7 million higher maintenance spending in the ~~On-site~~Steel business and ~~Steel businesses.~~$4 million higher spending for renewable natural gas projects.

Asset (gains) losses and impairments, net increased $9 million in the three and nine months ended September 30, 2019. The increase was primarily due to asset impairments recorded in 2018 related to the Renewables business.

Other (Income) and Deductions increased $3$12 million and ~~$12~~$24 million in the three and ~~six~~nine months ended ~~June~~September 30, 2019, respectively. The ~~increase~~increases in the ~~second~~third quarter and ~~six-month~~nine-month period ~~was~~were primarily due to the sale of membership interests in the REF business.

Income Taxes — Production Tax Credits decreased ~~$30~~$36 million and ~~$52~~$88 million in the three and ~~six~~nine months ended ~~June~~September 30, 2019, respectively. The ~~decrease~~decreases in the ~~second~~third quarter and ~~six-month~~nine-month period ~~was~~were primarily due to sale of membership interests in the REF business.

Net Loss Attributable to Noncontrolling Interests ~~increased $2~~decreased $1 million and ~~decreased $16~~$17 million in the three and ~~six~~nine months ended ~~June~~September 30, 2019, respectively. The ~~decrease~~decreases in the ~~six-month~~third quarter and nine-month period ~~was~~ were primarily due to ~~projects terminated~~sale of membership interests in the REF business.

Outlook — Power and Industrial Projects will continue to leverage its extensive energy-related operating experience and project management capability to develop additional energy projects to serve energy intensive industrial customers in addition to optimizing the REF facilities until the phase out at the end of 2021.

ENERGY TRADING

Energy Trading focuses on physical and financial power and natural gas marketing and trading, structured transactions, enhancement of returns from its asset portfolio, and optimization of contracted natural gas pipeline transportation and storage positions. Energy Trading also provides natural gas, power, and related services, which may include the management of associated storage and transportation contracts on the customers' behalf, and the supply or purchase of renewable energy credits to various customers. Energy Trading results are discussed below:


	Three Months Ended June 30,						Six Months Ended June 30,				Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019		2018		2019			2018			2019		2018
	(In millions)										(In millions)
Operating Revenues — Non-utility operations	$	1,113		$	1,164		$	2,414	$	2,662	$	1,105		$	1,332		$	3,519	$	3,994
Purchased power and gas — non-utility	1,100			1,149			2,335		2,585		1,101			1,328			3,436		3,913
Non-utility Margin	13			15			79		77		4			4			83		81
Operation and maintenance	17			17			36		34		18			19			54		53
Depreciation and amortization	2			2			3		3		2			1			5		4
Taxes other than income	1			1			3		3		1			1			4		4
Operating Income (Loss)	(7		)	(5		)	37		37		(17		)	(17		)	20		20
Other (Income) and Deductions	1			1			2		2		1			1			3		3
Income Tax Expense (Benefit)	(2		)	(1		)	9		9		(4		)	(5		)	5		4
Net Income (Loss) Attributable to DTE Energy Company	$	(6	)	$	(5	)	$	26	$	26	$	(14	)	$	(13	)	$	12	$	13

Operating Revenues — Non-utility operations decreased ~~$51~~$227 million and ~~$248~~$475 million in the three and ~~six~~nine months ended ~~June~~September 30, 2019, respectively. The ~~decrease~~decreases in the ~~second~~third quarter and the ~~six-month~~nine-month period ~~was~~were primarily due to a decrease in gas prices, ~~and volumes,~~ primarily in the gas structured and ~~gas~~ transportation strategies.

Non-utility Margin ~~decreased $2 million~~had no change in the third quarter and increased $2 million in the ~~three and six~~nine months ended ~~June~~September 30, ~~2019, respectively.~~2019. The following tables detail changes in Non-utility margin relative to the comparable prior periods:

Three Months
(In millions)
Unrealized Margins^(a)

Favorable results, primarily in the gas structured strategy^(b)
$ 25
Unfavorable results, primarily in gas trading and power full requirements strategies (12 )
13
Realized Margins^(a)

Favorable results, primarily in the environmental trading strategy 6
Unfavorable results, primarily in gas structured and gas trading strategies^(c)
(21 )
(15 )
Decrease in Non-utility Margin $ (2 )



	Three Months
	(In millions)
Unrealized Margins^(a)
Favorable results, primarily in gas structured and power trading strategies^(b)	$	9
Unfavorable results, primarily in gas trading and gas transportation strategies	(13		)
	(4		)
Realized Margins^(a)
Favorable results, primarily in the power full requirements strategy	20
Unfavorable results, primarily in the gas structured strategy^(c)	(16		)
	4
Decrease in Non-utility Margin	$	—

(a)

Natural gas structured transactions typically involve a physical purchase or sale of natural gas in the future and/or natural gas basis financial instruments which are derivatives and a related non-derivative pipeline transportation contract. These gas structured transactions can result in significant earnings volatility as the derivative components are marked-to-market without revaluing the related non-derivative contracts.


(b)	Amount includes ~~$29~~$4 million of timing related gains related to gas strategies which will reverse in future periods as the underlying contracts settle.


(c)	Amount includes ~~$13~~$10 million of timing related gains related to gas strategies recognized in previous periods that reversed as the underlying contracts settled.


	Six Months			Nine Months
	(In millions)			(In millions)
Unrealized Margins^(a)
Favorable results, primarily in gas structured and gas transportation strategies^(b)	$	73		$	69
Unfavorable results, primarily in gas trading and power full requirements strategies	(15		)	(13		)
	58			56
Realized Margins^(a)
Favorable results, primarily in power full requirements and gas and power trading strategies	31
Favorable results, primarily in power full requirements and gas transportation strategies				46
Unfavorable results, primarily in gas structured and gas storage strategies^(c)	(87		)	(100		)
	(56		)	(54		)
Increase in Non-utility Margin	$	2		$	2

(a)


(b)	Amount includes ~~$71~~$66 million of timing related gains related to gas strategies which will reverse in future periods as the underlying contracts settle.


(c)	Amount includes ~~$60~~$62 million of timing related gains related to gas strategies recognized in previous periods that reversed as the underlying contracts settled.

Outlook — In the near-term, Energy Trading expects market conditions to remain challenging, and the profitability of this segment may be impacted by the volatility in commodity prices and the uncertainty of impacts associated with regulatory changes, and changes in operating rules of Regional Transmission Organizations. Significant portions of the Energy Trading portfolio are economically hedged. Most financial instruments and physical power and natural gas contracts are deemed derivatives, whereas natural gas inventory, pipeline transportation, renewable energy credits, and storage assets are not derivatives. As a result, Energy Trading will experience earnings volatility as derivatives are marked-to-market without revaluing the underlying non-derivative contracts and assets. Energy Trading's strategy is to economically manage the price risk of these underlying non-derivative contracts and assets with futures, forwards, swaps, and options. This results in gains and losses that are recognized in different interim and annual accounting periods.

See also the "Fair Value" section herein and Notes 78 and 89 to the Consolidated Financial Statements, "Fair Value" and "Financial and Other Derivative Instruments," respectively.

CORPORATE AND OTHER

Corporate and Other includes various holding company activities, holds certain non-utility debt, and holds energy-related investments. The net loss of ~~$32~~$45 million and ~~$35~~$80 million for the three and ~~six~~nine months ended ~~June~~September 30, 2019, respectively, represents a decrease of $9$7 million and ~~$27~~$34 million from the net losses of ~~$41~~$52 million and ~~$62~~$114 million in the comparable 2018 period. The net loss decrease in the ~~second~~third quarter was primarily due to the impact of one-time tax items, including the $20 million valuation allowance for the AMT credit carryover in 2018. This decrease was partially offset by effective income tax rate adjustments and higher interest expense in 2019. For the nine-month period, the net loss decrease was primarily due to the impact of one-time tax items, including the $20 million valuation allowance for the AMT credit carryover in 2018. This decrease was also due to effective income tax rate adjustments, partially offset by higher interest expense. For the six-month period, the decrease was primarily due to effective income tax rate adjustments and higher excess tax benefits on stock-based compensation, partially offset by higher interest expense.

expense in 2019.

CAPITAL RESOURCES AND LIQUIDITY

Cash Requirements

DTE Energy uses cash to maintain and invest in the electric and natural gas utilities, to grow the non-utility businesses, to retire and pay interest on long-term debt, and to pay dividends. DTE Energy believes it will have sufficient internal and external capital resources to fund anticipated capital and operating requirements. DTE Energy expects that cash from operations in 2019 will be approximately ~~$2.4~~$2.7 billion. DTE Energy anticipates base level utility capital investments, including environmental, renewable, and energy waste reduction expenditures; expenditures for non-utility businesses; and contributions to equity method investees in 2019 of approximately ~~$3.9~~$5.9 billion. DTE Energy plans to seek regulatory approval to include utility capital expenditures in regulatory rate base consistent with prior treatment. Capital spending for growth of existing or new non-utility businesses will depend on the existence of opportunities that meet strict risk-return and value creation criteria.

Six Months Ended June 30,
2019 2018
(In millions)
Cash, Cash Equivalents, and Restricted Cash
Cash Flow From (Used For)
Operating Activities
Net Income $ 587
$ 587
Adjustments to reconcile Net Income to Net cash from operating activities:
Depreciation and amortization 601
553
Nuclear fuel amortization 30
25
Allowance for equity funds used during construction (13 ) (13 )
Deferred income taxes 80
80
Asset (gains) losses and impairments, net 13
—
Working capital and other 69
201
Net cash from operating activities 1,367
1,433
Investing Activities
Plant and equipment expenditures — utility (1,294 ) (1,027 )
Plant and equipment expenditures — non-utility (102 ) (130 )
Contributions to equity method investees (38 ) (233 )
Notes receivable (62 ) 5
Other (18 ) 5
Net cash used for investing activities (1,514 ) (1,380 )
Financing Activities
Issuance of long-term debt, net of issuance costs 1,438
520
Redemption of long-term debt —
(102 )
Short-term borrowings, net (606 ) (147 )
Issuance of common stock —
6
Dividends paid on common stock (345 ) (309 )
Contributions from noncontrolling interests, principally REF entities 17
22
Distributions to noncontrolling interests (31 ) (17 )
Purchases of noncontrolling interest, principally SGG (300 ) —
Other (40 ) (29 )
Net cash from (used for) financing activities 133
(56 )
Net Decrease in Cash, Cash Equivalents, and Restricted Cash $ (14 ) $ (3 )



	Nine Months Ended September 30,
	2019			2018
	(in millions)
Cash, Cash Equivalents, and Restricted Cash, Beginning	$	76		$	89
Net cash from operating activities	1,901			2,047
Net cash used for investing activities	(2,558		)	(2,336		)
Net cash from financing activities	657			304
Net Increase in Cash, Cash Equivalents, and Restricted Cash	—			15
Cash, Cash Equivalents, and Restricted Cash, Ending	$	76		$	104

Cash from Operating Activities

A majority of DTE Energy's operating cash flows are provided by the electric and natural gas utilities, which are significantly influenced by factors such as weather, electric retail access, regulatory deferrals, regulatory outcomes, economic conditions, changes in working capital, and operating costs.

~~Cash~~Net cash from operations decreased by ~~$66~~$146 million in 2019 due primarily to a decrease in cash from working capital items, partially offset by an increase in Deferred income taxes and Depreciation and ~~amortization expense.~~amortization.

The change in working capital items in 2019 was primarily related to an increase in cash used for ~~accounts~~Accounts payable ~~regulatory assets~~ and ~~liabilities, and other~~Other current and noncurrent assets and liabilities, partially offset by an increase in cash ~~from accounts~~relating to Accounts receivable and accrued pension ~~liability.~~and postretirement liabilities.

Cash used for Investing Activities

Cash inflows associated with investing activities are primarily generated from the sale of assets, while cash outflows are the result of plant and equipment expenditures. In any given year, DTE Energy looks to realize cash from under-performing or non-strategic assets or matured, fully valued assets.

Capital spending within the utility businesses is primarily to maintain and improve electric generation and the electric and natural gas distribution infrastructure, and to comply with environmental regulations and renewable energy requirements.

Capital spending within the non-utility businesses is primarily for ongoing maintenance, expansion, and growth. DTE Energy looks to make growth investments that meet strict criteria in terms of strategy, management skills, risks, and returns. All new investments are analyzed for their rates of return and cash payback on a risk adjusted basis. DTE Energy has been disciplined in how it deploys capital and will not make investments unless they meet the criteria. For new business lines, DTE Energy initially invests based on research and analysis. DTE Energy starts with a limited investment, evaluates the results, and either expands or exits the business based on those results. In any given year, the amount of growth capital will be determined by the underlying cash flows of DTE Energy, with a clear understanding of any potential impact on its credit ratings.

Net cash used for investing activities increased by ~~$134~~$222 million in 2019 due primarily to ~~the~~an increase in Plant and equipment expenditures — utility and ~~Notes Receivable,~~new acquisitions, partially offset by ~~the~~a decrease in Contributions to equity method ~~investees and Plant and equipment expenditures — non-utility.~~investees.

Cash from ~~(used for)~~ Financing Activities

DTE Energy relies on both short-term borrowing and long-term financing as a source of funding for capital requirements not satisfied by its operations.

DTE Energy's strategy is to have a targeted debt portfolio blend of fixed and variable interest rates and maturity. DTE Energy targets balance sheet financial metrics to ensure it is consistent with the objective of a strong investment grade debt rating.

Net cash from financing activities increased by ~~$189~~$353 million in 2019 due primarily to an increase in ~~Issuance of long-term debt and the reduction of Redemption of long-term debt,~~Short-term borrowings, partially offset by ~~the increase in repayments of Short-term borrowings and~~ Purchases of noncontrolling ~~interests,~~interest, principally related to SGG.

Outlook

DTE Energy expects cash flows from operations to increase over the long-term, primarily as a result of growth from the utility and non-utility businesses. Growth in the utilities is expected to be driven primarily by capital spending which will increase the base from which rates are determined. Non-utility growth is expected from additional investments, primarily in the Gas Storage and Pipelines and Power and Industrial Projects segments.

DTE Energy may be impacted by the timing of collection or refund of various recovery and tracking mechanisms, as a result of timing of MPSC orders. Energy prices are likely to be a source of volatility with regard to working capital requirements for the foreseeable future. DTE Energy continues its efforts to identify opportunities to improve cash flows through working capital initiatives and maintaining flexibility in the timing and extent of long-term capital projects.

DTE Energy has approximately ~~$1.5~~$1.2 billion in long-term debt, including finance leases, maturing in the next twelve months. The repayment of the debt is expected to be paid through internally generated funds or the issuance of long-term debt.

DTE Energy has approximately ~~$2.4~~$1.7 billion of available liquidity at ~~June~~September 30, 2019, consisting of cash and amounts available under unsecured revolving credit agreements.

DTE Energy expects to issue equity up to ~~$250~~$200 million in 2019 through the pension and other employee benefit plans, which is exclusive from any amounts related to the Equity Units described in Note 14 to the Consolidated Financial Statements, "Long-Term Debt," within the combined DTE Energy and DTE Electric 2018 Annual Report on Form 10-K. For contribution amounts related to pension plans, refer to Note 1314 of the Consolidated Financial Statements, "Retirement Benefits and Trusteed Assets."

In conjunction with the acquisition of midstream natural gas assets as described in Note 16 to the Consolidated Financial Statements, "Subsequent Event," DTE Energy expects to issue an additional $300 million of equity in the fourth quarter 2019. Refer to Note 16 for additional information regarding the subsequent event.

Various subsidiaries and equity investees of DTE Energy have entered into contracts which contain ratings triggers and are guaranteed by DTE Energy. These contracts contain provisions which allow the counterparties to require that DTE Energy post cash or letters of credit as collateral in the event that DTE Energy's credit rating is downgraded below investment grade. Certain of these provisions (known as "hard triggers") state specific circumstances under which DTE Energy can be required to post collateral upon the occurrence of a credit downgrade, while other provisions (known as "soft triggers") are not as specific. For contracts with soft triggers, it is difficult to estimate the amount of collateral which may be requested by counterparties and/or which DTE Energy may ultimately be required to post. The amount of such collateral which could be requested fluctuates based on commodity prices (primarily natural gas, power, and coal) and the provisions and maturities of the underlying transactions. As of ~~June~~September 30, 2019, DTE Energy's contractual obligation to post collateral in the form of cash or letters of credit in the event of a downgrade to below investment grade, under both hard trigger and soft trigger provisions, was ~~$541~~$517 million.

DTE Energy believes it will have sufficient operating flexibility, cash resources, and funding sources to maintain adequate amounts of liquidity and to meet future operating cash and capital expenditure needs. However, virtually all of DTE Energy's businesses are capital intensive, or require access to capital, and the inability to access adequate capital could adversely impact earnings and cash flows.

See Notes ~~5, 9,~~6, 10, ~~12,~~11, 13, and 1314 to the Consolidated Financial Statements, "Regulatory Matters," "Long-Term Debt," "Short-Term Credit Arrangements and Borrowings," "Commitments and Contingencies," and "Retirement Benefits and Trusteed Assets," respectively.

NEW ACCOUNTING PRONOUNCEMENTS

See Note 3 to the Consolidated Financial Statements, "New Accounting Pronouncements."

FAIR VALUE

Derivatives are generally recorded at fair value and shown as Derivative assets or liabilities. Contracts DTE Energy typically classifies as derivative instruments include power, natural gas, oil, and certain coal forwards, futures, options and swaps, and foreign currency exchange contracts. Items DTE Energy does not generally account for as derivatives include natural gas inventory, pipeline transportation contracts, renewable energy credits, and storage assets. See Notes 78 and 89 to the Consolidated Financial Statements, "Fair Value" and "Financial and Other Derivative Instruments," respectively.

The tables below do not include the expected earnings impact of non-derivative natural gas storage, transportation, certain power contracts, and renewable energy credits which are subject to accrual accounting. Consequently, gains and losses from these positions may not match with the related physical and financial hedging instruments in some reporting periods, resulting in volatility in the Registrants' reported period-by-period earnings; however, the financial impact of the timing differences will reverse at the time of physical delivery and/or settlement.

The Registrants manage their MTM risk on a portfolio basis based upon the delivery period of their contracts and the individual components of the risks within each contract. Accordingly, the Registrants record and manage the energy purchase and sale obligations under their contracts in separate components based on the commodity (e.g. electricity or natural gas), the product (e.g. electricity for delivery during peak or off-peak hours), the delivery location (e.g. by region), the risk profile (e.g. forward or option), and the delivery period (e.g. by month and year).

The Registrants have established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value in three broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). For further discussion of the fair value hierarchy, see Note 78 to the Consolidated Financial Statements, "Fair Value."

The following table provides details on changes in DTE Energy's MTM net asset (or liability) position:


	DTE Energy			DTE Energy
	(In millions)			(In millions)
MTM at December 31, 2018	$	(23	)	$	(23	)
Reclassified to realized upon settlement	(9		)	(36		)
Changes in fair value recorded to income	13			5
Amounts recorded to unrealized income	4			(31		)
Changes in fair value recorded in regulatory liabilities	7			3
Amounts recorded in other comprehensive income, pretax	(12		)	3
Change in collateral	21			17
MTM at June 30, 2019	$	(3	)
MTM at September 30, 2019				$	(31	)

The table below shows the maturity of DTE Energy's MTM positions. The positions from 2022 and beyond principally represent longer tenor gas structured transactions:


Source of Fair Value	2019			2020			2021			2022 and Beyond			Total Fair Value			2019			2020			2021			2022 and Beyond			Total Fair Value
	(In millions)															(In millions)
Level 1	$	(16	)	$	(3	)	$	(2	)	$	(1	)	$	(22	)	$	(10	)	$	(6	)	$	(5	)	$	(2	)	$	(23	)
Level 2	(8		)	9			1			4			6			4			8			3			5			20
Level 3	14			17			—			(22		)	9			(6		)	11			1			(34		)	(28		)
MTM before collateral adjustments	$	(10	)	$	23		$	(1	)	$	(19	)	(7		)	$	(12	)	$	13		$	(1	)	$	(31	)	(31		)
Collateral adjustments													4															—
MTM at June 30, 2019													$	(3	)
MTM at September 30, 2019																												$	(31	)

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market Price Risk

The Electric and Gas businesses have commodity price risk, primarily related to the purchases of coal, natural gas, uranium, and electricity. However, the Registrants do not bear significant exposure to earnings risk, as such changes are included in the PSCR and GCR regulatory rate-recovery mechanisms. In addition, changes in the price of natural gas can impact the valuation of lost and stolen gas, storage sales, and transportation services revenue at the Gas segment. The Gas segment manages its market price risk related to storage sales revenue primarily through the sale of long-term storage contracts. The Registrants are exposed to short-term cash flow or liquidity risk as a result of the time differential between actual cash settlements and regulatory rate recovery.

DTE Energy's Gas Storage and Pipelines segment has exposure to natural gas price fluctuations which impact the pricing for natural gas storage, gathering, and transportation. DTE Energy manages its exposure through the use of short, medium, and long-term storage, gathering, and transportation contracts.

DTE Energy's Power and Industrial Projects business segment is subject to electricity, natural gas, and coal product price risk. DTE Energy manages its exposure to commodity price risk through the use of long-term contracts.

DTE Energy's Energy Trading business segment has exposure to electricity, natural gas, coal, crude oil, heating oil, and foreign currency exchange price fluctuations. These risks are managed by the energy marketing and trading operations through the use of forward energy, capacity, storage, options, and futures contracts, within pre-determined risk parameters.

Credit Risk

Bankruptcies

DTE Energy's Power and Industrial Projects segment holds ownership interests in, and operates, five generating plants that sell electric output from renewable sources under long-term power purchase agreements with PG&E. PG&E filed for Chapter 11 bankruptcy protection on January 29, 2019. As of ~~June~~September 30, 2019, PG&E's account is substantially current and outstanding accounts receivable from PG&E are not material. Therefore, DTE Energy determined no reserve was necessary.

As of ~~June~~September 30, 2019, the book value of long-lived assets used in producing electric output for sale to PG&E was approximately ~~$103~~$102 million. The Power and Industrial Projects segment also has equity investments, including a note receivable, of approximately ~~$73~~$72 million in entities that sell power to PG&E. In January 2019, following the bankruptcy filing, DTE Energy performed an impairment analysis on its long-lived assets. Based on its undiscounted cash flow projections, DTE Energy determined it did not have an impairment loss as of December 31, 2018. DTE Energy also determined there was not an other-than-temporary decline in its equity investments. There were no other new events occurring during the ~~six~~nine months ended ~~June~~September 30, 2019, that would negatively impact the assumptions made within the December 31, 2018 impairment analysis. Therefore, no triggering events were identified. DTE Energy's assumptions and conclusions may change, and it could have impairment losses if any of the terms of the contracts are not honored by PG&E or the contracts are rejected through the bankruptcy process.

Other

The Registrants regularly review contingent matters relating to customers and their contracts and record provisions for amounts considered at risk of probable loss in the allowance for doubtful accounts. The Registrants believe their accrued amounts are adequate for probable loss.

Trading Activities

DTE Energy is exposed to credit risk through trading activities. Credit risk is the potential loss that may result if the trading counterparties fail to meet their contractual obligations. DTE Energy utilizes both external and internal credit assessments when determining the credit quality of trading counterparties.

The following table displays the credit quality of DTE Energy's trading counterparties as of ~~June~~September 30, 2019:


	Credit Exposure Before Cash Collateral		Cash Collateral			Net Credit Exposure		Credit Exposure Before Cash Collateral		Cash Collateral			Net Credit Exposure
	(In millions)							(In millions)
Investment Grade^(a)
A- and Greater	$	252	$	—		$	252	$	226	$	—		$	226
BBB+ and BBB	315		—			315		298		—			298
BBB-	38		—			38		33		—			33
Total Investment Grade	605		—			605		557		—			557
Non-investment grade^(b)	8		—			8		4		—			4
Internally Rated — investment grade^(c)	243		(1		)	242		283		(1		)	282
Internally Rated — non-investment grade^(d)	25		(2		)	23		29		(1		)	28
Total	$	881	$	(3	)	$	878	$	873	$	(2	)	$	871


(a)	This category includes counterparties with minimum credit ratings of Baa3 assigned by Moody’s Investors Service (Moody’s) or BBB-assigned by Standard & Poor’s Rating Group, a division of McGraw-Hill Companies, Inc. (Standard & Poor’s). The five largest counterparty exposures, combined, for this category represented ~~22%~~19% of the total gross credit exposure.


(b)	This category includes counterparties with credit ratings that are below investment grade. The five largest counterparty exposures, combined, for this category represented 1% of the total gross credit exposure.


(c)	This category includes counterparties that have not been rated by Moody’s or Standard & Poor’s but are considered investment grade based on DTE Energy’s evaluation of the counterparty’s creditworthiness. The five largest counterparty exposures, combined, for this category represented ~~11%~~12% of the total gross credit exposure.


(d)	This category includes counterparties that have not been rated by Moody’s or Standard & Poor’s and are considered non-investment grade based on DTE Energy’s evaluation of the counterparty’s creditworthiness. The five largest counterparty exposures, combined, for this category represented 1% of the total gross credit exposure.

Other

The Registrants engage in business with customers that are non-investment grade. The Registrants closely monitor the credit ratings of these customers and, when deemed necessary and permitted under the tariffs, request collateral or guarantees from such customers to secure their obligations.

Interest Rate Risk

DTE Energy is subject to interest rate risk in connection with the issuance of debt. In order to manage interest costs, DTE Energy may use treasury locks and interest rate swap agreements. DTE Energy's exposure to interest rate risk arises primarily from changes in U.S. Treasury rates, commercial paper rates, and London Inter-Bank Offered Rates (LIBOR). As of ~~June~~September 30, 2019, DTE Energy had a floating rate debt-to-total debt ratio of ~~0.02%~~4.57%.

Foreign Currency Exchange Risk

DTE Energy has foreign currency exchange risk arising from market price fluctuations associated with fixed priced contracts. These contracts are denominated in Canadian dollars and are primarily for the purchase and sale of natural gas and power, as well as for long-term transportation capacity. To limit DTE Energy's exposure to foreign currency exchange fluctuations, DTE Energy has entered into a series of foreign currency exchange forward contracts through ~~June~~December 2023.

Summary of Sensitivity Analyses

Sensitivity analyses were performed on the fair values of commodity contracts for DTE Energy and long-term debt obligations for the Registrants. The commodity contracts listed below principally relate to energy marketing and trading activities. The sensitivity analyses involved increasing and decreasing forward prices and rates at ~~June~~September 30, 2019 and 2018 by a hypothetical 10% and calculating the resulting change in the fair values.

The results of the sensitivity analyses:


	Assuming a 10% Increase in Prices/Rates						Assuming a 10% Decrease in Prices/Rates							Assuming a 10% Increase in Prices/Rates						Assuming a 10% Decrease in Prices/Rates
	As of June 30,						As of June 30,							As of September 30,						As of September 30,
Activity	2019			2018			2019			2018			Change in the Fair Value of	2019			2018			2019			2018			Change in the Fair Value of
	(In millions)													(In millions)
Gas contracts	$	11		$	5		$	(10	)	$	(5	)	Commodity contracts	$	5		$	(7	)	$	(5	)	$	9		Commodity contracts
Power contracts	$	1		$	3		$	(2	)	$	(7	)	Commodity contracts	$	1		$	8		$	(2	)	$	(11	)	Commodity contracts
Interest rate risk — DTE Energy	$	(633	)	$	(633	)	$	661		$	608		Long-term debt	$	(547	)	$	(618	)	$	572		$	649		Long-term debt
Interest rate risk — DTE Electric	$	(298	)	$	(283	)	$	320		$	306		Long-term debt	$	(287	)	$	(282	)	$	306		$	304		Long-term debt

For further discussion of market risk, see Note 89 to the Consolidated Financial Statements, "Financial and Other Derivative Instruments."

Item 4. Controls and Procedures

DTE Energy

(a) Evaluation of disclosure controls and procedures

Management of DTE Energy carried out an evaluation, under the supervision and with the participation of DTE Energy's Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the design and operation of DTE Energy's disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of ~~June~~September 30, 2019, which is the end of the period covered by this report. Based on this evaluation, DTE Energy's CEO and CFO have concluded that such disclosure controls and procedures are effective in providing reasonable assurance that information required to be disclosed by DTE Energy in reports that it files or submits under the Exchange Act (i) is recorded, processed, summarized, and reported within the time periods specified in the U.S. Securities and Exchange Commission's rules and forms and (ii) is accumulated and communicated to DTE Energy's management, including its CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. Due to the inherent limitations in the effectiveness of any disclosure controls and procedures, management cannot provide absolute assurance that the objectives of its disclosure controls and procedures will be attained.

(b) Changes in internal control over financial reporting

There have been no changes in DTE Energy's internal control over financial reporting during the quarter ended ~~June~~September 30, 2019 that have materially affected, or are reasonably likely to materially affect, DTE Energy's internal control over financial reporting.

DTE Electric

(a) Evaluation of disclosure controls and procedures

Management of DTE Electric carried out an evaluation, under the supervision and with the participation of DTE Electric's Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the design and operation of DTE Electric's disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of ~~June~~September 30, 2019, which is the end of the period covered by this report. Based on this evaluation, DTE Electric's CEO and CFO have concluded that such disclosure controls and procedures are effective in providing reasonable assurance that information required to be disclosed by DTE Electric in reports that it files or submits under the Exchange Act (i) is recorded, processed, summarized, and reported within the time periods specified in the U.S. Securities and Exchange Commission's rules and forms and (ii) is accumulated and communicated to DTE Electric's management, including its CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. Due to the inherent limitations in the effectiveness of any disclosure controls and procedures, management cannot provide absolute assurance that the objectives of its disclosure controls and procedures will be attained.

(b) Changes in internal control over financial reporting

There have been no changes in DTE Electric's internal control over financial reporting during the quarter ended ~~June~~September 30, 2019 that have materially affected, or are reasonably likely to materially affect, DTE Electric's internal control over financial reporting.

Part II — Other Information

Item 1. Legal Proceedings

In March 2018, the Trenton Channel Power Plant experienced exceedances of its mercury emission limits. The exceedances were reported to the EPA and the MDEQ. On September 12, 2018, the EPA issued a NOV. On June 28, 2019, DTE Electric entered into a Consent Agreement and Final Order (CAFO) with the EPA to resolve the allegations in the NOV. Under the CAFO, DTE Electric agreed to pay a civil penalty in the amount of $25,133 and to spend $95,000 on environmental projects that will benefit the Grosse Ile School District and the City of Trenton.

For ~~more~~ information on legal proceedings and matters related to the Registrants, see Notes 56 and 1213 to the Consolidated Financial Statements, "Regulatory Matters" and "Commitments and Contingencies," respectively.

Item 1A. Risk Factors

There are various risks associated with the operations of the Registrants' businesses. To provide a framework to understand the operating environment of the Registrants, a brief explanation of the more significant risks associated with the Registrants' businesses is provided in Part 1, Item 1A. Risk Factors in DTE Energy's and DTE Electric's combined 2018 Annual Report on Form 10-K. Although the Registrants have tried to identify and discuss key risk factors, others could emerge in the future.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Purchases of DTE Energy Equity Securities by the Issuer and Affiliated Purchasers

The following table provides information about DTE Energy purchases of equity securities that are registered by DTE Energy pursuant to Section 12 of the Exchange Act of 1934 for the quarter ended ~~June~~September 30, 2019:

Number of
Shares
Purchased^(a)

Average
Price
Paid per
Share^(a)

Number
of Shares
Purchased as
Part of Publicly
Announced
Plans or
Programs

Average
Price Paid
per Share

Maximum Dollar
Value that May
Yet Be
Purchased Under
the Plans or
Programs
04/01/2019 — 04/30/2019 2,920
$ 113.87
—
—
—
05/01/2019 — 05/31/2019 653
$ 107.73
—
—
—
06/01/2019 — 06/30/2019 —
$ —
—
—
—
Total 3,573
—



	Number of Shares Purchased^(a)	Average Price Paid per Share^(a)		Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Average Price Paid per Share	Maximum Dollar Value that May Yet Be Purchased Under the Plans or Programs
07/01/2019 — 07/31/2019	1,192	$	127.88	—	—	—
08/01/2019 — 08/31/2019	5,203	$	113.95	—	—	—
09/01/2019 — 09/30/2019	1,000	$	110.79	—	—	—
Total	7,395			—


(a)	Represents shares of common stock withheld to satisfy income tax obligations upon the vesting of restricted stock based on the price in effect at the grant date.

Item 6. Exhibits



Exhibit Number	Description	DTE Energy	DTE Electric

	(i) Exhibits filed herewith:

~~4.306~~4.307	Fiftieth Supplemental Indenture dated as of ~~June~~October 1, 2019, to ~~the Amended~~Indenture Mortgage and ~~Restated Indenture,~~Deed of Trust, dated as of ~~April 9, 1924,~~March 1, 1944, between DTE ~~Energy~~Gas Company and ~~The Bank of New York Mellon Trust Company,~~Citibank, N.A.~~, as successor~~ trustee. (2019 Series BD and C)E)	X

~~31.165~~31.169	Chief Executive Officer Section 302 Form 10-Q Certification of Periodic Report	X

~~31.166~~31.170	Chief Financial Officer Section 302 Form 10-Q Certification of Periodic Report	X

~~31.167~~31.171	Chief Executive Officer Section 302 Form 10-Q Certification of Periodic Report		X

~~31.168~~31.172	Chief Financial Officer Section 302 Form 10-Q Certification of Periodic Report		X

101.INS	XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.	X	X

101.SCH	XBRL Taxonomy Extension Schema	X	X

101.CAL	XBRL Taxonomy Extension Calculation Linkbase	X	X

101.DEF	XBRL Taxonomy Extension Definition Database	X	X

101.LAB	XBRL Taxonomy Extension Label Linkbase	X	X

101.PRE	XBRL Taxonomy Extension Presentation Linkbase	X	X

	(ii) Exhibits furnished herewith:

~~32.165~~32.169	Chief Executive Officer Section 906 Form 10-Q Certification of Periodic Report	X

~~32.166~~32.170	Chief Financial Officer Section 906 Form 10-Q Certification of Periodic Report	X

~~32.167~~32.171	Chief Executive Officer Section 906 Form 10-Q Certification of Periodic Report		X

~~32.168~~32.172	Chief Financial Officer Section 906 Form 10-Q Certification of Periodic Report		X

	~~(iii) Exhibits incorporated by reference:~~

~~4.307~~	Form of Fourth Amended and Restated Five-Year Credit Agreement, dated as of April 15, 2019, by and among DTE Energy, the lenders party thereto, Citibank, N.A., as Administrative Agent. (Exhibit 10.01 to DTE Energy's Form 8-K filed on April 16, 2019)	X

~~4.308~~	Form of Fourth Amended and Restated Five-Year Credit Agreement, dated as of April 15, 2019, by and among DTE Gas, the lenders party thereto, Citibank, N.A., as Administrative Agent. (Exhibit 10.02 to DTE Energy's Form 8-K filed on April 16, 2019)	X

~~4.309~~	Form of Fourth Amended and Restated Five-Year Credit Agreement, dated as of April 15, 2019, by and among DTE Electric Company, the lenders party thereto, Citibank, N.A., as Administrative Agent. (Exhibit 10.01 to DTE Energy's Form 8-K filed on April 16, 2019)	X	X

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, thereunto duly authorized. The signature for each undersigned Registrant shall be deemed to relate only to matters having reference to such Registrant and any subsidiaries thereof.



Date:	~~July 24,~~October 28, 2019
			DTE ENERGY COMPANY

		By:	/S/ MARK C. ROLLING
			Mark C. Rolling Vice President, Controller, and Chief Accounting Officer
			(Duly Authorized Officer)


			DTE ELECTRIC COMPANY

		By:	/S/ MARK C. ROLLING
			Mark C. Rolling Vice President, Controller, and Chief Accounting Officer
			(Duly Authorized Officer)

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