UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

~~10-Q~~

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

For the Quarterly Period ended ~~March 31,~~September 30, 2020

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

Commission File Number: 1-11607

DTE Energy Co~~mpany~~

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 Co~~mpany~~

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,, Michigan48226-1279

Registrants telephone number, including area code: (~~313~~) (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

2019 6.25% Corporate Units

DTP

New York Stock Exchange

2020 Series G 4.375% Junior Subordinated Debentures due 2080

DTB

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

☒

☐

DTE Electric Company (DTE Electric)

Yes

☒

☐

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

☒

☐

DTE Electric

Yes

☒

☐

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

☐

☒

DTE Electric

Yes

☐

☒

Number of shares of Common Stock outstanding at ~~March 31,~~September 30, 2020:

Registrant

Description

DTE Energy

Common Stock, without par value

~~192,611,882~~193,559,593

DTE Electric

Common Stock, $10 par value, indirectly-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, an 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	4
			Forward-Looking Statements	4
PART I - FINANCIAL INFORMATION
Item 1.			Financial Statements
			DTE Energy Consolidated Financial Statements (Unaudited)	6


				~~Page~~
			~~Definitions~~	1
			~~Filing Format~~	4
			~~Forward-Looking Statements~~	4
~~PART I - FINANCIAL INFORMATION~~
~~Item 1.~~	~~Financial Statements~~
	~~DTE Energy Consolidated Financial Statements (Unaudited)~~	6
	DTE Electric Consolidated Financial Statements (Unaudited)	1213





			Combined Notes to Consolidated Financial Statements (Unaudited)	1819
			Note 1 — Organization and Basis of Presentation	1819
			Note 2 — Significant Accounting Policies	2122
			Note 3 — New Accounting Pronouncements	2526
			Note 4 — Acquisitions	2627
			Note 5 — Revenue	2930
			Note 6 — Regulatory Matters	3132
			Note 7 — Earnings Per Share	3133
			Note 8 — Fair Value	3234
			Note 9 — Financial and Other Derivative Instruments	4041
			Note 10 — Long-Term Debt	4446
			Note 11 — Short-Term Credit Arrangements and Borrowings	4547
			Note 12 — Leases	4648
			Note 13 — Commitments and Contingencies	4749
			Note 14 — Retirement Benefits and Trusteed Assets	5255
			Note 15 — Segment and Related Information	5357
			Note 16 — Related Party Transactions	58

			Note 17 — Subsequent Event	59
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations	5660
Item 3.			Quantitative and Qualitative Disclosures About Market Risk	6977
Item 4.			Controls and Procedures	7280
PART II - OTHER INFORMATION
Item 1.			Legal Proceedings	81
Item 1.1A.			~~Legal Proceedings~~Risk Factors	7381
Item ~~1A.~~2.			~~Risk Factors~~	73
~~Item 2.~~	Unregistered Sales of Equity Securities and Use of Proceeds	7482
Item 6.			Exhibits	7583
			Signatures	7784

DEFINITIONS


ACE		Affordable Clean Energy

~~ACE~~AFUDC		~~Affordable Clean Energy~~

~~AFUDC~~	Allowance for Funds Used During Construction

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

AMT		Alternative Minimum Tax

ASU		Accounting Standards Update issued by the FASB

Blue Union		Blue Union gathering system is a midstream natural gas asset located in the Haynesville shale formation of Louisiana. DTE Energy purchased 100% of Blue Union in December 2019 and this asset is part of DTE Energy's Gas Storage and Pipelines segment

CAD		Canadian Dollar (C$)

~~CCR~~CARB		California Air Resources Board that administers California's Low Carbon Fuel Standard

CCR		Coal Combustion Residuals

CFTC		U.S. Commodity Futures Trading Commission

COVID-19		Coronavirus disease of 2019

DTE Electric		DTE Electric Company (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

DTE Midstream		DTE Energy’s natural gas pipeline, storage, and gathering non-utility, which primarily represents businesses in the Gas Storage and Pipelines segment

DTE Sustainable Generation		DTE Sustainable Generation Holdings, LLC (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 2019 equity units issued in November 2019, which were used to finance the Gas Storage and Pipelines acquisition on December 4, 2019

FASB		Financial Accounting Standards Board

FERC		Federal Energy Regulatory Commission

~~FOV~~FGD		Flue Gas Desulfurization

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~~LEAP		~~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.~~

~~LEAP~~	Louisiana Energy Access Project gathering pipeline is a midstream natural gas asset located in the Haynesville shale formation of Louisiana. DTE Energy purchased 100% of LEAP in December 2019 and this asset is part of DTE Energy's Gas Storage and Pipelines segment

DEFINITIONS


LIBOR						London Inter-Bank Offered Rates

~~DEFINITIONS~~



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 owns 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~~NPDES		National Pollutant Discharge Elimination System

NRC		U.S. Nuclear Regulatory Commission

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~~REC		~~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.

SIP		State Implementation Plan

SO₂		Sulfur Dioxide

TCJA		Tax Cuts and Jobs Act of 2017, which reduced the corporate Federal income tax rate from 35% to 21%

TCJA rate reduction ~~liability~~		Reduction in DTE Gas revenue ~~with an offsetting Regulatory liability~~ related to Calculation C of the TCJA. DTE Gas's Calculation C case was approved by the MPSC in August 2019 to address all remaining issues relative to the TCJA, which is primarily the remeasurement of deferred taxes and how the amounts deferred as Regulatory liabilities flow to ratepayers.

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

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

DEFINITIONS

Units of Measurement

~~Units of Measurement~~

Bcf

~~Bcf~~

Billion cubic feet of natural gas

BTU

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

~~MMBtu~~

MMBtu

One million BTU

Megawatt of electricity

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 2019 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:

•DTE Energy’s intent to spin-off DTE Midstream and DTE Energy’s preliminary strategic, operational and financial considerations related thereto. The statements with respect to the separation transaction are preliminary in nature and subject to change as additional information becomes available. The separation transaction will be subject to the satisfaction of a number of conditions, including the final approval of DTE Energy’s Board of Directors, and there is no assurance that such separation transaction will in fact occur;

•Risks related to the spin-off of DTE Midstream, including that the process of exploring the transaction and potentially completing the transaction could disrupt or adversely affect the consolidated or separate businesses, results of operations and financial condition, that the transaction may not achieve some or all of any anticipated benefits with respect to either business, and that the transaction may not be completed in accordance with DTE Energy’s expected plans or anticipated timelines, or at all;

•the duration and impact of the COVID-19 pandemic on the Registrants and customers;

•impact of regulation by the EPA, the FERC, the MPSC, the NRC, and for DTE Energy, the CFTC and CARB, 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;~~operations and volatility in the short-term natural gas storage markets impacting third-party storage revenues related to DTE Energy;

•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 March 31,							Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019				2020		2019		2020		2019
	(In millions, except per share amounts)							(In millions, except per share amounts)
Operating Revenues							Operating Revenues
Utility operations	$	1,733		$	1,864		Utility operations	$	1,844	$	1,656	$	5,119	$	4,937
Non-utility operations	1,289			1,650			Non-utility operations	1,440		1,463		3,770		4,584
	3,022			3,514				3,284		3,119		8,889		9,521

Operating Expenses							Operating Expenses
Fuel, purchased power, and gas — utility	467			582			Fuel, purchased power, and gas — utility	455		400		1,296		1,342
Fuel, purchased power, and gas — non-utility	968			1,385			Fuel, purchased power, and gas — non-utility	1,180		1,257		2,937		3,900
Operation and maintenance	579			591			Operation and maintenance	588		588		1,731		1,739
Depreciation and amortization	353			296			Depreciation and amortization	356		322		1,059		923
Taxes other than income	119			118			Taxes other than income	103		101		306		311
Asset (gains) losses and impairments, net	(10		)	—			Asset (gains) losses and impairments, net	(6)		1		39		14
	2,476			2,972				2,676		2,669		7,368		8,229
Operating Income	546			542			Operating Income	608		450		1,521		1,292

Other (Income) and Deductions							Other (Income) and Deductions
Interest expense	175			152			Interest expense	178		162		532		468
Interest income	(10		)	(4		)	Interest income	(15)		(4)		(31)		(11)
Non-operating retirement benefits, net	9			9			Non-operating retirement benefits, net	5		9		20		28
Other income	(65		)	(88		)	Other income	(120)		(98)		(286)		(259)
Other expenses	46			11			Other expenses	20		17		72		40
	155			80				68		86		307		266
Income Before Income Taxes	391			462			Income Before Income Taxes	540		364		1,214		1,026

Income Tax Expense	49			54			Income Tax Expense	63		47		118		122

Net Income	342			408			Net Income	477		317		1,096		904

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

Net Income Attributable to DTE Energy Company	$	340		$	401		Net Income Attributable to DTE Energy Company	$	476	$	319	$	1,093	$	902

Basic Earnings per Common Share							Basic Earnings per Common Share
Net Income Attributable to DTE Energy Company	$	1.77		$	2.20		Net Income Attributable to DTE Energy Company	$	2.47	$	1.74	$	5.67	$	4.93

Diluted Earnings per Common Share							Diluted Earnings per Common Share
Net Income Attributable to DTE Energy Company	$	1.76		$	2.19		Net Income Attributable to DTE Energy Company	$	2.46	$	1.73	$	5.66	$	4.91

Weighted Average Common Shares Outstanding							Weighted Average Common Shares Outstanding
Basic	192			182			Basic	193		183		192		183
Diluted	192			183			Diluted	193		184		193		184

See Combined Notes to Consolidated Financial Statements (Unaudited)

DTE Energy Company — DTE Electric Company

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

In April 2020, DTE Electric entered into a $200 million unsecured term loan, of which DTE Electric has drawn the full $200 million available, and a $200 million unsecured term loan, of which 0 amount has been drawn. In addition, in April 2020, DTE Gas entered into a $100 million unsecured term loan, of which DTE Gas has drawn the full $100 million available. All three loans expire in April 2021 and have terms consistent with the unsecured revolving credit agreements.

DTE Energy has $9$59 million of other outstanding letters of credit which are used for various corporate purposes and are not included in the facilities described above. These letters of credit include a $50 million uncommitted letter of credit facility entered into by DTE Energy in July 2020, of which the full amount has been drawn. The facility expires in July 2021 with an automatic renewal provision.

In October 2020, DTE Energy repaid several of its unsecured term loans. As noted in Note 10 to the Consolidated Financial Statements, "Long-term Debt", DTE Energy used proceeds from the issuance of long-term debt to repay its $500 million term loan expiring March 2021 and $167 million term loan expiring June 2021. In October 2020, DTE Gas also repaid its $100 million term loan expiring April 2021.

In conjunction with maintaining certain exchange traded risk management positions, DTE Energy may be required to post collateral with its clearing ~~agent.~~agents. DTE Energy has a demand financing agreements with its clearing agents, including an agreement for up to $100 million with ~~its clearing agent.~~an indefinite term and an agreement for up to $150 million currently contracted through 2022 and subject to renewal. The $100 million 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~~amount. Both agreements allow the right of setoff with posted collateral. At ~~March 31,~~September 30, 2020, the capacity under ~~this facility~~the facilities was ~~$150~~$300 million. The amount outstanding under ~~this agreement~~the agreements was ~~$96~~$43 million and $114 million at ~~March 31,~~September 30, 2020 and December 31, 2019, respectively, and was fully offset by the posted collateral.

NOTE 12 — LEASES

Lessor

During the second quarter 2020, DTE Energy executed a sale of membership interests in the REF business accounted for as a finance lease arrangement with a term of less than 2 years, resulting in a net investment in finances leases of $8 million and selling profit of $11 million.

During the first quarter of 2020, DTE Energy completed construction of and began operating certain energy infrastructure assets for a large industrial customer under a long-term agreement, where the assets will transfer to the customer at the end of the contract term in 2040. DTE Energy has accounted for a portion of the agreement as a finance lease arrangement, recognizing a net investment of $133 million.

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

DTE Energy
March 31, 2020
(In millions)
2020 $ 17
2021 19
2022 19
2023 19
2024 19
2025 and Thereafter 273
Total minimum future lease receipts 366
Residual value of leased pipeline 19
Less unearned income 208
Net investment in finance lease 177
Less current portion 7
$ 170


	DTE Energy
	September 30, 2020
	(In millions)
2020	$	8
2021	24
2022	20
2023	19
2024	19
2025 and Thereafter	273
Total minimum future lease receipts	363
Residual value of leased pipeline	19
Less unearned income	201
Net investment in finance lease	181
Less current portion	10
	$	171

Interest income recognized under finance leases was $4$4 million and $1$2 million for the three months ended ~~March 31,~~September 30, 2020 and 2019, respectively, and $12 million and $4 million for the nine months ended September 30, 2020 and 2019, respectively.

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

Three Months Ended March 31,
2020 2019
(In millions)
Fixed payments $ 16
$ 17
Variable payments 23
27
$ 39
$ 44

DTE Energy Company — DTE Electric Company

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

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


	Three Months Ended September 30,						Nine Months Ended September 30,
	2020		2019		2020		2019
	(In millions)
Fixed payments	$	17	$	17	$	50	$	51
Variable payments	43		40		82		92
	$	60	$	57	$	132	$	143

NOTE 13 — 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 scope and associated 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 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.

DTE Energy Company — DTE Electric Company

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

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.

In May 2020, the Registrants, the United States, and the Sierra Club reached a settlement, which was memorialized in the form of a Consent Decree and a separate settlement agreement between the Registrants and Sierra Club. The ~~proceedings at~~Consent Decree was submitted and received by the U.S. District Court ~~remain stayed until May~~and the public comment period ended on June 14, 2020. The Consent Decree was entered with the U.S. District Court with an effective date of July 23, 2020 ~~while~~and DTE Electric subsequently paid a civil penalty of $2 million. As of September 30, 2020, an additional $5 million remains accrued for the ~~parties discuss potential resolution~~settlement. The U.S. District Court is still reviewing the Sierra Club Consent Decree and a final decision is expected in the fourth quarter of 2020. The Registrants do not expect the ~~matter.~~final settlement to have a material financial impact.

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 2 NOVs/FOVs,~~ DTE Electric ~~could be~~is required to ~~install additional pollution control equipment~~retire, repower, refuel, or retrofit units at ~~some or all of the~~4 power plants by the dates set forth in ~~question,~~the Consent Decree and implement ~~early retirement of facilities where control equipment is not economical, engage in~~a supplemental environmental ~~programs, and/or pay fines.~~project. The Registrants do not expect the outcome of 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 ACE rule. The ACE Rule requires the state of Michigan to submit a plan in 2022 that includes GHG standards for existing coal-fired power plant units in Michigan. These final rules do not impact DTE Energy's commitments for its electric utility operations to reduce carbon emissions 32% by the early 2020s, 50% by 2030, and 80% by 2040 from the 2005 carbon emissions levels, or its goal of net 0 emissions for its electric utility operations by ~~2050, from the 2005 carbon emissions levels.~~2050.

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.

DTE Energy Company — DTE Electric Company

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

To comply with air pollution requirements, DTE Electric has spent approximately $2.4 ~~billion through 2019.~~billion. DTE Electric does not anticipate additional capital expenditures for air pollution requirements through ~~2026,~~2025, subject to the results of future rulemakings.

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)~~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 3 former MGP sites. Cleanup of one of the MGP sites is complete, and the site is closed. 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~~above ground 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 ~~March 31,~~September 30, 2020 and December 31, 2019, DTE Electric had $6 million and $8 million, respectively, accrued for remediation. These costs are not discounted to their present value. 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.

~~DTE Energy Company — DTE Electric Company~~

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

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, July 2018, and ~~July 2018.~~September 2020. The rule is based on the continued listing of coal ash as a non-hazardous waste and relies on various self-implementation design and performance standards. DTE Electric owns and operates 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 subject to certain provisions in the CCR rule. At certain facilities, the rule currently requires ~~the installation~~ongoing sampling and testing of monitoring wells, compliance with groundwater standards, and the closure of basins at the end of the useful life of the associated power plant. ~~At other facilities, the rule requires ash laden waters be moved from earthen basins to steel and concrete tanks.~~ DTE Electric has estimated the impact of the current rule to be ~~$592~~$629 million of capital expenditures.

On ~~December 2, 2019 a proposed revision to~~September 28, 2020, the CCR ~~Rule was published in~~rule "A Holistic Approach to Closure Part A: Deadline to Initiate Closure and Enhancing Public Access to Information" became effective and establishes April 11, 2021 as the ~~Federal Register~~new deadline for all unlined impoundments (including units previously classified as "clay-lined") to ~~address~~initiate closure. Additionally, the ~~D.C. Circuit's 2018 decision regarding~~rule amends certain reporting requirements and CCR impoundments that are not lined with an engineered liner system. The rule proposes that all CCR impoundments that do not meet the engineered liner requirements must close by specific dates, and it further confirms that all clay lined impoundments are viewed as unlined.website requirements. On March 3, 2020, an additional proposed revision to the CCR Rule was published in the Federal Register that provides a process to determine if certain unlined impoundments consist of an alternative liner system that may be as protective as the current liners specified in the CCR rule, and therefore may continue to operate. DTE Electric is currently evaluating ~~options~~both the final September 28, 2020 rule and the proposed CCR rule, including the alternative liner system demonstration for our clay lined impoundments, ~~based on the range of outcomes of the current proposed rules~~ to 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 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~~has submitted to the EPA for approval to fully regulate the CCR program in Michigan in lieu of a Federal permit program.

DTE Energy Company — DTE Electric Company

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

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)~~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 2015 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. On ~~November 22, 2019,~~August 31, 2020, the EPA ~~issued a proposed rule to revise~~released the ~~technology-based effluent limitations guidelines and standards applicable to flue gas desulfurization~~final version of the ELG Reconsideration Rule which revised the regulations from the 2015 ELG rule. The Reconsideration Rule revises requirements for two specific waste streams produced by steam electric power plants: FGD wastewater and bottom ash transport water. The Reconsideration Rule also provides additional compliance opportunities by finalizing low utilization and cessation of coal burning subcategories. The Reconsideration Rule provides new opportunities for DTE Electric to evaluate existing ELG compliance ~~requirements~~strategies and ~~final deadlines~~make any necessary adjustments to ensure full compliance with the ELGs in a cost effective manner.

DTE Electric is currently evaluating compliance strategies, technologies and system designs for both FGD wastewater and bottom ash transport water ~~and FGD wastewater, and total ELG related~~system to achieve compliance ~~costs will not be known until~~with the ~~EPA completes its reconsideration of the ELG Rule expected by the end of 2020.~~final rule.

DTE Gas

Air — In June 2020, DTE Energy expanded its net zero goal to include its gas utility operations by committing to reduce greenhouse gas emissions to net 0 by 2050 from procurement of natural gas through delivery. In addition, DTE Gas committed to partner with customers to help them reduce GHG emissions through energy efficiency and participation in a voluntary emissions offset program. Further details of the DTE Gas net zero goal will emerge as the company evaluates strategies and technologies for reducing emissions.

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 8 of the MGP sites is complete, and the sites are closed. DTE Gas has also completed partial closure of 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 ~~March 31,~~September 30, 2020 and December 31, 2019, DTE Gas had $24 million and $25 million, respectively, accrued for remediation. These costs are not discounted to their present value. 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 the associated investigation and remediation costs from having a material adverse impact on DTE Gas' results of operations.

~~DTE Energy Company — DTE Electric Company~~

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

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 EGLE did not comply with the Clean Air Act. EES Coke evaluated the EPA's alleged violations and 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 cannot predict the outcome or financial impact of this FOV.

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.

Michigan's Phase 1 non-attainment area includes DTE Energy facilities in southwest Detroit and areas of Wayne County. Modeling runs by 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 (SIP)~~SIP process, DTE Energy has worked with 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 on DTE's facilities 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 in 2020. 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 ~~March 31,~~September 30, 2020 was approximately $400 million. Payment under these guarantees ~~are~~is 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 ~~March 31,~~September 30, 2020 was ~~$547~~$543 million. Payments under these guarantees are considered remote.

NEXUS Guarantees

NEXUS is party to certain 15-year capacity agreements for the transportation of natural gas with DTE Gas and Texas Eastern Transmission, LP, an unrelated third party. In conjunction with these agreements, DTE Energy provided certain guarantees on behalf of NEXUS to DTE Gas and Texas Eastern Transmission, LP, with maximum potential payments totaling $226 million and $360 million at ~~March 31,~~September 30, 2020, 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 2033. The amount of each guarantee decreases annually as payments are made by NEXUS to each of the aforementioned counterparties.

~~DTE Energy Company — DTE Electric Company~~

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

NEXUS is also party to 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 ~~March 31,~~September 30, 2020, 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.

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~~$50 million at ~~March 31,~~September 30, 2020. Payments under these guarantees are considered remote.

~~DTE Energy is~~The Registrants are 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 ~~March 31,~~September 30, 2020, DTE Energy had ~~$122~~$125 million of performance bonds ~~outstanding.~~outstanding, including $69 million for DTE Electric. In the event that such bonds are called for nonperformance, ~~DTE Energy~~the Registrants would be obligated to reimburse the issuer of the performance bond. ~~DTE Energy is~~The Registrants are 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

In July 2019, DTE Energy, as lender, entered into a revolving term credit facility with Vector, as borrower, in the amount of C$70 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. The maximum potential ~~payments~~payment under the line of credit at ~~March 31,~~September 30, 2020 is ~~$49~~$52 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 ~~5,300~~5,200 represented employees, including DTE Electric's approximate ~~2,900~~2,800 represented employees. The majority of the represented employees are under contracts that expire in 2021 and 2022.

Purchase Commitments

Utility capital expenditures, expenditures for non-utility businesses, and contributions to equity method investees will be approximately $4.5 billion and $2.6 billion in 2020 for DTE Energy and DTE Electric, respectively. The Registrants have made certain commitments in connection with the estimated 2020 annual capital expenditures and contributions to equity method investees.

Bankruptcies

DTE Energy's Power and Industrial Projects segment holds ownership interests in, and operates, 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 March 31, 2020,~~ PG~~&Es account is substantially current~~&E emerged from Chapter 11 bankruptcy effective July 1, 2020. DTE's renewable power purchase agreements were assumed under PG&E's Reorganization Plan and ~~outstanding accounts receivable from PG&E are not material. Therefore, DTE Energy determined no reserve was necessary.~~

~~DTE Energy Company — DTE Electric Company~~

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

~~As of March 31, 2020, the book value of long-lived assets and operating lease right-of-use assets used in producing electric output~~payment has been received for sale to PG&E was approximately $100 million and $7 million, respectively. The Power and Industrial Projects segment also has equity investments, including a note receivable, of approximately $69 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 0t have an impairment loss as of December 31, 2018. DTE Energy also determined there was 0t an other-than-temporary decline in its equity investments. DTE has not identified subsequent facts or circumstances that would cause a changeall past due receivables related to these conclusions through March 31, 2020. 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.agreements.

COVID-19 Pandemic

DTE Energy ~~will continue to monitor~~is actively monitoring the impact of the COVID-19 pandemic on supply chains, markets, counterparties, and customers, and any related impacts on operating costs, customer demand, and recoverability of assets that could materially impact the ~~Registrants~~Registrants' financial results. ~~At this time,~~

Impacts from the COVID-19 pandemic for the three and nine months ended September 30, 2020 include a reduction in DTE Electric sales volumes from commercial and industrial customers and an increase in residential customer sales volumes. This shift contributed to a net reduction in DTE Electric sales volumes for the three and nine months ended September 30, 2020, but the impact to earnings has been mitigated by favorable rate mix.

Operation and maintenance expense has also been impacted by COVID-19, primarily at DTE Electric, due to higher costs for personal protective equipment and other health and safety related costs, including shift premiums and related expenses associated with the sequestration of certain employees critical to continued operations.

DTE Energy Company — DTE Electric Company

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

For non-utility businesses, COVID-19 has primarily impacted the Power and Industrial Projects segment, contributing to lower production in the REF business and lower demand in the Steel business. These impacts were most significant in March and April 2020 when government orders to cease non-essential business activity resulted in temporary shut-down of certain operations. While these impacts have adversely affected Operating revenues and Other income from REF entities, Net income has not been significantly impacted due to related decreases in Operating expenses.

Finally, as discussed in Note 2, "Significant Accounting Policies", the allowance for doubtful accounts was increased at our utilities due to additional risk relating to COVID-19. However, the impact of these increases has not been material.

In consideration of the above factors and all other current and expected impacts to the Registrants' performance and cash flows resulting from the COVID-19 pandemic, there have been no material adjustments or reserves deemed necessary to the Consolidated Financial Statements as of September 30, 2020.

The Registrants cannot predict the ~~ultimate impact~~future impacts of ~~these factors to our~~the COVID-19 pandemic on the Consolidated Financial Statements, as ~~future~~ developments involving ~~the severity of~~ COVID-19 ~~actions to contain or treat~~and its ~~impact, and the extent to which normal~~related effects on economic and operating conditions ~~can resume are~~remain highly uncertain.

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 6 and 9 to the Consolidated Financial Statements, "Regulatory Matters" and "Financial and Other Derivative Instruments," respectively.

NOTE 14 — 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 March 31,													Three Months Ended September 30,
	2020			2019			2020			2019				2020		2019		2020		2019
	(In millions)													(In millions)
Service cost	$	25		$	21		$	6		$	5		Service cost	$	25	$	21	$	7	$	5
Interest cost	46			55			14			18			Interest cost	46		55		14		18
Expected return on plan assets	(83		)	(81		)	(32		)	(31		)	Expected return on plan assets	(84)		(82)		(32)		(30)
Amortization of:													Amortization of:
Net actuarial loss	43			32			5			3			Net actuarial loss	43		33		4		3
Prior service credit	—			—			(5		)	(2		)	Prior service credit	0		0		(5)		(3)
Settlements													Settlements	2		0		0		0
Net periodic benefit cost (credit)	$	31		$	27		$	(12	)	$	(7	)	Net periodic benefit cost (credit)	$	32	$	27	$	(12)	$	(7)

DTE Energy Company — DTE Electric Company

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


	Pension Benefits						Other Postretirement Benefits
	Nine Months Ended September 30,
	2020		2019		2020		2019
	(In millions)
Service cost	$	74	$	63	$	20	$	16
Interest cost	139		164		42		53
Expected return on plan assets	(250)		(244)		(96)		(92)
Amortization of:
Net actuarial loss	129		99		12		9
Prior service credit	0		0		(15)		(7)
Settlements	2		0		0		0
Net periodic benefit cost (credit)	$	94	$	82	$	(37)	$	(21)

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~~non-qualified 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~~non-qualified pension benefit costs. DTE Electric's allocated portion of pension benefit costs included in capital expenditures and operating and maintenance expense were ~~$26~~$28 million and $23 million for the three months ended ~~March 31,~~September 30, 2020 and 2019, respectively, and $79 million and $68 million for the nine months ended September 30, 2020 and 2019, 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:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2020		2019		2020		2019
	(In millions)						(In millions)
Service cost	$	5	$	4	$	15	$	12
Interest cost	11		13		32		40
Expected return on plan assets	(21)		(21)		(65)		(63)
Amortization of:
Net actuarial loss	2		1		8		3
Prior service credit	(3)		(1)		(10)		(5)
Net periodic benefit credit	$	(6)	$	(4)	$	(20)	$	(13)

Other Postretirement Benefits
Three Months Ended March 31,
2020 2019
(In millions)
Service cost $ 5
$ 4
Interest cost 11
13
Expected return on plan assets (22 ) (21 )
Amortization of:
Net actuarial loss 3
1
Prior service credit (4 ) (1 )
Net periodic benefit credit $ (7 ) $ (4 )

~~At the discretion of management, and depending upon economic and financial market conditions,~~ DTE Energy ~~anticipates making up~~Company — DTE Electric Company

Combined Notes to ~~$185~~Consolidated Financial Statements (Unaudited) — (Continued)

Pension and Other Postretirement Contributions

For the nine months ended September 30, 2020, DTE Energy made contributions of $84 million ~~in contributions~~ to ~~the~~its qualified pension plans, ~~during 2020,~~ including ~~$160~~$82 million of common stock and $2 million of cash contributions. Details of the contribution of common stock to the DTE Energy Company Affiliates Employee Benefit Plans Master Trust are as follows:


Date	Number of Shares	Price per Share		Amount
				(In millions)
September 8, 2020	694,444	$	118.08	$	82

The above contribution was made on behalf of DTE Electric ~~contributions.~~and DTE Gas, for which DTE Electric and DTE Gas paid DTE Energy ~~does 0t anticipate making~~cash consideration of $60 million and $22 million, respectively, in September 2020. DTE Energy is currently assessing whether any additional contributions will be made to its ~~other~~pension plans in 2020. If any further contributions are made, they are not expected to be material to the Consolidated Financial Statements. NaN contributions are anticipated for DTE Energy's postretirement benefit plans in 2020.

NOTE 15 — 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.

~~DTE Energy Company — DTE Electric Company~~

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

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 September 30,						Nine Months Ended September 30,
	2020		2019		2020		2019
	(In millions)
Electric	$	16	$	16	$	46	$	43
Gas	4		3		12		8
Gas Storage and Pipelines	8		11		17		17
Power and Industrial Projects	134		160		308		462
Energy Trading	9		4		23		16
Corporate and Other	1		1		2		2
	$	172	$	195	$	408	$	548

Three Months Ended March 31,
2020 2019
(In millions)
Electric $ 15
$ 14
Gas 4
2
Gas Storage and Pipelines 4
3
Power and Industrial Projects 94
145
Energy Trading 6
7
Corporate and Other 1
1
$ 124
$ 172
Financial data of DTE Energy's business segments follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2020		2019		2020		2019
	(In millions)
Operating Revenues — Utility operations
Electric	$	1,690	$	1,520	$	4,211	$	3,945
Gas	173		155		964		1,043
Operating Revenues — Non-utility operations
Electric	3		0		10		0
Gas Storage and Pipelines	204		126		546		363
Power and Industrial Projects	324		406		850		1,196
Energy Trading	1,061		1,105		2,714		3,519
Corporate and Other	1		2		2		3
Reconciliation and Eliminations	(172)		(195)		(408)		(548)
Total	$	3,284	$	3,119	$	8,889	$	9,521


	Three Months Ended September 30,						Nine Months Ended September 30,
	2020		2019		2020		2019
	(In millions)
Net Income (Loss) Attributable to DTE Energy by Segment:
Electric	$	398	$	307	$	675	$	587
Gas	(20)		(38)		102		121
Gas Storage and Pipelines	104		60		246		158
Power and Industrial Projects	47		49		102		104
Energy Trading	(28)		(14)		5		12
Corporate and Other	(25)		(45)		(37)		(80)
Net Income Attributable to DTE Energy Company	$	476	$	319	$	1,093	$	902

NOTE 16 — RELATED PARTY TRANSACTIONS

DTE Energy enters into related party transactions with certain equity method investees, primarily NEXUS.

DTE Gas is party to a 15-year capacity lease agreement with NEXUS for the transportation of natural gas. Under the lease agreement, DTE Gas provides firm pipeline capacity in the DTE Gas system in order for NEXUS to provide service to its customers from an interconnect between NEXUS and DTE Gas. DTE Gas charges NEXUS a fixed daily pipeline reservation charge for this capacity.

DTE Energy Company — DTE Electric Company

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

DTE Electric and DTE Gas are also party to respective 20-year and 15-year service agreements with NEXUS for the transportation of natural gas. Under the service agreements, NEXUS provides firm pipeline capacity to transport natural gas to DTE Electric and to service DTE Gas customers. DTE Electric and DTE Gas incur a firm daily pipeline reservation charge, which is recovered through the respective PSCR and GCR mechanisms.

~~Financial data~~DTE Energy Trading also enters into related party transactions with NEXUS for the transportation of ~~DTE Energy's business segments follows:~~natural gas.

The following table summarizes the amounts resulting from these transactions included in the Consolidated Statements of Operations:

Three Months Ended March 31,
2020 2019
(In millions)
Operating Revenues — Utility operations
Electric $ 1,212
$ 1,235
Gas 540
645
Operating Revenues — Non-utility operations
Electric 4
—
Gas Storage and Pipelines 170
116
Power and Industrial Projects 307
388
Energy Trading 913
1,301
Corporate and Other —
1
Reconciliation and Eliminations (124 ) (172 )
Total $ 3,022
$ 3,514


	Three Months Ended September 30,						Nine Months Ended September 30,
	2020		2019		2020		2019
	(In millions)
Operating Revenues — Utility operations
DTE Gas	$	8	$	8	$	24	$	24
Fuel, purchased power, and gas — utility
DTE Electric	$	2	$	2	$	6	$	6
DTE Gas	$	2	$	2	$	14	$	15
Fuel, purchased power, and gas — non-utility
DTE Energy Trading	$	7	$	2	$	20	$	5

Other related party transactions with equity method investees include transactions with Vector Pipeline and Millennium Pipeline. These transactions were not material for the three and nine months ended September 30, 2020 and 2019.

Three Months Ended March 31,
2020 2019
(In millions)
Net Income (Loss) Attributable to DTE Energy by Segment:
Electric $ 94
$ 147
Gas 121
151
Gas Storage and Pipelines 72
48
Power and Industrial Projects 30
26
Energy Trading 34
32
Corporate and Other (11 ) (3 )
Net Income Attributable to DTE Energy Company $ 340
$ 401
NOTE 17 — SUBSEQUENT EVENT

On October 27, 2020, DTE Energy announced that its Board of Directors has authorized management to pursue a plan to spin-off the DTE Midstream business. DTE Energy expects to complete the separation by mid-year 2021, subject to final approval by its Board of Directors, the Form 10 registration statement being declared effective by the Securities and Exchange Commission, regulatory approvals, and satisfaction of other conditions. DTE Energy shareholder approval is not required to effect the separation transaction. Upon closing of the transaction, DTE Energy shareholders will own shares of both DTE Energy and the new Midstream company. The planned separation transaction is intended to be a tax-free spin to DTE Energy shareholders for U.S. federal income tax purposes. There can be no assurance that any separation transaction will ultimately occur or, if one does occur, of its terms or timing.

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 also 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 March 31,					Three Months Ended September 30,						Nine Months Ended September 30,
	2020		2019			2020		2019		2020		2019
	(In millions, except per share amounts)					(In millions, except per share amounts)
Net Income Attributable to DTE Energy Company	$	340	$	401	Net Income Attributable to DTE Energy Company	$	476	$	319	$	1,093	$	902
Diluted Earnings per Common Share	$	1.76	$	2.19	Diluted Earnings per Common Share	$	2.46	$	1.73	$	5.66	$	4.91

The ~~decrease~~increase in Net Income for the ~~first quarter~~three months ended September 30, 2020 was primarily due to higher earnings in the Electric, Gas, Gas Storage and Pipelines, and Corporate and Other segments, partially offset by lower earnings in the Energy Trading segment. The increase in Net Income for the nine months ended September 30, 2020 was primarily due to higher earnings in the Electric, Gas Storage and ~~Gas~~Pipelines, and Corporate and Other segments, partially offset by ~~higher~~lower earnings in the Gas ~~Storage~~ and ~~Pipelines segment.~~Energy Trading segments.

During the first quarter 2020, the COVID-19 pandemic began impacting Michigan and the other service territories throughout the United States in which the Registrants operate. DTE Energy ~~has taken~~took certain safety precautions including directing employees to work remotely whenever possible and pausing all non-critical construction projects. DTE Energy has complied with Michigan and other states' "stay-at-home" orders, which require employees to stay home unless their work is necessary to sustain or protect life, such as providing safe and reliable energy.

business activities. The spread of COVID-19 and efforts to contain the virus ~~have~~ resulted in closures and reduced operations of businesses, governmental agencies, and other institutions. ~~This has~~

Beginning in May 2020, DTE Energy resumed business activities that had been temporarily suspended. Local businesses and other institutions also ~~contributed~~resumed operations as new cases of COVID-19 began to ~~disruption~~decline and volatility in the financial markets. For certain non-qualified benefit plan trusts for which gains and losses affect earnings, this impact to financial markets resulted in pre-tax investment losses of $31 million for the Electric segment and $3 million for the Gas segment for the three months ended March 31, 2020.government restrictions were reduced.

~~Other impacts~~Impacts from the COVID-19 pandemic have included ~~decreased demand~~a reduction in sales volumes from commercial and industrial customers and an increase in sales volumes from residential customers within the Electric ~~segment, which contributed to lower base sales for the quarter, and lower production within~~segment. COVID-19 has also impacted the Power and Industrial Projects segment, contributing to lower production in the REF business and lower demand in the Steel business.

Operation and maintenance expense has been impacted by COVID-19, primarily in the Electric segment, due to higher costs for personal protective equipment and other health and safety related costs, including shift premiums and related expenses associated with the sequestration of certain ~~customers reducing their~~employees critical to continued operations. ~~The allowance for doubtful accounts was also increased for our utility customers. These impacts were not material to the Registrants' financial results for the three months ended March 31, 2020.~~

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

STRATEGY

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.

DTE Energy is committed to reduce the carbon emissions of its electric utility operations by 32% by the early 2020s, 50% by 2030, and 80% by 2040 from the 2005 carbon emissions levels. DTE Energy is also committed to a net zero carbon emissions goal by 2050 for its electric and gas utility operations. To achieve 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 2020-2024 period are estimated at ~~$12.0~~$12 billion, comprised of ~~$4.0~~$4 billion for capital replacements and other projects, ~~$5.0~~$5 billion for distribution infrastructure, and ~~$3.0~~$3 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~~River Rouge's final unit will retire in 2021 and five additional coal-fired generating units at Trenton Channel and St. Clair will be retired ~~through 2022 at the Trenton Channel, River Rouge, and St. Clair facilities.~~in 2022. 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 2020-2024 period are estimated at ~~$3.0~~$3 billion, comprised of $1.4 billion for base infrastructure and $1.6 billion for gas main renewal, meter move out, and pipeline integrity programs.

DTE Electric and DTE Gas plan 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 2020-2024 period are estimated at $2.2 billion to $2.7 billion for gathering and pipeline investments and expansions. Power and Industrial Projects' capital investments over the 2020-2024 period are estimated at ~~$1.0~~$1 billion to $1.4 billion for industrial energy services and RNG projects.

ENVIRONMENTAL MATTERS

The Registrants are subject to extensive environmental 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 13 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.

In the near term, DTE Energy will continue to monitor the impact of the COVID-19 pandemic on supply chains, markets, counterparties, and customers, and any related impacts on the operating costs, customer demand, and recoverability of assets in our business segments that could materially impact the ~~Registrants~~Registrants' financial results. ~~At this time,~~

DTE Energy expects the reduction in electric demand from commercial and industrial customers and increased demand from residential customers to continue in the near term. Operation and maintenance expenses will also continue to be impacted by the need for personal protective equipment and other safety-related costs.

DTE Energy will continue to review the allowance for doubtful accounts for any additional risk related to COVID-19 and will monitor any ongoing challenges to production and demand in the Power and Industrial Projects segment. DTE Energy will also continue to monitor and evaluate the impact of any regulatory and legislative activities related to the COVID-19 pandemic. Refer to Note 6 to the Consolidated Financial Statements, "Regulatory Matters," for further information on current regulatory issues.

The Registrants cannot predict the ultimate impact of these factors to our Consolidated Financial Statements as future developments involving ~~the severity of~~ COVID-19 ~~actions to contain or treat its impact,~~ and ~~the extent to which normal~~related impacts on economic and operating conditions ~~can resume~~ are highly uncertain.

DTE Energy will also monitor and evaluate the impact of any regulatory and legislative activities related to the COVID-19 pandemic, including the MPSC order on April 15, 2020 which authorized the deferral of certain uncollectible expenses. Refer to Note 6 to the Consolidated Financial Statements, "Regulatory Matters," for further detail regarding the order.

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 utility and gas utility 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. For the Electric segment, non-utility Operating Revenues are reported separately so that Utility Margin can be used to assess utility performance.

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 related credits, 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 September 30,						Nine Months Ended September 30,
	2020		2019		2020		2019
	(In millions)
Net Income (Loss) Attributable to DTE Energy by Segment
Electric	$	398	$	307	$	675	$	587
Gas	(20)		(38)		102		121
Gas Storage and Pipelines	104		60		246		158
Power and Industrial Projects	47		49		102		104
Energy Trading	(28)		(14)		5		12
Corporate and Other	(25)		(45)		(37)		(80)
Net Income Attributable to DTE Energy Company	$	476	$	319	$	1,093	$	902

Three Months Ended March 31,
2020 2019
(In millions)
Net Income (Loss) Attributable to DTE Energy by Segment
Electric $ 94
$ 147
Gas 121
151
Gas Storage and Pipelines 72
48
Power and Industrial Projects 30
26
Energy Trading 34
32
Corporate and Other (11 ) (3 )
Net Income Attributable to DTE Energy Company $ 340
$ 401

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 March 31,					Three Months Ended September 30,						Nine Months Ended September 30,
	2020		2019			2020		2019		2020		2019
	(In millions)					(In millions)
Operating Revenues — Utility operations	$	1,212	$	1,235	Operating Revenues — Utility operations	$	1,690	$	1,520	$	4,211	$	3,945
Fuel and purchased power — utility	294		346		Fuel and purchased power — utility	449		399		1,083		1,067
Utility Margin	918		889		Utility Margin	1,241		1,121		3,128		2,878
Operating Revenues — Non-utility operations	4		—		Operating Revenues — Non-utility operations	3		—		10		—
Operation and maintenance	356		352		Operation and maintenance	358		351		1,063		1,033
Depreciation and amortization	261		221		Depreciation and amortization	262		244		779		694
Taxes other than income	83		84		Taxes other than income	79		80		220		233
Asset (gains) losses and impairments, net					Asset (gains) losses and impairments, net	—		—		41		13
Operating Income	222		232		Operating Income	545		446		1,035		905
Other (Income) and Deductions	115		56		Other (Income) and Deductions	89		80		264		205
Income Tax Expense	13		29		Income Tax Expense	58		59		96		113
Net Income Attributable to DTE Energy Company	$	94	$	147	Net Income Attributable to DTE Energy Company	$	398	$	307	$	675	$	587

See DTE Electric's Consolidated Statements of Operations for a complete view of its results. Differences between the Electric segment and DTE Electric's Consolidated Statements of Operations are primarily due to non-utility operations at DTE Sustainable Generation and the classification of certain benefit costs. Refer to Note 14 to the Consolidated Financial Statements, "Retirement Benefits and Trusteed Assets" for additional information.

Utility Margin increased ~~$29~~$120 million and $250 million in the three and nine months ended ~~March 31, 2020.~~September 30, 2020, 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		Nine Months
	(In millions)
Implementation of new rates	$	47	$	168
Base sales / rate mix	61		71
Weather	9		20
Regulatory mechanism — TRM	—		(15)


Other regulatory mechanisms and other	3		6
Increase in Utility Margin	$	120	$	250

Three Months
(In millions)
Implementation of new rates $ 68
Base sales (5 )
Regulatory mechanism — TRM (13 )
Weather (33 )
Other regulatory mechanisms and other 12
Increase in Utility Margin $ 29


	Three Months Ended March 31,			Three Months Ended September 30,			Nine Months Ended September 30,
	2020	2019		2020	2019	2020	2019
	(In thousands of MWh)			(In thousands of MWh)
DTE Electric Sales			DTE Electric Sales
Residential	3,570	3,688	Residential	5,154	4,682	12,646	11,579
Commercial	3,909	4,077	Commercial	4,507	4,802	11,936	12,947
Industrial	2,302	2,460	Industrial	2,321	2,555	6,205	7,513
Other	60	63	Other	49	51	157	162
	9,841	10,288		12,031	12,090	30,944	32,201
Interconnection sales^(a)	408	1,030	Interconnection sales^(a)	295	784	823	2,525
Total DTE Electric Sales	10,249	11,318	Total DTE Electric Sales	12,326	12,874	31,767	34,726

DTE Electric Deliveries			DTE Electric Deliveries
Retail and wholesale	9,841	10,288	Retail and wholesale	12,031	12,090	30,944	32,201
Electric retail access, including self-generators^(b)	1,043	1,120	Electric retail access, including self-generators^(b)	1,030	1,282	2,865	3,516
Total DTE Electric Sales and Deliveries	10,884	11,408	Total DTE Electric Sales and Deliveries	13,061	13,372	33,809	35,717



	Three Months Ended March 31,
	2020			2019
	(In millions)
Net Income	$	342		$	408

Other comprehensive income (loss), net of tax:
Benefit obligations, net of taxes of $1 for both periods	3			4
Net unrealized gains (losses) on derivatives during the period, net of taxes of $—, and $(1), respectively	1			(3		)
Foreign currency translation	(1		)	1
Other comprehensive income	3			2

Comprehensive income	345			410
Less: Comprehensive income attributable to noncontrolling interests	2			7
Comprehensive Income Attributable to DTE Energy Company	$	343		$	403


	September 30,		December 31,
	2020		2019
	(In millions)
ASSETS
Current Assets
Cash and cash equivalents	$	945	$	93
Restricted cash	17		0
Accounts receivable (less allowance for doubtful accounts of $87 and $91, respectively)
Customer	1,419		1,642
Other	140		245
Inventories
Fuel and gas	412		373
Materials and supplies	403		386
Derivative assets	65		133
Regulatory assets	125		5

Other	295		209
	3,821		3,086
Investments
Nuclear decommissioning trust funds	1,664		1,661
Investments in equity method investees	1,865		1,862
Other	186		265
	3,715		3,788
Property
Property, plant, and equipment	37,256		35,072
Accumulated depreciation and amortization	(10,097)		(9,755)
	27,159		25,317
Other Assets
Goodwill	2,465		2,464
Regulatory assets	4,187		4,171
Intangible assets	2,358		2,393
Notes receivable	255		202
Derivative assets	29		41
Prepaid postretirement costs	125		69
Operating lease right-of-use assets	157		169
Other	168		182
	9,744		9,691
Total Assets	$	44,439	$	41,882



	March 31,			December 31,
	2020			2019
	(In millions)
ASSETS
Current Assets
Cash and cash equivalents	$	552		$	93
Restricted cash	124			—
Accounts receivable (less allowance for doubtful accounts of $90 and $91, respectively)
Customer	1,482			1,642
Other	260			245
Inventories
Fuel and gas	294			373
Materials and supplies	413			386
Derivative assets	112			133
Regulatory assets	21			5
Other	268			209
	3,526			3,086
Investments
Nuclear decommissioning trust funds	1,439			1,661
Investments in equity method investees	1,867			1,862
Other	228			265
	3,534			3,788
Property
Property, plant, and equipment	36,146			35,072
Accumulated depreciation and amortization	(9,910		)	(9,755		)
	26,236			25,317
Other Assets
Goodwill	2,466			2,464
Regulatory assets	4,356			4,171
Intangible assets	2,402			2,393
Notes receivable	217			202
Derivative assets	58			41
Prepaid postretirement costs	83			69
Operating lease right-of-use assets	164			169
Other	190			182
	9,936			9,691
Total Assets	$	43,232		$	41,882


	September 30,		December 31,
	2020		2019
	(In millions, except shares)
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	964	$	1,076
Accrued interest	167		147
Dividends payable	196		195
Short-term borrowings	988		828

Current portion long-term debt, including finance leases	467		687
Derivative liabilities	60		83

Regulatory liabilities	34		65
Operating lease liabilities	32		33
Acquisition related deferred payment	0		379
Other	509		504
	3,417		3,997
Long-Term Debt (net of current portion)
Mortgage bonds, notes, and other	17,052		14,778
Junior subordinated debentures	1,146		1,146
Finance lease liabilities	21		11
	18,219		15,935
Other Liabilities
Deferred income taxes	2,736		2,315
Regulatory liabilities	3,129		3,264
Asset retirement obligations	2,794		2,672
Unamortized investment tax credit	163		166
Derivative liabilities	44		86
Accrued pension liability	682		808

Nuclear decommissioning	251		249
Operating lease liabilities	116		127
Other	400		427
	10,315		10,114
Commitments and Contingencies (Notes 6 and 13)

Equity
Common stock (No par value, 400,000,000 shares authorized, and 193,559,593 and 192,208,533 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively)	5,369		5,233
Retained earnings	7,092		6,587
Accumulated other comprehensive loss	(138)		(148)
Total DTE Energy Company Equity	12,323		11,672
Noncontrolling interests	165		164
Total Equity	12,488		11,836
Total Liabilities and Equity	$	44,439	$	41,882



	March 31,			December 31,
	2020			2019
	(In millions, except shares)
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	1,028		$	1,076
Accrued interest	169			147
Dividends payable	195			195
Short-term borrowings	1,131			828
Current portion long-term debt, including finance leases	387			687
Derivative liabilities	88			83
Gas inventory equalization	62			—
Regulatory liabilities	61			65
Operating lease liabilities	32			33
Acquisition related deferred payment	382			379
Other	437			504
	3,972			3,997
Long-Term Debt (net of current portion)
Mortgage bonds, notes, and other	15,870			14,778
Junior subordinated debentures	1,146			1,146
Finance lease liabilities	10			11
	17,026			15,935
Other Liabilities
Deferred income taxes	2,553			2,315
Regulatory liabilities	3,244			3,264
Asset retirement obligations	2,721			2,672
Unamortized investment tax credit	165			166
Derivative liabilities	47			86
Accrued pension liability	795			808
Nuclear decommissioning	215			249
Operating lease liabilities	124			127
Other	382			427
	10,246			10,114
Commitments and Contingencies (Notes 6 and 13)

Equity
Common stock (No par value, 400,000,000 shares authorized, and 192,611,882 and 192,208,533 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively)	5,235			5,233
Retained earnings	6,732			6,587
Accumulated other comprehensive loss	(145		)	(148		)
Total DTE Energy Company Equity	11,822			11,672
Noncontrolling interests	166			164
Total Equity	11,988			11,836
Total Liabilities and Equity	$	43,232		$	41,882


				Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interests
	Common Stock
	Shares	Amount										Total
	(Dollars in millions, shares in thousands)
Balance, December 31, 2019	192,209	$	5,233	$	6,587	$	(148)	$	164	$	11,836

Net Income	—	—		340		—		2		342
Dividends declared on common stock ($1.01 per Common Share)	—	—		(195)		—		—		(195)



Other comprehensive income, net of tax	—	—		—		3		—		3
Stock-based compensation, net distributions to noncontrolling interests, and other	403	2		—		—		—		2
Balance, March 31, 2020	192,612	$	5,235	$	6,732	$	(145)	$	166	$	11,988

Net Income	—	—		277		—		—		277
Dividends declared on common stock ($2.03 per Common Share)	—	—		(390)		—		—		(390)



Other comprehensive income, net of tax	—	—		—		4		—		4

Stock-based compensation, net contributions from noncontrolling interests, and other	39	12		(1)		—		2		13
Balance, June 30, 2020	192,651	$	5,247	$	6,618	$	(141)	$	168	$	11,892

Net Income	—	—		476		—		1		477

Issuance of common stock	98	11		—		—		—		11

Contribution of common stock to pension plan	694	82		—		—		—		82
Other comprehensive income, net of tax	—	—		—		3		—		3

Stock-based compensation, net distributions to noncontrolling interests, and other	117	29		(2)		—		(4)		23
Balance, September 30, 2020	193,560	$	5,369	$	7,092	$	(138)	$	165	$	12,488


				Additional Paid-in Capital		Retained Earnings
	Common Stock
	Shares	Amount								Total
	(Dollars in millions, shares in thousands)
Balance, December 31, 2019	138,632	$	1,386	$	3,425	$	2,384	$	7,195
Net Income	—	—		—		94		94
Dividends declared on common stock	—	—		—		(135)		(135)


Balance, March 31, 2020	138,632	1,386		3,425		2,343		7,154
Net Income	—	—		—		183		183
Dividends declared on common stock	—	—		—		(134)		(134)


Balance, June 30, 2020	138,632	1,386		3,425		2,392		7,203
Net Income	—	—		—		400		400
Dividends declared on common stock	—	—		—		(135)		(135)

Capital contribution by parent company	—	—		400		—		400
Balance, September 30, 2020	138,632	$	1,386	$	3,825	$	2,657	$	7,868


	March 31, 2020						December 31, 2019							September 30, 2020										December 31, 2019
	SGG^(a)		Other		Total		SGG^(a)		Other		Total			SGG^(a)		Other		Total		SGG^(a)		Other		Total
	(In millions)													(In millions)
ASSETS													ASSETS
Cash and cash equivalents	$	20	$	13	$	33	$	16	$	11	$	27	Cash and cash equivalents	$	33	$	22	$	55	$	16	$	11	$	27

Accounts receivable	7		19		26		8		19		27		Accounts receivable	7		18		25		8		19		27
Inventories	—		101		101		—		74		74		Inventories	0		102		102		0		74		74
Property, plant, and equipment, net	408		31		439		410		33		443		Property, plant, and equipment, net	404		25		429		410		33		443
Goodwill	25		—		25		25		—		25		Goodwill	25		0		25		25		0		25
Intangible assets	538		—		538		542		—		542		Intangible assets	531		0		531		542		0		542
Other current and long-term assets	2		—		2		2		—		2		Other current and long-term assets	1		19		20		2		0		2
	$	1,000	$	164	$	1,164	$	1,003	$	137	$	1,140		$	1,001	$	186	$	1,187	$	1,003	$	137	$	1,140

LIABILITIES													LIABILITIES
Accounts payable and accrued current liabilities	$	1	$	14	$	15	$	2	$	13	$	15	Accounts payable and accrued current liabilities	$	0	$	19	$	19	$	2	$	13	$	15
Short-term borrowings													Short-term borrowings	0		21		21		0		0		0

Other current and long-term liabilities	6		7		13		7		7		14		Other current and long-term liabilities	6		4		10		7		7		14
	$	7	$	21	$	28	$	9	$	20	$	29		$	6	$	44	$	50	$	9	$	20	$	29



	Effective Tax Rate
	Three Months Ended March 31,
	2020		2019
DTE Energy	13	%	12	%
DTE Electric	12	%	16	%


	DTE Energy										DTE Electric
	Year of origination
	2020		2019		2018 and prior		Total		2020 and prior
	(In millions)
Notes receivable
Internal grade 1	$	0	$	18	$	9	$	27	$	18
Internal grade 2	60		19		6		85		0
Total notes receivable^(a)	$	60	$	37	$	15	$	112	$	18

Net investment in leases
Net investment in leases, internal grade 1	$	8	$	0	$	40	$	48	$	0
Net investment in leases, internal grade 2	132		0		1		133		0
Total net investment in leases^(a)	$	140	$	0	$	41	$	181	$	0



	DTE Energy									DTE Electric
	Trade accounts receivable			Other receivables			Total			Trade accounts receivable
	(In millions)
Beginning reserve balance at 1/1/2020	$	87		$	4		$	91		$	46
Current period provision	34			1			35			17
Write-offs charged against allowance	(51		)	(1		)	(52		)	(30		)
Recoveries of amounts previously written off	16			—			16			10
Ending reserve balance at 3/31/2020	$	86		$	4		$	90		$	43



	(In millions)
Contract intangibles	$	18
Property, plant, and equipment, net	76
Working capital	3
Total	$	97



	(In millions)
Assets
Cash	$	62
Accounts receivable	31
Property, plant, and equipment, net	1,035
Goodwill	173
Customer relationship intangibles	1,473
Other current assets	1
	$	2,775
Liabilities
Accounts payable	$	26
Acquisition related deferred payment	380
Other current liabilities	2
Asset retirement obligations	9
	$	417
Total cash consideration	$	2,358


~~(a)~~	~~Revenues under the Electric segment include $1,212 million related to DTE Electric and $4 million of Other revenues related to DTE Sustainable Generation.~~


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


~~(c)~~	~~Includes $4 million of other revenues outside the scope of Topic 606 for the three months ended March 31, 2020 and 2019.~~


~~(d)~~	Includes $2 million under Alternative Revenue Programs and $2 million of other revenues, which are outside the scope of Topic 606 for the three months ended March 31, 2020 and includes $3 million under Alternative Revenue Programs and $2 million of other revenues, which are both outside the scope of Topic 606 for the three months ended March 31, 2019.


~~(e)~~	~~Includes revenues outside the scope of Topic 606 primarily related to $2 million of contracts accounted for as leases for the three months ended March 31, 2020 and 2019.~~


~~(f)~~	~~Includes revenues outside the scope of Topic 606 primarily related to $27 million and $31 million of contracts accounted for as leases for the three months ended March 31, 2020 and 2019, respectively.~~


~~(g)~~	~~Includes revenues outside the scope of Topic 606 primarily related to $637 million and $926 million of derivatives for the three months ended March 31, 2020 and 2019, respectively.~~



	DTE Energy
	(In millions)
Beginning Balance, January 1, 2020	$	75
Increases due to cash received or receivable, excluding amounts recognized as revenue during the period	17
Revenue recognized that was included in the deferred revenue balance at the beginning of the period	(9		)
Ending Balance, March 31, 2020	$	83


~~(a)~~	~~Equity Units excluded from the calculation of diluted EPS were approximately 9.7 million for the three months ended March 31, 2020 as the dilutive stock price threshold was not met.~~


•	~~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.


	September 30, 2020																						December 31, 2019
	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)
Assets
Cash equivalents^(d)	$	567	$	0	$	0	$	—	$	—	$	567	$	15	$	0	$	0	$	—	$	—	$	15
Nuclear decommissioning trusts
Equity securities	872		0		0		141		—		1,013		1,046		0		0		—		—		1,046
Fixed income securities	122		325		0		80		—		527		160		378		0		—		—		538
Private equity and other	0		0		0		78		—		78		0		0		0		43		—		43
Cash equivalents	46		0		0		—		—		46		34		0		0		—		—		34
Other investments^(e)
Equity securities	49		0		0		—		—		49		140		0		0		—		—		140
Fixed income securities	6		0		0		—		—		6		79		0		0		—		—		79
Cash equivalents	98		0		0		—		—		98		4		0		0		—		—		4

Derivative assets
Commodity contracts^(f)
Natural gas	126		72		42		—		(194)		46		205		76		74		—		(266)		89
Electricity	0		103		34		—		(106)		31		0		223		83		—		(225)		81
Environmental & Other	0		194		7		—		(186)		15		0		110		3		—		(110)		3
Foreign currency exchange contracts	0		2		0		—		0		2		0		1		0		—		0		1
Total derivative assets	126		371		83		—		(486)		94		205		410		160		—		(601)		174
Total	$	1,886	$	696	$	83	$	299	$	(486)	$	2,478	$	1,683	$	788	$	160	$	43	$	(601)	$	2,073

Liabilities
Derivative liabilities
Commodity contracts^(f)
Natural gas	$	(118)	$	(66)	$	(81)	$	—	$	185	$	(80)	$	(221)	$	(41)	$	(89)	$	—	$	266	$	(85)
Electricity	0		(97)		(29)		—		104		(22)		0		(231)		(67)		—		225		(73)
Environmental & Other	(3)		(168)		0		—		171		0		0		(121)		0		—		110		(11)

Foreign currency exchange contracts	0		(2)		0		—		0		(2)		0		0		0		—		0		0

Total	$	(121)	$	(333)	$	(110)	$	—	$	460	$	(104)	$	(221)	$	(393)	$	(156)	$	—	$	601	$	(169)
Net Assets (Liabilities) at end of period	$	1,765	$	363	$	(27)	$	299	$	(26)	$	2,374	$	1,462	$	395	$	4	$	43	$	0	$	1,904
Assets
Current	$	679	$	273	$	59	$	—	$	(379)	$	632	$	218	$	320	$	123	$	—	$	(513)	$	148
Noncurrent	1,207		423		24		299		(107)		1,846		1,465		468		37		43		(88)		1,925
Total Assets	$	1,886	$	696	$	83	$	299	$	(486)	$	2,478	$	1,683	$	788	$	160	$	43	$	(601)	$	2,073
Liabilities
Current	$	(112)	$	(243)	$	(66)	$	—	$	361	$	(60)	$	(211)	$	(300)	$	(85)	$	—	$	513	$	(83)
Noncurrent	(9)		(90)		(44)		—		99		(44)		(10)		(93)		(71)		—		88		(86)
Total Liabilities	$	(121)	$	(333)	$	(110)	$	—	$	460	$	(104)	$	(221)	$	(393)	$	(156)	$	—	$	601	$	(169)
Net Assets (Liabilities) at end of period	$	1,765	$	363	$	(27)	$	299	$	(26)	$	2,374	$	1,462	$	395	$	4	$	43	$	0	$	1,904


~~(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.~~


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


~~(f)~~	~~For contracts with a clearing agent, DTE Energy nets all activity across commodities. This can result in some individual commodities having a contra balance.~~


~~(b)~~	~~At March 31, 2020 and December 31, 2019, the $11 million consisted of cash equivalents included in Other investments on DTE Electric's Consolidated Statements of Financial Position.~~


	Three Months Ended September 30, 2020														Three Months Ended September 30, 2019
	Natural Gas		Electricity		Other		Total		Natural Gas		Electricity		Other		Total
	(In millions)
Net Assets (Liabilities) as of June 30	$	20	$	16	$	10	$	46	$	(10)	$	10	$	9	$	9

Transfers from Level 3 into Level 2	(1)		0		0		(1)		0		0		0		0
Total gains (losses)
Included in earnings	(80)		37		1		(42)		(35)		37		0		2
Recorded in Regulatory liabilities	0		0		9		9		0		0		(3)		(3)
Purchases, issuances, and settlements


Settlements	22		(48)		(13)		(39)		4		(39)		(1)		(36)
Net Assets (Liabilities) as of September 30	$	(39)	$	5	$	7	$	(27)	$	(41)	$	8	$	5	$	(28)
Total gains (losses) included in Net Income attributed to the change in unrealized gains (losses) related to assets and liabilities held at September 30, 2020 and 2019^(a)	$	(57)	$	11	$	(1)	$	(47)	$	(36)	$	15	$	(1)	$	(22)



	Three Months Ended March 31, 2020												Three Months Ended March 31, 2019
	Natural Gas			Electricity			Other			Total			Natural Gas			Electricity			Other			Total
	(In millions)
Net Assets (Liabilities) as of January 1	$	(15	)	$	16		$	3		$	4		$	(49	)	$	(2	)	$	7		$	(44	)
Transfers into Level 3 from Level 2	—			—			—			—			—			—			—			—
Transfers from Level 3 into Level 2	(1		)	—			—			(1		)	—			—			—			—
Total gains (losses)
Included in earnings	24			20			—			44			31			(31		)	(1		)	(1		)
Recorded in Regulatory liabilities	—			—			(2		)	(2		)	—			—			(3		)	(3		)
Purchases, issuances, and settlements
Settlements	—			(21		)	—			(21		)	8			8			(1		)	15
Net Assets (Liabilities) as of March 31	$	8		$	15		$	1		$	24		$	(10	)	$	(25	)	$	2		$	(33	)
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 March 31, 2020 and 2019 and reflected in Operating Revenues — Non-utility operations and Fuel, purchased power, and gas — non-utility in DTE Energy's Consolidated Statements of Operations	$	19		$	21		$	—		$	40		$	16		$	(21	)	$	(1	)	$	(6	)



	Nine Months Ended September 30, 2020														Nine Months Ended September 30, 2019
	Natural Gas		Electricity		Other		Total		Natural Gas		Electricity		Other		Total
	(In millions)
Net Assets (Liabilities) as of December 31	$	(15)	$	16	$	3	$	4	$	(49)	$	(2)	$	7	$	(44)

Transfers from Level 3 into Level 2	(5)		0		0		(5)		0		0		0		0
Total gains (losses)
Included in earnings	(44)		90		(7)		39		(4)		47		(1)		42
Recorded in Regulatory liabilities	0		0		21		21		0		0		3		3
Purchases, issuances, and settlements


Settlements	25		(101)		(10)		(86)		12		(37)		(4)		(29)
Net Assets (Liabilities) as of September 30	$	(39)	$	5	$	7	$	(27)	$	(41)	$	8	$	5	$	(28)
Total gains (losses) included in Net Income attributed to the change in unrealized gains (losses) related to assets and liabilities held at September 30, 2020 and 2019^(a)	$	(20)	$	53	$	(17)	$	16	$	(20)	$	32	$	(6)	$	6


	September 30, 2020
Commodity Contracts	Derivative Assets		Derivative Liabilities		Valuation Techniques	Unobservable Input	Range									Weighted Average
	(In millions)
Natural Gas	$	42	$	(81)	Discounted Cash Flow	Forward basis price (per MMBtu)	$	(1.10)	—	$	2.30	/MMBtu	$	(0.06)	/MMBtu
Electricity	$	34	$	(29)	Discounted Cash Flow	Forward basis price (per MWh)	$	(9)	—	$	6	/MWh	$	(1)	/MWh


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