Item 8. Financial Statements and Supplementary Data

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Item 8. Financial Statements and Supplementary Data

The following Consolidated Financial Statements and financial statement schedules are included herein:


			Page
DTE Energy — Controls and Procedures			52
DTE Energy — Report of Independent Registered Public Accounting Firm (PCAOB ID 238)			53
DTE Energy — Consolidated Statements of Operations			55
DTE Energy — Consolidated Statements of Comprehensive Income			56
DTE Energy — Consolidated Statements of Financial Position			57
DTE Energy — Consolidated Statements of Cash Flows			58
DTE Energy — Consolidated Statements of Changes in Equity			61
DTE Electric — Controls and Procedures			62
DTE Electric — Report of Independent Registered Public Accounting Firm (PCAOB ID 238)			63
DTE Electric — Consolidated Statements of Operations			65
DTE Electric — Consolidated Statements of Comprehensive Income			66
DTE Electric — Consolidated Statements of Financial Position			67
DTE Electric — Consolidated Statements of Cash Flows			69
DTE Electric — Consolidated Statements of Changes in Shareholder's Equity			70
Combined Notes to Consolidated Financial Statements			71
Note 1 — Organization and Basis of Presentation			71
Note 2 — Significant Accounting Policies			75
Note 3 — New Accounting Pronouncements			81
Note 4 — Dispositions and Impairments			82
Note 5 — Revenue			85
Note 6 — Property, Plant, and Equipment			90
Note 7 — Jointly-Owned Utility Plant			92
Note 8 — Asset Retirement Obligations			93
Note 9 — Regulatory Matters			94
Note 1 0 — Income Taxes			99
Note 1 1 — Earnings Per Share			103
Note 1 2 — Fair Value			104
Note 1 3 — Financial and Other Derivative Instruments			111
Note 1 4 — Long-Term Debt			116
Note 1 5 — Preferred and Preference Securities			120
Note 1 6 — Short-Term Credit Arrangements and Borrowings			120
Note 1 7 — Leases			121
Note 1 8 — Commitments and Contingencies			125
Note 19 — Nuclear Operations			131
Note 2 0 — Retirement Benefits and Trusteed Assets			132
Note 2 1 — Stock-Based Compensation			142
Note 2 2 — Segment and Related Information			144
Note 2 3 — Related Party Transactions			147
Note 2 4 — Supplementary Quarterly Financial Information (Unaudited)			149

Financial Statement Schedule
Schedule II — Valuation and Qualifying Accounts			162

DTE Energy — Controls and Procedures

(a) Evaluation of disclosure controls and procedures

Management of DTE Energy carried out an evaluation, under the supervision and with the participation of DTE Energy's Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the design and operation of DTE Energy's disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of December 31, 2021, which is the end of the period covered by this report. Based on this evaluation, DTE Energy's CEO and CFO have concluded that such disclosure controls and procedures are effective in providing reasonable assurance that information required to be disclosed by DTE Energy in reports that it files or submits under the Exchange Act (i) is recorded, processed, summarized, and reported within the time periods specified in the U.S. Securities and Exchange Commission's rules and forms and (ii) is accumulated and communicated to DTE Energy's management, including its CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. Due to the inherent limitations in the effectiveness of any disclosure controls and procedures, management cannot provide absolute assurance that the objectives of its disclosure controls and procedures will be attained.

(b) Management’s report on internal control over financial reporting

Management of DTE Energy is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Internal control over financial reporting is a process designed by, or under the supervision of, DTE Energy's CEO and CFO, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management of DTE Energy has assessed the effectiveness of DTE Energy’s internal control over financial reporting as of December 31, 2021. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (2013 COSO) in Internal Control - Integrated Framework. Based on this assessment, management concluded that, as of December 31, 2021, DTE Energy’s internal control over financial reporting was effective based on those criteria.

The effectiveness of DTE Energy's internal control over financial reporting as of December 31, 2021 has been audited by PricewaterhouseCoopers, LLP, an independent registered public accounting firm who also audited DTE Energy's financial statements, as stated in their report which appears herein.

(c) Changes in internal control over financial reporting

There have been no changes in DTE Energy's internal control over financial reporting during the quarter ended December 31, 2021 that have materially affected, or are reasonably likely to materially affect, DTE Energy's internal control over financial reporting.

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of

DTE Energy Company

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated statements of financial position of DTE Energy Company and its subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of operations, of comprehensive income, of changes in equity and of cash flows for each of the three years in the period ended December 31, 2021, including the related notes and financial statement schedule listed in the accompanying index for each of the three years in the period ended December 31, 2021 (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020**,** and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s report on internal control over financial reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Accounting for the Effects of New, or Changes to Existing, Regulatory Matters

As described in Note 9 to the consolidated financial statements, the Company recorded $3,677 million of regulatory assets and $3,262 million of regulatory liabilities as of December 31, 2021. The Company is required to record regulatory assets and liabilities for certain transactions that would have been treated as revenue or expense in non-regulated businesses. Continued applicability of regulatory accounting treatment requires that rates be designed to recover specific costs of providing regulatory services and be charged to and collected from customers. Future regulatory changes could result in a discontinuance of this accounting treatment for regulatory assets and liabilities for some or all of the Company’s regulated businesses and may require the write-off of the portion of any regulatory asset or liability that was no longer probable of recovery through regulated rates. Management believes that currently available facts support the continued use of regulatory assets and liabilities and that all regulatory assets and liabilities are recoverable or refundable in the current regulatory environment.

The principal considerations for our determination that performing procedures relating to the Company's accounting for the effects of new, or changes to existing, regulatory matters is a critical audit matter are the significant judgment by management in assessing the potential outcome and resulting accounting implications of new, or changes to existing, regulatory matters; this in turn led to a high degree of auditor judgment, subjectivity and effort in evaluating the appropriateness of management’s assessment and audit evidence obtained related to the assessment.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s assessment and implementation of new regulatory matters or changes to existing regulatory matters. These procedures also included, among others, assessing (i) the reasonableness of management’s assessment of impacts arising from correspondence with regulators and changes in laws and regulations and (ii) the appropriateness of disclosures in the consolidated financial statements. Testing regulatory assets and liabilities, including those subject to pending rate orders, involved considering the provisions and formulas outlined in the rate orders, other regulatory correspondence, and the application of relevant regulatory precedents.

/s/ PricewaterhouseCoopers LLP

Detroit, Michigan

February 10, 2022

We have served as the Company’s auditor since 2008.

DTE Energy Company

Consolidated Statements of Operations


	Year Ended December 31,
	2021		2020		2019
	(In millions, except per share amounts)
Operating Revenues
Utility operations	$	7,288	$	6,845	$	6,638
Non-utility operations	7,676		4,578		5,530
	14,964		11,423		12,168
Operating Expenses
Fuel, purchased power, and gas — utility	1,904		1,719		1,798
Fuel, purchased power, gas, and other — non-utility	7,304		4,120		5,035
Operation and maintenance	2,420		2,305		2,316
Depreciation and amortization	1,377		1,292		1,169
Taxes other than income	431		395		406
Asset (gains) losses and impairments, net	33		37		14
	13,469		9,868		10,738
Operating Income	1,495		1,555		1,430

Other (Income) and Deductions
Interest expense	630		601		568
Interest income	(22)		(29)		(9)
Non-operating retirement benefits, net	17		50		39
Loss on extinguishment of debt	393		6		—
Other income	(254)		(259)		(250)
Other expenses	75		104		69
	839		473		417
Income Before Income Taxes	656		1,082		1,013

Income Tax Expense (Benefit) (Note 10)	(130)		37		71

Net Income from Continuing Operations	786		1,045		942
Net Income from Discontinued Operations, Net of Taxes (Note 4)	117		326		230
Net Income	903		1,371		1,172

Less: Net Income (Loss) Attributable to Noncontrolling Interests
Continuing operations	(10)		(9)		(13)
Discontinued operations	6		12		16
Net Income Attributable to DTE Energy Company	$	907	$	1,368	$	1,169

Basic Earnings per Common Share
Continuing operations	$	4.11	$	5.46	$	5.16
Discontinued operations	0.57		1.63		1.16
Total	$	4.68	$	7.09	$	6.32

Diluted Earnings per Common Share
Continuing operations	$	4.10	$	5.45	$	5.15
Discontinued operations	0.57		1.63		1.16
Total	$	4.67	$	7.08	$	6.31

Weighted Average Common Shares Outstanding
Basic	193		193		185
Diluted	194		193		185

See Combined Notes to Consolidated Financial Statements

DTE Energy Company

Consolidated Statements of Comprehensive Income


	Year Ended December 31,
	2021		2020		2019
	(In millions)
Net Income	$	903	$	1,371	$	1,172

Other comprehensive income (loss), net of tax:
Benefit obligations, net of taxes of $4, $3, and $2, respectively	8		8		8
Net unrealized gains (losses) on derivatives, net of taxes of $2, $1, and $(4), respectively	7		2		(12)

Foreign currency translation	—		1		1
Other comprehensive income (loss)	15		11		(3)

Comprehensive income	918		1,382		1,169
Less: Comprehensive income (loss) attributable to noncontrolling interests	(4)		3		3
Comprehensive Income Attributable to DTE Energy Company	$	922	$	1,379	$	1,166

See Combined Notes to Consolidated Financial Statements

DTE Energy Company

Consolidated Statements of Financial Position


	December 31,
	2021		2020
	(In millions)
ASSETS
Current Assets
Cash and cash equivalents	$	28	$	472
Restricted cash	7		2
Accounts receivable (less allowance for doubtful accounts of $92 and $104, respectively)
Customer	1,695		1,542
Other	135		127
Inventories
Fuel and gas	368		335
Materials, supplies, and other	490		373
Derivative assets	181		116
Regulatory assets	195		129
Other	218		185
Current assets of discontinued operations	—		217
	3,317		3,498
Investments
Nuclear decommissioning trust funds	2,071		1,855
Investments in equity method investees	187		177
Other	194		196
	2,452		2,228
Property
Property, plant, and equipment	37,083		34,016
Accumulated depreciation and amortization	(10,139)		(9,517)
	26,944		24,499
Other Assets
Goodwill	1,993		1,993
Regulatory assets	3,482		4,125

Intangible assets	177		199
Notes receivable	310		261
Derivative assets	90		40
Prepaid postretirement costs	678		561
Operating lease right-of-use assets	97		107
Other	179		126
Noncurrent assets of discontinued operations	—		7,859
	7,006		15,271
Total Assets	$	39,719	$	45,496

See Combined Notes to Consolidated Financial Statements

DTE Energy Company

Consolidated Statements of Financial Position — (Continued)


	December 31,
	2021		2020
	(In millions, except shares)
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	1,414	$	1,000
Accrued interest	140		158
Dividends payable	171		210
Short-term borrowings	758		38
Current portion long-term debt, including finance leases	2,874		469
Derivative liabilities	238		68
Regulatory liabilities	156		39
Operating lease liabilities	14		16

Other	581		594
Current liabilities of discontinued operations	—		99
	6,346		2,691
Long-Term Debt (net of current portion)
Mortgage bonds, notes, and other	13,629		17,802

Junior subordinated debentures	883		1,175
Finance lease obligations	19		24
	14,531		19,001
Other Liabilities
Deferred income taxes	2,163		2,069
Regulatory liabilities	3,106		3,363
Asset retirement obligations	3,162		2,829
Unamortized investment tax credit	158		162
Derivative liabilities	192		60
Accrued pension liability	339		797
Accrued postretirement liability	358		407
Nuclear decommissioning	321		283
Operating lease liabilities	74		83
Other	256		326
Noncurrent liabilities of discontinued operations	—		836
	10,129		11,215
Commitments and Contingencies (Notes 9 and 18)

Equity
Common stock (No par value, 400,000,000 shares authorized, and 193,747,509 and 193,770,617 shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively)	5,379		5,406
Retained earnings	3,438		7,156
Accumulated other comprehensive loss	(112)		(137)
Total DTE Energy Company Equity	8,705		12,425
Noncontrolling interests of continuing operations	8		10
Noncontrolling interests of discontinued operations	—		154
Total Equity	8,713		12,589
Total Liabilities and Equity	$	39,719	$	45,496

See Combined Notes to Consolidated Financial Statements

DTE Energy Company

Consolidated Statements of Cash Flows


	Year Ended December 31,
	2021		2020		2019
	(In millions)
Operating Activities
Net Income	$	903	$	1,371	$	1,172
Adjustments to reconcile Net Income to Net cash from operating activities:
Depreciation and amortization	1,459		1,443		1,263
Nuclear fuel amortization	58		37		60
Allowance for equity funds used during construction	(27)		(25)		(24)
Deferred income taxes	(32)		407		329
Equity earnings of equity method investees	(97)		(132)		(111)
Dividends from equity method investees	79		142		160
Loss on extinguishment of debt	393		6		—
Asset (gains) losses and impairments, net	50		47		14
Changes in assets and liabilities:
Accounts receivable, net	(146)		111		49
Inventories	(153)		45		59
Prepaid postretirement benefit costs	(117)		(107)		(24)
Accounts payable	308		—		(288)
Accrued pension liability	(458)		(11)		(29)
Accrued postretirement liability	(49)		22		—
Derivative assets and liabilities	187		(23)		(28)
Regulatory assets and liabilities	862		104		160
Other current and noncurrent assets and liabilities	(153)		260		(113)
Net cash from operating activities	3,067		3,697		2,649

Investing Activities
Plant and equipment expenditures — utility	(3,633)		(3,241)		(2,724)
Plant and equipment expenditures — non-utility	(139)		(616)		(273)
Acquisitions related to business combinations, net of cash acquired	—		(126)		(2,470)
Proceeds from sale of assets	3		13		—
Proceeds from sale of nuclear decommissioning trust fund assets	1,047		2,350		788
Investment in nuclear decommissioning trust funds	(1,046)		(2,350)		(794)
Distributions from equity method investees	18		24		10
Contributions to equity method investees	(8)		(37)		(149)
Notes receivable	(74)		(85)		(98)
Other	(31)		(2)		(22)
Net cash used for investing activities	(3,863)		(4,070)		(5,732)

See Combined Notes to Consolidated Financial Statements

DTE Energy Company

Consolidated Statements of Cash Flows — (Continued)


	Year Ended December 31,
	2021		2020		2019
	(In millions)




































Financing Activities
Issuance of long-term debt, net of issuance costs	4,457		3,692		2,506
Redemption of long-term debt	(3,522)		(882)		(821)

Issuance of equity units, net of issuance costs	—		—		1,265
Short-term borrowings, net	720		(790)		219
Issuance of common stock	—		2		1,023
Repurchase of common stock	(66)		—		—
Dividends paid on common stock	(791)		(760)		(692)
Contributions from noncontrolling interests, principally REF entities	44		36		38
Distributions to noncontrolling interests	(45)		(39)		(59)
Purchases of noncontrolling interest, principally SGG	—		—		(300)
Acquisition related deferred payment, excluding accretion	—		(380)		—
Prepayment cost for extinguishment of long-term debt	(361)		—		—
Transfer of cash to DT Midstream at separation	(37)		—		—
Other	(84)		(83)		(79)
Net cash from financing activities	315		796		3,100
Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash	(481)		423		17
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	516		93		76
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	35	$	516	$	93

Supplemental disclosure of cash information
Cash paid (received) for:
Interest, net of interest capitalized	$	671	$	679	$	595
Income taxes(a)	$	(3)	$	(360)	$	18
Supplemental disclosure of non-cash investing and financing activities

Plant and equipment expenditures in accounts payable	$	353	$	266	$	311
Separation of DT Midstream net assets, excluding cash transferred	$	3,973	$	—	$	—
Premium on equity units	$	—	$	—	$	150

(a)2020 cash received primarily relates to AMT credit and other refunds, of which a portion was accelerated due to the CARES Act

See Combined Notes to Consolidated Financial Statements

DTE Energy Company

Consolidated Statements of Changes in Equity


				Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interests
	Common Stock
	Shares	Amount						Total
	(Dollars in millions, shares in thousands)
Balance, December 31, 2018	181,925	$	4,245	$	6,112	$	(120)		$	480	$	10,717
Implementation of ASU 2018-02	—	—		25		(25)			—		—
Net Income	—	—		1,169		—			3		1,172
Dividends declared on common stock ($3.85 per Common Share)	—	—		(714)		—			—		(714)

Issuance of common stock	8,634	1,014		—		—			—		1,014
Premium on equity units	—	(150)		—		—			—		(150)
Issuance costs of equity units	—	(30)		—		—			—		(30)

Contribution of common stock to pension plan	815	100		—		—			—		100
Other comprehensive loss, net of tax	—	—		—		(3)			—		(3)
Purchase of noncontrolling interests, principally SGG	—	(3)		—		—			(297)		(300)
Stock-based compensation, net distributions to noncontrolling interests, and other	835	57		(5)		—			(22)		30
Balance, December 31, 2019	192,209	$	5,233	$	6,587	$	(148)		$	164	$	11,836

Net Income	—	—		1,368		—			3		1,371
Dividends declared on common stock ($4.12 per Common Share)	—	—		(796)		—			—		(796)

Issuance of common stock	192	22		—		—			—		22


Contribution of common stock to pension plan	694	82		—		—			—		82
Other comprehensive income, net of tax	—	—		—		11			—		11

Stock-based compensation, net distributions to noncontrolling interests, and other	676	69		(3)		—			(3)		63
Balance, December 31, 2020	193,771	$	5,406	$	7,156	$	(137)		$	164	$	12,589

Net Income (Loss)	—	—		907		—			(4)		903
Dividends declared on common stock ($3.88 per Common Share)	—	—		(752)		—			—		(752)

Repurchase of common stock	(529)	(66)		—		—			—		(66)



Other comprehensive income, net of tax	—	—		—		15			—		15

Stock-based compensation, net distributions to noncontrolling interests, and other	506	39		(4)		—			(1)		34
Separation of DT Midstream	—	—		(3,869)		10			(151)		(4,010)
Balance, December 31, 2021	193,748	$	5,379	$	3,438	$	(112)		$	8	$	8,713

See Combined Notes to Consolidated Financial Statements

DTE Electric — Controls and Procedures

(a) Evaluation of disclosure controls and procedures

Management of DTE Electric carried out an evaluation, under the supervision and with the participation of DTE Electric's Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the design and operation of DTE Electric's disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of December 31, 2021, which is the end of the period covered by this report. Based on this evaluation, DTE Electric's CEO and CFO have concluded that such disclosure controls and procedures are effective in providing reasonable assurance that information required to be disclosed by DTE Electric in reports that it files or submits under the Exchange Act (i) is recorded, processed, summarized, and reported within the time periods specified in the U.S. Securities and Exchange Commission's rules and forms and (ii) is accumulated and communicated to DTE Electric's management, including its CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. Due to the inherent limitations in the effectiveness of any disclosure controls and procedures, management cannot provide absolute assurance that the objectives of its disclosure controls and procedures will be attained.

(b) Management’s report on internal control over financial reporting

Management of DTE Electric is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Internal control over financial reporting is a process designed by, or under the supervision of, DTE Electric's CEO and CFO, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Management of DTE Electric has assessed the effectiveness of DTE Electric's internal control over financial reporting as of December 31, 2021. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (2013 COSO) in Internal Control - Integrated Framework. Based on this assessment, management concluded that, as of December 31, 2021, DTE Electric's internal control over financial reporting was effective based on those criteria.

This annual report does not include an audit report of DTE Electric's independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to audit by DTE Electric's independent registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit DTE Electric to provide only management’s report in this annual report.

(c) Changes in internal control over financial reporting

There have been no changes in DTE Electric's internal control over financial reporting during the quarter ended December 31, 2021 that have materially affected, or are reasonably likely to materially affect, DTE Electric's internal control over financial reporting.

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholder of

DTE Electric Company

Opinion on the Financial Statements

We have audited the accompanying consolidated statements of financial position of DTE Electric Company and its subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of operations, of comprehensive income, of changes in shareholder’s equity and of cash flows for each of the three years in the period ended December 31, 2021, including the related notes and financial statement schedule listed in the accompanying index for each of the three years in the period ended December 31, 2021 (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

Accounting for the Effects of New, or Changes to Existing, Regulatory Matters

As described in Note 9 to the consolidated financial statements, the Company recorded $3,136 million of regulatory assets and $2,375 million of regulatory liabilities as of December 31, 2021. The Company is required to record regulatory assets and liabilities for certain transactions that would have been treated as revenue or expense in non-regulated businesses. Continued applicability of regulatory accounting treatment requires that rates be designed to recover specific costs of providing regulatory services and be charged to and collected from customers. Future regulatory changes could result in a discontinuance of this accounting treatment for regulatory assets and liabilities for some or all of the Company’s regulated businesses and may require the write-off of the portion of any regulatory asset or liability that was no longer probable of recovery through regulated rates. Management believes that currently available facts support the continued use of regulatory assets and liabilities and that all regulatory assets and liabilities are recoverable or refundable in the current regulatory environment.

/s/ PricewaterhouseCoopers LLP

Detroit, Michigan

February 10, 2022

We have served as the Company's auditor since 2008.

DTE Electric Company

Consolidated Statements of Operations


	Year Ended December 31,
	2021		2020		2019
	(In millions)
Operating Revenues	$	5,809	$	5,506	$	5,224

Operating Expenses
Fuel and purchased power — utility	1,541		1,397		1,390
Operation and maintenance	1,569		1,505		1,452
Depreciation and amortization	1,109		1,043		946
Taxes other than income	320		296		310
Asset (gains) losses and impairments, net	1		41		13
	4,540		4,282		4,111
Operating Income	1,269		1,224		1,113

Other (Income) and Deductions
Interest expense	335		331		313
Interest income	—		(2)		(2)
Non-operating retirement benefits, net	(2)		(1)		(1)
Other income	(71)		(87)		(107)
Other expenses	37		96		56
	299		337		259
Income Before Income Taxes	970		887		854

Income Tax Expense	104		109		138

Net Income	$	866	$	778	$	716

See Combined Notes to Consolidated Financial Statements

DTE Electric Company

Consolidated Statements of Comprehensive Income


	Year Ended December 31,
	2021		2020		2019
	(In millions)
Net Income	$	866	$	778	$	716



Other comprehensive income	—		—		—
Comprehensive Income	$	866	$	778	$	716

See Combined Notes to Consolidated Financial Statements

DTE Electric Company

Consolidated Statements of Financial Position


	December 31,
	2021		2020
	(In millions)
ASSETS
Current Assets
Cash and cash equivalents	$	9	$	16

Accounts receivable (less allowance for doubtful accounts of $54 and $57, respectively)
Customer	694		763
Affiliates	36		13
Other	40		62
Inventories
Fuel	171		187
Materials and supplies	316		292



Regulatory assets	168		123
Other	101		71
	1,535		1,527
Investments
Nuclear decommissioning trust funds	2,071		1,855
Other	44		42
	2,115		1,897
Property
Property, plant, and equipment	28,849		26,171
Accumulated depreciation and amortization	(7,676)		(7,050)
	21,173		19,121
Other Assets
Regulatory assets	2,968		3,440


Prepaid postretirement costs — affiliates	402		335
Operating lease right-of-use assets	64		75
Other	148		118
	3,582		3,968
Total Assets	$	28,405	$	26,513

See Combined Notes to Consolidated Financial Statements

DTE Electric Company

Consolidated Statements of Financial Position — (Continued)


	December 31,
	2021		2020
	(In millions, except shares)
LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities
Accounts payable
Affiliates	$	83	$	62
Other	567		410
Accrued interest	95		91

Current portion long-term debt, including finance leases	322		468
Regulatory liabilities	154		18
Short-term borrowings
Affiliates	53		101
Other	153		—
Operating lease liabilities	10		11
Other	206		219
	1,643		1,380
Long-Term Debt (net of current portion)
Mortgage bonds, notes, and other	8,591		7,774
Finance lease obligations	7		13
	8,598		7,787
Other Liabilities
Deferred income taxes	2,741		2,525
Regulatory liabilities	2,221		2,432
Asset retirement obligations	2,932		2,607
Unamortized investment tax credit	158		162
Nuclear decommissioning	321		283
Accrued pension liability — affiliates	405		731
Accrued postretirement liability — affiliates	340		384
Operating lease liabilities	46		56
Other	97		96
	9,261		9,276
Commitments and Contingencies (Notes 9 and 18)

Shareholder's Equity
Common stock ($10 par value, 400,000,000 shares authorized, and 138,632,324 shares issued and outstanding for both periods)	6,002		5,447
Retained earnings	2,901		2,623

Total Shareholder's Equity	8,903		8,070
Total Liabilities and Shareholder's Equity	$	28,405	$	26,513

See Combined Notes to Consolidated Financial Statements

DTE Electric Company

Consolidated Statements of Cash Flows


	Year Ended December 31,
	2021		2020		2019
Operating Activities	(In millions)
Net Income	$	866	$	778	$	716
Adjustments to reconcile Net Income to Net cash from operating activities:
Depreciation and amortization	1,109		1,043		946
Nuclear fuel amortization	58		37		60
Allowance for equity funds used during construction	(25)		(23)		(22)
Deferred income taxes	122		89		97
Asset (gains) losses and impairments, net	1		41		13
Changes in assets and liabilities:
Accounts receivable, net	68		(42)		20
Inventories	(11)		(12)		(17)
Prepaid postretirement benefit costs — affiliates	(67)		(69)		(77)
Accounts payable	65		20		(57)
Accrued pension liability — affiliates	(326)		14		(1)
Accrued postretirement liability — affiliates	(44)		17		89
Regulatory assets and liabilities	716		55		139
Other current and noncurrent assets and liabilities	(216)		(43)		(197)
Net cash from operating activities	2,316		1,905		1,709
Investing Activities
Plant and equipment expenditures	(3,017)		(2,674)		(2,200)




Proceeds from sale of nuclear decommissioning trust fund assets	1,047		2,350		788
Investment in nuclear decommissioning trust funds	(1,046)		(2,350)		(794)
Notes receivable and other	(31)		(8)		(21)
Net cash used for investing activities	(3,047)		(2,682)		(2,227)
Financing Activities
Issuance of long-term debt, net of issuance costs	985		1,683		643
Redemption of long-term debt	(321)		(632)		—

Capital contribution by parent company	555		636		180
Short-term borrowings, net — affiliate	(48)		4		(4)
Short-term borrowings, net — other	153		(354)		205
Dividends paid on common stock	(588)		(539)		(494)
Other	(12)		(17)		(18)
Net cash from financing activities	724		781		512
Net Increase (Decrease) in Cash and Cash Equivalents	(7)		4		(6)
Cash and Cash Equivalents at Beginning of Period	16		12		18
Cash and Cash Equivalents at End of Period	$	9	$	16	$	12

Supplemental disclosure of cash information
Cash paid for:
Interest, net of interest capitalized	$	321	$	315	$	295
Income taxes	$	5	$	14	$	46
Supplemental disclosure of non-cash investing and financing activities
Plant and equipment expenditures in accounts payable	$	286	$	174	$	192

See Combined Notes to Consolidated Financial Statements

DTE Electric Company

Consolidated Statements of Changes in Shareholder's Equity


				Additional Paid-in Capital		Retained Earnings
	Common Stock
	Shares	Amount						Total
	(Dollars in millions, shares in thousands)
Balance, December 31, 2018	138,632	$	1,386	$	3,245	$	2,162		$	6,793

Net Income	—	—		—		716			716
Dividends declared on common stock	—	—		—		(494)			(494)

Capital contribution by parent company	—	—		180		—			180
Balance, December 31, 2019	138,632	$	1,386	$	3,425	$	2,384		$	7,195

Net Income	—	—		—		778			778
Dividends declared on common stock	—	—		—		(539)			(539)

Capital contribution by parent company	—	—		636		—			636
Balance, December 31, 2020	138,632	$	1,386	$	4,061	$	2,623		$	8,070

Net Income	—	—		—		866			866
Dividends declared on common stock	—	—		—		(588)			(588)

Capital contribution by parent company	—	—		555		—			555
Balance, December 31, 2021	138,632	$	1,386	$	4,616	$	2,901		$	8,903

See Combined Notes to Consolidated Financial Statements

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements

Index of Combined Notes to Consolidated Financial Statements

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


Note 1	Organization and Basis of Presentation	DTE Energy and DTE Electric
Note 2	Significant Accounting Policies	DTE Energy and DTE Electric
Note 3	New Accounting Pronouncements	DTE Energy and DTE Electric
Note 4	Dispositions and Impairments	DTE Energy
Note 5	Revenue	DTE Energy and DTE Electric

Note 6	Property, Plant, and Equipment	DTE Energy and DTE Electric
Note 7	Jointly-Owned Utility Plant	DTE Energy and DTE Electric
Note 8	Asset Retirement Obligations	DTE Energy and DTE Electric
Note 9	Regulatory Matters	DTE Energy and DTE Electric
Note 10	Income Taxes	DTE Energy and DTE Electric
Note 11	Earnings Per Share	DTE Energy
Note 12	Fair Value	DTE Energy and DTE Electric
Note 13	Financial and Other Derivative Instruments	DTE Energy and DTE Electric
Note 14	Long-Term Debt	DTE Energy and DTE Electric
Note 15	Preferred and Preference Securities	DTE Energy and DTE Electric
Note 16	Short-Term Credit Arrangements and Borrowings	DTE Energy and DTE Electric
Note 17	Leases	DTE Energy and DTE Electric
Note 18	Commitments and Contingencies	DTE Energy and DTE Electric
Note 19	Nuclear Operations	DTE Energy and DTE Electric
Note 20	Retirement Benefits and Trusteed Assets	DTE Energy and DTE Electric
Note 21	Stock-Based Compensation	DTE Energy and DTE Electric
Note 22	Segment and Related Information	DTE Energy
Note 23	Related Party Transactions	DTE Electric
Note 24	Supplementary Quarterly Financial Information (Unaudited)	DTE Energy

NOTE 1 — ORGANIZATION AND BASIS OF PRESENTATION

Corporate Structure

DTE Energy owns the following businesses:

DTE Electric is a public utility engaged in the generation, purchase, distribution, and sale of electricity to approximately 2.3 million customers in southeastern Michigan;
DTE Gas is a public utility engaged in the purchase, storage, transportation, distribution, and sale of natural gas to approximately 1.3 million customers throughout Michigan and the sale of storage and transportation capacity; and
Other businesses include 1) DTE Vantage, formerly DTE Energy's Power and Industrial Projects segment, which is primarily involved in renewable natural gas projects, providing industrial energy services, and reduced emissions fuel projects, and 2) energy marketing and trading operations.

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

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

Basis of Presentation

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

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

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

Separation of DT Midstream

On July 1, 2021, DTE Energy completed the previously announced separation of its natural gas pipeline, storage and gathering non-utility business. Effective with the separation, DTE retains no ownership in the new company, DT Midstream, which was formerly comprised of DTE Energy's Gas Storage and Pipelines segment and also included certain DTE Energy holding company activity within the Corporate and Other segment. Gas Storage and Pipelines is no longer a reportable segment of DTE Energy, and financial results of DT Midstream are presented as Income from discontinued operations, net of taxes on DTE Energy's Consolidated Statements of Operations. Assets and liabilities of DT Midstream are also presented as discontinued operations on DTE Energy's Consolidated Statements of Financial Position. Prior periods have been recast to reflect this presentation.

No adjustments were made to the historical activity within the Consolidated Statements of Comprehensive Income, Consolidated Statements of Cash Flows, or the Consolidated Statements of Changes in Equity. Unless noted otherwise, discussion in the Notes to the Consolidated Financial Statements relate to continuing operations. Refer to Note 4 to the Consolidated Financial Statements, “Dispositions and Impairments,” for additional information regarding the separation of DT Midstream and discontinued operations.

Principles of Consolidation

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

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

During the third quarter of 2021, the Registrants performed reassessments of certain VIEs owned by DT Midstream. Upon the separation of DT Midstream, DTE Energy no longer owns any interest in SGG, owner and operator of certain midstream natural gas assets. Therefore, SGG has been removed from the amounts for DTE Energy's consolidated VIEs in the table below. Additionally, as a result of the separation of DT Midstream, DTE Energy no longer has an equity interest in NEXUS, owner of a pipeline which transports shale gas to Ohio, Michigan, and Ontario market centers. DTE Energy has removed its equity investment in NEXUS from the amounts for its non-consolidated VIEs. The Registrants maintain a variable interest in NEXUS relating to DTE Electric's transportation services contract. Assets, liabilities, and earnings related to SGG and NEXUS are included in discontinued operations in the Consolidated Financial Statements.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

During the fourth quarter of 2021, DTE Energy also performed reassessments of REF entities that were previously concluded to be VIEs. The REF entities have ceased operations as of December 31, 2021 and DTE Energy has concluded the REF entities are no longer VIEs. Therefore, the REF entities have been removed from the VIE tables below.

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

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

DTE Energy has variable interests in VIEs through certain of its long-term purchase and sale contracts. DTE Electric has variable interests in VIEs through certain of its long-term purchase contracts. As of December 31, 2021, the carrying amount of assets and liabilities in DTE Energy's Consolidated Statements of Financial Position that relate to its variable interests under long-term purchase and sale contracts are predominantly related to working capital accounts and generally represent the amounts owed by or to DTE Energy for the deliveries associated with the current billing cycle under the contracts. As of December 31, 2021, the carrying amount of assets and liabilities in DTE Electric's Consolidated Statements of Financial Position that relate to its variable interests under long-term purchase contracts are predominantly related to working capital accounts and generally represent the amounts owed by DTE Electric for the deliveries associated with the current billing cycle under the contracts. The Registrants have not provided any significant form of financial support associated with these long-term contracts. There is no material potential exposure to loss as a result of DTE Energy's variable interests through these long-term purchase and sale contracts. In addition, there is no material potential exposure to loss as a result of DTE Electric's variable interests through these long-term purchase contracts.

The maximum risk exposure for consolidated VIEs is reflected on the Registrants' Consolidated Statements of Financial Position. For non-consolidated VIEs, the maximum risk exposure of the Registrants is generally limited to their investment, notes receivable, and future funding commitments.

The following table summarizes the major Consolidated Statements of Financial Position items for consolidated VIEs as of December 31, 2021 and 2020. All assets and liabilities of a consolidated VIE are presented where it has been determined that a consolidated VIE has either (1) assets that can be used only to settle obligations of the VIE or (2) liabilities for which creditors do not have recourse to the general credit of the primary beneficiary. VIEs, in which DTE Energy holds a majority voting interest and is the primary beneficiary, that meet the definition of a business and whose assets can be used for purposes other than the settlement of the VIE's obligations have been excluded from the table below.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

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


	December 31,
	2021		2020

	(In millions)
ASSETS
Cash and cash equivalents	$	11	$	20
Restricted cash	6		—
Accounts receivable	1		28
Inventories	3		107
Property, plant, and equipment, net	4		14


Notes receivable and other	70		33
	$	95	$	202

LIABILITIES
Accounts payable	$	5	$	22
Short-term borrowings	75		38




Other current and long-term liabilities	—		4
	$	80	$	64

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


	December 31,
	2021		2020
	(In millions)
Investments in equity method investees	$	172	$	159
Notes receivable	$	13	$	21
Future funding commitments	$	3	$	6

Equity Method Investments

Investments in non-consolidated affiliates that are not controlled by the Registrants, but over which they have significant influence, are accounted for using the equity method. Certain of the equity method investees are also considered VIEs and disclosed in the non-consolidated VIEs table above.

At December 31, 2021 and 2020, DTE Energy's Investments in equity method investees were $187 million and $177 million, respectively. The balances are primarily comprised of investments in the DTE Vantage and Corporate and Other segments, of which no investment is individually significant. DTE Vantage investments include projects that deliver energy and utility-type products and services to industrial customers, sell electricity from renewable energy projects under long-term power purchase agreements, and produce and sell metallurgical coke. Corporate and Other holds various ownership interests in limited partnerships that include investment funds supporting regional development and economic growth. For further information by segment, see Note 22 to the Consolidated Financial Statements, "Segment and Related Information."

At December 31, 2021 and 2020, DTE Energy's share of the underlying equity in the net assets of the investees exceeded the carrying amounts of Investments in equity method investees by $99 million and $93 million, respectively. The difference is being amortized over the life of the underlying assets. As of December 31, 2021 and 2020, DTE Energy's consolidated retained earnings balance includes undistributed earnings from equity method investments of $32 million and $15 million, respectively.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES

Other Income

Other income for the Registrants is recognized for non-operating income such as equity earnings of equity method investees, allowance for equity funds used during construction, contract services, and gains from trading securities, primarily from those held in DTE Energy's rabbi trust. The DTE Vantage segment also recognizes Other income in connection with the sale of membership interests in reduced emissions fuel facilities to investors. In exchange for the cash received, the investors receive a portion of the economic attributes of the facilities, including income tax attributes. The transactions are not treated as a sale of membership interests for financial reporting purposes. Other income related to fixed non-refundable cash payments received from investors for which the earnings process is not contingent upon production of refined coal is recognized on a straight-line basis over the non-cancelable contract term as the economic benefit from the ownership of the facility is transferred to investors. Other income related to cash payments that is contingent upon production of refined coal is considered earned and recognized when the contingency regarding the timing and amount of payment is resolved, generally as refined coal is produced and tax credits are generated.

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


	2021		2020		2019
	(In millions)
Income from REF entities	$	141	$	139	$	130
Equity earnings of equity method investees	38		26		14

Contract services	27		28		29
Allowance for equity funds used during construction	27		25		24
Gains from rabbi trust securities(a)	8		28		37

Other	13		13		16
	$	254	$	259	$	250

(a)Losses from rabbi trust securities are recorded separately to Other expenses on the Consolidated Statements of Operations.

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


	2021		2020		2019
	(In millions)
Contract services	$	27	$	28	$	32
Allowance for equity funds used during construction	25		23		22

Gains from rabbi trust securities allocated from DTE Energy(a)	8		28		37
Other	11		8		16
	$	71	$	87	$	107

(a)Losses from rabbi trust securities are recorded separately to Other expenses on the Consolidated Statements of Operations.

For information on equity earnings of equity method investees by segment, see Note 22 to the Consolidated Financial Statements, "Segment and Related Information."

Accounting for ISO Transactions

DTE Electric participates in the energy market through MISO. MISO requires that DTE Electric submit hourly day-ahead, real-time, and FTR bids and offers for energy at locations across the MISO region. DTE Electric accounts for MISO transactions on a net hourly basis in each of the day-ahead, real-time, and FTR markets. In any single hour, transactions in each of the MISO energy markets are netted based on MWh to determine if DTE Electric is in a net sale or purchase position. Net purchases are recorded in Fuel, purchased power, and gas — utility and net sales are recorded in Operating Revenues — Utility operations on the Registrants' Consolidated Statements of Operations.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

The Energy Trading segment participates in the energy markets through various ISOs and RTOs. These markets require that Energy Trading submits hourly day-ahead, real-time bids and offers for energy at locations across each region. Energy Trading submits bids in the annual and monthly auction revenue rights and FTR auctions to the RTOs. Energy Trading accounts for these transactions on a net hourly basis for the day-ahead, real-time, and FTR markets. These transactions are related to trading contracts which, if derivatives, are presented on a net basis in Operating Revenues — Non-utility operations, and if non-derivatives, the realized gains and losses for sales are recorded in Operating Revenues — Non-utility operations and purchases are recorded in Fuel, purchased power, gas, and other — non-utility in the DTE Energy Consolidated Statements of Operations.

DTE Electric and Energy Trading record accruals for future net purchases adjustments based on historical experience and reconcile accruals to actual costs when invoices are received from MISO and other ISOs and RTOs.

Derivatives

Energy Trading classifies derivative transactions as revenue or expense based on the intent of the transaction (buy or sell). Revenues are recorded on a gross or net basis within the income statement depending upon whether it represents a non-trading activity or trading activity, respectively. For additional information, refer to Note 13 to the Consolidated Financial Statements, "Financial and Other Derivative Instruments".

Changes in Accumulated Other Comprehensive Income (Loss)

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

Changes in Accumulated other comprehensive income (loss) are presented in DTE Energy's Consolidated Statements of Changes in Equity and DTE Electric's Consolidated Statements of Changes in Shareholder's Equity, if any. For the years ended December 31, 2021 and 2020, reclassifications out of Accumulated other comprehensive income (loss) were not material.

The following table summarizes the changes in DTE Energy's Accumulated other comprehensive income (loss) by component(a) for the years ended December 31, 2021 and 2020:


	Net Unrealized Gain (Loss) on Derivatives		Benefit Obligations(b)		Foreign Currency Translation		Total
	(In millions)
Balance, December 31, 2019	$	(25)	$	(117)	$	(6)	$	(148)
Other comprehensive income (loss) before reclassifications	(3)		(2)		1		(4)
Amounts reclassified from Accumulated other comprehensive loss	5		10		—		15
Net current period Other comprehensive income	2		8		1		11

Balance, December 31, 2020	$	(23)	$	(109)	$	(5)	$	(137)
Other comprehensive income before reclassifications	1		1		—		2
Amounts reclassified from Accumulated other comprehensive loss	6		7		—		13
Net current period Other comprehensive income	7		8		—		15
Separation of DT Midstream	5		—		5		10
Balance, December 31, 2021	$	(11)	$	(101)	$	—	$	(112)

(a)All amounts are net of tax, except for Foreign currency translation.

(b)The amounts reclassified from Accumulated other comprehensive income (loss) are included in the computation of the net periodic pension and other postretirement benefit costs (see Note 20 to the Consolidated Financial Statements, "Retirement Benefits and Trusteed Assets").

Cash, Cash Equivalents, and Restricted Cash

Cash and cash equivalents include cash on hand, cash in banks, and temporary investments purchased with remaining maturities of three months or less. Restricted cash consists of funds held in separate bank accounts to satisfy contractual obligations, fund certain construction projects, and guarantee performance. Restricted cash designated for payments within one year is classified as a Current Asset.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

Financing Receivables

Financing receivables are primarily composed of trade receivables, notes receivable, and unbilled revenue. The Registrants' financing receivables are stated at net realizable value.

DTE Energy had unbilled revenues of $1.0 billion and $0.8 billion at December 31, 2021 and 2020, respectively, including $270 million and $260 million of DTE Electric unbilled revenues, respectively, included in Customer Accounts receivable.

The Registrants monitor the credit quality of their financing receivables on a regular basis by reviewing credit quality indicators and monitoring for trigger events, such as a credit rating downgrade or bankruptcy. Credit quality indicators include, but are not limited to, ratings by credit agencies where available, collection history, collateral, counterparty financial statements and other internal metrics. Utilizing such data, the Registrants have determined three internal grades of credit quality. Internal grade 1 includes financing receivables for counterparties where credit rating agencies have ranked the counterparty as investment grade. To the extent credit ratings are not available, the Registrants utilize other credit quality indicators to determine the level of risk associated with the financing receivable. Internal grade 1 may include financing receivables for counterparties for which credit rating agencies have ranked the counterparty as below investment grade; however, due to favorable information on other credit quality indicators, the Registrants have determined the risk level to be similar to that of an investment grade counterparty. Internal grade 2 includes financing receivables for counterparties with limited credit information and those with a higher risk profile based upon credit quality indicators. Internal grade 3 reflects financing receivables for which the counterparties have the greatest level of risk, including those in bankruptcy status.

The following represents the Registrants' financing receivables by year of origination, classified by internal grade of credit risk. The related credit quality indicators and risk ratings utilized to develop the internal grades have been updated through December 31, 2021.


	DTE Energy								DTE Electric
	Year of origination
	2021		2020		2019 and prior		Total		2021 and prior
	(In millions)
Notes receivable
Internal grade 1	$	—	$	—	$	21	$	21	$	14
Internal grade 2	16		107		6		129		3

Total notes receivable(a)	$	16	$	107	$	27	$	150	$	17

Net investment in leases
Net investment in leases, internal grade 1	$	—	$	1	$	38	$	39	$	—
Net investment in leases, internal grade 2	—		159		1		160		—
Total net investment in leases(a)	$	—	$	160	$	39	$	199	$	—

(a)For DTE Energy, included in Current Assets — Other and Other Assets — Notes Receivable on the Consolidated Statements of Financial Position. For DTE Electric, included in Current Assets — Other on the Consolidated Statements of Financial Position.

The allowance for doubtful accounts on accounts receivable for the utility entities is generally calculated using an aging approach that utilizes rates developed in reserve studies. DTE Electric and DTE Gas establish an allowance for uncollectible accounts based on historical losses and management's assessment of existing and future economic conditions, customer trends and other factors. Customer accounts are generally considered delinquent if the amount billed is not received by the due date, which is typically in 21 days, however, factors such as assistance programs may delay aggressive action. DTE Electric and DTE Gas generally assess late payment fees on trade receivables based on past-due terms with customers. Customer accounts are written off when collection efforts have been exhausted. The time period for write-off is 150 days after service has been terminated.

The customer allowance for doubtful accounts for non-utility businesses and other receivables for both utility and non-utility businesses is generally calculated based on specific review of probable future collections based on receivable balances generally in excess of 30 days. Existing and future economic conditions, customer trends and other factors are also considered. Receivables are written off on a specific identification basis and determined based upon the specific circumstances of the associated receivable.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

Notes receivable for DTE Energy are primarily comprised of finance lease receivables and loans that are included in Notes Receivable and Other current assets on DTE Energy's Consolidated Statements of Financial Position. Notes receivable for DTE Electric are primarily comprised of loans.

Notes receivable are typically considered delinquent when payment is not received for periods ranging from 60 to 120 days. The Registrants cease accruing interest (nonaccrual status), consider a note receivable impaired, and establish an allowance for credit loss when it is probable that all principal and interest amounts due will not be collected in accordance with the contractual terms of the note receivable. In determining the allowance for credit losses for notes receivable, the Registrants consider the historical payment experience and other factors that are expected to have a specific impact on the counterparty's ability to pay including existing and future economic conditions.

Cash payments received on nonaccrual status notes receivable, that do not bring the account contractually current, are first applied to the contractually owed past due interest, with any remainder applied to principal. Accrual of interest is generally resumed when the note receivable becomes contractually current.

The following tables present a roll-forward of the activity for the Registrants' financing receivables credit loss reserves:


	DTE Energy				DTE Electric
	Trade accounts receivable		Other receivables			Total		Trade and other accounts receivable
	(In millions)
Beginning reserve balance, January 1, 2021	$	101	$	3		$	104	$	57
Current period provision	53		1			54		36

Write-offs charged against allowance	(126)		(1)			(127)		(77)
Recoveries of amounts previously written off	61		—			61		38
Ending reserve balance, December 31, 2021	$	89	$	3		$	92	$	54


	DTE Energy				DTE Electric
	Trade accounts receivable		Other receivables			Total		Trade and other accounts receivable
	(In millions)
Beginning reserve balance, January 1, 2020(a)	$	79	$	4		$	83	$	46
Current period provision	102		3			105		61

Write-offs charged against allowance	(130)		(4)			(134)		(80)
Recoveries of amounts previously written off	50		—			50		30
Ending reserve balance, December 31, 2020	$	101	$	3		$	104	$	57

(a)DTE Energy Trade accounts receivable beginning reserve balance excludes $8 million related to the discontinued operations of DT Midstream. Prospective activity includes only the continuing operations of DTE Energy.

Uncollectible expense for the Registrants is primarily comprised of the current period provision for allowance for doubtful accounts and is summarized as follows:


	Year Ended December 31,
	2021		2020		2019
	(In millions)
DTE Energy	$	55	$	105	$	106
DTE Electric	$	36	$	62	$	65

There are no material amounts of past due financing receivables for the Registrants as of December 31, 2021.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

Inventories

Inventory related to utility and non-utility operations is valued at the lower of cost or net realizable value, where cost is generally valued using average cost. Inventory primarily includes fuel, gas, materials, and supplies. Other inventories include RECs, emission allowances, and other environmental products in the Energy Trading segment.

DTE Gas' natural gas inventory of $50 million and $40 million as of December 31, 2021 and 2020, respectively, is determined using the last-in, first-out (LIFO) method. The replacement cost of gas in inventory exceeded the LIFO cost by $136 million and $62 million at December 31, 2021 and 2020, respectively.

Property, Retirement and Maintenance, and Depreciation and Amortization

Property is stated at cost and includes construction-related labor, materials, overheads, and AFUDC for utility property. The cost of utility properties retired is charged to accumulated depreciation. Expenditures for maintenance and repairs are charged to expense when incurred.

Utility property at DTE Electric and DTE Gas is depreciated over its estimated useful life using straight-line rates approved by the MPSC. DTE Energy's non-utility property is depreciated over its estimated useful life using the straight-line method. Depreciation and amortization expense also includes the amortization of certain regulatory assets for the Registrants.

The cost of nuclear fuel is capitalized. The amortization of nuclear fuel is included within Fuel, purchased power, and gas — utility in the DTE Energy Consolidated Statements of Operations, and Fuel and purchased power in the DTE Electric Consolidated Statements of Operations, and is recorded using the units-of-production method.

See Note 6 to the Consolidated Financial Statements, "Property, Plant, and Equipment."

Long-Lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. If the carrying amount of the asset exceeds the expected undiscounted future cash flows generated by the asset, an impairment loss is recognized resulting in the asset being written down to its estimated fair value. Assets to be disposed of are reported at the lower of the carrying amount or fair value, less costs to sell.

Intangible Assets

The Registrants have certain Intangible assets as shown below:


		December 31, 2021						December 31, 2020
	Useful Lives	Gross Carrying Value		Accumulated Amortization		Net Carrying Value		Gross Carrying Value		Accumulated Amortization		Net Carrying Value
		(In millions)
Intangible assets subject to amortization

Contract intangibles	6 to 26 years	$	271	$	(98)	$	173	$	271	$	(83)	$	188






Intangible assets not subject to amortization(a)		4		—		4		11		—		11

DTE Energy Long-term intangible assets		$	275	$	(98)	$	177	$	282	$	(83)	$	199

(a)Amounts primarily include Renewable energy credits and Gas carbon offsets that are charged to expense, using average cost, as the credits are consumed in the operation of the business. Amounts include DTE Electric intangible assets of $2 million and $11 million as of December 31, 2021 and 2020, respectively, and are included in Other Assets — Other on the DTE Electric Consolidated Statements of Financial Position.

The following table summarizes DTE Energy's estimated contract intangible amortization expense expected to be recognized during each year through 2026:


	2022		2023		2024		2025		2026
	(In millions)
Estimated amortization expense	$	16	$	16	$	16	$	16	$	14

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

DTE Energy amortizes contract intangible assets on a straight-line basis over the expected period of benefit. DTE Energy's Intangible assets amortization expense was $16 million in 2021 and 2020 and $9 million in 2019.

Cloud Computing Arrangements

Effective upon the adoption of ASU No. 2018-15 in January 2020, the Registrants capitalize implementation costs incurred in a cloud computing arrangement that is a service contract consistent with capitalized implementation costs incurred to develop or obtain internal-use software. Capitalized costs are recorded in Other noncurrent assets on the Consolidated Statements of Financial Position and amortization of the costs is reflected in Operation and maintenance within the Consolidated Statements of Operations. Costs are amortized on a straight-line basis over the life of the contract. Contracts primarily involve the implementation or upgrade of cloud-based solutions for generation and distribution operations and customer service support.

Capitalized cloud computing costs were $16 million for DTE Energy, including $12 million for DTE Electric, at December 31, 2021. Amortization of these costs was not material for the year ended December 31, 2021. There were no cloud computing costs capitalized in Other noncurrent assets at December 31, 2020.

Excise and Sales Taxes

The Registrants record the billing of excise and sales taxes as a receivable with an offsetting payable to the applicable taxing authority, with no net impact on the Registrants’ Consolidated Statements of Operations.

Deferred Debt Costs

The costs related to the issuance of long-term debt are deferred and amortized over the life of each debt issue. The deferred amounts are included as a direct deduction from the carrying amount of each debt issue in Mortgage bonds, notes, and other and Junior subordinated debentures on DTE Energy's Consolidated Statements of Financial Position and in Mortgage bonds, notes, and other on DTE Electric's Consolidated Statements of Financial Position. In accordance with MPSC regulations applicable to DTE Energy’s electric and gas utilities, the unamortized discount, premium, and expense related to utility debt redeemed with a refinancing are amortized over the life of the replacement issue. Discounts, premiums, and expense on early redemptions of debt associated with DTE Energy's non-utility operations are charged to earnings.

Investments in Debt and Equity Securities

The Registrants generally record investments in debt and equity securities at market value with unrealized gains or losses included in earnings. Changes in the fair value of Fermi 2 nuclear decommissioning investments are recorded as adjustments to Regulatory assets or liabilities, due to a recovery mechanism from customers. The Registrants' equity investments are reviewed for impairment each reporting period. If the assessment indicates that an impairment exists, a loss is recognized resulting in the equity investment being written down to its estimated fair value. See Note 12 of the Consolidated Financial Statements, "Fair Value."

DTE Energy Foundation

DTE Energy's contributions to the DTE Energy Foundation were $25 million and $20 million for the years ended December 31, 2021 and December 31, 2020, respectively. There were no charitable contributions made to the DTE Energy Foundation for the year ended December 31, 2019. The DTE Energy Foundation is a non-consolidated not-for-profit private foundation, the purpose of which is to contribute to and assist charitable organizations.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

Other Accounting Policies

See the following notes for other accounting policies impacting the Registrants’ Consolidated Financial Statements:


Note						Title
5						Revenue
6						Property, Plant, and Equipment
8						Asset Retirement Obligations
9						Regulatory Matters
10						Income Taxes
12						Fair Value
13						Financial and Other Derivative Instruments
17						Leases
20						Retirement Benefits and Trusteed Assets
21						Stock-Based Compensation

NOTE 3 — NEW ACCOUNTING PRONOUNCEMENTS

Recently Adopted Pronouncements

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes. The amendments in this update simplify the accounting for income taxes by removing certain exceptions, and clarifying certain requirements regarding franchise taxes, goodwill, consolidated tax expenses, and annual effective tax rate calculations. The Registrants adopted the ASU effective January 1, 2021 using the modified retrospective and prospective approaches, where applicable. The adoption of the ASU did not have a significant impact on the Registrants' Consolidated Financial Statements.

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting, as amended. The amendments in this update provide optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. The optional relief is temporary and cannot be applied to contract modifications and hedging relationships entered into or evaluated after December 31, 2022. The Registrants adopted the ASU and elected the optional expedients for contract modifications prospectively. The adoption of the ASU did not have a significant impact on the registrant's Consolidated Financial Statements.

In August 2020, the FASB issued ASU No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity. The amendments in this update simplify the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts indexed to and potentially settled in an entity's own equity. The Registrants adopted the ASU effective January 1, 2021 using the modified retrospective approach. The adoption of the ASU did not have a significant impact on the Registrants' Consolidated Financial Statements.

Recently Issued Pronouncements

In July 2021, the FASB issued ASU No. 2021-05, Leases (Topic 842): Lessors – Certain Leases with Variable Lease Payments. The amendments in this update modify lease classification requirements for lessors, providing that lease contracts with variable lease payments that do not depend on a reference index or a rate should be classified as operating leases if they would have been classified as a sales-type or direct financing lease and resulted in the recognition of a selling loss at lease commencement. The ASU is effective for the Registrants for fiscal years beginning after December 15, 2021, and interim periods therein. The Registrants will apply the guidance prospectively. The Registrants are currently assessing the impact of this standard on their Consolidated Financial Statements.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

In October 2021, The FASB issued ASU No. 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The amendments in this update require contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers. Historically, such amounts were recognized by the acquirer at fair value in acquisition accounting. The ASU is effective for the Registrants for fiscal years beginning after December 15, 2022, and interim periods therein. Early adoption is permitted. The Registrants will apply the guidance prospectively to acquisitions occurring on or after the effective date.

NOTE 4 — DISPOSITIONS AND IMPAIRMENTS

Separation of DT Midstream

On October 27, 2020, DTE Energy announced that its Board of Directors had authorized management to pursue a plan to spin-off its natural gas pipeline, storage and gathering non-utility business. On July 1, 2021, DTE Energy completed the separation of the new company, DT Midstream, through the distribution of 96,732,466 shares of DT Midstream common stock to DTE Energy shareholders. The distribution reflected 100% of the outstanding common stock of DT Midstream as of 5:00 p.m. ET on June 18, 2021 (the “record date”). DTE Energy shareholders received one share of DT Midstream common stock for every two shares of DTE Energy common stock held at the close of business on the record date, with certain shareholders receiving cash in lieu of fractional shares of DT Midstream common stock. For U.S. federal income tax purposes, DTE Energy’s U.S. shareholders generally should not recognize gain or loss as a result of the distribution of DT Midstream stock, except with respect to cash received in lieu of fractional shares.

In June 2021, in order to facilitate the separation and settle intercompany balances with DTE Energy, DT Midstream issued long-term debt in the form of $2.1 billion senior notes and a $1.0 billion term loan. Using the debt proceeds, net of discount and issuance costs of $53 million, DT Midstream made the following cash payments:

Settled Short-term borrowings due to DTE Energy as of June 30, 2021 of $2,537 million
Settled affiliate Accounts receivable due from DTE Energy and affiliate Accounts payable due to DTE Energy as of June 30, 2021 for net cash paid to DTE Energy of $9 million
Provided a one-time special dividend to DTE Energy of $501 million

These payments eliminated in consolidation and had no direct impact on DTE Energy’s Consolidated Financial Statements of Financial Position. During the third quarter 2021, DTE Energy used the proceeds received from DT Midstream to optionally redeem $2.6 billion of long-term debt. Refer to Note 10 to the Consolidated Financial Statements, “Long-term Debt,” for additional information.

Continuing Involvement

Following the separation on July 1, 2021, DT Midstream became an independent public company listed under the symbol “DTM” on the New York Stock Exchange (NYSE) and DTE Energy no longer retains any ownership in DT Midstream. In order to govern the ongoing relationships between DT Midstream and DTE Energy after the separation and to facilitate an orderly transition, the parties entered into a series of agreements including the following:

Separation and Distribution Agreement – sets forth the principal actions to be taken in connection with the separation, including the transfer of assets and assumption of liabilities, among others, and sets forth other agreements governing aspects of the relationship between DTE Energy and DT Midstream
Transition Services Agreement – allows for DTE Energy to provide DT Midstream with specified services for a limited time and no longer than 24 months following the separation, with related costs to be paid by DT Midstream. Services include support for gas operations, information technology, accounting, tax, legal, human resources, and various other administrative services
Tax Matters Agreement – governs the respective rights, responsibilities and obligations of DTE Energy and DT Midstream after the separation with respect to all tax matters
Employee Matters Agreement – addresses certain employment, compensation and benefits matters, including the allocation and treatment of certain assets and liabilities relating to DT Midstream employees

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

In addition, DTE Energy and its subsidiaries have various commercial agreements that are continuing after the separation. These agreements include certain pipeline, gathering, and storage services and operating and maintenance agreements, and are not considered material to the Consolidated Financial Statements.

Discontinued Operations

The table below reflects the financial results of DT Midstream that have been reclassified from continuing operations and included in discontinued operations within the Consolidated Statements of Operations. These results include the impact of tax-related adjustments and all transaction costs related to the separation. General corporate overhead costs have been excluded and no portion of corporate interest costs were allocated to discontinued operations.


	Year Ended December 31,
	2021		2020		2019

Operating Revenues — Non-utility operations	$	405	$	754	$	501

Operating Expenses
Cost of gas and other — non-utility	15		21		18
Operation and maintenance(a)	123		138		103
Depreciation and amortization	82		151		94
Taxes other than income	13		15		8
Asset (gains) losses and impairments, net	17		(2)		1
	250		323		224
Operating Income	155		431		277

Other (Income) and Deductions
Interest expense	50		113		73
Interest income	(4)		(9)		(8)
Other income	(62)		(129)		(100)
Other expenses	—		—		1
	(16)		(25)		(34)
Income from Discontinued Operations Before Income Taxes	171		456		311

Income Tax Expense	54		130		81

Net Income from Discontinued Operations, Net of Taxes	117		326		230

Less: Net Income Attributable to Noncontrolling Interests	6		12		16

Net Income from Discontinued Operations	$	111	$	314	$	214

(a)Includes separation transaction costs of $59 million and $8 million for the years ended December 31, 2021 and 2020, respectively, for various legal, accounting and other professional services fees.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

The table below reflects the major assets and liabilities that were transferred to DT Midstream and presented as discontinued operations in the Consolidated Statements of Financial Position as of December 31, 2020.


	December 31, 2020
	(In millions)
Total Assets of Discontinued Operations
Cash	$	42
Accounts receivable	126
Inventories	8
Other	44
Current assets of DT Midstream	220
Less: Previously affiliated amounts eliminated at DTE Energy	3
Current assets of discontinued operations for DTE Energy	217

Investments in equity method investees	1,691
Net property, plant, and equipment	3,470
Goodwill	473
Intangible assets	2,140
Notes receivable	19
Operating lease right-of-use assets	45
Other	21
Noncurrent assets of discontinued operations for DTE Energy	7,859
Total Assets of Discontinued Operations for DTE Energy	$	8,076

Total Liabilities of Discontinued Operations
Accounts payable	$	39
Operating lease liabilities	17
Short-term borrowings due to DTE Energy	2,913
Other	53
Current liabilities of DT Midstream	3,022
Less: Previously affiliated amounts eliminated at DTE Energy	2,923
Current liabilities of discontinued operations for DTE Energy	99

Deferred income taxes	753
Asset retirement obligations	10
Operating lease liabilities	28
Other	45
Noncurrent liabilities of discontinued operations for DTE Energy	836
Total Liabilities of Discontinued Operations for DTE Energy	$	935

There were no assets or liabilities from discontinued operations as of December 31, 2021. DT Midstream had net assets of $4.0 billion that separated on July 1, 2021 that resulted in a reduction to DTE Energy's equity. Refer to the Separation of DT Midstream line within DTE Energy's Consolidated Statements of Changes in Equity for further details.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

The following table is a summary of significant non-cash items, capital expenditures, and significant financing activities of discontinued operations included in DTE Energy's Consolidated Statements of Cash Flows:


	Year Ended December 31,
	2021		2020		2019
	(In millions)
Operating Activities
Depreciation and amortization	$	82	$	151	$	94
Deferred income taxes	53		125		78
Equity earnings of equity method investees	(59)		(106)		(97)
Asset (gains) losses and impairments, net	19		(2)		1
Investing Activities
Plant and equipment expenditures — non-utility	$	(60)	$	(517)	$	(214)
Acquisitions related to business combinations, net of cash acquired	—		—		(2,296)
Financing Activities
Purchase of noncontrolling interest	$	—	$	—	$	(297)
Acquisition related deferred payment, excluding accretion	—		(380)		—

DTE Vantage Segment Impairment

DTE Vantage owns a pulverized coal facility located at DTE Electric’s River Rouge power plant. The facility provides pulverized coal to a steel industry customer through a supply agreement expiring in 2028. The River Rouge plant provides operation and maintenance services to the facility through an agreement which also expires in 2028.

During the second quarter 2021, DTE Electric retired the River Rouge plant and provided an early termination notice of the operation and maintenance services agreement with the pulverized coal facility. The termination became effective December 31, 2021 and DTE Vantage has ceased operations at the facility.

In connection with these events, DTE Energy performed an impairment analysis of the pulverized coal facility long-lived assets in accordance with ASC 360, Property, Plant and Equipment. Based on its undiscounted cash flow projections, DTE Energy determined that the carrying value of the pulverized coal facility asset group is not recoverable. As a result, DTE Energy recorded a non-cash impairment charge of $27 million, which is included in Asset (gains) losses and impairments, net on DTE Energy’s Consolidated Statements of Operations for the year ended December 31, 2021. The charge included $18 million to fully impair the long-lived assets recorded to Property, plant and equipment and a $9 million write-down of Other noncurrent assets to fair value. Fair value of the assets was determined using an income approach, which utilized assumptions including management’s best estimates of the expected future cash flows, the estimated useful life of the asset group and discount rate.

During the fourth quarter 2021, DTE Energy terminated the supply agreement with the steel industry customer and settled all outstanding claims. As a result, DTE Energy reversed $17 million of deferred revenues that were previously recorded, which increased Operating Revenues - Non-utility operations for the year ended December 31, 2021.

NOTE 5 — REVENUE

Significant Accounting Policy

Revenue is measured based upon the consideration specified in a contract with a customer at the time when performance obligations are satisfied. A performance obligation is a promise in a contract to transfer a distinct good or service or a series of distinct goods or services to the customer. The Registrants recognize revenue when performance obligations are satisfied by transferring control over a product or service to a customer. The Registrants have determined control to be transferred when the product is delivered, or the service is provided to the customer.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

Rates for DTE Electric and DTE Gas include provisions to adjust billings for fluctuations in fuel and purchased power costs, cost of natural gas, and certain other costs. Revenues are adjusted for differences between actual costs subject to reconciliation and the amounts billed in current rates. Under or over recovered revenues related to these cost recovery mechanisms are included in Regulatory assets or liabilities on the Registrants' Consolidated Statements of Financial Position and are recovered or returned to customers through adjustments to the billing factors.

For discussion of derivative contracts, see Note 13 to the Consolidated Financial Statements, "Financial and Other Derivative Instruments."

Disaggregation of Revenue

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


	2021		2020		2019
	(In millions)
Electric(a)
Residential	$	2,926	$	2,825	$	2,427
Commercial	1,908		1,739		1,795
Industrial	628		592		659
Other(b)	359		364		348
Total Electric operating revenues	$	5,821	$	5,520	$	5,229

Gas
Gas sales	$	1,058	$	971	$	1,043
End User Transportation	233		218		219
Intermediate Transportation	82		79		78
Other(b)	180		146		142
Total Gas operating revenues	$	1,553	$	1,414	$	1,482

Other segment operating revenues
DTE Vantage	$	1,482	$	1,224	$	1,560
Energy Trading	$	6,831	$	3,863	$	4,610

(a)Revenues generally represent those of DTE Electric, except $12 million, $14 million, and $5 million of Other revenues related to DTE Sustainable Generation for the years ended December 31, 2021, 2020, and 2019, respectively.

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

Revenues included the following which were outside the scope of Topic 606:


	2021		2020		2019
	(In millions)
Electric — Alternative Revenue Programs	$	36	$	26	$	22
Electric — Other revenues	19		22		19
Gas — Alternative Revenue Programs	10		10		8
Gas — Other revenues	6		8		7
DTE Vantage — Leases	103		99		121
Energy Trading — Derivatives	5,603		2,690		3,415

Nature of Goods and Services

The following is a description of principal activities, separated by reportable segments, from which DTE Energy generates revenue. For more detailed information about reportable segments, see Note 22 to the Consolidated Financial Statements, “Segment and Related Information.”

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

The Registrants have contracts with customers which may contain more than one performance obligation. When more than one performance obligation exists in a contract, the consideration under the contract is allocated to the performance obligations based on the relative standalone selling price. DTE Energy generally determines standalone selling prices based on the prices charged to customers or the use of the adjusted market assessment approach. The adjusted market assessment approach involves the evaluation of the market in which DTE Energy sells goods or services and estimating the price that a customer in that market would be willing to pay.

Under Topic 606, when a customer simultaneously receives and consumes the product or service provided, revenue is considered to be recognized over time. Alternatively, if it is determined that the criteria for recognition of revenue over time is not met, the revenue is considered to be recognized at a point in time.

Electric

Electric consists principally of DTE Electric. Electric revenues are primarily comprised of the supply and delivery of electricity, and related capacity. Revenues are primarily associated with cancellable contracts, with the exception of certain long-term contracts with commercial and industrial customers. Revenues, including estimated unbilled amounts, are generally recognized over time based upon volumes delivered or through the passage of time ratably based upon providing a stand-ready service. The Registrants have determined that the above methods represent a faithful depiction of the transfer of control to the customer. Unbilled revenues are typically determined utilizing approved tariff rates and estimated meter volumes. Estimated unbilled amounts recognized in revenue are subject to adjustment in the following reporting period as actual volumes by customer class are known. Revenues are typically subject to tariff rates based upon customer class and type of service and are billed and received monthly. Tariff rates are determined by the MPSC on a per unit or monthly basis.

Gas

Gas consists principally of DTE Gas. Gas revenues are primarily comprised of the supply and delivery of natural gas, and other services including storage, transportation, and appliance maintenance. Revenues are primarily associated with cancellable contracts with the exception of certain long-term contracts with commercial and industrial customers. Revenues, including estimated unbilled amounts, are generally recognized over time based upon volumes delivered or through the passage of time ratably based upon providing a stand-ready service. DTE Energy has determined that the above methods represent a faithful depiction of the transfer of control to the customer. Unbilled revenues are typically determined using both estimated meter volumes and estimated usage based upon the number of unbilled days and historical temperatures. Estimated unbilled amounts recognized in revenue are subject to adjustment in the following reporting period as actual volumes by customer class and service type are known. Revenues are typically subject to tariff rates or other rates subject to regulatory oversight and are billed and received monthly. Tariff rates are determined by the MPSC on a per unit or monthly basis.

DTE Vantage

DTE Vantage revenues include contracts accounted for as leases which are outside of the scope of Topic 606. For performance obligations within the scope of Topic 606, the timing of revenue recognition is dependent upon when control over the associated product or service is transferred.

Revenues at DTE Vantage, within the scope of Topic 606, generally consist of sales of refined coal, coal, blast furnace coke, coke oven gas, electricity, equipment maintenance services, and other energy related products and services. Revenues, including estimated unbilled amounts, for the sale of blast furnace coke are generally recognized at a point in time when the product is delivered, which represents the transfer of control to the customer. Other revenues are generally recognized over time based upon services provided or through the passage of time ratably based upon providing a stand-ready service. DTE Energy has determined that the above methods represent a faithful depiction of the transfer of control to the customer. Market based pricing structures exist in such contracts including adjustments for consumer price or other indices. Consideration may consist of both fixed and variable components. Generally, uncertainties in the variable consideration components are resolved, and revenues are known at the time of recognition. Billing terms vary and are generally monthly with payment terms typically within 30 days following billing.

Energy Trading

Energy Trading revenues consist primarily of derivative contracts outside of the scope of Topic 606. For performance obligations within the scope of Topic 606, the timing of revenue recognition is dependent upon when control over the associated product or service is transferred.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

Revenues, including estimated unbilled amounts, within the scope of Topic 606 arising from the sale of natural gas, electricity, power capacity, and other energy related products are generally recognized over time based upon volumes delivered or through the passage of time ratably based upon providing a stand-ready service. DTE Energy has determined that the above methods represent a faithful depiction of the transfer of control to the customer. Revenues are known at the time of recognition. Payment for the aforementioned revenues is generally due from customers in the month following delivery.

Revenues associated with RECs and other environmental products are recognized at a point in time when control is transferred to the customer which is deemed to be when these products are entered for transfer to the customer in the applicable tracking system. Revenues associated with RECs under a wholesale full requirements power contract are deferred until control has been transferred. The deferred revenues represent a contract liability for which payment has been received and the amounts have been estimated using the adjusted market assessment approach. With the exception of RECs, generally all other performance obligations associated with wholesale full requirements power contracts are satisfied over time in conjunction with the delivery of power. At the time power is delivered, DTE Energy may not have control over the RECs as the RECs are not self-generated and may not yet have been procured resulting in deferred revenues.

Deferred Revenue

The following is a summary of deferred revenue activity:


	DTE Energy
	(In millions)
Beginning Balance, January 1, 2021(a)	$	65
Increases due to cash received or receivable, excluding amounts recognized as revenue during the period	72
Revenue recognized that was included in the deferred revenue balance at the beginning of the period	(59)
Ending Balance, December 31, 2021	$	78

(a)Excludes $22 million of deferred revenue related to the discontinued operations of DT Midstream. Prospective activity includes only the continuing operations of DTE Energy.

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

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

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

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


	DTE Energy
	(In millions)
2022	$	75
2023	1
2024	1
2025	—
2026	—
2027 and thereafter	1
	$	78

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

Transaction Price Allocated to the Remaining Performance Obligations

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

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

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


	DTE Energy		DTE Electric
	(In millions)
2022	$	292	$	8
2023	285		8
2024	171		8
2025	91		—
2026	59		—
2027 and thereafter	364		—
	$	1,262	$	24

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

NOTE 6 — PROPERTY, PLANT, AND EQUIPMENT

The following is a summary of Property, plant, and equipment by classification as of December 31:


	2021		2020
Property, plant, and equipment	(In millions)
DTE Electric
Zero carbon generation
Nuclear	$	3,394	$	3,295
Renewables	2,522		1,817
Fossil and other generation	8,640		8,031
Distribution	11,414		10,354
Other	2,879		2,674
Total DTE Electric	28,849		26,171
DTE Gas
Distribution	4,900		4,517
Storage	593		576
Transmission and other	1,415		1,341
Total DTE Gas	6,908		6,434
DTE Vantage	1,118		1,194
Other	208		217
Total DTE Energy	$	37,083	$	34,016
Accumulated depreciation and amortization
DTE Electric
Zero carbon generation
Nuclear	$	(413)	$	(373)
Renewables	(357)		(295)
Fossil and other generation	(3,214)		(3,014)
Distribution	(2,842)		(2,686)
Other	(850)		(682)
Total DTE Electric	(7,676)		(7,050)
DTE Gas
Distribution	(1,265)		(1,215)
Storage	(154)		(146)
Transmission and other	(426)		(403)
Total DTE Gas	(1,845)		(1,764)
DTE Vantage	(545)		(619)
Other	(73)		(84)
Total DTE Energy	$	(10,139)	$	(9,517)
Net DTE Energy Property, plant, and equipment	$	26,944	$	24,499
Net DTE Electric Property, plant, and equipment	$	21,173	$	19,121

AFUDC and Capitalized Interest

AFUDC represents the cost of financing construction projects for regulated businesses, including the estimated cost of debt and authorized return-on-equity. The debt component is recorded as a reduction to interest expense and the equity component is recorded as other income. Non-regulated businesses record capitalized interest as a reduction to interest expense.

The AFUDC and capitalized interest rates were as follows for the years ended December 31:


	2021		2020		2019
DTE Electric AFUDC	5.46	%	5.47	%	5.43	%
DTE Gas AFUDC	5.55	%	5.56	%	5.56	%
Non-regulated businesses capitalized interest	3.30	%	3.90	%	4.00	%

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

The following is a summary of AFUDC and interest capitalized for the years ended December 31:


	2021		2020		2019
DTE Energy	(In millions)
Allowance for debt funds used during construction and interest capitalized	$	12	$	11	$	14
Allowance for equity funds used during construction	27		25		24
Total	$	39	$	36	$	38


	2021		2020		2019
DTE Electric	(In millions)
Allowance for debt funds used during construction	$	11	$	10	$	10
Allowance for equity funds used during construction	25		23		22
Total	$	36	$	33	$	32

Depreciation and Amortization

The composite depreciation rate for DTE Electric was approximately 4.2%, 4.2%, and 4.0% in 2021, 2020 and 2019, respectively. The composite depreciation rate for DTE Gas was 2.9%, 2.8%, and 2.7% in 2021, 2020, and 2019, respectively. The average estimated useful life for each major class of utility Property, plant, and equipment as of December 31, 2021 follows:


	Estimated Useful Lives in Years
Utility	Generation	Distribution	Storage
DTE Electric	34	38	N/A
DTE Gas	N/A	49	58

The estimated useful lives for DTE Electric's Other utility assets range from 3 to 80 years, while the estimated useful lives for DTE Gas' Transmission and other utility assets range from 3 to 80 years. The estimated useful lives for major classes of DTE Energy's non-utility assets and facilities range from 3 to 50 years.

The following is a summary of Depreciation and amortization expense for DTE Energy:


	2021		2020		2019
	(In millions)
Property, plant, and equipment	$	1,095	$	1,025	$	927
Regulatory assets and liabilities	259		244		227
Intangible assets	16		16		9
Other	7		7		6
	$	1,377	$	1,292	$	1,169

The following is a summary of Depreciation and amortization expense for DTE Electric:


	2021		2020		2019
	(In millions)
Property, plant, and equipment	$	890	$	831	$	748
Regulatory assets and liabilities	214		207		193

Other	5		5		5
	$	1,109	$	1,043	$	946

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

Capitalized Software

Capitalized software costs are classified as Property, plant, and equipment and the related amortization is included in accumulated depreciation and amortization on the Registrants' Consolidated Financial Statements. The Registrants capitalize the costs associated with computer software developed or obtained for use in their businesses. The Registrants amortize capitalized software costs on a straight-line basis over the expected period of benefit, ranging from 3 to 15 years for both DTE Energy and DTE Electric.

The following balances for capitalized software relate to DTE Energy:


	Year Ended December 31,
	2021		2020		2019
	(In millions)
Amortization expense of capitalized software	$	145	$	128	$	122
Gross carrying value of capitalized software	$	920	$	863
Accumulated amortization of capitalized software	$	493	$	430

The following balances for capitalized software relate to DTE Electric:


	Year Ended December 31,
	2021		2020		2019
	(In millions)
Amortization expense of capitalized software	$	132	$	118	$	112
Gross carrying value of capitalized software	$	826	$	756
Accumulated amortization of capitalized software	$	439	$	363

NOTE 7 — JOINTLY-OWNED UTILITY PLANT

DTE Electric has joint ownership interest in two power plants, Belle River and Ludington Hydroelectric Pumped Storage. DTE Electric’s share of direct expenses of the jointly-owned plants are included in Fuel, purchased power, and gas — utility and Operation and maintenance expenses in the DTE Energy Consolidated Statements of Operations and Fuel and purchased power— utility and Operation and maintenance expenses in the DTE Electric Consolidated Statements of Operations.

DTE Electric's ownership information of the two utility plants as of December 31, 2021 was as follows:


	Belle River		Ludington Hydroelectric Pumped Storage
In-service date	1984-1985		1973
Total plant capacity	1,270 MW		2,220 MW
Ownership interest	81%		49%
Investment in Property, plant, and equipment (in millions)	$	1,952	$	618
Accumulated depreciation (in millions)	$	1,007	$	128

Belle River

The Michigan Public Power Agency (MPPA) has ownership interests in Belle River Unit No. 1 and other related facilities. The MPPA is entitled to 19% of the total capacity and energy of the plant and is responsible for the same percentage of the plant’s operation, maintenance, and capital improvement costs.

Ludington Hydroelectric Pumped Storage

Consumers Energy Company has an ownership interest in the Ludington Hydroelectric Pumped Storage Plant. Consumers Energy is entitled to 51% of the total capacity and energy of the plant and is responsible for the same percentage of the plant’s operation, maintenance, and capital improvement costs.

NOTE 8 — ASSET RETIREMENT OBLIGATIONS

DTE Electric has a legal retirement obligation for the decommissioning costs for its Fermi 1 and Fermi 2 nuclear plants, dismantlement of facilities located on leased property, and various other operations. DTE Electric has conditional retirement obligations for asbestos and PCB removal at certain of its power plants and various distribution equipment. DTE Gas has conditional retirement obligations for gas pipelines, certain service centers, compressor and gate stations. The Registrants recognize such obligations as liabilities at fair market value when they are incurred, which generally is at the time the associated assets are placed in service. Fair value is measured using expected future cash outflows discounted at the Registrants' credit-adjusted risk-free rate. For its utility operations, the Registrants recognize in the Consolidated Statements of Operations removal costs in accordance with regulatory treatment. Any differences between costs recognized related to asset retirement and those reflected in rates are recognized as either a Regulatory asset or liability on the Consolidated Statements of Financial Position.

If a reasonable estimate of fair value cannot be made in the period in which the retirement obligation is incurred, such as for assets with indeterminate lives, the liability is recognized when a reasonable estimate of fair value can be made. Natural gas storage system and certain other distribution assets for DTE Gas and substations, manholes, and certain other distribution assets for DTE Electric have an indeterminate life. Therefore, no liability has been recorded for these assets.

Changes to asset retirement obligations for 2021, 2020, and 2019 were as follows:


	2021		2020		2019
DTE Energy	(In millions)
Asset retirement obligations at January 1	$	2,829	$	2,656	$	2,463
Accretion	167		156		148
Liabilities incurred	28		24		11
Liabilities settled	(30)		(13)		(17)
Revision in estimated cash flows	168		6		51
Asset retirement obligations at December 31	$	3,162	$	2,829	$	2,656


	2021		2020		2019
DTE Electric	(In millions)
Asset retirement obligations at January 1	$	2,607	$	2,447	$	2,271
Accretion	155		145		138
Liabilities incurred	29		18		1
Liabilities settled	(27)		(8)		(14)
Revision in estimated cash flows	168		5		51
Asset retirement obligations at December 31	$	2,932	$	2,607	$	2,447

Approximately $2.4 billion of the asset retirement obligations represent nuclear decommissioning liabilities that are funded through a surcharge to electric customers over the life of the Fermi 2 nuclear plant. The NRC has jurisdiction over the decommissioning of nuclear power plants and requires minimum decommissioning funding based upon a formula. The MPSC and FERC regulate the recovery of costs of decommissioning nuclear power plants and both require the use of external trust funds to finance the decommissioning of Fermi 2. Rates approved by the MPSC provide for the recovery of decommissioning costs of Fermi 2 and the disposal of low-level radioactive waste. DTE Electric believes the MPSC collections will be adequate to fund the estimated cost of decommissioning. The decommissioning assets, anticipated earnings thereon, and future revenues from decommissioning collections will be used to decommission Fermi 2. DTE Electric expects the liabilities to be reduced to zero at the conclusion of the decommissioning activities. If amounts remain in the trust funds for Fermi 2 following the completion of the decommissioning activities, those amounts will be disbursed based on rulings by the MPSC and FERC.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

A portion of the funds recovered through the Fermi 2 decommissioning surcharge and deposited in external trust accounts is designated for the removal of non-radioactive assets and returning the site to greenfield. This removal and greenfielding is not considered a legal liability. Therefore, it is not included in the asset retirement obligation, but is reflected as the Nuclear decommissioning liability. The decommissioning of Fermi 1 is funded by DTE Electric. Contributions to the Fermi 1 trust are discretionary. For additional discussion of Nuclear decommissioning trust fund assets, see Note 12 to the Consolidated Financial Statements, "Fair Value."

NOTE 9 — REGULATORY MATTERS

Regulation

DTE Electric and DTE Gas are subject to the regulatory jurisdiction of the MPSC, which issues orders pertaining to rates, recovery of certain costs, including the costs of generating facilities and regulatory assets, conditions of service, accounting, and operating-related matters. DTE Electric is also regulated by the FERC with respect to financing authorization, wholesale electric market activities, certain affiliate transactions, the acquisition and disposition of certain generation and other facilities, and, in conjunction with the NERC, compliance with mandatory reliability standards. Regulation results in differences in the application of generally accepted accounting principles between regulated and non-regulated businesses.

The Registrants are unable to predict the outcome of any unresolved regulatory matters discussed herein. Resolution of these matters is dependent upon future MPSC and FERC orders and appeals, which may materially impact the Consolidated Financial Statements of the Registrants.

Regulatory Assets and Liabilities

DTE Electric and DTE Gas are required to record Regulatory assets and liabilities for certain transactions that would have been treated as revenue or expense in non-regulated businesses. Continued applicability of regulatory accounting treatment requires that rates be designed to recover specific costs of providing regulated services and be charged to and collected from customers. Future regulatory changes could result in the discontinuance of this accounting treatment for Regulatory assets and liabilities for some or all of the Registrants' businesses and may require the write-off of the portion of any Regulatory asset or liability that was no longer probable of recovery through regulated rates. Management believes that currently available facts support the continued use of Regulatory assets and liabilities and that all Regulatory assets and liabilities are recoverable or refundable in the current regulatory environment.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

The following are balances and a brief description of the Registrants' Regulatory assets and liabilities at December 31:


	DTE Energy				DTE Electric
	2021		2020		2021		2020
Assets	(In millions)
Recoverable pension and other postretirement costs
Pension	$	1,372	$	1,938	$	1,056	$	1,477
Other postretirement costs	53		165		27		108
Recoverable undepreciated costs on retiring plants	667		664		667		664
Fermi 2 asset retirement obligation	613		645		613		645
Enhanced Tree Trimming Program deferred costs	189		119		189		119
Recoverable Michigan income taxes	163		176		133		142
Accrued PSCR/GCR revenue	160		100		142		100
Energy Waste Reduction incentive	79		62		63		49
Recoverable income taxes related to AFUDC equity	68		64		61		54
Deferred environmental costs	51		57		—		—
Unamortized loss on reacquired debt	51		55		38		41
Customer360 deferred costs	46		51		46		51
Nuclear Performance Evaluation and Review Committee Tracker	39		55		39		55
Non-service pension and other postretirement costs	25		21		—		—
Energy Waste Reduction	20		19		—		—
Other recoverable income taxes	16		19		16		19
Transitional Reconciliation Mechanism	8		11		8		11


Other	57		33		38		28
	3,677		4,254		3,136		3,563
Less amount included in Current Assets	(195)		(129)		(168)		(123)
	$	3,482	$	4,125	$	2,968	$	3,440


	DTE Energy				DTE Electric
	2021		2020		2021		2020
Liabilities	(In millions)
Refundable federal income taxes	$	2,117	$	2,255	$	1,729	$	1,827
Removal costs liability	679		831		283		410
Negative other postretirement offset	150		122		106		86
Non-service pension and other postretirement costs	110		78		54		36
Incremental tree trim surge	90		—		90		—
COVID-19 voluntary refund	30		30		30		30
Energy Waste Reduction	27		15		27		15
Renewable energy	13		21		13		21








Other	46		50		43		25
	3,262		3,402		2,375		2,450
Less amount included in Current Liabilities	(156)		(39)		(154)		(18)
	$	3,106	$	3,363	$	2,221	$	2,432

As noted below, certain Regulatory assets for which costs have been incurred have been included (or are expected to be included, for costs incurred subsequent to the most recently approved rate case) in DTE Electric's or DTE Gas' rate base, thereby providing a return on invested costs (except as noted). Certain other Regulatory assets are not included in rate base but accrue recoverable carrying charges until surcharges to collect the assets are billed. Certain Regulatory assets do not result from cash expenditures and therefore do not represent investments included in rate base or have offsetting liabilities that reduce rate base.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

ASSETS

Recoverable pension and other postretirement costs — Accounting standards for pension and other postretirement benefit costs require, among other things, the recognition in Other comprehensive income of the actuarial gains or losses and the prior service costs that arise during the period but are not immediately recognized as components of net periodic benefit costs. DTE Electric and DTE Gas record the impact of actuarial gains or losses and prior service costs as Regulatory assets since the traditional rate setting process allows for the recovery of pension and other postretirement costs. The asset will reverse as the deferred items are amortized and recognized as components of net periodic benefit costs. Refer to Note 20 to the Consolidated Financial Statements, "Retirement Benefits and Trusteed Assets," for additional information regarding the changes in pension and other postretirement costs for the period and the impact on Regulatory assets.(a)
Recoverable undepreciated costs on retiring plants — Deferral of estimated remaining balances associated with coal power plants expected to be retired by the end of 2022. Amounts also include $73 million for the remaining undepreciated cost of the River Rouge power plant, which was retired in 2021 and approved for securitization and recovery in the MPSC's June 2021 order. Refer to the "2021 Securitization Filing" section below for additional information.
Fermi 2 asset retirement obligation — Obligation for Fermi 2 decommissioning costs. The asset captures the timing differences between expense recognition and current recovery in rates and will reverse over the remaining life of the related plant.(a)
Enhanced Tree Trimming Program deferred costs — The MPSC approved the deferral of costs for a tree trimming surge through 2022, aimed at reducing the number and duration of customer interruptions. The MPSC also approved the securitization and recovery of up to $157 million of these costs in their June 2021 order. Refer to the "2021 Securitization Filing" section below for additional information. Additional tree trim surge costs are expected to be recovered through future securitization filings. DTE Electric also requested continued deferral of tree trimming surge costs through 2024 in its January 21, 2022 rate case filing, with an MPSC order expected in November 2022.
Recoverable Michigan income taxes — The State of Michigan enacted a corporate income tax resulting in the establishment of state deferred tax liabilities for DTE Energy's utilities. Offsetting Regulatory assets were also recorded as the impacts of the deferred tax liabilities will be reflected in rates as the related taxable temporary differences reverse and flow through current income tax expense.

*•*Accrued PSCR/GCR revenue — Receivable for the temporary under-recovery of and carrying costs on fuel and purchased power costs incurred by DTE Electric which are recoverable through the PSCR mechanism and temporary under-recovery of and carrying costs on gas costs incurred by DTE Gas which are recoverable through the GCR mechanism.

Energy Waste Reduction incentive — DTE Electric and DTE Gas operate MPSC approved energy waste reduction programs designed to reduce overall energy usage by their customers. The utilities are eligible to earn an incentive by exceeding statutory savings targets. The utilities have consistently exceeded the savings targets and recognize the incentive as a Regulatory asset in the period earned.(a)
Recoverable income taxes related to AFUDC equity — Accounting standards for income taxes require recognition of a deferred tax liability for the equity component of AFUDC. A Regulatory asset is required for the future increase in taxes payable related to the equity component of AFUDC that will be recovered from customers through future rates over the remaining life of the related plant.
Deferred environmental costs — The MPSC approved the deferral of investigation and remediation costs associated with DTE Gas' former MGP sites. Amortization of deferred costs is over a ten-year period beginning in the year after costs were incurred, with recovery (net of any insurance proceeds) through base rate filings.(a)
Unamortized loss on reacquired debt — The unamortized discount, premium, and expense related to debt redeemed with a refinancing are deferred, amortized, and recovered over the life of the replacement issue.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

Customer360 deferred costs — The MPSC approved the deferral and amortization of certain costs associated with implementing Customer360, an integrated software application that enables improved interface among customer service, billing, meter reading, credit and collections, device management, account management, and retail access. Amortization of deferred costs over a 15-year amortization period began after the billing system was put into operation during the second quarter of 2017. The deferred costs are recorded as Regulatory Assets at DTE Electric and DTE Gas receives an intercompany charge for their proportionate share of amortization expense.

*•*Nuclear Performance Evaluation and Review Committee Tracker — Deferral and amortization of certain costs associated with oversight and review of DTE Electric's nuclear power generation program, including safety and regulatory compliance, nuclear leadership, nuclear facilities, and operational and financial performance, pursuant to MPSC authorization. Deferrals are amortized over a five-year period with recovery through base rate filings.

Non-service pension and other postretirement costs — Upon adoption of ASU 2017-07 on January 1, 2018, certain non-service pension and other postretirement costs are no longer capitalized into Property, Plant & Equipment. Such costs may be recorded to Regulatory assets for ratemaking purposes and recovered as amortization expense based on the composite depreciation rate for plant-in-service.
Energy Waste Reduction — Receivable for the under-recovery of energy waste reduction costs incurred by DTE Gas which are recoverable through a surcharge.(a)
Other recoverable income taxes — Income tax receivable from DTE Electric's customers representing the difference in property-related deferred income taxes and amounts previously reflected in DTE Electric's rates. This asset will reverse over the remaining life of the related plant.
Transitional Reconciliation Mechanism — The MPSC approved the recovery of the deferred net incremental revenue requirement associated with the transition of PLD customers to DTE Electric's distribution system effective July 1, 2014. Annual reconciliations are filed and surcharges are implemented to recover approved amounts.

(a)Regulatory assets not earning a return or accruing carrying charges.

LIABILITIES

Refundable federal income taxes — In December 2017, the TCJA was enacted and reduced the corporate income tax rate, effective January 1, 2018. DTE Electric and DTE Gas remeasured deferred taxes, resulting in a reduction to deferred tax liabilities, to reflect the impact of the TCJA on the cumulative temporary differences expected to reverse after the effective date. Regulatory liabilities were also recorded to offset the impact of the deferred tax remeasurement reflected in rates.

*•*Removal costs liability — The amounts collected from customers to fund future asset removal activities in excess of removal costs incurred.

Negative other postretirement offset — DTE Electric and DTE Gas' negative other postretirement costs are not included as a reduction to their authorized rates; therefore, DTE Electric and DTE Gas are accruing a Regulatory liability to eliminate the impact on earnings of the negative other postretirement expense accrual. The Regulatory liabilities will reverse to the extent DTE Electric and DTE Gas' other postretirement expense is positive in future years.
Non-service pension and other postretirement costs — Upon adoption of ASU 2017-07 on January 1, 2018, certain non-service pension and other postretirement cost activity is no longer credited to Property, Plant & Equipment. Such costs may be recorded to Regulatory liabilities for ratemaking purposes and refunded through credits to amortization expense based on the composite depreciation rate for plant-in-service.
Incremental tree trim surge — One-time voluntary refund to be administered by investing in tree trimming, incremental to the Enhanced Tree Trimming Program, without seeking future cost recovery. Refer to the “2020-2021 Accounting Applications” section below for additional information regarding the refund.
COVID-19 voluntary refund — One-time refund obligation owed to DTE Electric customers due to certain sales increases driven by the COVID-19 pandemic. Amortization of the liability will be used to offset the cost of service related to new plant, beginning January 1, 2022 and continuing until the earlier of the implementation of new base rates or December 31, 2022.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

Energy Waste Reduction — Amounts collected in rates in excess of energy waste reduction costs incurred by DTE Electric.
Renewable energy — Amounts collected in rates in excess of renewable energy expenditures.

2020-2021 Accounting Applications

On July 9, 2020, the MPSC approved DTE Electric's request to accelerate amortization of the portion of its refundable federal income taxes regulatory liability related to non-plant accumulated deferred income tax balances that resulted from the TCJA. DTE Electric was authorized to increase amortization by $102 million beginning in May 2021, which would fully amortize this portion of the liability by the end of 2021 instead of April 2033. The accelerated amortization would not impact customer rates and would allow DTE Electric to defer its next rate case filing previously set for July 2020 to March 2021.

On February 26, 2021, DTE Electric filed an additional application requesting a delay in the accelerated amortization approved in the 2020 application. DTE Electric requested delaying the start of amortization from May 2021 to December 1, 2021, which would fully amortize these balances by the end of 2022 and allow DTE Electric to further defer its next rate case filing. The accounting application was approved by the MPSC on April 8, 2021.

On August 31, 2021, DTE Electric filed an accounting application with the MPSC requesting approval of a one-time voluntary refund of $70 million collected in 2021 associated with the unexpected customer usage patterns due to the COVID-19 pandemic. This refund will be administered by investing in additional tree trimming without seeking future cost recovery. Such efforts would serve to improve customer reliability without impacting rates, thus providing an affordability benefit to customers. These investments will be incremental to the Tree Trim Surge expenses previously authorized by the MPSC.

On November 4, 2021, the MPSC issued an order authorizing the one-time accounting and a regulatory liability for a minimum of $70 million. In that order, the MPSC directed DTE Electric to file a letter before December 31, 2021 indicating the amount of the final regulatory liability it planned to record.

On December 27, 2021, DTE Electric submitted a letter to the MPSC substantiating that a regulatory liability of $90 million would be recorded. On December 28, 2021, the MPSC Staff confirmed that DTE Electric complied with the requirements set forth in the November 4th order. Accordingly, DTE Electric recognized the regulatory liability of $90 million and will relieve the liability as the additional tree trim expenses are incurred during 2022-2023. If the full $90 million is not spent by the end of 2023, DTE Electric will provide refunds to customers via bill credits for any shortage.

2021 Securitization Filing

On March 26, 2021, DTE Electric filed an application requesting a financing order approving the securitization financing of $184 million of qualified costs related to the net book value of the River Rouge generation plant and tree trimming surge program costs. The filing requested recovery of these qualifying costs from DTE Electric's customers.

A final MPSC financing order was issued on June 23, 2021 authorizing DTE Electric to proceed with the issuance of securitization bonds for qualified costs of up to $236 million, increased for the inclusion of deferred income taxes. The financing order further authorized customer charges for the timely recovery of the debt service costs on the securitization bonds and other ongoing qualified costs. Securitization financing is expected to occur in March 2022.

2021 Gas Rate Case Filing

DTE Gas filed a rate case with the MPSC on February 12, 2021 requesting an increase in base rates of $195 million based on a projected twelve-month period ending December 31, 2022. The requested increase in base rates was primarily due to an increase in net plant resulting from infrastructure investments and operating and maintenance expenses. The rate filing also requested an increase in return on equity from 9.9% to 10.25% and included projected changes in sales and working capital. On December 9, 2021, the MPSC issued an order approving an annual revenue increase of $84 million for services rendered on or after January 1, 2022 and a return on equity of 9.9%.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

2022 Electric Rate Case Filing

DTE Electric filed a rate case with the MPSC on January 21, 2022 requesting an increase in base rates of $388 million based on a projected twelve-month period ending October 31, 2023. The requested increase in base rates is primarily due to an increase in net plant resulting from generation and distribution investments, as well as related increases to depreciation and property tax expenses. The rate filing also requested an increase in return on equity from 9.9% to 10.25% and includes projected changes in sales. A final MPSC order in this case is expected in November 2022.

NOTE 10 — INCOME TAXES

Income Tax Summary

DTE Energy files a consolidated federal income tax return. DTE Electric is a part of the consolidated federal income tax return of DTE Energy. DTE Energy and its subsidiaries file consolidated and/or separate company income tax returns in various states and localities, including a consolidated return in the State of Michigan. DTE Electric is part of the Michigan consolidated income tax return of DTE Energy. The federal, state and local income tax expense for DTE Electric is determined on an individual company basis with no allocation of tax expenses or benefits from other affiliates of DTE Energy. DTE Electric had income tax receivables with DTE Energy of $31 million and $8 million at December 31, 2021 and 2020, respectively.

On July 1, 2021, DTE Energy completed the separation of its natural gas pipeline, storage and gathering non-utility business, DT Midstream. Refer to Note 4 to the Consolidated Financial Statements, "Dispositions and Impairments" for additional information regarding the separation. The separation was a tax free distribution to shareholders, but triggered certain tax effects at DTE Energy including the remeasurement of state deferred tax assets and liabilities and the recognition of a deferred intercompany gain. The state remeasurement reduced deferred tax liabilities and generated a deferred tax benefit of $85 million. The recognition of the deferred intercompany gain resulted in $9 million of additional deferred tax expense. Both of these impacts were reflected in Income Tax Expense (Benefit) in the Consolidated Statements of Operations for the year ended December 31, 2021.

The Registrants' total Income Tax Expense varied from the statutory federal income tax rate for the following reasons:


	2021			2020			2019
DTE Energy	(In millions)
Income Before Income Taxes	$	656		$	1,082		$	1,013
Income tax expense at 21% statutory rate	$	138		$	227		$	213
Production tax credits	(138)			(121)			(128)
TCJA regulatory liability amortization	(103)			(76)			(38)
State deferred tax remeasurement due to separation of DT Midstream, net of federal benefit	(85)			—			—
Investment tax credits	(3)			(4)			(4)
Net operating loss carryback	—			(34)			—
Enactment of West Virginia income tax legislation, net of federal benefit	8			—			—
Deferred intercompany gain	9			—			—
Valuation allowance on charitable contribution carryforwards	18			3			6
State and local income taxes, excluding items above, net of federal benefit	30			47			29
Other, net	(4)			(5)			(7)
Income Tax Expense (Benefit)	$	(130)		$	37		$	71
Effective income tax rate	(19.9)		%	3.4		%	7.0		%

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)


	2021			2020			2019
DTE Electric	(In millions)
Income Before Income Taxes	$	970		$	887		$	854
Income tax expense at 21% statutory rate	$	204		$	186		$	179
TCJA regulatory liability amortization	(73)			(62)			(35)
Production tax credits	(70)			(55)			(45)
Investment tax credits	(3)			(4)			(4)



State and local income taxes, excluding items above, net of federal benefit	54			50			49
Other, net	(8)			(6)			(6)
Income Tax Expense	$	104		$	109		$	138
Effective income tax rate	10.7		%	12.3		%	16.2		%

Components of the Registrants' Income Tax Expense were as follows:


	2021		2020		2019
DTE Energy	(In millions)
Current income tax expense (benefit)
Federal	$	(33)	$	(249)	$	(183)
State and other income tax	(12)		4		3
Total current income taxes	(45)		(245)		(180)
Deferred income tax expense (benefit)
Federal	(42)		227		218
State and other income tax	(43)		55		33
Total deferred income taxes	(85)		282		251


	$	(130)	$	37	$	71


	2021		2020		2019
DTE Electric	(In millions)
Current income tax expense (benefit)
Federal	$	(11)	$	15	$	25
State and other income tax	(7)		5		16
Total current income taxes	(18)		20		41
Deferred income tax expense
Federal	47		30		51
State and other income tax	75		59		46
Total deferred income taxes	122		89		97


	$	104	$	109	$	138

Deferred tax assets and liabilities are recognized for the estimated future tax effect of temporary differences between the tax basis of assets or liabilities and the reported amounts in the Registrants' Consolidated Financial Statements.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

The Registrants' deferred tax assets (liabilities) were comprised of the following at December 31:


	DTE Energy				DTE Electric
	2021		2020		2021		2020
	(In millions)
Property, plant, and equipment	$	(3,970)	$	(3,691)	$	(3,428)	$	(3,099)
Regulatory assets and liabilities	(117)		(102)		(64)		(53)
Tax credit carry-forwards	1,260		1,144		379		278
Pension and benefits	310		310		282		264
Federal net operating loss carry-forward	199		109		5		—


State and local net operating loss carry-forwards	73		36		15		—
Investments in equity method investees	58		51		(1)		—
Other	75		115		71		85
	(2,112)		(2,028)		(2,741)		(2,525)
Less: Valuation allowance	(51)		(41)		—		—
Long-term deferred income tax liabilities	$	(2,163)	$	(2,069)	$	(2,741)	$	(2,525)

Deferred income tax assets	$	2,224	$	2,050	$	988	$	883
Deferred income tax liabilities	(4,387)		(4,119)		(3,729)		(3,408)
	$	(2,163)	$	(2,069)	$	(2,741)	$	(2,525)

Tax credit carry-forwards for DTE Energy include $1.3 billion of general business credits that expire from 2032 through 2041. No valuation allowance is required for the tax credits carry-forward deferred tax asset.

DTE Energy has a pre-tax federal net operating loss carry-forward of $950 million as of December 31, 2021. The net operating loss carry-forwards generated in 2015 and 2016 will expire from 2035 through 2036, and the net operating loss carry-forward generated in 2018 and subsequent years will be carried forward indefinitely. No valuation allowance is required for the federal net operating loss deferred tax asset.

DTE Energy has state and local deferred tax assets related to net operating loss carry-forwards of $73 million and $36 million at December 31, 2021 and 2020, respectively. Most of the state and local net operating loss carry-forwards expire from 2022 through 2041 with the remainder being carried forward indefinitely.

DTE Energy has recorded valuation allowances of $51 million and $41 million at December 31, 2021 and 2020, respectively, including $29 million and $30 million for the respective periods related to the state net operating loss carryforwards noted above. The remaining valuation allowances related to charitable contribution carryforwards. The change in balances in 2021 includes establishing a valuation allowance of $18 million based on a change in expected ability to utilize certain of these charitable contributions carryforwards.

In assessing the realizability of deferred tax assets, DTE Energy considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

Tax credit carry-forwards for DTE Electric include $379 million of general business credits that expire from 2036 through 2041. No valuation allowance is required for the tax credits carry-forward deferred tax asset.

DTE Electric has a pre-tax federal net operating loss carry-forward of $24 million as of December 31, 2021. The net operating loss carry-forward will be carried forward indefinitely. No valuation allowance is required for the federal net operating loss deferred tax asset.

DTE Electric has $15 million in state and local deferred tax assets related to net operating loss carry-forwards at December 31, 2021 which will expire in 2030 and 2031. DTE Electric had no state and local deferred tax assets related to net operating loss carry-forwards at December 31, 2020. No valuation allowance is required for the state and local net operating loss deferred tax assets.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

The above tables exclude unamortized investment tax credits that are shown separately on the Registrants' Consolidated Statements of Financial Position. Investment tax credits are deferred and amortized to income over the average life of the related property.

Uncertain Tax Positions

A reconciliation of the beginning and ending amount of unrecognized tax benefits for the Registrants is as follows:


	2021		2020		2019
DTE Energy	(In millions)
Balance at January 1	$	10	$	10	$	10
Additions for tax positions of prior years	—		—		—




Balance at December 31	$	10	$	10	$	10


	2021		2020		2019
DTE Electric	(In millions)
Balance at January 1	$	13	$	13	$	13
Additions for tax positions of prior years	—		—		—




Balance at December 31	$	13	$	13	$	13

If recognized, all of the Registrants' unrecognized tax benefits would favorably impact their effective tax rate in future years. The Registrants do not anticipate any material decrease in unrecognized tax benefits in the next twelve months.

The Registrants recognize interest and penalties pertaining to income taxes in Interest expense and Other expenses, respectively, on the Consolidated Statements of Operations.

Accrued interest pertaining to income taxes for DTE Energy totaled $5 million at December 31, 2021 and 2020. DTE Energy recognized a nominal amount of interest expense related to income taxes in 2021 and $1 million in 2020 and 2019. DTE Energy has not accrued any penalties pertaining to income taxes.

Accrued interest pertaining to income taxes for DTE Electric totaled $7 million at December 31, 2021 and $6 million at December 31, 2020. DTE Electric recognized interest expense related to income taxes of $1 million in 2021, 2020, and 2019. DTE Electric has not accrued any penalties pertaining to income taxes.

In 2021, DTE Energy, including DTE Electric, settled a federal tax audit for the 2019 tax year. DTE Energy's federal income tax returns for 2020 and subsequent years remain subject to examination by the IRS. DTE Energy's Michigan Business Tax returns for the years 2008-2011 and Michigan Corporate Income Tax returns for the year 2017 and subsequent years remain subject to examination by the State of Michigan. DTE Energy also files tax returns in numerous state and local jurisdictions with varying statutes of limitation.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

NOTE 11 — EARNINGS PER SHARE

Basic earnings per share is calculated by dividing net income, adjusted for income allocated to participating securities, by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflect the dilution that would occur if any potentially dilutive instruments were exercised or converted into common shares. DTE Energy's participating securities are restricted shares under the stock incentive program that contain rights to receive non-forfeitable dividends. Equity units and performance shares do not receive cash dividends; as such, these awards are not considered participating securities. For additional information, see Notes 14 and 21 to the Consolidated Financial Statements, "Long-Term Debt" and "Stock-Based Compensation," respectively.

The following is a reconciliation of DTE Energy's basic and diluted income per share calculation for the years ended December 31:


	2021		2020		2019
	(In millions, except per share amounts)
Basic Earnings per Share
Net Income Attributable to DTE Energy Company — continuing operations	$	796	$	1,054	$	955
Less: Allocation of earnings to net restricted stock awards	(2)		(2)		(2)
	$	794	$	1,052	$	953
Net Income Attributable to DTE Energy Company — discontinued operations	111		314		214
Net income available to common shareholders — basic	$	905	$	1,366	$	1,167

Average number of common shares outstanding — basic	193		193		185

Income from continuing operations	$	4.11	$	5.46	$	5.16
Income from discontinued operations	0.57		1.63		1.16
Basic Earnings per Common Share	$	4.68	$	7.09	$	6.32

Diluted Earnings per Share
Net Income Attributable to DTE Energy Company — continuing operations	$	796	$	1,054	$	955
Less: Allocation of earnings to net restricted stock awards	(2)		(2)		(2)
	$	794	$	1,052	$	953
Net Income Attributable to DTE Energy Company — discontinued operations	111		314		214
Net income available to common shareholders — diluted	$	905	$	1,366	$	1,167

Average number of common shares outstanding — basic	193		193		185

Average dilutive equity units and performance share awards	1		—		—
Average number of common shares outstanding — diluted	194		193		185

Income from continuing operations	$	4.10	$	5.45	$	5.15
Income from discontinued operations	0.57		1.63		1.16
Diluted Earnings per Common Share(a)	$	4.67	$	7.08	$	6.31

(a)Equity units excluded from the calculation of diluted EPS were approximately 11.5 million for the year ended December 31, 2021 and 10.3 million for the years ended December 31, 2020 and 2019, respectively, as the dilutive stock price threshold was not met. For more information regarding equity units, see Note 14 to the Consolidated Financial Statements, "Long-Term Debt."

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

NOTE 12 — FAIR VALUE

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in a principal or most advantageous market. Fair value is a market-based measurement that is determined based on inputs, which refer broadly to assumptions that market participants use in pricing assets or liabilities. These inputs can be readily observable, market corroborated, or generally unobservable inputs. The Registrants make certain assumptions they believe that market participants would use in pricing assets or liabilities, including assumptions about risk, and the risks inherent in the inputs to valuation techniques. Credit risk of the Registrants and their counterparties is incorporated in the valuation of assets and liabilities through the use of credit reserves, the impact of which was immaterial at December 31, 2021 and 2020. The Registrants believe they use valuation techniques that maximize the use of observable market-based inputs and minimize the use of unobservable inputs.

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

Level 1 — Consists of unadjusted quoted prices in active markets for identical assets or liabilities that the Registrants have the ability to access as of the reporting date.
Level 2 — Consists of inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data.
Level 3 — Consists of unobservable inputs for assets or liabilities whose fair value is estimated based on internally developed models or methodologies using inputs that are generally less readily observable and supported by little, if any, market activity at the measurement date. Unobservable inputs are developed based on the best available information and subject to cost-benefit constraints.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

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


	December 31, 2021												December 31, 2020
	Level 1		Level 2		Level 3		Other (a)		Netting (b)		Net Balance		Level 1		Level 2		Level 3		Other (a)		Netting (b)		Net Balance
	(In millions)
Assets
Cash equivalents(c)	$	4	$	—	$	—	$	—	$	—	$	4	$	438	$	—	$	—	$	—	$	—	$	438
Nuclear decommissioning trusts
Equity securities	917		—		—		190		—		1,107		947		—		—		222		—		1,169
Fixed income securities	124		418		—		102		—		644		102		371		—		82		—		555
Private equity and other	—		—		—		205		—		205		—		—		—		104		—		104
Hedge funds and similar investments	58		18		—		—		—		76		—		—		—		—		—		—
Cash equivalents	39		—		—		—		—		39		27		—		—		—		—		27
Other investments(d)
Equity securities	68		—		—		—		—		68		55		—		—		—		—		55
Fixed income securities	7		—		—		—		—		7		8		—		—		—		—		8
Cash equivalents	86		—		—		—		—		86		97		—		—		—		—		97

Derivative assets
Commodity contracts(e)
Natural gas	273		115		66		—		(394)		60		99		74		60		—		(156)		77
Electricity	—		500		143		—		(441)		202		—		128		52		—		(120)		60
Environmental & Other	—		285		9		—		(285)		9		—		150		4		—		(135)		19

Total derivative assets	273		900		218		—		(1,120)		271		99		352		116		—		(411)		156
Total	$	1,576	$	1,336	$	218	$	497	$	(1,120)	$	2,507	$	1,773	$	723	$	116	$	408	$	(411)	$	2,609

Liabilities
Derivative liabilities
Commodity contracts(e)
Natural gas	$	(177)	$	(172)	$	(245)	$	—	$	347	$	(247)	$	(88)	$	(59)	$	(76)	$	—	$	151	$	(72)
Electricity	—		(434)		(188)		—		443		(179)		—		(126)		(42)		—		125		(43)
Environmental & Other	—		(288)		—		—		288		—		—		(137)		—		—		129		(8)

Foreign currency exchange contracts	—		(4)		—		—		—		(4)		—		(5)		—		—		—		(5)

Total	$	(177)	$	(898)	$	(433)	$	—	$	1,078	$	(430)	$	(88)	$	(327)	$	(118)	$	—	$	405	$	(128)
Net Assets (Liabilities) at end of period	$	1,399	$	438	$	(215)	$	497	$	(42)	$	2,077	$	1,685	$	396	$	(2)	$	408	$	(6)	$	2,481

Assets
Current	$	227	$	646	$	166	$	—	$	(854)	$	185	$	532	$	260	$	92	$	—	$	(330)	$	554
Noncurrent	1,349		690		52		497		(266)		2,322		1,241		463		24		408		(81)		2,055
Total Assets	$	1,576	$	1,336	$	218	$	497	$	(1,120)	$	2,507	$	1,773	$	723	$	116	$	408	$	(411)	$	2,609
Liabilities
Current	$	(168)	$	(609)	$	(260)	$	—	$	799	$	(238)	$	(84)	$	(223)	$	(79)	$	—	$	318	$	(68)
Noncurrent	(9)		(289)		(173)		—		279		(192)		(4)		(104)		(39)		—		87		(60)
Total Liabilities	$	(177)	$	(898)	$	(433)	$	—	$	1,078	$	(430)	$	(88)	$	(327)	$	(118)	$	—	$	405	$	(128)
Net Assets (Liabilities) at end of period	$	1,399	$	438	$	(215)	$	497	$	(42)	$	2,077	$	1,685	$	396	$	(2)	$	408	$	(6)	$	2,481

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

(b)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.

(c)Amounts consisted of $1 million and $2 million of cash equivalents included in Restricted cash on DTE Energy's Consolidated Statements of Financial Position at December 31, 2021 and December 31, 2020, respectively. All other amounts are included in Cash and cash equivalents on the Consolidated Statements of Financial Position.

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

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

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

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


	December 31, 2021										December 31, 2020
	Level 1		Level 2		Level 3		Other(a)		Net Balance		Level 1		Level 2		Level 3		Other(a)		Net Balance
	(In millions)
Assets
Cash equivalents	$	—	$	—	$	—	$	—	$	—	$	4	$	—	$	—	$	—	$	4
Nuclear decommissioning trusts
Equity securities	917		—		—		190		1,107		947		—		—		222		1,169
Fixed income securities	124		418		—		102		644		102		371		—		82		555
Private equity and other	—		—		—		205		205		—		—		—		104		104
Hedge funds and similar investments	58		18		—		—		76		—		—		—		—		—
Cash equivalents	39		—		—		—		39		27		—		—		—		27
Other investments
Equity securities	20		—		—		—		20		16		—		—		—		16
Fixed income securities	—		—		—		—		—		—		—		—		—		—
Cash equivalents	11		—		—		—		11		11		—		—		—		11

Derivative assets — FTRs	—		—		9		—		9		—		—		4		—		4
Total	$	1,169	$	436	$	9	$	497	$	2,111	$	1,107	$	371	$	4	$	408	$	1,890

Assets
Current	$	—	$	—	$	9	$	—	$	9	$	4	$	—	$	4	$	—	$	8
Noncurrent	1,169		436		—		497		2,102		1,103		371		—		408		1,882
Total Assets	$	1,169	$	436	$	9	$	497	$	2,111	$	1,107	$	371	$	4	$	408	$	1,890

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

Cash Equivalents

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

Nuclear Decommissioning Trusts and Other Investments

The nuclear decommissioning trusts and other investments hold debt and equity securities directly and indirectly through commingled funds. Exchange-traded debt and equity securities held directly, as well as publicly traded commingled funds, are valued using quoted market prices in actively traded markets. Non-exchange traded fixed income securities are valued based upon quotations available from brokers or pricing services.

Non-publicly traded commingled funds holding exchange-traded equity or debt securities are valued based on stated NAVs. There are no significant restrictions for these funds and investments may be redeemed with 7 to 65 days notice depending on the fund. There is no intention to sell the investment in these commingled funds.

Private equity and other assets include a diversified group of funds that are classified as NAV assets. These funds primarily invest in limited partnerships, including private equity, private real estate and private credit. Distributions are received through the liquidation of the underlying fund assets over the life of the funds. There are generally no redemption rights. The limited partner must hold the fund for its life or find a third-party buyer, which may need to be approved by the general partner. The funds are established with varied contractual durations generally in the range of 7 years to 12 years. The fund life can often be extended by several years by the general partner, and further extended with the approval of the limited partners. Unfunded commitments related to these investments totaled $199 million and $183 million as of December 31, 2021 and 2020, respectively.

Hedge funds and similar investments utilize a diversified group of strategies that attempt to capture uncorrelated sources of return. These investments include publicly traded mutual funds that are valued using quoted prices in actively traded markets, as well as insurance-linked and asset-backed securities and that are valued using quotations from broker or pricing services.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

For pricing the nuclear decommissioning trusts and other investments, a primary price source is identified by asset type, class, or issue for each security. The trustee monitors prices supplied by pricing services and may use a supplemental price source or change the primary source of a given security if the trustee determines that another price source is considered preferable. The Registrants have obtained an understanding of how these prices are derived, including the nature and observability of the inputs used in deriving such prices.

Derivative Assets and Liabilities

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

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


	Year Ended December 31, 2021								Year Ended December 31, 2020
	Natural Gas		Electricity		Other		Total		Natural Gas		Electricity		Other		Total
	(In millions)
Net Assets (Liabilities) as of January 1	$	(16)	$	10	$	4	$	(2)	$	(15)	$	16	$	3	$	4

Transfers from Level 3 into Level 2	—		—		—		—		(2)		—		—		(2)
Total gains (losses)
Included in earnings(a)	(343)		54		—		(289)		(75)		113		(7)		31
Recorded in Regulatory liabilities	—		—		19		19		—		—		20		20
Purchases, issuances, and settlements:


Settlements	180		(109)		(14)		57		76		(119)		(12)		(55)
Net Assets (Liabilities) as of December 31	$	(179)	$	(45)	$	9	$	(215)	$	(16)	$	10	$	4	$	(2)
Total gains (losses) included in Net Income attributed to the change in unrealized gains (losses) related to assets and liabilities held at December 31(a)	$	(208)	$	4	$	(72)	$	(276)	$	(4)	$	70	$	(70)	$	(4)
Total gains (losses) included in Regulatory liabilities attributed to the change in unrealized gains (losses) related to assets and liabilities held at December 31	$	—	$	—	$	9	$	9	$	—	$	—	$	4	$	4

(a)Amounts are reflected in Operating Revenues — Non-utility operations and Fuel, purchased power, gas, and other — non-utility in DTE Energy's Consolidated Statements of Operations.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

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


	Year Ended December 31,
	2021		2020
	(In millions)
Net Assets as of January 1	$	4	$	3
Total gains recorded in Regulatory liabilities	19		20
Purchases, issuances, and settlements:
Settlements	(14)		(19)
Net Assets as of December 31	$	9	$	4
Total gains (losses) included in Regulatory liabilities attributed to the change in unrealized gains (losses) related to assets and liabilities held at December 31	$	9	$	4

Derivatives are transferred between levels primarily due to changes in the source data used to construct price curves as a result of changes in market liquidity. Transfers in and transfers out are reflected as if they had occurred at the beginning of the period. There were no transfers from or into Level 3 for DTE Electric during the years ended December 31, 2021 and 2020.

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


	December 31, 2021
Commodity Contracts	Derivative Assets		Derivative Liabilities		Valuation Techniques	Unobservable Input	Range						Weighted Average
	(In millions)
Natural Gas	$	66	$	(245)	Discounted Cash Flow	Forward basis price (per MMBtu)	$	(1.36)	—	$	3.82	/MMBtu	$	(0.04)	/MMBtu
Electricity	$	143	$	(188)	Discounted Cash Flow	Forward basis price (per MWh)	$	(12)	—	$	7	/MWh	$	(2)	/MWh


	December 31, 2020
Commodity Contracts	Derivative Assets		Derivative Liabilities		Valuation Techniques	Unobservable Input	Range						Weighted Average
	(In millions)
Natural Gas	$	60	$	(76)	Discounted Cash Flow	Forward basis price (per MMBtu)	$	(0.86)	—	$	2.50	/MMBtu	$	(0.07)	/MMBtu
Electricity	$	52	$	(42)	Discounted Cash Flow	Forward basis price (per MWh)	$	(9)	—	$	6	/MWh	$	—	/MWh

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

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

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

Fair Value of Financial Instruments

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


	December 31, 2021								December 31, 2020
	Carrying		Fair Value						Carrying		Fair Value
	Amount		Level 1		Level 2		Level 3		Amount		Level 1		Level 2		Level 3
	(In millions)
Notes receivable(a), excluding lessor finance leases	$	150	$	—	$	—	$	167	$	141	$	—	$	—	$	141
Short-term borrowings	$	758	$	—	$	758	$	—	$	38	$	—	$	38	$	—
Notes payable(b)	$	27	$	—	$	—	$	27	$	19	$	—	$	—	$	19
Long-term debt(c)	$	17,378	$	2,284	$	15,425	$	1,207	$	19,439	$	2,547	$	18,230	$	1,397

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

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

(c)Includes debt due within one year and excludes finance lease obligations. Carrying value also includes unamortized debt discounts and issuance costs.

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


	December 31, 2021								December 31, 2020
	Carrying		Fair Value						Carrying		Fair Value
	Amount		Level 1		Level 2		Level 3		Amount		Level 1		Level 2		Level 3
	(In millions)
Notes receivable — Other(a)	$	17	$	—	$	—	$	17	$	16	$	—	$	—	$	16
Short-term borrowings — affiliates	$	53	$	—	$	—	$	53	$	101	$	—	$	—	$	101
Short-term borrowings — other	$	153	$	—	$	153	$	—	$	—	$	—	$	—	$	—
Notes payable(b)	$	27	$	—	$	—	$	27	$	17	$	—	$	—	$	17
Long-term debt(c)	$	8,907	$	—	$	9,898	$	150	$	8,236	$	—	$	9,579	$	379

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

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

(c)Includes debt due within one year and excludes finance lease obligations. Carrying value also includes unamortized debt discounts and issuance costs.

For further fair value information on financial and derivative instruments, see Note 13 to the Consolidated Financial Statements, "Financial and Other Derivative Instruments."

Nuclear Decommissioning Trust Funds

DTE Electric has a legal obligation to decommission its nuclear power plants following the expiration of its operating licenses. This obligation is reflected as an Asset retirement obligation on DTE Electric's Consolidated Statements of Financial Position. Rates approved by the MPSC provide for the recovery of decommissioning costs of Fermi 2 and the disposal of low-level radioactive waste. See Note 8 to the Consolidated Financial Statements, "Asset Retirement Obligations."

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


	December 31,
	2021		2020
	(In millions)
Fermi 2	$	2,051	$	1,841
Fermi 1	3		3
Low-level radioactive waste	17		11
	$	2,071	$	1,855

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

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


	Year Ended December 31,
	2021		2020		2019
	(In millions)
Realized gains	$	95	$	192	$	56
Realized losses	$	(12)	$	(111)	$	(31)
Proceeds from sale of securities	$	1,047	$	2,350	$	788

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

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


	December 31, 2021						December 31, 2020
	Fair Value		Unrealized Gains		Unrealized Losses		Fair Value		Unrealized Gains		Unrealized Losses
	(In millions)
Equity securities	$	1,107	$	546	$	(9)	$	1,169	$	468	$	(6)
Fixed income securities	644		23		(6)		555		22		(1)
Private equity and other	205		58		(8)		104		11		—
Hedge funds and similar investments	76		1		(2)		—		—		—
Cash equivalents	39		—		—		27		—		—
	$	2,071	$	628	$	(25)	$	1,855	$	501	$	(7)

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


	December 31, 2021
	(In millions)
Due within one year	$	20
Due after one through five years	135
Due after five through ten years	109
Due after ten years	278
	$	542

Fixed income securities held in nuclear decommissioning trust funds include $102 million of non-publicly traded commingled funds that do not have a contractual maturity date.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

Other Securities

At December 31, 2021 and 2020, the Registrants' securities included in Other investments on the Consolidated Statements of Financial Position were comprised primarily of investments within DTE Energy's rabbi trust. The rabbi trust was established to fund certain non-qualified pension benefits, and therefore changes in market value are recognized in earnings. Gains and losses are allocated from DTE Energy to DTE Electric and are included in Other Income or Other Expense, respectively, in the Registrants' Consolidated Statements of Operations. The following table summarizes the Registrants' gains (losses) related to the trust:


	Year Ended December 31,
	2021		2020		2019
	(In millions)
Gains (losses) related to equity securities	$	7	$	(1)	$	27
Gains (losses) related to fixed income securities	—		(2)		10
	$	7	$	(3)	$	37

NOTE 13 — FINANCIAL AND OTHER DERIVATIVE INSTRUMENTS

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

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

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

DTE Gas — DTE Gas purchases, stores, transports, distributes, and sells natural gas, and buys and sells transportation and storage capacity. DTE Gas has fixed-priced contracts for portions of its expected natural gas supply requirements through March 2024. Substantially all of these contracts meet the normal purchases and normal sales exception and are therefore accounted for under the accrual method. Forward transportation and storage contracts are generally not derivatives and are therefore accounted for under the accrual method.

DTE Vantage — This segment manages and operates renewable gas recovery projects, industrial energy projects, reduced emissions fuel projects, and power generation assets. Primarily fixed-price contracts are used in the marketing and management of the segment assets. These contracts are generally not derivatives and are therefore accounted for under the accrual method.

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

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

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

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

Credit Risk — DTE Energy maintains credit policies that significantly minimize overall credit risk. These policies include an evaluation of potential customers’ and counterparties’ financial condition, including the viability of underlying productive assets, credit rating, collateral requirements, or other credit enhancements such as letters of credit or guarantees. DTE Energy generally uses standardized agreements that allow the netting of positive and negative transactions associated with a single counterparty. DTE Energy maintains a provision for credit losses based on factors surrounding the credit risk of its customers, historical trends, and other information. Based on DTE Energy's credit policies and its December 31, 2021 provision for credit losses, DTE Energy’s exposure to counterparty nonperformance is not expected to have a material adverse effect on DTE Energy's Consolidated Financial Statements.

Derivative Activities

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

Asset Optimization — Represents derivative activity associated with assets owned and contracted by DTE Energy, including forward natural gas purchases and sales, natural gas transportation, and storage capacity. Changes in the value of derivatives in this category typically economically offset changes in the value of underlying non-derivative positions, which do not qualify for fair value accounting. The difference in accounting treatment of derivatives in this category and the underlying non-derivative positions can result in significant earnings volatility.
Marketing and Origination — Represents derivative activity transacted by originating substantially hedged positions with wholesale energy marketers, producers, end-users, utilities, retail aggregators, and alternative energy suppliers.
Fundamentals Based Trading — Represents derivative activity transacted with the intent of taking a view, capturing market price changes, or putting capital at risk. This activity is speculative in nature as opposed to hedging an existing exposure.
Other — Includes derivative activity at DTE Electric related to FTRs. Changes in the value of derivative contracts at DTE Electric are recorded as Derivative assets or liabilities, with an offset to Regulatory assets or liabilities as the settlement value of these contracts will be included in the PSCR mechanism when realized.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

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


	December 31, 2021				December 31, 2020
	Derivative Assets		Derivative Liabilities		Derivative Assets		Derivative Liabilities
	(In millions)
Derivatives designated as hedging instruments
Foreign currency exchange contracts	$	—	$	(4)	$	—	$	(4)
Derivatives not designated as hedging instruments
Commodity contracts
Natural gas	$	454	$	(594)	$	233	$	(223)
Electricity	643		(622)		180		(168)
Environmental & Other	294		(288)		154		(137)
Foreign currency exchange contracts	—		—		—		(1)
Total derivatives not designated as hedging instruments	$	1,391	$	(1,504)	$	567	$	(529)

Current	$	1,035	$	(1,037)	$	446	$	(386)
Noncurrent	356		(471)		121		(147)
Total derivatives	$	1,391	$	(1,508)	$	567	$	(533)

The fair value of derivative instruments at DTE Electric was $9 million and $4 million at December 31, 2021 and 2020, respectively, comprised of FTRs recorded to Other current assets on the Consolidated Statements of Financial Position and not designated as hedging instruments.

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

DTE Energy also provides and receives collateral in the form of letters of credit which can be offset against net Derivative assets and liabilities as well as Accounts receivable and payable. DTE Energy had issued letters of credit of $18 million outstanding at December 31, 2021 and $7 million at December 31, 2020, which could be used to offset net Derivative liabilities. Letters of credit received from third parties which could be used to offset net Derivative assets were $37 million and $9 million at December 31, 2021 and 2020, respectively. Such balances of letters of credit are excluded from the tables below and are not netted with the recognized assets and liabilities in DTE Energy's Consolidated Statements of Financial Position.

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

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


	December 31,
	2021		2020
	(In millions)
Cash collateral netted against Derivative assets	$	(90)	$	(12)
Cash collateral netted against Derivative liabilities	48		6
Cash collateral recorded in Accounts receivable(a)	55		14
Cash collateral recorded in Accounts payable(a)	(21)		(1)
Total net cash collateral posted (received)	$	(8)	$	7

(a)Amounts are recorded net by counterparty.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

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


	December 31, 2021						December 31, 2020
	Gross Amounts of Recognized Assets (Liabilities)		Gross Amounts Offset in the Consolidated Statements of Financial Position		Net Amounts of Assets (Liabilities) Presented in the Consolidated Statements of Financial Position		Gross Amounts of Recognized Assets (Liabilities)		Gross Amounts Offset in the Consolidated Statements of Financial Position		Net Amounts of Assets (Liabilities) Presented in the Consolidated Statements of Financial Position
	(In millions)
Derivative assets
Commodity contracts
Natural gas	$	454	$	(394)	$	60	$	233	$	(156)	$	77
Electricity	643		(441)		202		180		(120)		60
Environmental & Other	294		(285)		9		154		(135)		19

Total derivative assets	$	1,391	$	(1,120)	$	271	$	567	$	(411)	$	156

Derivative liabilities
Commodity contracts
Natural gas	$	(594)	$	347	$	(247)	$	(223)	$	151	$	(72)
Electricity	(622)		443		(179)		(168)		125		(43)
Environmental & Other	(288)		288		—		(137)		129		(8)

Foreign currency exchange contracts	(4)		—		(4)		(5)		—		(5)
Total derivative liabilities	$	(1,508)	$	1,078	$	(430)	$	(533)	$	405	$	(128)

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


	December 31, 2021								December 31, 2020
	Derivative Assets				Derivative Liabilities				Derivative Assets				Derivative Liabilities
	Current		Noncurrent		Current		Noncurrent		Current		Noncurrent		Current		Noncurrent
	(In millions)
Total fair value of derivatives	$	1,035	$	356	$	(1,037)	$	(471)	$	446	$	121	$	(386)	$	(147)
Counterparty netting	(791)		(239)		791		239		(318)		(81)		318		81
Collateral adjustment	(63)		(27)		8		40		(12)		—		—		6
Total derivatives as reported	$	181	$	90	$	(238)	$	(192)	$	116	$	40	$	(68)	$	(60)

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


	Location of Gain (Loss) Recognized in Income on Derivatives		Gain (Loss) Recognized in Income on Derivatives for Years Ended December 31,
		2021			2020			2019
			(In millions)




Commodity contracts
Natural gas	Operating Revenues — Non-utility operations		$	(224)		$	(70)		$	44
Natural gas	Fuel, purchased power, gas, and other — non-utility		(89)			20			(5)
Electricity	Operating Revenues — Non-utility operations		169			91			44
Environmental & Other	Operating Revenues — Non-utility operations		(40)			(118)			(26)
Foreign currency exchange contracts	Operating Revenues — Non-utility operations		—			(6)			(2)
Total			$	(184)		$	(83)		$	55

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

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

The following represents the cumulative gross volume of DTE Energy's derivative contracts outstanding as of December 31, 2021:


Commodity						Number of Units
Natural gas (MMBtu)						2,139,606,569
Electricity (MWh)						32,140,743

Foreign currency exchange ($ CAD)						116,073,431

Renewable Energy Certificates (MWh)						7,711,766
Carbon emissions (Metric Ton)						1,142,009

Various subsidiaries of DTE Energy have entered into contracts which contain ratings triggers and are guaranteed by DTE Energy. These contracts contain provisions which allow the counterparties to require that DTE Energy post cash or letters of credit as collateral in the event that DTE Energy’s credit rating is downgraded below investment grade. Certain of these provisions (known as "hard triggers") state specific circumstances under which DTE Energy can be required to post collateral upon the occurrence of a credit downgrade, while other provisions (known as "soft triggers") are not as specific. For contracts with soft triggers, it is difficult to estimate the amount of collateral which may be requested by counterparties and/or which DTE Energy may ultimately be required to post. The amount of such collateral which could be requested fluctuates based on commodity prices (primarily natural gas, power, environmental, and coal) and the provisions and maturities of the underlying transactions. As of December 31, 2021, DTE Energy's contractual obligation to post collateral in the form of cash or letters of credit in the event of a downgrade to below investment grade, under both hard trigger and soft trigger provisions, was $667 million.

As of December 31, 2021, DTE Energy had $1.3 billion of derivatives in net liability positions, for which hard triggers exist. There is $8 million of collateral that has been posted against such liabilities, including cash and letters of credit. Associated derivative net asset positions for which contractual offset exists were $1.0 billion. The net remaining amount of $232 million is derived from the $667 million noted above.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

NOTE 14 — LONG-TERM DEBT

Long-Term Debt

DTE Energy's long-term debt outstanding and weighted average interest rates of debt outstanding at December 31 were:


	Interest Rate(a)	Maturity Date	2021		2020
			(In millions)
Mortgage bonds, notes, and other
DTE Energy Debt, Unsecured	2.1%	2022 — 2030	$	5,555	$	8,175
DTE Electric Debt, Principally Secured	3.7%	2022 — 2051	8,988		8,308

DTE Gas Debt, Principally Secured	3.9%	2023 — 2051	2,065		1,910

			16,608		18,393
Unamortized debt discount			(23)		(25)
Unamortized debt issuance costs			(90)		(104)
Long-term debt due within one year			(2,866)		(462)
			$	13,629	$	17,802




Junior Subordinated Debentures
Subordinated Debentures	4.8%	2077 — 2081	$	910	$	1,210
Unamortized debt issuance costs			(27)		(35)
			$	883	$	1,175

(a)Weighted average interest rate as of December 31, 2021.

DTE Electric's long-term debt outstanding and weighted average interest rates of debt outstanding at December 31 were:


	Interest Rate(a)	Maturity Date	2021		2020
			(In millions)
Mortgage bonds, notes, and other
Long Term Debt, Principally Secured	3.7%	2022 — 2051	$	8,988	$	8,308


Unamortized debt discount			(19)		(16)
Unamortized debt issuance costs			(62)		(56)
Long-term debt due within one year			(316)		(462)
			$	8,591	$	7,774

(a)Weighted average interest rate as of December 31, 2021.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

Debt Issuances

In 2021, the following debt was issued:


Company	Month	Type	Interest Rate	Maturity Date	Amount
					(In millions)
DTE Electric	March	Mortgage bonds(a)	1.90%	2028	$	575
DTE Electric	March	Mortgage bonds(a)	3.25%	2051	425
DT Midstream	June	Senior notes(b)	4.125%	2029	1,100
DT Midstream	June	Senior notes(b)	4.375%	2031	1,000
DT Midstream	June	Term loan facility(b)	Variable	2028	1,000
DTE Gas	November	Mortgage bonds(c)	2.07%	2031	60
DTE Gas	November	Mortgage bonds(c)	2.85%	2051	95
DTE Energy	November	Junior subordinated debentures(d)	4.375%	2081	280
					$	4,535

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

(b)Proceeds used for the repayment of short-term borrowings due to DTE Energy to facilitate the separation of DT Midstream, as well as a one-time special dividend provided to DTE Energy. The debt was transferred to DT Midstream upon its separation on July 1, 2021. Refer to Note 4 to the Consolidated Financial Statements, “Dispositions and Impairments,” for additional information and to the Debt Redemptions section below for DTE Energy's use of the proceeds received from DT Midstream.

(c)Proceeds used for the repayment of short-term borrowings and general corporate purposes, including capital expenditures.

(d)Proceeds used for the repayment of $280 million of DTE Energy's 2016 Series F 6.00% Junior Subordinated Debentures due 2076.

In September 2021, DTE Electric completed a mandatory remarketing of $82 million of 1.45% Tax-Exempt Revenue Bonds at the same rate of 1.45% until maturity in 2030 and $59 million of 1.45% Tax-Exempt Revenue Bonds at a rate of 1.35% until maturity in 2029.

Debt Redemptions

In 2021, the following debt was redeemed:


Company	Month	Type	Interest Rate	Maturity Date	Amount
					(In millions)
DTE Electric	April	Mortgage bonds	3.90%	2021	$	250
DTE Electric	May	Mortgage bonds	7.00%	2021	33
DTE Energy	June	Junior subordinated debentures(a)	5.375%	2076	300
DTE Energy	July	Senior notes	3.30%	2022	300
DTE Energy	July	Senior notes	2.60%	2022	300
DTE Energy	July	Senior notes	3.70%	2023	600
DTE Energy	July	Senior notes	3.85%	2023	135
DTE Energy	July	Senior notes	3.50%	2024	350
DTE Energy	July	Senior notes	3.80%	2027	350
DTE Energy	July	Senior notes	3.40%	2029	21
DTE Energy	July	Senior notes	6.375%	2033	191
DTE Energy	August	Senior notes	3.85%	2023	165
DTE Energy	August	Senior notes	6.375%	2033	209
DTE Electric	August	Mortgage bonds	6.90%	2021	38
DTE Energy	December	Junior subordinated debentures(a)	6.00%	2076	280
					$	3,522

(a)Early redemptions and the write-off of unamortized issuance costs resulted in a total loss on extinguishment of debt of $17 million for the year ended December 31, 2021, including $8 million for the June redemption and $9 million for the December redemption.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

During the third quarter 2021, DTE Energy optionally redeemed $2.6 billion of Senior Notes included in the table above using proceeds from DT Midstream's repayment of short-term borrowings and one-time special dividend. To early retire this debt and reduce future interest expense, DTE Energy incurred prepayment costs of $361 million and wrote off $15 million of unamortized issuance costs and discounts related to the debt. These amounts have been included within the Loss on extinguishment of debt line item within the Consolidated Statements of Operations for the year ended December 31, 2021.

The following table shows the Registrants' scheduled debt maturities, excluding any unamortized discount on debt:


	2022		2023		2024		2025		2026		2027 and Thereafter		Total
	(In millions)
DTE Energy(a)	$	2,866	$	277	$	1,075	$	1,220	$	777	$	11,302	$	17,517
DTE Electric	$	316	$	202	$	400	$	350	$	177	$	7,543	$	8,988

(a)Amounts include DTE Electric's scheduled debt maturities.

The following table shows scheduled interest payments related to the Registrants' long-term debt:


	2022		2023		2024		2025		2026		2027 and Thereafter		Total
	(In millions)
DTE Energy(a)	$	575	$	548	$	529	$	494	$	450	$	7,510	$	10,106
DTE Electric	$	330	$	322	$	305	$	292	$	284	$	4,222	$	5,755

(a)Amounts include DTE Electric's scheduled interest payments.

Junior Subordinated Debentures

DTE Energy has the right to defer interest payments on the Junior Subordinated Debentures. Should DTE Energy exercise this right, it cannot declare or pay dividends on, or redeem, purchase or acquire, any of its capital stock during the deferral period. Any deferred interest payments will bear additional interest at the rate associated with the related debt issue. As of December 31, 2021, no interest payments have been deferred on the Junior Subordinated Debentures.

Cross Default Provisions

Substantially all of the net utility properties of DTE Electric and DTE Gas are subject to the lien of mortgages. Should DTE Electric or DTE Gas fail to timely pay their indebtedness under these mortgages, such failure may create cross defaults in the indebtedness of DTE Energy.

Acquisition Financing

In December 2019, DTE Energy closed on the purchase of midstream natural gas assets. The acquisition was financed through the issuance of Senior Notes, common stock, and $1.3 billion of equity units. Each equity unit has a stated amount of $50 and was initially issued in the form of a Corporate Unit, comprised of (i) a forward purchase contract to buy DTE Energy common stock (stock purchase contract) and (ii) a 1/20 undivided beneficial ownership interest in a $1,000 principal amount of DTE Energy’s 2019 Series F 2.25% RSNs due 2025. The RSN debt instruments and the stock purchase contract equity instruments are deemed to be separate instruments as the investor may trade the RSNs separately from the stock purchase contracts and may also settle the stock purchase contracts separately. The Corporate Units are listed on the New York Stock Exchange under the symbol DTP.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

The stock purchase contract obligates the holder to purchase from DTE Energy on the settlement date, November 1, 2022, for a price of $50 per stock purchase contract, a certain number of shares of DTE Energy's common stock. As a result of the separation of DT Midstream in July 2021, there was a change in the settlement rates in the stock purchase contract to reflect the dividend of DT Midstream stock to DTE Energy shareholders. As adjusted for this change, anti-dilution adjustments to date, and subject to future anti-dilution adjustments, the following number of shares must be purchased:

if the AMV of DTE Energy’s common stock, which is the average volume-weighted average price of DTE Energy’s common stock for the trading days during the 20 consecutive scheduled trading day period ending on the third scheduled trading day immediately preceding the stock purchase contract settlement date, is equal to or greater than $133.08, 0.3757 shares of common stock;
if the AMV is less than $133.08 but greater than $106.50, a number of shares of common stock equal to $50 divided by the AMV; and
if the AMV is less than or equal to $106.50, 0.4695 shares of common stock.

The RSNs bear interest at a rate of 2.25% per year, payable quarterly, and mature on November 1, 2025. The RSNs will be remarketed in 2022. If this remarketing is successful, the interest rate on the RSNs will be reset, and interest thereafter will be payable semi-annually at the reset rate. If there is no successful remarketing, the interest rate on the RSNs will not be reset. The holders of the RSNs would have the right to put the RSNs to DTE Energy at a price equal to 100% of the principal amount, and the proceeds of the put right would be deemed to have been applied against the holders’ obligation under the stock purchase contracts. DTE Energy may also redeem, in whole or in part, the RSNs in the event of a failed final remarketing.

The present value of the future contract adjustment payments of $150 million was recorded as a reduction of shareholders’ equity, offset by the stock purchase contract liability. The stock purchase contract liability is included in Current Liabilities — Other and Other Liabilities —Other on DTE Energy’s Consolidated Statements of Financial Position. On February 1, 2020, DTE Energy began paying the stock purchase contract holders quarterly contract adjustment payments at a rate of 4% per year of the stated amount of $50 per equity unit, or $2 per year. Interest payments on the RSNs are being recorded as Interest expense and stock purchase contract payments are being charged against the liability. Accretion of the stock purchase contract liability is recorded as imputed Interest expense.

The treasury stock method is used to compute diluted EPS for the stock purchase contract. Under the treasury stock method, the stock purchase contract will only have a dilutive effect when the settlement rate is based on the market value of DTE’s common stock that is greater than $133.08 (the threshold appreciation price). At December 31, 2021, the stock purchase price contract was anti-dilutive and, therefore, not included in the computation of diluted earnings per share.

If payments for the stock purchase contract are deferred, DTE Energy may not make any cash distributions related to its capital stock, including dividends, redemptions, repurchases, liquidation payments or guarantee payments. Also, during the deferral period, DTE Energy may not make any payments on or redeem or repurchase any debt securities that are equal in right of payment with, or subordinated to, the RSNs.

Until settlement of the stock purchase contracts, the shares of stock underlying each contract are not outstanding. Under the terms of the stock purchase contracts, assuming no anti-dilution or other adjustments, DTE Energy will issue between 9.8 million and 12.2 million shares of its common stock in November 2022. A total of 13 million shares of DTE Energy’s common stock have been reserved for issuance in connection with the stock purchase contracts.

Selected information about DTE Energy’s equity units is presented below:


Issuance Date	Units Issued	Total Net Proceeds		Total Long-Term Debt		RSN Annual Interest Rate	Stock Purchase Contract Annual Rate	Stock Purchase Settlement Date	Stock Purchase Contract Liability(a)		RSN Maturity Date
(In millions, except interest rates)
11/1/19	26	$	1,265	$	1,300	2.25%	4.0%	11/1/2022	$	150	11/1/2025

(a)Payments of $50 million and $49 million were made in 2021 and 2020, respectively. The stock purchase contract liability was $51 million and $101 million as of December 31, 2021 and 2020, respectively, exclusive of interest.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

NOTE 15 — PREFERRED AND PREFERENCE SECURITIES

As of December 31, 2021, the amount of authorized and unissued stock is as follows:


Company	Type of Stock	Par Value		Shares Authorized
DTE Energy	Preferred	$	—	5,000,000
DTE Electric	Preferred	$	100	6,747,484
DTE Electric	Preference	$	1	30,000,000
DTE Gas	Preferred	$	1	7,000,000
DTE Gas	Preference	$	1	4,000,000

NOTE 16 — SHORT-TERM CREDIT ARRANGEMENTS AND BORROWINGS

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

In December 2021, DTE Energy entered into a $400 million unsecured term loan to raise additional liquidity, with terms consistent with the unsecured revolving credit agreements. No amount has been drawn as of December 31, 2021 and the loan will expire in June 2022.

The unsecured revolving credit agreements have historically required DTE Energy, DTE Electric, and DTE Gas to maintain a total funded debt to capitalization ratio of no more than 0.65 to 1. In June 2021, DTE Energy amended its total funded debt to capitalization ratio requirement to no more than 0.70 to 1 starting with the third quarter of 2021 and ending December 2022. The amendment was a result of temporary balance sheet impacts resulting from the separation of DT Midstream on July 1, 2021. In the agreements, "total funded debt" means all indebtedness of each respective company and their consolidated subsidiaries, including finance lease obligations, hedge agreements, and guarantees of third parties’ debt, but excluding contingent obligations, nonrecourse and junior subordinated debt, and certain equity-linked securities and, except for calculations at the end of the second quarter, certain DTE Gas short-term debt. "Capitalization" means the sum of (a) total funded debt plus (b) "consolidated net worth," which is equal to consolidated total equity of each respective company and their consolidated subsidiaries (excluding pension effects under certain FASB statements), as determined in accordance with accounting principles generally accepted in the United States of America. At December 31, 2021, the total funded debt to total capitalization ratios for DTE Energy, DTE Electric, and DTE Gas were 0.66 to 1, 0.51 to 1, and 0.48 to 1, respectively, and were in compliance with this financial covenant.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

The availability under the facilities in place at December 31, 2021 is shown in the following table:


	DTE Energy		DTE Electric		DTE Gas		Total
	(In millions)
Unsecured revolving credit facility, expiring April 2025(a)	$	1,500	$	500	$	300	$	2,300
Unsecured term loan, expiring June 2022	400		—		—		400
Unsecured Canadian revolving credit facility, expiring May 2023	87		—		—		87
Unsecured letter of credit facility, expiring February 2023	150		—		—		150
Unsecured letter of credit facility, expiring July 2023	70		—		—		70
Unsecured letter of credit facility(b)	50		—		—		50


	2,257		500		300		3,057
Amounts outstanding at December 31, 2021
Revolver borrowings	75		—		—		75
Commercial paper issuances	320		153		210		683
Letters of credit	258		—		—		258

	653		153		210		1,016
Net availability at December 31, 2021	$	1,604	$	347	$	90	$	2,041

(a)Total availability of $102 million expires in April 2024, including $67 million at DTE Energy, $22 million at DTE Electric, and $13 million at DTE Gas. All other availability expires in April 2025.

(b)Uncommitted letter of credit facility with automatic renewal provision for each July and therefore no expiration.

For DTE Energy, the weighted average interest rate for short-term borrowings was 0.3% and 1.1% at December 31, 2021 and 2020, respectively. For DTE Electric, the weighted average interest rate for short-term borrowings was 0.2% at December 31, 2021. There were no short-term borrowings outstanding as of December 31, 2020.

In conjunction with maintaining certain exchange-traded risk management positions, DTE Energy may be required to post collateral with its clearing agents. DTE Energy has demand financing agreements with its clearing agents, including an agreement for up to $50 million with an indefinite term and an agreement for up to $150 million currently contracted through 2022 and subject to renewal. The $50 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. Both agreements allow the right of setoff with posted collateral. At December 31, 2021, the capacity under these facilities was $250 million. The amount outstanding under these agreements was $103 million and $49 million at December 31, 2021 and 2020, respectively, and was fully offset by the posted collateral.

Dividend Restrictions

Certain of DTE Energy’s credit facilities contain a provision requiring DTE Energy to maintain a total funded debt to capitalization ratio, as defined in the agreements, of no more than 0.65 to 1, which has the effect of limiting the amount of dividends DTE Energy can pay in order to maintain compliance with this provision. As noted above, the total funded debt to capitalization ratio has been temporarily increased to 0.70 to 1 through December 2022. At December 31, 2021, the effect of this provision was a restriction on dividend payments to no more than $1.4 billion of DTE Energy's Retained earnings of $3.4 billion. There are no other effective limitations with respect to DTE Energy’s ability to pay dividends.

NOTE 17 — LEASES

Lessee

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

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

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

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

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

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

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

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

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

The following is a summary of the components of lease cost for the years ended December 31:


	DTE Energy						DTE Electric
	2021		2020		2019		2021		2020		2019
	(In millions)
Operating lease cost	$	19	$	21	$	23	$	14	$	14	$	17
Finance lease cost:
Amortization of right-of-use assets	7		5		4		6		4		4
Interest of lease liabilities	1		—		—		—		—		—
Total finance lease cost	8		5		4		6		4		4
Variable lease cost	9		10		10		—		—		—
Short-term lease cost	14		11		9		6		6		3

	$	50	$	47	$	46	$	26	$	24	$	24

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

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

The following is a summary of other information related to leases for the years ended December 31:


	DTE Energy									DTE Electric
	2021			2020			2019			2021			2020			2019
	(In millions)
Supplemental Cash Flows Information
Cash paid for amounts included in the measurement of these liabilities:
Operating cash flows for finance leases	$	8		$	3		$	5		$	7		$	2		$	5
Operating cash flows for operating leases	$	19		$	22		$	22		$	14		$	14		$	16

Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	5		$	2		$	42		$	1		$	—		$	27
Finance leases	$	3		$	19		$	8		$	1		$	14		$	—

Weighted Average Remaining Lease Term (Years)
Operating leases	12.7			12.1			12.1			10.3			10.4			10.6
Finance leases	7.8			7.6			9.1			2.1			3.1			2.0

Weighted Average Discount Rate
Operating leases	3.6		%	3.6		%	3.5		%	3.4		%	3.3		%	3.3		%
Finance leases	2.2		%	2.0		%	3.1		%	1.0		%	1.0		%	3.1		%

The Registrants' future minimum lease payments under leases for remaining periods as of December 31, 2021 are as follows:


	DTE Energy				DTE Electric
	Operating Leases		Finance Leases		Operating Leases		Finance Leases
	(In millions)
2022	$	16	$	8	$	12	$	6
2023	13		9		10		6
2024	11		3		8		1
2025	8		1		6		—
2026	7		1		5		—
2027 and thereafter	56		8		27		—
Total future minimum lease payments	111		30		68		13
Imputed interest	(23)		(3)		(12)		—
Lease liabilities	$	88	$	27	$	56	$	13

Finance leases reported on the Consolidated Statements of Financial Position are as follows for the years ended December 31:


	DTE Energy				DTE Electric
	2021		2020		2021		2020
	(In millions)
Right-of-use assets, within Property, plant, and equipment, net	$	26	$	29	$	12	$	16
Current lease liabilities, within Current portion of long-term debt	$	8	$	7	$	6	$	6
Long-term lease liabilities	$	19	$	24	$	7	$	13

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

Lessor

During the first quarter 2021, 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 an additional net investment of $31 million. DTE Energy also leases a portion of its pipeline system through a finance lease contract that has been renewed through 2025, with additional renewal options reasonably certain to be exercised through 2040.

DTE Energy also leases various assets under operating leases for a pipeline, energy facilities and related equipment. Such leases are comprised of both fixed payments and variable payments which are contingent on volumes, with terms ranging from 2 to 24 years. Generally, the operating leases do not have renewal provisions or options to purchase the assets at the end of the lease. The operating leases generally do not have termination for convenience provisions. Termination may be allowed under specific circumstances stated in the lease contract, such as under an event of default.

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

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

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

DTE Energy’s lease income associated with operating leases, including the line items in which it was included on the Consolidated Statements of Operations, was as follows:


	2021		2020		2019
	(In millions)
Fixed payments	$	67	$	57	$	56
Variable payments	131		124		128
	$	198	$	181	$	184

Operating revenues	$	103	$	99	$	121
Other income	95		82		63
	$	198	$	181	$	184

DTE Energy’s minimum future rental revenues under operating leases for remaining periods as of December 31, 2021 are as follows:


	DTE Energy
	(In millions)
2022	$	15
2023	15
2024	15
2025	15
2026	11
2027 and thereafter	51
	$	122

Depreciation expense associated with DTE Energy's property under operating leases was $22 million, $24 million, and $23 million for the years ended December 31, 2021, 2020, and 2019 respectively.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

The following is a summary of property under operating leases for DTE Energy as of December 31:


	2021		2020
	(In millions)
Gross property under operating leases	$	341	$	389
Accumulated amortization of property under operating leases	$	181	$	191

The components of DTE Energy’s net investment in finance leases for remaining periods as of December 31, 2021 are as follows:


	DTE Energy
	(In millions)
2022	$	23
2023	22
2024	22
2025	21
2026	21
2027 and thereafter	271
Total minimum future lease receipts	380
Residual value of leased pipeline	17
Less unearned income	198
Net investment in finance lease	199
Less current portion	6
	$	193

Interest income recognized under finance leases was $17 million, $16 million, and $5 million for the years ended December 31, 2021, 2020, and 2019, respectively. During 2020, DTE Energy also recognized $11 million of profit from the sale of membership interests in the REF business accounted for as a finance lease arrangement.

NOTE 18 — 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 NOX. 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, NOX, mercury, and other emissions. Additional rulemakings may occur over the next few years which could require additional controls for SO2, NOX, 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 planning to submit a request for redesignation of the southeast Michigan ozone non-attainment area to the EPA. However, the State is required to develop and implement a plan to address the non-attainment area. The plan will likely be submitted to the EPA by mid-2022 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.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (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 was vacated and remanded back to the EPA in a D.C. Circuit Court decision on January 19, 2021. Petitions were filed asking the Supreme Court to review the D.C. Circuit's decision vacating the ACE rule, and the petition was granted in October 2021. A decision from the Supreme Court is expected by June 2022. The next steps taken by the EPA with respect to regulation of GHGs from EGUs is uncertain. Regardless of future rules, DTE Energy remains committed for its electric utility operations to reduce carbon emissions 32% by 2023, 50% by 2028, and 80% by 2040 from 2005 carbon emissions levels, and its goal of net zero emissions from its electric utility operations by 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 rule was finalized on January 13, 2021 and immediately challenged. An order vacating the rule was filed by the D.C. Circuit Court of Appeals on April 5, 2021. The carbon standards for new sources are not expected to have a material impact on DTE Electric, since DTE Electric has no plans to build new coal-fired generation and any potential new gas generation will be able to comply with the standards.

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

To comply with air pollution requirements, DTE Electric has spent approximately $2.4 billion. DTE Electric does not anticipate additional capital expenditures for air pollution requirements, 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 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 rule making at this time.

Contaminated and Other Sites — Prior to the construction of major interstate natural gas pipelines, gas for heating and other uses was manufactured locally from processes involving coal, coke, or oil. The facilities, which produced gas, have been designated as MGP sites. DTE Electric conducted remedial investigations at contaminated sites, including three 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 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 December 31, 2021 and 2020, DTE Electric had $14 million and $10 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 — (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, September 2020, and November 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 three 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 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.

On September 28, 2020, the CCR rule "A Holistic Approach to Closure Part A: Deadline to Initiate Closure and Enhancing Public Access to Information" became effective and established April 11, 2021 as the new deadline for all unlined impoundments (including units previously classified as "clay-lined") to initiate closure. Additionally, the rule amends certain reporting requirements and CCR website requirements. On November 12, 2020, an additional revision to the CCR Rule "A Holistic Approach to Closure Part B: Alternate Demonstration for Unlined Surface Impoundments" 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 has submitted applications to the EPA that support continued use of all impoundments through their active lives. The applications are currently under review and the forced closure date of April 11, 2021 is effectively delayed while the EPA completes their review.

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 statutory revision provides the basis of a CCR program that EGLE has submitted to the EPA for approval to fully regulate the CCR program in Michigan in lieu of a Federal permit program. The EPA is currently working with EGLE in reviewing the submitted State program, and DTE Electric will work with EGLE to implement a State program that may be approved in the future.

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 2015 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 October 13, 2020, the EPA finalized the ELG Reconsideration Rule which revised the regulations from the 2015 ELG rule. The Reconsideration Rule re-establishes the technology-based effluent limitations guidelines and standards applicable to FGD wastewater and bottom ash transport water. The EPA set the applicability dates for bottom ash transport water "as soon as possible" beginning October 13, 2021 and no later than December 31, 2025. FGD wastewater retrofits must be completed "as soon as possible" beginning October 13, 2021 and no later than December 31, 2025 or December 31, 2028 if a permittee decides to pursue the Voluntary Incentives Program (VIP) subcategory for FGD wastewater. If a facility applies for the VIP, they must meet more stringent standards, but are allowed an extended time period to complete the project.

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 strategies and make any necessary adjustments to ensure full compliance with the ELGs in a cost-effective manner.

Compliance schedules for individual facilities and individual waste streams are determined through issuance of new NPDES permits by the State of Michigan. The State of Michigan has issued an NPDES permit for the Belle River power plant establishing compliance deadlines based on the 2020 Reconsideration Rule. On October 11, 2021, in consideration of the deadlines above, DTE Electric submitted the appropriate documentation titled the Notice of Planned Participation (NOPP) to the State of Michigan that formally announced the intent to pursue compliance subcategories as ELG compliance options: the cessation of coal at the Belle River power plant no later than 2028 and the VIP for FGD wastewater at Monroe power plant.

On July 27, 2021, the EPA announced they will revisit some of the compliance requirements that were established in the 2020 Reconsideration Rule and plan to release a new proposed rule in Fall of 2022. The 2020 Reconsideration Rule remains in effect until that time.

DTE Electric continues to evaluate compliance strategies, technologies, and system designs for both FGD wastewater and bottom ash transport water system to achieve compliance with the EPA rules at the Monroe power plant.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

DTE Electric has estimated the impact of the CCR and ELG rules to be $522 million of capital expenditures, including $417 million for 2022 through 2026.

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 zero by 2050 from procurement of natural gas and within its gas utility. DTE Energy is working to source gas with lower methane intensity, reduce emissions through its gas main renewal and pipeline integrity programs, and if necessary, use carbon offsets to achieve net zero. DTE Gas also committed to helping its customers reduce their emissions from natural gas by 35% by 2050. To support this goal, DTE Gas launched its CleanVision Natural Gas Balance program in January 2021 that offers customers a way to reduce their carbon footprint using carbon offsets and renewable natural gas. The carbon offset program is focused on protecting Michigan forests that naturally absorb carbon dioxide.

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 eight of the MGP sites is complete and the sites are closed. DTE Gas has also completed partial closure of four 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 December 31, 2021 and 2020, DTE Gas had $24 million 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.

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 an FOV 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. In September 2020, the EPA issued another FOV alleging EES Coke's 2018 and 2019 SO2 emissions exceeded projections and hence violated non-attainment new source review requirements. EES Coke evaluated the EPA's alleged violations and believes that the permits approved by EGLE complied with the Clean Air Act. EES Coke also responded to the EPA's September 2020 allegations demonstrating its actual emissions are compliant with non-attainment new source review requirements. Discussions with the EPA are ongoing. At the present time, DTE Energy cannot predict the outcome or financial impact of this FOV.

Other

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

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

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 Michigan's 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. The Michigan SIP was completed and submitted to the EPA on May 31, 2016 and supplemented on June 30, 2016. On March 19, 2021, the EPA published in the Federal Register partial approval and partial disapproval of Michigan's Detroit SO2 non-attainment area plan. The partial disapproval does not appear to impact DTE's sources and further discussions are underway with the EPA to finalize the plan. Since several non-DTE Energy sources are also part of the proposed compliance plan, DTE Energy is unable to determine the full impact of any further emissions reductions that may be required from DTE's facilities at this time.

Michigan's Phase 2 non-attainment area includes DTE Electric facilities in St. Clair County. The EPA recently approved a clean data determination request submitted by EGLE. This does not automatically redesignate the area to attainment. Until the area is officially redesignated as attainment, DTE Energy is unable to determine the impacts.

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 December 31, 2021 was approximately $70 million. Payment under these guarantees 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 December 31, 2021 was $720 million. Payments under these guarantees are considered remote.

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. The Registrants may also provide indirect guarantees for the indebtedness of others. DTE Energy’s guarantees are not individually material with maximum potential payments totaling $40 million at December 31, 2021. Payments under these guarantees are considered remote.

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 December 31, 2021, DTE Energy had $168 million of performance bonds outstanding, including $119 million for DTE Electric. In the event that such bonds are called for nonperformance, the Registrants would be obligated to reimburse the issuer of the performance bond. 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.

Labor Contracts

There are several bargaining units for DTE Energy subsidiaries' approximately 5,200 represented employees, including DTE Electric's approximately 2,700 represented employees. This represents 50% and 57% of DTE Energy's and DTE Electric's total employees, respectively. Of these represented employees, approximately 15% and 21% have contracts expiring within one year for DTE Energy and DTE Electric, respectively.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

Purchase Commitments

As of December 31, 2021, the Registrants were party to numerous long-term purchase commitments relating to a variety of goods and services required for their businesses. These agreements primarily consist of fuel supply commitments and renewable energy contracts for the Registrants, as well as energy trading contracts for DTE Energy. The Registrants estimate the following commitments from 2022 through 2051 for DTE Energy, and 2022 through 2051 for DTE Electric, as detailed in the following tables:


	2022		2023		2024		2025		2026		2027 and Thereafter		Total
DTE Energy	(In millions)
Long-term power purchase agreements(a)	$	87	$	92	$	103	$	103	$	103	$	986	$	1,474
Other purchase commitments(b)	3,203		1,704		1,174		482		357		980		7,900
Total commitments	$	3,290	$	1,796	$	1,277	$	585	$	460	$	1,966	$	9,374

	2022		2023		2024		2025		2026		2027 and Thereafter		Total
DTE Electric	(In millions)
Long-term power purchase agreements(a)	$	92	$	97	$	108	$	108	$	109	$	1,006	$	1,520
Other purchase commitments(b)	365		402		431		197		118		275		1,788
Total commitments	$	457	$	499	$	539	$	305	$	227	$	1,281	$	3,308

(a)The agreements represent the minimum obligations with suppliers for renewable energy and renewable energy credits under existing contract terms which expire from 2030 through 2035. DTE Electric's share of plant output ranges from 28% to 100%. Purchase commitments for DTE Electric include affiliate agreements with DTE Sustainable Generation that are eliminated in consolidation for DTE Energy.

(b)Excludes amounts associated with full requirements contracts where no stated minimum purchase volume is required.

Utility capital expenditures and expenditures for non-utility businesses will be approximately $3.7 billion and $2.7 billion in 2022 for DTE Energy and DTE Electric, respectively. The Registrants have made certain commitments in connection with the estimated 2022 annual capital expenditures.

COVID-19 Pandemic

DTE Energy has been 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' financial results.

In 2021 and 2020, the COVID-19 pandemic has impacted DTE Electric sales volumes. As businesses have transitioned to more remote operations, related sales volumes have been lower for commercial and industrial customers and higher for residential customers as compared to historical volumes before the pandemic. This impact has contributed to a net reduction in DTE Electric sales for these customers, but has been offset by favorable rate mix. Therefore, there has not been a significant impact to the Registrants' Consolidated Financial Statements.

In 2020, COVID-19 also resulted in incremental operating expenses at the electric and gas utilities related to personal protective equipment and other health and safety-related matters, as well as lower volumes for certain companies within the DTE Vantage segment. For the year ended December 31, 2021, however, there has not been any significant impact to operating expenses or DTE Vantage volumes attributable to the COVID-19 pandemic.

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 as of December 31, 2021. The Registrants cannot predict the future impacts of the COVID-19 pandemic on the Consolidated Financial Statements, as developments involving COVID-19 and its related effects on economic and operating conditions remain highly uncertain.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

Other Contingencies

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

For a discussion of contingencies related to regulatory matters and derivatives, see Notes 9 and 13 to the Consolidated Financial Statements, "Regulatory Matters" and "Financial and Other Derivative Instruments," respectively.

NOTE 19 — NUCLEAR OPERATIONS

Property Insurance

DTE Electric maintains property insurance policies specifically for the Fermi 2 plant. These policies cover such items as replacement power and property damage. NEIL is the primary supplier of the insurance policies.

DTE Electric maintains a policy for extra expenses, including replacement power costs necessitated by Fermi 2’s unavailability due to an insured event. This policy has a 12-week waiting period and provides an aggregate $490 million of coverage over a three-year period.

DTE Electric has $1.5 billion in primary coverage and $1.25 billion of excess coverage for stabilization, decontamination, debris removal, repair and/or replacement of property, and decommissioning. The combined coverage limit for total property damage is $2.75 billion. The total limit for property damage for non-nuclear events is $1.8 billion and an aggregate of $328 million of coverage for extra expenses over a two-year period.

On December 20, 2019, the Terrorism Risk Insurance Program Reauthorization Act of 2019 was signed, extending TRIA through December 31, 2027. For multiple terrorism losses caused by acts of terrorism not covered under the TRIA occurring within one year after the first loss from terrorism, the NEIL policies would make available to all insured entities up to $3.2 billion, plus any amounts recovered from reinsurance, government indemnity, or other sources to cover losses.

Under NEIL policies, DTE Electric could be liable for maximum assessments of up to $57 million per event if the loss associated with any one event at any nuclear plant should exceed the accumulated funds available to NEIL.

Public Liability Insurance

As required by federal law, DTE Electric maintains $450 million of public liability insurance for a nuclear incident. For liabilities arising from a terrorist act outside the scope of TRIA, the policy is subject to one industry aggregate limit of $300 million. Further, under the Price-Anderson Amendments Act of 2005, deferred premium charges up to $138 million could be levied against each licensed nuclear facility, but not more than $20 million per year per facility. Thus, deferred premium charges could be levied against all owners of licensed nuclear facilities in the event of a nuclear incident at any of these facilities.

Nuclear Fuel Disposal Costs

In accordance with the Federal Nuclear Waste Policy Act of 1982, DTE Electric has a contract with the DOE for the future storage and disposal of spent nuclear fuel from Fermi 2 that required DTE Electric to pay the DOE a fee of 1 mill per kWh of Fermi 2 electricity generated and sold. The fee was a component of nuclear fuel expense. The 1 mill per kWh DOE fee was reduced to zero effective May 16, 2014.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

The DOE's Yucca Mountain Nuclear Waste Repository program for the acceptance and disposal of spent nuclear fuel was terminated in 2011. DTE Electric is a party in the litigation against the DOE for both past and future costs associated with the DOE's failure to accept spent nuclear fuel under the timetable set forth in the Federal Nuclear Waste Policy Act of 1982. In July 2012, DTE Electric executed a settlement agreement with the federal government for costs associated with the DOE's delay in acceptance of spent nuclear fuel from Fermi 2 for permanent storage. The settlement agreement, including extensions, provides for a claims process and payment of delay-related costs experienced by DTE Electric through 2022. DTE Electric's claims are being settled and paid on a timely basis. The settlement proceeds reduce the cost of the dry cask storage facility assets and provide reimbursement for related operating expenses.

DTE Electric currently employs a spent nuclear fuel storage strategy utilizing a fuel pool and a dry cask storage facility. The spent nuclear fuel storage strategy is expected to provide sufficient spent fuel storage capability for the life of the plant as defined by DTE Electric's operating license agreement.

The federal government continues to maintain its legal obligation to accept spent nuclear fuel from Fermi 2 for permanent storage. Issues relating to long-term waste disposal policy and to the disposition of funds contributed by DTE Electric ratepayers to the federal waste fund await future governmental action.

NOTE 20 — RETIREMENT BENEFITS AND TRUSTEED ASSETS

DTE Energy's subsidiary, DTE Energy Corporate Services, LLC, sponsors defined benefit pension plans and other postretirement plans covering certain employees of the Registrants.

The table below represents the pension and other postretirement benefit plans of each Registrant at December 31, 2021:


	Registrants
	DTE Energy	DTE Electric
Qualified Pension Plans
DTE Energy Company Retirement Plan	X	X
DTE Gas Company Retirement Plan for Employees Covered by Collective Bargaining Agreements	X
Shenango Inc. Pension Plan(a)	X
Non-qualified Pension Plans
DTE Energy Company Supplemental Retirement Plan(b)	X	X
DTE Energy Company Executive Supplemental Retirement Plan(b)	X	X
DTE Energy Company Supplemental Severance Benefit Plan	X
Other Postretirement Benefit Plans
The DTE Energy Company Comprehensive Non-Health Welfare Plan	X	X
The DTE Energy Company Comprehensive Retiree Group Health Care Plan	X	X
DTE Supplemental Retiree Benefit Plan	X	X
DTE Energy Company Retiree Reimbursement Arrangement Plan	X	X

(a)Sponsored by Shenango, LLC

(b)Sponsored by DTE Energy Company

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

DTE Electric participates in various plans that provide pension and other postretirement benefits for DTE Energy and its affiliates. The plans are primarily sponsored by the LLC. DTE Electric accounts for its participation in DTE Energy's qualified and 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.

Pension Plan Benefits

DTE Energy has qualified defined benefit retirement plans for eligible represented and non-represented employees. The plans are noncontributory and provide traditional retirement benefits based on the employee's years of benefit service, average final compensation, and age at retirement. In addition, certain represented and non-represented employees are covered under cash balance provisions that determine benefits on annual employer contributions and interest credits. DTE Energy also maintains supplemental non-qualified, noncontributory, retirement benefit plans for certain management employees. These plans provide for benefits that supplement those provided by DTE Energy’s other retirement plans.

Net pension cost for DTE Energy includes the following components:


	2021		2020		2019
	(In millions)
Service cost	$	108	$	99	$	84
Interest cost	158		186		219
Expected return on plan assets	(339)		(334)		(325)
Amortization of:
Net actuarial loss	196		171		131
Prior service cost	—		1		1
Settlements	16		25		2
Net pension cost	$	139	$	148	$	112


	2021		2020
	(In millions)
Other changes in plan assets and benefit obligations recognized in Regulatory assets and Other comprehensive income (loss)
Net actuarial (gain) loss	$	(376)	$	137
Amortization of net actuarial loss	(209)		(193)
Prior service cost	4		—
Amortization of prior service cost	(3)		(1)
Total recognized in Regulatory assets and Other comprehensive income (loss)	$	(584)	$	(57)
Total recognized in net periodic pension cost, Regulatory assets, and Other comprehensive income (loss)	$	(445)	$	91

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

The following table reconciles the obligations, assets, and funded status of the plans as well as the amounts recognized as prepaid pension cost or pension liability in DTE Energy's Consolidated Statements of Financial Position at December 31:


	DTE Energy
	2021		2020
	(In millions)
Accumulated benefit obligation, end of year	$	5,448	$	5,843
Change in projected benefit obligation
Projected benefit obligation, beginning of year	$	6,304	$	5,810
Service cost	108		99
Interest cost	158		186
Plan amendments	4		—
Actuarial (gain) loss	(255)		619

Special termination benefits	—		3
Benefits paid	(414)		(353)
Settlements	(48)		(60)
Projected benefit obligation, end of year	$	5,857	$	6,304
Change in plan assets
Plan assets at fair value, beginning of year	$	5,497	$	4,993
Actual return on plan assets	460		815
Company contributions	12		102
Benefits paid	(414)		(353)
Settlements	(48)		(60)
Plan assets at fair value, end of year	$	5,507	$	5,497
Funded status	$	(350)	$	(807)
Amount recorded as:
Current liabilities	$	(11)	$	(10)
Noncurrent liabilities	(339)		(797)
	$	(350)	$	(807)
Amounts recognized in Accumulated other comprehensive income (loss), pre-tax
Net actuarial loss	$	126	$	142
Prior service cost	1		3
	$	127	$	145
Amounts recognized in Regulatory assets(a)
Net actuarial loss	$	1,381	$	1,949
Prior service credit	(9)		(11)
	$	1,372	$	1,938

(a)See Note 9 to the Consolidated Financial Statements, "Regulatory Matters."

The decrease in DTE Energy's pension benefit obligation for the year ended December 31, 2021 was primarily due to an actuarial gain driven by an increase in discount rates. The increase in the pension benefit obligation in 2020 was primarily due to an actuarial loss driven by a decrease in discount rates, partially offset by a one-time settlement.

The Registrants' policy is to fund pension costs by contributing amounts consistent with the provisions of the Pension Protection Act of 2006, and additional amounts when it deems appropriate. There were no contributions made to the qualified pension plans in 2021. The following table provides a summary of annual contributions to the qualified plans:


	2021		2020		2019
	(In millions)
DTE Energy	$	—	$	92	$	150
DTE Electric	$	—	$	60	$	100

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

At the discretion of management and depending upon financial market conditions, DTE Energy anticipates making up to $7 million in contributions to the qualified pension plans in 2022. In addition, DTE Energy anticipates a transfer of up to $50 million of qualified pension plan funds from DTE Gas to DTE Electric in 2022.

DTE Energy's subsidiaries are responsible for their share of qualified and non-qualified pension benefit costs. DTE Electric's allocated portion of pension benefit costs included in capital expenditures and operating and maintenance expense were $107 million, $106 million, and $93 million for the years ended December 31, 2021, 2020, and 2019, respectively. These amounts include recognized contractual termination benefit charges, curtailment gains, and settlement charges.

At December 31, 2021, the benefits related to DTE Energy's qualified and non-qualified pension plans expected to be paid in each of the next five years and in the aggregate for the five fiscal years thereafter are as follows:


	(In millions)
2022	$	346
2023	360
2024	341
2025	350
2026	346
2027-2031	1,723
Total	$	3,466

Assumptions used in determining the projected benefit obligation and net pension costs of DTE Energy are:


	2021	2020	2019
Projected benefit obligation
Discount rate	2.91%	2.57%	3.28%
Rate of compensation increase	3.80%	3.80%	3.85%
Cash balance interest crediting rate	2.40%	2.00%	3.30%
Net pension costs
Discount rate	2.57%	3.28%	4.40%
Rate of compensation increase	3.80%	3.85%	3.85%
Expected long-term rate of return on plan assets	7.00%	7.10%	7.30%
Cash balance interest crediting rate	2.00%	3.30%	3.70%

DTE Energy employs a formal process in determining the long-term rate of return for various asset classes. Management reviews historic financial market risks and returns and long-term historic relationships between the asset classes of equities, fixed income, and other assets, consistent with the widely accepted capital market principle that asset classes with higher volatility generate a greater return over the long-term. Current market factors such as inflation, interest rates, asset class risks, and asset class returns are evaluated and considered before long-term capital market assumptions are determined. The long-term portfolio return is also established employing a consistent formal process, with due consideration of diversification, active investment management, and rebalancing. Peer data is reviewed to check for reasonableness. As a result of this process, the Registrants have a long-term rate of return assumption for the pension plans of 6.80%. The Registrants believe this rate is a reasonable assumption for the long-term rate of return on plan assets for 2022 given the current investment strategy.

The DTE Energy Company Affiliates Employee Benefit Plans Master Trust employs a liability driven investment program whereby the characteristics of plan liabilities are considered when determining investment policy. Risk tolerance is established through consideration of future plan cash flows, plan funded status, and corporate financial considerations. The investment portfolio contains a diversified blend of equity, fixed income, and other investments. Furthermore, equity investments are diversified across U.S. and non-U.S. stocks and large and small market capitalizations. Fixed income investments generally include U.S. Treasuries, other governmental debt, diversified corporate bonds, bank loans, and mortgage-backed securities. Other investments are used to enhance long-term returns while improving portfolio diversification. Derivatives may be utilized in a risk controlled manner, to potentially increase the portfolio beyond the market value of invested assets and/or reduce portfolio investment risk. Investment risk is measured and monitored on an ongoing basis through annual liability measurements, periodic asset/liability studies, and quarterly investment portfolio reviews.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

Target allocations for DTE Energy's pension plan assets as of December 31, 2021 are listed below:


U.S. Large Capitalization (Cap) Equity Securities	13	%
U.S. Small Cap and Mid Cap Equity Securities	3
Non-U.S. Equity Securities	13
Fixed Income Securities	48

Hedge Funds and Similar Investments	11
Private Equity and Other	12
	100	%

The following tables provide the fair value measurement amounts for DTE Energy's pension plan assets at December 31, 2021 and 2020(a):


	December 31, 2021						December 31, 2020
	Level 1		Level 2		Other(b)		Total		Level 1		Level 2		Other(b)		Total
DTE Energy asset category:	(In millions)
Short-term Investments(c)	$	112	$	—	$	—	$	112	$	92	$	—	$	—	$	92
Equity Securities
Domestic(d)	155		—		758		913		167		—		1,093		1,260
International(e)	88		—		588		676		100		—		791		891
Fixed Income Securities
Governmental(f)	943		83		—		1,026		459		95		—		554
Corporate(g)	—		1,466		—		1,466		—		1,404		—		1,404

Hedge Funds and Similar Investments(h)	139		63		365		567		238		61		411		710
Private Equity and Other(i)	—		—		747		747		—		—		586		586


DTE Energy Total	$	1,437	$	1,612	$	2,458	$	5,507	$	1,056	$	1,560	$	2,881	$	5,497

(a)For a description of levels within the fair value hierarchy, see Note 12 to the Consolidated Financial Statements, "Fair Value."

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

(c)This category predominantly represents certain short-term fixed income securities and money market investments that are managed in separate accounts or commingled funds. Pricing for investments in this category are obtained from quoted prices in actively traded markets.

(d)This category represents portfolios of large, medium and small capitalization domestic equities. Investments in this category include exchange-traded securities for which unadjusted quoted prices can be obtained and exchange-traded securities held in a commingled fund classified as NAV assets.

(e)This category primarily consists of portfolios of non-U.S. developed and emerging market equities. Investments in this category include exchange-traded securities for which unadjusted quoted prices can be obtained and exchange-traded securities held in a commingled fund classified as NAV assets.

(f)This category includes U.S. Treasuries, bonds, and other governmental debt. Pricing for investments in this category is obtained from quoted prices in actively traded markets and quotations from broker or pricing services.

(h)This category utilizes a diversified group of strategies that attempt to capture uncorrelated sources of return and includes publicly traded mutual funds, insurance-linked and asset-backed securities, commingled funds and limited partnership funds. Pricing for mutual funds in this category is obtained from quoted prices in actively traded markets. Pricing for insurance-linked and asset-backed securities is obtained from quotations. from broker or pricing services. Commingled funds and limited partnership funds are classified as NAV assets.

(i)This category includes a diversified group of funds and strategies that primarily invests in private equity partnerships. This category also includes investments in private real estate and private debt. All investments in this category are classified as NAV assets.

The pension trust holds debt and equity securities directly and indirectly through commingled funds. Exchange-traded debt and equity securities held directly, as well as publicly traded commingled funds, are valued using quoted market prices in actively traded markets. Non-publicly traded commingled funds hold exchange-traded equity or debt securities and are valued based on stated NAVs. Non-exchange traded fixed income securities are valued by the trustee based upon quotations available from brokers or pricing services. A primary price source is identified by asset type, class, or issue for each security. The trustee monitors prices supplied by pricing services and may use a supplemental price source or change the primary price source of a given security if the trustee challenges an assigned price and determines that another price source is considered preferable. DTE Energy has obtained an understanding of how these prices are derived, including the nature and observability of the inputs used in deriving such prices.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

Other Postretirement Benefits

The Registrants participate in defined benefit plans sponsored by the LLC that provide certain other postretirement health care and life insurance benefits for employees who are eligible for these benefits. The Registrants' policy is to fund certain trusts to meet its other postretirement benefit obligations. DTE Energy did not make any contributions to these trusts during 2021 and does not anticipate making any contributions to the trusts in 2022.

DTE Energy and DTE Electric offer a defined contribution VEBA for eligible represented and non-represented employees, in lieu of defined benefit post-employment health care benefits. The Registrants allocate a fixed amount per year to an account in a defined contribution VEBA for each employee. These accounts are managed either by the Registrant (for non-represented and certain represented groups) or by the Utility Workers of America for Local 223 employees. The following table provides contributions to the VEBA in:


	2021		2020		2019
	(In millions)
DTE Energy	$	18	$	15	$	13
DTE Electric	$	8	$	7	$	6

The Registrants also contribute a fixed amount to a Retiree Reimbursement Account for certain non-represented and represented retirees, spouses, and surviving spouses when the youngest of the retiree's covered household becomes eligible for Medicare Part A based on age. The amount of the annual allocation to each participant is determined by the employee's retirement date and increases each year for each eligible participant at the lower of the rate of medical inflation or 2%.

Net other postretirement credit for DTE Energy includes the following components:


	2021		2020		2019
	(In millions)
Service cost	$	30	$	26	$	22
Interest cost	46		56		70
Expected return on plan assets	(129)		(128)		(96)
Amortization of:
Net actuarial loss	13		16		12
Prior service credit	(19)		(19)		(9)


Net other postretirement credit	$	(59)	$	(49)	$	(1)


	2021		2020
	(In millions)
Other changes in plan assets and accumulated postretirement benefit obligation recognized in Regulatory assets and Other comprehensive income (loss)
Net actuarial gain	$	(113)	$	(38)
Amortization of net actuarial loss	(13)		(16)
Prior service cost	1		—
Amortization of prior service credit	19		19

Total recognized in Regulatory assets and Other comprehensive income (loss)	$	(106)	$	(35)
Total recognized in net periodic benefit cost, Regulatory assets, and Other comprehensive income (loss)	$	(165)	$	(84)

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

Net other postretirement credit for DTE Electric includes the following components:


	2021		2020		2019
	(In millions)
Service cost	$	23	$	20	$	16
Interest cost	35		43		53
Expected return on plan assets	(86)		(87)		(65)
Amortization of:
Net actuarial loss	11		11		5
Prior service credit	(14)		(14)		(7)

Net other postretirement cost (credit)	$	(31)	$	(27)	$	2


	2021		2020
	(In millions)
Other changes in plan assets and accumulated postretirement benefit obligation recognized in Regulatory assets
Net actuarial gain	$	(84)	$	(26)
Amortization of net actuarial loss	(11)		(11)
Amortization of prior service credit	14		14

Total recognized in Regulatory assets	$	(81)	$	(23)
Total recognized in net periodic benefit cost and Regulatory assets	$	(112)	$	(50)

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

The following table reconciles the obligations, assets, and funded status of the plans including amounts recorded as Accrued postretirement liability in the Registrants' Consolidated Statements of Financial Position at December 31:


	DTE Energy				DTE Electric
	2021		2020		2021		2020
	(In millions)
Change in accumulated postretirement benefit obligation
Accumulated postretirement benefit obligation, beginning of year	$	1,807	$	1,751	$	1,369	$	1,337
Service cost	30		26		23		20
Interest cost	46		56		35		43
Plan amendments	1		—		—		—
Actuarial (gain) loss	(100)		54		(73)		31

Benefits paid	(82)		(80)		(61)		(62)
Accumulated postretirement benefit obligation, end of year	$	1,702	$	1,807	$	1,293	$	1,369
Change in plan assets
Plan assets at fair value, beginning of year	$	1,960	$	1,819	$	1,320	$	1,236
Actual return on plan assets	142		220		96		145

Benefits paid	(81)		(79)		(61)		(61)
Plan assets at fair value, end of year	$	2,021	$	1,960	$	1,355	$	1,320
Funded status	$	319	$	153	$	62	$	(49)
Amount recorded as:
Noncurrent assets	$	678	$	561	$	402	$	335
Current liabilities	(1)		(1)		—		—
Noncurrent liabilities	(358)		(407)		(340)		(384)
	$	319	$	153	$	62	$	(49)
Amounts recognized in Accumulated other comprehensive income (loss), pre-tax
Net actuarial gain	$	(1)	$	(7)	$	—	$	—




Amounts recognized in Regulatory assets(a)
Net actuarial loss	$	102	$	234	$	61	$	156
Prior service credit	(49)		(69)		(34)		(48)

	$	53	$	165	$	27	$	108

(a)See Note 9 to the Consolidated Financial Statements, "Regulatory Matters."

The decrease in the Registrants' other postretirement benefit obligations for the year ended December 31, 2021 was primarily due to an actuarial gain driven by an increase in discount rates. The increase in the other postretirement benefit obligations in 2020 was primarily due to an actuarial loss driven by a decrease in discount rates, partially offset by favorable changes in healthcare cost assumptions.

The following table reflects other postretirement benefit plans with accumulated postretirement benefit obligations in excess of plan assets as of December 31:


	DTE Energy				DTE Electric
	2021		2020		2021		2020
	(In millions)
Accumulated postretirement benefit obligation	$	822	$	878	$	775	$	826
Fair value of plan assets	463		470		435		442
Accumulated postretirement benefit obligation in excess of plan assets	$	359	$	408	$	340	$	384

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

At December 31, 2021, the benefits expected to be paid, including prescription drug benefits, in each of the next five years and in the aggregate for the five fiscal years thereafter for the Registrants are as follows:


	DTE Energy		DTE Electric
	(In millions)
2022	$	85	$	64
2023	89		68
2024	91		69
2025	94		71
2026	95		72
2027-2031	493		375
Total	$	947	$	719

Assumptions used in determining the accumulated postretirement benefit obligation and net other postretirement benefit costs of the Registrants are:


	2021	2020	2019
Accumulated postretirement benefit obligation
Discount rate	2.91%	2.58%	3.29%
Health care trend rate pre- and post- 65	6.75 / 7.25%	6.75 / 7.25%	6.75 / 7.25%
Ultimate health care trend rate	4.50%	4.50%	4.50%
Year in which ultimate reached pre- and post- 65	2034	2033	2032
Other postretirement benefit costs
Discount rate	2.58%	3.29%	4.40%

Expected long-term rate of return on plan assets	6.70%	7.20%	7.30%
Health care trend rate pre- and post- 65	6.75 / 7.25%	6.75 / 7.25%	6.75 / 7.25%
Ultimate health care trend rate	4.50%	4.50%	4.50%
Year in which ultimate reached pre- and post- 65	2033	2032	2031

The process used in determining the long-term rate of return on assets for the other postretirement benefit plans is similar to that previously described for the pension plans. As a result of this process, the Registrants have a long-term rate of return assumption for the other postretirement benefit plans of 6.40% for 2022. The Registrants believe this rate is a reasonable assumption for the long-term rate of return on plan assets for 2022 given the current investment strategy.

The DTE Energy Company Master VEBA Trust employs a liability driven investment program whereby the characteristics of plan liabilities are considered when determining investment policy. Risk tolerance is established through consideration of future plan cash flows, plan funded status, and corporate financial considerations. The investment portfolio contains a diversified blend of equity, fixed income, and other investments. Furthermore, equity investments are diversified across U.S. and non-U.S. stocks and large and small market capitalizations. Fixed income investments generally include U.S. Treasuries, other governmental debt, diversified corporate bonds, bank loans, and mortgage-backed securities. Other investments are used to enhance long-term returns while improving portfolio diversification. Derivatives may be utilized in a risk controlled manner to potentially increase the portfolio beyond the market value of invested assets and/or reduce portfolio investment risk. Investment risk is measured and monitored on an ongoing basis through annual liability measurements, periodic asset/liability studies, and quarterly investment portfolio reviews.

Target allocations for the Registrants' other postretirement benefit plan assets as of December 31, 2021 are listed below:


U.S. Large Cap Equity Securities	10	%
U.S. Small Cap and Mid Cap Equity Securities	2
Non-U.S. Equity Securities	10
Fixed Income Securities	54
Hedge Funds and Similar Investments	10
Private Equity and Other	14
	100	%

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

The following tables provide the fair value measurement amounts for the Registrants' other postretirement benefit plan assets at December 31, 2021 and 2020(a):


	December 31, 2021						December 31, 2020
	Level 1		Level 2		Other(b)		Total		Level 1		Level 2		Other(b)		Total
	(In millions)
DTE Energy asset category:
Short-term Investments(c)	$	39	$	—	$	—	$	39	$	21	$	—	$	—	$	21
Equity Securities
Domestic(d)	27		—		199		226		51		—		200		251
International(e)	27		—		141		168		23		—		178		201
Fixed Income Securities
Governmental(f)	343		32		—		375		40		45		—		85
Corporate(g)	—		355		271		626		—		477		379		856
Hedge Funds and Similar Investments(h)	58		26		120		204		61		17		124		202
Private Equity and Other(i)	—		—		383		383		—		—		344		344


DTE Energy Total	$	494	$	413	$	1,114	$	2,021	$	196	$	539	$	1,225	$	1,960

DTE Electric asset category:
Short-term Investments(c)	$	26	$	—	$	—	$	26	$	14	$	—	$	—	$	14
Equity Securities
Domestic(d)	18		—		132		150		33		—		131		164
International(e)	18		—		93		111		16		—		117		133
Fixed Income Securities
Governmental(f)	230		21		—		251		24		31		—		55
Corporate(g)	—		235		187		422		—		321		263		584
Hedge Funds and Similar Investments(h)	39		17		81		137		41		11		83		135
Private Equity and Other(i)	—		—		258		258		—		—		235		235


DTE Electric Total	$	331	$	273	$	751	$	1,355	$	128	$	363	$	829	$	1,320

(a)For a description of levels within the fair value hierarchy see Note 12 to the Consolidated Financial Statements, "Fair Value."

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

(f)This category includes U.S. Treasuries, bonds and other governmental debt. Pricing for investments in this category is obtained from quoted prices in actively traded markets and quotations from broker or pricing services.

(g)This category primarily consists of corporate bonds from diversified industries, bank loans, and mortgage backed securities. Pricing for investments in this category is obtained from quotations from broker or pricing services. Non-exchange traded securities and exchange-traded securities held in commingled funds are classified as NAV assets.

(h)This category utilizes a diversified group of strategies that attempt to capture uncorrelated sources of income and includes publicly traded mutual funds, insurance-linked and asset-backed securities, commingled funds and limited partnership funds. Pricing for mutual funds in this category is obtained from quoted prices in actively traded markets. Prices for insurance-linked and asset-backed securities are obtained from quotations from broker or pricing services. Commingled funds and limited partnership funds are classified as NAV assets.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

The DTE Energy Company Master VEBA Trust holds debt and equity securities directly and indirectly through commingled funds. Exchange-traded debt and equity securities held directly, as well as publicly traded commingled funds, are valued using quoted market prices in actively traded markets. Non-publicly traded commingled funds hold exchange-traded equity or debt securities and are valued based on NAVs. Non-exchange traded fixed income securities are valued by the trustee based upon quotations available from brokers or pricing services. A primary price source is identified by asset type, class, or issue for each security. The trustee monitors prices supplied by pricing services and may use a supplemental price source or change the primary price source of a given security if the trustee challenges an assigned price and determines that another price source is considered preferable. The Registrants have obtained an understanding of how these prices are derived, including the nature and observability of the inputs used in deriving such prices.

Defined Contribution Plans

The Registrants also sponsor defined contribution retirement savings plans. Participation in one of these plans is available to substantially all represented and non-represented employees. For substantially all employees, the Registrants match employee contributions up to certain predefined limits based upon eligible compensation and the employee’s contribution rate. Additionally, for eligible represented and non-represented employees who do not participate in the Pension Plans, the Registrants annually contribute an amount equivalent to 4% (8% for certain DTE Gas represented employees) of an employee's eligible pay to the employee's defined contribution retirement savings plan. For DTE Energy, the cost of these plans was $70 million, $73 million, and $65 million for the years ended December 31, 2021, 2020, and 2019, respectively. For DTE Electric, the cost of these plans was $34 million, $34 million, and $31 million for the years ended December 31, 2021, 2020, and 2019, respectively.

NOTE 21 — STOCK-BASED COMPENSATION

DTE Energy’s stock incentive program permits the grant of incentive stock options, non-qualifying stock options, stock awards, performance shares, and performance units to employees and members of its Board of Directors. As a result of a stock award, a settlement of an award of performance shares, or by exercise of a participant’s stock option, DTE Energy may deliver common stock from its authorized but unissued common stock and/or from outstanding common stock acquired by or on behalf of DTE Energy in the name of the participant. Key provisions of the stock incentive program are:

Authorized limit is 20,162,716 shares of common stock;
Prohibits the grant of a stock option with an exercise price that is less than the fair market value of DTE Energy’s stock on the date of the grant; and
Imposes the following award limits to a single participant in a single calendar year, (1) options for more than 500,000 shares of common stock; (2) stock awards for more than 150,000 shares of common stock; (3) performance share awards for more than 300,000 shares of common stock (based on the maximum payout under the award); or (4) more than 1,000,000 performance units, which have a face amount of $1.00 each.

DTE Energy records compensation expense at fair value over the vesting period for all awards it grants.

The following table summarizes the components of stock-based compensation for DTE Energy:


	2021		2020		2019
	(In millions)
Stock-based compensation expense	$	71	$	63	$	71
Tax benefit	$	13	$	12	$	13
Stock-based compensation cost capitalized in Property, plant, and equipment(a)	$	—	$	—	$	16

(a)In DTE Electric's May 2020 rate order, the MPSC disallowed certain capital expenditures related to incentive compensation. Therefore, beginning in 2020, no stock-based compensation cost will be capitalized in Property, plant, and equipment.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

Restricted Stock Awards

Stock awards granted under the plan are restricted for varying periods, generally for three years. Participants have all rights of a shareholder with respect to a stock award, including the right to receive dividends and vote the shares. Prior to vesting in stock awards, the participant: (i) may not sell, transfer, pledge, exchange, or otherwise dispose of shares; (ii) shall not retain custody of the share certificates; and (iii) will deliver to DTE Energy a stock power with respect to each stock award upon request.

The stock awards are recorded at cost that approximates fair value on the date of grant. The cost is amortized to compensation expense over the vesting period.

The fair value of awards vested were not material for the years ended December 31, 2021, 2020, and 2019. Compensation cost charged against income was $14 million, $13 million, and $11 million for the years ended December 31, 2021, 2020, and 2019, respectively.

Performance Share Awards

Performance shares awarded under the plan are for a specified number of shares of DTE Energy common stock that entitle the holder to receive a cash payment, shares of DTE Energy common stock, or a combination thereof. The final value of the award is determined by the achievement of certain performance objectives and market conditions. The awards vest at the end of a specified period, usually three years. Awards granted in 2021, 2020, and 2019 were primarily deemed to be equity awards. The DTE Energy stock price and number of probable shares attributable to market conditions for such equity awards are fair valued only at the grant date. DTE Energy accounts for performance share awards by accruing compensation expense over the vesting period based on: (i) the number of shares expected to be paid which is based on the probable achievement of performance objectives; and (ii) the closing stock price market value. The settlement of the award is based on the closing price at the settlement date.

DTE Energy recorded activity relating to performance share awards as follows:


	2021		2020		2019
	(In millions, except per share amounts)
Weighted average grant date fair value of awards granted (per share)	$	118.43	$	129.68	$	115.85
Awards settled in cash(a)	$	12	$	21	$	19
Awards settled in stock(a)	$	74	$	53	$	79
Compensation expense	$	58	$	50	$	60

(a)Sum of awards settled in cash and stock approximates the intrinsic value of the awards.

During the vesting period, the recipient of a performance share award has no shareholder rights. During the period beginning on the date the performance shares are awarded and ending on the certification date of the performance objectives, the number of performance shares awarded will be increased, assuming full dividend reinvestment at the fair market value on the dividend payment date. The cumulative number of performance shares will be adjusted to determine the final payment based on the performance objectives achieved. Performance share awards are nontransferable and are subject to risk of forfeiture.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

The following table summarizes DTE Energy’s performance share activity for the period ended December 31, 2021:


	Performance Shares	Weighted Average Grant Date Fair Value
Balance at December 31, 2020	1,127,437	$	117.06
Grants(a)	567,196	$	118.43
Forfeitures(b)	(162,091)	$	123.04
Payouts	(429,925)	$	107.84
Balance at December 31, 2021	1,102,617	$	120.33

(a)Includes 166,686 incremental shares granted in 2021 to DTE Energy employees who did not separate with DT Midstream. The shares were granted to preserve the value of unvested 2019-2021 awards, considering the impact from the spin-off of DT Midstream on DTE Energy's stock price.

(b)Includes the cancellation of 95,923 shares that were held by employees that separated due to the spin-off of DT Midstream.

Unrecognized Compensation Costs

As of December 31, 2021, DTE Energy's total unrecognized compensation cost related to non-vested stock incentive plan arrangements and the weighted average recognition period was as follows:


	Unrecognized Compensation Cost		Weighted Average to be Recognized
	(In millions)		(In years)

Stock awards	$	19	1.50
Performance shares	44		1.04
	$	63	1.18

Allocated Stock-Based Compensation

DTE Electric received an allocation of costs from DTE Energy associated with stock-based compensation. DTE Electric's allocation for 2021, 2020, and 2019 for stock-based compensation expense was $45 million, $37 million, and $43 million, respectively.

NOTE 22 — 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 2.3 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.

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

Energy Trading consists of energy marketing and trading operations.

Corporate and Other includes various holding company activities, holds certain non-utility debt, and holds certain investments, including funds supporting regional development and economic growth.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

DTE Energy completed the separation of DT Midstream on July 1, 2021, which was comprised of the Gas Storage and Pipelines segment and also certain DTE Energy holding company activity within the Corporate and Other segment. Amounts relating to DT Midstream have been classified as discontinued operations, and Gas Storage and Pipelines is no longer a reportable segment of DTE Energy. Refer to Note 4 to the Consolidated Financial Statements, “Dispositions and Impairments,” for additional information.

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, natural gas sales, and renewable natural gas sales in the following segments:


	Year Ended December 31,
	2021		2020		2019
	(In millions)
Electric(a)	$	64	$	61	$	56
Gas	14		16		12
DTE Vantage	575		464		596
Energy Trading	56		31		22
Corporate and Other	2		2		2

	$	711	$	574	$	688

(a)Inter-segment billing for the Electric segment includes $4 million and $2 million relating to Non-utility operations for the years ended December 31, 2021 and 2020, respectively.

Centrally incurred costs such as labor and overheads are assigned directly to DTE Energy's business segments or allocated based on various cost drivers, depending on the nature of service provided.

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 also 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.

All inter-segment transactions and balances are eliminated in consolidation for DTE Energy. The Reclassifications and Eliminations group below also includes the reclassification of deferred tax assets, which are netted against deferred tax liabilities for presentation on the DTE Energy Consolidated Statements of Financial Position. Refer to Note 10 to the Consolidated Financial Statements, "Income Taxes," for additional information regarding the Registrants' deferred taxes.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

Financial data of DTE Energy's business segments follows:


	Electric		Gas	DTE Vantage	Energy Trading	Corporate and Other(a)	Reclassifications and Eliminations	Total from Continuing Operations		Discontinued Operations	Total
	(In millions)
2021
Operating Revenues — Utility operations	$	5,809	1,553	—	—	—	(74)	$	7,288
Operating Revenues — Non-utility operations	$	12	—	1,482	6,831	2	(651)	$	7,676
Depreciation and amortization	$	1,122	177	71	6	1	—	$	1,377
Interest expense	$	338	81	28	5	270	(92)	$	630
Interest income	$	—	(6)	(23)	(1)	(84)	92	$	(22)
Equity in earnings of equity method investees	$	—	1	8	—	29	—	$	38
Income Tax Expense (Benefit)	$	104	38	(31)	(27)	(214)	—	$	(130)
Net Income (Loss) Attributable to DTE Energy Company	$	864	214	168	(83)	(367)	—	$	796	111	$	907
Investment in equity method investees	$	6	13	118	—	50	—	$	187
Capital expenditures and acquisitions	$	3,016	621	69	6	—	—	$	3,712	60	$	3,772
Goodwill	$	1,208	743	25	17	—	—	$	1,993
Total Assets	$	28,524	6,729	983	1,174	4,281	(1,972)	$	39,719	—	$	39,719

(a)Corporate and Other results include significant one-time items resulting from the separation of DT Midstream, including a loss on debt extinguishment of $376 million following the settlement of intercompany borrowings with DT Midstream and optional redemption of DTE Energy long-term debt. DTE Energy also recognized a tax benefit of $85 million for the remeasurement of state deferred tax liabilities following the separation of DT Midstream. Refer to Notes 10 and 14 to the Consolidated Financial Statements, "Income Taxes" and "Long-Term Debt," for additional information.


	Electric		Gas	DTE Vantage	Energy Trading	Corporate and Other	Reclassifications and Eliminations	Total from Continuing Operations		Discontinued Operations	Total
	(In millions)
2020
Operating Revenues — Utility operations	$	5,506	1,414	—	—	—	(75)	$	6,845
Operating Revenues — Non-utility operations	$	14	—	1,224	3,863	2	(525)	$	4,578
Depreciation and amortization	$	1,057	157	72	5	1	—	$	1,292
Interest expense	$	337	80	37	6	325	(184)	$	601
Interest income	$	(4)	(5)	(22)	(2)	(180)	184	$	(29)
Equity in earnings of equity method investees	$	—	1	17	—	8	—	$	26
Income Tax Expense (Benefit)	$	108	48	(40)	12	(91)	—	$	37
Net Income (Loss) Attributable to DTE Energy Company	$	777	186	134	36	(79)	—	$	1,054	314	$	1,368
Investment in equity method investees	$	6	12	125	—	34	—	$	177
Capital expenditures and acquisitions	$	2,701	574	186	5	—	—	$	3,466	517	$	3,983
Goodwill	$	1,208	743	25	17	—	—	$	1,993
Total Assets	$	26,588	6,339	696	807	5,063	(2,073)	$	37,420	8,076	$	45,496

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)


	Electric		Gas	DTE Vantage	Energy Trading	Corporate and Other	Reclassifications and Eliminations	Total from Continuing Operations		Discontinued Operations	Total
	(In millions)
2019
Operating Revenues — Utility operations	$	5,224	1,482	—	—	—	(68)	$	6,638
Operating Revenues — Non-utility operations	$	5	—	1,560	4,610	2	(647)	$	5,530
Depreciation and amortization	$	949	144	69	6	1	—	$	1,169
Interest expense	$	315	78	33	8	266	(132)	$	568
Interest income	$	(2)	(6)	(9)	(4)	(120)	132	$	(9)
Equity in earnings of equity method investees	$	1	2	14	—	(3)	—	$	14
Income Tax Expense (Benefit)	$	137	62	(63)	17	(82)	—	$	71
Net Income (Loss) Attributable to DTE Energy Company	$	714	185	133	49	(126)	—	$	955	214	$	1,169
Investment in equity method investees	$	5	11	130	—	31	—	$	177
Capital expenditures and acquisitions	$	2,368	530	54	5	—	—	$	2,957	2,510	$	5,467
Goodwill	$	1,208	743	25	17	—	—	$	1,993
Total Assets	$	24,617	5,717	537	798	4,779	(1,843)	$	34,605	7,663	$	42,268

Reclassifications and Eliminations include $14 million, $26 million, and $27 million of Operating Revenues — Non-utility operations for the years ended December 31, 2021, 2020, and 2019, respectively, for eliminations related to DTE Energy's prior Gas Storage and Pipelines segment that remain in continuing operations. Eliminations for these revenues are offset by related cost eliminations and have no impact on DTE Energy net income.

NOTE 23 — RELATED PARTY TRANSACTIONS

DTE Electric has agreements with affiliated companies to sell energy for resale, purchase fuel and power, provide fuel supply services, and provide power plant operation and maintenance services. DTE Electric also has agreements with certain DTE Energy affiliates where it charges the affiliates for their use of the shared capital assets of DTE Electric. A shared services company accumulates various corporate support expenses and charges various subsidiaries of DTE Energy, including DTE Electric. DTE Electric records federal, state, and local income taxes payable to or receivable from DTE Energy based on its federal, state, and local tax provisions.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

The following is a summary of DTE Electric's transactions with affiliated companies:


	2021		2020		2019
	(In millions)
Revenues and Other Income
Energy sales	$	9	$	8	$	10
Other services and interest	$	2	$	2	$	5
Shared capital assets	$	49	$	47	$	42
Costs
Fuel and purchased power	$	13	$	16	$	6
Other services and interest	$	—	$	1	$	24
Corporate expenses	$	391	$	367	$	372
Other
Dividends declared	$	588	$	539	$	494
Dividends paid	$	588	$	539	$	494
Capital contribution from DTE Energy	$	555	$	636	$	180

DTE Electric's Accounts receivable and Accounts payable related to Affiliates are payable upon demand and are generally settled in cash within a monthly business cycle. Notes receivable and Short-term borrowings related to Affiliates are subject to a credit agreement with DTE Energy whereby short-term excess cash or cash shortfalls are remitted to or funded by DTE Energy. This credit arrangement involves the charge and payment of interest at market-based rates. Refer to DTE Electric's Consolidated Statements of Financial Position for affiliate balances at December 31, 2021 and 2020.

There were $2 million and $20 million in charitable contributions made by DTE Electric to the DTE Energy Foundation for the years ended December 31, 2021 and 2020, respectively, and no contributions for the year ended December 31, 2019. The DTE Energy Foundation is a non-consolidated not-for-profit private foundation, the purpose of which is to contribute to and assist charitable organizations.

For a discussion of other related party transactions impacting DTE Electric, see Notes 20 and 21 to the Consolidated Financial Statements, "Retirement Benefits and Trusteed Assets" and "Stock-Based Compensation," respectively.

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements — (Continued)

NOTE 24 — SUPPLEMENTARY QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

The Registrants have adopted the SEC amendment to Regulation S-K Item 302(a) which requires disclosure of supplemental quarterly financial data only if material retrospective adjustments have been applied. For DTE Energy, the information has been presented below to reflect the impact of the discontinued operations of DT Midstream. No retrospective adjustments have been applied for DTE Electric.

DTE Energy

The sum of quarterly earnings per share may not equal year-end amounts, since quarterly computations are based on weighted average common shares outstanding during each quarter.


	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Year
	(In millions, except per share amounts)
2021
Operating Revenues	$	3,581	$	3,021	$	3,715	$	4,647	$	14,964
Operating Income	433		242		405		415		1,495
Net Income from Continuing Operations(a)	317		114		55		300		786
Net Income (Loss) from Discontinued Operations	80		65		(33)		5		117
Net Income	397		179		22		305		903
Net Income Attributable to DTE Energy Company	$	397	$	179	$	25	$	306	$	907
Basic Earnings per Share
Continuing Operations	$	1.65	$	0.60	$	0.30	$	1.56	$	4.11
Discontinued Operations	0.40		0.32		(0.17)		0.02		0.57
Total	$	2.05	$	0.92	$	0.13	$	1.58	$	4.68
Diluted Earnings per Share
Continuing Operations	$	1.65	$	0.60	$	0.30	$	1.55	$	4.10
Discontinued Operations	0.40		0.32		(0.17)		0.02		0.57
Total	$	2.05	$	0.92	$	0.13	$	1.57	$	4.67

2020
Operating Revenues	$	2,852	$	2,411	$	3,080	$	3,080	$	11,423
Operating Income	445		263		479		368		1,555
Net Income from Continuing Operations	268		201		370		206		1,045
Net Income from Discontinued Operations	74		76		107		69		326
Net Income	342		277		477		275		1,371
Net Income Attributable to DTE Energy Company	$	340	$	277	$	476	$	275	$	1,368
Basic Earnings per Share
Continuing Operations	$	1.39	$	1.06	$	1.93	$	1.08	$	5.46
Discontinued Operations	0.38		0.38		0.54		0.34		1.63
Total	$	1.77	$	1.44	$	2.47	$	1.42	$	7.09
Diluted Earnings per Share
Continuing Operations	$	1.39	$	1.06	$	1.92	$	1.08	$	5.45
Discontinued Operations	0.37		0.38		0.54		0.34		1.63
Total	$	1.76	$	1.44	$	2.46	$	1.42	$	7.08

(a)Third Quarter 2021 results include significant one-time items resulting from the separation of DT Midstream, including a loss on debt extinguishment of $376 million following the settlement of intercompany borrowings with DT midstream and optional redemption of DTE Energy long-term debt. Refer to Note 14 to the Consolidated Financial Statements, "Long-Term Debt," for additional information. Third Quarter 2021 results also include a tax benefit of $85 million for the remeasurement of state deferred tax liabilities following the separation of DT Midstream. Refer to Note 10 to the Consolidated Financial Statements, "Income Taxes," for additional information.

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