DTE Energy 10-Q 2022-03-31

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________________________________

FORM 10-Q

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

For the Quarterly Period ended March 31, 2022

Or

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

Commission File Number: 1-11607

DTE Energy Company

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

Commission File Number: 1-2198

DTE Electric Company

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

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

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

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

Title of Each Class						Trading Symbol(s)						Name of Exchange on which Registered
Common stock, without par value						DTE						New York Stock Exchange
2017 Series E 5.25% Junior Subordinated Debentures due 2077						DTW						New York Stock Exchange
2019 6.25% Corporate Units						DTP						New York Stock Exchange
2020 Series G 4.375% Junior Subordinated Debentures due 2080						DTB						New York Stock Exchange
2021 Series E 4.375% Junior Subordinated Debentures due 2081						DTG						New York Stock Exchange

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

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

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

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

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

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

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

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

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

Number of shares of Common Stock outstanding at March 31, 2022:

Registrant						Description						Shares
DTE Energy						Common Stock, without par value						193,739,166
DTE Electric						Common Stock, $10 par value, indirectly-owned by DTE Energy						138,632,324

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

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

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						Page
			Definitions			1
			Filing Format			3
			Forward-Looking Statements			3
PART I - FINANCIAL INFORMATION
Item 1.			Financial Statements
			DTE Energy Consolidated Financial Statements (Unaudited)			5
			DTE Electric Consolidated Financial Statements (Unaudited)			11
			Combined Notes to Consolidated Financial Statements (Unaudited)			17
			Note 1 — Organization and Basis of Presentation			17
			Note 2 — Significant Accounting Policies			20
			Note 3 — New Accounting Pronouncements			24
			Note 4 — Discontinued Operations			25
			Note 5 — Revenue			26
			Note 6 — Regulatory Matters			28
			Note 7 — Earnings Per Share			29
			Note 8 — Fair Value			30
			Note 9 — Financial and Other Derivative Instruments			37
			Note 10 — Long-Term Debt			42
			Note 11 — Short-Term Credit Arrangements and Borrowings			42
			Note 12 — Leases			44
			Note 13 — Commitments and Contingencies			45
			Note 14 — Retirement Benefits and Trusteed Assets			49
			Note 15 — Segment and Related Information			51
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			53
Item 3.			Quantitative and Qualitative Disclosures About Market Risk			66
Item 4.			Controls and Procedures			68
PART II - OTHER INFORMATION
Item 1.			Legal Proceedings			69
Item 1A.			Risk Factors			69
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			69
Item 6.			Exhibits			70
			Signatures			71

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DEFINITIONS

ACE						Affordable Clean Energy
AFUDC						Allowance for Funds Used During Construction
ASU						Accounting Standards Update issued by the FASB
CAD						Canadian Dollar (C$)
CARB						California Air Resources Board that administers California's Low Carbon Fuel Standard
Carbon emissions						Emissions of carbon containing compounds, including carbon dioxide and methane, that are identified as greenhouse gases
CCR						Coal Combustion Residuals
CFTC						U.S. Commodity Futures Trading Commission
COVID-19						Coronavirus disease of 2019
DTE Electric						DTE Electric Company (an indirect wholly-owned subsidiary of DTE Energy) and subsidiary companies
DTE Energy						DTE Energy Company, directly or indirectly the parent of DTE Electric, DTE Gas, and numerous non-utility subsidiaries
DTE Gas						DTE Gas Company (an indirect wholly-owned subsidiary of DTE Energy) and subsidiary companies
DTE Securitization						DTE Electric Securitization Funding I, LLC, a special purpose entity wholly-owned by DTE Electric. The entity was created to issue securitization bonds for certain qualified costs authorized by the MPSC and to recover debt service costs from DTE Electric customers
DTE Sustainable Generation						DTE Sustainable Generation Holdings, LLC (an indirect wholly-owned subsidiary of DTE Energy) and subsidiary companies
DT Midstream						DT Midstream, Inc., formerly DTE Energy's natural gas pipeline, storage, and gathering non-utility business comprising the Gas Storage and Pipelines segment and certain DTE Energy holding company activity in the Corporate and Other segment, which separated from DTE Energy and became an independent public company on July 1, 2021
EGLE						Michigan Department of Environment, Great Lakes, and Energy, formerly known as Michigan Department of Environmental Quality
EGU						Electric Generating Unit
ELG						Effluent Limitations Guidelines
EPA						U.S. Environmental Protection Agency
Equity units						DTE Energy's 2019 equity units issued in November 2019, which were used to finance the Gas Storage and Pipelines acquisition on December 4, 2019
FASB						Financial Accounting Standards Board
FERC						Federal Energy Regulatory Commission
FGD						Flue Gas Desulfurization
FOV						Finding of Violation
FTRs						Financial Transmission Rights are financial instruments that entitle the holder to receive payments related to costs incurred for congestion on the transmission grid
GCR						A Gas Cost Recovery mechanism authorized by the MPSC that allows DTE Gas to recover through rates its natural gas costs
GHGs						Greenhouse gases
Green Bonds						A financing option to fund projects that have a positive environmental impact based upon a specified set of criteria. The proceeds are required to be used for eligible green expenditures
MGP						Manufactured Gas Plant

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DEFINITIONS

MPSC						Michigan Public Service Commission
MTM						Mark-to-market
NAV						Net Asset Value
Net zero						Collective efforts to reduce the carbon emissions of DTE Energy's utility operations and gas suppliers, as well as efforts to offset an amount equivalent to any remaining emissions. Progress towards this goal is estimated and may vary from the calculations of other utility businesses with similar targets
Non-utility						An entity that is not a public utility. Its conditions of service, prices of goods and services, and other operating related matters are not directly regulated by the MPSC
NOX						Nitrogen Oxides
NPDES						National Pollutant Discharge Elimination System
NRC						U.S. Nuclear Regulatory Commission
Production tax credits						Tax credits as authorized under Section 45 of the Internal Revenue Code that are designed to stimulate investment in and development of alternate fuel sources. The amount of a production tax credit can vary each year as determined by the Internal Revenue Service
PSCR						A Power Supply Cost Recovery mechanism authorized by the MPSC that allows DTE Electric to recover through rates its fuel, fuel-related, and purchased power costs
REC						Renewable Energy Credit
REF						Reduced Emissions Fuel
Registrants						DTE Energy and DTE Electric
Retail access						Michigan legislation provided customers the option of access to alternative suppliers for electricity and natural gas
RPS						Renewable Portfolio Standard program, which includes a mechanism authorized by the MPSC allowing DTE Electric to recover through rates its renewable energy costs
SIP						State Implementation Plan
SO2						Sulfur Dioxide
TCJA						Tax Cuts and Jobs Act of 2017, which reduced the corporate Federal income tax rate from 35% to 21%
Topic 606						FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, as amended
VIE						Variable Interest Entity

Units of Measurement
Bcf						Billion cubic feet of natural gas
BTU						British thermal unit, heat value (energy content) of fuel
MMBtu						One million BTU
MWh						Megawatt-hour of electricity

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FILING FORMAT

This combined Form 10-Q is separately filed by DTE Energy and DTE Electric. Information in this combined Form 10-Q relating to each individual Registrant is filed by such Registrant on its own behalf. DTE Electric makes no representation regarding information relating to any other companies affiliated with DTE Energy other than its own subsidiaries. Neither DTE Energy, nor any of DTE Energy’s other subsidiaries (other than DTE Electric), has any obligation in respect of DTE Electric's debt securities, and holders of such debt securities should not consider the financial resources or results of operations of DTE Energy nor any of DTE Energy’s other subsidiaries (other than DTE Electric and its own subsidiaries (in relevant circumstances)) in making a decision with respect to DTE Electric's debt securities. Similarly, none of DTE Electric nor any other subsidiary of DTE Energy has any obligation in respect to debt securities of DTE Energy. This combined Form 10-Q should be read in its entirety. No one section of this combined Form 10-Q deals with all aspects of the subject matter of this combined Form 10-Q. This combined Form 10-Q should be read in conjunction with the Consolidated Financial Statements and Combined Notes to Consolidated Financial Statements and with Management's Discussion and Analysis included in the combined DTE Energy and DTE Electric 2021 Annual Report on Form 10-K.

FORWARD-LOOKING STATEMENTS

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

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

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

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

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

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

• impact of volatility in prices in international steel markets and in prices of environmental attributes generated from renewable natural gas investments on the operations of DTE Vantage;

• the risk of a major safety incident;

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

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

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

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

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

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

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

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

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

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

• impacts of inflation and the timing and extent of changes in interest rates;

• the level of borrowings;

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

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

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

• unplanned outages at our generation plants;

• employee relations and the impact of collective bargaining agreements;

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

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

• the effects of competition;

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

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

• successful execution of new business development and future growth plans;

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

• the ability of the electric and gas utilities to achieve net zero emissions goals; and

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

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

Part I — Financial Information

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DTE Energy Company

Consolidated Statements of Operations (Unaudited)

									Three Months Ended March 31,
															2022						2021
															(In millions, except per share amounts)
Operating Revenues
Utility operations															$	2,234					$	1,953
Non-utility operations															2,343						1,628
															4,577						3,581
Operating Expenses
Fuel, purchased power, and gas — utility															700						544
Fuel, purchased power, gas, and other — non-utility															2,242						1,595
Operation and maintenance															596						567
Depreciation and amortization															358						327
Taxes other than income															123						115
															4,019						3,148
Operating Income															558						433
Other (Income) and Deductions
Interest expense															154						155
Interest income															(8)						(4)
Non-operating retirement benefits, net															(3)						4
Other income															(8)						(43)
Other expenses															13						10
															148						122
Income Before Income Taxes															410						311
Income Tax Expense (Benefit) (Note 2)															16						(6)
Net Income from Continuing Operations															394						317
Net Income from Discontinued Operations, Net of Taxes (Note 4)															—						80
Net Income															394						397
Less: Net Income (Loss) Attributable to Noncontrolling Interests
Continuing operations															—						(3)
Discontinued operations															—						3
Net Income Attributable to DTE Energy Company															$	394					$	397
Basic Earnings per Common Share
Continuing operations															2.03						1.65
Discontinued operations															—						0.40
Total															$	2.03					$	2.05
Diluted Earnings per Common Share
Continuing operations															2.03						1.65
Discontinued operations															—						0.40
Total															$	2.03					$	2.05
Weighted Average Common Shares Outstanding
Basic															193						194
Diluted															194						194

See Combined Notes to Consolidated Financial Statements (Unaudited)

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DTE Energy Company

Consolidated Statements of Comprehensive Income (Unaudited)

									Three Months Ended March 31,
															2022						2021
															(In millions)
Net Income															$	394					$	397
Other comprehensive income, net of tax:
Benefit obligations, net of taxes of $1 for both periods															3						2
Net unrealized gains (losses) on derivatives, net of taxes of $— for both periods															—						1
Other comprehensive income															3						3
Comprehensive income															397						400
Less: Comprehensive income attributable to noncontrolling interests															—						—
Comprehensive Income Attributable to DTE Energy Company															$	397					$	400

See Combined Notes to Consolidated Financial Statements (Unaudited)

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DTE Energy Company

Consolidated Statements of Financial Position (Unaudited)

			March 31,						**Decembe

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

EXECUTIVE OVERVIEW

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

On July 1, 2021, DTE Energy completed the separation of DT Midstream, its former natural gas pipeline, storage, and gathering non-utility business. Financial results of DT Midstream are presented as discontinued operations in the Consolidated Financial Statements. Refer to Note 4 to the Consolidated Financial Statements, “Discontinued Operations,” for additional information.

Management’s Discussion and Analysis of Financial Condition and Results of Operations below reflect DTE Energy’s continuing operations, unless noted otherwise. The following table summarizes DTE Energy's financial results:

									Three Months Ended March 31,
															2022						2021
															(In millions, except per share amounts)
Net Income Attributable to DTE Energy Company — Continuing operations															$	394					$	320
Diluted Earnings per Common Share — Continuing operations															$	2.03					$	1.65

The increase in Net Income Attributable to DTE Energy Company for the three months ended March 31, 2022 was primarily due to higher earnings in the Gas, Energy Trading, and Corporate and Other segments, partially offset by lower earnings in the DTE Vantage segment.

STRATEGY

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

DTE Energy's utilities are investing capital to support a modern, reliable grid and cleaner, affordable energy through investments in base infrastructure and new generation. An increasing amount of high wind and other extreme weather events driven by climate change, coupled with increasing electric vehicle adoption, will drive a continued need for substantial grid investment over the long-term.

DTE Energy is committed to reducing the carbon emissions of its electric utility operations by 32% by 2023, 50% by 2028, and 80% by 2040 from 2005 carbon emissions levels. DTE Energy is also committed to a net zero carbon emissions goal by 2050 for its electric and gas utility operations. To achieve the carbon reduction goals at the electric utility, DTE Energy has begun to transition away from coal-powered sources and is replacing or offsetting the generation from these facilities with renewable energy and energy waste reduction initiatives. Refer to the "Capital Investments" section below for further discussion regarding DTE Energy's retirement of its aging coal-fired plants and transition to renewable energy and other sources. Over the long-term, DTE Energy is also monitoring the viability of emerging technologies involving energy storage, carbon capture and sequestration, alternative fuels such as hydrogen, and advanced nuclear power.

For gas utility operations, DTE Energy aims to cut carbon emissions across the entire value chain. To achieve net zero emissions by 2050 for both internal operations and from suppliers, 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 address any remaining emissions. DTE Energy is also committed to helping DTE Gas customers reduce their emissions by 35% by 2040 by increasing energy efficiency, pursuing advanced technologies such as hydrogen, and through the CleanVision Natural Gas Balance program which provides customers the option to use carbon offsets and renewable natural gas.

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DTE Energy expects that these initiatives at the electric and gas utilities will continue to provide significant opportunities for capital investments and result in earnings growth. DTE Energy is focused on executing its plans to achieve operational excellence and customer satisfaction with a focus on customer affordability. DTE Energy's utilities operate in a constructive regulatory environment and have solid relationships with their regulators.

DTE Energy also has significant investments in non-utility businesses and expects growth opportunities in its DTE Vantage segment. DTE Energy employs disciplined investment criteria when assessing growth opportunities that leverage its assets, skills, and expertise, and provides diversity in earnings and geography. Specifically, DTE Energy invests in targeted markets with attractive competitive dynamics where meaningful scale is in alignment with its risk profile.

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

CAPITAL INVESTMENTS

DTE Energy's utility businesses require significant capital investments to maintain and improve the electric generation and electric and natural gas distribution infrastructure and to comply with environmental regulations and renewable energy requirements. Capital plans may be regularly updated as these requirements change.

DTE Electric's capital investments over the 2022-2026 period are estimated at $15 billion, comprised of $8 billion for distribution infrastructure, $4 billion for base infrastructure, and $3 billion for cleaner generation including renewables. DTE Electric has retired six coal-fired generation units at the Trenton Channel, River Rouge, and St. Clair facilities and has announced plans to retire its remaining eleven coal-fired generating units, including five units at Trenton Channel and St. Clair expected to be retired in the second quarter 2022. The two units at the Belle River facility will cease the use of coal by 2028 and are being evaluated for conversion to cleaner energy resources. The four units at the Monroe facility are expected to be retired by 2040. Generation from the retired facilities will be replaced or offset with a combination of renewables, energy waste reduction, demand response, and natural gas fueled generation, including the Blue Water Energy Center which will commence operations in the second quarter 2022.

DTE Gas' capital investments over the 2022-2026 period are estimated at $3.1 billion, comprised of $1.5 billion for base infrastructure and $1.6 billion for gas main renewal, meter move out, and pipeline integrity programs.

DTE Electric and DTE Gas plan to seek regulatory approval for capital expenditures consistent with ratemaking treatment.

DTE Energy's non-utility businesses' capital investments are primarily for expansion, growth, and ongoing maintenance in the DTE Vantage segment, including approximately $1 billion to $1.5 billion from 2022-2026 for renewable energy projects and industrial energy services.

ENVIRONMENTAL MATTERS

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

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

For further discussion of environmental matters, see Note 13 to the Consolidated Financial Statements, "Commitments and Contingencies."

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OUTLOOK

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

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

• electric and gas customer satisfaction;

• electric distribution system reliability;

• new electric generation;

• gas distribution system renewal;

• reducing carbon emissions at the electric and gas utilities;

• rate competitiveness and affordability;

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

• strategic investments in growth projects at DTE Vantage;

• employee engagement, health, safety and well-being, and diversity, equity, and inclusion;

• cost structure optimization across all business segments; and

• cash, capital, and liquidity to maintain or improve financial strength.

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

RESULTS OF OPERATIONS

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

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

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

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

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

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

									Three Months Ended March 31,
															2022						2021
															(In millions)
Net Income (Loss) Attributable to DTE Energy by Segment
Electric															$	201					$	208
Gas															196						169
DTE Vantage															14						28
Energy Trading															(9)						(55)
Corporate and Other															(8)						(30)
Income from Continuing Operations Attributable to DTE Energy Company															394						320
Discontinued Operations															—						77
Net Income Attributable to DTE Energy Company															$	394					$	397

ELECTRIC

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

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

									Three Months Ended March 31,
															2022						2021
															(In millions)
Operating Revenues — Utility operations															$	1,486					$	1,360
Fuel and purchased power — utility															437						360
Utility Margin															1,049						1,000
Operating Revenues — Non-utility operations															4						4
Operation and maintenance															388						354
Depreciation and amortization															297						264
Taxes other than income															88						82
Operating Income															280						304
Other (Income) and Deductions															76						76
Income Tax Expense															3						20
Net Income Attributable to DTE Energy Company															$	201					$	208

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

Utility Margin increased $49 million in the three months ended March 31, 2022. Revenues associated with certain mechanisms and surcharges are offset by related expenses elsewhere in the Registrants' Consolidated Statements of Operations.

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

									Three Months
									(In millions)
Weather									$	21
Regulatory mechanism — RPS									19
COVID-19 voluntary refund amortization									8
Base sales / rate mix									(4)
Other regulatory mechanisms and other									5
Increase in Utility Margin									$	49

									Three Months Ended March 31,
															2022						2021
															(In thousands of MWh)
DTE Electric Sales
Residential															3,839						3,759
Commercial															3,950						3,872
Industrial															2,054						2,202
Other															57						59
															9,900						9,892
Interconnection sales(a)															594						1,203
Total DTE Electric Sales															10,494						11,095
DTE Electric Deliveries
Retail and wholesale															9,900						9,892
Electric retail access, including self-generators(b)															1,090						937
Total DTE Electric Sales and Deliveries															10,990						10,829

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

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

Operation and maintenance expense increased $34 million in the three months ended March 31, 2022. The increase was primarily due to higher plant generation expense of $27 million and higher distribution operations expense of $14 million, partially offset by lower legal and environmental expense of $4 million and lower uncollectible expense of $3 million.

Depreciation and amortization expense increased $33 million in the three months ended March 31, 2022. The increase was primarily due to a $30 million increase resulting from a higher depreciable base.

Taxes other than income increased $6 million in the three months ended March 31, 2022. The increase was primarily due to higher property taxes of $4 million.

Income Tax Expense decreased $17 million in the three months ended March 31, 2022. The decrease was primarily due to higher amortization of the TCJA regulatory liability, driven by accelerated amortization approved in DTE Electric's 2021 accounting application to the MPSC, and lower earnings.

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

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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 requests 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.

GAS

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

									Three Months Ended March 31,
															2022						2021
															(In millions)
Operating Revenues — Utility operations															$	766					$	612
Cost of gas — utility															280						195
Utility Margin															486						417
Operation and maintenance															135						130
Depreciation and amortization															47						43
Taxes other than income															28						26
Operating Income															276						218
Other (Income) and Deductions															20						19
Income Tax Expense															60						30
Net Income Attributable to DTE Energy Company															$	196					$	169

Utility Margin increased $69 million in the three months ended March 31, 2022. Revenues associated with certain mechanisms and surcharges are offset by related expenses elsewhere in DTE Energy's Consolidated Statements of Operations.

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

									Three Months
									(In millions)
Implementation of new rates									$	30
Weather									28
Home protection program									2
Midstream storage and transportation revenues									2
Other									7
Increase in Utility Margin									$	69

									Three Months Ended March 31,
															2022						2021
															(In Bcf)
Gas Markets
Gas sales															71						62
End-user transportation															55						53
															126						115
Intermediate transportation															150						151
Total Gas sales															276						266

Operation and maintenance expense increased $5 million in the three months ended March 31, 2022. The increase was primarily due to higher gas operations expense of $4 million and higher corporate support costs of $3 million, partially offset by lower uncollectible expense of $1 million.

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Depreciation and amortization expense increased $4 million in the three months ended March 31, 2022. The increase was primarily due to a higher depreciable base.

Income Tax Expense increased $30 million in the three months ended March 31, 2022. The increase was primarily due to higher earnings and lower amortization of the TCJA regulatory liability.

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

DTE VANTAGE

The DTE Vantage segment is comprised primarily of renewable energy projects that sell electricity and pipeline-quality gas and projects that deliver energy and utility-type products and services to industrial, commercial, and institutional customers. DTE Vantage formerly included projects that produced reduced emissions fuel; however, these projects were closed as planned in 2022 upon REF facilities exhausting their eligibility for generating production tax credits. DTE Vantage results and outlook are discussed below:

									Three Months Ended March 31,
															2022						2021
															(In millions)
Operating Revenues — Non-utility operations															$	179					$	366
Fuel, purchased power, and gas — non-utility															80						285
Non-utility Margin															99						81
Operation and maintenance															65						70
Depreciation and amortization															13						19
Taxes other than income															4						4
Operating Income (Loss)															17						(12)
Other (Income) and Deductions															1						(21)
Income Taxes
Expense															4						4
Production Tax Credits															(2)						(20)
															2						(16)
Net Income															14						25
Less: Net Loss Attributable to Noncontrolling Interests															—						(3)
Net Income Attributable to DTE Energy Company															$	14					$	28

Operating Revenues — Non-utility operations decreased $187 million in the three months ended March 31, 2022. The decrease was due to the following:

									Three Months
									(In millions)
Closure of the REF business									$	(213)
Closure in the Steel business									(6)
Higher prices in the On-site business									3
New contract in the Renewables business									5
Higher production in the Renewables business									11
Higher demand and prices in the Steel business									11
Other									2
									$	(187)

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Non-utility Margin increased $18 million in the three months ended March 31, 2022. The following table details changes in Non-utility Margin relative to the comparable prior period:

									Three Months
									(In millions)
Higher production in the Renewables business									$	11
New contract in the Renewables business									4
Higher demand and prices in the Steel business									3
Closure of the REF business									3
Closure in the Steel business									(2)
Other									(1)
									$	18

Operation and maintenance expense decreased $5 million in the three months ended March 31, 2022. The decrease was primarily due to closure of the REF business.

Depreciation and amortization expense decreased $6 million in the three months ended March 31, 2022. The decrease was primarily due to closure of the REF business.

Other (Income) and Deductions changed $22 million in the three months ended March 31, 2022. The change was primarily due to $24 million lower income associated with the closure of the REF business and $4 million of lower equity investment earnings due to a planned outage in the Renewables business, partially offset by $4 million of lower interest expense.

Income Taxes — Production Tax Credits decreased $18 million in the three months ended March 31, 2022. The decrease was primarily due to closure of the REF business.

Net Loss Attributable to Noncontrolling Interests decreased $3 million in the three months ended March 31, 2022. The decrease was primarily due to closure of the REF business.

Outlook — DTE Vantage will continue to leverage its extensive energy-related operating experience and project management capability to develop additional energy and renewable natural gas projects to serve energy intensive industrial customers. Compared to prior years, DTE Vantage expects that lower earnings will continue in 2022 due to the closure of the REF business. Over the long-term, DTE Vantage expects that growth in renewable energy and industrial energy services projects will offset the decreases to Net Income caused by the REF closures. DTE Vantage is also exploring decarbonization opportunities relating to carbon capture and storage projects.

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ENERGY TRADING

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

									Three Months Ended March 31,
															2022						2021
															(In millions)
Operating Revenues — Non-utility operations															$	2,203					$	1,439
Purchased power and gas — non-utility															2,190						1,481
Non-utility Margin															13						(42)
Operation and maintenance															19						27
Depreciation and amortization															1						1
Taxes other than income															3						3
Operating Loss															(10)						(73)
Other (Income) and Deductions															2						—
Income Tax Benefit															(3)						(18)
Net Loss Attributable to DTE Energy Company															$	(9)					$	(55)

Operating Revenues — Non-utility operations increased $764 million in the three months ended March 31, 2022. The increase was primarily due to higher gas prices in the gas structured and gas transportation strategies.

Non-utility Margin increased $55 million in the three months ended March 31, 2022. The following table details changes in Non-utility margin relative to the comparable prior period:

			Three Months
			(In millions)
Unrealized Margins**(a)**
Favorable results, primarily in gas transportation, power full requirements, and environmental trading strategies			$	88
Unfavorable results, primarily in the gas structured strategy(b)			(52)
			36
Realized Margins**(a)**
Favorable results, primarily in power trading, gas full requirements, and gas transportation strategies(c)			84
Unfavorable results, primarily in gas structured, power full requirements, and gas trading strategies			(65)
			19
Increase in Non-utility Margin			$	55

---

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

(b)Amount includes $19 million of timing related losses related to gas strategies which will reverse in future periods as the underlying contracts settle.

(c)Amount includes $33 million of timing related losses related to gas strategies recognized in previous periods that reversed as the underlying contracts settled.

Operation and maintenance decreased $8 million in the three months ended March 31, 2022. The decrease was primarily due to lower uncollectible expense.

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

See also the "Fair Value" section herein and Notes 8 and 9 to the Consolidated Financial Statements, "Fair Value" and "Financial and Other Derivative Instruments," respectively.

CORPORATE AND OTHER

Corporate and Other includes various holding company activities, holds certain non-utility debt, and holds certain investments, including funds supporting regional development and economic growth. The net loss of $8 million for the three months ended March 31, 2022 represents a decrease of $22 million from the net loss of $30 million in the comparable 2021 period. The decrease was primarily due to effective income tax rate adjustments and lower interest expense, partially offset by lower equity investment earnings.

CAPITAL RESOURCES AND LIQUIDITY

Cash Requirements

DTE Energy uses cash to maintain and invest in the electric and natural gas utilities, to grow the non-utility businesses, to retire and pay interest on long-term debt, and to pay dividends. DTE Energy believes it will have sufficient internal and external capital resources to fund anticipated capital and operating requirements. DTE Energy expects that cash from operations in 2022 will be approximately $2.6 billion. DTE Energy anticipates base level utility capital investments, including environmental, renewable, and energy waste reduction expenditures, and expenditures for non-utility businesses of approximately $3.7 billion in 2022. DTE Energy plans to seek regulatory approval to include utility capital expenditures in regulatory rate base consistent with prior treatment. Capital spending for growth of existing or new non-utility businesses will depend on the existence of opportunities that meet strict risk-return and value creation criteria.

Refer below for analysis of cash flows relating to operating, investing, and financing activities, which reflect DTE Energy's change in financial condition. Any significant non-cash items are included in the Supplemental disclosure of non-cash investing and financing activities within the Consolidated Statements of Cash Flows, as applicable.

			Three Months Ended March 31,
			2022						2021
			(in millions)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period			$	35					$	516
Net cash from operating activities			808						1,057
Net cash used for investing activities			(782)						(705)
Net cash from financing activities			95						702
Net Increase in Cash, Cash Equivalents, and Restricted Cash			121						1,054
Cash, Cash Equivalents, and Restricted Cash at End of Period			$	156					$	1,570

Cash from Operating Activities

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

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Net cash from operations decreased by $249 million in 2022. The decrease was primarily due to lower cash from working capital items, as well as decreases in Deferred income taxes and Depreciation and amortization.

The change in working capital items in 2022 was primarily due to decreases in cash related to Regulatory assets and liabilities, Accounts receivable, net, and Accounts payable, partially offset by increases in cash related to Inventories and Other current and noncurrent assets and liabilities.

Cash used for Investing Activities

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

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

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

Net cash used for investing activities increased by $77 million in 2022 primarily due to an increase in utility plant and equipment expenditures, partially offset by decreases in Notes receivable and non-utility plant and equipment expenditures.

Cash from Financing Activities

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

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

Net cash from financing activities decreased by $607 million in 2022 primarily due to decreases in cash related to Short-term borrowings, net and Redemption of long-term debt, partially offset by increases in cash related to Issuance of long-term debt, net of issuance costs and Dividends paid on common stock.

Outlook

Sources of Cash

DTE Energy expects cash flows from operations to increase over the long-term, primarily as a result of growth from the utility and non-utility businesses. Growth in the utilities is expected to be driven primarily by capital spending which will increase the base from which rates are determined. Non-utility growth is expected from additional investments in the DTE Vantage segment. Compared to prior years, DTE Vantage expects that lower cash flows will continue in 2022 due to the closure of REF business. Growth from new renewable energy investments and industrial energy services projects are expected to offset these decreases over the long-term.

DTE Energy's separation of DT Midstream on July 1, 2021 may also contribute to lower cash from operations in 2022 and the near term. However, DTE Energy still expects higher cash flows from operations over the long-term due to the growth of its utilities and remaining non-utility businesses. For additional information regarding the separation of DT Midstream, refer to Note 4 to the Consolidated Financial Statements, "Discontinued Operations."

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

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To finance the acquisition of midstream natural gas assets in December 2019, DTE Energy issued equity units that will result in the issuance of $1.3 billion of common stock in November 2022. DTE Energy does not anticipate the issuance of any additional equity in 2022. However, at the discretion of management and depending upon economic and financial market conditions, DTE Energy could issue additional equity as part of its financial planning process. If issued, DTE Energy anticipates these discretionary equity issuances would be made through contributions to the dividend reinvestment plan or employee benefit plans.

Over the long-term, DTE Energy does not have any equity commitments other than the 2019 equity units noted above and will continue to evaluate equity needs on an annual basis.

Uses of Cash

DTE Energy has $2.6 billion in long-term debt, including finance leases, maturing within twelve months. Repayment of the debt is expected to be made through internally generated funds, the issuance or remarketing of long-term debt, and proceeds from the equity issuances associated with the 2019 equity units.

DTE Energy has paid quarterly cash dividends for more than 100 consecutive years and expects to continue paying regular cash dividends in the future, including approximately $0.7 billion in 2022. Any payment of future dividends is subject to approval by the Board of Directors and may depend on DTE Energy's future earnings, capital requirements, and financial condition. Over the long-term, DTE Energy expects continued dividend growth and is targeting a payout ratio consistent with pure-play utility companies.

Various subsidiaries and equity investees of DTE Energy have entered into contracts which contain ratings triggers and are guaranteed by DTE Energy. These contracts contain provisions which allow the counterparties to require that DTE Energy post cash or letters of credit as collateral in the event that DTE Energy's credit rating is downgraded below investment grade. Certain of these provisions (known as "hard triggers") state specific circumstances under which DTE Energy can be required to post collateral upon the occurrence of a credit downgrade, while other provisions (known as "soft triggers") are not as specific. For contracts with soft triggers, it is difficult to estimate the amount of collateral which may be requested by counterparties and/or which DTE Energy may ultimately be required to post. The amount of such collateral which could be requested fluctuates based on commodity prices (primarily natural gas, power, environmental, and coal) and the provisions and maturities of the underlying transactions. As of March 31, 2022, 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 $813 million.

Other obligations are further described in the following Combined Notes to the Consolidated Financial Statements:

Note						Title
1						Organization and Basis of Presentation
6						Regulatory Matters
10						Long-Term Debt
11						Short-Term Credit Arrangements and Borrowings
13						Commitments and Contingencies
14						Retirement Benefits and Trusteed Assets

Also refer to the "Capital Investments" section above regarding DTE Energy's capital strategy and estimated spend over the next five years. For additional information regarding DTE Energy's future cash obligations, including scheduled debt maturities and interest payments, minimum lease payments, and future purchase commitments, refer to DTE Energy's Annual Report on Form 10-K for the year ended December 31, 2021.

Liquidity

DTE Energy has approximately $2.7 billion of available liquidity at March 31, 2022, consisting primarily of cash and cash equivalents and amounts available under unsecured revolving credit agreements.

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

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NEW ACCOUNTING PRONOUNCEMENTS

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

FAIR VALUE

Derivatives are generally recorded at fair value and shown as Derivative assets or liabilities. Contracts DTE Energy typically classifies as derivative instruments include power, natural gas, some environmental contracts, and certain forwards, futures, options and swaps, and foreign currency exchange contracts. Items DTE Energy does not generally account for as derivatives include natural gas and environmental inventory, pipeline transportation contracts, storage assets, and some environmental contracts. See Notes 8 and 9 to the Consolidated Financial Statements, "Fair Value" and "Financial and Other Derivative Instruments," respectively.

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

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

The Registrants have established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value in three broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). For further discussion of the fair value hierarchy, see Note 8 to the Consolidated Financial Statements, "Fair Value."

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

			DTE Energy
			(In millions)
MTM at December 31, 2021			$	(159)
Reclassified to realized upon settlement			58
Changes in fair value recorded to income			(170)
Amounts recorded to unrealized income			(112)
Changes in fair value recorded in Regulatory liabilities			(4)
Change in collateral			8
MTM at March 31, 2022			$	(267)

The table below shows the maturity of DTE Energy's MTM positions. The positions from 2025 and beyond principally represent longer tenor gas structured transactions:

Source of Fair Value						2022						2023						2024						2025 and Beyond						Total Fair Value
						(In millions)
Level 1						$	164					$	78					$	24					$	7					$	273
Level 2						(10)						(40)						(44)						(23)						(117)
Level 3						(124)						(96)						(40)						(81)						(341)
MTM before collateral adjustments						$	30					$	(58)					$	(60)					$	(97)					(185)
Collateral adjustments																														(82)
MTM at March 31, 2022																														$	(267)

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