Item 1. Financial Statements

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Item 1. Financial Statements

DTE Energy Company

Consolidated Statements of Operations (Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In millions, except per share amounts)
Operating Revenues
Utility operations	$	2,053	$	1,875	$	6,196	$	5,483
Non-utility operations	3,198		1,840		8,556		4,834
	5,251		3,715		14,752		10,317
Operating Expenses
Fuel, purchased power, and gas — utility	594		477		1,901		1,411
Fuel, purchased power, gas, and other — non-utility	3,023		1,766		8,324		4,708
Operation and maintenance	608		615		1,803		1,750
Depreciation and amortization	369		344		1,093		1,010
Taxes other than income	111		106		349		329
Asset (gains) losses and impairments, net	1		2		(4)		29
	4,706		3,310		13,466		9,237
Operating Income	545		405		1,286		1,080

Other (Income) and Deductions
Interest expense	171		156		486		477
Interest income	(10)		(6)		(26)		(16)
Non-operating retirement benefits, net	(5)		3		(13)		10
Loss on extinguishment of debt	—		376		—		384
Other income	(16)		(90)		(35)		(187)
Other expenses	12		30		56		50
	152		469		468		718
Income (Loss) Before Income Taxes	393		(64)		818		362

Income Tax Expense (Benefit) (Note 2)	6		(119)		—		(124)

Net Income from Continuing Operations	387		55		818		486
Income (Loss) from Discontinued Operations, Net of Taxes (Note 4)	—		(33)		—		112
Net Income	387		22		818		598

Less: Net Income (Loss) Attributable to Noncontrolling Interests
Continuing operations	—		(3)		—		(9)
Discontinued operations	—		—		—		6
Net Income Attributable to DTE Energy Company	$	387	$	25	$	818	$	601

Basic Earnings per Common Share
Continuing operations	2.00		0.30		4.22		2.55
Discontinued operations	—		(0.17)		—		0.55
Total	$	2.00	$	0.13	$	4.22	$	3.10

Diluted Earnings per Common Share
Continuing operations	1.99		0.30		4.21		2.55
Discontinued operations	—		(0.17)		—		0.55
Total	$	1.99	$	0.13	$	4.21	$	3.10

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

See Combined Notes to Consolidated Financial Statements (Unaudited)

Table of Contents

DTE Energy Company

Consolidated Statements of Comprehensive Income (Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In millions)
Net Income	$	387	$	22	$	818	$	598

Other comprehensive income, net of tax:
Benefit obligations, net of taxes of $—, $1, $2, and $2, respectively	2		2		7		5
Net unrealized gains on derivatives, net of taxes of $1, $1, $2, and $2, respectively	4		4		7		6


Other comprehensive income	6		6		14		11

Comprehensive income	393		28		832		609
Less: Comprehensive loss attributable to noncontrolling interests	—		(3)		—		(3)
Comprehensive Income Attributable to DTE Energy Company	$	393	$	31	$	832	$	612

See Combined Notes to Consolidated Financial Statements (Unaudited)

Table of Contents

DTE Energy Company

Consolidated Statements of Financial Position (Unaudited)


	September 30,		December 31,
	2022		2021
	(In millions)
ASSETS
Current Assets
Cash and cash equivalents	$	26	$	28
Restricted cash	25		7
Accounts receivable (less allowance for doubtful accounts of $95 and $92, respectively)
Customer	1,781		1,695
Other	199		135
Inventories
Fuel and gas	540		368
Materials, supplies, and other	508		490
Derivative assets	395		181
Regulatory assets	511		195

Other	325		218

	4,310		3,317
Investments
Nuclear decommissioning trust funds	1,764		2,071
Investments in equity method investees	169		187
Other	157		194
	2,090		2,452
Property
Property, plant, and equipment	38,550		37,083
Accumulated depreciation and amortization	(10,451)		(10,139)
	28,099		26,944
Other Assets
Goodwill	1,993		1,993
Regulatory assets	3,583		3,482
Securitized regulatory assets	214		—
Intangible assets	170		177
Notes receivable	316		310
Derivative assets	123		90
Prepaid postretirement costs	738		678
Operating lease right-of-use assets	91		97
Other	227		179

	7,455		7,006
Total Assets	$	41,954	$	39,719

See Combined Notes to Consolidated Financial Statements (Unaudited)

Table of Contents

DTE Energy Company

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


	September 30,		December 31,
	2022		2021
	(In millions, except shares)
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	1,619	$	1,414
Accrued interest	157		140
Dividends payable	171		171
Short-term borrowings	994		758

Current portion long-term debt, including securitization bonds and finance leases	1,425		2,874
Derivative liabilities	498		238

Regulatory liabilities	54		156
Operating lease liabilities	13		14

Other	535		581

	5,466		6,346
Long-Term Debt (net of current portion)
Mortgage bonds, notes, and other	16,354		13,629
Securitization bonds	192		—
Junior subordinated debentures	883		883
Finance lease liabilities	13		19
	17,442		14,531
Other Liabilities
Deferred income taxes	2,313		2,163
Regulatory liabilities	2,731		3,106
Asset retirement obligations	3,425		3,162
Unamortized investment tax credit	183		158
Derivative liabilities	256		192
Accrued pension liability	268		339
Accrued postretirement liability	350		358
Nuclear decommissioning	272		321
Operating lease liabilities	69		74
Other	193		256

	10,060		10,129
Commitments and Contingencies (Notes 6 and 13)

Equity
Common stock (No par value, 400,000,000 shares authorized, and 193,741,991 and 193,747,509 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively)	5,337		5,379
Retained earnings	3,741		3,438
Accumulated other comprehensive loss	(98)		(112)
Total DTE Energy Company Equity	8,980		8,705
Noncontrolling interests	6		8

Total Equity	8,986		8,713
Total Liabilities and Equity	$	41,954	$	39,719

See Combined Notes to Consolidated Financial Statements (Unaudited)

Table of Contents

DTE Energy Company

Consolidated Statements of Cash Flows (Unaudited)


	Nine Months Ended September 30,
	2022		2021
	(In millions)
Operating Activities
Net Income	$	818	$	598
Adjustments to reconcile Net Income to Net cash from operating activities:
Depreciation and amortization	1,093		1,092
Nuclear fuel amortization	26		44
Allowance for equity funds used during construction	(20)		(20)
Deferred income taxes	15		(36)
Equity (earnings) losses of equity method investees	15		(90)
Dividends from equity method investees	4		78
Loss on extinguishment of debt	—		384
Asset (gains) losses and impairments, net	(4)		46
Changes in assets and liabilities:
Accounts receivable, net	(150)		(8)
Inventories	(204)		(209)
Prepaid postretirement benefit costs	(60)		(59)
Accounts payable	228		225

Accrued pension liability	(71)		(65)
Accrued postretirement liability	(8)		(9)
Derivative assets and liabilities	77		309
Regulatory assets and liabilities	(552)		270
Other current and noncurrent assets and liabilities	205		(178)
Net cash from operating activities	1,412		2,372
Investing Activities
Plant and equipment expenditures — utility	(2,342)		(2,591)
Plant and equipment expenditures — non-utility	(55)		(109)

Proceeds from sale of assets	4		2
Proceeds from sale of nuclear decommissioning trust fund assets	707		854
Investment in nuclear decommissioning trust funds	(710)		(853)
Distributions from equity method investees	11		11
Contributions to equity method investees	(12)		(7)
Notes receivable	(13)		(65)
Other	(43)		(22)
Net cash used for investing activities	(2,453)		(2,780)
Financing Activities
Issuance of long-term debt, net of discount and issuance costs	1,771		4,033
Redemption of long-term debt	(316)		(3,242)


Short-term borrowings, net	236		323

Repurchase of common stock	(55)		(66)
Dividends paid on common stock	(514)		(631)
Contributions from noncontrolling interests	3		35
Distributions to noncontrolling interests	(5)		(33)


Prepayment costs for extinguishment of long-term debt	—		(361)
Transfer of cash to DT Midstream at separation	—		(37)
Other	(63)		(73)
Net cash from (used for) financing activities	1,057		(52)
Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash	16		(460)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	35		516
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	51	$	56

Supplemental disclosure of non-cash investing and financing activities
Plant and equipment expenditures in accounts payable	$	331	$	386
Separation of DT Midstream net assets, excluding cash transferred	$	—	$	3,962

See Combined Notes to Consolidated Financial Statements (Unaudited)

Table of Contents

DTE Energy Company

Consolidated Statements of Changes in Equity (Unaudited)


				Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interests
	Common Stock
	Shares	Amount						Total
	(Dollars in millions, shares in thousands)
Balance, December 31, 2021	193,748	$	5,379	$	3,438	$	(112)		$	8	$	8,713
Net Income	—	—		394		—			—		394
Dividends declared on common stock ($0.89 per Common Share)	—	—		(171)		—			—		(171)

Repurchase of common stock	(465)	(55)		—		—			—		(55)

Other comprehensive income, net of tax	—	—		—		3			—		3
Stock-based compensation, net distributions to noncontrolling interests, and other	456	(14)		1		—			(4)		(17)
Balance, March 31, 2022	193,739	$	5,310	$	3,662	$	(109)		$	4	$	8,867
Net Income	—	—		37		—			—		37
Dividends declared on common stock ($1.77 per Common Share)	—	—		(343)		—			—		(343)



Other comprehensive income, net of tax	—	—		—		5			—		5
Stock-based compensation, net contributions from noncontrolling interests, and other	(3)	13		(1)		—			1		13
Balance, June 30, 2022	193,736	$	5,323	$	3,355	$	(104)		$	5	$	8,579
Net Income	—	—		387		—			—		387




Other comprehensive income, net of tax	—	—		—		6			—		6

Stock-based compensation, net contributions from noncontrolling interests, and other	6	14		(1)		—			1		14
Balance, September 30, 2022	193,742	$	5,337	$	3,741	$	(98)		$	6	$	8,986

See Combined Notes to Consolidated Financial Statements (Unaudited)

Table of Contents

DTE Energy Company

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


				Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interests
	Common Stock
	Shares	Amount						Total
	(Dollars in millions, shares in thousands)
Balance, December 31, 2020	193,771	$	5,406	$	7,156	$	(137)		$	164	$	12,589

Net Income	—	—		397		—			—		397
Dividends declared on common stock ($1.09 per Common Share)	—	—		(210)		—			—		(210)

Repurchase of common stock	(430)	(54)		—		—			—		(54)

Other comprehensive income, net of tax	—	—		—		3			—		3
Stock-based compensation, net distributions to noncontrolling interests, and other	386	(8)		(1)		—			(2)		(11)
Balance, March 31, 2021	193,727	$	5,344	$	7,342	$	(134)		$	162	$	12,714

Net Income	—	—		179		—			—		179
Dividends declared on common stock ($1.91 per Common Share)	—	—		(370)		—			—		(370)



Other comprehensive income, net of tax	—	—		—		2			—		2

Stock-based compensation, net distributions to noncontrolling interests, and other	25	17		(2)		—			(1)		14
Balance, June 30, 2021	193,752	$	5,361	$	7,149	$	(132)		$	161	$	12,539

Net Income (Loss)	—	—		25		—			(3)		22


Repurchase of common stock	(99)	(12)		—		—			—		(12)

Other comprehensive income, net of tax	—	—		—		6			—		6
Stock-based compensation, net contributions from noncontrolling interests, and other	74	17		1		—			5		23
Separation of DT Midstream	—	—		(3,858)		10			(151)		(3,999)
Balance, September 30, 2021	193,727	$	5,366	$	3,317	$	(116)		$	12	$	8,579

See Combined Notes to Consolidated Financial Statements (Unaudited)

Table of Contents

DTE Electric Company

Consolidated Statements of Operations (Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In millions)
Operating Revenues — Utility operations	$	1,844	$	1,700	$	4,896	$	4,468

Operating Expenses
Fuel and purchased power — utility	595		462		1,551		1,185
Operation and maintenance	403		410		1,167		1,122
Depreciation and amortization	304		278		899		810
Taxes other than income	85		83		257		245

	1,387		1,233		3,874		3,362
Operating Income	457		467		1,022		1,106

Other (Income) and Deductions
Interest expense	93		84		271		251

Non-operating retirement benefits, net	(1)		—		(2)		(1)
Other income	(15)		(14)		(46)		(52)
Other expenses	11		8		37		26
	88		78		260		224
Income Before Income Taxes	369		389		762		882

Income Tax Expense	6		45		12		92

Net Income	$	363	$	344	$	750	$	790

See Combined Notes to Consolidated Financial Statements (Unaudited)

Table of Contents

DTE Electric Company

Consolidated Statements of Comprehensive Income (Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In millions)
Net Income	$	363	$	344	$	750	$	790


Other comprehensive income	—		—		—		—
Comprehensive Income	$	363	$	344	$	750	$	790

See Combined Notes to Consolidated Financial Statements (Unaudited)

Table of Contents

DTE Electric Company

Consolidated Statements of Financial Position (Unaudited)


	September 30,		December 31,
	2022		2021
	(In millions)
ASSETS
Current Assets
Cash and cash equivalents	$	8	$	9
Restricted Cash	23		—
Accounts receivable (less allowance for doubtful accounts of $53 and $54, respectively)
Customer	756		694
Affiliates	32		36
Other	59		40
Inventories
Fuel	180		171
Materials and supplies	319		316



Regulatory assets	424		168
Prepaid property tax	125		57
Other	49		44
	1,975		1,535
Investments
Nuclear decommissioning trust funds	1,764		2,071
Other	39		44
	1,803		2,115
Property
Property, plant, and equipment	29,909		28,849
Accumulated depreciation and amortization	(7,928)		(7,676)
	21,981		21,173
Other Assets
Regulatory assets	3,110		2,968
Securitized regulatory assets	214		—


Prepaid postretirement costs — affiliates	439		402
Operating lease right-of-use assets	57		64
Other	188		148
	4,008		3,582
Total Assets	$	29,767	$	28,405

See Combined Notes to Consolidated Financial Statements (Unaudited)

Table of Contents

DTE Electric Company

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


	September 30,		December 31,
	2022		2021
	(In millions, except shares)
LIABILITIES AND SHAREHOLDER’S EQUITY
Current Liabilities
Accounts payable
Affiliates	$	72	$	83
Other	551		567
Accrued interest	91		95

Current portion long-term debt, including securitization bonds and finance leases	148		322
Regulatory liabilities	52		154
Short-term borrowings
Affiliates	78		53
Other	459		153
Operating lease liabilities	9		10
Other	196		206
	1,656		1,643
Long-Term Debt (net of current portion)
Mortgage bonds, notes, and other	9,380		8,591
Securitization bonds	192		—
Finance lease liabilities	2		7
	9,574		8,598
Other Liabilities
Deferred income taxes	2,876		2,741
Regulatory liabilities	1,860		2,221
Asset retirement obligations	3,186		2,932
Unamortized investment tax credit	183		158
Nuclear decommissioning	272		321
Accrued pension liability — affiliates	365		405
Accrued postretirement liability — affiliates	334		340
Operating lease liabilities	41		46
Other	71		97
	9,188		9,261
Commitments and Contingencies (Notes 6 and 13)

Shareholder’s Equity
Common stock ($10 par value, 400,000,000 shares authorized, and 138,632,324 shares issued and outstanding for both periods)	6,298		6,002
Retained earnings	3,051		2,901

Total Shareholder’s Equity	9,349		8,903
Total Liabilities and Shareholder’s Equity	$	29,767	$	28,405

See Combined Notes to Consolidated Financial Statements (Unaudited)

Table of Contents

DTE Electric Company

Consolidated Statements of Cash Flows (Unaudited)


	Nine Months Ended September 30,
	2022		2021
	(In millions)
Operating Activities
Net Income	$	750	$	790
Adjustments to reconcile Net Income to Net cash from operating activities:
Depreciation and amortization	899		810
Nuclear fuel amortization	26		44
Allowance for equity funds used during construction	(18)		(18)
Deferred income taxes	11		90

Changes in assets and liabilities:
Accounts receivable, net	(77)		(25)
Inventories	(26)		(19)
Accounts payable	17		40
Prepaid postretirement benefit costs — affiliates	(37)		(36)
Accrued pension liability — affiliates	(40)		(34)
Accrued postretirement liability — affiliates	(6)		(6)
Regulatory assets and liabilities	(563)		229
Other current and noncurrent assets and liabilities	166		(259)
Net cash from operating activities	1,102		1,606
Investing Activities
Plant and equipment expenditures	(1,853)		(2,152)

Proceeds from sale of assets	4		—

Proceeds from sale of nuclear decommissioning trust fund assets	707		854
Investment in nuclear decommissioning trust funds	(710)		(853)
Notes receivable and other	(42)		(22)
Net cash used for investing activities	(1,894)		(2,173)
Financing Activities
Issuance of long-term debt, net of discount and issuance costs	1,118		986
Redemption of long-term debt	(316)		(321)

Capital contribution by parent company	296		273
Short-term borrowings, net — affiliate	25		(69)
Short-term borrowings, net — other	306		159
Dividends paid on common stock	(600)		(441)
Other	(15)		(18)
Net cash from financing activities	814		569
Net Increase in Cash, Cash Equivalents, and Restricted Cash	22		2
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	9		16
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	31	$	18

Supplemental disclosure of non-cash investing and financing activities
Plant and equipment expenditures in accounts payable	$	242	$	307

See Combined Notes to Consolidated Financial Statements (Unaudited)

Table of Contents

DTE Electric Company

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


				Additional Paid-in Capital		Retained Earnings
	Common Stock
	Shares	Amount						Total
	(Dollars in millions, shares in thousands)
Balance, December 31, 2021	138,632	$	1,386	$	4,616	$	2,901		$	8,903
Net Income	—	—		—		201			201
Dividends declared on common stock	—	—		—		(277)			(277)


Balance, March 31, 2022	138,632	$	1,386	$	4,616	$	2,825		$	8,827
Net Income	—	—		—		186			186
Dividends declared on common stock	—	—		—		(162)			(162)


Balance, June 30, 2022	138,632	$	1,386	$	4,616	$	2,849		$	8,851
Net Income	—	—		—		363			363
Dividends declared on common stock	—	—		—		(161)			(161)

Capital contribution by parent company	—	—		296		—			296
Balance, September 30, 2022	138,632	$	1,386	$	4,912	$	3,051		$	9,349


				Additional Paid-in Capital		Retained Earnings
	Common Stock
	Shares	Amount						Total
	(Dollars in millions, shares in thousands)
Balance, December 31, 2020	138,632	$	1,386	$	4,061	$	2,623		$	8,070

Net Income	—	—		—		208			208
Dividends declared on common stock	—	—		—		(147)			(147)


Balance, March 31, 2021	138,632	$	1,386	$	4,061	$	2,684		$	8,131

Net Income	—	—		—		238			238
Dividends declared on common stock	—	—		—		(146)			(146)


Balance, June 30, 2021	138,632	$	1,386	$	4,061	$	2,776		$	8,223

Net Income	—	—		—		344			344
Dividends declared on common stock	—	—		—		(148)			(148)

Capital contribution by parent company				273					273
Balance, September 30, 2021	138,632	$	1,386	$	4,334	$	2,972		$	8,692

See Combined Notes to Consolidated Financial Statements (Unaudited)

Table of Contents

DTE Energy Company — DTE Electric Company

Combined Notes to Consolidated Financial Statements (Unaudited)

Index of Combined Notes to Consolidated Financial Statements (Unaudited)

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


Note 1	Organization and Basis of Presentation	DTE Energy and DTE Electric
Note 2	Significant Accounting Policies	DTE Energy and DTE Electric
Note 3	New Accounting Pronouncements	DTE Energy and DTE Electric
Note 4	Discontinued Operations	DTE Energy
Note 5	Revenue	DTE Energy and DTE Electric
Note 6	Regulatory Matters	DTE Energy and DTE Electric
Note 7	Earnings per Share	DTE Energy
Note 8	Fair Value	DTE Energy and DTE Electric
Note 9	Financial and Other Derivative Instruments	DTE Energy and DTE Electric
Note 10	Long-Term Debt	DTE Energy and DTE Electric
Note 11	Short-Term Credit Arrangements and Borrowings	DTE Energy and DTE Electric
Note 12	Leases	DTE Energy
Note 13	Commitments and Contingencies	DTE Energy and DTE Electric
Note 14	Retirement Benefits and Trusteed Assets	DTE Energy and DTE Electric
Note 15	Segment and Related Information	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, which is primarily involved in renewable natural gas projects and providing industrial energy services and was formerly involved in reduced emissions fuel projects until 2022, 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.

Basis of Presentation

The Consolidated Financial Statements should be read in conjunction with the Combined Notes to Consolidated Financial Statements included in the combined DTE Energy and DTE Electric 2021 Annual Report on Form 10-K.

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

Table of Contents

DTE Energy Company — DTE Electric Company

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

The Consolidated Financial Statements are unaudited but, in the Registrants' opinions, include all adjustments necessary to present a fair statement of the results for the interim periods. All adjustments are of a normal recurring nature, except as otherwise disclosed in these Consolidated Financial Statements and Combined Notes to Consolidated Financial Statements. Financial results for this interim period are not necessarily indicative of results that may be expected for any other interim period or for the fiscal year ending December 31, 2022.

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 separation of DT Midstream, its former natural gas pipeline, storage and gathering non-utility business. Financial results of DT Midstream in the prior period are presented as Income from discontinued operations, net of taxes on DTE Energy's Consolidated Statements of Operations.

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, “Discontinued Operations,” for additional information.

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.

Legal 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.

Table of Contents

DTE Energy Company — DTE Electric Company

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

DTE Energy has variable interests in VIEs through certain of its long-term purchase and sale contracts. DTE Electric has variable interests in VIEs through certain of its long-term purchase contracts. As of September 30, 2022, 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 September 30, 2022, 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.

In the first quarter 2022, DTE Electric financed regulatory assets for previously deferred costs related to the River Rouge generation plant and tree trimming surge program through the sale of bonds by a wholly-owned special purpose entity, DTE Securitization. DTE Securitization is a VIE. DTE Electric has the power to direct the most significant activities of DTE Securitization, including performing servicing activities such as billing and collecting surcharge revenue. Accordingly, DTE Electric is the primary beneficiary and DTE Securitization is consolidated by the Registrants.

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 September 30, 2022 and December 31, 2021. All assets and liabilities of a consolidated VIE are presented where it has been determined that a consolidated VIE has either (1) assets that can be used only to settle obligations of the VIE or (2) liabilities for which creditors do not have recourse to the general credit of the primary beneficiary. VIEs, in which DTE Energy holds a majority voting interest and is the primary beneficiary, that meet the definition of a business and whose assets can be used for purposes other than the settlement of the VIE's obligations have been excluded from the table below.

Amounts for the Registrants' consolidated VIEs are as follows:


	September 30, 2022				December 31, 2021
	DTE Energy		DTE Electric(a)		DTE Energy
	(In millions)
ASSETS
Cash and cash equivalents	$	10	$	—	$	11
Restricted cash	23		23		6




Securitized regulatory assets	214		214		—

Notes receivable	80		—		70
Other current and long-term assets	14		2		8
	$	341	$	239	$	95

LIABILITIES

Short-term borrowings	$	79	$	—	$	75


Securitization bonds(b)	232		232		—

Other current and long-term liabilities	17		11		5
	$	328	$	243	$	80

(a)DTE Electric amounts reflect DTE Securitization, which was a new VIE beginning the first quarter of 2022. See Note 6 to the Consolidated Financial Statements, "Regulatory Matters."

(b)Includes $40 million reported in Current portion of long-term debt on the Registrants' Consolidated Statements of Financial Position for the period ended September 30, 2022.

Table of Contents

DTE Energy Company — DTE Electric Company

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

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


	September 30, 2022		December 31, 2021
	(In millions)
Investments in equity method investees	$	141	$	172
Notes receivable	$	15	$	13
Future funding commitments	$	2	$	3

NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES

Other Income

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In millions)
Contract services	$	7	$	6	$	21	$	21
Allowance for equity funds used during construction	6		7		20		20

Income from REF entities	—		57		—		102
Gains from rabbi trust securities(a)	—		—		—		4
Equity earnings (losses) of equity method investees	—		17		(15)		31
Other	3		3		9		9
	$	16	$	90	$	35	$	187

(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:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In millions)
Contract services	$	7	$	6	$	21	$	21
Allowance for equity funds used during construction	6		6		18		18
Gains from rabbi trust securities allocated from DTE Energy(a)	—		—		—		4

Other	2		2		7		9
	$	15	$	14	$	46	$	52

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

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 three and nine months ended September 30, 2022 and 2021, reclassifications out of Accumulated other comprehensive income (loss) were not material.

Table of Contents

DTE Energy Company — DTE Electric Company

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

Income Taxes

The interim effective tax rates of the Registrants are as follows:


	Effective Tax Rate
	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
DTE Energy	2	%	186	%	—	%	(34)	%
DTE Electric	2	%	12	%	2	%	10	%

These tax rates are affected by estimated annual permanent items, production tax credits, regulatory adjustments, and discrete items that may occur in any given period, but are not consistent from period to period. DTE Energy's effective tax rates in 2021 were significantly impacted by pre-tax losses in the third quarter, driven primarily by the loss on extinguishment of debt and reclassification of DT Midstream earnings to discontinued operations.

The 184% decrease in DTE Energy's effective tax rate for the three months ended September 30, 2022 was primarily due to a deferred tax remeasurement of 133% in 2021, production tax credits of 57%, and amortization of the TCJA regulatory liability of 32%, partially offset by a valuation allowance of 28% in 2021 and recognition of a deferred intercompany gain of 13% in 2021.

The 34% increase in DTE Energy’s effective tax rate for the nine months ended September 30, 2022 was primarily due to a deferred tax remeasurement of 23% in 2021 and closure of the REF business and resulting decrease in production tax credits of 17%, partially offset by a valuation allowance of 5% in 2021.

The 10% decrease in DTE Electric's effective tax rate for the three months ended September 30, 2022 and the 8% decrease in DTE Electric's effective tax rate for the nine months ended September 30, 2022 were primarily due to higher amortization of the TCJA regulatory liability, which was driven by the accelerated amortization approved in DTE Electric's prior year accounting applications to the MPSC.

DTE Electric had income tax receivables with DTE Energy related to federal and state taxes of $31 million and $33 million at September 30, 2022 and December 31, 2021, respectively, which are included in Accounts Receivable - Affiliates on the DTE Electric Consolidated Statements of Financial Position. DTE Electric also had income tax payables with DTE Energy related to state taxes of $2 million at December 31, 2021, which are included in Accounts Payable - Affiliates on the DTE Electric Consolidated Statements of Financial Position.

DTE Energy and DTE Electric had respective unrecognized tax benefits of $10 million and $13 million related to state exposures at September 30, 2022, which are included in Current Liabilities - Other on the Registrants' Consolidated Statements of Financial Position. Of these benefits, the Registrants believe it is reasonably possible that $8 million at DTE Energy and $9 million at DTE Electric will be recognized in the next 12 months. If recognized, these benefits would favorably impact effective tax rates and reduce tax expense in future periods by $6 million at DTE Energy and $7 million at DTE Electric, net of federal benefit.

During the third quarter 2022, the Inflation Reduction Act (IRA) was signed into law. The IRA included several new tax provisions, including a corporate alternative minimum tax and various tax incentives for energy and climate initiatives. Enactment of this legislation did not impact the Registrants' financial statements for the period ended September 30, 2022. The Registrants do not expect the legislation to have a significant impact in the near term and continue to assess any potential long-term impacts.

Unrecognized Compensation Costs

As of September 30, 2022, DTE Energy had $81 million of total unrecognized compensation cost related to non-vested stock incentive plan arrangements. That cost is expected to be recognized over a weighted-average period of 1.4 years.

Allocated Stock-Based Compensation

DTE Electric received an allocation of costs from DTE Energy associated with stock-based compensation of $9 million and $10 million for the three months ended September 30, 2022 and 2021, respectively, while such allocation was $30 million and $35 million for the nine months ended September 30, 2022 and 2021, respectively.

Table of Contents

DTE Energy Company — DTE Electric Company

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

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 includes funds held in separate bank accounts and principally consists of amounts at DTE Securitization to pay for debt service and other qualified costs. Restricted cash designated for payments within one year is classified as a Current Asset.

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.

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 September 30, 2022.


	DTE Energy								DTE Electric
	Year of Origination
	2022		2021		2020 and Prior		Total		2022 and Prior
	(In millions)
Notes receivable
Internal grade 1	$	—	$	—	$	21	$	21	$	17
Internal grade 2	25		3		16		44		—

Total notes receivable(a)	$	25	$	3	$	37	$	65	$	17

Net investment in leases
Net investment in leases, internal grade 1	$	—	$	—	$	38	$	38	$	—
Net investment in leases, internal grade 2	64		—		189		253		—
Total net investment in leases(a)	$	64	$	—	$	227	$	291	$	—

(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.

Table of Contents

DTE Energy Company — DTE Electric Company

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

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.

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, 2022	$	89	$	3		$	92	$	54
Current period provision	41		—			41		25

Write-offs charged against allowance	(72)		—			(72)		(47)
Recoveries of amounts previously written off	34		—			34		21
Ending reserve balance, September 30, 2022	$	92	$	3		$	95	$	53


	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

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In millions)
DTE Energy	$	12	$	7	$	46	$	42
DTE Electric	$	12	$	10	$	28	$	26

There are no material amounts of past due financing receivables for the Registrants as of September 30, 2022.

Table of Contents

DTE Energy Company — DTE Electric Company

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

NOTE 3 — NEW ACCOUNTING PRONOUNCEMENTS

Recently Adopted 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 Registrants adopted the ASU effective January 1, 2022 using the prospective approach. The adoption of the ASU did not have a significant impact on the Registrants' Consolidated Financial Statements.

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 Registrants early adopted the ASU effective January 1, 2022, which had no impact on the Registrants' Consolidated Financial Statements for the current period. The Registrants will apply the guidance prospectively to any future business combinations.

Recently Issued Pronouncements

In March 2022, the FASB issued ASU No. 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. The amendments in this update eliminate the accounting guidance for troubled debt restructurings by creditors that have adopted the Current Expected Credit Loss (“CECL”) model under ASC 326 and enhance the disclosure requirements for loan refinancings and restructurings made with borrowers experiencing financial difficulty. Additionally, the amendments require the disclosure of current period gross write-offs for financing receivables and net investment in leases by year of origination in the vintage disclosures. 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 after the effective date.

In June 2022, the FASB issued ASU No. 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The amendments in this update clarify that contractual sale restrictions should not be considered when measuring the fair value of equity securities subject to such restrictions. The amendments also require the disclosure of the fair value of such equity securities, the nature and remaining duration of the restrictions, and the circumstances leading to a lapse in the restrictions. The ASU is effective for the Registrants for fiscal years beginning after December 15, 2023, and interim periods therein. Early adoption is permitted. The Registrants are currently assessing the impact of this standard on their Consolidated Financial Statements.

Table of Contents

DTE Energy Company — DTE Electric Company

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

NOTE 4 — DISCONTINUED OPERATIONS

Separation of DT Midstream

On July 1, 2021, DTE Energy completed the separation of DT Midstream, its former natural gas pipeline, storage, and gathering non-utility business. The table below reflects the financial results of DT Midstream that are 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.


	Three Months Ended September 30,		Nine Months Ended September 30,
	2021		2021
	(In millions)
Operating Revenues — Non-utility operations	$	—	$	405

Operating Expenses
Cost of gas and other — non-utility	—		15
Operation and maintenance(a)	30		124
Depreciation and amortization	—		82
Taxes other than income	—		13
Asset (gains) losses and impairments, net	—		17
	30		251
Operating Income (Loss)	(30)		154

Other (Income) and Deductions
Interest expense	—		50
Interest income	—		(4)
Other income	—		(62)

	—		(16)
Income (Loss) from Discontinued Operations Before Income Taxes	(30)		170

Income Tax Expense	3		58

Net Income (Loss) from Discontinued Operations, Net of Taxes	(33)		112

Less: Net Income Attributable to Noncontrolling Interests	—		6

Net Income (Loss) from Discontinued Operations	$	(33)	$	106

(a)Includes separation transaction costs of $30 million and $59 million for the three and nine months ended September 30, 2021, respectively, for various legal, accounting and other professional services fees.

Table of Contents

DTE Energy Company — DTE Electric Company

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

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


	Nine Months Ended September 30,
	2021
	(In millions)
Operating Activities
Depreciation and amortization	$	82
Deferred income taxes	57
Equity earnings of equity method investees	(59)
Asset (gains) losses and impairments, net	19
Investing Activities
Plant and equipment expenditures — non-utility	(60)

NOTE 5 — REVENUE

Disaggregation of Revenue

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In millions)
Electric(a)
Residential	$	882	$	885	$	2,273	$	2,262
Commercial	541		533		1,505		1,452
Industrial	167		167		498		473
Other(b)	257		117		631		290
Total Electric operating revenues	$	1,847	$	1,702	$	4,907	$	4,477

Gas
Gas sales	$	128	$	95	$	955	$	726
End User Transportation	42		38		195		171
Intermediate Transportation	15		16		60		59
Other(b)	45		44		148		114
Total Gas operating revenues	$	230	$	193	$	1,358	$	1,070

Other segment operating revenues
DTE Vantage	$	227	$	372	$	626	$	1,132
Energy Trading	$	3,024	$	1,602	$	8,059	$	4,208

(a)Revenues generally represent those of DTE Electric, except $3 million and $2 million of Other revenues related to DTE Sustainable Generation for the three months ended September 30, 2022 and 2021, respectively, and $11 million and $9 million for the nine months ended September 30, 2022 and 2021, respectively.

(b)Includes revenue adjustments related to various regulatory mechanisms, including the PSCR at the Electric segment and GCR at the Gas segment. Revenues related to these mechanisms may vary based on changes in the cost of fuel, purchased power, and gas.

Table of Contents

DTE Energy Company — DTE Electric Company

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

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In millions)

Electric — Other revenues	$	7	$	6	$	15	$	14

Gas — Other revenues	$	2	$	1	$	6	$	5
DTE Vantage — Leases	$	24	$	26	$	63	$	70
Energy Trading — Derivatives	$	2,531	$	1,324	$	6,691	$	3,377

Deferred Revenue

The following is a summary of deferred revenue activity:


	DTE Energy
	(In millions)
Beginning Balance, January 1, 2022	$	78
Increases due to cash received or receivable, excluding amounts recognized as revenue during the period	86
Revenue recognized that was included in the deferred revenue balance at the beginning of the period	(54)
Ending Balance, September 30, 2022	$	110

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	$	42
2023	64
2024	1
2025	2
2026	—
2027 and thereafter	1
	$	110

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.

Table of Contents

DTE Energy Company — DTE Electric Company

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

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	$	43	$	2
2023	292		7
2024	192		7
2025	118		1
2026	67		—
2027 and thereafter	355		—
	$	1,067	$	17

NOTE 6 — REGULATORY MATTERS

2021 Securitization Filing

On June 23, 2021, the MPSC issued a financing order authorizing DTE Electric to issue Securitization bonds for qualified costs of up to $236 million, including $73 million for the net book value of the River Rouge generation plant, $157 million for tree trimming surge program costs, and $6 million for other qualified costs. 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.

On March 17, 2022, DTE Electric closed on the issuance of Securitization bonds of $236 million. Refer to Note 10 to the Consolidated Financial Statements, “Long-Term Debt,” for additional information regarding the terms of the bonds and use of proceeds. Upon closing the transaction, DTE Electric recognized Securitized regulatory assets of $230 million, which were reclassified from existing Regulatory assets for the net book value of the River Rouge plant and tree trimming surge program. Debt service costs relating to tree trimming will be recovered over a period not to exceed 5 years, while amounts relating to River Rouge will be recovered over a period not to exceed 14 years.

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.

Table of Contents

DTE Energy Company — DTE Electric Company

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

NOTE 7 — 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.

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In millions, except per share amounts)
Basic Earnings per Share
Net Income Attributable to DTE Energy Company — continuing operations	$	387	$	58	$	818	$	495
Less: Allocation of earnings to net restricted stock awards	1		—		2		1
	$	386	$	58	$	816	$	494
Net Income Attributable to DTE Energy Company — discontinued operations	—		(33)		—		106
Net income available to common shareholders — basic	$	386	$	25	$	816	$	600

Average number of common shares outstanding — basic	193		193		193		193

Income from continuing operations	$	2.00	$	0.30	$	4.22	$	2.55
Income from discontinued operations	—		(0.17)		—		0.55
Basic Earnings per Common Share	$	2.00	$	0.13	$	4.22	$	3.10

Diluted Earnings per Share
Net Income Attributable to DTE Energy Company — continuing operations	$	387	$	58	$	818	$	495
Less: Allocation of earnings to net restricted stock awards	1		—		2		1
	$	386	$	58	$	816	$	494
Net Income Attributable to DTE Energy Company — discontinued operations	—		(33)		—		106
Net income available to common shareholders — diluted	$	386	$	25	$	816	$	600

Average number of common shares outstanding — basic	193		193		193		193

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

Income from continuing operations	$	1.99	$	0.30	$	4.21	$	2.55
Income from discontinued operations	—		(0.17)		—		0.55
Diluted Earnings per Common Share(a)	$	1.99	$	0.13	$	4.21	$	3.10

(a)Equity units excluded from the calculation of diluted EPS were approximately 10.1 million and 11.1 million for the three months ended September 30, 2022 and 2021, respectively, and 10.2 million and 11.5 million for the nine months ended September 30, 2022 and 2021, respectively, as the dilutive stock price threshold was not met.

Table of Contents

DTE Energy Company — DTE Electric Company

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

NOTE 8 — 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 September 30, 2022 and December 31, 2021. 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.

Table of Contents

DTE Energy Company — DTE Electric Company

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

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


	September 30, 2022												December 31, 2021
	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)	$	26	$	—	$	—	$	—	$	—	$	26	$	4	$	—	$	—	$	—	$	—	$	4
Nuclear decommissioning trusts
Equity securities	653		—		—		155		—		808		917		—		—		190		—		1,107
Fixed income securities	102		357		—		91		—		550		124		418		—		102		—		644
Private equity and other	—		—		—		259		—		259		—		—		—		205		—		205
Hedge funds and similar investments	77		41		—		—		—		118		58		18		—		—		—		76
Cash equivalents	29		—		—		—		—		29		39		—		—		—		—		39
Other investments(d)
Equity securities	52		—		—		—		—		52		68		—		—		—		—		68
Fixed income securities	7		—		—		—		—		7		7		—		—		—		—		7
Cash equivalents	71		—		—		—		—		71		86		—		—		—		—		86

Derivative assets
Commodity contracts(e)
Natural gas	554		233		104		—		(852)		39		273		115		66		—		(394)		60
Electricity	—		1,185		437		—		(1,160)		462		—		500		143		—		(441)		202
Environmental & Other	—		222		16		—		(224)		14		—		285		9		—		(285)		9
Foreign currency exchange contracts	—		3		—		—		—		3		—		—		—		—		—		—
Total derivative assets	554		1,643		557		—		(2,236)		518		273		900		218		—		(1,120)		271
Total	$	1,571	$	2,041	$	557	$	505	$	(2,236)	$	2,438	$	1,576	$	1,336	$	218	$	497	$	(1,120)	$	2,507

Liabilities
Derivative liabilities
Commodity contracts(e)
Natural gas	$	(293)	$	(483)	$	(417)	$	—	$	772	$	(421)	$	(177)	$	(172)	$	(245)	$	—	$	347	$	(247)
Electricity	—		(1,064)		(513)		—		1,244		(333)		—		(434)		(188)		—		443		(179)
Environmental & Other	—		(224)		(1)		—		226		1		—		(288)		—		—		288		—

Foreign currency exchange contracts	—		(1)		—		—		—		(1)		—		(4)		—		—		—		(4)

Total	$	(293)	$	(1,772)	$	(931)	$	—	$	2,242	$	(754)	$	(177)	$	(898)	$	(433)	$	—	$	1,078	$	(430)
Net Assets (Liabilities) at end of period	$	1,278	$	269	$	(374)	$	505	$	6	$	1,684	$	1,399	$	438	$	(215)	$	497	$	(42)	$	2,077
Assets
Current	$	453	$	1,340	$	442	$	—	$	(1,814)	$	421	$	227	$	646	$	166	$	—	$	(854)	$	185
Noncurrent	1,118		701		115		505		(422)		2,017		1,349		690		52		497		(266)		2,322
Total Assets	$	1,571	$	2,041	$	557	$	505	$	(2,236)	$	2,438	$	1,576	$	1,336	$	218	$	497	$	(1,120)	$	2,507
Liabilities
Current	$	(263)	$	(1,382)	$	(637)	$	—	$	1,784	$	(498)	$	(168)	$	(609)	$	(260)	$	—	$	799	$	(238)
Noncurrent	(30)		(390)		(294)		—		458		(256)		(9)		(289)		(173)		—		279		(192)
Total Liabilities	$	(293)	$	(1,772)	$	(931)	$	—	$	2,242	$	(754)	$	(177)	$	(898)	$	(433)	$	—	$	1,078	$	(430)
Net Assets (Liabilities) at end of period	$	1,278	$	269	$	(374)	$	505	$	6	$	1,684	$	1,399	$	438	$	(215)	$	497	$	(42)	$	2,077

(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 include $25 million and $1 million of cash equivalents recorded in Restricted cash on DTE Energy's Consolidated Statements of Financial Position at September 30, 2022 and December 31, 2021, respectively. All other amounts are included in Cash and cash equivalents on DTE Energy's 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.

Table of Contents

DTE Energy Company — DTE Electric Company

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

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


	September 30, 2022										December 31, 2021
	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(b)	$	23	$	—	$	—	$	—	$	23	$	—	$	—	$	—	$	—	$	—
Nuclear decommissioning trusts
Equity securities	653		—		—		155		808		917		—		—		190		1,107
Fixed income securities	102		357		—		91		550		124		418		—		102		644
Private equity and other	—		—		—		259		259		—		—		—		205		205
Hedge funds and similar investments	77		41		—		—		118		58		18		—		—		76
Cash equivalents	29		—		—		—		29		39		—		—		—		39
Other investments
Equity securities	15		—		—		—		15		20		—		—		—		20

Cash equivalents	11		—		—		—		11		11		—		—		—		11
Derivative assets — FTRs	—		—		16		—		16		—		—		9		—		9
Total	$	910	$	398	$	16	$	505	$	1,829	$	1,169	$	436	$	9	$	497	$	2,111

Assets
Current	$	23	$	—	$	16	$	—	$	39	$	—	$	—	$	9	$	—	$	9
Noncurrent	887		398		—		505		1,790		1,169		436		—		497		2,102
Total Assets	$	910	$	398	$	16	$	505	$	1,829	$	1,169	$	436	$	9	$	497	$	2,111

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

(b)Cash equivalents of $23 million are included in Restricted cash on DTE Electric's Consolidated Statements of Financial Position at September 30, 2022.

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 $190 million and $199 million as of September 30, 2022 and December 31, 2021, 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 that are valued using quotations from broker or pricing services.

Table of Contents

DTE Energy Company — DTE Electric Company

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


	Three Months Ended September 30, 2022								Three Months Ended September 30, 2021
	Natural Gas		Electricity		Other		Total		Natural Gas		Electricity		Other		Total
	(In millions)
Net Assets (Liabilities) as of June 30	$	(362)	$	(96)	$	30	$	(428)	$	(181)	$	(49)	$	15	$	(215)
Transfers into Level 3 from Level 2	(3)		—		—		(3)		—		—		—		—
Transfers from Level 3 into Level 2	—		—		(5)		(5)		—		—		—		—
Total gains (losses)
Included in earnings(a)	(32)		40		(1)		7		(162)		(21)		—		(183)
Recorded in Regulatory liabilities	—		—		(4)		(4)		—		—		(1)		(1)
Purchases, issuances, and settlements


Settlements	84		(20)		(5)		59		63		(25)		(2)		36
Net Assets (Liabilities) as of September 30	$	(313)	$	(76)	$	15	$	(374)	$	(280)	$	(95)	$	12	$	(363)
Total gains (losses) included in Net Income attributed to the change in unrealized gains (losses) related to assets and liabilities held at September 30(a)	$	29	$	37	$	(5)	$	61	$	(109)	$	(30)	$	(2)	$	(141)
Total gains (losses) included in Regulatory liabilities attributed to the change in unrealized gains (losses) related to assets and liabilities held at September 30	$	—	$	—	$	(1)	$	(1)	$	—	$	—	$	—	$	—

(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.

Table of Contents

DTE Energy Company — DTE Electric Company

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



	Nine Months Ended September 30, 2022								Nine Months Ended September 30, 2021
	Natural Gas		Electricity		Other		Total		Natural Gas		Electricity		Other		Total
	(In millions)
Net Assets (Liabilities) as of December 31	$	(179)	$	(45)	$	9	$	(215)	$	(16)	$	10	$	4	$	(2)

Transfers from Level 3 into Level 2	5		—		—		5		—		—		—		—
Total gains (losses)
Included in earnings(a)	(382)		22		1		(359)		(356)		(5)		—		(361)
Recorded in Regulatory liabilities	—		—		20		20		—		—		14		14
Purchases, issuances, and settlements


Settlements	243		(53)		(15)		175		92		(100)		(6)		(14)
Net Assets (Liabilities) as of September 30	$	(313)	$	(76)	$	15	$	(374)	$	(280)	$	(95)	$	12	$	(363)
Total gains (losses) included in Net Income attributed to the change in unrealized gains (losses) related to assets and liabilities held at September 30(a)	$	(248)	$	(2)	$	(31)	$	(281)	$	(301)	$	(54)	$	(17)	$	(372)
Total gains (losses) included in Regulatory liabilities attributed to the change in unrealized gains (losses) related to assets and liabilities held at September 30	$	—	$	—	$	16	$	16	$	—	$	—	$	12	$	12

(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.

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In millions)
Net Assets as of beginning of period	$	25	$	15	$	9	$	4
Total gains (losses) recorded in Regulatory liabilities	(4)		(1)		20		14
Purchases, issuances, and settlements
Settlements	(5)		(2)		(13)		(6)
Net Assets as of September 30	$	16	$	12	$	16	$	12
Total gains (losses) included in Regulatory liabilities attributed to the change in unrealized gains (losses) related to assets and liabilities held at September 30	$	(1)	$	—	$	16	$	12

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 three and nine months ended months ended September 30, 2022 and 2021.

Table of Contents

DTE Energy Company — DTE Electric Company

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

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


	September 30, 2022
Commodity Contracts	Derivative Assets		Derivative Liabilities		Valuation Techniques	Unobservable Input	Range						Weighted Average
	(In millions)
Natural Gas	$	104	$	(417)	Discounted Cash Flow	Forward basis price (per MMBtu)	$	(2.34)	—	$	9.94	/MMBtu	$	0.02	/MMBtu
Electricity	$	437	$	(513)	Discounted Cash Flow	Forward basis price (per MWh)	$	(50)	—	$	20	/MWh	$	(4)	/MWh


	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

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.

Fair Value of Financial Instruments

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


	September 30, 2022								December 31, 2021
	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	$	65	$	—	$	—	$	65	$	150	$	—	$	—	$	167
Short-term borrowings	$	994	$	—	$	994	$	—	$	758	$	—	$	758	$	—
Notes payable(b)	$	17	$	—	$	—	$	17	$	27	$	—	$	—	$	27
Long-term debt(c)	$	18,846	$	731	$	14,776	$	1,189	$	17,378	$	2,284	$	15,425	$	1,207

(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.

Table of Contents

DTE Energy Company — DTE Electric Company

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

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


	September 30, 2022								December 31, 2021
	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)	$	17	$	—	$	—	$	17	$	17	$	—	$	—	$	17

Short-term borrowings — affiliates	$	78	$	—	$	—	$	78	$	53	$	—	$	—	$	53
Short-term borrowings — other	$	459	$	—	$	459	$	—	$	153	$	—	$	153	$	—
Notes payable(b)	$	17	$	—	$	—	$	17	$	27	$	—	$	—	$	27
Long-term debt(c)	$	9,714	$	—	$	8,191	$	133	$	8,907	$	—	$	9,898	$	150

(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 9 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.

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


	September 30, 2022		December 31, 2021
	(In millions)
Fermi 2	$	1,742	$	2,051
Fermi 1	3		3
Low-level radioactive waste	19		17
	$	1,764	$	2,071

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In millions)
Realized gains	$	19	$	21	$	65	$	80
Realized losses	$	(19)	$	(1)	$	(42)	$	(9)
Proceeds from sale of securities	$	194	$	217	$	707	$	854

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.

Table of Contents

DTE Energy Company — DTE Electric Company

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

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


	September 30, 2022						December 31, 2021
	Fair Value		Unrealized Gains		Unrealized Losses		Fair Value		Unrealized Gains		Unrealized Losses
	(In millions)
Equity securities	$	808	$	285	$	(31)	$	1,107	$	546	$	(9)
Fixed income securities	550		1		(65)		644		23		(6)
Private equity and other	259		72		(4)		205		58		(8)
Hedge funds and similar investments	118		—		(20)		76		1		(2)
Cash equivalents	29		—		—		39		—		—
	$	1,764	$	358	$	(120)	$	2,071	$	628	$	(25)

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


	September 30, 2022
	(In millions)
Due within one year	$	22
Due after one through five years	105
Due after five through ten years	92
Due after ten years	240
	$	459

Fixed income securities held in nuclear decommissioning trust funds include $91 million of non-publicly traded commingled funds that do not have a contractual maturity date.

Other Securities

At September 30, 2022 and December 31, 2021, DTE Energy's 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 Registrant's gains (losses) related to the trust:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In millions)
Gains (losses) related to equity securities	$	(2)	$	(1)	$	(7)	$	3
Gains (losses) related to fixed income securities	—		—		(1)		—
	$	(2)	$	(1)	$	(8)	$	3

Table of Contents

DTE Energy Company — DTE Electric Company

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

NOTE 9 — 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, certain 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 2025. 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, and power generation assets. Long-term contracts and hedging instruments are used in the marketing and management of the segment assets. These contracts and hedging instruments 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.

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 September 30, 2022 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.

Table of Contents

DTE Energy Company — DTE Electric Company

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

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.

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


	September 30, 2022				December 31, 2021
	Derivative Assets		Derivative Liabilities		Derivative Assets		Derivative Liabilities
	(In millions)
Derivatives designated as hedging instruments
Foreign currency exchange contracts	$	—	$	(1)	$	—	$	(4)
Derivatives not designated as hedging instruments
Commodity contracts
Natural gas	$	891	$	(1,193)	$	454	$	(594)
Electricity	1,622		(1,577)		643		(622)
Environmental & Other	238		(225)		294		(288)
Foreign currency exchange contracts	3		—		—		—
Total derivatives not designated as hedging instruments	$	2,754	$	(2,995)	$	1,391	$	(1,504)

Current	$	2,209	$	(2,282)	$	1,035	$	(1,037)
Noncurrent	545		(714)		356		(471)
Total derivatives	$	2,754	$	(2,996)	$	1,391	$	(1,508)

The fair value of derivative instruments at DTE Electric was $16 million and $9 million at September 30, 2022 and December 31, 2021, respectively, comprised of FTRs recorded to Current Assets - Other on the Consolidated Statements of Financial Position and not designated as hedging instruments.

Table of Contents

DTE Energy Company — DTE Electric Company

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

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 $79 million of letters of credit issued and outstanding at September 30, 2022 and $18 million at December 31, 2021, 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 $56 million and $37 million at September 30, 2022 and December 31, 2021, 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:


	September 30, 2022		December 31, 2021
	(In millions)
Cash collateral netted against Derivative assets	$	(272)	$	(90)
Cash collateral netted against Derivative liabilities	278		48
Cash collateral recorded in Accounts receivable(a)	103		55
Cash collateral recorded in Accounts payable(a)	(19)		(21)
Total net cash collateral posted (received)	$	90	$	(8)

(a)Amounts are recorded net by counterparty.

Table of Contents

DTE Energy Company — DTE Electric Company

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

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


	September 30, 2022						December 31, 2021
	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(a)
Natural gas	$	891	$	(852)	$	39	$	454	$	(394)	$	60
Electricity	1,622		(1,160)		462		643		(441)		202
Environmental & Other	238		(224)		14		294		(285)		9
Foreign currency exchange contracts	3		—		3		—		—		—
Total derivative assets	$	2,754	$	(2,236)	$	518	$	1,391	$	(1,120)	$	271

Derivative liabilities
Commodity contracts(a)
Natural gas	$	(1,193)	$	772	$	(421)	$	(594)	$	347	$	(247)
Electricity	(1,577)		1,244		(333)		(622)		443		(179)
Environmental & Other	(225)		226		1		(288)		288		—

Foreign currency exchange contracts	(1)		—		(1)		(4)		—		(4)
Total derivative liabilities	$	(2,996)	$	2,242	$	(754)	$	(1,508)	$	1,078	$	(430)

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

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:


	September 30, 2022								December 31, 2021
	Derivative Assets				Derivative Liabilities				Derivative Assets				Derivative Liabilities
	Current		Noncurrent		Current		Noncurrent		Current		Noncurrent		Current		Noncurrent
	(In millions)
Total fair value of derivatives	$	2,209	$	545	$	(2,282)	$	(714)	$	1,035	$	356	$	(1,037)	$	(471)
Counterparty netting	(1,609)		(355)		1,609		355		(791)		(239)		791		239
Collateral adjustment	(205)		(67)		175		103		(63)		(27)		8		40
Total derivatives as reported	$	395	$	123	$	(498)	$	(256)	$	181	$	90	$	(238)	$	(192)

Table of Contents

DTE Energy Company — DTE Electric Company

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

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


	Location of Gain (Loss) Recognized in Income on Derivatives	Gain (Loss) Recognized in Income on Derivatives for the Three Months Ended September 30,				Gain (Loss) Recognized in Income on Derivatives for the Nine Months Ended September 30,
	2022	2021		2022		2021
		(In millions)
Commodity contracts
Natural gas	Operating Revenues — Non-utility operations	$	(52)	$	(214)	$	(315)	$	(371)
Natural gas	Fuel, purchased power, gas, and other — non-utility	108		63		8		(16)
Electricity	Operating Revenues — Non-utility operations	61		68		173		143
Environmental & Other	Operating Revenues — Non-utility operations	(3)		3		15		(36)
Foreign currency exchange contracts	Operating Revenues — Non-utility operations	5		2		5		(1)
Total		$	119	$	(78)	$	(114)	$	(281)

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 September 30, 2022:


Commodity						Number of Units
Natural gas (MMBtu)						2,218,333,992
Electricity (MWh)						30,593,651
Oil (Gallons)						8,532,000
Foreign currency exchange ($ CAD)						132,812,314

Renewable Energy Certificates (MWh)						7,816,573
Carbon emissions (Metric Tons)						592,605

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 September 30, 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 $699 million.

As of September 30, 2022, DTE Energy had $2.6 billion of derivatives in net liability positions, for which hard triggers exist. There is $287 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 $1.9 billion. The net remaining amount of $351 million is derived from the $699 million noted above.

Table of Contents

DTE Energy Company — DTE Electric Company

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

NOTE 10 — LONG-TERM DEBT

Debt Issuances

In 2022, the following debt was issued:


Company	Month	Type	Interest Rate	Maturity Date	Amount
					(In millions)
DTE Electric	February	Mortgage bonds(a)	3.00%	2032	$	500
DTE Electric	February	Mortgage bonds(b)	3.65%	2052	400
DTE Electric	March	Securitization bonds(c)	2.64%	2027(d)	184
DTE Electric	March	Securitization bonds(c)	3.11%	2036(e)	52
DTE Energy	August	Term loan facility	Variable	2023	400
DTE Gas	September	Mortgage bonds(a)	4.76%	2032	130
DTE Gas	September	Mortgage bonds(a)	5.05%	2052	130
					$	1,796

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

(b)Bonds were issued as Green Bonds with proceeds to be used for eligible green expenditures, including costs related to the generation of solar and wind energy, purchases of renewable energy from wind and solar power facilities, and energy optimization programs.

(c)Proceeds were used to reimburse DTE Electric for qualified costs previously incurred, including the net book value of the River Rouge generation plant, tree trimming surge program costs, and other qualified costs. The securitization financing order from the MPSC required that the net proceeds be subsequently applied by DTE Electric to retire existing debt or equity. Accordingly, DTE Electric used proceeds of $115 million towards retirement of the 2012 Series A Mortgage bonds noted in the Debt Redemptions table below and issued a one-time special dividend of $115 million to DTE Energy. Refer to Note 6 to the Consolidated Financial Statements, “Regulatory Matters,” for additional information

(d)Principal payments on the bonds will be made semi-annually beginning December 2022, with the final payment scheduled for December 2026.

(e)Principal payments on the bonds will be made semi-annually beginning June 2027, with the final payment scheduled for December 2035.

In June 2022, DTE Energy entered into a $1.125 billion unsecured term loan with a maturity date of December 2023. DTE Energy had mandatory draw obligations of at least $400 million within sixty days of closing and a total of $800 million within six months of closing. DTE Energy complied with the initial obligation and drew $400 million in August 2022, as noted in the table above. Borrowings are being recorded as long-term debt, given the term of the loan exceeds one year. Borrowings are for the general corporate purposes of DTE Energy and its subsidiaries, bearing interest at SOFR plus 0.90% per annum. Any unused capacity under the loan will terminate if not drawn by June 24, 2023.

Other terms of the loan are consistent with DTE Energy's unsecured revolving credit agreements. Refer to Note 11 to the Consolidated Financial Statements, "Short-term Credit Arrangements and Borrowings", for additional information regarding the unsecured revolving credit agreements.

Debt Redemptions

In 2022, the following debt was redeemed:


Company	Month	Type	Interest Rate	Maturity Date	Amount
					(In millions)
DTE Electric	March	Mortgage bonds	2.65%	2022	$	250
DTE Electric	September	Mortgage Bonds	6.95%	2022	66


					$	316

Remarketable Senior Notes

In November 2019, DTE Energy issued $1.3 billion of equity units, initially in the form of Corporate Units. Each Corporate Unit consisted of a stock purchase contract and a 1/20 interest in a RSN issued by DTE Energy. The stock purchase contracts obligated the holders to purchase shares of DTE Energy's common stock at a future settlement date. The RSNs were pledged as collateral to secure the purchase of common stock under the related stock purchase contracts.

Table of Contents

DTE Energy Company — DTE Electric Company

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

In August 2022, DTE Energy remarketed the $1.3 billion 2019 Series F 2.25% RSNs pursuant to the terms of the 2019 equity units. DTE Energy elected to pull forward the maturity of the notes to November 1, 2024, compared to the original maturity date of November 1, 2025. As a result of the remarketing, the interest rate was reset to 4.22%, payable semi-annually at the new rate beginning August 8, 2022. At September 30, 2022, the notes are included in Mortgage, bonds, notes and other within DTE Energy's Consolidated Statements of Financial Position.

DTE Energy did not receive any proceeds for the remarketing. All proceeds belong to the investors holding the 2019 equity units and were temporarily used to purchase a portfolio of treasury securities. The securities will be released on behalf of investors on the related stock purchase contracts settlement date of November 1, 2022 to pay the purchase price to DTE Energy for the issuance of common stock. Under the terms of the stock purchase contracts, assuming no anti-dilution or other adjustments, DTE Energy would issue between 9.8 million and 12.2 million shares of its common stock in November 2022. At this time, and in consideration of changes in stock price during October 2022, DTE Energy estimates that approximately 12 million shares will be issued.

NOTE 11 — 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 June 2022, DTE Energy increased its $70 million letter of credit facility to $375 million and amended the maturity date from July 2023 to June 2023. The facility will support general corporate purposes and has terms consistent with the unsecured revolving credit agreements.

The unsecured revolving credit agreements currently require a total funded debt to capitalization ratio of no more than 0.70 to 1 for DTE Energy and 0.65 to 1 for DTE Electric and DTE Gas. 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 September 30, 2022, the total funded debt to total capitalization ratios for DTE Energy, DTE Electric, and DTE Gas were 0.68 to 1, 0.52 to 1, and 0.50 to 1, respectively, and were in compliance with this financial covenant.

The availability under these facilities as of September 30, 2022 is shown in the following table:


	DTE Energy		DTE Electric		DTE Gas		Total
	(In millions)
Unsecured revolving credit facility, expiring April 2026	$	1,500	$	500	$	300	$	2,300

Unsecured Canadian revolving credit facility, expiring May 2023	79		—		—		79
Unsecured letter of credit facility, expiring February 2023	150		—		—		150
Unsecured letter of credit facility, expiring June 2023	375		—		—		375
Unsecured letter of credit facility(a)	50		—		—		50
	2,154		500		300		2,954
Amounts outstanding at September 30, 2022
Revolver borrowings	79		—		—		79
Commercial paper issuances	326		459		130		915

Letters of credit	338		—		—		338
	743		459		130		1,332
Net availability at September 30, 2022	$	1,411	$	41	$	170	$	1,622

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

Table of Contents

DTE Energy Company — DTE Electric Company

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

In October 2022, the unsecured revolving credit agreements were amended and the maturity date was extended from April 2026 to October 2027. The amendment increased the total availability of DTE Energy's unsecured revolving credit facility from $2.3 billion to $2.6 billion, including an increase from $500 million to $800 million at DTE Electric. Current financial covenants relating to total funded debt to capitalization ratios will remain through the maturity date, and the facility will continue to provide liquidity support for the Registrants' commercial paper programs.

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 agreements for up to $50 million and for up to $150 million. 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 September 30, 2022, the capacity under the facilities was $250 million. The amounts outstanding under the agreements were $191 million and $103 million at September 30, 2022 and December 31, 2021, respectively, and were fully offset by the posted collateral.

NOTE 12 — LEASES

Lessor

During the first quarter 2022, 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 $33 million.

During the third quarter 2022, DTE Energy completed construction of and began operating energy infrastructure assets for another large industrial customer in Canada. Under the long-term agreement, the customer will have the option to purchase the assets at the end of the initial contract term in 2042. The customer may also elect to extend the term in 5 year increments and may purchase the assets during the extension period. DTE Energy has accounted for a portion of the agreement as a finance lease arrangement, recognizing an additional net investment of $64 million, subject to foreign currency translation adjustments.

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


	DTE Energy
	September 30, 2022
	(In millions)
2022	$	9
2023	34
2024	34
2025	34
2026	33
2027 and Thereafter	451
Total minimum future lease receipts	595
Residual value of leased pipeline	17
Less unearned income	321
Net investment in finance lease	291
Less current portion	7
	$	284

Interest income recognized under finance leases was $6 million and $4 million for the three months ended September 30, 2022 and 2021, respectively, and $17 million and $13 million for the nine months ended September 30, 2022 and 2021, respectively.

Table of Contents

DTE Energy Company — DTE Electric Company

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

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:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In millions)
Fixed payments	$	3	$	13	$	11	$	42
Variable payments	21		55		52		90
	$	24	$	68	$	63	$	132

Operating revenues	$	24	$	26	$	63	$	70
Other income	—		42		—		62
	$	24	$	68	$	63	$	132

NOTE 13 — COMMITMENTS AND CONTINGENCIES

Environmental

DTE Electric

Air — DTE Electric is subject to the EPA ozone and fine particulate transport and acid rain regulations that limit power plant emissions of SO2 and 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 rule making may occur over the next few years which could require additional controls for SO2, NOX, and other hazardous air pollutants.

In 2015, the EPA finalized National Ambient Air Quality Standards ("NAAQS") for ground level ozone. In October 2016, the State of Michigan recommended to the EPA which areas of the State are not attaining the standards. In August 2018, the EPA designated southeast Michigan as "marginal non-attainment" with the 2015 ozone NAAQS. In January 2022, after collecting several years of data, the State submitted a request to the EPA for redesignation of the southeast Michigan ozone non-attainment area to attainment, and to accept their maintenance plan and emission inventories as a revision to the Michigan SIP. On March 14, 2022, the EPA published a proposal in the Federal Register to formally redesignate the southeast Michigan ozone non-attainment areas to attainment with the 2015 ozone NAAQS. The redesignation includes a public comment period. Measured 2022 ozone values exceeded the 2015 NAAQS and the redesignation being finalized is unlikely. Until a final SIP is developed, DTE Electric cannot predict the financial impact of this proposal.

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. The Supreme Court granted a petition for certiorari in October 2021 and issued a decision on June 30, 2022 that reversed the January 2021 decision of the D.C. Circuit Court and remands the case for further proceedings. The next steps taken by the EPA with respect to regulation of GHGs from EGUs remain uncertain. While DTE Energy is reviewing the impacts of this ruling and subsequent responses from federal and state regulators, the ruling does not impact the plans for our utilities to reduce carbon emissions and achieve net zero emissions 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 is expected to be able to comply with the standards.

Table of Contents

DTE Energy Company — DTE Electric Company

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

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. Potential 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 EPA regulations and in accordance with the Clean Water Act section 316(b), DTE Electric was required to examine alternatives for reducing the environmental impacts of the cooling water intake structures at several of its facilities. A final rule became effective in October 2014, which required 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 completed the required studies and submitted reports for most of its generation plants, and a final study is in-process for Monroe power plant. Final compliance for the installation of any required technology to reduce the impacts of water intake structures 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 determining 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.

As part of the Monroe power plant NPDES draft permit, EGLE has added requirements to evaluate the thermal discharge of the facility as it relates to Clean Water Act section 316(a) regulations. Once the final permit is issued, DTE Electric will be required to evaluate the impacts of the thermal discharge on a balanced indigenous biological community and submit a biological demonstration study plan to EGLE. After approval by EGLE and completion of field sampling, data will be processed and compiled into a comprehensive report. At the present time, DTE Electric cannot predict the outcome of this evaluation or financial impact.

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 September 30, 2022 and December 31, 2021, DTE Electric had $10 million and $14 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.

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 August 2016, July 2018, August 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.

Table of Contents

DTE Energy Company — DTE Electric Company

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

On August 28, 2020, the CCR rule "A Holistic Approach to Closure Part A: Deadline to Initiate Closure and Enhancing Public Access to Information" was published in the Federal Register and required all unlined impoundments (including units previously classified as "clay-lined") to initiate closure as soon as technically feasible, but no later than April 11, 2021. 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 consisting of an alternative liner system 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. On September 1, 2022, DTE Electric ceased receipt of CCR and non-CCR waste streams at the St. Clair power plant bottom ash basins and initiated closure. Therefore, DTE Electric withdrew the Part A rule demonstration for St. Clair, as it was no longer necessary for the EPA to issue an extension of the April 11, 2021 deadline to cease receipt of waste.

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 the 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. On October 13, 2020, the EPA finalized the ELG Reconsideration Rule which revised the regulations from the 2015 ELG rule for FGD wastewater and bottom ash transport water only. 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 meet the compliance requirements.

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 December 31, 2028 and the VIP for FGD wastewater at Monroe power plant by December 31, 2028.

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 the fourth quarter 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 Electric has estimated the impact of the CCR and ELG rules to be $560 million of capital expenditures, including $455 million for 2022 through 2026.

Table of Contents

DTE Energy Company — DTE Electric Company

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

DTE Gas

Contaminated and Other Sites — DTE Gas owns or previously owned 14 former MGP sites. Investigations have revealed contamination related to the by-products of gas manufacturing at each site. Cleanup of eight 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 September 30, 2022 and December 31, 2021, DTE Gas had $23 million and $24 million, respectively, accrued for remediation. These costs are not discounted to their present value. Any change in assumptions, such as remediation techniques, nature and extent of contamination, and regulatory requirements, could impact the estimate of remedial action costs for the sites and affect DTE Gas' financial position and cash flows. DTE Gas anticipates the cost amortization methodology approved by the MPSC, which allows for amortization of the MGP costs over a ten-year period beginning with the year subsequent to the year the MGP costs were incurred, will prevent the associated investigation and remediation costs from having a material adverse impact on DTE Gas' results of operations.

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 Battery, LLC ("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 permitting 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 responded to the EPA's September 2020 allegations demonstrating its actual emissions are compliant with non-attainment new source review requirements. On June 1, 2022, the U.S. Department of Justice, on behalf of the EPA, filed a complaint against EES Coke in the U.S. District Court for the Eastern District of Michigan alleging that EES Coke failed to comply with non-attainment new source review requirements under the Clean Air Act when it applied for the 2014 permit. In August 2022, EES Coke filed a response to the complaint and the EPA filed a motion for summary judgment. In September 2022, the Sierra Club and City of River Rouge filed motions to intervene. At the present time, DTE Energy cannot predict the outcome or financial impact of this matter.

Separately, in December 2021, EGLE issued a Notice of Violation to EES Coke alleging excess visible emissions from pushing operations. In January 2022, EES Coke provided EGLE a response describing the corrective actions taken to prevent future recurrences. At the present time, EES Coke cannot predict the outcome or financial impact of this matter.

Other

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

Michigan's Phase 1 non-attainment area includes DTE Energy facilities in southwest Detroit and areas of Wayne County. Modeling runs by EGLE suggest that emission reductions may be required by significant sources of SO2 emissions in these areas, including DTE Electric power plants and DTE Energy's Michigan coke battery facility. As part 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. On June 1, 2022, the EPA published a Federal Implementation Plan (FIP) which aligned with the partial approval and partial disapproval of the State's plan. The proposed FIP underwent a public comment period and was finalized on September 30, 2022. No DTE Electric sources were materially impacted by the final FIP.

Table of Contents

DTE Energy Company — DTE Electric Company

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

Michigan's Phase 2 non-attainment area includes DTE Electric facilities in St. Clair County. The EPA approved a clean data determination request submitted by EGLE. This determination suspends certain planning requirements and sanctions for the non-attainment area for as long as the area continues to attain the 2010 SO2 air quality standards, but 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.

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 September 30, 2022 was $605 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 September 30, 2022. 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 September 30, 2022, DTE Energy had $384 million of performance bonds outstanding, including $119 million for DTE Electric. Performance bonds are not individually material, except for $250 million of bonds supporting Energy Trading operations. These bonds are meant to provide counterparties with additional assurance that Energy Trading will meet its contractual obligations for various commercial transactions. The terms of the bonds align with those of the underlying Energy Trading contracts and are estimated to be outstanding approximately 1 to 3 years. In the event that any performance 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' approximate 5,200 represented employees, including DTE Electric's approximately 2,600 represented employees. This represents 50% and 56% of DTE Energy's and DTE Electric's total employees, respectively. Of these represented employees, approximately 4% have contracts expiring within one year for both DTE Energy and DTE Electric.

Purchase Commitments

Utility capital expenditures and expenditures for non-utility businesses will be approximately $3.5 billion and $2.6 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.

Ludington Plant Contract Dispute

DTE Electric and Consumers Energy Company ("Consumers"), joint owners of the Ludington Hydroelectric Pumped Storage plant ("Ludington"), are parties to a 2010 engineering, procurement, and construction contract with Toshiba America Energy Systems ("TAES"), under which TAES is charged with performing a major overhaul and upgrade of Ludington. TAES' performance has been unsatisfactory and resulted in overhaul project delays. DTE Electric and Consumers have demanded that TAES provide a comprehensive plan to resolve quality control concerns, including adherence to its warranty commitments and other contractual obligations. DTE Electric and Consumers have taken extensive efforts to resolve these issues with TAES, including a formal demand to TAES' parent, Toshiba Corporation, under a parent guaranty it provided in the contract. TAES has not provided a comprehensive plan or otherwise met its performance obligations. In order to enforce the contract, DTE Electric and Consumers filed a complaint against TAES and Toshiba Corporation in the U.S. District Court for the Eastern District of Michigan in April 2022.

Table of Contents

DTE Energy Company — DTE Electric Company

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

In June 2022, TAES and Toshiba Corporation filed a motion to dismiss the complaint, along with counterclaims seeking approximately $15 million in damages related to payments allegedly owed under the parties' contract. As a joint owner of Ludington, DTE Electric would be liable for 49% of these damages. During September 2022, the motion to dismiss was denied. DTE Electric believes the outstanding counterclaims are without merit and is currently awaiting a scheduling order to determine the timing of further proceedings. DTE Electric cannot predict the financial impact or outcome of this matter.

Other Contingencies

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

For a discussion of contingencies related to regulatory matters and derivatives, see Notes 6 and 9 to the Consolidated Financial Statements, "Regulatory Matters" and "Financial and Other Derivative Instruments," respectively.

NOTE 14 — RETIREMENT BENEFITS AND TRUSTEED ASSETS

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


	Pension Benefits				Other Postretirement Benefits
	Three Months Ended September 30,
	2022		2021		2022		2021
	(In millions)
Service cost	$	25	$	27	$	6	$	8
Interest cost	41		39		12		12
Expected return on plan assets	(87)		(84)		(32)		(33)
Amortization of:
Net actuarial loss	29		49		1		3
Prior service credit	—		—		(4)		(5)

Net periodic benefit cost (credit)	$	8	$	31	$	(17)	$	(15)


	Pension Benefits				Other Postretirement Benefits
	Nine Months Ended September 30,
	2022		2021		2022		2021
	(In millions)
Service cost	$	72	$	81	$	20	$	23
Interest cost	124		118		36		35
Expected return on plan assets	(260)		(254)		(95)		(97)
Amortization of:
Net actuarial loss	86		147		3		10
Prior service credit	—		—		(14)		(15)

Net periodic benefit cost (credit)	$	22	$	92	$	(50)	$	(44)

Table of Contents

DTE Energy Company — DTE Electric Company

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

DTE Electric participates in various plans that provide pension and other postretirement benefits for DTE Energy and its affiliates. The plans are primarily sponsored by DTE Energy's subsidiary, DTE Energy Corporate Services, 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.

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 operation and maintenance expense was $9 million and $26 million for the three months ended September 30, 2022 and 2021, respectively, and $27 million and $78 million for the nine months ended September 30, 2022 and 2021, respectively. These amounts include recognized contractual termination benefit charges, curtailment gains, and settlement charges.

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In millions)
Service cost	$	5	$	6	$	15	$	17
Interest cost	10		8		28		25
Expected return on plan assets	(22)		(22)		(64)		(65)
Amortization of:
Net actuarial loss	2		3		4		9
Prior service credit	(4)		(3)		(10)		(10)
Net periodic benefit credit	$	(9)	$	(8)	$	(27)	$	(24)

Pension and Other Postretirement Contributions

No contributions are currently expected for DTE Energy's qualified pension plans or postretirement benefit plans in 2022. Plans may be updated at the discretion of management and depending on economic and financial market conditions. DTE Energy anticipates a transfer of up to $50 million of qualified pension plan funds from DTE Gas to DTE Electric during the fourth quarter 2022.

Table of Contents

DTE Energy Company — DTE Electric Company

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

NOTE 15 — SEGMENT AND RELATED INFORMATION

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

Electric segment consists principally of DTE Electric, which is engaged in the generation, purchase, distribution, and sale of electricity to approximately 2.3 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 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.

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.

On July 1, 2021, DTE Energy completed the separation of DT Midstream, which was comprised of the former Gas Storage and Pipelines segment and also certain 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, “Discontinued Operations,” for additional information.

Inter-segment billing for goods and services exchanged between segments is based upon tariffed or market-based prices of the provider. Such billing primarily consists of power sales, sale and transportation of natural gas, and renewable natural gas sales in the segments below, as well as charges from Electric to other segments for use of the shared capital assets of DTE Electric. For the prior periods, inter-segment billing also included the sale of reduced emissions fuel at DTE Vantage.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In millions)
Electric	$	19	$	17	$	53	$	48
Gas	4		3		10		10
DTE Vantage	15		125		57		463
Energy Trading	39		9		78		35
Corporate and Other	—		1		—		2
	$	77	$	155	$	198	$	558

All inter-segment transactions and balances are eliminated in consolidation for DTE Energy. 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.

Table of Contents

DTE Energy Company — DTE Electric Company

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

Financial data of DTE Energy's business segments follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In millions)
Operating Revenues — Utility operations
Electric	$	1,844	$	1,700	$	4,896	$	4,468
Gas	230		193		1,358		1,070
Operating Revenues — Non-utility operations
Electric	3		2		11		9
DTE Vantage	227		372		626		1,132
Energy Trading	3,024		1,602		8,059		4,208
Corporate and Other	—		1		—		2
Reconciliation and Eliminations(a)	(77)		(155)		(198)		(572)
Total	$	5,251	$	3,715	$	14,752	$	10,317

(a)Includes $14 million for the nine months ended September 30, 2021 for eliminations related to DTE Energy's former 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.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In millions)
Net Income (Loss) Attributable to DTE Energy by Segment:
Electric	$	363	$	342	$	750	$	788
Gas	(23)		(30)		179		146
DTE Vantage	26		73		68		115
Energy Trading	56		(52)		(80)		(173)
Corporate and Other	(35)		(275)		(99)		(381)
Income from Continuing Operations	387		58		818		495
Discontinued Operations	—		(33)		—		106
Net Income Attributable to DTE Energy Company	$	387	$	25	$	818	$	601

Table of Contents

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