UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period ended March 31, 20172018
Commission File Number Registrants;Registrants, State of Incorporation; Address;Incorporation, Address, and Telephone Number I.R.S. Employer Identification No.
1-11607 
DTE Energy Company
(a Michigan corporation)
One Energy Plaza
Detroit, Michigan 48226-1279
313-235-4000
 38-3217752
     
1-2198 
DTE Electric Company
(a Michigan corporation)
One Energy Plaza
Detroit, Michigan 48226-1279
313-235-4000
 38-0478650
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
DTE Energy Company (DTE Energy)
DTE Energy Company (DTE Energy)    Yes x No oDTE Electric Company (DTE Electric)    Yes x No o
DTE Electric Company (DTE Electric)
Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
DTE Energy
DTE Energy                Yes x No oDTE Electric                Yes x No o
DTE Electric
Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
DTE Energy
Large accelerated filer x
Accelerated filer o
Non-accelerated filer o
Smaller reporting company o
Emerging growth company o
   
(Do not check if a smaller
reporting company)
Emerging growth company o
DTE Electric
Large accelerated filer o
Accelerated filer o
Non-accelerated filer x
Smaller reporting company o
Emerging growth company o
   
(Do not check if a smaller
reporting company)
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
DTE Energy
DTE Energy                Yes o No xDTE Electric                Yes o No x
DTE Electric
Yes o No x
Number of shares of Common Stock outstanding at March 31, 2017:2018:
Registrant Description Shares
DTE Energy Common Stock, without par value 179,387,424181,483,163
     
DTE Electric Common Stock, $10 par value, directly owned by DTE Energy 138,632,324
This combined Form 10-Q is filed separately by two registrants: DTE Energy and DTE Electric. Information contained herein relating to anany individual registrant is filed by such registrant solely on its own behalf. DTE Electric makes no representation as to information relating exclusively to DTE Energy.
DTE Electric, a wholly-owned subsidiary of DTE Energy, meets the conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q and is therefore filing this form with the reduced disclosure format specified in General Instructions H(2) of Form 10-Q.
 





















THIS PAGE INTENTIONALLY LEFT BLANK





TABLE OF CONTENTS

  Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




DEFINITIONS

AFUDCAllowance for Funds Used During Construction
  
AGSAppalachia Gathering System is a midstream natural gas asset located in Pennsylvania and West Virginia. DTE Energy purchased 100% of AGS in October 2016, and this asset is part of DTE Energy's Gas Storage and Pipelines segment.
  
ANPRAdvanced Notice of Proposed Rulemaking
ASUAccounting Standards Update issued by the FASB
  
CCRCoal Combustion Residuals
  
CFTCU.S. Commodity Futures Trading Commission
CONCertificate of Necessity
  
DTE ElectricDTE Electric Company (a direct wholly-owned subsidiary of DTE Energy) and subsidiary companies
  
DTE EnergyDTE Energy Company, directly or indirectly the parent of DTE Electric, DTE Gas, and numerous non-utility subsidiaries
  
DTE GasDTE Gas Company (an indirect wholly-owned subsidiary of DTE Energy) and subsidiary companies
  
EGUElectric Generating Unit
  
ELGEffluent Limitations Guidelines
  
EPAU.S. Environmental Protection Agency
Equity unitsDTE Energy's 2016 Equity Units issued in October 2016, which were used to finance the October 1, 2016 Gas Storage and Pipelines acquisition
  
FASBFinancial Accounting Standards Board
  
FERCFederal Energy Regulatory Commission
  
FOVFinding of Violation
  
FTRsFinancial Transmission Rights are financial instruments that entitle the holder to receive payments related to costs incurred for congestion on the transmission grid.
  
GCRA Gas Cost Recovery mechanism authorized by the MPSC that allows DTE Gas to recover through rates its natural gas costs.
  
GHGsGreenhouse gases
  
MDEQMichigan Department of Environmental Quality
  
MGPManufactured Gas Plant
MPSCMichigan Public Service Commission
  
MTMMark-to-market
  
NAVNet Asset Value
  
NEXUSNEXUS Gas Transmission, LLC, a joint venture in which DTE Energy own a 50% partnership interest.
  
Non-utilityAn entity that is not a public utility. Its conditions of service, prices of goods and services, and other operating related matters are not directly regulated by the MPSC.
  
NOVNotice of Violation
  
NOX
Nitrogen Oxides
  
NRCU.S. Nuclear Regulatory Commission
  


DEFINITIONS

Production tax creditsTax credits as authorized under Sections 45K and 45 of the Internal Revenue Code that are designed to stimulate investment in and development of alternate fuel sources. The amount of a production tax credit can vary each year as determined by the Internal Revenue Service.
  
PSCRA Power Supply Cost Recovery mechanism authorized by the MPSC that allows DTE Electric to recover through rates its fuel, fuel-related, and purchased power costs.
  
RECRenewable Energy Credit
REFReduced Emissions Fuel
  
RegistrantsDTE Energy and DTE Electric
  

1



DEFINITIONS

Retail accessMichigan legislation provided customers the option of access to alternative suppliers for electricity and natural gas.
  
SGGStonewall Gas Gathering is a midstream natural gas asset located in West Virginia. DTE Energy purchased 55% of SGG in October 2016, and this asset is part of DTE Energy's Gas Storage and Pipelines segment.
  
SO2
Sulfur Dioxide
TCJATax Cuts and Jobs Act of 2017
TCJA rate reduction reserve
Beginning January 1, 2018, as a result of the change in the corporate tax rate,
DTE Electric and DTE Gas have reduced revenue and recorded an offsetting regulatory liability
Topic 606FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, as amended
TRMA Transitional Reconciliation Mechanism authorized by the MPSC that allows DTE Electric to recover through rates the deferred net incremental revenue requirement associated with the transition of City of Detroit's Public Lighting Department customers to DTE Electric's distribution system.
  
SO2
Sulfur Dioxide
VIEVariable Interest Entity
Units of Measurement 
BcfBillion cubic feet of natural gas
  
BTUHeat value (energy content) of fuel
  
MMBtuOne million BTU
  
MWhMegawatthour of electricity


2



FILING FORMAT


This combined Form 10-Q is separately filed by DTE Energy and DTE Electric. Information in this combined Form 10-Q relating to each individual Registrant is filed by such Registrant on its own behalf. DTE Electric makes no representation regarding information relating to any other companies affiliated with DTE Energy other than its own subsidiaries. Neither DTE Energy, nor any of DTE Energy’s other subsidiaries (other than DTE Electric), has any obligation in respect of DTE Electric's debt securities, and holders of such debt securities should not consider the financial resources or results of operations of DTE Energy nor any of DTE Energy’s other subsidiaries (other than DTE Electric and its own subsidiaries (in relevant circumstances)) in making a decision with respect to DTE Electric's debt securities. Similarly, none of DTE Electric nor any other subsidiary of DTE Energy has any obligation in respect of debt securities of DTE Energy. This combined Form 10-Q should be read in its entirety. No one section of this combined Form 10-Q deals with all aspects of the subject matter of this combined Form 10-Q. This combined Form 10-Q report should be read in conjunction with the Consolidated Financial Statements and Combined Notes to Consolidated Financial Statements and with Management's Discussion and Analysis included in the combined DTE Energy and DTE Electric 20162017 Annual Report on Form 10-K.

FORWARD-LOOKING STATEMENTS
Certain information presented herein includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, and businesses of the Registrants. Words such as “anticipate,” “believe,” “expect,” “may,” “could,” “projected,” “aspiration,” “plans,” and “goals” signify forward-looking statements. Forward-looking statements are not guarantees of future results and conditions, but rather are subject to numerous assumptions, risks, and uncertainties that may cause actual future results to be materially different from those contemplated, projected, estimated, or budgeted. Many factors may impact forward-looking statements of the Registrants including, but not limited to, the following:
impact of regulation by the EPA, the FERC, the MPSC, the NRC, and for DTE Energy, the CFTC, as well as other applicable governmental proceedings and regulations, including any associated impact on rate structures;
the amount and timing of cost recovery allowed as a result of regulatory proceedings, related appeals, or new legislation, including legislative amendments and retail access programs;
economic conditions and population changes in the Registrants' geographic area resulting in changes in demand, customer conservation, and thefts of electricity and, for DTE Energy, natural gas;
environmental issues, laws, regulations, and the increasing costs of remediation and compliance, including actual and potential new federal and state requirements;
the cost of protecting assets against, or damage due to, cyber crime and terrorism;
health, safety, financial, environmental, and regulatory risks associated with ownership and operation of nuclear facilities;
changes in the cost and availability of coal and other raw materials, purchased power, and natural gas;
volatility in the short-term natural gas storage markets impacting third-party storage revenues related to DTE Energy;
impact of volatility of prices in the oil and gas markets on DTE Energy's gas storage and pipelines operations;
impact of volatility in prices in the international steel markets on DTE Energy's power and industrial projects operations;
volatility in commodity markets, deviations in weather, and related risks impacting the results of DTE Energy's energy trading operations;
changes in the cost and availability of coal and other raw materials, purchased power, and natural gas;
advances in technology that produce power or reduce power consumption;
changes in the financial condition of DTE Energy's significant customers and strategic partners;
the potential for losses on investments, including nuclear decommissioning and benefit plan assets and the related increases in future expense and contributions;


access to capital markets and the results of other financing efforts which can be affected by credit agency ratings;
instability in capital markets which could impact availability of short and long-term financing;


the timing and extent of changes in interest rates;
the level of borrowings;
the potential for increased costs or delays in completion of significant capital projects;
changes in, and application of, federal, state, and local tax laws and their interpretations, including the Internal Revenue Code, regulations, rulings, court proceedings, and audits;
the effects of weather and other natural phenomena on operations and sales to customers, and purchases from suppliers;
unplanned outages;
the cost of protecting assets against, or damage due to, cyber crime and terrorism;
employee relations and the impact of collective bargaining agreements;
the risk of a major safety incident at an electric distribution or generation facility and, for DTE Energy, a gas storage, transmission, or distribution facility;
the availability, cost, coverage, and terms of insurance and stability of insurance providers;
cost reduction efforts and the maximization of plant and distribution system performance;
the effects of competition;
changes in and application of accounting standards and financial reporting regulations;
changes in federal or state laws and their interpretation with respect to regulation, energy policy, and other business issues;
contract disputes, binding arbitration, litigation, and related appeals;
implementation of new information systems; and
the risks discussed in the Registrants' public filings with the Securities and Exchange Commission.
New factors emerge from time to time. The Registrants cannot predict what factors may arise or how such factors may cause results to differ materially from those contained in any forward-looking statement. Any forward-looking statements speak only as of the date on which such statements are made. The Registrants undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events.


Part I — Financial Information

Item 1. Financial Statements

DTE Energy Company

Consolidated Statements of Operations (Unaudited)
Three Months Ended March 31,Three Months Ended March 31,
2017 20162018 2017
(In millions, except per share amounts)(In millions, except per share amounts)
Operating Revenues      
Utility operations$1,718
 $1,664
$1,740
 $1,718
Non-utility operations1,518
 902
2,013
 1,518
3,236
 2,566
3,753
 3,236
      
Operating Expenses 
  
   
Fuel, purchased power, and gas — utility529
 565
553
 529
Fuel, purchased power, and gas — non-utility1,180
 776
1,773
 1,180
Operation and maintenance600
 516
534
 584
Depreciation and amortization249
 229
281
 249
Taxes other than income109
 99
111
 109
Asset (gains) losses and impairments, net(3) 
2,667
 2,185
3,249
 2,651
Operating Income569
 381
504
 585
      
Other (Income) and Deductions 
  
   
Interest expense125
 113
135
 125
Interest income(3) (11)(3) (3)
Non-operating retirement benefits, net9
 16
Other income(64) (52)(81) (64)
Other expenses7
 8
25
 7
65
 58
85
 81
Income Before Income Taxes504
 323
419
 504
      
Income Tax Expense110
 83
68
 110
      
Net Income394
 240
351
 394
      
Less: Net Loss Attributable to Noncontrolling Interests(6) (7)(10) (6)
      
Net Income Attributable to DTE Energy Company$400
 $247
$361
 $400
      
Basic Earnings per Common Share      
Net Income Attributable to DTE Energy Company$2.23
 $1.38
$2.01
 $2.23
      
Diluted Earnings per Common Share      
Net Income Attributable to DTE Energy Company$2.23
 $1.37
$2.00
 $2.23
      
Weighted Average Common Shares Outstanding 
  
   
Basic179
 179
180
 179
Diluted179
 180
180
 179
Dividends Declared per Common Share$0.825
 $0.73
$0.88
 $0.83
See Combined Notes to Consolidated Financial Statements (Unaudited)


DTE Energy Company

Consolidated Statements of Comprehensive Income (Unaudited)

 Three Months Ended March 31,
 2017 2016
 (In millions)
Net Income$394
 $240
    
Other comprehensive income, net of tax:   
Benefit obligations, net of taxes of $2, for both periods4
 3
Foreign currency translation
 2
Other comprehensive income4
 5
    
Comprehensive income398
 245
Less comprehensive loss attributable to noncontrolling interests(6) (7)
Comprehensive Income Attributable to DTE Energy Company$404
 $252
 Three Months Ended March 31,
 2018 2017
 (In millions)
Net Income$351
 $394
    
Other comprehensive income (loss), net of tax:   
Implementation of ASU 2016-01(5) 
Benefit obligations, net of taxes of $1, and $2, respectively2
 4
Other comprehensive income (loss)(3) 4
    
Comprehensive income348
 398
Less: Comprehensive loss attributable to noncontrolling interests(10) (6)
Comprehensive Income Attributable to DTE Energy Company$358
 $404

See Combined Notes to Consolidated Financial Statements (Unaudited)


DTE Energy Company

Consolidated Statements of Financial Position (Unaudited)

March 31, December 31,March 31, December 31,
2017 20162018 2017
(In millions)(In millions)
ASSETS
Current Assets      
Cash and cash equivalents$82
 $92
$164
 $66
Restricted cash20
 21
22
 23
Accounts receivable (less allowance for doubtful accounts of $32 and $41, respectively)   
Accounts receivable (less allowance for doubtful accounts of $54 and $49, respectively)   
Customer1,408
 1,522
1,709
 1,758
Other101
 71
116
 98
Inventories      
Fuel and gas286
 416
237
 399
Materials and supplies354
 356
360
 380
Derivative assets68
 47
84
 103
Regulatory assets26
 42
44
 55
Other222
 195
221
 199
2,567
 2,762
2,957
 3,081
Investments      
Nuclear decommissioning trust funds1,364
 1,320
1,481
 1,492
Investments in equity method investees868
 752
1,141
 1,073
Other210
 201
230
 232
2,442
 2,273
2,852
 2,797
Property      
Property, plant, and equipment30,287
 30,029
31,656
 31,424
Accumulated depreciation and amortization(10,421) (10,299)(10,786) (10,703)
19,866
 19,730
20,870
 20,721
Other Assets      
Goodwill2,292
 2,286
2,293
 2,293
Regulatory assets3,833
 3,871
3,715
 3,723
Intangible assets837
 842
867
 867
Notes receivable71
 73
70
 73
Derivative assets73
 34
58
 51
Other168
 170
159
 161
7,274
 7,276
7,162
 7,168
Total Assets$32,149
 $32,041
$33,841
 $33,767

See Combined Notes to Consolidated Financial Statements (Unaudited)


DTE Energy Company

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

March 31, December 31,March 31, December 31,
2017 20162018 2017
(In millions, except shares)(In millions, except shares)
LIABILITIES AND EQUITY
Current Liabilities      
Accounts payable$910
 $1,079
$920
 $1,171
Accrued interest131
 96
132
 111
Dividends payable148
 148
160
 158
Short-term borrowings59
 499
635
 621
Current portion long-term debt, including capital leases13
 14
106
 109
Derivative liabilities33
 69
69
 99
Gas inventory equalization86
 
85
 
Regulatory liabilities37
 34
23
 18
Other417
 498
411
 525
1,834
 2,437
2,541
 2,812
Long-Term Debt (net of current portion)      
Mortgage bonds, notes, and other10,999
 10,506
11,040
 11,039
Junior subordinated debentures756
 756
1,145
 1,145
Capital lease obligations3
 7

 1
11,758
 11,269
12,185
 12,185
Other Liabilities 
  
 
  
Deferred income taxes4,270
 4,162
1,936
 1,888
Regulatory liabilities563
 555
3,001
 2,875
Asset retirement obligations2,229
 2,197
2,361
 2,320
Unamortized investment tax credit91
 93
122
 122
Derivative liabilities93
 98
58
 47
Accrued pension liability1,022
 1,152
737
 924
Accrued postretirement liability63
 36
25
 61
Nuclear decommissioning203
 194
219
 220
Other335
 349
293
 323
8,869
 8,836
8,752
 8,780
Commitments and Contingencies (Notes 5 and 11)   
Commitments and Contingencies (Notes 5 and 10)   



 



 

Equity      
Common stock, without par value, 400,000,000 shares authorized, and 179,387,424 and 179,432,581 shares issued and outstanding, respectively3,958
 4,030
Common stock, without par value, 400,000,000 shares authorized, and 181,483,163 and 179,386,967 shares issued and outstanding, respectively4,163
 3,989
Retained earnings5,365
 5,114
5,848
 5,643
Accumulated other comprehensive loss(129) (133)(123) (120)
Total DTE Energy Company Equity9,194
 9,011
9,888
 9,512
Noncontrolling interests494
 488
475
 478
Total Equity9,688
 9,499
10,363
 9,990
Total Liabilities and Equity$32,149
 $32,041
$33,841
 $33,767

See Combined Notes to Consolidated Financial Statements (Unaudited)


DTE Energy Company

Consolidated Statements of Cash Flows (Unaudited)

Three Months Ended March 31,Three Months Ended March 31,
2017 20162018 2017
(In millions)(In millions)
Operating Activities      
Net Income$394
 $240
$351
 $394
Adjustments to reconcile Net Income to net cash from operating activities:   
Adjustments to reconcile Net Income to Net cash from operating activities:   
Depreciation and amortization249
 229
281
 249
Nuclear fuel amortization12
 15
15
 12
Allowance for equity funds used during construction(7) (5)(7) (7)
Deferred income taxes100
 80
60
 100
Equity earnings of equity method investees(26) (15)(21) (26)
Dividends from equity method investees18
 18
15
 18
Changes in assets and liabilities:      
Accounts receivable, net84
 97
33
 84
Inventories135
 143
182
 135
Accounts payable(33) (93)(136) (33)
Gas inventory equalization86
 87
85
 86
Accrued pension liability(130) (3)(187) (130)
Accrued postretirement liability27
 (29)(36) 27
Derivative assets and liabilities(100) 40
(7) (100)
Regulatory assets and liabilities128
 34
148
 128
Other current and noncurrent assets and liabilities(150) (93)62
 (150)
Net cash from operating activities787
 745
838
 787
Investing Activities      
Plant and equipment expenditures — utility(533) (394)(466) (533)
Plant and equipment expenditures — non-utility(22) (30)(61) (22)
Proceeds from sale of nuclear decommissioning trust fund assets394
 260
336
 394
Investment in nuclear decommissioning trust funds(378) (262)(337) (378)
Distributions from equity method investees6
 3
4
 6
Contributions to equity method investees(112) (26)(64) (112)
Other4
 12
2
 3
Net cash used for investing activities(641) (437)(586) (642)
Financing Activities      
Issuance of long-term debt, net of issuance costs496
 

 496
Redemption of long-term debt(5) (11)
Short-term borrowings, net(440) (134)14
 (440)
Repurchase of common stock(51) (33)
 (51)
Dividends on common stock(148) (131)(158) (148)
REF contributions from noncontrolling interests12
 11
Other(8) (1)(23) (24)
Net cash used for financing activities(156) (310)(155) (156)
Net Decrease in Cash and Cash Equivalents(10) (2)
Cash and Cash Equivalents at Beginning of Period92
 37
Cash and Cash Equivalents at End of Period$82
 $35
Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash97
 (11)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period89
 113
Cash, Cash Equivalents, and Restricted Cash at End of Period$186
 $102
      
Supplemental disclosure of non-cash investing and financing activities      
Plant and equipment expenditures in accounts payable$196
 $134
$179
 $196

See Combined Notes to Consolidated Financial Statements (Unaudited)


DTE Energy Company

Consolidated Statements of Changes in Equity (Unaudited)

    Retained Earnings 
Accumulated
Other Comprehensive Income (Loss)
 Noncontrolling Interests      Retained Earnings Accumulated Other Comprehensive Income (Loss) Noncontrolling Interests  
Common Stock  Common Stock  
Shares Amount TotalShares Amount Total
(Dollars in millions, shares in thousands)(Dollars in millions, shares in thousands)
Balance, December 31, 2016179,433
 $4,030
 $5,114
 $(133) $488
 $9,499
Balance, December 31, 2017179,387
 $3,989
 $5,643
 $(120) $478
 $9,990
Implementation of ASU 2016-01
 
 5
 (5) 
 
Net Income (Loss)
 
 400
 
 (6) 394

 
 361
 
 (10) 351
Dividends declared on common stock
 
 (148) 
 
 (148)
 
 (160) 
 
 (160)
Repurchase of common stock(524) (51) 
 
 
 (51)
Contribution of common stock to pension plan1,751
 175
 
 
 
 175
Benefit obligations, net of tax
 
 
 4
 
 4

 
 
 2
 
 2
Stock-based compensation, net contributions from noncontrolling interests, and other478
 (21) (1) 
 12
 (10)345
 (1) (1) 
 7
 5
Balance, March 31, 2017179,387
 $3,958
 $5,365
 $(129) $494
 $9,688
Balance, March 31, 2018181,483
 $4,163
 $5,848
 $(123) $475
 $10,363

See Combined Notes to Consolidated Financial Statements (Unaudited)


DTE Electric Company

Consolidated Statements of Operations (Unaudited)

Three Months Ended March 31,Three Months Ended March 31,
2017 20162018 2017
(In millions)(In millions)
Operating Revenues — Utility operations$1,175
 $1,153
$1,205
 $1,175
      
Operating Expenses      
Fuel and purchased power — utility314
 335
339
 314
Operation and maintenance383
 324
320
 383
Depreciation and amortization181
 176
212
 181
Taxes other than income80
 73
81
 80
958
 908
952
 958
Operating Income217
 245
253
 217
      
Other (Income) and Deductions      
Interest expense66
 65
68
 66
Interest income
 (8)
Other income(19) (16)(27) (19)
Other expenses7
 7
25
 7
54
 48
66
 54
Income Before Income Taxes163
 197
187
 163
      
Income Tax Expense57
 70
47
 57
      
Net Income$106
 $127
$140
 $106

See Combined Notes to Consolidated Financial Statements (Unaudited)


DTE Electric Company

Consolidated Statements of Comprehensive Income (Unaudited)

Three Months Ended March 31,Three Months Ended March 31,
2017 20162018 2017
(In millions)(In millions)
Net Income$106
 $127
$140
 $106
Other comprehensive income, net of tax:   
Implementation of ASU 2016-013
 
Other comprehensive income
 
3
 
Comprehensive Income$106
 $127
$143
 $106

See Combined Notes to Consolidated Financial Statements (Unaudited)


DTE Electric Company

Consolidated Statements of Financial Position (Unaudited)

March 31, December 31,March 31, December 31,
2017 20162018 2017
(In millions)(In millions)
ASSETS
Current Assets      
Cash and cash equivalents$11
 $13
$16
 $15
Accounts receivable (less allowance for doubtful accounts of $19 and $25, respectively)   
Accounts receivable (less allowance for doubtful accounts of $31 for both periods)   
Customer654
 728
754
 791
Affiliates19
 12
14
 20
Other38
 29
39
 37
Inventories      
Fuel178
 225
138
 190
Materials and supplies276
 271
277
 275
Regulatory assets11
 36
40
 50
Prepaid property tax89
 45
91
 48
Other16
 18
18
 20
1,292
 1,377
1,387
 1,446
Investments      
Nuclear decommissioning trust funds1,364
 1,320
1,481
 1,492
Other34
 36
36
 36
1,398
 1,356
1,517
 1,528
Property      
Property, plant, and equipment22,276
 22,094
23,098
 22,972
Accumulated depreciation and amortization(7,812) (7,721)(8,023) (7,984)
14,464
 14,373
15,075
 14,988
Other Assets      
Regulatory assets3,090
 3,113
3,009
 3,005
Intangible assets32
 31
31
 25
Prepaid postretirement costs — affiliates114
 114
113
 113
Other125
 125
123
 123
3,361
 3,383
3,276
 3,266
Total Assets$20,515
 $20,489
$21,255
 $21,228

See Combined Notes to Consolidated Financial Statements (Unaudited)


DTE Electric Company

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

March 31, December 31,March 31, December 31,
2017 20162018 2017
(In millions, except shares)(In millions, except shares)
LIABILITIES AND SHAREHOLDER’S EQUITY
Current Liabilities      
Accounts payable      
Affiliates$55
 $58
$61
 $52
Other384
 452
295
 416
Accrued interest72
 65
70
 72
Current portion long-term debt, including capital leases5
 6
2
 5
Regulatory liabilities33
 27
21
 17
Short-term borrowings      
Affiliates205
 117
142
 116
Other59
 62
380
 238
Other149
 146
133
 145
962
 933
1,104
 1,061
Long-Term Debt (net of current portion)      
Mortgage bonds, notes, and other5,879
 5,878
6,018
 6,017
Capital lease obligations3
 7

 1
5,882
 5,885
6,018
 6,018
Other Liabilities      
Deferred income taxes3,850
 3,793
2,127
 2,088
Regulatory liabilities241
 229
2,218
 2,137
Asset retirement obligations2,041
 2,012
2,165
 2,125
Unamortized investment tax credit88
 90
120
 120
Nuclear decommissioning203
 194
219
 220
Accrued pension liability — affiliates885
 1,008
633
 811
Accrued postretirement liability — affiliates290
 269
287
 311
Other79
 81
74
 72
7,677
 7,676
7,843
 7,884
Commitments and Contingencies (Notes 5 and 11)
 
Commitments and Contingencies (Notes 5 and 10)
 
      
Shareholder’s Equity      
Common stock, $10 par value, 400,000,000 shares authorized, and 138,632,324 shares issued and outstanding4,206
 4,206
4,306
 4,306
Retained earnings1,786
 1,787
1,984
 1,956
Accumulated other comprehensive income2
 2

 3
Total Shareholder’s Equity5,994
 5,995
6,290
 6,265
Total Liabilities and Shareholder’s Equity$20,515
 $20,489
$21,255
 $21,228

See Combined Notes to Consolidated Financial Statements (Unaudited)


DTE Electric Company

Consolidated Statements of Cash Flows (Unaudited)

Three Months Ended March 31,Three Months Ended March 31,
2017 20162018 2017
(In millions)(In millions)
Operating Activities      
Net Income$106
 $127
$140
 $106
Adjustments to reconcile Net Income to net cash from operating activities:   
Adjustments to reconcile Net Income to Net cash from operating activities:   
Depreciation and amortization181
 176
212
 181
Nuclear fuel amortization12
 15
15
 12
Allowance for equity funds used during construction(6) (4)(5) (6)
Deferred income taxes57
 70
48
 57
Changes in assets and liabilities:      
Accounts receivable, net58
 57
39
 58
Inventories44
 31
50
 44
Accounts payable26
 25
(30) 26
Accrued pension liability — affiliates(123) 3
(178) (123)
Accrued postretirement liability — affiliates21
 (19)(24) 21
Regulatory assets and liabilities122
 40
97
 122
Other current and noncurrent assets and liabilities(87) (68)(41) (87)
Net cash from operating activities411
 453
323
 411
Investing Activities      
Plant and equipment expenditures(408) (315)(370) (408)
Proceeds from sale of assets
 6
Proceeds from sale of nuclear decommissioning trust fund assets394
 260
336
 394
Investment in nuclear decommissioning trust funds(378) (262)(337) (378)
Other5
 14

 5
Net cash used for investing activities(387) (297)(371) (387)
Financing Activities      
Redemption of long-term debt
 (10)
Short-term borrowings, net — affiliate88
 22
26
 88
Short-term borrowings, net — other(3) (61)142
 (3)
Dividends on common stock(108) (105)(115) (108)
Other(3) 
(4) (3)
Net cash used for financing activities(26) (154)
Net cash from (used for) financing activities49
 (26)
Net Increase (Decrease) in Cash and Cash Equivalents(2) 2
1
 (2)
Cash and Cash Equivalents at Beginning of Period13
 15
15
 13
Cash and Cash Equivalents at End of Period$11
 $17
$16
 $11
      
Supplemental disclosure of non-cash investing and financing activities      
Plant and equipment expenditures in accounts payable$134
 $100
$109
 $134

See Combined Notes to Consolidated Financial Statements (Unaudited)


DTE Electric Company

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

     Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income  
 Common Stock     
 Shares Amount    Total
 (Dollars in millions, shares in thousands)
Balance, December 31, 2016138,632
 $1,386
 $2,820
 $1,787
 $2
 $5,995
Net Income
 
 
 106
 
 106
Dividends declared on common stock
 
 
 (108) 
 (108)
Other
 
 
 1
 
 1
Balance, March 31, 2017138,632
 $1,386
 $2,820
 $1,786
 $2
 $5,994
     Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income  
 Common Stock     
 Shares Amount    Total
 (Dollars in millions, shares in thousands)
Balance, December 31, 2017138,632
 $1,386
 $2,920
 $1,956
 $3
 $6,265
Implementation of ASU 2016-01
 
 
 3
 (3) 
Net Income
 
 
 140
 
 140
Dividends declared on common stock
 
 
 (115) 
 (115)
Balance, March 31, 2018138,632
 $1,386
 $2,920
 $1,984
 $
 $6,290

See Combined Notes to Consolidated Financial Statements (Unaudited)

16


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 AcquisitionRevenue DTE Energy and DTE Electric
Note 5 Regulatory Matters DTE Energy and DTE Electric
Note 6 Earnings per Share DTE Energy
Note 7 Fair Value DTE Energy and DTE Electric
Note 8 Financial and Other Derivative Instruments DTE Energy and DTE Electric
Note 9 Long-Term DebtDTE Energy
Note 10Short-Term Credit Arrangements and Borrowings DTE Energy and DTE Electric
Note 1110 Commitments and Contingencies DTE Energy and DTE Electric
Note 1211 Retirement Benefits and Trusteed Assets DTE Energy and DTE Electric
Note 1312 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 2.2 million customers in southeastern Michigan;
DTE Gas is a public utility engaged in the purchase, storage, transportation, distribution, and sale of natural gas to approximately 1.3 million customers throughout Michigan and the sale of storage and transportation capacity; and
Other businesses involved in 1) services related to the gathering, transportation, and storage of natural gas pipelines, gathering, and storage;gas; 2) power and industrial projects; and 3) energy marketing and trading operations.
DTE Electric and DTE Gas are regulated by the MPSC. Certain activities of DTE Electric and DTE Gas, as well as various other aspects of businesses under DTE Energy, are regulated by the FERC. In addition, the Registrants are regulated by other federal and state regulatory agencies including the NRC, the EPA, the MDEQ, and for DTE Energy, the CFTC.
Basis of Presentation
The Consolidated Financial Statements should be read in conjunction with the Combined Notes to Consolidated Financial Statements included in the combined DTE Energy and DTE Electric 20162017 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.
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, 2017.2018.

17


DTE Energy Company — DTE Electric Company
Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

The information in these combined notes relates to each of the Registrants as noted in the Index of Combined Notes to Consolidated Financial Statements. However, DTE Electric does not make any representation as to information related solely to DTE Energy or the subsidiaries of DTE Energy other than itself.
Certain prior year balances for the RegistrantsDTE Energy were reclassified to match the current year's Consolidated Financial Statements presentation. Due to the implementation of ASU 2017-07, amounts previously included in Operation and maintenance were reclassified to Non-operating retirement benefits, net on the Consolidated Statements of Operations. See Note 3 to the Consolidated Financial Statements, "New Accounting Pronouncements."
Principles of Consolidation
The Registrants consolidate all majority-owned subsidiaries and investments in entities in which they have controlling influence. Non-majority owned investments are accounted for using the equity method when the Registrants are able to significantly influence the operating policies of the investee. When the Registrants do not influence the operating policies of an investee, the cost method is used. These Consolidated Financial Statements also reflect the Registrants' proportionate interests in certain jointly-owned utility plants. The Registrants eliminate all intercompany balances and transactions.
The Registrants evaluate whether an entity is a VIE whenever reconsideration events occur. The Registrants consolidate VIEs for which they are the primary beneficiary. If a Registrant is not the primary beneficiary and an ownership interest is held, the VIE is accounted for under the equity method of accounting. When assessing the determination of the primary beneficiary, a Registrant considers all relevant facts and circumstances, including: the power, through voting or similar rights, to direct the activities of the VIE that most significantly impact the VIE's economic performance and the obligation to absorb the expected losses and/or the right to receive the expected returns of the VIE. The Registrants perform ongoing reassessments of all VIEs to determine if the primary beneficiary status has changed.
Legal entities within DTE Energy's Power and Industrial Projects segment enter into long-term contractual arrangements with customers to supply energy-related products or services. The entities are generally designed to pass-through the commodity risk associated with these contracts to the customers, with DTE Energy retaining operational and customer default risk. These entities generally are VIEs and consolidated when DTE Energy is the primary beneficiary. In addition, DTE Energy has interests in certain VIEs through which control of all significant activities is shared with partners, and therefore are accounted for under the equity method.
DTE Energy owns a 55% interest in SGG, which owns and operates midstream natural gas assets. SGG has contracts through which certain construction risk is designed to pass-through to the customers, with DTE Energy retaining operational and customer default risk. SGG is a VIE with DTE Energy as the primary beneficiary. See Note 4
The Registrants have variable interests in NEXUS, which include DTE Energy's 50% ownership interest and DTE Electric's transportation services contract. NEXUS is a joint venture which is in the process of constructing a 255-mile pipeline to transport Utica and Marcellus shale gas to Ohio, Michigan, and Ontario market centers. NEXUS is a VIE as it has insufficient equity at risk to finance its activities. The Registrants are not the primary beneficiaries, as the power to direct significant activities is shared between the owners of the equity interests. DTE Energy accounts for its ownership interest in NEXUS under the equity method.
The Registrants hold ownership interests in certain limited partnerships. The limited partnerships include investment funds which support regional development and economic growth, as well as an operational business providing energy-related products. These entities are generally VIEs as a result of certain characteristics of the limited partnership voting rights. The ownership interests are accounted for under the equity method as the Registrants are not the primary beneficiaries.

DTE Energy Company — DTE Electric Company
Combined Notes to Consolidated Financial Statements "Acquisition," for more information.(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 March 31, 2017,2018, 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 March 31, 2017,2018, 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 significant potential exposure to loss as a result of DTE Energy's variable interests through these long-term purchase and sale contracts. In addition, there is no significant potential exposure to loss as a result of DTE Electric's variable interests through these long-term purchase contracts.
The maximum risk exposure for consolidated VIEs is reflected on the Registrants' Consolidated Statements of Financial Position.Position and in Note 10 to the Consolidated Financial Statements, "Commitments and Contingencies," related to the REF guarantees and indemnities. For non-consolidated VIEs, the maximum risk exposure of the Registrants is generally limited to itstheir investment, notes receivable, and future funding commitments.

18


commitments, and amounts which DTE Energy Company — DTE Electric Company
Combined Noteshas guaranteed. See Note 10 to the Consolidated Financial Statements, (Unaudited) — (Continued)

"Commitments and Contingencies," for further discussion of the NEXUS guarantee arrangements.
The following table summarizes the major Consolidated Statements of Financial Position items for consolidated VIEs as of March 31, 20172018 and December 31, 2016.2017. 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.
March 31, 2017 December 31, 2016March 31, 2018 December 31, 2017
SGG(a)
 Other Total 
SGG(a)
 Other Total
SGG(a)
 Other Total 
SGG(a)
 Other Total
(In millions)(In millions)
ASSETS                      
Cash and cash equivalents$52
 $11
 $63
 $36
 $27
 $63
$29
 $12
 $41
 $23
 $14
 $37
Restricted cash
 7
 7
 
 7
 7

 8
 8
 
 8
 8
Accounts receivable10
 19
 29
 8
 34
 42
11
 37
 48
 11
 42
 53
Inventories3
 59
 62
 3
 112
 115
3
 66
 69
 3
 114
 117
Property, plant, and equipment, net397
 75
 472
 398
 76
 474
386
 73
 459
 400
 75
 475
Goodwill22
 
 22
 17
 
 17
25
 
 25
 25
 
 25
Intangible assets583
 
 583
 586
 
 586
568
 
 568
 572
 
 572
Other current and long-term assets
 1
 1
 1
 1
 2
2
 
 2
 4
 
 4
$1,067
 $172
 $1,239
 $1,049
 $257
 $1,306
$1,024
 $196
 $1,220
 $1,038
 $253
 $1,291
                      
LIABILITIES                      
Accounts payable and accrued current liabilities$19
 $21
 $40
 $19
 $32
 $51
$2
 $35
 $37
 $26
 $47
 $73
Current portion long-term debt, including capital leases
 5
 5
 
 5
 5

 4
 4
 
 4
 4
Mortgage bonds, notes, and other
 4
 4
 
 5
 5

 
 
 
 1
 1
Other current and long-term liabilities2
 14
 16
 2
 15
 17
2
 15
 17
 1
 16
 17
$21
 $44
 $65
 $21
 $57
 $78
$4
 $54
 $58
 $27
 $68
 $95

(a)Amounts shown are 100% of SGG's assets and liabilities, of which DTE Energy owns 55%.
Amounts for DTE Energy's non-consolidated VIEs are as follows:
 March 31, 2017 December 31, 2016
 (In millions)
Investments in equity method investees$186
 $187
Notes receivable$15
 $15
Future funding commitments$6
 $7


19


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:
 March 31, 2018 December 31, 2017
 (In millions)
Investments in equity method investees$866
 $811
Notes receivable$17
 $17
Future funding commitments$551
 $598

NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES
Other Income
The following is a summary of DTE Energy's Other income:
Three Months Ended March 31,Three Months Ended March 31,
2017 20162018 2017
(In millions)(In millions)
Income from REF entities$23
 $18
Equity earnings of equity method investees$26
 $15
21
 26
Income from REF investees18
 19
Gains from trading securities8
 5
Contract services20
 4
Allowance for equity funds used during construction7
 5
7
 7
Contract services4
 6
Gains from equity securities
 8
Other1
 2
10
 1
$64
 $52
$81
 $64
The following is a summary of DTE Electric's Other income:
Three Months Ended March 31,Three Months Ended March 31,
2017 20162018 2017
(In millions)(In millions)
Gains from trading securities allocated from DTE Energy$8
 $5
Contract services$20
 $4
Allowance for equity funds used during construction6
 4
5
 6
Contract services4
 6
Gains from equity securities allocated from DTE Energy
 8
Other1
 1
2
 1
$19
 $16
$27
 $19
Changes in Accumulated Other Comprehensive Income (Loss)
For the three months ended March 31, 20172018 and 2016,2017, reclassifications out of Accumulated other comprehensive income (loss) for the Registrants were not material. Changes in Accumulated other comprehensive income (loss) are presented in DTE Energy's Consolidated Statements of Changes in Equity and DTE Electric's Consolidated Statements of Changes in Shareholder's Equity. For further discussion regarding changes in Accumulated other comprehensive income (loss), see Note 3 to the Consolidated Financial Statements, "New Accounting Pronouncements."

DTE Energy Company — DTE Electric Company
Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

Income Taxes
The 2018 estimated annual effective tax rates for DTE Energy and DTE Electric are 13% and 22%, respectively. These tax rates are affected by estimated annual permanent items, including AFUDC equity, production tax credits, and other flow-through items, as well as discrete items that may occur in any given period, but are not consistent from period to period.
The interim effective tax rate and unrecognized tax benefits of the Registrants are as follows:
Effective Tax Rate 
Unrecognized
Tax Benefits
Three Months Ended March 31, March 31,Effective Tax Rate
2017 2016 2017Three Months Ended March 31,
    (In millions)2018 2017
DTE Energy22% 26% $10
16% 22%
DTE Electric35% 36% $13
25% 35%
The 4%6% decrease in DTE Energy's effective tax rate for the three months ended March 31, 2017 is2018 was primarily due to $13the reduction of the corporate tax rate from 35% to 21%, which became effective in 2018. The decrease in the effective tax rate was partially offset by true-up adjustments to the remeasurement of deferred taxes in 2018 of $21 million, which increased the effective tax rate by 5%, and the reduction of excess tax benefits on stock-based compensation recognizedof $10 million, which increased the effective tax rate by 2%. For further discussion regarding the true-up adjustments, see Note 3 to the Consolidated Financial Statements, "New Accounting Pronouncements."
The 10% decrease in accordance with ASU 2016-09, ImprovementsDTE Electric's effective tax rate for the three months ended March 31, 2018 was primarily due to Employee Share-Based Payment Accountingthe reduction of the corporate tax rate from 35% to 21%, which was adoptedbecame effective July 1, 2016.in 2018, partially offset by true-up adjustments to the remeasurement of deferred taxes in 2018 of $8 million, which increased the effective tax rate by 4%.
DTE Energy had $7 millionEnergy's total amount of unrecognized tax benefits that,as of March 31, 2018 was $8 million, of which $8 million, if recognized, would favorably impact its effective tax rate. DTE Electric had $8 millionElectric's total amount of unrecognized tax benefits that,as of March 31, 2018 was $10 million, of which $10 million, if recognized, would favorably impact its effective tax rate. The Registrants do not anticipate any material changes to the unrecognized tax benefits in the next twelve months.

20


DTE Energy Company — DTE Electric Company
Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

DTE Electric had income tax receivables with DTE Energy of $10$13 million and $9$12 million at March 31, 20172018 and December 31, 2016,2017, respectively.
Unrecognized Compensation Costs
As of March 31, 2017,2018, DTE Energy had $92$111 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 1.821.75 years.
Allocated Stock-Based Compensation
DTE Electric received an allocation of costs from DTE Energy associated with stock-based compensation of $8$9 million and $10$8 million for the three months ended March 31, 2018 and 2017, respectively.
Cash, Cash Equivalents, and 2016, respectively.Restricted Cash
Cash and cash equivalents include cash on hand, cash in banks, and temporary investments purchased with remaining maturities of three months or less. Restricted cash consists of funds held to satisfy requirements of certain debt and DTE Energy partnership operating agreements. Restricted cash designated for interest and principal payments within one year is classified as a Current Asset.

DTE Energy Company — DTE Electric Company
Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

The following is a table that provides a reconciliation of DTE Energy's Cash and cash equivalents as well as Restricted cash reported within the Consolidated Statements of Financial Position that sum to the total of the same such amounts shown in the Consolidated Statements of Cash Flows:
 Three Months Ended March 31,
 2018 2017
 (In millions)
Cash and cash equivalents$164
 $82
Restricted cash22
 20
Total cash, cash equivalents, and restricted cash shown in the Consolidated Statements of Cash Flows$186
 $102

NOTE 3 — NEW ACCOUNTING PRONOUNCEMENTS
Recently Adopted Pronouncements
In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330), Simplifying the Measurement of Inventory. The ASU replaces the current lower of cost or market test with a lower of cost or net realizable value test when cost is determined on a first-in, first-out or average cost basis. The standard is effective for public entities for annual reporting periods beginning after December 15, 2016, and interim periods therein. It is applied prospectively. The Registrants adopted this ASU at January 1, 2017. The adoption of the ASU did not have a significant impact on the Registrants' Consolidated Financial Statements.
Recently Issued Pronouncements
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), as amended. The objectives of this ASU are to improve upon revenue recognition requirements by providing a single comprehensive model to determine the measurement of revenue and timing of recognition. The core principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. This ASU also requiresrequired expanded qualitative and quantitative disclosures regarding the nature, amount, timing, and uncertainty of revenues and cash flows arising from contracts with customers. The standard is to be applied retrospectively. The Registrants adopted the standard effective January 1, 2018 using the modified retrospective approach. Under the modified retrospective approach, the information for periods prior to the adoption date has not been restated and continues to be reported under the accounting standards in effect for those periods. As permitted under the standard, the Registrants have elected to apply the guidance only to those contracts that were not completed at January 1, 2018, and have elected not to restate the impacts of any contract modifications made prior to the earliest period presented.
The adoption of the ASU did not have a significant impact on the Registrants' financial position or results of operations, but required additional disclosures for revenue. See Note 4 to the Consolidated Financial Statements, "Revenue."
In March 2017, the FASB issued ASU No. 2017-07, Compensation Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The amendments in this update required that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside of income from operations. The amendments in this update also allow only the service cost component to be eligible for capitalization when applicable. The Registrants adopted the standard effective January 1, 2018. The standard has been applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement and prospectively for the capitalization of the service cost component of net periodic pension cost and net periodic postretirement benefit in assets. As permitted by the standard, the Registrants have used benefit cost amounts disclosed for prior periods as the basis for retrospective application in the income statement. As a result of regulatory mechanisms, the impact to the Consolidated Financial Statements was not material for the first interim period within annual reporting periods beginning after December 15, 2017.quarter of 2018.
In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, as amended. The standardnew guidance is intended to improve the recognition and measurement of financial instruments. The guidance primarily impacts accounting for equity investments in unconsolidated entities (other than those accounted for using the equity method of accounting) and financial liabilities under the fair value option. The guidance requires equity investments to be applied retrospectively,generally measured at fair value, with subsequent changes in fair value recognized in net income. The guidance requires entities to make a cumulative-effect adjustment to the Statements of Financial Position as of the beginning of the first reporting period in which the guidance is effective. The Registrants adopted the standard effective January 1, 2018. Upon adoption, DTE Energy and early adoption is permittedDTE Electric recorded a cumulative-effect adjustment to reclassify $5 million and $3 million of unrealized gains from Accumulated other comprehensive income (loss) to Retained earnings, respectively.

DTE Energy Company — DTE Electric Company
Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

In March 2018, the FASB issued ASU No. 2018-05, Income Taxes (Topic 740): Amendments to SEC paragraphs pursuant to SEC Staff Accounting Bulletin No. 118. The Amendments in this update add various SEC paragraphs pursuant to the issuance of SEC Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118). SAB 118 directs taxpayers to consider the implications of the TCJA as provisional when it does not have the necessary information available, prepared, or analyzed in reasonable detail to complete its accounting for the change in the preceding year.tax law. As described in Note 10 to the Consolidated Financial Statements, "Income Taxes," within the combined DTE Energy and DTE Electric 2017 Annual Report on Form 10-K and in accordance with SAB 118, the Registrants recorded amounts that were considered provisional. In first quarter of 2018, DTE Energy and DTE Electric recorded true-up adjustments to the remeasurement of deferred taxes of $21 million and $8 million, respectively. The Registrants do not plan to early adopt the standard. The Registrants are currently assessing the impact of the ASU, as amended, on their Consolidated Financial Statements as well astrue-up adjustments was an increase in Income Tax Expense, of which $16 million was attributable to the transition method the Registrants will useregulated utilities and offset to adopt the guidance. Regulatory liabilities.The Registrants have completed the preliminary evaluationstrue-up adjustments were a result of the impact of this guidancefurther analysis for items subject to further consideration at December 31, 2017 under SAB 118 and doprimarily related to timing differences not expect the ASU to significantly affect results of operations for tariff-based sales, which represent a majority of the Registrants' revenues,recoverable from DTE Electric and the remaining non-tariff revenues.DTE Gas customers. The Registrants will continue to evaluateanalyze the impact of the ASU on existing revenue recognition policies and procedures and monitor the unresolved industry-related issues. Specifically, the Registrants are considering whether the new guidance will affect accounting for certain contracts where collectibility isamounts throughout 2018, which may result in question, contributions in aid of construction, and other utility industry-related areas. The Registrants are evaluating information that would be useful for users of the Consolidated Financial Statements, including information already provided in disclosures outside of the Combined Notes to the Consolidated Financial Statements.additional changes.
Recently Issued Pronouncements
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), a replacement of Leases (Topic 840).as amended. This guidance requires a lessee to account for leases as finance or operating leases.leases, and disclose key information about leasing arrangements. Both types of leases will result in the lessee recognizing a right-of-use asset and a corresponding lease liability on its balance sheet, with differing methodology for income statement recognition. For lessors,recognition, depending on the lease classification. The Registrants will adopt the standard modifieson January 1, 2019. As originally issued, the classification criteria and the accounting for sales-type and direct financing leases. Entities will classify leases to determine how to recognize lease-related revenue and expense. This ASU is effective for public entities for fiscal years, and interim periods within those years, beginning after December 15, 2018, and early adoption is permitted. Astandard requires a modified retrospective approach is required for leases existing or entered into after the beginning of the earliest comparative period in the Consolidated Financial Statements. The Registrants are evaluating the transition practical expedients available under the guidance, such as retaining the current lease assessment and classifications for existing leases at the effective date, and not applying the new guidance to land easements that exist or expire before the effective date.
A third-party software tool is being implemented that will assist with the initial adoption and ongoing compliance of the standard. The Registrants are evaluating contracts for leases and abstracting the required data, as well as evaluating new business processes, internal controls, and accounting policies. In addition, the Registrants are monitoring utility industry implementation issues for purchase power agreements, pipeline laterals, and other industry specific arrangements. While the Registrants expect an increase in assets and liabilities, however,as well as additional disclosures, they are currentlystill assessing the impact of this ASU on their Consolidated Financial Statements.

21


DTE Energy Company — DTE Electric Company
Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The amendments in this update replace the incurred loss impairment methodology in current GAAPgenerally accepted accounting principles with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. Entities will apply the new guidance as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. The ASU is effective for the Registrants beginning after December 15, 2019, and interim periods therein. Early adoption is permitted. The Registrants are currently assessing the impact of this standard on their Consolidated Financial Statements.
In March 2017,February 2018, the FASB issued ASU No. 2017-07,2018-02, CompensationIncome Statement Retirement BenefitsReporting Comprehensive Income (Topic 715)220): Improving the PresentationReclassification of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. Certain Tax Effects from Accumulated Other Comprehensive Income. The amendments in this update require that an employer report the service cost component in the same line item or items asallow a reclassification from accumulated other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are requiredcomprehensive income to be presented in the income statement separatelyretained earnings for stranded tax effects resulting from the service cost component and outside income from operations.TCJA. The amendments in this update also allow only the service cost componentrequire entities to be eligibledisclose their accounting policy for capitalization when applicable. The standard will be applied retrospectively for the presentation of the service cost component and thereleasing income tax effects from accumulated other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement and prospectively for the capitalization of the service cost component of net periodic pension cost and net periodic postretirement benefit in assets.comprehensive income. The ASU is effective for the Registrants for fiscal years beginning after December 15, 2017, including2018, and interim periods therein. Early adoption is permitted. The componentsRegistrants are currently assessing the impact of net periodic benefitthis standard on their Consolidated Financial Statements.


DTE Energy Company — DTE Electric Company
Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

NOTE 4 — REVENUE
Significant Accounting Policy
Upon the adoption of Topic 606, revenue is measured based upon the consideration specified in a contract with a customer at the time when performance obligations are satisfied. Under Topic 606, a performance obligation is a promise in a contract to transfer a distinct good or service or a series of distinct goods or services to the customer. The Registrants recognize revenue when performance obligations are satisfied by transferring control over a product or service to a customer. The Registrants have determined control to be transferred when the product is delivered or the service is provided to the customer. For the three months ended March 31, 2018, recognition of revenue for the Registrants subsequent to the adoption of Topic 606 is substantially similar in amount and approach to that prior to adoption.
Rates for DTE Electric and DTE Gas include provisions to adjust billings for fluctuations in fuel and purchased power costs, (credits)cost of natural gas, and certain other costs. Revenues are adjusted for pension benefitsdifferences between actual costs subject to reconciliation and other postretirement benefitsthe amounts billed in current rates. Under or over recovered revenues related to these cost recovery mechanisms are disclosedincluded in Regulatory assets or liabilities on the Registrants' Consolidated Statements of Financial Position and are recovered or returned to customers through adjustments to the billing factors.
For discussion of derivative contracts, see Note 8 to the Consolidated Financial Statements, "Financial and Other Derivative Instruments."
Disaggregation of Revenue
The following is a summary of revenues disaggregated by segment for DTE Energy:
 Three Months Ended March 31, 2018
 (In millions)
Electric(a)
 
Residential$586
Commercial429
Industrial176
Other(b)
14
Total Electric operating revenues(c)
$1,205
  
Gas 
Gas sales$457
End User Transportation85
Intermediate Transportation18
Other(d)
(10)
Total Gas operating revenues(e)
$550
  
Other segment operating revenues(f)
 
Gas Storage and Pipelines$119
Power and Industrial Projects$567
Energy Trading$1,498

(a)Revenues under the Electric segment generally represent those of DTE Electric.
(b)Includes a reduction of $39 million in revenues related to TCJA rate reduction reserve.
(c)Includes $5 million of other revenues which are outside the scope of Topic 606.
(d)
Includes a reduction of $32 million in revenues related to TCJA rate reduction reserve.
(e)Includes a reduction of $3 million under Alternative Revenue Programs and $2 million of other revenues which are both outside the scope of Topic 606.
(f)Includes revenues outside the scope of Topic 606 primarily related to $445 million of contracts accounted for as leases at the Power and Industrial Projects segment and $1.2 billion related to derivatives at the Energy Trading segment.

DTE Energy Company — DTE Electric Company
Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

Nature of Goods and Services
The following is a description of principal activities, separated by reportable segments, from which DTE Energy generates revenue. For more detailed information about reportable segments, see Note 12 to the Consolidated Financial Statements, "Retirement Benefits“Segment and Trusteed Assets." Related Information.”
The ASU will notRegistrants have contracts with customers which may contain more than one performance obligation. When more than one performance obligation exists in a significant impactcontract, the consideration under the contract is allocated to the performance obligations based on the Registrants' Consolidated Financial Statements.relative standalone selling price. DTE Energy generally determines stand alone selling prices based on the prices charged to customers or the use of the adjusted market assessment approach. The adjusted market assessment approach involves the evaluation of the market in which DTE Energy sells goods or services and estimating the price that a customer in that market would be willing to pay.
Under Topic 606, when a customer simultaneously receives and consumes the product or service provided, revenue is considered to be recognized over time. Alternatively, if it is determined that the criteria for recognition of revenue over time is not met, the revenue is considered to be recognized at a point in time.
Electric

Electric consists principally of DTE Electric. Electric revenues are primarily comprised of the supply and delivery of electricity, and related capacity. Revenues are primarily associated with cancelable contracts, with the exception of certain long-term contracts with commercial and industrial customers. Revenues, including estimated unbilled amounts, are generally recognized over time based upon volumes delivered or through the passage of time ratably based upon providing a stand-ready service. The Registrants have determined that the above methods represent a faithful depiction of the transfer of control to the customer. Unbilled revenues are typically determined utilizing approved tariff rates and estimated meter volumes. Estimated unbilled amounts recognized in revenue are subject to adjustment in the following reporting period as actual volumes by customer class are known. Revenues are typically subject to tariff rates based upon customer class and type of service, and are billed and received monthly. Tariff rates are determined by the MPSC on a per kWh or monthly basis.
Gas
NOTE 4 — ACQUISITIONGas revenues are primarily comprised of the supply and delivery of natural gas, and other services including storage, transportation, and appliance maintenance. Revenues are primarily associated with cancelable contracts with the exception of certain long-term contracts with commercial and industrial customers. Revenues, including estimated unbilled amounts, are generally recognized over time based upon volumes delivered or through the passage of time ratably based upon providing a stand-ready service. DTE Energy has determined that the above methods represent a faithful depiction of the transfer of control to the customer. Unbilled revenues are typically determined using both estimated meter volumes and estimated usage based upon the number of unbilled days and historical temperatures. Estimated unbilled amounts recognized in revenue are subject to adjustment in the following reporting period as actual volumes by customer class and service type are known. Revenues are typically subject to tariff rates or other rates subject to regulatory oversight and are billed and received monthly. Tariff rates are determined by the MPSC on a per unit or monthly basis.
Gas Storage and Pipelines
Gas Storage and Pipelines Acquisition
Effective October 1, 2016,revenues generally consist of services related to the gathering, transportation, and storage of natural gas. Contracts are primarily long-term in nature. Revenues, including estimated unbilled amounts, are generally recognized over time based upon services provided or through the passage of time ratably based upon providing a stand-ready service. DTE Energy closed onhas determined that the purchase of midstream natural gas assets in supportabove methods represent a faithful depiction of the strategytransfer of control to continue to growthe customer. Revenues are typically billed and earn competitive returnsreceived monthly. Pricing for shareholders. such revenues may consist of demand rates, commodity rates, transportation rates, and other associated fees. Consideration may consist of both fixed and variable components. Generally, uncertainties in the variable consideration components are resolved and revenues are known at the time of recognition.
Power and Industrial Projects
Power and Industrial Projects revenues consist primarily of contracts accounted for as leases which are outside of the scope of Topic 606. For performance obligations within the scope of Topic 606, the timing of revenue recognition is dependent upon when control over the associated product or service is transferred.

DTE Energy purchased 100%Company — DTE Electric Company
Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

Revenues at Power and Industrial Projects, within the scope of AGS, locatedTopic 606, generally consist of sales of blast furnace coke and coke oven gas, electricity, equipment maintenance services, and other energy related products and services. Revenues, including estimated unbilled amounts, for the sale of blast furnace coke are generally recognized at a point in Pennsylvania and West Virginia, and 40%time when the product is delivered, which represents the transfer of SGG, located in West Virginia, from M3 Midstream. In addition,control to the customer. Other revenues are generally recognized over time based upon services provided or through the passage of time ratably based upon providing a stand-ready service. DTE Energy purchased 15%has determined that the above methods represent a faithful depiction of SGGthe transfer of control to the customer. Market based pricing structures exist in such contracts including adjustments for consumer price or other indices. Consideration may consist of both fixed and variable components. Generally, uncertainties in the variable consideration components are resolved and revenues are known at the time of recognition. Billing terms vary and are generally monthly with payment terms typically within 30 days following billing.
Energy Trading
Energy Trading revenues consist primarily of derivative contracts outside of the scope of Topic 606. For performance obligations within the scope of Topic 606, the timing of revenue recognition is dependent upon when control over the associated product or service is transferred.
Revenues, including estimated unbilled amounts, within the scope of Topic 606 arising from Vega Energy Partners, resulting in 55% total ownership of SGG by DTE Energy.
Consideration transferred for the entities acquired was approximately $1.2 billion paid in cash and the assumption of SGG debt of $204 million. The $204 million of debt was comprised of DTE Energy's 55% interest in SGG of $112 million and 45% related to noncontrolling interest partners of $92 million. The acquisition was financed through the issuance of Equity Units and Senior Notes. These entities are part of DTE Energy's Gas Storage and Pipelines segment which owns and manages a networksale of natural gas, gathering, transmission,electricity, power capacity, and storage facilities servicingother energy related products are generally recognized over time based upon volumes delivered or through the Midwest, Ontario, and Northeast markets. SGGpassage of time ratably based upon providing a stand-ready service. DTE Energy has beendetermined that the above methods represent a faithful depiction of the transfer of control to the customer. Revenues are known at the time of recognition. Payment for the aforementioned revenues is generally due from customers in the month following delivery.
Revenues associated with RECs are recognized at a point in time when control of the RECs are transferred to the customer which is deemed to be when the subject RECs are entered for transfer to the customer in the applicable regulatory tracking system. Revenues associated with RECs under a VIE,wholesale full requirements power contract are deferred until control has been transferred. The deferred revenues represent a contract liability for which payment has been received and the amounts have been estimated using the adjusted market assessment approach. With the exception of RECs, generally all other performance obligations associated with wholesale full requirements power contracts are satisfied over time in conjunction with the delivery of power. At the time power is delivered, DTE Energy may not have control over the RECs as the RECs are not self-generated and may not yet have been procured resulting in deferred revenues.
Deferred Revenue
The following is a summary of deferred revenue activity:
 DTE Energy
 (In millions)
Beginning Balance, January 1, 2018$56
Increases due to cash received or receivable, excluding amounts recognized as revenue during the period14
Revenue recognized that was included in the deferred revenue balance at the beginning of the period(16)
Ending Balance, March 31, 2018$54
The deferred revenues at DTE Energy generally represent amounts paid by or receivable from customers for which the primary beneficiary. Thus, SGG's assetsassociated 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 liabilitiesservices related to customer prepayments. Deferred revenues associated with these products and services are included in DTE Energy's Consolidated Statements of Financial Position. See Note 1recognized when control has transferred to the Consolidated Financial Statements, "Organization and Basis of Presentation," for more information.customer.
DTE Energy has applied purchase accounting to the acquired entities. The allocation of the purchase price included in the Consolidated Statements of Financial Position is preliminary and may be revised up to one year from the date of acquisition due to adjustments in the estimated fair value of the assets acquired and the liabilities assumed. The purchase price is subject to (i) final working capital settlement adjustments, and (ii) resolution of any indemnification claims that might be deducted from the $130 million of cash consideration paid and held in escrow. As such, DTE Energy cannot estimate the potential amount of the additional revisions to the purchase price allocation in 2017. The excess purchase price over the fair value of net assets acquired totaled approximately $268 million and was classified as goodwill. During the first quarter of 2017, a final working capital adjustment was recognized resulting in an additional goodwill of approximately $6 million. The factors contributing to the recognition of goodwill are based on various strategic benefits that are expected to be realized from the AGS and SGG acquisition. The acquisition provides DTE Energy with a platform for midstream growth and access to further investment opportunities in the Appalachian basin, an additional connection to the NEXUS Pipeline which should drive incremental volumes on the NEXUS Pipeline, and a new set of producer relationships that may lead to more partnering opportunities. The goodwill is expected to be deductible for income tax purposes.

22


DTE Energy Company — DTE Electric Company
Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

The preliminary allocation of the purchase price was based on estimated fair values of the AGS and SGG assets acquired and liabilities assumed at the date of acquisition, October 1, 2016. The components of the preliminary purchase price allocation werefollowing table represents deferred revenue amounts for DTE Energy that are expected to be recognized as follows:revenue in future periods:
 (In millions)
Assets 
Cash$83
Accounts receivable24
Inventory6
Property, plant, and equipment, net730
Goodwill268
Customer relationship intangibles770
Other current assets1
 $1,882
Liabilities 
Accounts payable$19
Other current liabilities14
Long-term debt204
Other long-term liabilities26
 $263
Less noncontrolling interest390
Total cash consideration$1,229
 DTE Energy
 (In millions)
2018$23
20199
20201
20215
20226
2023 and thereafter10
 $54
Transaction Price Allocated to the Remaining Performance Obligations
In accordance with optional exemptions available under Topic 606, the Registrants did not disclose the value of unsatisfied performance obligations for (1) contracts with an original expected length of one year or less, (2) with the exception of fixed consideration, contracts for which revenue is recognized at the amount to which the Registrants have the right to invoice for goods provided and services performed, and (3) contracts for which variable consideration relates entirely to an unsatisfied performance obligation.
Such contracts consist of varying types of performance obligations across the segments, including the supply and delivery of energy related products and services. Contracts with variable volumes and/or variable pricing, including those with pricing provisions tied to a consumer price or other index, have also been excluded as the related consideration under the contract is variable at inception of the contract. Contract lengths vary from cancelable to multi-year.
The intangible assets recorded as a resultRegistrants expect to recognize revenue for the following amounts related to fixed consideration associated with remaining performance obligations in each of the acquisition pertain to existing customer relationships, which were valued at approximately $770 million as of the acquisition date. The fair value of the intangible assets acquired was estimated by applying the income approach. The income approach was based upon discounted projected future cash flows attributable to the existing contracts and agreements. The fair value measurement was based on significant unobservable inputs, including management estimates and assumptions, and thus represents a Level 3 measurement, pursuant to the applicable accounting guidance. Key estimates and inputs included revenue and expense projections and discount rates based on the risks associated with the entities. The intangible assets are amortized on a straight line basis over a period of 40 years, which is based on the number of years the assets are expected to economically contribute to the business. The expected economic benefit incorporates existing customer contracts with a weighted-average amortization life of 10 years and expected renewal rates, based on the estimated volume and production lives of gas resources in the region.periods noted:
The fair value of the noncontrolling interest in the table above was derived based on the purchase price DTE Energy paid for the 55% interest in SGG.
 DTE Energy DTE Electric
 (In millions)
2018$159
 $6
2019238
 8
2020168
 
2021128
 
2022103
 
2023 and thereafter351
 
Total$1,147
 $14
Other Matters
DTE Energy evaluated pre-acquisition contingencies relating to AGS and SGG that existed ashas recognized charges of the acquisition date. Based on the evaluation, DTE Energy determined that $39$25 million of certain pre-acquisition contingencies, related to repairing existing right-of-ways, are probable in nature and estimable as of the acquisition date. Accordingly, DTE Energy recorded its best estimatesexpense recognized for these contingencies as part of the purchase accounting for AGS and SGG.
DTE Energy incurred $15 million of direct transaction costsestimated uncollectible accounts receivable for the yearthree months ended DecemberMarch 31, 2016. These costs were primarily2018. DTE Electric has recognized charges of $14 million related to advisory fees and included in Operation and maintenance in DTE Energy's 2016 Consolidated Statements of Operations.
DTE Energy's 2016 Consolidated Statements of Operations included Operating Revenues — Non-utility operations of $39 million and Net Income of $4 million associated with the acquired entitiesexpense recognized for estimated uncollectible accounts receivable for the three-month period following the acquisition date, excluding the $15 million transaction costs described above. The pro forma financial information was not presented for DTE Energy because the effects of the acquisition were not material to the Consolidated Statements of Operations.three months ended March 31, 2018.


23


DTE Energy Company — DTE Electric Company
Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

NOTE 5 — REGULATORY MATTERS
2016 Electric Rate Case Filing
DTE Electric filed a rate case with the MPSC on February 1, 2016 requesting an increase in base rates of $344 million based on a projected twelve-month period ending July 31, 2017. On August 1, 2016, DTE Electric self-implemented a base rate increase of $245 million. On January 31, 2017, the MPSC issued an order approving an annual revenue increase of $184 million for service rendered on or after February 7, 2017. The MPSC authorized a return on equity of 10.1%. DTE Electric has recorded a refund liability of $37 million, representing the total estimated refund due to customers, inclusive of interest, at March 31, 2017. DTE Electric will file a self-implementation reconciliation with the MPSC by April 30, 2017.
2017 Electric Rate Case Filing
DTE Electric filed a rate case with the MPSC on April 19, 2017 requesting an increase in base rates of $231 million based on a projected twelve-month period ending October 31, 2018. The requested increase in base rates is primarily due primarily to an increase in net plant resulting from infrastructure investments, environmental compliance, and reliability improvement projects. The rate filing also includes projected changes in sales, operation and maintenance expenses, and working capital. The rate filing also requests an increase in return on equity from 10.1% to 10.5% on capital structure. . To mitigate the impact to its customers resulting from ASU No. 2017-07, Compensation Retirement Benefits (Topic 715), DTE Electric anticipates self-implementingimplemented regulatory accounting treatment. As such, beginning January 1, 2018, pension and postretirement cost components previously included as capital overhead are being deferred. For further discussion of ASU No. 2017-07, see Note 3 to the Consolidated Financial Statements, "New Accounting Pronouncements." On November 1, 2017, DTE Electric self-implemented a base rate increase in November 2017 withof $125 million. On April 18, 2018, the MPSC issued an order approving an annual revenue increase of $65.2 million for service rendered on or after May 1, 2018. The MPSC order expected by April 2018.
PSCR Proceedings
The PSCR process is designed to allowauthorized a return on equity of 10.0%. DTE Electric has recorded a refund liability of $25 million, representing the total estimated refund due to recover allcustomers, inclusive of its power supply costs if incurred under reasonable and prudent policies and practices. DTE Electric's power supply costs include fuel and related transportation costs, purchased and net interchange power costs, NOx and SO2 emission allowances costs, urea costs, transmission costs, MISO, and other related costs. The MPSC reviews these costs, policies, and practices for prudence in annual plan and reconciliation filings.interest, at March 31, 2018.
2015 PSCR Year — In March 2016, DTE Electric filed its 2015 PSCR reconciliation. The Administrative Law Judge and certain intervenors in the reconciliation case have challenged the recoveryCertificate of approximately $13 million of costs related to a customer settlement. Resolution of this matter is expected in 2017.Necessity
2016 DTE Main Electric Depreciation Case Filing
On July 31, 2017, DTE Electric filed a depreciationrequest for authority to build a 1,100 megawatt natural gas fueled combined cycle generation facility at DTE Electric's Belle River Power Plant. DTE Electric requested the MPSC to issue three CONs for the following: (1) power supplied by the proposed project is needed, (2) the size, fuel type, and other design characteristics of the proposed project represent the most reasonable and prudent means of meeting the power need, and (3) the estimated capital costs of $989 million for the proposed project will be recoverable in rates from DTE Electric's customers. DTE Electric expects an order in this proceeding from the MPSC by April 27, 2018.
2017 Gas Rate Case Filing
DTE Gas filed a rate case with the MPSC on November 1, 201622, 2017 requesting an increase in depreciationbase rates of $156$85.1 million when comparedbased on a projected twelve-month period ending September 30, 2019. The requested increase in base rates is primarily due to current depreciation rates for Plantan increase in service balancesnet plant. The rate filing also requests an increase in return on equity from 10.1% to 10.5% and includes projected changes in sales, operations, maintenance expenses, and working capital. To mitigate the impact to its customers resulting from ASU No. 2017-07, Compensation Retirement Benefits (Topic 715), DTE Gas suggested regulatory accounting treatment, consistent with the methodology approved by the MPSC in the 2017 DTE Electric Rate Case order. As such, beginning January 1, 2018, pension and postretirement cost components previously included as capital overhead are being deferred. For further discussion of December 31, 2015. AnASU No. 2017-07, see Note 3 to the Consolidated Financial Statements, "New Accounting Pronouncements." A final MPSC order in this case is expected by September 2018.
2017 Tax Reform
On December 27, 2017, the MPSC issued an order to consider changes in 2018.the rates of all Michigan rate-regulated utilities to reflect the effects of the federal TCJA. On January 19, 2018, DTE Electric and DTE Gas filed information with the MPSC regarding the potential change in revenue requirements due to the TCJA effective January 1, 2018, and outlined their recommended method to flow the current and deferred tax benefits of those impacts to ratepayers.


24

On February 22, 2018, the MPSC issued an order in this case requiring utilities, including DTE Electric and DTE Gas, to follow a 3-step approach of credits and calculations. The first step is to establish Credit A, through contested cases. Credit A is a going-forward tax credit to reflect the reduction of the corporate tax rate from 35% to 21%. DTE Gas submitted its Credit A filing on March 28, 2018, reflecting a reduction in revenues of $38.2 million. The proposed new rates are expected to be effective July 1, 2018. DTE Electric is required to file its Credit A application by May 18, 2018. The second step is to establish Credit B, through contested cases. Credit B is a backward-looking tax credit to reflect the reduction of the corporate rate of 35% to 21%, for the period January 1, 2018 through the date Credit A is established. The Credit B filing is required within sixty days after Credit A is implemented. DTE Electric and DTE Gas have been deferring the impact of the reduction to the corporate tax rate since January 1, 2018. The third step is to perform Calculation C, through contested cases. Calculation C will address all remaining issues relative to the new tax law, which is primarily the remeasurement of deferred taxes and how the amounts deferred as Regulatory liabilities will flow to ratepayers. DTE Electric and DTE Gas are required to file Calculation C no later than October 1, 2018, unless they file a new general rate case prior to October 1, 2018, and address Calculation C within that filing.

DTE Energy Company — DTE Electric Company
Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)


NOTE 6 — EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the net income, adjusted for income allocated to participating securities, by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflect the dilution that would occur if any potentially dilutive instruments were exercised or converted into common shares. DTE Energy’s participating securities are restricted shares under the stock incentive program that contain rights to receive non-forfeitable dividends. Equity units, performance shares, and stock options do not receive cash dividends; as such, these awards are not considered participating securities.
The following is a reconciliation of DTE Energy's basic and diluted income per share calculation:
Three Months Ended March 31,Three Months Ended March 31,
2017 20162018 2017
(In millions, except per share amounts)(In millions, except per share amounts)
Basic Earnings per Share 
  
   
Net income attributable to DTE Energy Company$400
 $247
Less allocation of earnings to net restricted stock awards(1) 
Net Income Attributable to DTE Energy Company$361
 $400
Less: Allocation of earnings to net restricted stock awards1
 1
Net income available to common shareholders — basic$399
 $247
$360
 $399
      
Average number of common shares outstanding179
 179
180
 179
Basic Earnings per Common Share$2.23
 $1.38
$2.01
 $2.23
      
Diluted Earnings per Share      
Net income attributable to DTE Energy Company$400
 $247
Less allocation of earnings to net restricted stock awards(1) 
Net Income Attributable to DTE Energy Company$361
 $400
Less: Allocation of earnings to net restricted stock awards1
 1
Net income available to common shareholders — diluted$399
 $247
$360
 $399
      
Average number of common shares outstanding179
 180
180
 179
Diluted Earnings per Common Share(a)
$2.23
 $1.37
$2.00
 $2.23

(a)The October 2016 Equity Units are potentially dilutive securities but were excluded from the calculation of diluted EPS were approximately 6.6 million and 6.8 million for the three months ended March 31, 2018 and 2017, respectively, as the dilutive stock price threshold was not met.


25


DTE Energy Company — DTE Electric Company
Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

NOTE 7 — 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 March 31, 20172018 and December 31, 2016.2017. The Registrants believe they use valuation techniques that maximize the use of observable market-based inputs and minimize the use of unobservable inputs.

DTE Energy Company — DTE Electric Company
Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

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.

26


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:
March 31, 2017 December 31, 2016March 31, 2018 December 31, 2017
Level
1
 Level
2
 Level
3
 
Netting(a)
 Net Balance Level
1
 Level
2
 Level
3
 
Netting(a)
 Net BalanceLevel
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)(In millions)
Assets:                   
Assets                       
Cash equivalents(b)(c)
$14
 $3
 $
 $
 $17
 $14
 $3
 $
 $
 $17
$16
 $
 $
 $
 $
 $16
 $16
 $3
 $
 $
 $
 $19
Nuclear decommissioning trusts(c)
                                          
Equity securities890
 
 
 
 890
 887
 
 
 
 887
933
 
 
 
 
 933
 978
 
 
 
 
 978
Fixed income securities11
 460
 
 
 471
 11
 414
 
 
 425
14
 516
 
 
 
 530
 18
 477
 
 
 
 495
Private equity securities
 
 
 5
 
 5
 
 
 
 5
 
 5
Cash equivalents3
 
 
 
 3
 8
 
 
 
 8
13
 
 
 
 
 13
 14
 
 
 
 
 14
Other investments(d)
                                          
Equity securities110
 
 
 
 110
 104
 
 
 
 104
117
 
 
 
 
 117
 118
 
 
 
 
 118
Fixed income securities63
 
 
 
 63
 61
 
 
 
 61
70
 
 
 
 
 70
 72
 
 
 
 
 72
Cash equivalents4
 
 
 
 
 4
 4
 
 
 
 
 4
Derivative assets 
  
  
  
    
  
  
  
                         
Commodity Contracts 
  
  
  
            
Natural Gas82
 151
 71
 (206) 98
 216
 79
 53
 (306) 42
Commodity contracts                       
Natural gas49
 92
 66
 
 (118) 89
 148
 112
 97
 
 (256) 101
Electricity
 152
 34
 (146) 40
 
 154
 39
 (157) 36

 162
 21
 
 (135) 48
 
 243
 42
 
 (241) 44
Other
 
 1
 
 1
 
 
 2
 
 2

 
 5
 
 
 5
 
 
 9
 
 
 9
Foreign currency exchange contracts
 5
 
 (3) 2
 
 6
 
 (5) 1

 2
 
 
 (2) 
 
 1
 
 
 (1) 
Total derivative assets82
 308
 106

(355) 141
 216
 239
 94
 (468) 81
49
 256
 92


 (255) 142
 148
 356
 148
 

(498) 154
Total$1,173
 $771
 $106

$(355) $1,695
 $1,301
 $656
 $94
 $(468) $1,583
$1,216
 $772
 $92

$5
 $(255) $1,830
 $1,368
 $836
 $148
 $5

$(498) $1,859
Liabilities:                   
Liabilities                       
Derivative liabilities                                          
Commodity Contracts 
  
  
  
    
  
  
  
  
Natural Gas$(82) $(121) $(86) $202
 $(87) $(226) $(86) $(149) $321
 $(140)
Commodity contracts                       
Natural gas$(58) $(62) $(76) $
 $126
 $(70) $(141) $(111) $(126) $
 $263
 $(115)
Electricity
 (157) (40) 158
 (39) 
 (159) (30) 163
 (26)
 (164) (34) 
 142
 (56) 
 (245) (30) 
 246
 (29)
Other
 
 (3) 3
 
 
 
 (3) 2
 (1)
 
 (1) 
 
 (1) 
 
 (1) 
 1
 
Foreign currency exchange contracts
 (2) 
 2
 
 
 (3) 
 3
 

 (2) 
 
 2
 
 
 (3) 
 
 1
 (2)
Total derivative liabilities(82) (280) (129) 365
 (126) (226) (248) (182) 489
 (167)(58) (228) (111) 
 270
 (127) (141) (359) (157) 
 511
 (146)
Total$(82) $(280) $(129) $365
 $(126) $(226) $(248) $(182) $489
 $(167)$(58) $(228) $(111) $
 $270
 $(127) $(141) $(359) $(157) $
 $511
 $(146)
Net Assets (Liabilities) at end of period$1,091
 $491
 $(23) $10
 $1,569
 $1,075
 $408
 $(88) $21
 $1,416
$1,158
 $544
 $(19) $5
 $15
 $1,703
 $1,227
 $477
 $(9) $5
 $13
 $1,713
Assets:                   
Assets                       
Current$78
 $228
 $60
 $(281) $85
 $205
 $199
 $60
 $(400) $64
$65
 $194
 $51
 $
 $(210) $100
 $157
 $298
 $104
 $
 $(437) $122
Noncurrent1,095
 543
 46
 (74) 1,610
 1,096
 457
 34
 (68) 1,519
1,151
 578
 41
 5
 (45) 1,730
 1,211
 538
 44
 5
 (61) 1,737
Total Assets$1,173
 $771
 $106
 $(355) $1,695
 $1,301
 $656
 $94
 $(468) $1,583
$1,216
 $772
 $92
 $5
 $(255) $1,830
 $1,368
 $836
 $148
 $5
 $(498) $1,859
Liabilities:                   
Liabilities                       
Current$(63) $(213) $(36) $279
 $(33) $(203) $(211) $(79) $424
 $(69)$(53) $(183) $(53) $
 $220
 $(69) $(137) $(313) $(108) $
 $459
 $(99)
Noncurrent(19) (67) (93) 86
 (93) (23) (37) (103) 65
 (98)(5) (45) (58) 
 50
 (58) (4) (46) (49) 
 52
 (47)
Total Liabilities$(82) $(280) $(129) $365
 $(126) $(226) $(248) $(182) $489
 $(167)$(58) $(228) $(111) $
 $270
 $(127) $(141) $(359) $(157) $
 $511
 $(146)
Net Assets (Liabilities) at end of period$1,091
 $491
 $(23) $10
 $1,569
 $1,075
 $408
 $(88) $21
 $1,416
$1,158
 $544
 $(19) $5
 $15
 $1,703
 $1,227
 $477
 $(9) $5
 $13
 $1,713

(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.
(b)(c)At March 31, 20172018, equity securities of $16 million consisted of $8 million and $8 million of cash equivalents included in Restricted cash and Other investments on DTE Energy's Consolidated Statements of Financial Position, respectively. At December 31, 2016, available-for-sale2017, equity securities of $17$19 million included $7consisted of $8 million and $10$11 million of cash equivalents included in Restricted cash and Other investments on DTE Energy's Consolidated Statements of Financial Position, respectively.
(c)At March 31, 2017, the Nuclear Decommissioning Master Trust had outstanding commitments to invest in private equity investments of approximately $15 million. These commitments will be funded by existing nuclear decommissioning trust funds.
(d)Excludes cash surrender value of life insurance investments.

27


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:
March 31, 2017 December 31, 2016March 31, 2018 December 31, 2017
Level 1 Level 2 Level 3 Net Balance Level 1 Level 2 Level 3 Net BalanceLevel 1 Level 2 Level 3 
Other(a)
 Net Balance Level 1 Level 2 Level 3 
Other(a)
 Net Balance
(In millions)(In millions)
Assets:               
Assets                   
Cash equivalents(a)(b)
$8
 $3
 $
 $11
 $8
 $3
 $
 $11
$8
 $
 $
 $
 $8
 $8
 $3
 $
 $
 $11
Nuclear decommissioning trusts(b)
                                  
Equity securities890
 
 
 890
 887
 
 
 887
933
 
 
 
 933
 978
 
 
 
 978
Fixed income securities11
 460
 
 471
 11
 414
 
 425
14
 516
 
 
 530
 18
 477
 
 
 495
Private equity securities
 
 
 5
 5
 
 
 
 5
 5
Cash equivalents3
 
 
 3
 8
 
 
 8
13
 
 
 
 13
 14
 
 
 
 14
Other investments                                  
Equity securities9
 
 
 9
 9
 
 
 9
11
 
 
 
 11
 11
 
 
 
 11
Derivative assets — FTRs
 
 1
 1
 
 
 2
 2

 
 5
 
 5
 
 
 9
 
 9
Total$921
 $463
 $1
 $1,385
 $923
 $417
 $2
 $1,342
$979
 $516
 $5
 $5
 $1,505
 $1,029
 $480
 $9
 $5
 $1,523
                                  
Assets:               
Assets                   
Current$8
 $3
 $1
 $12
 $8
 $3
 $2
 $13
$8
 $
 $5
 $
 $13
 $8
 $3
 $9
 $
 $20
Noncurrent913
 460
 
 1,373
 915
 414
 
 1,329
971
 516
 
 5
 1,492
 1,021
 477
 
 5
 1,503
Total Assets$921
 $463
 $1
 $1,385
 $923
 $417
 $2
 $1,342
$979
 $516
 $5
 $5
 $1,505
 $1,029
 $480
 $9
 $5
 $1,523

(a)Amounts represent assets valued at NAV as a practical expedient for fair value.
(b)At March 31, 2017 and2018, equity securities of $8 million consisted of cash equivalents included in Other investments on DTE Electric's Consolidated Statements of Financial Position. At December 31, 2016, available-for-sale2017, equity securities of $11 million consisted of cash equivalents included in Other investments on DTE Electric's Consolidated Statements of Financial Position, respectively.
(b)At March 31, 2017, the Nuclear Decommissioning Master Trust had outstanding commitments to invest in private equity investments of approximately $15 million. These commitments will be funded by existing nuclear decommissioning trust funds.Position.
Cash Equivalents
Cash equivalents include investments with maturities of three months or less when purchased. The cash equivalents shown in the fair value table are comprised of short-term investments and money market funds.
Nuclear Decommissioning Trusts and Other Investments
The nuclear decommissioning trusts and other investments hold debt and equity securities directly and indirectly through institutional mutual funds and commingled funds. Other assets such as private market investments are used to enhance long-term returns while improving portfolio diversification. All pricing for investments in this category are classified as NAV assets. Exchange-traded debt and equity securities held directly 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. The institutional mutual funds hold exchange-traded equity or debt securities (exchange and non-exchange traded) and are valued based on publicly available NAVs. A primary price source is identified by asset type, class, or issue for each security. The trustee monitors prices supplied by pricing services and may use a supplemental price source or change the primary price source of a given security if the trustee determines that another price source is considered to be 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. Additionally, the Registrants selectively corroborate the fair value of securities by comparison of market-based price sources. Investment policies and procedures are determined by DTE Energy's Trust Investments Department which reports to DTE Energy's Vice President and Treasurer.

28


DTE Energy Company — DTE Electric Company
Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

Derivative Assets and Liabilities
Derivative assets and liabilities are comprised of physical and financial derivative contracts, including futures, forwards, options, and swaps that are both exchange-traded and over-the-counter traded contracts. Various inputs are used to value derivatives depending on the type of contract and availability of market data. Exchange-traded derivative contracts are valued using quoted prices in active markets. The Registrants consider the following criteria in determining whether a market is considered active: frequency in which pricing information is updated, variability in pricing between sources or over time, and the availability of public information. Other derivative contracts are valued based upon a variety of inputs including commodity market prices, broker quotes, interest rates, credit ratings, default rates, market-based seasonality, and basis differential factors. The Registrants monitor the prices that are supplied by brokers and pricing services and may use a supplemental price source or change the primary price source of an index if prices become unavailable or another price source is determined to be more representative of fair value. The Registrants have obtained an understanding of how these prices are derived. Additionally, the Registrants selectively corroborate the fair value of their transactions by comparison of market-based price sources. Mathematical valuation models are used for derivatives for which external market data is not readily observable, such as contracts which extend beyond the actively traded reporting period. The Registrants have established a Risk Management Committee whose responsibilities include directly or indirectly ensuring all valuation methods are applied in accordance with predefined policies. The development and maintenance of the Registrants' forward price curves has been assigned to DTE Energy's Risk Management Department, which is separate and distinct from the trading functions within DTE Energy.
The following table presents the fair value reconciliation of Level 3 assets and liabilities measured at fair value on a recurring basis for DTE Energy:
Three Months Ended March 31, 2017 Three Months Ended March 31, 2016Three Months Ended March 31, 2018 Three Months Ended March 31, 2017
Natural Gas Electricity Other Total Natural Gas Electricity Other TotalNatural Gas Electricity Other Total Natural Gas Electricity Other Total
(In millions)(In millions)
Net Assets (Liabilities) as of January 1$(96) $9
 $(1) $(88) $(5) $6
 $(5) $(4)$(29) $12
 $8
 $(9) $(96) $9
 $(1) $(88)
Transfers into Level 3 from Level 2
 
 
 
 
 
 
 

 
 
 
 
 
 
 
Transfers from Level 3 into Level 2
 
 
 
 (1) 
 
 (1)(3) 
 
 (3) 
 
 
 
Total gains (losses)                              
Included in earnings52
 (9) 1
 44
 (20) (58) (1) (79)(70) 131
 
 61
 52
 (9) 1
 44
Recorded in Regulatory liabilities
 
 2
 2
 
 
 (2) (2)
 
 
 
 
 
 2
 2
Purchases, issuances, and settlements                              
Settlements29
 (6) (4) 19
 (8) 36
 1
 29
92
 (156) (4) (68) 29
 (6) (4) 19
Net Liabilities as of March 31$(15) $(6) $(2) $(23) $(34) $(16) $(7) $(57)
The amount of total gains (losses) included in Net Income attributed to the change in unrealized gains (losses) related to assets and liabilities held at March 31, 2017 and 2016 and reflected in Operating Revenues — Non-utility operations and Fuel, purchased power, and gas — non-utility in DTE Energy's Consolidated Statements of Operations$35
 $(3) $
 $32
 $(72) $(3) $(1) $(76)
Net Assets (Liabilities) as of March 31$(10) $(13) $4
 $(19) $(15) $(6) $(2) $(23)
The amount of total gains (losses) included in Net Income attributed to the change in unrealized gains (losses) related to assets and liabilities held at March 31, 2018 and 2017 and reflected in Operating Revenues — Non-utility operations and Fuel, purchased power, and gas — non-utility in DTE Energy's Consolidated Statements of Operations$(58) $(10) $
 $(68) $35
 $(3) $
 $32
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 March 31,Three Months Ended March 31,
2017 20162018 2017
(In millions)(In millions)
Net Assets as of January 1$2
 $3
Net Assets as of beginning of period$9
 $2
Change in fair value recorded in Regulatory liabilities2
 (2)
 2
Purchases, issuances, and settlements      
Settlements(3) 
(4) (3)
Net Assets as of March 31$1
 $1
$5
 $1
The amount of total gains (losses) included in Regulatory liabilities attributed to the change in unrealized gains (losses) related to assets held at March 31, 2017 and 2016 and reflected in DTE Electric's Consolidated Statements of Financial Position$
 $
The amount of total gains (losses) included in Regulatory liabilities attributed to the change in unrealized gains (losses) related to assets held at March 31, 2018 and 2017 and reflected in DTE Electric's Consolidated Statements of Financial Position$3
 $

29


DTE Energy Company — DTE Electric Company
Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

Derivatives are transferred between levels primarily due to changes in the source data used to construct price curves as a result of changes in market liquidity. Transfers in and transfers out are reflected as if they had occurred at the beginning of the period.
There were no transfers between Levels 1 and 2 for the Registrants during the three months ended March 31, 20172018 and 2016,2017, and there were no transfers from or into Level 3 for DTE Electric during the same periods.
The following tables present the unobservable inputs related to DTE Energy's Level 3 assets and liabilities:
 March 31, 2017       March 31, 2018      
Commodity Contracts Derivative Assets Derivative Liabilities Valuation Techniques Unobservable Input Range Weighted Average Derivative Assets Derivative Liabilities Valuation Techniques Unobservable Input Range Weighted Average
 (In millions)       (In millions)      
Natural Gas $71
 $(86) Discounted Cash Flow Forward basis price (per MMBtu) $(0.87) $6.25/MMBtu $(0.14)/MMBtu $66
 $(76) Discounted Cash Flow Forward basis price (per MMBtu) $(1.37) $4.10/MMBtu $(0.08)/MMBtu
Electricity $34
 $(40) Discounted Cash Flow Forward basis price (per MWh) $(6) $8/MWh $1/MWh $21
 $(34) Discounted Cash Flow Forward basis price (per MWh) $(6) $8/MWh $
 December 31, 2016       December 31, 2017      
Commodity Contracts Derivative Assets Derivative Liabilities Valuation Techniques Unobservable Input Range Weighted Average Derivative Assets Derivative Liabilities Valuation Techniques Unobservable Input Range Weighted Average
 (In millions)       (In millions)      
Natural Gas $53
 $(149) Discounted Cash Flow Forward basis price (per MMBtu) $(1.00) $7.90/MMBtu $(0.05)/MMBtu $97
 $(126) Discounted Cash Flow Forward basis price (per MMBtu) $(1.10) $9.75/MMBtu $(0.03)/MMBtu
Electricity $39
 $(30) Discounted Cash Flow Forward basis price (per MWh) $(6) $12/MWh $1/MWh $42
 $(30) Discounted Cash Flow Forward basis price (per MWh) $(5) $15/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 inputs listed above would have a direct impact on the fair values of the above security types if they were adjusted. A significant increase (decrease) in the basis price would result in a higher (lower) fair value for long positions, with offsetting impacts to short positions.
Fair Value of Financial Instruments
The following table presents the carrying amount and fair value of financial instruments included in the table below is determined by using quoted market prices when available. When quoted prices are not available, pricing services may be used to determine the fair value with reference to observable interest rate indexes. The Registrants have obtained an understanding of how the fair values are derived. The Registrants also selectively corroborate the fair value of their transactions by comparison of market-based price sources. Discounted cash flow analyses based upon estimated current borrowing rates are also used to determine fair value when quoted market prices are not available. The fair values of notes receivable, excluding capital leases, and notes payable are generally estimated using discounted cash flow techniques that incorporate market interest rates as well as assumptions about the remaining life of the loans and credit risk. Depending on the information available, other valuation techniques may be used that rely on internal assumptions and models. Valuation policies and procedures for the Registrants are determined by DTE Energy's Treasury Department which reports to DTE Energy's Vice President and Treasurer and DTE Energy's Controller's Department which reports to DTE Energy's Vice President and Controller.

Energy:
30

 March 31, 2018 December 31, 2017
 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 capital leases
$37
 $
 $
 $37
 $38
 $
 $
 $38
Dividends payable$160
 $160
 $
 $
 $158
 $158
 $
 $
Short-term borrowings$635
 $
 $635
 $
 $621
 $
 $621
 $
Notes payable — Other(b), excluding capital leases
$12
 $
 $
 $12
 $12
 $
 $
 $12
Long-term debt(c)
$12,289
 $1,874
 $10,136
 $813
 $12,288
 $1,939
 $10,571
 $764

(a)Current portion included in Current Assets — Other on DTE Energy's Consolidated Statements of Financial Position.
(b)Included in Current Liabilities — Other and Other Liabilities — Other on DTE Energy's Consolidated Statements of Financial Position.
(c)Includes debt due within one year, unamortized debt discounts, and issuance costs. Excludes Capital lease obligations.

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 Energy:Electric:
 March 31, 2017 December 31, 2016
 Carrying Fair Value Carrying Fair Value
 Amount Level 1 Level 2 Level 3 Amount Level 1 Level 2 Level 3
 (In millions)
Notes receivable, excluding capital leases$31
 $
 $
 $31
 $36
 $
 $
 $36
Dividends payable$148
 $148
 $
 $
 $148
 $148
 $
 $
Short-term borrowings$59
 $
 $59
 $
 $499
 $
 $499
 $
Notes payable — Other(a)
$18
 $
 $
 $18
 $17
 $
 $
 $17
Long-term debt(b)
$11,762
 $1,505
 $9,874
 $1,044
 $11,270
 $1,465
 $9,384
 $1,056
 March 31, 2018 December 31, 2017
 Carrying Fair Value Carrying Fair Value
 Amount Level 1 Level 2 Level 3 Amount Level 1 Level 2 Level 3
 (In millions)
Short-term borrowings — affiliates$142
 $
 $
 $142
 $116
 $
 $
 $116
Short-term borrowings — other$380
 $
 $380
 $
 $238
 $
 $238
 $
Notes payable — Other(b), excluding capital leases
$2
 $
 $
 $2
 $2
 $
 $
 $2
Long-term debt(c)
$6,018
 $
 $6,194
 $171
 $6,017
 $
 $6,441
 $171

(a)IncludedCurrent portion included in Current Liabilities — Other and Other LiabilitiesAssets — Other on DTE Energy'sElectric's Consolidated Statements of Financial Position.
(b)Includes debt due within one year, unamortized debt discounts, premiums, and issuance costs. Excludes Capital lease obligations.
The following table presents the carrying amount and fair value of financial instruments for DTE Electric:
 March 31, 2017 December 31, 2016
 Carrying Fair Value Carrying Fair Value
 Amount Level 1 Level 2 Level 3 Amount Level 1 Level 2 Level 3
 (In millions)
Notes receivable, excluding capital leases$
 $
 $
 $
 $5
 $
 $
 $5
Short-term borrowings — affiliates$205
 $
 $
 $205
 $117
 $
 $
 $117
Short-term borrowings — other$59
 $
 $59
 $
 $62
 $
 $62
 $
Notes payable — Other(a)
$6
 $
 $
 $6
 $6
 $
 $
 $6
Long-term debt(b)
$5,879
 $
 $6,016
 $262
 $5,878
 $
 $6,026
 $264

(a)Included in Current Liabilities — Other and Other Liabilities — Other on DTE Electric's Consolidated Statements of Financial Position.
(b)(c)Includes debt due within one year, unamortized debt discounts, and issuance costs. Excludes Capital lease obligations.
For further fair value information on financial and derivative instruments, see Note 8 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:
 March 31, 2017 December 31, 2016
 (In millions)
Fermi 2$1,350
 $1,291
Fermi 13
 3
Low-level radioactive waste11
 26
Total$1,364
 $1,320

31


DTE Energy Company — DTE Electric Company
Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

 March 31, 2018 December 31, 2017
 (In millions)
Fermi 2$1,463
 $1,475
Fermi 13
 3
Low-level radioactive waste15
 14

$1,481
 $1,492
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 March 31,Three Months Ended March 31,
2017 20162018 2017
(In millions)(In millions)
Realized gains$23
 $9
$23
 $23
Realized losses$(8) $(15)$(9) $(8)
Proceeds from sale of securities$394
 $260
$336
 $394
Realized gains and losses from the sale of securities forand unrealized gains and losses incurred by the Fermi 2 trust are recorded to the Regulatory asset and Nuclear decommissioning liability. Realized gains and losses from the sale of securities forand unrealized gains and losses on the low-level radioactive waste funds are recorded to the Nuclear decommissioning liability.

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:
March 31, 2017 December 31, 2016March 31, 2018 December 31, 2017
Fair
Value
 Unrealized
Gains
 Unrealized
Losses
 Fair
Value
 Unrealized
Gains
 Unrealized
Losses
Fair
Value
 Unrealized
Gains
 Unrealized
Losses
 Fair
Value
 Unrealized
Gains
 Unrealized
Losses
(In millions)(In millions)
Equity securities$890
 $250
 $(38) $887
 $222
 $(46)$933
 $302
 $(38) $978
 $320
 $(32)
Fixed income securities471
 12
 (4) 425
 11
 (5)530
 8
 (7) 495
 13
 (3)
Private equity securities5
 
 
 5
 
 
Cash equivalents3
 
 
 8
 
 
13
 
 
 14
 
 
$1,364
 $262
 $(42) $1,320
 $233
 $(51)$1,481
 $310
 $(45) $1,492
 $333
 $(35)
The following table summarizes the fair value of the fixed income securities held in nuclear decommissioning trust funds by contractual maturity:
 March 31, 2017
 (In millions)
Due within one year$19
Due after one through five years109
Due after five through ten years91
Due after ten years252
 $471
Securities held in the Nuclear decommissioning trust funds are classified as available-for-sale. As DTE Electric does not have the ability to hold impaired investments for a period of time sufficient to allow for the anticipated recovery of market value, all unrealized losses are considered to be other-than-temporary impairments.
Unrealized losses incurred by the Fermi 2 trust are recognized as a Regulatory asset and Nuclear decommissioning liability. Unrealized losses on the low-level radioactive waste funds are recognized as a Nuclear decommissioning liability.
 March 31, 2018
 (In millions)
Due within one year$25
Due after one through five years108
Due after five through ten years117
Due after ten years280
 $530
Other Securities
At March 31, 20172018 and December 31, 2016,2017, the Registrants' securities were comprised primarily of money market and equity securities. There were no unrealized losses on available-for-saleLosses related to equity securities which were reclassified out of Other comprehensive income (loss) and realized into Net Income for DTE Energy or DTE Electric during the three months endedheld at March 31, 20172018 were $3 million and 2016. Gainsgains related to tradingequity securities held at March 31, 2017 and 2016 were $8 million and $5 million, respectively, for the Registrants. The trading gains or losses related to the Rabbi Trust assets, included in Other investments at DTE Energy, are allocated from DTE Energy to DTE Electric.


32


DTE Energy Company — DTE Electric Company
Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

NOTE 8 — FINANCIAL AND OTHER DERIVATIVE INSTRUMENTS
The Registrants recognize all derivatives at their fair value as Derivative assets or liabilities on their respective Consolidated Statements of Financial Position unless they qualify for certain scope exceptions, including the normal purchases and normal sales exception. Further, derivatives that qualify and are designated for hedge accounting are classified as either hedges of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge); or as hedges of the fair value of a recognized asset or liability or of an unrecognized firm commitment (fair value hedge). For cash flow hedges, the portion of the derivative gain or loss that is effective in offsetting the change in the value of the underlying exposure is deferred in Accumulated other comprehensive income (loss) and later reclassified into earnings when the underlying transaction occurs. Gains or losses from the ineffective portion of cash flow hedges are recognized in earnings immediately. For fair value hedges, changes in fair values for the derivative and hedged item are recognized in earnings each period. For derivatives that do not qualify or are not designated for hedge accounting, changes in fair value are recognized in earnings each period.
The Registrants’ primary market risk exposure is associated with commodity prices, credit, and interest rates. The Registrants have risk management policies to monitor and manage market risks. The Registrants use derivative instruments to manage some of the exposure. DTE Energy uses derivative instruments for trading purposes in its Energy Trading segment. Contracts classified as derivative instruments include electricity, natural gas, oil, certain coal forwards, futures, options, swaps, and foreign currency exchange contracts. Items not classified as derivatives include natural gas inventory, pipeline transportation contracts, renewable energy credits, and natural gas storage assets.

DTE Energy Company — DTE Electric Company
Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

DTE Electric — DTE Electric generates, purchases, distributes, and sells electricity. DTE Electric uses forward energy contracts to manage changes in the price of electricity and fuel. Substantially all of these contracts meet the normal purchases and normal sales exception and are therefore accounted for under the accrual method. Other derivative contracts are MTM and recoverable through the PSCR mechanism when settled. This results in the deferral of unrealized gains and losses as Regulatory assets or liabilities until realized.
DTE Gas — DTE Gas purchases, stores, transports, distributes, and sells natural gas, and sells storage and transportation capacity. DTE Gas has fixed-priced contracts for portions of its expected natural gas supply requirements through March 2020.2021. Substantially all of these contracts meet the normal purchases and normal sales exception and are therefore accounted for under the accrual method. DTE Gas may also sell forward transportation and storage capacity contracts. Forward transportation and storage contracts are generally not derivatives and are therefore accounted for under the accrual method.
Gas Storage and Pipelines — This segment is primarily engaged in services related to the gathering, transportation, and storage of natural gas. Primarily fixed-priced contracts are used in the marketing and management of transportation and storage services. Generally, these contracts are not derivatives and are therefore accounted for under the accrual method.
Power and Industrial Projects — This segment manages and operates energy and pulverized coal projects, a coke battery, reduced emissions fuel projects, landfill gas recovery, and power generation assets. Primarily fixed-price contracts are used in the marketing and management of the segment assets. These contracts are generally not derivatives and are therefore accounted for under the accrual method.
Energy Trading — Commodity Price Risk — Energy Trading markets and trades electricity, natural gas physical products, and energy financial instruments, and provides energy and asset management services utilizing energy commodity derivative instruments. Forwards, futures, options, and swap agreements are used to manage exposure to the risk of market price and volume fluctuations in its operations. These derivatives are accounted for by recording changes in fair value to earnings unless hedge accounting criteria are met.
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.

33


DTE Energy Company — DTE Electric Company
Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

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 March 31, 20172018 provision for credit losses, DTE Energy’s exposure to counterparty nonperformance is not expected to have a material adverse effect on DTE Energy's Consolidated Financial Statements.
Derivative Activities
DTE Energy manages its MTM risk on a portfolio basis based upon the delivery period of its contracts and the individual components of the risks within each contract. Accordingly, it records and manages the energy purchase and sale obligations under its contracts in separate components based on the commodity (e.g. electricity or natural gas), the product (e.g. electricity for delivery during peak or off-peak hours), the delivery location (e.g. by region), the risk profile (e.g. forward or option), and the delivery period (e.g. by month and year). The following describes the categories of activities represented by their operating characteristics and key risks:
Asset Optimization — Represents derivative activity associated with assets owned and contracted by DTE Energy, including forward natural gas purchases and sales, natural gas transportation, and storage capacity. Changes in the value of derivatives in this category typically economically offset changes in the value of underlying non-derivative positions, which do not qualify for fair value accounting. The difference in accounting treatment of derivatives in this category and the underlying non-derivative positions can result in significant earnings volatility.

DTE Energy Company — DTE Electric Company
Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

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:
 March 31, 2017 December 31, 2016
 
Derivative
Assets
 
Derivative
Liabilities
 
Derivative
Assets
 
Derivative
Liabilities
 (In millions)
Derivatives not designated as hedging instruments       
Commodity Contracts     
  
Natural Gas$304
 $(289) $348
 $(461)
Electricity186
 (197) 193
 (189)
Other1
 (3) 2
 (3)
Foreign currency exchange contracts5
 (2) 6
 (3)
Total derivatives not designated as hedging instruments$496
 $(491) $549
 $(656)
        
Current$349
 $(312) $447
 $(493)
Noncurrent147
 (179) 102
 (163)
Total derivatives$496
 $(491) $549
 $(656)

34


DTE Energy Company — DTE Electric Company
Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

 March 31, 2018 December 31, 2017
 Derivative
Assets
 Derivative Liabilities Derivative
Assets
 Derivative Liabilities
 (In millions)
Derivatives not designated as hedging instruments       
Commodity contracts       
Natural gas$207
 $(196) $357
 $(378)
Electricity183
 (198) 285
 (275)
Other5
 (1) 9
 (1)
Foreign currency exchange contracts2
 (2) 1
 (3)
Total derivatives not designated as hedging instruments$397
 $(397) $652
 $(657)
        
Current$294
 $(289) $540
 $(558)
Noncurrent103
 (108) 112
 (99)
Total derivatives$397
 $(397) $652
 $(657)
The following table presents the fair value of derivative instruments for DTE Electric:
March 31, 2017 December 31, 2016March 31, 2018 December 31, 2017
(In millions)(In millions)
FTRs — Other current assets$1
 $2
$5
 $9
Total derivatives not designated as hedging instrument$1
 $2
Total derivatives not designated as hedging instruments$5
 $9
Certain of DTE Energy's derivative positions are subject to netting arrangements which provide for offsetting of asset and liability positions as well as related cash collateral. Such netting arrangements generally do not have restrictions. Under such netting arrangements, DTE Energy offsets the fair value of derivative instruments with cash collateral received or paid for those contracts executed with the same counterparty, which reduces DTE Energy's Total Assets and Liabilities. Cash collateral is allocated between the fair value of derivative instruments and customer accounts receivable and payable with the same counterparty on a pro-rata basis to the extent there is exposure. Any cash collateral remaining, after the exposure is netted to zero, is reflected in Accounts receivable and Accounts payable as collateral paid or received, respectively.
DTE Energy also provides and receives collateral in the form of letters of credit which can be offset against net Derivative assets and liabilities as well as Accounts receivable and payable. DTE Energy had issued letters of credit of approximately $3$1 million and $2$4 million outstanding at March 31, 20172018 and December 31, 2016,2017, respectively, which could be used to offset net Derivative liabilities. Letters of credit received from third parties which could be used to offset net Derivative assets were $4$5 million and $2$4 million at March 31, 20172018 and December 31, 2016,2017, 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. Certain contracts that have netting arrangements have not been offset in

DTE Energy'sEnergy Company — DTE Electric Company
Combined Notes to Consolidated Financial Statements of Financial Position. The impact of netting these derivative instruments and cash collateral related to such contracts is not material. Only the gross amounts for these derivative instruments are included in the table below.(Unaudited) — (Continued)

For DTE Energy, the total cash collateral posted, net of cash collateral received, was $48$18 million and $34$28 million as of March 31, 20172018 and December 31, 2016,2017, respectively. DTE Energy had $3 million of cash collateral related to unrealized positions to net against Derivative assets while Derivative liabilities are shown net of cash collateral of $13 million as of March 31, 2017. DTE Energy had $7 million of cash collateral related to unrealized positions to net against Derivative assets while Derivative liabilities are shown net of cash collateral of $28$22 million as of March 31, 2018. DTE Energy had $9 million of cash collateral related to unrealized positions to net against Derivative assets while Derivative liabilities are shown net of cash collateral of $22 million as of December 31, 2016.2017. DTE Energy recorded cash collateral paid of $41$15 million and cash collateral received of $12 million not related to unrealized derivative positions as of March 31, 2018. DTE Energy recorded cash collateral paid of $18 million and cash collateral received of $3 million not related to unrealized derivative positions as of MarchDecember 31, 2017. DTE Energy recorded cash collateral paid of $18 million and cash collateral received of $5 million not related to unrealized derivative positions as of December 31, 2016. These amounts are included in Accounts receivable and Accounts payable and are recorded net by counterparty.

35


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:
March 31, 2017 December 31, 2016March 31, 2018 December 31, 2017
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 PositionGross Amounts of Recognized Assets (Liabilities) Gross Amounts Offset in the Consolidated Statements of Financial Position Net Amounts of Assets (Liabilities) Presented in the Consolidated Statements of Financial Position Gross Amounts of Recognized Assets (Liabilities) Gross Amounts Offset in the Consolidated Statements of Financial Position Net Amounts of Assets (Liabilities) Presented in the Consolidated Statements of Financial Position
(In millions)(In millions)
Derivative assets                      
Commodity Contracts           
Natural Gas$304
 $(206) $98
 $348
 $(306) $42
Commodity contracts           
Natural gas$207
 $(118) $89
 $357
 $(256) $101
Electricity186
 (146) 40
 193
 (157) 36
183
 (135) 48
 285
 (241) 44
Other1
 
 1
 2
 
 2
5
 
 5
 9
 
 9
Foreign currency exchange contracts5
 (3) 2
 6
 (5) 1
2
 (2) 
 1
 (1) 
Total derivative assets$496
 $(355) $141
 $549
 $(468) $81
$397
 $(255) $142
 $652
 $(498) $154
                      
Derivative liabilities                      
Commodity Contracts           
Natural Gas$(289) $202
 $(87) $(461) $321
 $(140)
Commodity contracts           
Natural gas$(196) $126
 $(70) $(378) $263
 $(115)
Electricity(197) 158
 (39) (189) 163
 (26)(198) 142
 (56) (275) 246
 (29)
Other(3) 3
 
 (3) 2
 (1)(1) 
 (1) (1) 1
 
Foreign currency exchange contracts(2) 2
 
 (3) 3
 
(2) 2
 
 (3) 1
 (2)
Total derivative liabilities$(491) $365
 $(126) $(656) $489
 $(167)$(397) $270
 $(127) $(657) $511
 $(146)
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:
March 31, 2017 December 31, 2016March 31, 2018 December 31, 2017
Derivative Assets Derivative Liabilities Derivative Assets Derivative LiabilitiesDerivative Assets Derivative Liabilities Derivative Assets Derivative Liabilities
Current Noncurrent Current Noncurrent Current Noncurrent Current NoncurrentCurrent Noncurrent Current Noncurrent Current Noncurrent Current Noncurrent
(In millions)(In millions)
Total fair value of derivatives$349
 $147
 $(312) $(179) $447
 $102
 $(493) $(163)$294
 $103
 $(289) $(108) $540
 $112
 $(558) $(99)
Counterparty netting(278) (74) 278
 74
 (396) (65) 396
 65
(205) (43) 205
 43
 (437) (52) 437
 52
Collateral adjustment(3) 
 1
 12
 (4) (3) 28
 
(5) (2) 15
 7
 
 (9) 22
 
Total derivatives as reported$68
 $73
 $(33) $(93) $47
 $34
 $(69) $(98)$84
 $58
 $(69) $(58) $103
 $51
 $(99) $(47)

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:
Derivatives not Designated as Hedging Instruments Location of Gain (Loss) Recognized in Income on Derivatives Gain (Loss) Recognized in Income on Derivatives for the Three Months Ended March 31,
  2017 2016
    (In millions)
Commodity Contracts      
Natural Gas Operating Revenues — Non-utility operations $57
 $(56)
Natural Gas Fuel, purchased power, and gas — non-utility 61
 41
Electricity Operating Revenues — Non-utility operations (7) (24)
Other Operating Revenues — Non-utility operations 
 (2)
Foreign currency exchange contracts Operating Revenues — Non-utility operations 
 (5)
Total   $111
 $(46)

36


DTE Energy Company — DTE Electric Company
Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

Derivatives not Designated as Hedging Instruments Location of Gain (Loss) Recognized in Income on Derivatives Gain (Loss) Recognized in Income on Derivatives for the Three Months Ended March 31,
  2018 2017
    (In millions)
Commodity contracts      
Natural gas Operating Revenues — Non-utility operations $(110) $57
Natural gas Fuel, purchased power, and gas — non-utility 52
 61
Electricity Operating Revenues — Non-utility operations 129
 (7)
Other Operating Revenues — Non-utility operations (1) 
Foreign currency exchange contracts Operating Revenues — Non-utility operations 2
 
Total   $72
 $111
Revenues and energy costs related to trading contracts are presented on a net basis in DTE Energy's Consolidated Statements of Operations. Commodity derivatives used for trading purposes, and financial non-trading commodity derivatives, are accounted for using the MTM method with unrealized and realized gains and losses recorded in Operating Revenues — Non-utility operations. Non-trading physical commodity sale and purchase derivative contracts are generally accounted for using the MTM method with unrealized and realized gains and losses for sales recorded in Operating Revenues — Non-utility operations and purchases recorded in Fuel, purchased power, and gas — non-utility.
The following represents the cumulative gross volume of DTE Energy's derivative contracts outstanding as of March 31, 2017:2018:
Commodity Number of Units
Natural Gasgas (MMBtu) 1,781,816,7801,858,053,782
Electricity (MWh) 35,032,431
Oil (Gallons)12,936,00038,397,695
Foreign Currency Exchangecurrency exchange (Canadian dollars) 73,633,072103,281,830
Various subsidiaries of DTE Energy have entered into contracts which contain ratings triggers and are guaranteed by DTE Energy. These contracts contain provisions which allow the counterparties to require that DTE Energy post cash or letters of credit as collateral in the event that DTE Energy’s credit rating is downgraded below investment grade. Certain of these provisions (known as “hard triggers”) state specific circumstances under which DTE Energy can be required to post collateral upon the occurrence of a credit downgrade, while other provisions (known as “soft triggers”) are not as specific. For contracts with soft triggers, it is difficult to estimate the amount of collateral which may be requested by counterparties and/or which DTE Energy may ultimately be required to post. The amount of such collateral which could be requested fluctuates based on commodity prices (primarily natural gas, power, and coal) and the provisions and maturities of the underlying transactions. As of March 31, 2017,2018, 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 approximately $437$513 million.
As of March 31, 2017,2018, DTE Energy had approximately $397$290 million of derivatives in net liability positions, for which hard triggers exist. There is nocollateral that has been posted against such liabilities, including cash and letters of credit. Associated derivative net asset positions for which contractual offset exists were approximately $342$230 million. The net remaining amount of approximately $55$60 million is derived from the $437$513 millionnoted above.

NOTE 9 — LONG-TERM DEBT
Debt Issuances
In 2017, the following debt was issued:
Company Month Type Interest Rate Maturity Amount
          (In millions)
DTE Energy March 
Senior Notes(a)
 3.80% 2027 $500
          $500

(a)Proceeds were used for repayment of short-term borrowings and general corporate purposes.
Debt Redemptions
In 2017, the following debt was redeemed:
Company Month Type Interest Rate Maturity Amount
          (In millions)
DTE Energy Various Other Long-Term Debt Various 2017 $5
          $5


37


DTE Energy Company — DTE Electric Company
Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

NOTE 10 — SHORT-TERM CREDIT ARRANGEMENTS AND BORROWINGS
DTE Energy, DTE Electric, and DTE Gas have unsecured revolving credit agreements that can be used for general corporate borrowings, but are intended to provide liquidity support for each of the companies’ commercial paper programs. Borrowings under the revolvers are available at prevailing short-term interest rates. Additionally, DTE Energy has other facilities to support letter of credit issuance.

DTE Energy Company — DTE Electric Company
Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

The agreements require DTE Energy, DTE Electric, and DTE Gas to maintain a total funded debt to capitalization ratio of no more than 0.65 to 1. In the agreements, “total funded debt” means all indebtedness of each respective company and their consolidated subsidiaries, including capital lease obligations, hedge agreements, and guarantees of third parties’ debt, but excluding contingent obligations, nonrecourse and junior subordinated debt, and certain equity-linked securities and, except for calculations at the end of the second quarter, certain DTE Gas short-term debt. “Capitalization” means the sum of (a) total funded debt plus (b) “consolidated net worth,” which is equal to consolidated total equity of each respective company and their consolidated subsidiaries (excluding pension effects under certain FASB statements), as determined in accordance with accounting principles generally accepted in the United States of America. At March 31, 2017,2018, the total funded debt to total capitalization ratios for DTE Energy, DTE Electric, and DTE Gas were 0.53 to 1, 0.500.51 to 1, and 0.450.46 to 1, respectively, and were in compliance with this financial covenant.
The availability under the facilities in place at March 31, 20172018 is shown in the following table:
 DTE Energy DTE Electric DTE Gas Total
 (In millions)
Unsecured letter of credit facility, expiring in February 2019(a)
$150
 $
 $
 $150
Unsecured letter of credit facility, expiring in September 201770
 
 
 70
Unsecured revolving credit facility, expiring April 20211,200
 400
 300
 1,900
 1,420
 400
 300
 2,120
Amounts outstanding at March 31, 2017       
Commercial paper issuances
 59
 
 59
Letters of credit139
 
 
 139
 139
 59
 
 198
Net availability at March 31, 2017$1,281
 $341
 $300
 $1,922

(a)In February 2017, DTE Energy amended its $100 million letter of credit facility. The facility's maturity date was amended from February 2017 to February 2019. As part of this amendment, DTE Energy increased its $100 million letter of credit facility to $150 million.
In April 2017, DTE Energy, DTE Electric, and DTE Gas exercised the extension features in their revolving credit agreements to add one year to the existing maturities. Each of these revolvers' expirations were extended from April 2021 to April 2022.
 DTE Energy DTE Electric DTE Gas Total
 (In millions)
Unsecured letter of credit facility, expiring in February 2019$150
 $
 $
 $150
Unsecured letter of credit facility, expiring in September 201970
 
 
 70
Unsecured revolving credit facility, expiring April 20221,200
 400
 300
 1,900
 1,420
 400
 300
 2,120
Amounts outstanding at March 31, 2018       
Commercial paper issuances
 380
 255
 635
Letters of credit221
 
 
 221
 221
 380
 255
 856
Net availability at March 31, 2018$1,199
 $20
 $45
 $1,264
DTE Energy has $9 million of other outstanding letters of credit which are used for various corporate purposes and are not included in the abovefacilities described facilities totaling approximately $17 million which are used for various corporate purposes.above.
In conjunction with maintaining certain exchange traded risk management positions, DTE Energy may be required to post collateral with its clearing agent. DTE Energy has a demand financing agreement for up to $100 million with its clearing agent. The agreement, as amended, also allows for up to $50 million of additional margin financing provided that DTE Energy posts a letter of credit for the incremental amount and allows the right of setoff with posted collateral. At March 31, 2017, a $35 million letter of credit was in place, raising2018, the capacity under this facility to $135was $125 million. The $35 million letter of credit is included in the table above. The amount outstanding under this agreement was $16$84 million and $50$56 million at March 31, 20172018 and December 31, 2016,2017, respectively, and was fully offset by the posted collateral.


38


DTE Energy Company — DTE Electric Company
Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

NOTE 1110 — 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.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 NOx, SO2, NOX, mercury, and other emissions. Additional rulemakings may occur over the next few years which could require additional controls for SO2, NOx,NOX, and other hazardous air pollutants.
The Cross State Air Pollution Rule (CSAPR), required further reductions of SO2 and NOx emissions beginning in January 2015. On September 7, 2016, the EPA finalized an update to the CSAPR ozone season program by issuing the CSAPR Update Rule. Beginning in May 2017, this rule is expected to reduce summertime (May - September) NOx emissions from power plants in 22 states in the eastern half of the U.S., including DTE Electric facilities. The CSAPR Update Rule is intended to reduce air quality impacts of the interstate transport of air pollution on downwind areas' ability to meet the 2008 ozone National Ambient Air Quality Standards implementing power sector emission budgets and NOx allowance trading programs. DTE Electric expects to meet its obligations under CSAPR. DTE Electric does not expect this rule to have a material effect on its compliance program.
The EPA proposed revised air quality standards for ground level ozone in November 2014 and specifically requested comments on the form and level of the ozone standards. The standards were finalized in October 2015. The State of Michigan recommended to the EPA in October 2016 which areas of the state are not attaining the new standard. In November 2017, the EPA completed the majority of the United States attainment/unclassifiable area designations. The Registrants expect the EPA will designate areas as either attainment orto complete the remaining designations, including the non-attainment area descriptions with the 2015 ozone standards by October 2017.the second quarter of 2018. DTE Electric cannot predict the financial impact of the revised ozone standards at this time.

DTE Energy Company — DTE Electric Company
Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

In July 2009, DTE Energy received a NOV/FOV from the EPA alleging, among other things, that five DTE Electric power plants violated New Source Performance standards, Prevention of Significant Deterioration requirements, and operating permit requirements under the Clean Air Act. In June 2010, the EPA issued a NOV/FOV making similar allegations related to a project and outage at Unit 2 of the Monroe Power Plant. In March 2013, DTE Energy received a supplemental NOV from the EPA relating to the July 2009 NOV/FOV. The supplemental NOV alleged additional violations relating to the New Source Review provisions under the Clean Air Act, among other things.
In August 2010, the U.S. Department of Justice, at the request of the EPA, brought a civil suit in the U.S. District Court for the Eastern District of Michigan against DTE Energy and DTE Electric, related to the June 2010 NOV/FOV and the outage work performed at Unit 2 of the Monroe Power Plant. In August 2011, the U.S. District Court judge granted DTE Energy's motion for summary judgment in the civil case, dismissing the case and entering judgment in favor of DTE Energy and DTE Electric. In October 2011, the EPA caused to be filed a Notice of Appeal to the Court of Appeals for the Sixth Circuit. In March 2013, the Court of Appeals remanded the case to the U.S. District Court for review of the procedural component of the New Source Review notification requirements. In September 2013, the EPA caused to be filed a motion seeking leave to amend their complaint regarding the June 2010 NOV/FOV adding additional claims related to outage work performed at the Trenton Channel and Belle River Power Plants as well as additional claims related to work performed at the Monroe Power Plant. In March 2014, the U.S. District Court judge again granted again DTE Energy's motion for summary judgment dismissing the civil case related to Monroe Unit 2. In April 2014, the U.S. District Court judge granted motions filed by the EPA and the Sierra Club to amend their New Source Review complaint adding additional claims for Monroe Units 1, 2, and 3, Belle River Units 1 and 2, and Trenton Channel Unit 9. In October 2014, the EPA and the U.S. Department of Justice filed a notice of appeal of the U.S. District Court judge's dismissal of the Monroe Unit 2 case. The amended New Source Review claims were all stayed untilpending resolution of the appeal is resolved by the Court of Appeals for the Sixth Circuit. Oral arguments for the appeal occurred in December 2015. On January 10, 2017, a divided panel of the Court reversed the decision of the U.S. District Court. On February 24,May 8, 2017, DTE Energy and DTE Electric filed a motion to stay the mandate pending filing of a petition for writ of certiorari with the U.S. Supreme Court. The Sixth Circuit granted the motion on May 16, 2017, staying the claims in the U.S. District Court until the U.S. Supreme Court disposes of the case. DTE Electric and DTE Energy filed a petition for writ of certiorari on July 31, 2017. On December 11, 2017, the U.S. Supreme Court denied certiorari. As a result of the Supreme Court electing not to review the matter, the case was sent back to the U.S. District Court for a rehearing and a rehearing en banc. The Court requested responses to the petition from the EPA and the Sierra Club, which were filed on April 3, 2017.further proceedings.
The Registrants believe that the plants and generating units identified by the EPA and the Sierra Club have complied with all applicable federal environmental regulations. Depending upon the outcome of the litigation and further discussions with the EPA regarding the two NOVs/FOVs, DTE Electric could be required to install additional pollution control equipment at some or all of the power plants in question, implement early retirement of facilities where control equipment is not economical, engage in supplemental environmental programs, and/or pay fines. The Registrants cannot predict the financial impact or outcome of this matter, or the timing of its resolution.

39


DTE Energy Company — DTE Electric Company
Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

The EPA has implemented regulatory actions under the Clean Air Act to address emissions of GHGs from the utility sector and other sectors of the economy. Among these actions, in 2015 the EPA finalized performance standards for emissions of carbon dioxide from new and existing EGUs. The carbon standards for new sources are not expected to have a material impact on DTE Electric, since DTE Electric has no plans to build new coal-fired generation and any potential new gas generation will be able to comply with the standards. In February 2016, the U.S. Supreme Court granted petitioners' requests for a stay of the carbon rules for existing EGUs (also known as the EPA Clean Power Plan) pending final review by the courts. The Clean Power Plan has no legal effect while the stay is in place. On March 28, 2017, a presidential executive order was issued on "Promoting Energy Independence and Economic Growth." The order instructs the EPA to review, and if appropriate, suspend, revise or rescind the Clean Power Plan rule. Additionally, federal agencies have been directed to conduct a review of all existing regulations that potentially burden the development and use of domestically produced energy resources. Following the issuance of this order, the federal government requested the U.S. Court of Appeals for the D.C. Circuit to hold all legal challenges in abeyance until the review of these regulations is completed. On October 10, 2017, the EPA proposed to rescind the Clean Power Plan and announced its intent to issue an ANPR seeking input as to whether it should replace the rule and, if so, what form it should take. It is not possible to determine the potential impact of this orderthe EPA's repeal and possible replacement of the Clean Power Plan on existing sources at this time.
Pending or future legislation or other regulatory actions could have a material impact on DTE Electric's operations and financial position and the rates charged to its customers. Impacts include expenditures for environmental equipment beyond what is currently planned, financing costs related to additional capital expenditures, the purchase of emission credits from market sources, higher costs of purchased power, and the retirement of facilities where control equipment is not economical. DTE Electric would seek to recover these incremental costs through increased rates charged to its utility customers, as authorized by the MPSC.
To comply with air pollution requirements, DTE Electric spent approximately $2.4 billion through 2016.2017. DTE Electric does not anticipate additional capital expenditures through 2023.2024.

DTE Energy Company — DTE Electric Company
Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

Water— In response to an EPA regulation, DTE Electric was required to examine alternatives for reducing the environmental impacts of the cooling water intake structures at several of its facilities. Based on the results of completed studies and expected future studies, DTE Electric may be required to install technologies to reduce the impacts of the water intake structures. A final rule became effective in October 2015.2014. The final rule requires studies to be completed by April 2018and submitted as part of the National Pollutant Discharge Elimination System (NPDES) permit application process to determine the type of technology needed to reduce impacts to fish. DTE Electric has initiated the process of completing the required studies. Final compliance for the installation of any required technology will be determined by each state on a case by case, site specific basis. DTE Electric is currently evaluating the compliance options and working with the State of Michigan on evaluating whether any controls are needed. These evaluations/studies may require modifications to some existing intake structures. It is not possible to quantify the impact of this rulemaking at this time.
Contaminated and Other Sites— Prior to the construction of major interstate natural gas pipelines, gas for heating and other uses was manufactured locally from processes involving coal, coke, or oil. The facilities, which produced gas, have been designated as MGP sites. DTE Electric conducted remedial investigations at contaminated sites, including three former MGP sites. The investigations have revealed contamination related to the by-products of gas manufacturing at each MGP site. In addition to the MGP sites, DTE Electric is also in the process of cleaning up other contaminated sites, including the area surrounding an ash landfill, electrical distribution substations, electric generating power plants, and underground and aboveground storage tank locations. The findings of these investigations indicated that the estimated cost to remediate these sites is expected to be incurred over the next several years. At March 31, 20172018 and December 31, 2016,2017, DTE Electric had $8$6 million accrued for remediation. Any change in assumptions, such as remediation techniques, nature and extent of contamination, and regulatory requirements, could impact the estimate of remedial action costs for the sites and affect DTE Electric’s financial position and cash flows. DTE Electric believes the likelihood of a material change to the accrued amount is remote based on current knowledge of the conditions at each site.
Coal Combustion Residuals and Effluent Limitations Guidelines — A final EPA rule for the disposal of CCR,coal combustion residuals, commonly known as coal ash, became effective in October 2015.2015, and was revised in October 2016. On March 15, 2018, the EPA published a proposed rule for public comment that is expected to be issued in final form in 2019. Some of the proposed rule provisions could change compliance and closure plans for CCR units if included in the final rule. 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. At certain facilities, the rule requiresCCR obligations vary based on plant life, but include the installation of monitoring wells, compliance with groundwater standards, and the closure of landfills and basins at the end of the useful life of the associated power plant or as a basin becomes inactive. At other facilities, the rule requires ash laden waters be moved from earthen basins to steel and concrete tanks.

40


DTE Energy Company — DTE Electric Company
Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

In November 2015, the EPA finalized the ELG Rule for the steam electric power generating industry which may require additional controls to be installed between 2018 and 2023. Compliance schedules for individual facilities and individual waste streams are determined through issuance of new wastewater permits by the State of Michigan. The State of Michigan has issued a National Pollutant Discharge Elimination System permit for the Belle River Power Plant establishing a compliance deadline of December 31, 2021. No new permits have been issued for other facilities, consequently no compliance timelines have been established. Under the current rule, certain ELG requirements would be required to be performed in conjunction with the CCR. Over the next six years, to comply with the ELG requirements of the November 2015 rules and for the CCR requirements, costs associated with the building of new facilities or installation of controls are estimated to be approximately $309$283 million.
On April 12, 2017, the EPA granted a petition for reconsideration of the ELG Rule. The EPA also signed an administrative stay of the ELG Rule’s compliance deadlines for fly ash transport water, bottom ash transport water, and flue gas desulfurization (FGD) wastewater, among others. The administrative stay will become effective whenOn June 6, 2017, the EPA published in the Federal Register.Register a proposed rule to postpone certain applicable deadlines within the ELG rule. The final rule was published on September 18, 2017, which extended the earliest compliance deadlines for the FGD wastewater and bottom ash transport until November 1, 2020 in order for the EPA to propose and finalize a new ruling. The ELG compliance requirements, final deadlines, and compliance costs will not be known until the EPA completes its reconsideration of the ELG Rule.

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 six of the MGP sites is complete, and the sites are closed. DTE Gas has also completed partial closure of foursix additional sites. Cleanup activities associated with the remaining sites will continue over the next several years. The MPSC has established a cost deferral and rate recovery mechanism for investigation and remediation costs incurred at former MGP sites. In addition to the MGP sites, DTE Gas is also in the process of cleaning up other contaminated sites, including gate stations, gas pipeline releases, and underground storage tank locations. As of March 31, 20172018 and December 31, 2016,2017, DTE Gas had $41$40 million and $43$41 million accrued for remediation, respectively.  Any change in assumptions, such as remediation techniques, nature and extent of contamination, and regulatory requirements, could impact the estimate of remedial action costs for the sites and affect DTE Gas' financial position and cash flows. DTE Gas anticipates the cost amortization methodology approved by the MPSC, which allows for amortization of the MGP costs over a ten-year period beginning with the year subsequent to the year the MGP costs were incurred, will prevent environmental costs from having a material adverse impact on DTE Gas' results of operations.
Non-utility
DTE Energy's non-utility businesses are subject to a number of environmental laws and regulations dealing with the protection of the environment from various pollutants.
The District Attorney's office of Yolo County, California has been investigating the ash management and disposition practices of Woodland Biomass Power, Ltd., and DTE Woodland, LLC, wholly-owned subsidiaries of DTE Energy (the Woodland Companies), a renewable wood-fired power generation facility. The District Attorney alleged that some of the ash generated at the Woodland Companies' generating facility should have been characterized and handled as hazardous waste under California regulation. DTE Energy is currently working through a final settlement, which includes reimbursement of the District Attorney's investigation costs. As of March 31, 2017, DTE Energy had approximately $4 million accrued for this matter. DTE Energy does not expect changes in estimated remediation and settlement costs to be materially different than the amounts accrued at March 31, 2017.
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 three 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.

41


DTE Energy Company — DTE Electric Company
Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

Michigan's Phase 1 non-attainment area includes DTE Energy facilities in southwest Detroit and areas of Wayne County. Modeling runs by the MDEQ suggest that emission reductions may be required by significant sources of SO2 emissions in these areas, including DTE Electric power plants and DTE Energy's Michigan coke battery facility. As part of the state implementation plan process, DTE Energy has worked with the MDEQ to develop air permits reflecting significant SO2 emission reductions that, in combination with other non-DTE Energy sourcessources' emission reduction strategies, will help the state attain the standard and sustain its attainment. Since several non-DTE Energy sources are also part of the proposed compliance plan, DTE Energy is unable to determine the full impact of the final required emissions reductions at this time.
Michigan's Phase 2 non-attainment area includes DTE Electric facilities in St. Clair County. State implementation plans (SIPs) for Phase 2 areasplan (SIP) submittal and EPA approval describing the control strategy and timeline for demonstrating compliance with the new SO2 standard are dueis the next step in the process, expected to be completed by the EPA by mid-2018.end of the year. DTE Energy is currently working with the MDEQ to develop the required SIP. DTE Energy is unable to determine the full impact of the SIP strategy as it currently is under development.strategy.
Synthetic Fuel Guarantees
DTE Energy discontinued the operations of its synthetic fuel production facilities throughout the United States as of December 31, 2007. DTE Energy provided certain guarantees and indemnities in conjunction with the sales of interests in its synfuel facilities. The guarantees cover potential commercial, environmental, oil price, and tax-related obligations that will survive until 90 days after expiration of all applicable statutes of limitations. DTE Energy estimates that its maximum potential liability under these guarantees at March 31, 2017 is2018 was approximately $620$400 million. PaymentPayments under these guarantees isare considered remote.
REF Guarantees
DTE Energy has provided certain guarantees and indemnities in conjunction with the sales of interests in or lease of its REF facilities. The guarantees cover potential commercial, environmental, and tax-related obligations that will survive until 90 days after expiration of all applicable statutes of limitations. DTE Energy estimates that its maximum potential liability under these guarantees at March 31, 2017 is2018 was approximately $308$420 million. PaymentPayments under these guarantees isare considered remote.

DTE Energy Company — DTE Electric Company
Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

NEXUS Guarantees
NEXUS entered into certain 15-year capacity lease agreements for the transportation of natural gas with DTE Gas and Texas Eastern Transmission, LP, an unrelated third party. Pursuant to the terms of those agreements, in December 2016, DTE Energy executed separate guarantee agreements with DTE Gas and Texas Eastern Transmission, LP, with maximum potential payments totaling $53$82 million and $8$11 million at March 31, 2018, respectively; each representing 50% of all payment obligations due and payable by NEXUS. Should NEXUS fail to perform under the terms of those agreements, DTE Energy is required to perform on its behalf. Each guarantee terminates at the earlier of (i) such time as all of the guaranteed obligations have been fully performed, or (ii) two months following the end of the primary term of the capacity lease agreements. Subsequent to the NEXUS in-service date, the amount of each guarantee decreases annually as payments are made by NEXUS to each of the aforementioned counterparties. 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. Finally, the Registrants may provide indirect guarantees for the indebtedness of others. DTE Energy’s guarantees are not individually material with maximum potential payments totaling $55 million at March 31, 2017. Payment2018. Payments under these guarantees isare considered remote.
DTE Energy is periodically required to obtain performance surety bonds in support of obligations to various governmental entities and other companies in connection with its operations. As of March 31, 2017,2018, DTE Energy had approximately $56$59 million of performance bonds outstanding. In the event that such bonds are called for nonperformance, DTE Energy would be obligated to reimburse the issuer of the performance bond. DTE Energy is released from the performance bonds as the contractual performance is completed and does not believe that a material amount of any currently outstanding performance bonds will be called.

42


DTE Energy Company — DTE Electric Company
Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

Labor Contracts
There are several bargaining units for DTE Energy's approximately 4,800Energy subsidiaries' approximate 5,000 represented employees, including DTE Electric's approximately 2,600approximate 2,700 represented employees. The majority of the represented employees are under contracts that expire in 20172020 and 2020.2021.
Purchase Commitments
DTE Energy and DTE Electric expect that 2017 annualUtility capital expenditures, expenditures for non-utility businesses, and contributions to equity method investees will be approximately $3.0$3.6 billion and $1.5$1.9 billion in 2018 for DTE Energy and DTE Electric, respectively. The Registrants have made certain commitments in connection with the estimated 20172018 annual capital expenditures and contributions to equity method investees.
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 5 and 8 to the Consolidated Financial Statements, "Regulatory Matters,"Matters" and "Financial and Other Derivative Instruments," respectively.


DTE Energy Company — DTE Electric Company
Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

NOTE 1211 — 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 BenefitsPension Benefits Other Postretirement Benefits
2017 2016 2017 20162018 2017 2018 2017
Three Months Ended March 31,(In millions)(In millions)
Service cost$24
 $23
 $7
 $6
$25
 $24
 $7
 $7
Interest cost54
 54
 18
 20
50
 54
 17
 18
Expected return on plan assets(78) (77) (33) (32)(82) (78) (36) (33)
Amortization of:              
Net actuarial loss43
 40
 3
 8
44
 43
 3
 3
Prior service credit
 
 (3) (30)
 
 
 (3)
Net periodic benefit cost (credit)$43
 $40
 $(8) $(28)$37
 $43
 $(9) $(8)
DTE Electric participates in various plans that provide pension and other postretirement benefits for DTE Energy and its affiliates. The plans are sponsored by DTE Energy's subsidiary, DTE Energy Corporate Services, LLC. DTE Electric accounts for its participation in DTE Energy's qualified and nonqualified pension plans by applying multiemployer accounting. DTE Electric accounts for its participation in other postretirement benefit plans by applying multiple-employer accounting. Within multiemployer and multiple-employer plans, participants pool plan assets for investment purposes and to reduce the cost of plan administration. The primary difference between plan types is assets contributed in multiemployer plans can be used to provide benefits for all participating employers, while assets contributed within a multiple-employer plan are restricted for use by the contributing employer. Plan participants of all plans are solely DTE Energy and affiliate participants.
DTE Energy's subsidiaries are responsible for their share of qualified and nonqualified pension benefit costs. DTE Electric's allocated portion of pension benefit costs included in capital expenditures and operating and maintenance expense were $30 million and $35 million for the three months ended March 31, 2018 and 2017, 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 pension benefits and other postretirement benefits for DTE Electric:
Pension Benefits Other Postretirement BenefitsOther Postretirement Benefits
2017 2016 2017 20162018 2017
Three Months Ended March 31,(In millions)(In millions)
Service cost$18
 $18
 $5
 $5
$5
 $5
Interest cost41
 41
 14
 15
13
 14
Expected return on plan assets(55) (55) (23) (23)(24) (23)
Amortization of:          
Net actuarial loss31
 29
 2
 6
2
 2
Prior service credit
 
 (2) (22)
 (2)
Net periodic benefit cost (credit)$35
 $33
 $(4) $(19)
Net periodic benefit credit$(4) $(4)

Pension and Other Postretirement Contributions
During 2018, DTE Energy contributed the following amounts of DTE Energy common stock to the DTE Energy Company Affiliates Employee Benefit Plans Master Trust:
43

Date Number of Shares Price per Share Amount
      (In millions)
March 7, 2018 1,751,401 $99.92 $175

DTE Energy Company — DTE Electric Company
Combined Notes to Consolidated Financial Statements (Unaudited) — (Continued)

Pension and Other Postretirement Contributions
The above contribution was made on behalf of DTE Electric, who paid DTE Energy cash consideration of $175 million in March 2018. During the first three months of 2017, DTE Energy made cash contributions of $126 million, including contributions from DTE Electric of $125 million, to its pension plans. At the discretion of management and depending upon financial market conditions, DTE Energy may make additional contributions up to $180 million, including additional contributions from DTE Electric of $145$25 million to its pension plans in 2017.2018, with no additional contributions planned from DTE Electric.
DTE Energy does not anticipate making any contributions to the other postretirement benefit plans in 2017.2018.

NOTE 1312 — SEGMENT AND RELATED INFORMATION
DTE Energy sets strategic goals, allocates resources, and evaluates performance based on the following structure:
Electric segment consists principally of DTE Electric, which is engaged in the generation, purchase, distribution, and sale of electricity to approximately 2.2 million residential, commercial, and industrial customers in southeastern Michigan.
Gas segment consists principally of DTE Gas, which is engaged in the purchase, storage, transportation, distribution, and sale of natural gas to approximately 1.3 million residential, commercial, and industrial customers throughout Michigan and the sale of storage and transportation capacity.
Gas Storage and Pipelines consistsis primarily engaged in services related to the gathering, transportation, and storage of natural gas pipeline, gathering, and storage businesses.gas.
Power and Industrial Projects is comprised primarily of projects that deliver energy and utility-type products and services to industrial, commercial, and institutional customers, produce reduced emissions fuel, and sell electricity and pipeline-quality gas from renewable energy projects.
Energy Trading consists of energy marketing and trading operations.
Corporate and Other includes various holding company activities, holds certain non-utility debt, and holds energy-related investments.
The federal income tax provisions or benefits of DTE Energy’s subsidiaries are determined on an individual company basis and recognize the tax benefit of tax credits and net operating losses, if applicable. The state and local income tax provisions of the utility subsidiaries are determined on an individual company basis and recognize the tax benefit of various tax credits and net operating losses, if applicable. The subsidiaries record federal, state, and local income taxes payable to or receivable from DTE Energy based on the federal, state, and local tax provisions of each company.
Inter-segment billing for goods and services exchanged between segments is based upon tariffed or market-based prices of the provider and primarily consists of the sale of reduced emissions fuel, power sales, and natural gas sales in the following segments:
Three Months Ended March 31,Three Months Ended March 31,
2017 20162018 2017
(In millions)(In millions)
Electric$12
 $9
$13
 $12
Gas3
 
2
 3
Gas Storage and Pipelines7
 2
8
 7
Power and Industrial Projects168
 148
155
 168
Energy Trading11
 10
7
 11
Corporate and Other1
 
1
 1
$202
 $169
$186
 $202

44


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 March 31,Three Months Ended March 31,
2017 20162018 2017
(In millions)(In millions)
Operating Revenues — Utility operations      
Electric$1,175
 $1,153
$1,205
 $1,175
Gas557
 520
550
 557
Operating Revenues — Non-utility operations      
Gas Storage and Pipelines105
 67
119
 105
Power and Industrial Projects548
 446
567
 548
Energy Trading1,052
 549
1,498
 1,052
Corporate and Other1
 

 1
Reconciliation and Eliminations(202) (169)(186) (202)
Total$3,236
 $2,566
$3,753
 $3,236
Net Income (Loss) Attributable to DTE Energy by Segment:      
Electric$106
 $127
$140
 $106
Gas107
 87
104
 107
Gas Storage and Pipelines45
 30
62
 45
Power and Industrial Projects30
 17
45
 30
Energy Trading96
 (7)31
 96
Corporate and Other16
 (7)(21) 16
Net Income Attributable to DTE Energy Company$400
 $247
$361
 $400

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following combined discussion is separately filed by DTE Energy and DTE Electric. However, DTE Electric does not make any representations as to information related solely to DTE Energy or the subsidiaries of DTE Energy other than itself.
EXECUTIVE OVERVIEW
DTE Energy is a diversified energy company and is the parent company of DTE Electric and DTE Gas, regulated electric and natural gas utilities engaged primarily in the business of providing electricity and natural gas sales, distribution, and storage services throughout Michigan. DTE Energy operates three energy-related non-utility segments with operations throughout the United States.


The following table summarizes DTE Energy's financial results:
Three Months Ended March 31,Three Months Ended March 31,
2017 20162018 2017
(In millions, except per share amounts)(In millions, except per share amounts)
Net Income Attributable to DTE Energy Company$400
 $247
$361
 $400
Diluted Earnings per Common Share$2.23
 $1.37
$2.00
 $2.23
The increasedecrease in Net Income forin the three months ended March 31, 2017 is2018 was primarily due to higherlower earnings in the Energy Trading and GasCorporate and Other segments, partially offset by lowerhigher earnings in the Electric, segment.Gas Storage and Pipelines, and Power and Industrial Projects segments. The decrease in the first quarter of 2018 was also due to true-up adjustments for the remeasurement of deferred taxes of $21 million. The impact of the true-up adjustments was an increase in Income Tax Expense, of which $16 million was attributable to the regulated utilities and offset to Regulatory liabilities.Total Income Tax Expense decreased from the prior year due to the reduction of the corporate tax rate from 35% to 21%, which became effective in 2018.
Please see detailed explanations of segment performance in the following "Results of Operations" section.
DTE Energy's strategy is to achieve long-term earnings growth, a strong balance sheet, and an attractive dividend yield.


DTE Energy's utilities are investing capital to improve customer reliability through investments in base infrastructure and new generation, and to comply with environmental requirements. DTE Energy expects that planned significant capital investments will result in earnings growth. DTE Energy is focused on executing plans to achieve operational excellence and customer satisfaction with a focus on customer affordability. DTE Energy operates in a constructive regulatory environment and has solid relationships with its regulators.
In May 2017, DTE Energy announced its plan to reduce carbon emissions. This goal will be attained by cutting carbon emissions 30% by the early 2020s, 45% by 2030, 75% by 2040, and more than 80% by 2050. To achieve this reduction, DTE Energy will transition away from coal-powered sources and incorporate more renewable energy, energy efficiency, demand response, and highly-efficient natural gas fueled power plants. DTE Energy has already begun the transition in the way it produces power through the continued retirement of its aging coal-fired plants. Refer to the "Capital Investments" section below for further discussion.
DTE Energy has significant investments in non-utility businesses. DTE Energy employs disciplined investment criteria when assessing growth opportunities that leverage its assets, skills, and expertise, and provides diversity in earnings and geography. Specifically, DTE Energy invests in targeted energy markets with attractive competitive dynamics where meaningful scale is in alignment with its risk profile. DTE Energy expects growth opportunities in the Gas Storage and Pipelines and Power and Industrial Projects segments.
A key priority for DTE Energy is to maintain a strong balance sheet which facilitates access to capital markets and reasonably priced short-term and long-term financing. Near-term growth will be funded through internally generated cash flows and the issuance of debt and equity. DTE Energy has an enterprise risk management program that, among other things, is designed to monitor and manage exposure to earnings and cash flow volatility related to commodity price changes, interest rates, and counterparty credit risk.
CAPITAL INVESTMENTS
DTE Energy's utility businesses require significant capital investments to maintain and improve the electric generation and electric and natural gas distribution infrastructure and to comply with environmental regulations and renewable energy requirements.


DTE Electric's capital investments over the 2017-20212018-2022 period are estimated at $8.4$10.4 billion comprised of $3.2$4.1 billion for capital replacements and other projects, $3.2$4.3 billion for distribution infrastructure, and $2.0 billion for new generation. DTE Electric has retired threefour coal-fired generation units at the Trenton Channel, and River Rouge, and St. Clair facilities and has announced plans to retire an additional eightits remaining thirteen coal-fired generating units. Seven of these coal-fired generating units will be retired through 2023 at the Trenton Channel, River Rouge, and St. Clair facilities. The remaining coal-fired generating units at the Belle River and Monroe facilities are expected to be retired by 2040. The retired facilities will be replaced with renewables, energy efficiency, demand response, and natural gas-firedgas fueled generation. DTE Electric constructed and placed in service 50 megawatts of solar generation and renewables.in 2017. DTE Electric plans to build a natural gas turbine plantsfueled combined cycle generation facility to provide approximately 1,0001,100 megawatts of energy between 2021 and 2023.beginning in 2022. In September 2016,the third quarter of 2017, DTE Electric received an order fromfiled a CON with the MPSC inseeking approval for the planned build of this natural gas plant. In March 2018, DTE Electric filed its amended2018 Renewable Energy Plan approving two 150 megawattwith the MPSC proposing approximately 1,000 additional megawatts of energy from new wind and solar projects to be completed by 2022. The MPSC had previously approved 300 of the 1,000 additional megawatts for wind projects expected to be constructed and in service betweenan MPSC order received in September 2016. In January 2018, and 2020, and 25 megawatts of company-owned solar projects which will be constructed and in service between 2019 and 2020. DTE Electric is also currently constructing 50 megawatts of solar generation expectedfiled with the MPSC its five-year distribution operations investment and maintenance plan to be in service mid-2017.improve system reliability. DTE Electric plans to seek regulatory approval for capital expenditures consistent with prior ratemaking treatment.
DTE Gas' capital investments over the 2017-20212018-2022 period are estimated at $1.8$2.1 billion comprised of $1.0 billion$950 million for base infrastructure, $700 million$1.1 billion for gas main renewal, meter move out, and pipeline integrity programs, and $100$10 million for expenditures related to the NEXUS Pipeline. DTE Gas plans to seek regulatory approval in general rate case filings for base infrastructure capital expenditures consistent with prior ratemaking treatment.
DTE Energy's non-utility businesses' capital investments are primarily for expansion, growth, and ongoing maintenance. Gas Storage and Pipelines' capital investments over the 2017-20212018-2022 period are estimated at $2.2$2.8 billion to $2.8$3.4 billion for gathering and pipeline investments and expansions, including the NEXUS Pipeline. Power and Industrial Projects' capital investments over the 2017-20212018-2022 period are estimated at $600$800 million to $1.0$1.2 billion for investments in cogeneration and on-site energy projects.
ENVIRONMENTAL MATTERS
The Registrants are subject to extensive environmental regulation. Additional costs may result as the effects of various substances on the environment are studied and governmental regulations are developed and implemented. Actual costs to comply could vary substantially. The Registrants expect to continue recovering environmental costs related to utility operations through rates charged to customers.


customers, as authorized by the MPSC.
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.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 NOx, SO2, NOX, mercury, and other emissions. Additional rulemakings are expectedmay occur over the next few years which could require additional controls for SO2, NOx,NOX, and other hazardous air pollutants. To comply with theseexisting requirements, DTE Electric spent approximately $2.4 billion through 2016.2017. DTE Electric does not anticipate additional capital expenditures through 2023.2024.
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 EGUs. The carbon standards for new sources are not expected to have a material impact on DTE Electric, since DTE Electric has no plans to build new coal-fired generation and any potential new gas generation will be able to comply with the standards. In February 2016, the U.S. Supreme Court granted petitioners' requests for a stay of the carbon rules for existing EGUs (also known as the EPA Clean Power Plan) pending final review by the courts. The Clean Power Plan has no legal effect while the stay is in place. On March 28, 2017, a presidential executive order was issued on "Promoting Energy Independence and Economic Growth." The order instructs the EPA to review, and if appropriate, suspend, revise or rescind the Clean Power Plan rule. Additionally, federal agencies have been directed to conduct a review of all existing regulations that potentially burden the development and use of domestically produced energy resources. Following the issuance of this order, the federal government requested the U.S. Court of Appeals for the D.C. Circuit to hold all legal challenges in abeyance until the review of these regulations is completed. On October 10, 2017, the EPA proposed to rescind the Clean Power Plan and announced its intent to issue an ANPR seeking input as to whether it should replace the rule and, if so, what form it should take. It is not possible to determine the potential impact of the EPAEPA's repeal and possible replacement of the Clean Power Plan on existing sources at this time.


Pending or future legislation or other regulatory actions could have a material impact on DTE Electric's operations and financial position and the rates charged to its customers. Impacts include expenditures for environmental equipment beyond what is currently planned, financing costs related to additional capital expenditures, the purchase of emission credits from market sources, higher costs of purchased power, and the retirement of facilities where control equipment is not economical. DTE Electric would seek to recover these incremental costs through increased rates charged to its utility customers, as authorized by the MPSC.
Increased costs for energy produced from traditional coal-based sources due to recent, pending, and future regulatory initiatives, could also increase the economic viability of energy produced from renewable, natural gas-firedgas fueled generation, and/or nuclear sources, energy efficiency initiatives, and the potential development of market-based trading of carbon instruments which could provide new business opportunities for DTE Energy's utility and non-utility segments. At the present time, it is not possible to quantify the financial impacts of these climate related regulatory initiatives on the Registrants or their customers.
For further discussion of environmental matters, see Note 1110 to the Consolidated Financial Statements, "Commitments and Contingencies."
OUTLOOK
The next few years will be a period of rapid change for DTE Energy and for the energy industry. DTE Energy's strong utility base, combined with its integrated non-utility operations, position it well for long-term growth.
Looking forward, DTE Energy will focus on several areas that are expected to improve future performance:
electric and gas customer satisfaction;
electric distribution system reliability;
new electric generation;
gas distribution system renewal;
rate competitiveness and affordability;
regulatory stability and investment recovery for the electric and gas utilities;
employee safety and engagement;
cost structure optimization across all business segments;


cash, capital, and liquidity to maintain or improve financial strength; and
investments that integrate assets and leverage skills and expertise.
DTE Energy will continue to pursue opportunities to grow its businesses in a disciplined manner if it can secure opportunities that meet its strategic, financial, and risk criteria.

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


Utility Margin includes electric and gas Operating Revenues net of Fuel, purchased power, and gas expenses. The utilities’ fuel, purchased power, and natural gas supply are passed through to customers, and therefore, result in changes to the utilities’ revenues that are comparable to changes in such expenses. As such, DTE Energy believes Utility Margin provides a meaningful basis for evaluating the utilities’ operations across periods, as it excludes the revenue effect of fluctuations in these expenses.
The Non-utility Margin relates to the Power and Industrial Projects and Energy Trading segments. For the Power and Industrial Projects segment, Non-utility Margin primarily includes Operating Revenues net of Fuel, purchased power, and gas expenses. Operating Revenues include sales of refined coal to third parties and the affiliated Electric utility, metallurgical coke and related by-products, petroleum coke, renewable natural gas, and electricity, as well as rental income and revenues from utility-type consulting, management, and operational services. For the Energy Trading segment, Non-utility Margin includes revenue and realized and unrealized gains and losses from physical and financial power and gas marketing, optimization, and trading activities, net of Purchased power and gas related to these activities. DTE Energy evaluates its operating performance of these non-utility businesses using the measure of Operating Revenues net of Fuel, purchased power, and gas expenses.
Utility Margin and Non-utility Margin are not measures calculated in accordance with GAAP and should be viewed as a supplement to and not a substitute for the results of operations presented in accordance with GAAP. Utility Margin and Non-utility Margin do not intend to represent operating income, the most comparable GAAP measure, as an indicator of operating performance and are not necessarily comparable to similarly titled measures reported by other companies.
The following sections provide a detailed discussion of the operating performance and future outlook of DTE Energy's segments. Segment information, described below, includes intercompany revenues and expenses, and other income and deductions that are eliminated in the Consolidated Financial Statements.
Three Months Ended March 31,Three Months Ended March 31,
2017 20162018 2017
(In millions)(In millions)
Net Income (Loss) Attributable to DTE Energy by Segment      
Electric$106
 $127
$140
 $106
Gas107
 87
104
 107
Gas Storage and Pipelines45
 30
62
 45
Power and Industrial Projects30
 17
45
 30
Energy Trading96
 (7)31
 96
Corporate and Other16
 (7)(21) 16
Net Income Attributable to DTE Energy Company$400
 $247
$361
 $400


ELECTRIC
The Results of Operations discussion for DTE Electric is presented in a reduced disclosure format in accordance with General Instruction H(2) of Form 10-Q.
The Electric segment consists principally of DTE Electric. Results for Electric segment with a reconciliation to DTE Electricresults are discussed below:
Three Months Ended March 31,Three Months Ended March 31,
2017 20162018 2017
(In millions)(In millions)
Operating Revenues — Utility operations$1,175
 $1,153
$1,205
 $1,175
Fuel and purchased power — utility314
 335
339
 314
Gross Margin861
 818
Utility Margin866
 861
Operation and maintenance383
 324
312
 371
Depreciation and amortization181
 176
212
 181
Taxes other than income80
 73
81
 80
Operating Income217
 245
261
 229
Other (Income) and Deductions54
 48
74
 66
Income Tax Expense57
 70
47
 57
DTE Electric Net Income Attributable to DTE Energy Company$106

$127
Net Income Attributable to DTE Energy Company$140
 $106
See DTE Electric's Consolidated Statements of Operations for a complete view of its results.
GrossUtility Margin increased $43$5 million in the three months ended March 31, 2017.2018. Revenues associated with certain mechanisms and surcharges are offset by related expenses elsewhere in the Registrants' Consolidated Statements of Operations.


The following table details changes in various gross marginUtility Margin components relative to the comparable prior period:
Three MonthsThree Months
(In millions)(In millions)
Implementation of new rates$46
$14
Weather25
Base sales2
(5)
Weather(13)
TCJA rate reduction reserve(39)
Regulatory mechanisms and other8
10
Increase in gross margin$43
Increase in Utility Margin$5
Three Months Ended March 31,Three Months Ended March 31,
2017 20162018 2017
(In thousands of MWh)(In thousands of MWh)
DTE Electric Sales      
Residential3,518
 3,618
3,677
 3,518
Commercial4,083
 4,109
4,030
 4,083
Industrial2,375
 2,421
2,604
 2,375
Other79
 78
57
 79
10,055
 10,226
10,368
 10,055
Interconnection sales(a)
672
 693
1,082
 672
Total DTE Electric Sales10,727
 10,919
11,450
 10,727
      
DTE Electric Deliveries      
Retail and wholesale10,055
 10,226
10,368
 10,055
Electric retail access, including self-generators(b)
1,194
 1,159
1,142
 1,194
Total DTE Electric Sales and Deliveries11,249
 11,385
11,510
 11,249

(a)Represents power that is not distributed by DTE Electric.
(b)Represents deliveries for self-generators that have purchased power from alternative energy suppliers to supplement their power requirements.


Operation and maintenance expense increaseddecreased $59 million in the three months ended March 31, 2017.2018. The increasedecrease was primarily due to increaseddecreased power plant generation expenses of $28$24 million, related to outages, increasedlower storm restoration expenses of $21 million, increased distribution operations expenses of $6$30 million, and increaseda one-time benefits expense reimbursement of $4$9 million. The increaseddecrease in power plant generation expenses includeincludes a decrease of $9 million of costs related to the 2016 fire at a generation facility which DTE Electric expects to be partially reimbursed byincurred in 2017 and $7 million in related insurance proceeds.proceeds received in 2018.
Depreciation and amortization expense increased $5$31 million in the three months ended March 31, 2017.2018. The increase was primarily due to $4$14 million of increased expensesexpense due to an increased depreciable base and an increase of $4$18 million associated with the TRM, partially offset by a decrease of $3 million in amortization of regulatory assets.TRM.
Other (Income) and Deductions increased $6$8 million in the three months ended March 31, 2017.2018. The increase was primarily due to higher interest expense of $2 million and lower interest incomeinvestment earnings of $8$10 million, related to a sales and use tax settlement received in 2016, partially offset by $3 milliondecreased non-operating retirement benefits, net of higher investment earnings.$4 million.
Outlook DTE Electric will continue to move forward in its efforts to achieve operational excellence, sustainedsustain strong cash flows, and earn its authorized return on equity. DTE Electric expects that planned significant capital investments will result in earnings growth. DTE Electric expects to continue its efforts to improve productivity and decrease costs while improving customer satisfaction with consideration of customer rate affordability. Looking forward, additional factors may impact earnings, such as weather, the outcome of regulatory proceedings, benefit plan design changes, investment returns and changes in discount rate assumptions in benefit plans and health care costs, impact of 2016 Michigan energy legislation, uncertainty of legislative or regulatory actions regarding climate change, and effects of energy efficiencywaste reduction programs.


DTE Electric filed a rate case with the MPSC on April 19, 2017 requesting an increase in base rates of $231 million based on a projected twelve-month period ending October 31, 2018. The requested increase in base rates is primarily due primarily to an increase in net plant resulting from infrastructure investments, environmental compliance, and reliability improvement projects. The rate filing also includes projected changes in sales, operation and maintenance expenses, and working capital. The rate filing also requests an increase in return on equity from 10.1% to 10.5% on capital structure.. On November 1, 2017, DTE Electric anticipates self-implementingself-implemented a base rate increase of $125 million. On April 18, 2018, the MPSC issued an order approving an annual revenue increase of $65.2 million for service rendered on or after May 1, 2018. The MPSC authorized a return on equity of 10.0%. DTE Electric has recorded a refund liability of $25 million, representing the total estimated refund due to customers, inclusive of interest, at March 31, 2018.
On January 19, 2018, DTE Electric filed information with the MPSC regarding the potential change in November 2017 withrevenue requirements due to the TCJA effective January 1, 2018, and outlined its recommended method to flow the current and deferred tax benefits of those impacts to ratepayers.
On February 22, 2018, the MPSC issued an MPSC order in this case requiring utilities, including DTE Electric, to follow a 3-step approach of credits and calculations. The first step is to establish Credit A, through contested cases. Credit A is a going-forward tax credit to reflect the reduction of the corporate tax rate from 35% to 21%. The proposed new rates are expected to be effective July 1, 2018. DTE Electric is required to file its Credit A application by AprilMay 18, 2018. The second step is to establish Credit B, through contested cases. Credit B is a backward-looking tax credit to reflect the reduction of the corporate rate of 35% to 21%, for the period January 1, 2018 through the date Credit A is established. The Credit B filing is required within sixty days after Credit A is implemented. DTE Electric has been deferring the impact of the reduction to the corporate tax rate since January 1, 2018. The third step is to perform Calculation C, through contested cases. Calculation C will address all remaining issues relative to the new tax law, which is primarily the remeasurement of deferred taxes and how the amounts deferred as Regulatory liabilities will flow to ratepayers. DTE Electric is required to file Calculation C no later than October 1, 2018, unless it files a new general rate case prior to October 1, 2018, and address Calculation C within that filing.


GAS
The Gas segment consists principally of DTE Gas. Gas results are discussed below:
Three Months Ended March 31,Three Months Ended March 31,
2017 20162018 2017
(In millions)(In millions)
Operating Revenues — Utility operations$557
 $520
$550
 $557
Cost of gas — utility221
 233
220
 221
Gross Margin336
 287
Utility Margin330
 336
Operation and maintenance107
 96
111
 107
Depreciation and amortization30
 26
32
 30
Taxes other than income20
 19
21
 20
Operating Income179
 146
166
 179
Other (Income) and Deductions13
 11
14
 13
Income Tax Expense59
 48
48
 59
Net Income Attributable to DTE Energy Company$107
 $87
$104
 $107
GrossUtility Margin increased $49decreased $6 million in the three months ended March 31, 2017.2018. Revenues associated with certain surcharges are offset by related expenses elsewhere in DTE Energy's Consolidated Statements of Operations.
The following table details changes in various gross marginUtility Margin components relative to the comparable prior period:
Three MonthsThree Months
(In millions)(In millions)
Implementation of new rates$54
Weather30
Midstream storage and transportation revenues2
Revenue decoupling mechanism5
(3)
Weather(12)
TCJA rate reduction reserve(32)
Other2
(3)
Increase in gross margin$49
Decrease in Utility Margin$(6)
Three Months Ended March 31,Three Months Ended March 31,
2017 20162018 2017
(In Bcf)(In Bcf)
Gas Markets      
Gas sales53
 55
62
 53
End-user transportation52
 56
59
 52
105
 111
121
 105
Intermediate transportation82
 67
72
 82
Total Gas sales187
 178
193
 187
Operation and maintenance expense increased $11$4 million in the three months ended March 31, 2017.2018. The increase was primarily due to increased employee benefitsuncollectible and gas operations expenses of $8 million, increased corporate expenses of $2 million, and increased energy optimization expenses of $2 million, partially offset by decreased uncollectiblea one-time benefits expense of $1 million.reimbursement.


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


DTE Gas filed a rate case with the MPSC on November 22, 2017 requesting an increase in base rates of $85.1 million based on a projected twelve-month period ending September 30, 2019. The requested increase in base rates is primarily due to an increase in net plant. The rate filing also includes projected changes in sales, operations, maintenance expenses, and working capital. The rate filing also requests an increase in return on equity from 10.1% to 10.5%. A final MPSC order in this case is expected by September 2018.
On January 19, 2018, DTE Gas filed information with the MPSC regarding the potential change in revenue requirements due to the TCJA effective January 1, 2018, and outlined its recommended method to flow the current and deferred tax benefits of those impacts to ratepayers.
On February 22, 2018, the MPSC issued an order in this case requiring utilities, including DTE Gas, to follow a 3-step approach of credits and calculations. The first step is to establish Credit A, through contested cases. Credit A is a going-forward tax credit to reflect the reduction of the corporate tax rate from 35% to 21%. DTE Gas submitted its Credit A filing on March 28, 2018, reflecting a reduction in revenues of $38.2 million. The second step is to establish Credit B, through contested cases. Credit B is a backward-looking tax credit to reflect the reduction of the corporate rate of 35% to 21%, for the period January 1, 2018 through the date Credit A is established. The Credit B filing is required within sixty days after Credit A is implemented. DTE Gas has been deferring the impact of the reduction to the corporate tax rate since January 1, 2018. The third step is to perform Calculation C, through contested cases. Calculation C will address all remaining issues relative to the new tax law, which is primarily the remeasurement of deferred taxes and how the amounts deferred as Regulatory liabilities will flow to ratepayers. DTE Gas is required to file Calculation C no later than October 1, 2018, unless it files a new general rate case prior to October 1, 2018, and address Calculation C within that filing.
GAS STORAGE AND PIPELINES
The Gas Storage and Pipelines segment consists of the non-utility gas pipelines and storage businesses. Gas Storage and Pipelines results are discussed below:
Three Months Ended March 31,Three Months Ended March 31,
2017 20162018 2017
(In millions)(In millions)
Operating Revenues — Non-utility operations$105
 $67
$119
 $105
Cost of gas — Non-utility6
 
4
 6
Operation and maintenance19
 16
23
 19
Depreciation and amortization19
 8
20
 19
Taxes other than income3
 1
3
 3
Asset (gains) losses and impairments, net(2) 
Operating Income58
 42
71
 58
Other (Income) and Deductions(14) (8)(17) (14)
Income Tax Expense21
 19
19
 21
Net Income51
 31
69
 51
Less: Net Income Attributable to Noncontrolling Interests6
 1
7
 6
Net Income Attributable to DTE Energy Company$45
 $30
$62
 $45
Operating Revenues — Non-utility operations increased $38$14 million in the three months ended March 31, 2017.2018. The increase was primarily due to the acquisition of AGSincreased pipeline and SGG and increased volumes from Susquehanna gathering.gathering volumes.
Depreciation and amortizationCost of gas — Non-utility expenseincreased$11 million in the three months endedMarch 31, 2017. The increase is primarily due to the acquisition of AGS and SGG.
Other (Income) and Deductions increased $6decreased $2 million in the three months ended March 31, 2017. This increase is2018. The decrease was primarily duedriven by less physical gas purchases from AGS customers for resale to higher pipeline earnings from AFUDC recorded on the NEXUS Pipeline.optimize available transportation capacity.
Net Income Attributable to Noncontrolling InterestsOperation and maintenance expense increased$5 $4 million in the three months ended March 31, 2017.2018. The increase iswas primarily due to additional compression activity on the acquisition of SGG.
See Note 4 to the Consolidated Financial Statements, "Acquisition," for discussion of the acquisition of AGSBluestone Pipeline and SGG in October 2016.Susquehanna gathering systems.
Outlook — The Bluestone Pipeline expansion is expected to be in service in the second quarter of 2017. Additionally, theand Susquehanna gathering system will beare being expanded with additional compression facilities and gathering lines as needed to accommodate shipper demand. DTE Energy believes its long-term agreement with Southwestern Energy Production Company and the quality of the natural gas reserves in the Marcellus region soundly positions Bluestone Pipeline and Susquehanna gathering system for future growth.


Progress continues on development activities on the NEXUS Pipeline, a transportation path to transport Appalachian Basin shale gas, including Utica and Marcellus shale gas, directly to consuming markets in northern Ohio, southeastern Michigan, and Dawn Ontario. DTE Energy owns a 50% partnership interest in the NEXUS Pipeline, with an investment balance of $435$704 million at March 31, 2017. A2018. The FERC application was filedapproved on August 25, 2017 and construction commenced in the fourth quarter of 2015. With the departure of one of the three remaining FERC commissioners on February 3, 2017, a necessary quorum of three FERC commissioners no longer exists, thereby delaying pipeline approvals until at least one new commissioner is appointed. Construction will commence as soon as the FERC order is received. Premised on a timely appointment of at least one FERC Commissioner,October 2017. DTE Energy is targetinganticipates a year-end 2017third quarter 2018 in-service date for the NEXUS Pipeline.


The October 2016 acquisition of AGS and SGG providesprovide a platform for midstream growth and access to further investment opportunities in the Appalachian basin, an additional connection to the NEXUS Pipeline which should drive incremental volumes on the NEXUS Pipeline, and a new set of producer relationships that may lead to more partnering opportunities.
In March 2018, the FERC application was approved for the Birdsboro Pipeline, a 14-mile lateral to serve a new power plant in Pennsylvania. DTE Energy is targeting a 2018 in-service date.
Gas Storage and Pipelines expects to maintain its steady growth by developing an asset portfolio with multiple growth platforms through investment in new projects and expansions. Gas Storage and Pipelines will continue to look for additional investment opportunities and other storage and pipeline projects at favorable prices.
POWER AND INDUSTRIAL PROJECTS
The Power and Industrial Projects segment is comprised primarily of projects that deliver energy and utility-type products and services to industrial, commercial, and institutional customers, produce reduced emissions fuel, and sell electricity and pipeline-quality gas from renewable energy projects. Power and Industrial Projects results are discussed below:
Three Months Ended March 31,Three Months Ended March 31,
2017 20162018 2017
(In millions)(In millions)
Operating Revenues — Non-utility operations$548
 $446
$567
 $548
Fuel, purchased power, and gas — non-utility486
 383
498
 486
Gross Margin62
 63
Non-utility Margin69
 62
Operation and maintenance82
 75
82
 82
Depreciation and amortization18
 18
16
 18
Taxes other than income4
 5
4
 4
Operating Loss(42) (35)(33) (42)
Other (Income) and Deductions(16) (14)(18) (16)
Income Taxes      
Benefit(6) (5)
 (6)
Production Tax Credits(38) (25)(43) (38)
(44) (30)(43) (44)
Net Income18
 9
28
 18
Less: Net Loss Attributable to Noncontrolling Interests(12) (8)(17) (12)
Net Income Attributable to DTE Energy Company$30
 $17
$45
 $30
Operating Revenues — Non-utility operations increased $102$19 million in the three months ended March 31, 2017.2018. The increase was primarily due to $96 million associated with higher production in the REF business, and a $9 million increase primarily due to higher sales as a result of improved conditions in the steel business.following:
 (In millions)
Higher demand due to improved conditions in the steel business$27
New projects and higher production in the renewables business5
Lower coal prices, offset by higher production in the REF business(8)
Project termination in the on-site business(5)
 $19


GrossNon-utility Margin decreased $1 million in the three months ended March 31, 2017. The decrease was primarily due to $4 million of lower sales associated with expired contracts in the on-site business, and a $3 million decrease associated with production in the REF business, offset by a $9 million increase primarily due to higher sales as a result of improved business conditions in the steel business.
Operation and maintenance expense increased $7 million in the three months ended March 31, 2017.2018. The increase was due to the following:
 (In millions)
Higher demand due to improved conditions in the steel business$4
New projects, higher production, and lower fuel cost in the renewables business4
Project termination in the on-site business(1)
 $7
Income Taxes — Production Tax Credits increased $5 million in the three months ended March 31, 2018. The increase was primarily due to $4 million of higher maintenance in the renewables projects, and $2 million of higher spending primarily due to new projects and higher production in the REF business.
Income TaxNet Loss Attributable to Noncontrolling Interests Production Tax Creditsincreased by $13$5 million in the three months ended March 31, 2017.2018. The increase was primarily due to new projects and higher production in the REF business.
Outlook Power and Industrial Projects has constructed and placed in service REF facilities at eleven sites including facilities located at eight third-party owned coal-fired power plants. DTE Energy has sold membership interests in four of the facilities and entered into lease arrangements in three of the facilities. One of the third-party owned lease facilities ceased operations and the lease arrangement terminated effective April 2018. After the termination date, the REF business has ten remaining sites at seven third-party owned coal-fired power plants. DTE Energy will continue to optimize thesethe remaining facilities by seeking investors or entering into lease arrangements for facilities operating at DTE Electric and other utility sites. DTE Energy is in the process of entering into a sub license agreement with a third-party owned and operated REF facility.


DTE Energy expects improved production levels of metallurgical coke and pulverized coal supplied to steel industry customers for 2017. The segment has four renewable power generation facilities in operation. On-site energy services will continue to be delivered in accordance with the terms of long-term contracts. DTE Energy will continue to look for additional investment opportunities and other energy projects at favorable prices.
Power and Industrial Projects will continue to leverage its extensive energy-related operating experience and project management capability to develop additional energy projects to serve energy intensive industrial customers.
ENERGY TRADING
Energy Trading focuses on physical and financial power and natural gas marketing and trading, structured transactions, enhancement of returns from its asset portfolio, and optimization of contracted natural gas pipeline transportation and storage positions. Energy Trading also provides natural gas, power, and related services, which may include the management of associated storage and transportation contracts on the customers' behalf, and the supply or purchase of renewable energy credits to various customers. Energy Trading results are discussed below:
Three Months Ended March 31,Three Months Ended March 31,
2017 20162018 2017
(In millions)(In millions)
Operating Revenues — Non-utility operations$1,052
 $549
$1,498
 $1,052
Purchased power and gas — non-utility873
 541
1,436
 873
Gross Margin179
 8
Non-utility Margin62
 179
Operation and maintenance19
 16
17
 19
Depreciation and amortization1
 1
1
 1
Taxes other than income1
 1
2
 1
Operating Income (Loss)158
 (10)
Operating Income42
 158
Other (Income) and Deductions1
 1
1
 1
Income Tax Expense (Benefit)61
 (4)
Net Income (Loss) Attributable to DTE Energy Company$96
 $(7)
Income Tax Expense10
 61
Net Income Attributable to DTE Energy Company$31
 $96
Operating Revenues — Non-utility operations increased$503 $446 million in the three months ended March 31, 2017.2018. The increase was primarily due primarily to highhigher volumes and higher gas prices primarily in the gas structured strategy.


GrossNon-utility Margin increased $171decreased $117 million in the three months ended March 31, 2017.2018. The increase was due primarily to timing from MTM adjustments on certain transactions in the gas structured strategy.
The increase in Gross Margin in the three months ended March 31, 2017 represents a $91 million increase in unrealized margins and a $80 million increase in realized margins. The $91 million increase in unrealized marginsdecrease was due to $103 million of favorable results, primarily in gas structuredthe unrealized and power full requirements strategies, offset by $12 million of unfavorable results, primarily in power and gas trading strategies. The $80 million increase in realized margins was due to $85 million of favorable results, primarily in gas structured, gas storage, gas full requirements, and environmental, power and gas trading strategies, offset by $5 million of unfavorable results, primarilypresented in the power full requirements strategy.following table:
Natural gas structured transactions typically involve a physical purchase or sale of natural gas in the future and/or natural gas basis financial instruments which are derivatives and a related non-derivative pipeline transportation contract. These gas structured transactions can result in significant earnings volatility as the derivative components are marked-to-market without revaluing the related non-derivative contracts. Included in the $103 million of favorable unrealized results for the three months ended March 31, 2017, related to gas strategies was $95 million of timing related gains which will reverse in future periods as the underlying contracts settle. Included in the $85 million of favorable realized results for the three months ended March 31, 2017 related to gas strategies was $71 million of timing related losses recognized in previous periods that reversed as the underlying contracts settled.
 (In millions)
Unrealized Margins(a)
 
Unfavorable results, primarily in gas structured and gas storage strategies(b)
$(98)
Favorable results, primarily in the gas trading strategy6
 (92)
Realized Margins(a)
 
Unfavorable results, primarily in power full requirements, gas full requirements, and gas and power trading strategies(58)
Favorable results, primarily in the gas storage strategy(c)
33
 (25)
Decrease in Non-utility Margin$(117)


(a)Natural gas structured transactions typically involve a physical purchase or sale of natural gas in the future and/or natural gas basis financial instruments which are derivatives and a related non-derivative pipeline transportation contract. These gas structured transactions can result in significant earnings volatility as the derivative components are marked-to-market without revaluing the related non-derivative contracts.
(b)Amount includes $103 million of timing related losses related to gas strategies which will reverse in future periods as the underlying contracts settle.
(c)Amount includes $17 million of timing related losses related to gas strategies recognized in previous periods that reversed as the underlying contracts settled.
Outlook — In the near-term, Energy Trading expects market conditions to remain challenging, and the profitability of this segment may be impacted by the volatility in commodity prices and the uncertainty of impacts associated with financial reform, regulatory changes, and changes in operating rules of RTOs.Regional Transmission Organizations. Significant portions of the Energy Trading portfolio are economically hedged. Most financial instruments and physical power and natural gas contracts are deemed derivatives, whereas natural gas inventory, pipeline transportation, renewable energy credits, and storage assets are not derivatives. As a result, Energy Trading will experience earnings volatility as derivatives are marked-to-market without revaluing the underlying non-derivative contracts and assets. Energy Trading's strategy is to economically manage the price risk of these underlying non-derivative contracts and assets with futures, forwards, swaps, and options. This results in gains and losses that are recognized in different interim and annual accounting periods.
See also the "Fair Value" section herein and Notes 7 and 8 to the Consolidated Financial Statements, "Fair Value" and "Financial and Other Derivative Instruments," respectively.
CORPORATE AND OTHER
Corporate and Other includes various holding company activities, holds certain non-utility debt, and holds energy-related investments. The net incomeloss of $16$21 million in the three months ended March 31, 20172018, represents an increasea decrease of $23$37 million from the net lossincome of $7$16 million in the comparable 20162017 period. The increasedecrease was primarily due primarily to effective income tax rate adjustments, higher interest expense, a reduction in the corporate tax rate from the TCJA in December 2017, and $13 million oflower excess tax benefits on stock-based compensation recognized in accordance with ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which was adopted effective July 1, 2016.compensation.

CAPITAL RESOURCES AND LIQUIDITY
Cash Requirements
DTE Energy uses cash to maintain and invest in the electric and natural gas utilities, to grow the non-utility businesses, to retire, and pay interest on long-term debt, and to pay dividends. DTE Energy believes it will have sufficient internal and external capital resources to fund anticipated capital and operating requirements. DTE Energy expects that cash from operations in 20172018 will be approximately $1.9$2.0 billion. DTE Energy anticipates base level utility capital investments;investments, including environmental, renewable, and energy optimizationwaste reduction expenditures; expenditures for non-utility businesses; and contributions to equity method investees in 20172018 of approximately $3.0$3.6 billion. DTE Energy plans to seek regulatory approval to include utility capital expenditures in regulatory rate base consistent with prior treatment. Capital spending for growth of existing or new non-utility businesses will depend on the existence of opportunities that meet strict risk-return and value creation criteria.


Three Months Ended March 31,Three Months Ended March 31,
2017 20162018 2017
Cash and Cash Equivalents(In millions)
(In millions)
Cash, Cash Equivalents, and Restricted Cash   
Cash Flow From (Used For)      
Operating Activities      
Net Income$394
 $240
$351
 $394
Adjustments to reconcile Net Income to Net cash from operating activities:      
Depreciation and amortization249
 229
281
 249
Nuclear fuel amortization12
 15
15
 12
Allowance for equity funds used during construction(7) (5)(7) (7)
Deferred income taxes100
 80
60
 100
Working capital and other39
 186
138
 39
Net cash from operating activities787
 745
838
 787
Investing Activities      
Plant and equipment expenditures — utility(533) (394)(466) (533)
Plant and equipment expenditures — non-utility(22) (30)(61) (22)
Contributions to equity method investees(112) (26)(64) (112)
Other26
 13
5
 25
Net cash used for investing activities(641) (437)(586) (642)
Financing Activities      
Issuance of long-term debt, net of issuance costs496
 

 496
Redemption of long-term debt(5) (11)
Short-term borrowings, net(440) (134)14
 (440)
Repurchase of common stock(51) (33)
 (51)
Dividends on common stock and other(156) (132)
Dividends on common stock(158) (148)
REF contributions from noncontrolling interests12
 11
Other(23) (24)
Net cash used for financing activities(156) (310)(155) (156)
Net Decrease in Cash and Cash Equivalents$(10) $(2)
Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash$97
 $(11)
Cash from Operating Activities
A majority of DTE Energy's operating cash flows are provided by the electric and natural gas utilities, which are significantly influenced by factors such as weather, electric retail access, regulatory deferrals, regulatory outcomes, economic conditions, changes in working capital, and operating costs.
Cash from operations increased by $42$51 million in the three months ended March 31, 2017 compared2018 due primarily to the three months ended March 31, 2016. The increase in operating cash flows reflects an increase to Net Income,in Depreciation and amortization, and Deferred income taxes,working capital adjustments, partially offset by a decrease to Net Income, and Deferred income taxes.
The change in working capital adjustments.items in 2018 was primarily related to increases of cash from Inventories, and Other current and noncurrent assets and liabilities, and a decrease in cash used for Derivative assets and liabilities, partially offset by increases in cash used for Accounts payable, Accrued pension obligation, and Accrued postretirement obligation, and a decrease in cash from Accounts receivable, net.
Cash used for Investing Activities
Cash inflows associated with investing activities are primarily generated from the sale of assets, while cash outflows are the result of plant and equipment expenditures. In any given year, DTE Energy looks to realize cash from under-performing or non-strategic assets or matured, fully valued assets.
Capital spending within the utility businesses is primarily to maintain and improve electric generation and the electric and natural gas distribution infrastructure, and to comply with environmental regulations and renewable energy requirements.


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


Net cash used for investing activities increaseddecreased by $204$56 million in 20172018 primarily due to increased capitala decrease in Plant and equipment expenditures by the utility, business and increased contributionsContributions to equity method investees, primarily to the NEXUS Pipeline as it continues to develop.pipeline, partially offset by an increase in Plant and equipment expenditures — non-utility.
Net Cash used for Financing Activities
DTE Energy relies on both short-term borrowing and long-term financing as a source of funding for capital requirements not satisfied by its operations.
DTE Energy's strategy is to have a targeted debt portfolio blend of fixed and variable interest rates and maturity. DTE Energy continually evaluates its leverage target, which is currently 50% to 53%54%, to ensure it is consistent with the objective of a strong investment grade debt rating.
Net cash used for financing activities decreased by $154$1 million in 20172018 primarily due primarily to an increasea decrease in Issuancecash used for Short-term borrowings, net, and Repurchases of long-term debt,common stock, partially offset by a decrease to Short-term borrowings, net and increased RepurchaseIssuances of common stock and Dividends on common stock.long-term debt.
Outlook
DTE Energy expects cash flows from operations to increase over the long-term, primarily as a result of growth from the utility and non-utility businesses. Growth in the utilities is expected to be driven primarily by capital spending to maintain and improve the electric generation and electric and natural gas distribution infrastructure and to comply with new and existing state and federal regulations that will result in additional environmental and renewable energy investments which will increase the base from which rates are determined. Non-utility growth is expected from additional investments, primarily in the Gas Storage and Pipelines and Power and Industrial Projects segments.
DTE Energy may be impacted by the timing of collection or refund of various recovery and tracking mechanisms, as a result of timing of MPSC orders. Energy prices are likely to be a source of volatility with regard to working capital requirements for the foreseeable future. DTE Energy continues its efforts to identify opportunities to improve cash flows through working capital initiatives and maintaining flexibility in the timing and extent of long-term capital projects.
DTE Energy has approximately $10$110 million in long-term debt, including capital leases, maturing in the next twelve months. The repayment of the debt is expected to be paid through internally generated funds or the issuance of long-term debt.
DTE Energy has approximately $2.0$1.4 billion of available liquidity at March 31, 2017,2018, consisting of cash and amounts available under unsecured revolving credit agreements.
DTE Energy expects to issue equity up to $300 million in 2018 through the dividend reinvestment plan and pension and other employee benefit plans.
At the discretion of management, and depending upon financial market conditions, DTE Energy may make additional contributions up to $180 million, including contributions from DTE Electric of $145$25 million to its pension plans in 2017.2018. DTE Energy does not anticipate making any contributions to the other postretirement benefit plans in 2017.2018.


Various subsidiaries and an equity investeeinvestees of DTE Energy have entered into contracts which contain ratings triggers and are guaranteed by DTE Energy. These contracts contain provisions which allow the counterparties to require that DTE Energy post cash or letters of credit as collateral in the event that DTE Energy's credit rating is downgraded below investment grade. Certain of these provisions (known as "hard triggers") state specific circumstances under which DTE Energy can be required to post collateral upon the occurrence of a credit downgrade, while other provisions (known as "soft triggers") are not as specific. For contracts with soft triggers, it is difficult to estimate the amount of collateral which may be requested by counterparties and/or which DTE Energy may ultimately be required to post. The amount of such collateral which could be requested fluctuates based on commodity prices (primarily natural gas, power, and coal) and the provisions and maturities of the underlying transactions. As of March 31, 2017,2018, 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 approximately $437$513 million.
DTE Energy believes it will have sufficient operating flexibility, cash resources, and funding sources to maintain adequate amounts of liquidity and to meet future operating cash and capital expenditure needs. However, virtually all of DTE Energy's businesses are capital intensive, or require access to capital, and the inability to access adequate capital could adversely impact earnings and cash flows.


See Notes 5, 9, 10, 11, and 1211 to the Consolidated Financial Statements, "Regulatory Matters," "Long-Term Debt," "Short-Term Credit Arrangements and Borrowings," "Commitments and Contingencies," and "Retirement Benefits and Trusteed Assets," respectively.
NEW ACCOUNTING PRONOUNCEMENTS
See Note 3 to the Consolidated Financial Statements, "New Accounting Pronouncements."
FAIR VALUE
Derivatives are generally recorded at fair value and shown as Derivative assets or liabilities. Contracts DTE Energy typically classifies as derivative instruments include power, natural gas, oil, and certain coal forwards, futures, options and swaps, and foreign currency exchange contracts. Items DTE Energy does not generally account for as derivatives include natural gas inventory, pipeline transportation contracts, renewable energy credits, and storage assets. See Notes 7 and 8 to the Consolidated Financial Statements, "Fair Value" and "Financial and Other Derivative Instruments," respectively.
The tables below do not include the expected earnings impact of non-derivative natural gas storage, transportation, certain power contracts, and renewable energy credits which are subject to accrual accounting. Consequently, gains and losses from these positions may not match with the related physical and financial hedging instruments in some reporting periods, resulting in volatility in the Registrants' reported period-by-period earnings; however, the financial impact of the timing differences will reverse at the time of physical delivery and/or settlement.
The Registrants manage their MTM risk on a portfolio basis based upon the delivery period of their contracts and the individual components of the risks within each contract. Accordingly, the Registrants record and manage the energy purchase and sale obligations under their contracts in separate components based on the commodity (e.g. electricity or natural gas), the product (e.g. electricity for delivery during peak or off-peak hours), the delivery location (e.g. by region), the risk profile (e.g. forward or option), and the delivery period (e.g. by month and year).
The Registrants have established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value in three broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). For further discussion of the fair value hierarchy, see Note 7 to the Consolidated Financial Statements, "Fair Value."


The following tables providetable provides details on changes in DTE Energy's MTM net asset (or liability) position:
 Three Months Ended
 March 31, 2017
 (In millions)
MTM at December 31, 2016$(86)
Reclassified to realized upon settlement(1)
Changes in fair value recorded to income111
Amounts recorded to unrealized income110
Changes in fair value recorded in regulatory liabilities2
Change in collateral held for others(11)
MTM at March 31, 2017$15


 DTE Energy
 (In millions)
MTM at December 31, 2017$8
Reclassified to realized upon settlement(66)
Changes in fair value recorded to income72
Amounts recorded to unrealized income6
Change in collateral1
MTM at March 31, 2018$15
The table below shows the maturity of DTE Energy's MTM positions. The positions from 20202021 and beyond principally represent longer tenor gas structured transactions:
Source of Fair Value 2017 2018 2019 2020 and Beyond Total Fair Value 2018 2019 2020 2021 and Beyond Total Fair Value
 (In millions) (In millions)
Level 1 $(2) $(1) $4
 $(1) $
 $(10) $2
 $(1) $
 $(9)
Level 2 11
 5
 8
 4
 28
 10
 8
 4
 6
 28
Level 3 1
 13
 4
 (41) (23) (20) 12
 3
 (14) (19)
MTM before collateral adjustments $10
 $17
 $16
 $(38) 5
 $(20) $22
 $6
 $(8) 
Collateral adjustments         10
         15
MTM at March 31, 2017         $15
MTM at March 31, 2018         $15


Item 3. Quantitative and Qualitative Disclosures About Market Risk
Market Price Risk
The Electric and Gas businesses have commodity price risk, primarily related to the purchases of coal, natural gas, uranium, and electricity. However, the Registrants do not bear significant exposure to earnings risk, as such changes are included in the PSCR and GCR regulatory rate-recovery mechanisms. In addition, changes in the price of natural gas can impact the valuation of lost and stolen gas, storage sales, and transportation services revenue at the Gas segment. The Gas segment manages its market price risk related to storage sales revenue primarily through the sale of long-term storage contracts. The Registrants are exposed to short-term cash flow or liquidity risk as a result of the time differential between actual cash settlements and regulatory rate recovery.
DTE Energy's Gas Storage and Pipelines business segment has exposure to natural gas price fluctuations which impact the pricing for natural gas storage, gathering, and transportation. DTE Energy manages its exposure through the use of short, medium, and long-term storage, gathering, and transportation contracts.
DTE Energy's Power and Industrial Projects business segment is subject to electricity, natural gas, and coal product price risk. DTE Energy manages its exposure to commodity price risk through the use of long-term contracts.
DTE Energy's Energy Trading business segment has exposure to electricity, natural gas, coal, crude oil, heating oil, and foreign currency exchange price fluctuations. These risks are managed by the energy marketing and trading operations through the use of forward energy, capacity, storage, options, and futures contracts, within pre-determined risk parameters.
Credit Risk
The Registrants regularly review contingent matters relating to customers and their contracts and record provisions for amounts considered at risk of probable loss in the allowance for doubtful accounts. The Registrants believe their accrued amounts are adequate for probable loss.


Trading Activities
DTE Energy is exposed to credit risk through trading activities. Credit risk is the potential loss that may result if the trading counterparties fail to meet their contractual obligations. DTE Energy utilizes both external and internal credit assessments when determining the credit quality of trading counterparties.
The following table displays the credit quality of DTE Energy's trading counterparties as of March 31, 2017:2018:
Credit Exposure
Before Cash
Collateral
 Cash
Collateral
 Net Credit
Exposure
Credit Exposure
Before Cash
Collateral
 Cash
Collateral
 Net Credit
Exposure
(In millions)(In millions)
Investment Grade(a)
          
A− and Greater$210
 $(1) $209
$268
 $(2) $266
BBB+ and BBB230
 
 230
270
 (5) 265
BBB−33
 
 33
90
 
 90
Total Investment Grade473
 (1) 472
628
 (7) 621
Non-investment grade(b)
4
 
 4
20
 
 20
Internally Rated — investment grade(c)
331
 
 331
328
 (1) 327
Internally Rated — non-investment grade(d)
17
 (2) 15
63
 (11) 52
Total$825
 $(3) $822
$1,039
 $(19) $1,020

(a)This category includes counterparties with minimum credit ratings of Baa3 assigned by Moody’s Investors Service (Moody’s) or BBB- assigned by Standard & Poor’s Rating Group, a division of McGraw-Hill Companies, Inc. (Standard & Poor’s). The five largest counterparty exposures, combined, for this category represented approximately 17%13% of the total gross credit exposure.
(b)This category includes counterparties with credit ratings that are below investment grade. The five largest counterparty exposures, combined, for this category represented approximately 1%2% of the total gross credit exposure.
(c)This category includes counterparties that have not been rated by Moody’s or Standard & Poor’s, but are considered investment grade based on DTE Energy’s evaluation of the counterparty’s creditworthiness. The five largest counterparty exposures, combined, for this category represented approximately 15%14% of the total gross credit exposure.
(d)This category includes counterparties that have not been rated by Moody’s or Standard & Poor’s, and are considered non-investment grade based on DTE Energy’s evaluation of the counterparty’s creditworthiness. The five largest counterparty exposures, combined, for this category represented approximately 2%3% of the total gross credit exposure.
Other
The Registrants engage in business with customers that are non-investment grade. The Registrants closely monitor the credit ratings of these customers and, when deemed necessary and permitted under the tariffs, request collateral or guarantees from such customers to secure their obligations.
Interest Rate Risk
DTE Energy is subject to interest rate risk in connection with the issuance of debt. In order to manage interest costs, DTE Energy may use treasury locks and interest rate swap agreements. DTE Energy's exposure to interest rate risk arises primarily from changes in U.S. Treasury rates, commercial paper rates, and London Inter-Bank Offered Rates (LIBOR). As of March 31, 2017,2018, DTE Energy had a floating rate debt-to-total debt ratio of approximately 0.6%4.9%.
Foreign Currency Exchange Risk
DTE Energy has foreign currency exchange risk arising from market price fluctuations associated with fixed priced contracts. These contracts are denominated in Canadian dollars and are primarily for the purchase and sale of natural gas and power, as well as for long-term transportation capacity. To limit DTE Energy's exposure to foreign currency exchange fluctuations, DTE Energy has entered into a series of foreign currency exchange forward contracts through December 2020.June 2022.


Summary of Sensitivity Analyses
The RegistrantsSensitivity analyses were performed sensitivity analyses on the fair values of commodity contracts for DTE Energy and long-term debt obligations.obligations for the Registrants. The commodity contracts listed below principally relate to energy marketing and trading activities. The sensitivity analysisanalyses involved increasing and decreasing forward prices and rates at March 31, 20172018 and 20162017 by a hypothetical 10% and calculating the resulting change in the fair values.


The results of the sensitivity analysis calculations:analyses:
 Assuming a
10% Increase in Prices/Rates
 Assuming a
10% Decrease in Prices/Rates
  Assuming a
10% Increase in Prices/Rates
 Assuming a
10% Decrease in Prices/Rates
 
 As of March 31, As of March 31,  As of March 31, As of March 31, 
Activity 2017 2016 2017 2016 Change in the Fair Value of 2018 2017 2018 2017 Change in the Fair Value of
 (In millions)  (In millions) 
Gas contracts $21
 $17
 $(21) $(17) Commodity contracts $18
 $21
 $(19) $(21) Commodity contracts
Power contracts $9
 $17
 $(10) $(16) Commodity contracts $5
 $9
 $(8) $(10) Commodity contracts
Interest rate risk — DTE Energy $(540) $(356) $526
 $377
 Long-term debt $(593) $(540) $572
 $526
 Long-term debt
Interest rate risk — DTE Electric $(232) $(214) $249
 $230
 Long-term debt $(250) $(232) $268
 $249
 Long-term debt
For further discussion of market risk, see Note 8 to the Consolidated Financial Statements, "Financial and Other Derivative Instruments."



Item 4. Controls and Procedures
DTE Energy
(a) Evaluation of disclosure controls and procedures
Management of DTE Energy carried out an evaluation, under the supervision and with the participation of DTE Energy's Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the design and operation of DTE Energy's disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of March 31, 2017,2018, which is the end of the period covered by this report. Based on this evaluation, DTE Energy's CEO and CFO have concluded that such disclosure controls and procedures are effective in providing reasonable assurance that information required to be disclosed by DTE Energy in reports that it files or submits under the Exchange Act (i) is recorded, processed, summarized, and reported within the time periods specified in the U.S. Securities and Exchange Commission's rules and forms and (ii) is accumulated and communicated to DTE Energy's management, including its CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. Due to the inherent limitations in the effectiveness of any disclosure controls and procedures, management cannot provide absolute assurance that the objectives of its disclosure controls and procedures will be attained.
(b) Changes in internal control over financial reporting
There have been no changes in DTE Energy's internal control over financial reporting during the quarter ended March 31, 20172018 that have materially affected, or are reasonably likely to materially affect, DTE Energy's internal control over financial reporting. In April 2017, DTE Energy implemented a new customer billing system which is designed to improve efficiency and enhance the customer experience.
DTE Electric
(a) Evaluation of disclosure controls and procedures
Management of DTE Electric carried out an evaluation, under the supervision and with the participation of DTE Electric's Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the design and operation of DTE Electric's disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of March 31, 2017,2018, which is the end of the period covered by this report. Based on this evaluation, DTE Electric's CEO and CFO have concluded that such disclosure controls and procedures are effective in providing reasonable assurance that information required to be disclosed by DTE Electric in reports that it files or submits under the Exchange Act (i) is recorded, processed, summarized, and reported within the time periods specified in the U.S. Securities and Exchange Commission's rules and forms and (ii) is accumulated and communicated to DTE Electric's management, including its CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. Due to the inherent limitations in the effectiveness of any disclosure controls and procedures, management cannot provide absolute assurance that the objectives of its disclosure controls and procedures will be attained.
(b) Changes in internal control over financial reporting
There have been no changes in DTE Electric's internal control over financial reporting during the quarter ended March 31, 20172018 that have materially affected, or are reasonably likely to materially affect, DTE Electric's internal control over financial reporting. In April 2017, DTE Electric implemented a new customer billing system which is designed to improve efficiency and enhance the customer experience.



Part II — Other Information

Item 1. Legal Proceedings
As a result of a multimedia inspectionAn FOV was issued by the EPA EES Coke,to DTE Electric in 2017 alleging violations related to exceedances of the Michigan coke battery facility, a wholly-owned subsidiary ofmercury emission limits for the Monroe Power Plant. DTE Energy, received two FOVs in 2015 related to: 1) failing to repeat benzene sampling of waste streams due to a process change and use of calibration gas that is inconsistent with the applicable regulation; and 2) alleged deficiencies in its oil pollution prevention measures and spill prevention, control and countermeasures plan. EES CokeElectric is currently working with the EPA to address the alleged violations. At this time, DTE EnergyElectric cannot predict the impact of the final settlement.
For more information on legal proceedings and matters related to the Registrants, see Notes 5 and 1110 to the Consolidated Financial Statements, "Regulatory Matters" and "Commitments and Contingencies," respectively.

Item 1A. Risk Factors
There are various risks associated with the operations of the Registrants' businesses. To provide a framework to understand the operating environment of the Registrants, a brief explanation of the more significant risks associated with the Registrants' businesses is provided in Part 1, Item 1A. Risk Factors in DTE Energy's and DTE Electric's combined 20162017 Annual Report on Form 10-K. Although the Registrants have tried to identify and discuss key risk factors, others could emerge in the future.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Purchases of DTE Energy Equity Securities by the Issuer and Affiliated Purchasers
On March 7, 2018, DTE Energy contributed $175 million of its common stock to the DTE Energy Company Affiliates Employee Benefit Plans Master Trust. The contribution consisted of 1,751,401 shares valued at $99.92 per share, the closing market price of DTE Energy common stock on that date. The shares were contributed to the trust in a private placement transaction made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended. The common stock contribution was made on behalf of DTE Electric, who paid DTE Energy cash consideration of $175 million in March 2018.
The following table provides information about DTE Energy purchases of equity securities that are registered by DTE Energy pursuant to Section 12 of the Exchange Act of 1934 for the quarter ended March 31, 2017:2018:
 
Number of
Shares
Purchased(a)
 
Average
Price
Paid per
Share(a)
 
Number
of Shares
Purchased as
Part of Publicly
Announced
Plans or
Programs
 
Average
Price Paid
per Share
 
Maximum Dollar
Value that May
Yet Be
Purchased Under
the Plans or
Programs
01/01/2017 — 01/31/20172,232
 $95.68
 
 
 
02/01/2017 — 02/28/2017568,633
 $97.95
 
 
 
03/01/2017 — 03/31/20171,014
 $93.45
 
 
 
Total571,879
  
 
  
  
 
Number of
Shares
Purchased(a)
 
Average
Price
Paid per
Share(a)
 
Number
of Shares
Purchased as
Part of Publicly
Announced
Plans or
Programs
 
Average
Price Paid
per Share
 
Maximum Dollar
Value that May
Yet Be
Purchased Under
the Plans or
Programs
01/01/2018 — 01/31/20183,105
 $95.63
 
 
 
02/01/2018 — 02/28/201848,877
 $101.08
 
 
 
03/01/2018 — 03/31/20181,014
 $99.08
 
 
 
Total52,996
   
    

(a)Represents shares of DTE Energy common stock purchased on the open market to provide shares to participants under various employee compensation and incentive programs. This also includes shares of common stock withheld to satisfy income tax obligations upon the vesting of restricted stock based on the price in effect at the grant date.



Item 6. Exhibits
Exhibit Number Description 
DTE
Energy
 
DTE
Electric
       
  (i) Exhibits filed herewith:    
       
4.298Supplemental Indenture, dated as of March 1, 2017 to the Amended and Restated Indenture, dated as of April 9, 2001, by and between DTE Energy Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (2017 Series A)X
12.75 Computation of Ratio of Earnings to Fixed Charges X  
       
12.76 Computation of Ratio of Earnings to Fixed Charges   X
       
31.129 Chief Executive Officer Section 302 Form 10-Q Certification of Periodic Report X  
       
31.130 Chief Financial Officer Section 302 Form 10-Q Certification of Periodic Report X  
       
31.131 Chief Executive Officer Section 302 Form 10-Q Certification of Periodic Report   X
       
31.132 Chief Financial Officer Section 302 Form 10-Q Certification of Periodic Report   X
       
101.INS XBRL Instance Document X X
       
101.SCH XBRL Taxonomy Extension Schema X X
       
101.CAL XBRL Taxonomy Extension Calculation Linkbase X X
       
101.DEF XBRL Taxonomy Extension Definition Database X X
       
101.LAB XBRL Taxonomy Extension Label Linkbase X X
       
101.PRE XBRL Taxonomy Extension Presentation Linkbase X X
       
  (ii) Exhibits furnished herewith:    
       
32.129 Chief Executive Officer Section 906 Form 10-Q Certification of Periodic Report X  
       
32.130 Chief Financial Officer Section 906 Form 10-Q Certification of Periodic Report X  
       
32.131 Chief Executive Officer Section 906 Form 10-Q Certification of Periodic Report   X
       
32.132 Chief Financial Officer Section 906 Form 10-Q Certification of Periodic Report   X


Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrants have duly caused this report to be signed on their behalf by the undersigned, thereunto duly authorized. The signature for each undersigned Registrant shall be deemed to relate only to matters having reference to such Registrant and any subsidiaries thereof.
Date:April 26, 201725, 2018  
   DTE ENERGY COMPANY
    
  By:/S/DONNA M. ENGLAND JEFFREY A. JEWELL
   Donna M. EnglandJeffrey A. Jewell
Vice President, Controller, and Chief Accounting Officer
   (Duly Authorized Officer)
    
    
   DTE ELECTRIC COMPANY
    
  By:/S/DONNA M. ENGLAND JEFFREY A. JEWELL
   Donna M. EnglandJeffrey A. Jewell
Vice President, Controller, and Chief Accounting Officer
   (Duly Authorized Officer)

6570