Company Quick10K Filing
Quick10K
DTE Energy
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$122.81 183 $22,500
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-04-24 Earnings, Regulation FD, Exhibits
8-K 2019-04-16 Enter Agreement, Leave Agreement, Off-BS Arrangement, Exhibits
8-K 2019-04-16 Enter Agreement, Leave Agreement, Off-BS Arrangement, Exhibits
8-K 2019-04-09 Regulation FD, Exhibits
8-K 2019-03-08 Earnings, Exhibits
8-K 2019-02-07 Earnings, Regulation FD, Exhibits
8-K 2019-02-04 Officers
8-K 2018-12-12 Regulation FD, Exhibits
8-K 2018-12-04 Officers
8-K 2018-11-09 Regulation FD, Exhibits
8-K 2018-10-31 Earnings, Exhibits
8-K 2018-10-24 Earnings, Regulation FD, Exhibits
8-K 2018-10-02 Regulation FD, Exhibits
8-K 2018-09-18 Regulation FD, Exhibits
8-K 2018-09-16 Officers
8-K 2018-09-14 Other Events, Exhibits
8-K 2018-09-05 Regulation FD, Exhibits
8-K 2018-08-28 Regulation FD, Exhibits
8-K 2018-08-15 Regulation FD, Exhibits
8-K 2018-08-01 Earnings, Exhibits
8-K 2018-07-25 Earnings, Regulation FD, Exhibits
8-K 2018-07-06 Other Events, Exhibits
8-K 2018-06-22 Regulation FD, Exhibits
8-K 2018-06-08 Regulation FD, Exhibits
8-K 2018-05-31 Officers, Exhibits
8-K 2018-05-14 Regulation FD, Exhibits
8-K 2018-05-04 Regulation FD, Exhibits
8-K 2018-05-03 Shareholder Vote
8-K 2018-04-19 Other Events, Exhibits
8-K 2018-04-09 Regulation FD, Exhibits
8-K 2018-04-02 Regulation FD, Exhibits
8-K 2018-03-19 Regulation FD, Exhibits
8-K 2018-03-09 Earnings, Exhibits
8-K 2018-02-27 Regulation FD, Exhibits
8-K 2018-01-10 Regulation FD, Exhibits
TJX TJX Companies 66,180
ABC Amerisourcebergen 15,910
OLLI Ollie's Bargain Outlet 5,910
MTZ Mastec 3,980
EIG Employers Holdings 1,340
CAC Camden National 666
FBM Foundation Building Materials 539
MPX Marine Products 472
SHRV Sharing Services 0
ALPC Alpha Investment 0
DTE 2019-03-31
Part I - Financial Information
Item 1. Financial Statements
Note 1 - Organization and Basis of Presentation
Note 2 - Significant Accounting Policies
Note 3 - New Accounting Pronouncements
Note 4 - Revenue
Note 5 - Regulatory Matters
Note 6 - Earnings per Share
Note 7 - Fair Value
Note 8 - Financial and Other Derivative Instruments
Note 9 - Long-Term Debt
Note 10 - Short-Term Credit Arrangements and Borrowings
Note 11 - Leases
Note 12 - Commitments and Contingencies
Note 13 - Retirement Benefits and Trusteed Assets
Note 14 - Segment and Related Information
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 6. Exhibits
EX-31.161 a20190331ex31161.htm
EX-31.162 a20190331ex31162.htm
EX-31.163 a20190331ex31163.htm
EX-31.164 a20190331ex31164.htm
EX-32.161 a20190331ex32161.htm
EX-32.162 a20190331ex32162.htm
EX-32.163 a20190331ex32163.htm
EX-32.164 a20190331ex32164.htm

DTE Energy Earnings 2019-03-31

DTE 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 dteenergy2019033110q.htm DTE ENERGY FORM 10-Q Document


 
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, 2019
Commission File Number
 
Registrants, State of 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)
Yes x No o
 
DTE Electric Company (DTE Electric)
Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
DTE Energy
Yes 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, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
DTE Energy
Large accelerated filer x
Accelerated filer o
Non-accelerated filer o
Smaller reporting company o
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
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
Yes o No x
 
DTE Electric
Yes o No x
Number of shares of Common Stock outstanding at March 31, 2019:
Registrant
 
Description
 
Shares
DTE Energy
 
Common Stock, without par value
 
183,212,427

 
 
 
 
 
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 any individual registrant is filed by such registrant solely on its own behalf. DTE Electric makes no representation as to information relating exclusively to DTE Energy.
DTE Electric, 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.
 





















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TABLE OF CONTENTS

 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




DEFINITIONS

AFUDC
 
Allowance for Funds Used During Construction
 
 
 
AGS
 
Appalachia 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.
 
 
 
ASU
 
Accounting Standards Update issued by the FASB
 
 
 
CCR
 
Coal Combustion Residuals
 
 
 
CFTC
 
U.S. Commodity Futures Trading Commission
 
 
 
DTE Electric
 
DTE Electric Company (a direct wholly-owned subsidiary of DTE Energy) and subsidiary companies
 
 
 
DTE Energy
 
DTE Energy Company, directly or indirectly the parent of DTE Electric, DTE Gas, and numerous non-utility subsidiaries
 
 
 
DTE Gas
 
DTE Gas Company (an indirect wholly-owned subsidiary of DTE Energy) and subsidiary companies
 
 
 
EGU
 
Electric Generating Unit
 
 
 
ELG
 
Effluent Limitations Guidelines
 
 
 
EPA
 
U.S. Environmental Protection Agency
 
 
 
Equity units
 
DTE Energy's 2016 equity units issued in October 2016, which were used to finance the October 1, 2016 Gas Storage and Pipelines acquisition
 
 
 
FASB
 
Financial Accounting Standards Board
 
 
 
FERC
 
Federal Energy Regulatory Commission
 
 
 
FOV
 
Finding of Violation
 
 
 
FTRs
 
Financial Transmission Rights are financial instruments that entitle the holder to receive payments related to costs incurred for congestion on the transmission grid.
 
 
 
GCR
 
A Gas Cost Recovery mechanism authorized by the MPSC that allows DTE Gas to recover through rates its natural gas costs.
 
 
 
GHGs
 
Greenhouse gases
 
 
 
Green Bonds
 
A financing option to fund projects that have a positive environmental impact based upon a specified set of criteria. The proceeds are required to be used for eligible green expenditures.
 
 
 
MDEQ
 
Michigan Department of Environmental Quality
 
 
 
MGP
 
Manufactured Gas Plant
 
 
 
MPSC
 
Michigan Public Service Commission
 
 
 
MTM
 
Mark-to-market
 
 
 
NAV
 
Net Asset Value
 
 
 
NEXUS
 
NEXUS Gas Transmission, LLC, a joint venture in which DTE Energy own a 50% partnership interest.
 
 
 
Non-utility
 
An entity that is not a public utility. Its conditions of service, prices of goods and services, and other operating related matters are not directly regulated by the MPSC.
 
 
 
NOV
 
Notice of Violation
 
 
 
NOX
 
Nitrogen Oxides
 
 
 
NRC
 
U.S. Nuclear Regulatory Commission
 
 
 
PG&E
 
Pacific Gas and Electric Corporation
 
 
 

1



DEFINITIONS

Production tax credits
 
Tax credits as authorized under Sections 45K and 45 of the Internal Revenue Code that are designed to stimulate investment in and development of alternate fuel sources. The amount of a production tax credit can vary each year as determined by the Internal Revenue Service.
 
 
 
PSCR
 
A Power Supply Cost Recovery mechanism authorized by the MPSC that allows DTE Electric to recover through rates its fuel, fuel-related, and purchased power costs.
 
 
 
RDM
 
A Revenue Decoupling Mechanism authorized by the MPSC that is designed to minimize the impact on revenues of changes in average customer usage.
 
 
 
REC
 
Renewable Energy Credit
 
 
 
REF
 
Reduced Emissions Fuel
 
 
 
Registrants
 
DTE Energy and DTE Electric
 
 
 
Retail access
 
Michigan legislation provided customers the option of access to alternative suppliers for electricity and natural gas.
 
 
 
RNG
 
Renewable Natural Gas
 
 
 
SEC
 
Securities and Exchange Commission
 
 
 
SGG
 
Stonewall Gas Gathering is a midstream natural gas asset located in West Virginia. DTE Energy purchased 55% of SGG in October 2016, and this asset is part of DTE Energy's Gas Storage and Pipelines segment.
 
 
 
SO2
 
Sulfur Dioxide
 
 
 
TCJA
 
Tax Cuts and Jobs Act of 2017
 
 
 
TCJA rate reduction liability
 
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 606
 
FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, as amended
 
 
 
Topic 840
 
FASB issued ASC 840, Leases
 
 
 
Topic 842
 
FASB issued ASU No. 2016-02, Leases, as amended, which replaced Topic 840
 
 
 
TRM
 
A Transitional Reconciliation Mechanism authorized by the MPSC that allows DTE Electric to recover through rates the deferred net incremental revenue requirement associated with the transition of City of Detroit's Public Lighting Department customers to DTE Electric's distribution system.
 
 
 
VIE
 
Variable Interest Entity
Units of Measurement
 
 
 
Bcf
 
Billion cubic feet of natural gas
 
 
 
BTU
 
British thermal unit, heat value (energy content) of fuel
 
 
 
MMBtu
 
One million BTU
 
 
 
MWh
 
Megawatt-hour of electricity


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 to debt securities of DTE Energy. This combined Form 10-Q should be read in its entirety. No one section of this combined Form 10-Q deals with all aspects of the subject matter of this combined Form 10-Q. This combined Form 10-Q should be read in conjunction with the Consolidated Financial Statements and Combined Notes to Consolidated Financial Statements and with Management's Discussion and Analysis included in the combined DTE Energy and DTE Electric 2018 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;
the operational failure of electric or gas distribution systems or infrastructure;
impact of volatility of prices in the oil and gas markets on DTE Energy's gas storage and pipelines operations;
impact of volatility in prices in the international steel markets on DTE Energy's power and industrial projects operations;
the risk of a major safety incident;
environmental issues, laws, regulations, and the increasing costs of remediation and compliance, including actual and potential new federal and state requirements;
the cost of protecting assets against, or damage due to, cyber incidents and terrorism;
health, safety, financial, environmental, and regulatory risks associated with ownership and operation of nuclear facilities;
volatility in the short-term natural gas storage markets impacting third-party storage revenues related to DTE Energy;
volatility in commodity markets, deviations in weather, and related risks impacting the results of DTE Energy's energy trading operations;
changes in the cost and availability of coal and other raw materials, purchased power, and natural gas;
advances in technology that produce power, store power, or reduce power consumption;

3



changes in the financial condition of significant customers and strategic partners;
the potential for losses on investments, including nuclear decommissioning and benefit plan assets and the related increases in future expense and contributions;
access to capital markets and the results of other financing efforts which can be affected by credit agency ratings;
instability in capital markets which could impact availability of short and long-term financing;
the timing and extent of changes in interest rates;
the level of borrowings;
the potential for increased costs or delays in completion of significant capital projects;
changes in, and application of, federal, state, and local tax laws and their interpretations, including the Internal Revenue Code, regulations, rulings, court proceedings, and audits;
the effects of weather and other natural phenomena on operations and sales to customers, and purchases from suppliers;
unplanned outages;
employee relations and the impact of collective bargaining agreements;
the availability, cost, coverage, and terms of insurance and stability of insurance providers;
cost reduction efforts and the maximization of plant and distribution system performance;
the effects of competition;
changes in and application of accounting standards and financial reporting regulations;
changes in federal or state laws and their interpretation with respect to regulation, energy policy, and other business issues;
contract disputes, binding arbitration, litigation, and related appeals; and
the risks discussed in the Registrants' public filings with the Securities and Exchange Commission.
New factors emerge from time to time. The Registrants cannot predict what factors may arise or how such factors may cause results to differ materially from those contained in any forward-looking statement. Any forward-looking statements speak only as of the date on which such statements are made. The Registrants undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events.

4



Part I — Financial Information
Item 1. Financial Statements

DTE Energy Company

Consolidated Statements of Operations (Unaudited)
 
Three Months Ended March 31,
 
2019
 
2018
 
(In millions, except per share amounts)
Operating Revenues
 
 
 
Utility operations
$
1,864

 
$
1,740

Non-utility operations
1,650

 
2,013

 
3,514

 
3,753

 
 
 
 
Operating Expenses
 
 
 
Fuel, purchased power, and gas — utility
582

 
553

Fuel, purchased power, and gas — non-utility
1,385

 
1,773

Operation and maintenance
591

 
534

Depreciation and amortization
296

 
281

Taxes other than income
118

 
111

Asset (gains) losses and impairments, net

 
(3
)
 
2,972

 
3,249

Operating Income
542

 
504

 
 
 
 
Other (Income) and Deductions
 
 
 
Interest expense
152

 
135

Interest income
(4
)
 
(3
)
Non-operating retirement benefits, net
9

 
9

Other income
(88
)
 
(81
)
Other expenses
11

 
25

 
80

 
85

Income Before Income Taxes
462

 
419

 
 
 
 
Income Tax Expense
54

 
68

 
 
 
 
Net Income
408

 
351

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

 
(10
)
 
 
 
 
Net Income Attributable to DTE Energy Company
$
401

 
$
361

 
 
 
 
Basic Earnings per Common Share
 
 
 
Net Income Attributable to DTE Energy Company
$
2.20

 
$
2.01

 
 
 
 
Diluted Earnings per Common Share
 
 
 
Net Income Attributable to DTE Energy Company
$
2.19

 
$
2.00

 
 
 
 
Weighted Average Common Shares Outstanding
 
 
 
Basic
182

 
180

Diluted
183

 
180

See Combined Notes to Consolidated Financial Statements (Unaudited)

5



DTE Energy Company

Consolidated Statements of Comprehensive Income (Unaudited)

 
Three Months Ended March 31,
 
2019
 
2018
 
(In millions)
Net Income
$
408

 
$
351

 
 
 
 
Other comprehensive income (loss), net of tax:
 
 
 
Benefit obligations, net of taxes of $1 and $1, respectively
4

 
2

Net unrealized losses on derivatives during the period, net of taxes of $(1) and $—, respectively
(3
)
 

Foreign currency translation
1

 

Other comprehensive income
2

 
2

 
 
 
 
Comprehensive income
410

 
353

Less: Comprehensive income (loss) attributable to noncontrolling interests
7

 
(10
)
Comprehensive Income Attributable to DTE Energy Company
$
403

 
$
363


See Combined Notes to Consolidated Financial Statements (Unaudited)

6



DTE Energy Company

Consolidated Statements of Financial Position (Unaudited)

 
March 31,
 
December 31,
 
2019
 
2018
 
(In millions)
ASSETS
Current Assets
 
 
 
Cash and cash equivalents
$
56

 
$
71

Restricted cash
5

 
5

Accounts receivable (less allowance for doubtful accounts of $91 for both periods)
 
 
 
Customer
1,683

 
1,789

Other
72

 
108

Inventories
 
 
 
Fuel and gas
195

 
406

Materials and supplies
409

 
405

Derivative assets
72

 
102

Regulatory assets
117

 
153

Other
231

 
221

 
2,840

 
3,260

Investments
 
 
 
Nuclear decommissioning trust funds
1,509

 
1,378

Investments in equity method investees
1,772

 
1,771

Other
238

 
219

 
3,519

 
3,368

Property
 
 
 
Property, plant, and equipment
32,214

 
31,810

Accumulated depreciation and amortization
(10,350
)
 
(10,160
)
 
21,864

 
21,650

Other Assets
 
 
 
Goodwill
2,293

 
2,293

Regulatory assets
4,520

 
4,568

Intangible assets
846

 
849

Notes receivable
158

 
64

Derivative assets
22

 
31

Prepaid postretirement costs
76

 
45

Operating lease right-of-use assets
138

 

Other
158

 
160

 
8,211

 
8,010

Total Assets
$
36,434

 
$
36,288


See Combined Notes to Consolidated Financial Statements (Unaudited)

7



DTE Energy Company

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

 
March 31,
 
December 31,
 
2019
 
2018
 
(In millions, except shares)
LIABILITIES AND EQUITY
Current Liabilities
 
 
 
Accounts payable
$
981

 
$
1,329

Accrued interest
149

 
127

Dividends payable
173

 
172

Short-term borrowings
156

 
609

Current portion long-term debt, including finance leases
1,499

 
1,499

Derivative liabilities
50

 
67

Gas inventory equalization
88

 

Regulatory liabilities
95

 
126

Operating lease liabilities
33

 

Other
423

 
509

 
3,647

 
4,438

Long-Term Debt (net of current portion)
 
 
 
Mortgage bonds, notes, and other
11,624

 
10,982

Junior subordinated debentures
1,146

 
1,145

Finance lease liabilities
6

 
7

 
12,776

 
12,134

Other Liabilities
 

 
 

Deferred income taxes
2,029

 
1,975

Regulatory liabilities
2,895

 
2,922

Asset retirement obligations
2,500

 
2,469

Unamortized investment tax credit
137

 
138

Derivative liabilities
52

 
89

Accrued pension liability
722

 
837

Nuclear decommissioning
224

 
205

Operating lease liabilities
98

 

Other
334

 
364

 
8,991

 
8,999

Commitments and Contingencies (Notes 5 and 12)
 
 
 



 


Equity
 
 
 
Common stock (No par value, 400,000,000 shares authorized, and 183,212,427 and 181,925,281 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively)
4,324

 
4,245

Retained earnings
6,364

 
6,112

Accumulated other comprehensive loss
(143
)
 
(120
)
Total DTE Energy Company Equity
10,545

 
10,237

Noncontrolling interests
475

 
480

Total Equity
11,020

 
10,717

Total Liabilities and Equity
$
36,434

 
$
36,288


See Combined Notes to Consolidated Financial Statements (Unaudited)

8



DTE Energy Company

Consolidated Statements of Cash Flows (Unaudited)

 
Three Months Ended March 31,
 
2019
 
2018
 
(In millions)
Operating Activities
 
 
 
Net Income
$
408

 
$
351

Adjustments to reconcile Net Income to Net cash from operating activities:
 
 
 
Depreciation and amortization
296

 
281

Nuclear fuel amortization
15

 
15

Allowance for equity funds used during construction
(7
)
 
(7
)
Deferred income taxes
49

 
60

Equity earnings of equity method investees
(23
)
 
(21
)
Dividends from equity method investees
44

 
15

Changes in assets and liabilities:
 
 
 
Accounts receivable, net
143

 
33

Inventories
207

 
182

Prepaid postretirement benefit costs
(31
)
 

Accounts payable
(288
)
 
(136
)
Gas inventory equalization
88

 
85

Accrued pension liability
(115
)
 
(187
)
Accrued postretirement liability

 
(36
)
Derivative assets and liabilities
(15
)
 
(7
)
Regulatory assets and liabilities
112

 
148

Other current and noncurrent assets and liabilities
(131
)
 
62

Net cash from operating activities
752

 
838

Investing Activities
 
 
 
Plant and equipment expenditures — utility
(641
)
 
(466
)
Plant and equipment expenditures — non-utility
(27
)
 
(61
)
Proceeds from sale of nuclear decommissioning trust fund assets
176

 
336

Investment in nuclear decommissioning trust funds
(178
)
 
(337
)
Distributions from equity method investees
1

 
4

Contributions to equity method investees
(22
)
 
(64
)
Notes receivable
(48
)
 
3

Other
(9
)
 
(1
)
Net cash used for investing activities
(748
)
 
(586
)
Financing Activities
 
 
 
Issuance of long-term debt, net of issuance costs
644

 

Short-term borrowings, net
(453
)
 
14

Dividends paid on common stock
(172
)
 
(158
)
Contributions from noncontrolling interest, principally REF entities
9

 
12

Distributions to noncontrolling interests
(21
)
 
(4
)
Other
(26
)
 
(19
)
Net cash used for financing activities
(19
)
 
(155
)
Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash
(15
)
 
97

Cash, Cash Equivalents, and Restricted Cash at Beginning of Period
76

 
89

Cash, Cash Equivalents, and Restricted Cash at End of Period
$
61

 
$
186

 
 
 
 
Supplemental disclosure of non-cash investing and financing activities
 
 
 
Plant and equipment expenditures in accounts payable
$
235

 
$
179

See Combined Notes to Consolidated Financial Statements (Unaudited)

9



DTE Energy Company

Consolidated Statements of Changes in Equity (Unaudited)

 
 
 
 
 
Retained Earnings
 
Accumulated Other Comprehensive Income (Loss)
 
Noncontrolling Interests
 
 
 
Common Stock
 
 
 
 
 
 
Shares
 
Amount
 
 
 
 
Total
 
(Dollars in millions, shares in thousands)
Balance, December 31, 2018
181,925

 
$
4,245

 
$
6,112

 
$
(120
)
 
$
480

 
$
10,717

Implementation of ASU 2018-02

 

 
25

 
(25
)
 

 

Net Income

 

 
401

 

 
7

 
408

Dividends declared on common stock ($0.945 per Common Share)

 

 
(173
)
 

 

 
(173
)
Contribution of common stock to pension plan
815

 
100

 

 

 

 
100

Other comprehensive income, net of tax

 

 

 
2

 

 
2

Stock-based compensation, net contributions from noncontrolling interests, and other
472

 
(21
)
 
(1
)
 

 
(12
)
 
(34
)
Balance, March 31, 2019
183,212

 
$
4,324

 
$
6,364

 
$
(143
)
 
$
475

 
$
11,020


 
 
 
 
 
Retained Earnings
 
Accumulated Other Comprehensive Income (Loss)
 
Noncontrolling Interests
 
 
 
Common Stock
 
 
 
 
 
 
Shares
 
Amount
 
 
 
 
Total
 
(Dollars in millions, shares in thousands)
Balance, December 31, 2017
179,387

 
$
3,989

 
$
5,643

 
$
(120
)
 
$
478

 
$
9,990

Implementation of ASU 2016-01

 

 
5

 
(5
)
 

 

Net Income (Loss)

 

 
361

 

 
(10
)
 
351

Dividends declared on common stock ($0.88 per Common Share)

 

 
(160
)
 

 

 
(160
)
Contribution of common stock to pension plan
1,751

 
175

 

 

 

 
175

Other comprehensive income, net of tax

 

 

 
2

 

 
2

Stock-based compensation, net contributions from noncontrolling interests, and other
345

 
(1
)
 
(1
)
 

 
7

 
5

Balance, March 31, 2018
181,483

 
$
4,163

 
$
5,848

 
$
(123
)
 
$
475

 
$
10,363


See Combined Notes to Consolidated Financial Statements (Unaudited)

10



DTE Electric Company

Consolidated Statements of Operations (Unaudited)

 
Three Months Ended March 31,
 
2019
 
2018
 
(In millions)
Operating Revenues — Utility operations
$
1,235

 
$
1,205

 
 
 
 
Operating Expenses
 
 
 
Fuel and purchased power — utility
346

 
339

Operation and maintenance
358

 
320

Depreciation and amortization
221

 
212

Taxes other than income
84

 
81

 
1,009

 
952

Operating Income
226

 
253

 
 
 
 
Other (Income) and Deductions
 
 
 
Interest expense
76

 
68

Interest income
(1
)
 

Other income
(33
)
 
(27
)
Other expenses
8

 
25

 
50

 
66

Income Before Income Taxes
176

 
187

 
 
 
 
Income Tax Expense
29

 
47

 
 
 
 
Net Income
$
147

 
$
140


See Combined Notes to Consolidated Financial Statements (Unaudited)

11



DTE Electric Company

Consolidated Statements of Comprehensive Income (Unaudited)

 
Three Months Ended March 31,
 
2019
 
2018
 
(In millions)
Net Income
$
147

 
$
140

Other comprehensive income

 

Comprehensive Income
$
147

 
$
140


See Combined Notes to Consolidated Financial Statements (Unaudited)

12



DTE Electric Company

Consolidated Statements of Financial Position (Unaudited)

 
March 31,
 
December 31,
 
2019
 
2018
 
(In millions)
ASSETS
Current Assets
 
 
 
Cash and cash equivalents
$
10

 
$
18

Accounts receivable (less allowance for doubtful accounts of $49 and $53, respectively)
 
 
 
Customer
728

 
750

Affiliates
15

 
11

Other
25

 
54

Inventories
 
 
 
Fuel
116

 
171

Materials and supplies
283

 
279

Notes receivable
 

 
 

Affiliates
83

 

Other
13

 
6

Regulatory assets
102

 
148

Prepaid property tax
87

 
47

Other
27

 
36

 
1,489

 
1,520

Investments
 
 
 
Nuclear decommissioning trust funds
1,509

 
1,378

Other
35

 
34

 
1,544

 
1,412

Property
 
 
 
Property, plant, and equipment
23,100

 
22,747

Accumulated depreciation and amortization
(7,442
)
 
(7,310
)
 
15,658

 
15,437

Other Assets
 
 
 
Regulatory assets
3,791

 
3,829

Intangible assets
24

 
21

Prepaid postretirement costs — affiliates
189

 
189

Operating lease right-of-use assets
70

 

Other
135

 
121

 
4,209

 
4,160

Total Assets
$
22,900

 
$
22,529


See Combined Notes to Consolidated Financial Statements (Unaudited)

13



DTE Electric Company

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

 
March 31,
 
December 31,
 
2019
 
2018
 
(In millions, except shares)
LIABILITIES AND SHAREHOLDER’S EQUITY
Current Liabilities
 
 
 
Accounts payable
 
 
 
Affiliates
$
71

 
$
71

Other
363

 
441

Accrued interest
81

 
74

Accrued vacation
44

 
41

Current portion long-term debt, including finance leases
4

 
4

Regulatory liabilities
87

 
98

Short-term borrowings
 
 
 
Affiliates
51

 
101

Other

 
149

Operating lease liabilities
14

 

Other
101

 
98

 
816

 
1,077

Long-Term Debt (net of current portion)
 
 
 
Mortgage bonds, notes, and other
7,178

 
6,538

Finance lease liabilities
6

 
7

 
7,184

 
6,545

Other Liabilities
 
 
 
Deferred income taxes
2,276

 
2,246

Regulatory liabilities
2,142

 
2,171

Asset retirement obligations
2,299

 
2,271

Unamortized investment tax credit
136

 
137

Nuclear decommissioning
224

 
205

Accrued pension liability — affiliates
615

 
718

Accrued postretirement liability — affiliates
257

 
278

Operating lease liabilities
50

 

Other
85

 
88

 
8,084

 
8,114

Commitments and Contingencies (Notes 5 and 12)

 

 
 
 
 
Shareholder’s Equity
 
 
 
Common stock ($10 par value, 400,000,000 shares authorized, and 138,632,324 shares issued and outstanding for both periods)
4,631

 
4,631

Retained earnings
2,185

 
2,162

Total Shareholder’s Equity
6,816

 
6,793

Total Liabilities and Shareholder’s Equity
$
22,900

 
$
22,529


See Combined Notes to Consolidated Financial Statements (Unaudited)

14



DTE Electric Company

Consolidated Statements of Cash Flows (Unaudited)

 
Three Months Ended March 31,
 
2019
 
2018
 
(In millions)
Operating Activities
 
 
 
Net Income
$
147

 
$
140

Adjustments to reconcile Net Income to Net cash from operating activities:
 
 
 
Depreciation and amortization
221

 
212

Nuclear fuel amortization
15

 
15

Allowance for equity funds used during construction
(6
)
 
(5
)
Deferred income taxes
23

 
48

Changes in assets and liabilities:
 
 
 
Accounts receivable, net
47

 
39

Inventories
51

 
50

Accounts payable
(36
)
 
(30
)
Accrued pension liability — affiliates
(103
)
 
(178
)
Accrued postretirement liability — affiliates
(21
)
 
(24
)
Regulatory assets and liabilities
130

 
97

Other current and noncurrent assets and liabilities
(146
)
 
(41
)
Net cash from operating activities
322

 
323

Investing Activities
 
 
 
Plant and equipment expenditures
(531
)
 
(370
)
Notes receivable, including affiliates
(96
)
 

Proceeds from sale of nuclear decommissioning trust fund assets
176

 
336

Investment in nuclear decommissioning trust funds
(178
)
 
(337
)
Other
(10
)
 

Net cash used for investing activities
(639
)
 
(371
)
Financing Activities
 
 
 
Issuance of long-term debt, net of issuance costs
644

 

Short-term borrowings, net — affiliate
(50
)
 
26

Short-term borrowings, net — other
(149
)
 
142

Dividends paid on common stock
(124
)
 
(115
)
Other
(12
)
 
(4
)
Net cash from financing activities
309

 
49

Net Increase (Decrease) in Cash and Cash Equivalents
(8
)
 
1

Cash and Cash Equivalents at Beginning of Period
18

 
15

Cash and Cash Equivalents at End of Period
$
10

 
$
16

 
 
 
 
Supplemental disclosure of non-cash investing and financing activities
 
 
 
Plant and equipment expenditures in accounts payable
$
140

 
$
109


See Combined Notes to Consolidated Financial Statements (Unaudited)

15



DTE Electric Company

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

 
 
 
 
 
Additional Paid-in Capital
 
Retained Earnings
 
 
 
Common Stock
 
 
 
 
 
Shares
 
Amount
 
 
 
Total
 
(Dollars in millions, shares in thousands)
Balance, December 31, 2018
138,632

 
$
1,386

 
$
3,245

 
$
2,162

 
$
6,793

Net Income

 

 

 
147

 
147

Dividends declared on common stock

 

 

 
(124
)
 
(124
)
Balance, March 31, 2019
138,632

 
$
1,386

 
$
3,245

 
$
2,185

 
$
6,816


 
 
 
 
 
Additional Paid-in Capital
 
Retained Earnings
 
Accumulated Other Comprehensive Income (Loss)
 
 
 
Common Stock
 
 
 
 
 
 
Shares
 
Amount
 
 
 
 
Total
 
(Dollars in millions, shares in thousands)
Balance, December 31, 2017
138,632

 
$
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, 2018
138,632

 
$
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
 
Revenue
 
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 Debt
 
DTE Energy and DTE Electric
Note 10
 
Short-Term Credit Arrangements and Borrowings
 
DTE Energy and DTE Electric
Note 11
 
Leases
 
DTE Energy and DTE Electric
Note 12
 
Commitments and Contingencies
 
DTE Energy and DTE Electric
Note 13
 
Retirement Benefits and Trusteed Assets
 
DTE Energy and DTE Electric
Note 14
 
Segment and Related Information
 
DTE Energy

NOTE 1ORGANIZATION 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; 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 2018 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, 2019.

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 Registrants were reclassified to match the current year's Consolidated Financial Statements presentation.
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 generally 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.
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 owns a 256-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 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, 2019, 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, 2019, 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.

18


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

The maximum risk exposure for consolidated VIEs is reflected on the Registrants' Consolidated Statements of Financial Position and, for DTE Energy, in Note 12 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 their investment, notes receivable, future funding commitments, and amounts which DTE Energy has guaranteed. See Note 12 to the Consolidated Financial Statements, "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, 2019 and December 31, 2018. All assets and liabilities of a consolidated VIE are presented where it has been determined that a consolidated VIE has either (1) assets that can be used only to settle obligations of the VIE or (2) liabilities for which creditors do not have recourse to the general credit of the primary beneficiary. VIEs, in which DTE Energy holds a majority voting interest and is the primary beneficiary, that meet the definition of a business and whose assets can be used for purposes other than the settlement of the VIE's obligations have been excluded from the table below.
Amounts for DTE Energy's consolidated VIEs are as follows:
 
March 31, 2019
 
December 31, 2018
 
SGG(a)
 
Other
 
Total
 
SGG(a)
 
Other
 
Total
 
(In millions)
ASSETS
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
21

 
$
14

 
$
35

 
$
25

 
$
14

 
$
39

Restricted cash

 
5

 
5

 

 
5

 
5

Accounts receivable
10

 
28

 
38

 
9

 
37

 
46

Inventories

 
47

 
47

 
1

 
92

 
93

Property, plant, and equipment, net
394

 
42

 
436

 
395

 
46

 
441

Goodwill
25

 

 
25

 
25

 

 
25

Intangible assets
553

 

 
553

 
557

 

 
557

Other current and long-term assets
1

 

 
1

 
3

 

 
3

 
$
1,004

 
$
136

 
$
1,140

 
$
1,015

 
$
194

 
$
1,209

 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES
 
 
 
 
 
 
 
 
 
 
 
Accounts payable and accrued current liabilities
$
1

 
$
22

 
$
23

 
$
3

 
$
31

 
$
34

Other current and long-term liabilities
8

 
10

 
18

 
9

 
10

 
19

 
$
9

 
$
32

 
$
41

 
$
12

 
$
41

 
$
53

_____________________________________
(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, 2019
 
December 31, 2018
 
(In millions)
Investments in equity method investees
$
1,412

 
$
1,425

Notes receivable
$
26

 
$
15

Future funding commitments
$
64

 
$
55



19


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

NOTE 2SIGNIFICANT ACCOUNTING POLICIES
Other Income
The following is a summary of DTE Energy's Other income:
 
Three Months Ended March 31,
 
2019
 
2018
 
(In millions)
Income from REF entities
$
27

 
$
23

Equity earnings of equity method investees
23

 
21

Gains from equity securities
17

 

Contract services
8

 
20

Allowance for equity funds used during construction
7

 
7

Other
6

 
10

 
$
88

 
$
81

The following is a summary of DTE Electric's Other income:
 
Three Months Ended March 31,
 
2019
 
2018
 
(In millions)
Gains from equity securities allocated from DTE Energy
$
17

 
$

Contract services
8

 
20

Allowance for equity funds used during construction
6

 
5

Other
2

 
2

 
$
33

 
$
27

Changes in Accumulated Other Comprehensive Income (Loss)
Comprehensive income (loss) is the change in common shareholders' equity during a period from transactions and events from non-owner sources, including Net Income. The amounts recorded to Accumulated other comprehensive income (loss) for DTE Energy include changes in benefit obligations, consisting of deferred actuarial losses and prior service costs, unrealized gains and losses from derivatives accounted for as cash flow hedges, DTE Energy's interest in other comprehensive income of equity investees which comprise the net unrealized gains and losses on investments, and foreign currency translation adjustments. DTE Energy releases income tax effects from accumulated other comprehensive income when the circumstances upon which they are premised cease to exist.
Changes in Accumulated other comprehensive income (loss) are presented in DTE Energy's Consolidated Statements of Changes in Equity and DTE Electric's Consolidated Statements of Changes in Shareholder's Equity. For further discussion regarding changes in Accumulated other comprehensive income (loss), see Note 3 to the Consolidated Financial Statements, "New Accounting Pronouncements." For the three months ended March 31, 2019 and 2018, reclassifications out of Accumulated other comprehensive income (loss) not relating to the adoption of new accounting pronouncements for DTE Energy were not material.

20


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

Income Taxes
The 2019 estimated annual effective tax rates for DTE Energy and DTE Electric are 12% and 16%, 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 of the Registrants are as follows:
 
Effective Tax Rate
 
Three Months Ended March 31,
 
2019
 
2018
DTE Energy
12
%
 
16
%
DTE Electric
16
%
 
25
%
The 4% decrease in DTE Energy's effective tax rate for the three months ended March 31, 2019 was primarily due to the amortization of the TCJA regulatory liability of 3% in 2019 and the remeasurement of deferred taxes in 2018 of $21 million that impacted the effective tax rate by 5%. The decrease in the effective tax rate was partially offset by lower production tax credits of 5% in 2019.
The 9% decrease in DTE Electric's effective tax rate for the three months ended March 31, 2019 was primarily due to the amortization of the TCJA regulatory liability of 4% and higher production tax credits of 1% in 2019. The remeasurement of deferred taxes in 2018 of $8 million impacted the effective tax rate by 4%.
DTE Energy's total amount of unrecognized tax benefits as of March 31, 2019 was $8 million, which if recognized, would favorably impact its effective tax rate. DTE Electric's total amount of unrecognized tax benefits as of March 31, 2019 was $10 million, which 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.
DTE Electric had income tax receivables of $3 million with DTE Energy at March 31, 2019 and income tax receivables with DTE Energy of $8 million at December 31, 2018.
Unrecognized Compensation Costs
As of March 31, 2019, DTE Energy had $121 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 1.77 years.
Allocated Stock-Based Compensation
DTE Electric received an allocation of costs from DTE Energy associated with stock-based compensation of $13 million and $9 million for the three months ended March 31, 2019 and 2018, respectively.
Cash, Cash Equivalents, and Restricted Cash
Cash and cash equivalents include cash on hand, cash in banks, and temporary investments purchased with remaining maturities of three months or less. Restricted cash consists of funds held 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.

21


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

NOTE 3NEW ACCOUNTING PRONOUNCEMENTS
Recently Adopted Pronouncements
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), as amended. This guidance requires a lessee to account for leases as finance or operating 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, depending on the lease classification. The Registrants adopted the standard on January 1, 2019 using the prospective approach. The standard provides a number of transition practical expedients of which the Registrants elected the package of three expedients that must be taken together, allowing entities to not reassess whether an agreement is a lease, to carryforward the existing lease classification, and to not reassess initial direct costs associated with existing leases; but did not elect to apply hindsight in determining lease term and impairment of the right-of-use assets. The Registrants also elected to not evaluate land easements under the new guidance at adoption if they were not previously accounted for as leases. These practical expedients apply to leases that commenced prior to January 1, 2019.
At adoption of the new standard, the Registrants recognized on the Consolidated Statements of Financial Position, right-of-use assets and lease liabilities for certain operating leases of approximately $137 million and $130 million, respectively, for DTE Energy and approximately $74 million and $67 million, respectively, for DTE Electric as of January 1, 2019. The right-of-use lease assets include $9 million of prepaid lease costs that have been reclassified from Other assets, current and noncurrent, and $2 million of deferred lease costs that have been reclassified from Other liabilities, current and noncurrent, for the Registrants. The adoption of the ASU did not have a significant impact on the Registrants' Consolidated Statements of Operations, but required additional disclosures for leases. See Note 11 to the Consolidated Financial Statements, "Leases."
In February 2018, the FASB issued ASU No. 2018-02, Income Statement — Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The amendments in this update allow a reclassification from accumulated other comprehensive income to retained earnings from stranded tax effects resulting from the TCJA. The amendments in this update also require entities to disclose their accounting policy for releasing income tax effects from accumulated other comprehensive income. The Registrants adopted the standard effective January 1, 2019. Upon adoption, DTE Energy reclassified $25 million of income tax effects from Accumulated other comprehensive income (loss) to Retained Earnings.
Recently Issued Pronouncements
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 generally 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 August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurements (Topic 820): Disclosure Framework Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this update modify the disclosure requirements on fair value measurements in Topic 820. The ASU is effective for the Registrants for fiscal years 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 August 2018, the FASB issued ASU No. 2018-14, Compensation Retirement Benefits Defined Benefit Plans (Subtopic 715-20): Disclosure Framework Changes to the Disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. The amendments in this update modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. The ASU is effective for the Registrants for fiscal years ending after December 15, 2020. Early adoption is permitted. The Registrants are currently assessing the impact of this standard on their Consolidated Financial Statements.

22


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

In August 2018, the FASB issued ASU No. 2018-15, Intangibles Goodwill and Other Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract. The amendments in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). The ASU is effective for the Registrants for fiscal years 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 October 2018, the FASB issued ASU No. 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities. The amendments in this update modify the requirements for determining whether a decision-making fee is a variable interest and require reporting entities to consider indirect interests held through related parties under common control on a proportional basis. The ASU is effective for the Registrants for fiscal years 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.


23


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

NOTE 4REVENUE
Disaggregation of Revenue
The following is a summary of revenues disaggregated by segment for DTE Energy:
 
Three Months Ended March 31,
 
2019
 
2018
 
(In millions)
Electric(a)
 
 
 
Residential
$
553

 
$
586

Commercial
421

 
429

Industrial
163

 
176

Other(b)
98

 
14

Total Electric operating revenues(c)
$
1,235

 
$
1,205

 
 
 
 
Gas
 
 
 
Gas sales
$
477

 
$
457

End User Transportation
81

 
85

Intermediate Transportation
26

 
18

Other(d)
61

 
(10
)
Total Gas operating revenues(e)
$
645

 
$
550

 
 
 
 
Other segment operating revenues
 
 
 
Gas Storage and Pipelines(f)
$
116

 
$
119

Power and Industrial Projects(g)
$
388

 
$
567

Energy Trading(h)
$
1,301

 
$
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 the TCJA rate reduction liability for the three months ended March 31, 2018. Also includes revenue adjustments related to various regulatory mechanisms.
(c)
Includes $4 million and $5 million of other revenues outside the scope of Topic 606 for the three months ended March 31, 2019 and 2018, respectively.
(d)
Includes a reduction of $32 million in revenues related to the TCJA rate reduction liability for the three months ended March 31, 2018. Also includes revenue adjustments related to various regulatory mechanisms.
(e)
Includes $3 million under Alternative Revenue Programs for the three months ended March 31, 2018 and $2 million of other revenues for both periods, which are both outside the scope of Topic 606.
(f)
Includes revenues outside the scope of Topic 606 primarily related to $2 million of contracts accounted for as leases for the three months ended March 31, 2019.
(g)
Includes revenues outside the scope of Topic 606 primarily related to $31 million and $28 million of contracts accounted for as leases for the three months ended March 31, 2019 and 2018, respectively.
(h)
Includes revenues outside the scope of Topic 606 primarily related to $926 million and $1.2 billion of derivatives for the three months ended March 31, 2019 and 2018, respectively.
Deferred Revenue
The following is a summary of deferred revenue activity:
 
DTE Energy
 
(In millions)
Beginning Balance, January 1, 2019
$
74

Increases due to cash received or receivable, excluding amounts recognized as revenue during the period
17

Revenue recognized that was included in the deferred revenue balance at the beginning of the period
(16
)
Ending Balance, March 31, 2019
$
75

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

24


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

Deferred revenues include amounts associated with REC performance obligations under certain wholesale full requirements power contracts. Deferred revenues associated with RECs are recognized as revenue when control of the RECs has transferred.
Other performance obligations associated with deferred revenues include providing products and services related to customer prepayments. Deferred revenues associated with these products and services are recognized when control has transferred to the customer.
The following table represents deferred revenue amounts for DTE Energy that are expected to be recognized as revenue in future periods:
 
DTE Energy
 
(In millions)
2019
$
43

2020
3

2021
5

2022
7

2023
6

2024 and thereafter
11

 
$
75

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 Registrants expect to recognize revenue for the following amounts related to fixed consideration associated with remaining performance obligations in each of the future periods noted:
 
DTE Energy
 
DTE Electric
 
(In millions)
2019
$
173

 
$
6

2020
295

 

2021
240

 

2022
188

 

2023
134

 

2024 and thereafter
656

 

 
$
1,686

 
$
6

Other Matters
DTE Energy has recognized charges of $29 million and $25 million related to expense recognized for estimated uncollectible accounts receivable for the three months ended March 31, 2019 and 2018, respectively. DTE Electric has recognized charges of $16 million and $14 million related to expense recognized for estimated uncollectible accounts receivable for the three months ended March 31, 2019 and 2018, respectively.


25


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

NOTE 5REGULATORY MATTERS
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. On November 1, 2017, DTE Electric self-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%. On June 28, 2018, the MPSC issued an order on a rehearing granting in part and denying in part, petitions for rehearings of DTE Electric and other intervenors. As a result, the approved addition to base rates increased from $65.2 million to $74.4 million. In August 2018, DTE Electric filed to refund its customers $26.2 million, inclusive of interest, based on their pro rata share of the revenue collected through the self-implementation surcharge in effect from November 1, 2017 to May 1, 2018. In March 2019, the MPSC approved the self-implementation refund of $27.2 million, including interest. The refund will be effective on a per kilowatt-hour basis for bills rendered May and June 2019. DTE Electric has a refund liability as of March 31, 2019.
2018 Electric Rate Case Filing
DTE Electric filed a rate case with the MPSC on July 6, 2018 requesting an increase in base rates of $328 million based on a projected twelve-month period ending April 30, 2020. The requested increase in base rates is primarily due to an increase in net plant resulting from infrastructure investments, depreciation expense, as requested in the 2016 DTE Electric Depreciation Case Filing, and reliability improvement projects. The rate filing also requests an increase in return on equity from 10.0% to 10.5% and includes projected changes in sales, operation and maintenance expenses, and working capital. In addition, the rate filing requests an Infrastructure Recovery Mechanism to recover the incremental revenue requirement associated with certain distribution, fossil generation, and nuclear generation capital expenditures through 2022. Finally, as noted in the 2017 Tax Reform section below, DTE Electric addressed Calculation C in this filing. On February 1, 2019, DTE Electric reduced its initial requested increase in base rates to $248.6 million, primarily reflecting the reduction in requested depreciation expense resulting from the MPSC's approval of new depreciation rates. A final MPSC order in this case is expected in May 2019.
2016 DTE Electric Depreciation Case Filing
DTE Electric filed a depreciation case with the MPSC on November 1, 2016 requesting an increase in depreciation rates for plant in service balances as of December 31, 2015. The MPSC issued an order on December 6, 2018 authorizing DTE Electric to increase its composite depreciation rate from 3.06% to 3.72%. The new rates will be effective upon a final order in DTE Electric's 2018 rate case filing expected in May 2019.
2017 Tax Reform
On December 27, 2017, the MPSC issued an order to consider changes in 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.
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. In 2018, MPSC orders for the first two steps, Credit A and Credit B, were issued for DTE Electric and DTE Gas. The third step is to perform Calculation C to 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 filed its Calculation C case on November 16, 2018 to reduce the revenue requirement by $12 million related to the amortization of deferred tax remeasurement. DTE Electric addressed Calculation C in its general rate case filed July 6, 2018.

NOTE 6EARNINGS 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.

26


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

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