RETIREMENT BENEFITS AND TRUSTEED ASSETS

Pension Plan Benefits

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

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 Corporate Services, LLC (LLC), a subsidiary of DTE Energy. DTE Electric is allocated net periodic benefit costs for its share of the amounts of the combined plans.

Effective January 1, 2012 for the Registrants' non-represented employees, and in June 2011 for certain DTE Energy represented employees and March 2013 for the majority of DTE Electric represented employees, the Registrants discontinued offering a defined benefit retirement plan to newly hired employees. In its place, the Registrants will annually contribute an amount equivalent to 4% (8% for certain DTE Gas represented employees) of an employee's eligible pay to the employee's defined contribution retirement savings plan.

The Registrants' policy is to fund pension costs by contributing amounts consistent with the provisions of the Pension Protection Act of 2006 and additional amounts when it deems appropriate. DTE Energy contributed $177 million, including $145 million of DTE Electric contributions, to the qualified pension plans in 2015. At the discretion of management, and depending upon financial market conditions, DTE Energy anticipates making up to $180 million in contributions, including $145 million of DTE Electric contributions, to the pension plans in 2016.

Net pension cost for DTE Energy includes the following components:



	2015			2014			2013
	(In millions)
Service cost	$	100		$	83		$	94
Interest cost	210			212			192
Expected return on plan assets	(296		)	(273		)	(266		)
Amortization of net actuarial loss	205			157			208
Special termination benefits	2			—			—
Net pension cost	$	221		$	179		$	228



	2015			2014
	(In millions)
Other changes in plan assets and benefit obligations recognized in Regulatory assets and Other comprehensive income (loss)
Net actuarial loss	$	19		$	805
Amortization of net actuarial loss	(205		)	(157		)
Prior service credit	—			(7		)
Total recognized in Regulatory assets and Other comprehensive income (loss)	$	(186	)	$	641
Total recognized in net periodic pension cost, Regulatory assets, and Other comprehensive income (loss)	$	35		$	820
Estimated amounts to be amortized from Regulatory assets and Accumulated other comprehensive income (loss) into net periodic benefit cost during next fiscal year
Net actuarial loss	$	162		$	206

Net pension cost for DTE Electric includes the following components:



	2015			2014			2013
	(In millions)
Service cost	$	77		$	64		$	73
Interest cost	160			162			146
Expected return on plan assets	(210		)	(194		)	(184		)
Amortization of:
Net actuarial loss	147			110			148
Prior service cost	1			2			1
Special termination benefits	1			—			—
Net pension cost	$	176		$	144		$	184



	2015			2014
	(In millions)
Other changes in plan assets and benefit obligations recognized in Regulatory assets and Other comprehensive income (loss)
Net actuarial (gain) loss	$	(13	)	$	614
Amortization of net actuarial loss	(147		)	(110		)
Prior service credit	—			(2		)
Amortization of prior service cost	(1		)	(2		)
Total recognized in Regulatory assets and Other comprehensive income (loss)	$	(161	)	$	500
Total recognized in net periodic pension cost, Regulatory assets, and Other comprehensive income (loss)	$	15		$	644
Estimated amounts to be amortized from Regulatory assets and Accumulated other comprehensive income (loss) into net periodic benefit cost during next fiscal year
Net actuarial loss	$	115		$	149
Prior service cost	$	1		$	1

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



	DTE Energy						DTE Electric
	2015			2014			2015			2014
	(In millions)
Accumulated benefit obligation, end of year	$	4,569		$	4,853		$	3,401		$	3,712
Change in projected benefit obligation
Projected benefit obligation, beginning of year	$	5,269		$	4,380		$	4,018		$	3,341
Service cost	100			83			75			64
Interest cost	210			212			156			162
Plan amendments	—			(7		)	—			(2		)
Actuarial (gain) loss	(357		)	836			(273		)	634
Transfer due to plan sponsorship change	—			—			(99		)	—
Special termination benefits	2			—			—			—
Benefits paid	(253		)	(235		)	(192		)	(181		)
Projected benefit obligation, end of year	$	4,971		$	5,269		$	3,685		$	4,018
Change in plan assets
Plan assets at fair value, beginning of year	$	3,981		$	3,720		$	2,812		$	2,632
Actual return on plan assets	(79		)	301			(56		)	212
Company contributions	183			195			145			149
Benefits paid	(253		)	(235		)	(192		)	(181		)
Plan assets at fair value, end of year	$	3,832		$	3,981		$	2,709		$	2,812
Funded status of the plans	$	(1,139	)	$	(1,288	)	$	(976	)	$	(1,206	)
Amount recorded as:
Current liabilities	$	(6	)	$	(8	)	$	—		$	(6	)
Noncurrent liabilities	(1,133		)	(1,280		)	(976		)	(1,200		)
	$	(1,139	)	$	(1,288	)	$	(976	)	$	(1,206	)
Amounts recognized in Accumulated other comprehensive income (loss), pre-tax
Net actuarial loss	$	180		$	194		$	—		$	44
Prior service credit	(1		)	(1		)	—			—
	$	179		$	193		$	—		$	44
Amounts recognized in Regulatory assets (see Note 8 - "Regulatory Matters")
Net actuarial loss	$	2,113		$	2,285		$	1,588		$	1,738
Prior service cost (credit)	(1		)	(1		)	4			5
	$	2,112		$	2,284		$	1,592		$	1,743

At December 31, 2015, the benefits related to the Registrants' qualified and nonqualified pension plans expected to be paid in each of the next five years and in the aggregate for the five fiscal years thereafter are as follows:



	DTE Energy		DTE Electric
	(In millions)
2016	$	274	$	213
2017	285		221
2018	297		231
2019	306		238
2020	314		244
2021-2025	1,662		1,279
Total	$	3,138	$	2,426

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



	2015	2014	2013
Projected benefit obligation
Discount rate	4.50%	4.12%	4.95%
Rate of compensation increase	4.65%	4.65%	4.20%
Net pension costs
Discount rate	4.12%	4.95%	4.15%
Rate of compensation increase	4.65%	4.20%	4.20%
Expected long-term rate of return on plan assets	7.75%	7.75%	8.25%

The Registrants employ a formal process in determining the long-term rate of return for various asset classes. Management reviews historic financial market risks and returns and long-term historic relationships between the asset classes of equities, fixed income, and other assets, consistent with the widely accepted capital market principle that asset classes with higher volatility generate a greater return over the long-term. Current market factors such as inflation, interest rates, asset class risks, and asset class returns are evaluated and considered before long-term capital market assumptions are determined. The long-term portfolio return is also established employing a consistent formal process, with due consideration of diversification, active investment management, and rebalancing. Peer data is reviewed to check for reasonableness. As a result of this process, the Registrants have long-term rate of return assumptions for the pension plans of 7.75% and other postretirement benefit plans of 8.00% for 2016. The Registrants believe these rates are a reasonable assumption for the long-term rate of return on plan assets for 2016 given the current investment strategy.

The Registrants employ a total return investment approach whereby a mix of equities, fixed income, and other investments are used to maximize the long-term return on plan assets consistent with prudent levels of risk, with consideration given to the liquidity needs of the plan. Risk tolerance is established through consideration of future plan cash flows, plan funded status, and corporate financial considerations. The investment portfolio contains a diversified blend of equity, fixed income, and other investments. Furthermore, equity investments are diversified across U.S. and non-U.S. stocks, growth and value stocks, and large and small market capitalizations. Fixed income securities generally include market duration bonds of companies from diversified industries, mortgage-backed securities, non-U.S. securities, bank loans, and U.S. Treasuries. Pension assets include long duration U.S. government and diversified corporate bonds intended to partially mitigate liability volatility caused by changes in discount rates. Other assets, such as private markets and hedge funds, are used to enhance long-term returns while improving portfolio diversification. Derivatives may be utilized in a risk controlled manner, to potentially increase the portfolio beyond the market value of invested assets and/or reduce portfolio investment risk. Investment risk is measured and monitored on an ongoing basis through annual liability measurements, periodic asset/liability studies, and quarterly investment portfolio reviews.

Target allocations for the Registrants' pension plan assets as of December 31, 2015 are listed below:



U.S. Large Capitalization (Cap) Equity Securities	22	%
U.S. Small Cap and Mid Cap Equity Securities	5
Non-U.S. Equity Securities	20
Fixed Income Securities	25
Hedge Funds and Similar Investments	20
Private Equity and Other	8
	100	%

The following tables provide the fair value measurement amounts for the Registrants' pension plan assets at December 31, 2015 and 2014 (a):



	December 31, 2015											December 31, 2014
	Level 1			Level 2			Level 3		Total			Level 1			Level 2			Level 3		Total
	(In millions)
DTE Energy asset category:
Short-term Investments (b)	$	23		$	—		$	—	$	23		$	46		$	—		$	—	$	46
Equity Securities
U.S. Large Cap (c)	842			—			—		842			899			—			—		899
U.S. Small Cap and Mid Cap (d)	219			—			—		219			225			—			—		225
Non-U.S. (e)	510			251			—		761			526			219			—		745
Fixed Income Securities (f)	5			1,024			—		1,029			7			1,113			—		1,120
Hedge Funds and Similar Investments (g)	220			96			452		768			226			95			438		759
Private Equity and Other (h)	—			—			190		190			—			—			187		187
Securities Lending (i)	(129		)	(25		)	—		(154		)	(189		)	(50		)	—		(239		)
Securities Lending Collateral (i)	129			25			—		154			189			50			—		239
DTE Energy Total	$	1,819		$	1,371		$	642	$	3,832		$	1,929		$	1,427		$	625	$	3,981

DTE Electric asset category:
Short-term Investments (b)	$	16		$	—		$	—	$	16		$	33		$	—		$	—	$	33
Equity Securities
U.S. Large Cap (c)	599			—			—		599			638			—			—		638
U.S. Small Cap and Mid Cap (d)	157			—			—		157			162			—			—		162
Non-U.S. (e)	367			178			—		545			378			157			—		535
Fixed Income Securities (f)	4			699			—		703			5			758			—		763
Hedge Funds and Similar Investments (g)	158			69			325		552			163			68			315		546
Private Equity and Other (h)	—			—			137		137			—			—			135		135
Securities Lending (i)	(93		)	(18		)	—		(111		)	(136		)	(36		)	—		(172		)
Securities Lending Collateral (i)	93			18			—		111			136			36			—		172
DTE Electric Total	$	1,301		$	946		$	462	$	2,709		$	1,379		$	983		$	450	$	2,812

_______________________________________


(a)	For a description of levels within the fair value hierarchy, see Note 11 to the Consolidated Financial Statements, "Fair Value".


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


(c)	This category comprises both actively and not actively managed portfolios that track the S&P 500 low cost equity index funds. Investments in this category are exchange-traded securities whereby unadjusted quote prices can be obtained. Exchange-traded securities held in a commingled fund are classified as Level 2 assets.


(d)	This category represents portfolios of small and medium capitalization domestic equities. Investments in this category are exchange-traded securities whereby unadjusted quote prices can be obtained. Exchange-traded securities held in a commingled fund are classified as Level 2 assets.


(e)	This category primarily consists of portfolios of non-U.S. developed and emerging market equities. Investments in this category are exchange-traded securities whereby unadjusted quote prices can be obtained. Exchange-traded securities held in a commingled fund are classified as Level 2 assets.


(f)	This category includes corporate bonds from diversified industries, U.S. Treasuries, and mortgage-backed securities. Pricing for investments in this category is obtained from quoted prices in actively traded markets and quotations from broker or pricing services. Non-exchange traded securities and exchange-traded securities held in commingled funds are classified as Level 2 assets.

(g)

This category utilizes a diversified group of strategies that attempt to capture financial market inefficiencies and includes publicly traded debt and equity, publicly traded mutual funds, commingled and limited partnership funds, and non-exchange traded securities. Pricing for Level 1 and Level 2 assets in this category is obtained from quoted prices in actively traded markets and quoted prices from broker or pricing services. Non-exchange traded securities held in commingled funds are classified as Level 2 assets. Valuations for some Level 3 assets in this category may be based on limited observable inputs as there may be little, if any, publicly available pricing.

(h)

This category includes a diversified group of funds and strategies that primarily invests in private equity partnerships. This category also includes investments in timber and private mezzanine debt. Pricing for investments in this category is based on limited observable inputs as there is little, if any, publicly available pricing. Valuations for assets in this category may be based on discounted cash flow analyses, relevant publicly-traded comparables, and comparable transactions.


(i)	In 2014, the Registrants began a securities lending program with a third-party agent. The program allows the agent to lend certain securities from the Registrants' pension trusts to selected entities against receipt of collateral (in the form of cash) as provided for and determined in accordance with their securities lending agency agreements.

The pension trust holds debt and equity securities directly and indirectly through commingled funds and institutional mutual funds. Exchange-traded debt and equity securities held directly are valued using quoted market prices in actively traded markets. The commingled funds and institutional mutual funds hold exchange-traded equity or debt securities and are valued based on stated NAVs. Non-exchange traded fixed income securities are valued by the trustee based upon quotations available from brokers or pricing services. A primary price source is identified by asset type, class, or issue for each security. The trustee monitors prices supplied by pricing services and may use a supplemental price source or change the primary price source of a given security if the trustee challenges an assigned price and determines that another price source is considered 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 values of securities by comparison of market-based price sources.

The following table provides a reconciliation of beginning and ending balances of DTE Energy's pension plan assets measured at fair value on a recurring basis where the determination of fair value includes significant unobservable inputs (Level 3):



	Year Ended December 31, 2015								Year Ended December 31, 2014
	Hedge Funds and Similar Investments		Private Equity and Other			Total			Hedge Funds and Similar Investments			Private Equity and Other			Total
	(In millions)
Beginning Balance at January 1	$	438	$	187		$	625		$	395		$	170		$	565
Total realized/unrealized gains (losses)	10		10			20			22			16			38
Purchases, sales, and settlements:
Purchases	4		32			36			22			31			53
Sales	—		(39		)	(39		)	(1		)	(30		)	(31		)
Ending Balance at December 31	$	452	$	190		$	642		$	438		$	187		$	625
The amount of total gains for the period attributable to the change in unrealized gains or losses related to assets still held at the end of the period	$	10	$	(3	)	$	7		$	21		$	11		$	32

The following table provides a reconciliation of beginning and ending balances of DTE Electric's pension plan assets measured at fair value on a recurring basis where the determination of fair value includes significant unobservable inputs (Level 3):



	Year Ended December 31, 2015								Year Ended December 31, 2014
	Hedge Funds and Similar Investments		Private Equity and Other			Total			Hedge Funds and Similar Investments			Private Equity and Other			Total
	(In millions)
Beginning Balance at January 1	$	315	$	135		$	450		$	285		$	122		407
Total realized/unrealized gains (losses)	7		7			14			15			12			27
Purchases, sales, and settlements:
Purchases	3		23			26			16			22			38
Sales	—		(28		)	(28		)	(1		)	(21		)	(22		)
Ending Balance at December 31	$	325	$	137		$	462		$	315		$	135		$	450
The amount of total gains for the period attributable to the change in unrealized gains or losses related to assets still held at the end of the period	$	7	$	(2	)	$	5		$	15		$	8		$	23

There were no transfers from or into Level 3 and there were no significant transfers between Level 2 and Level 1 in the years ended December 31, 2015 and 2014 for either of the Registrants.

Other Postretirement Benefits

The Registrants participate in defined benefit plans sponsored by the LLC that provide certain other postretirement health care and life insurance benefits for employees who are eligible for these benefits. The Registrants' policy is to fund certain trusts to meet its other postretirement benefit obligations. Separate qualified VEBA and other benefit trusts exist. DTE Energy contributed $199 million to these trusts, including $175 million of DTE Electric contributions, for the defined benefit other postretirement medical and life insurance benefit plans during 2015. At the discretion of management, DTE Energy anticipates making up to $20 million of contributions, through contributions from DTE Gas, to the trusts in 2016.

Starting in 2012, in lieu of offering future employees defined benefit post-employment health care and life insurance benefits, the Registrants allocate a fixed amount per year to an account in a defined contribution VEBA for each employee. These accounts are managed either by the Registrant (for non-represented and certain represented groups) or by the Utility Workers of America (UWUA) for Local 223 employees. DTE Energy contributions to the VEBA for these accounts were $5 million in 2015, $4 million in 2014, and $2 million in 2013, including DTE Electric contributions of $3 million in 2015, $2 million in 2014, and $1 million in 2013.

Beginning in 2013, the Registrants replaced the defined benefit employer-sponsored retiree medical, prescription drug, and dental coverage with a notional allocation to a Retiree Reimbursement Account. This change applies to both current and future Medicare eligible non-represented and future represented retirees, spouses, surviving spouses, or same sex domestic partners when the youngest of the retiree's covered household turns age 65. The amount of the annual allocation to each participant is determined by the employee's retirement date, and increases each year for each eligible participant at the lower of the rate of medical inflation or 2%.

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



	2015			2014			2013
	(In millions)
Service cost	$	34		$	34		$	47
Interest cost	81			89			88
Expected return on plan assets	(131		)	(122		)	(110		)
Amortization of:
Net actuarial loss	43			20			64
Prior service credit	(126		)	(144		)	(131		)
Net other postretirement credit	$	(99	)	$	(123	)	$	(42	)



	2015			2014
	(In millions)
Other changes in plan assets and accumulated postretirement benefit obligation recognized in Regulatory assets and Other comprehensive income (loss)
Net actuarial (gain) loss	$	(68	)	$	192
Amortization of net actuarial loss	(43		)	(20		)
Amortization of prior service credit	126			144
Total recognized in Regulatory assets and Other comprehensive income (loss)	$	15		$	316
Total recognized in net periodic benefit cost, Regulatory assets, and Other comprehensive income (loss)	$	(84	)	$	193
Estimated amounts to be amortized from Regulatory assets and Accumulated other comprehensive income (loss) into net periodic benefit cost during next fiscal year
Net actuarial loss	$	32		$	43
Prior service credit	$	(118	)	$	(126	)

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



	2015			2014			2013
	(In millions)
Service cost	$	25		$	26		$	35
Interest cost	62			68			67
Expected return on plan assets	(90		)	(85		)	(74		)
Amortization of:
Net actuarial loss	31			14			47
Prior service credit	(95		)	(109		)	(100		)
Net other postretirement credit	$	(67	)	$	(86	)	$	(25	)



	2015			2014
	(In millions)
Other changes in plan assets and accumulated postretirement benefit obligation recognized in Regulatory assets and Other comprehensive income (loss)
Net actuarial (gain) loss	$	(57	)	$	144
Amortization of net actuarial loss	(31		)	(14		)
Amortization of prior service credit	95			109
Total recognized in Regulatory assets and Other comprehensive income (loss)	$	7		$	239
Total recognized in net periodic benefit cost, Regulatory assets, and Other comprehensive income (loss)	$	(60	)	$	153
Estimated amounts to be amortized from Regulatory assets and Accumulated other comprehensive income (loss) into net periodic benefit cost during next fiscal year
Net actuarial loss	$	22		$	31
Prior service credit	$	(89	)	$	(94	)

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



	DTE Energy						DTE Electric
	2015			2014			2015			2014
	(In millions)
Change in accumulated postretirement benefit obligation
Accumulated postretirement benefit obligation, beginning of year	$	2,044		$	1,878		$	1,558		$	1,430
Service cost	34			34			25			26
Interest cost	81			89			62			68
Actuarial (gain) loss	(224		)	131			(166		)	100
Benefits paid	(89		)	(88		)	(65		)	(66		)
Accumulated postretirement benefit obligation, end of year	$	1,846		$	2,044		$	1,414		$	1,558
Change in plan assets
Plan assets at fair value, beginning of year	$	1,528		$	1,527		$	1,038		$	1,061
Actual return on plan assets	(25		)	62			(19		)	41
Company contributions	199			24			175			—
Benefits paid	(85		)	(85		)	(63		)	(64		)
Plan assets at fair value, end of year	$	1,617		$	1,528		$	1,131		$	1,038
Funded status, end of year	$	(229	)	$	(516	)	$	(283	)	$	(520	)
Amount recorded as:
Noncurrent assets	$	—		$	—		$	24		$	—
Current liabilities	(1		)	(1		)	—			—
Noncurrent liabilities	(228		)	(515		)	(307		)	(520		)
	$	(229	)	$	(516	)	$	(283	)	$	(520	)
Amounts recognized in Accumulated other comprehensive income (loss), pre-tax
Net actuarial loss	$	24		$	34		$	—		$	—
Prior service credit	(2		)	(5		)	—			—
	$	22		$	29		$	—		$	—
Amounts recognized in Regulatory assets (see Note 8 - "Regulatory Matters")
Net actuarial loss	$	387		$	488		$	297		$	385
Prior service credit	(131		)	(254		)	(99		)	(194		)
	$	256		$	234		$	198		$	191

At December 31, 2015, the benefits expected to be paid, including prescription drug benefits, in each of the next five years and in the aggregate for the five fiscal years thereafter for the Registrants are as follows:



	DTE Energy		DTE Electric
	(In millions)
2016	$	100	$	77
2017	105		81
2018	108		84
2019	113		88
2020	116		90
2021-2025	621		476
Total	$	1,163	$	896

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



	2015	2014	2013
Accumulated postretirement benefit obligation
Discount rate	4.50%	4.10%	4.95%
Health care trend rate pre- and post- 65	6.25 / 6.75%	7.50 / 6.50%	7.50 / 6.50%
Ultimate health care trend rate	4.50%	4.50%	4.50%
Year in which ultimate reached pre- and post- 65	2027	2025 / 2024	2025 / 2024
Other postretirement benefit costs
Discount rate (prior to interim remeasurement)	4.10%	4.95%	4.15%
Discount rate (post interim remeasurement)	N/A	N/A	4.30%
Expected long-term rate of return on plan assets	8.00%	8.00%	8.25%
Health care trend rate pre- and post- 65	7.50 / 6.50%	7.50 / 6.50%	7.00%
Ultimate health care trend rate	4.50%	4.50%	5.00%
Year in which ultimate reached pre- and post- 65	2025 / 2024	2025 / 2024	2021

A one percentage point increase in health care cost trend rates would have increased the total service cost and interest cost components of benefit costs for DTE Energy by $6 million, including $4 million for DTE Electric, in 2015 and would have increased the accumulated benefit obligation for DTE Energy by $100 million, including $74 million for DTE Electric, at December 31, 2015. A one percentage point decrease in the health care cost trend rates would have decreased the total service and interest cost components of benefit costs for DTE Energy by $5 million, including $4 million for DTE Electric, in 2015 and would have decreased the accumulated benefit obligation for DTE Energy by $86 million, including $64 million for DTE Electric, at December 31, 2015.

The process used in determining the long-term rate of return for assets and the investment approach for the other postretirement benefit plans is similar to those previously described for the pension plans.

Target allocations for the Registrants' other postretirement benefit plan assets as of December 31, 2015 are listed below:



U.S. Large Cap Equity Securities	17	%
U.S. Small Cap and Mid Cap Equity Securities	4
Non-U.S. Equity Securities	20
Fixed Income Securities	25
Hedge Funds and Similar Investments	20
Private Equity and Other	14
	100	%

The following tables provide the fair value measurement amounts for the Registrants' other postretirement benefit plan assets at December 31, 2015 and 2014 (a):



	December 31, 2015											December 31, 2014
	Level 1			Level 2			Level 3		Total			Level 1			Level 2			Level 3		Total
DTE Energy asset category:	(In millions)
Short-term Investments (b)	$	7		$	—		$	—	$	7		$	6		$	—		$	—	$	6
Equity Securities
U.S. Large Cap (c)	264			—			—		264			266			—			—		266
U.S. Small Cap and Mid Cap (d)	138			—			—		138			149			—			—		149
Non-U.S. (e)	262			55			—		317			222			59			—		281
Fixed Income Securities (f)	23			390			—		413			15			360			—		375
Hedge Funds and Similar Investments (g)	109			45			171		325			107			45			168		320
Private Equity and Other (h)	—			—			153		153			—			—			131		131
Securities Lending (i)	(122		)	(6		)	—		(128		)	(141		)	(17		)	—		(158		)
Securities Lending Collateral (i)	122			6			—		128			141			17			—		158
DTE Energy Total	$	803		$	490		$	324	$	1,617		$	765		$	464		$	299	$	1,528

DTE Electric asset category:
Short-term Investments (b)	$	5		$	—		$	—	$	5		$	4		$	—		$	—	$	4
Equity Securities
U.S. Large Cap (c)	183			—			—		183			179			—			—		179
U.S. Small Cap and Mid Cap (d)	97			—			—		97			102			—			—		102
Non-U.S. (e)	184			37			—		221			151			39			—		190
Fixed Income Securities (f)	17			272			—		289			11			243			—		254
Hedge Funds and Similar Investments (g)	76			32			119		227			73			31			114		218
Private Equity and Other (h)	—			—			109		109			—			—			91		91
Securities Lending (i)	(87		)	(4		)	—		(91		)	(98		)	(11		)	—		(109		)
Securities Lending Collateral (i)	87			4			—		91			98			11			—		109
DTE Electric Total	$	562		$	341		$	228	$	1,131		$	520		$	313		$	205	$	1,038

_______________________________________


(a)	For a description of levels within the fair value hierarchy see Note 11 to the Consolidated Financial Statements, "Fair Value".


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


(c)	This category comprises both actively and not actively managed portfolios that track the S&P 500 low cost equity index funds. Investments in this category are exchange-traded securities whereby unadjusted quote prices can be obtained. Exchange-traded securities held in a commingled fund are classified as Level 2 assets.


(d)	This category represents portfolios of small and medium capitalization domestic equities. Investments in this category are exchange-traded securities whereby unadjusted quote prices can be obtained. Exchange-traded securities held in a commingled fund are classified as Level 2 assets.


(e)	This category primarily consists of portfolios of non-U.S. developed and emerging market equities. Investments in this category are exchange-traded securities whereby unadjusted quote prices can be obtained. Exchange-traded securities held in a commingled fund are classified as Level 2 assets.


(f)	This category includes corporate bonds from diversified industries, U.S. Treasuries, bank loans, and mortgage backed securities. Pricing for investments in this category is obtained from quoted prices in actively traded markets and quotations from broker or pricing services. Non-exchange traded securities and exchange-traded securities held in commingled funds are classified as Level 2 assets.

(g)

(h)


(i)	In 2014, the Registrants began a securities lending program with a third-party agent. The program allows the agent to lend certain securities from the Registrants' VEBA trust to selected entities against receipt of collateral (in the form of cash) as provided for and determined in accordance with their securities lending agency agreements.

The DTE Energy Company Master VEBA Trust holds debt and equity securities directly and indirectly through commingled funds and institutional mutual funds. Exchange-traded debt and equity securities held directly are valued using quoted market prices in actively traded markets. The commingled funds and institutional mutual funds hold exchange-traded equity or debt securities and are valued based on NAVs. Non-exchange traded fixed income securities are valued by the trustee based upon quotations available from brokers or pricing services. A primary price source is identified by asset type, class, or issue for each security. The trustee monitors prices supplied by pricing services and may use a supplemental price source or change the primary price source of a given security if the trustee challenges an assigned price and determines that another price source is considered 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 values of securities by comparison of market-based price sources.

The following table provides a reconciliation of beginning and ending balances of DTE Energy's other postretirement benefit plan assets measured at fair value on a recurring basis where the determination of fair value includes significant unobservable inputs (Level 3):



	Year Ended December 31, 2015									Year Ended December 31, 2014
	Hedge Funds and Similar Investments			Private Equity and Other			Total			Hedge Funds and Similar Investments			Private Equity and Other			Total
	(In millions)
Beginning Balance at January 1	$	168		$	131		$	299		$	159		$	101		$	260
Total realized/unrealized gains (losses)	4			9			13			8			9			17
Purchases, sales, and settlements:
Purchases	11			34			45			9			33			42
Sales	(12		)	(21		)	(33		)	(8		)	(12		)	(20		)
Ending Balance at December 31	$	171		$	153		$	324		$	168		$	131		$	299
The amount of total gains for the period attributable to the change in unrealized gains or losses related to assets still held at the end of the period	$	—		$	3		$	3		$	7		$	8		$	15

The following table provides a reconciliation of beginning and ending balances of DTE Electric's other postretirement benefit plan assets measured at fair value on a recurring basis where the determination of fair value includes significant unobservable inputs (Level 3):



	Year Ended December 31, 2015									Year Ended December 31, 2014
	Hedge Funds and Similar Investments			Private Equity and Other			Total			Hedge Funds and Similar Investments			Private Equity and Other			Total
	(In millions)
Beginning Balance at January 1	$	114		$	91		$	205		$	111		$	71		$	182
Total realized/unrealized gains (losses)	3			6			9			5			6			11
Purchases, sales, and settlements:
Purchases	11			26			37			4			22			26
Sales	(9		)	(14		)	(23		)	(6		)	(8		)	(14		)
Ending Balance at December 31	$	119		$	109		$	228		$	114		$	91		$	205
The amount of total gains for the period attributable to the change in unrealized gains or losses related to assets still held at the end of the period	$	—		$	2		$	2		$	5		$	5		$	10

There were no transfers from or into Level 3 and there were no significant transfers between Level 2 and Level 1 in the years ended December 31, 2015 and 2014 for either of the Registrants.

Interim Re-Measurement of Other Postretirement Benefit Obligation

In March 2013, the Registrants reached agreements on new four-year labor contracts with certain represented employees under several bargaining units. As a term of the agreements, the Registrants replaced the defined benefit employer-sponsored retiree medical, prescription drug, and dental coverage for future Medicare eligible retirees and their covered dependents with an allocation to a Retiree Reimbursement Account, when the youngest of the retiree's covered household turns age 65. The initial amount of the allocation of $3,250 per year for each eligible participant increases each year at the lower of the rate of medical inflation or 2%. The modification in retiree health coverage will reduce future other postretirement benefit costs.

Based on the impact of such benefit cost savings on the Registrants' Consolidated Financial Statements, the Registrants re-measured their retiree health plan as of March 31, 2013. In performing the re-measurement, the Registrants updated their significant actuarial assumptions, including an adjustment to the discount rate from 4.15% at December 31, 2012 to 4.30% at March 31, 2013. Plan assets were also updated to reflect fair value as of the re-measurement date. Beginning April 2013, net other postretirement benefit costs were recorded based on the updated actuarial assumptions and benefit changes resulting from the new labor contracts.

DTE Energy Common Stock

DTE Energy contributed the following amounts of DTE Energy common stock to the DTE Energy Company Master VEBA Trust for funding its other postretirement benefit plans:



Date	Number of Shares	Price per Share	Amount
			(In millions)
February 17, 2015	1,427,835	$81.91	$	117
			$	117

The above contribution was made on behalf of DTE Electric, which paid DTE Energy cash consideration of $117 million in February 2015.

During 2015, DTE Energy also made cash contributions of $82 million, including DTE Electric contributions of $58 million, to the DTE Energy Company Master VEBA Trust for its other postretirement benefit plans.

Grantor Trust

DTE Gas maintains a Grantor Trust that invests in life insurance contracts and income securities to fund other postretirement benefit obligations. Employees and retirees have no right, title, or interest in the assets of the Grantor Trust, and DTE Gas can revoke the trust subject to providing the MPSC with prior notification. DTE Gas accounts for its investment at fair value, which approximated $18 million at December 31, 2015 and 2014, with unrealized gains and losses recorded to earnings. The Grantor Trust investment is included in Other investments on DTE Energy's Consolidated Statements of Financial Position.

Defined Contribution Plans

The Registrants also sponsor defined contribution retirement savings plans. Participation in one of these plans is available to substantially all represented and non-represented employees. For substantially all employees, the Registrants match employee contributions up to certain predefined limits based upon eligible compensation and the employee’s contribution rate. The cost of these plans was $49 million, $48 million, and $41 million in each of the years 2015, 2014, and 2013, respectively, for DTE Energy, and $23 million, $24 million, and $21 million in each of the years 2015, 2014, and 2013, respectively, for DTE Electric.

Plan Changes

In 2015, certain executive retirement benefit plans were amended to transfer the obligation for benefits as attributed to the LLC. The related plan liabilities were transferred from DTE Electric and DTE Gas to the LLC. The related Rabbi Trust assets were also transferred to DTE Energy from DTE Electric.