Short-Term Credit Arrangements and Borrowings

12 Months Ended

Dec. 31, 2020

Short-Term Credit Arrangements and Borrowings

SHORT-TERM CREDIT ARRANGEMENTS AND BORROWINGS

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

During 2020, the Registrants entered into a series of unsecured term loans to raise additional liquidity, including terms consistent with the unsecured revolving credit agreements. Several of these term loans were entered into and subsequently repaid in 2020. One unsecured term loan remains as of December 31, 2020, a $200 million loan entered into by DTE Electric in November 2020 with a maturity date in November 2021. Through December 31, 2020, no amounts have been drawn and commitment fees have not been material. The loan will terminate if no amounts are drawn by April 30, 2021.

In May 2020, DTE Lake Erie Generation, Inc., an indirect wholly-owned subsidiary of DTE Energy, entered into a C$110 million unsecured revolving credit agreement to fund construction of on-site electric generation and related infrastructure projects at a Canadian integrated steel manufacturing facility in Ontario, Canada. The revolving credit agreement is guaranteed by DTE Energy and there was C$49 million outstanding as of December 31, 2020. The revolving credit agreement expires in May 2023 and has terms consistent with DTE Energy's unsecured revolving credit agreements.

The unsecured revolving credit agreements require DTE Energy, DTE Electric, and DTE Gas to maintain a total funded debt to capitalization ratio of no more than 0.65 to 1. In the agreements, "total funded debt" means all indebtedness of each respective company and their consolidated subsidiaries, including finance lease obligations, hedge agreements, and guarantees of third parties’ debt, but excluding contingent obligations, nonrecourse and junior subordinated debt, and certain equity-linked securities and, except for calculations at the end of the second quarter, certain DTE Gas short-term debt. "Capitalization" means the sum of (a) total funded debt plus (b) "consolidated net worth," which is equal to consolidated total equity of each respective company and their consolidated subsidiaries (excluding pension effects under certain FASB statements), as determined in accordance with accounting principles generally accepted in the United States of America. At December 31, 2020, the total funded debt to total capitalization ratios for DTE Energy, DTE Electric, and DTE Gas were 0.59 to 1, 0.51 to 1, and 0.48 to 1, respectively, and were in compliance with this financial covenant.

The availability under the facilities in place at December 31, 2020 is shown in the following table:


	DTE Energy		DTE Electric		DTE Gas		Total
	(In millions)
Unsecured letter of credit facility, expiring in February 2021	$	150	$	—	$	—	$	150
Unsecured letter of credit facility, expiring in August 2021	110		—		—		110
Unsecured term loan, expiring in November 2021	—		200		—		200
Unsecured Canadian revolving credit facility, expiring May 2023	86		—		—		86
Unsecured revolving credit facility, expiring April 2024	1,500		500		300		2,300
	1,846		700		300		2,846
Amounts outstanding at December 31, 2020

Letters of credit	193		—		—		193

Revolver borrowings	38		—		—		38
	231		—		—		231
Net availability at December 31, 2020	$	1,615	$	700	$	300	$	2,615

DTE Energy has $59 million of other outstanding letters of credit which are used for various corporate purposes and are not included in the facilities described above. These letters of credit include a $50 million uncommitted letter of credit facility entered into by DTE Energy in July 2020, of which the full amount has been drawn. The facility expires in July 2021 with an automatic renewal provision.

For DTE Energy, the weighted average interest rate for short-term borrowings was 1.1% and 2.0% at December 31, 2020 and 2019, respectively. For DTE Electric, the weighted average interest rate for short-term borrowings was 1.9% at December 31, 2019. There were no short-term borrowings outstanding as of December 31, 2020.

In conjunction with maintaining certain exchange-traded risk management positions, DTE Energy may be required to post collateral with its clearing agents. DTE Energy has demand financing agreements with its clearing agents, including an agreement for up to $100 million with an indefinite term and an agreement for up to $150 million currently contracted through 2022 and subject to renewal. The $100 million agreement, as amended, also allows for up to $50 million of additional margin financing provided that DTE Energy posts a letter of credit for the incremental amount. Both agreements allow the right of setoff with posted collateral. At December 31, 2020, the capacity under these facilities was $300 million. The amount outstanding under these agreements was $49 million and $114 million at December 31, 2020 and 2019, respectively, and was fully offset by the posted collateral.

Dividend Restrictions

Certain of DTE Energy’s credit facilities contain a provision requiring DTE Energy to maintain a total funded debt to capitalization ratio, as defined in the agreements, of no more than 0.65 to 1, which has the effect of limiting the amount of dividends DTE Energy can pay in order to maintain compliance with this provision. At December 31, 2020, the effect of this provision was a restriction on dividend payments to no more than $2.8 billion of DTE Energy's Retained earnings of $7.2 billion. There are no other effective limitations with respect to DTE Energy’s ability to pay dividends.