LONG-TERM DEBT

Long-Term Debt

DTE Energy's long-term debt outstanding and weighted average interest rates of debt outstanding at December 31 were:



	Rate^(a)	Maturity Date	2016			2015
			(In millions)
Mortgage bonds, notes, and other
DTE Energy Debt, Unsecured	3.0%	2019 — 2033	$	3,325		$	1,950
DTE Electric Taxable Debt, Principally Secured	4.4%	2018 — 2046	5,615			5,325
DTE Electric Tax-Exempt Revenue Bonds^(b)	4.3%	2020 — 2029	310			310
DTE Gas Taxable Debt, Principally Secured	4.9%	2018 — 2046	1,250			1,125
Other Long-Term Debt, including Non-Recourse Debt			92			105
Total Long-Term Debt			10,592			8,815
Unamortized debt discount and premium, net			(10		)	(10		)
Unamortized debt issuance costs^(c)			(67		)	(60		)
Long-term debt due within one year			(9		)	(465		)
			$	10,506		$	8,280
Junior Subordinated Debentures
Subordinated debentures	5.6%	2062 — 2076	$	780		$	480
Unamortized debt issuance costs^(c)			(24		)	(15		)
			$	756		$	465

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(a)	Weighted average interest rate as of December 31, 2016.


(b)	DTE Electric Tax-Exempt Revenue Bonds are issued by a public body that loans the proceeds to DTE Electric on terms substantially mirroring the Revenue Bonds.


(c)	Certain December 31, 2015 balances have been adjusted for the adoption of accounting guidance related to simplifying the presentation of debt issuance costs. See Note 3 to the Consolidated Financial Statements, "New Accounting Pronouncements," for additional information related to the new accounting standard.

DTE Electric's long-term debt outstanding and weighted average interest rates of debt outstanding at December 31 were:



	Rate^(a)	Maturity Date	2016			2015
			(In millions)
Mortgage bonds, notes, and other
Taxable Debt, Principally Secured	4.4%	2018 — 2046	$	5,615		$	5,325
Tax-Exempt Revenue Bonds^(b)	4.3%	2020 — 2029	310			310
Total Long-Term Debt			5,925			5,635
Unamortized debt discount			(10		)	(11		)
Unamortized debt issuance costs^(c)			(37		)	(36		)
Long-term debt due within one year			—			(151		)
			$	5,878		$	5,437

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(a)	Weighted average interest rate as of December 31, 2016.


(b)	Tax-Exempt Revenue Bonds are issued by a public body that loans the proceeds to DTE Electric on terms substantially mirroring the Revenue Bonds.


(c)	Certain December 31, 2015 balances have been adjusted for the adoption of accounting guidance related to simplifying the presentation of debt issuance costs. See Note 3 to the Consolidated Financial Statements, "New Accounting Pronouncements," for additional information related to the new accounting standard.

Debt Issuances

In 2016, the following debt was issued:



Company	Month	Type	Interest Rate	Maturity	Amount
					(In millions)
DTE Electric	May	Mortgage Bonds^(a)	3.70%	2046	$	300
DTE Energy	May	Junior Subordinated Debentures^(b)	5.375%	2076	300
DTE Energy	October	Equity Units^(c)	(d)	2024	675
DTE Energy	October	Senior Notes^(c)	2.85%	2026	600
DTE Energy	October	Senior Notes^(e)	1.50%	2019	400
DTE Energy	December	Junior Subordinated Debentures^(f)	6.00%	2076	280
DTE Gas	December	Mortgage Bonds^(a)	4.07%	2046	125
					$	2,680

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(a)	Proceeds were used for repayment of short-term borrowings and general corporate purposes.


(b)	Proceeds were used for repayment of long-term debt and general corporate purposes.


(c)	Proceeds were used for the acquisition, see "Acquisition Financing" below for more information.


(d)	See "Acquisition Financing" below for more information regarding the rates associated with the Equity Units.


(e)	Proceeds were used for the acquisition and general corporate purposes, see "Acquisition Financing" below for more information.


(f)	Proceeds were used for the repayment of Junior Subordinated Debentures.

Debt Redemptions

In 2016, the following debt was redeemed:



Company	Month	Type	Interest Rate	Maturity	Amount
					(In millions)
DTE Electric	March	Mortgage Bonds	7.904%	2016	$	10
DTE Energy	June	Senior Notes	6.35%	2016	300
DTE Energy	December	Junior Subordinated Debentures	6.50%	2061	280
DTE Energy	December	Senior Secured Term Loan^(a)	8.75%^(b)	2022	204
DTE Energy	Various	Other Long-Term Debt	Various	2016	13
					$	807

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(a)	Debt was assumed as part of the Gas Storage and Pipelines acquisition. See Note 4 of the Consolidated Financial Statements, "Acquisitions and Exit Activities".


(b)	Senior Security Term Loan bore interest at LIBOR (subject to a 1% floor) + 7.75%.

The following table shows the Registrants' scheduled debt maturities, excluding any unamortized discount or premium on debt:



	2017		2018		2019		2020		2021		2022 and Thereafter		Total
	(In millions)
DTE Energy^(a)	$	9	$	406	$	1,502	$	688	$	467	$	8,300	$	11,372
DTE Electric	$	—	$	300	$	—	$	632	$	462	$	4,531	$	5,925

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(a)	Amounts include DTE Electric's scheduled debt maturities.

Remarketed Bonds

In August 2016, DTE Electric repurchased $59 million of 5.50% Tax Exempt Revenue Bonds. In September 2016, DTE Electric reissued the $59 million of Tax Exempt Revenue Bonds in a long-term mode at 1.45% for a five-year term. The final maturity is August 1, 2029.

In September 2016, DTE Electric remarketed $82 million of Tax Exempt Revenue Bonds in a long-term mode at 1.45% for a five-year term. The final maturity is September 1, 2030.

Junior Subordinated Debentures

At December 31, 2016, DTE Energy had $200 million of 5.25% Junior Subordinated Debentures due 2062, $300 million of 5.375% Junior Subordinated Debentures due 2076 and $280 million of 6% Junior Subordinated Debentures due 2076. DTE Energy has the right to defer interest payments on the debt securities. Should DTE Energy exercise this right, it cannot declare or pay dividends on, or redeem, purchase or acquire, any of its capital stock during the deferral period. Any deferred interest payments will bear additional interest at the rate associated with the related debt issue. As of December 31, 2016, no interest payments have been deferred on the debt securities.

Cross Default Provisions

Substantially all of the net utility properties of DTE Electric and DTE Gas are subject to the lien of mortgages. Should DTE Electric or DTE Gas fail to timely pay their indebtedness under these mortgages, such failure may create cross defaults in the indebtedness of DTE Energy.

Acquisition Financing

Effective October 1, 2016, DTE Energy closed on the purchase of midstream natural gas assets. The acquisition was financed through the issuance of Equity Units and Senior Notes. See Note 4 to the Consolidated Financial Statements, "Acquisitions and Exit Activities," for more information on the acquisition.

In October 2016, DTE issued $675 million of Equity Units. Each Equity Unit has a stated amount of $50, initially in the form of a Corporate Unit, is comprised of (i) a forward purchase contract to buy DTE Energy common stock (stock purchase contract) and (ii) a 1/20 undivided beneficial ownership interest in $1,000 principal amount of DTE Energy’s 2016 Series C 1.5% RSNs due 2024. The RSN debt instruments and the stock purchase contract equity instruments are deemed to be separate instruments as the investor may trade the RSNs separately from the stock purchase contracts and may also settle the stock purchase contracts separately. The Corporate Units are listed on the New York Stock Exchange under the symbol DTV.

The stock purchase contract obligates the holder to purchase from DTE Energy on the settlement date, October 1, 2019, for a price of $50 per stock purchase contract, the following number of shares of DTE Energy’s common stock, subject to anti-dilution adjustments:


•	if the AMV of DTE Energy’s common stock, which is the average volume-weighted average price of DTE Energy’s common stock for the trading days during the 20 consecutive scheduled trading day period ending on the third scheduled trading day immediately preceding the stock purchase contract settlement date, is equal to or greater than $116.31, 0.4299 shares of common stock;


•	if the AMV is less than $116.31 but greater than $93.05, a number of shares of common stock equal to $50 divided by the AMV, rounded to the nearest 1/10,000th of a share; and


•	if the AMV is less than or equal to $93.05, 0.5373 shares of common stock.

The RSNs bear interest at a rate of 1.5% per year, payable quarterly, and mature on October 1, 2024. The RSNs will be remarketed in 2019. If this remarketing is successful, the interest rate on the RSNs will be reset, and thereafter interest will be payable semi-annually at the reset rate. If there is no successful remarketing, the interest rate on the RSNs will not be reset, and the holders of the RSNs will have the right to put the RSNs to DTE Energy at a price equal to 100% of the principal amount, and the proceeds of the put right will be deemed to have been applied against the holders’ obligation under the stock purchase contracts. DTE Energy may also redeem, in whole or in part, the RSNs in the event of a failed final remarketing.

DTE Energy will also pay the stock purchase contract holders quarterly contract adjustment payments at a rate of 5% per year of the stated amount of $50 per Equity Unit, or $2.50 per year, commencing on January 1, 2017. The present value of the future contract adjustment payments of $98 million is recorded as a reduction of shareholders’ equity, offset by the stock purchase contract liability. The stock purchase contract liability is included in Current Liabilities — Other and Other Liabilities — Other on DTE Energy’s Consolidated Statements of Financial Position. Interest payments on the RSNs are recorded as interest expense and stock purchase contract payments are charged against the liability. Accretion of the stock purchase contract liability is recorded as imputed interest expense. The treasury stock method will be used to compute diluted EPS for the stock purchase contract. Under the treasury stock method, the stock purchase contract will only have a dilutive effect when the settlement rate is based on the market value of DTE’s common stock that is greater than $116.31 (the threshold appreciation price). If payments for the stock purchase contract are deferred, DTE Energy may not make any cash distributions related to its capital stock, including dividends, redemptions, repurchases, liquidation payments or guarantee payments. Also, during the deferral period, DTE Energy may not make any payments on or redeem or repurchase any debt securities that are equal in right of payment with, or subordinated to, the RSNs.

Until settlement of the stock purchase contracts, the shares of stock underlying each contract are not outstanding. Under the terms of the stock purchase contracts, assuming no anti-dilution or other adjustments, DTE Energy will issue between 5.8 million and 7.3 million shares of its common stock in October 2019. A total of 9 million shares of DTE Energy’s common stock have been reserved for issuance in connection with the stock purchase contracts.

Selected information about DTE Energy’s 2016 Equity Units is presented below:

Issuance Date

Units Issued

Total Net Proceeds

Total Long-Term Debt

RSN Annual Interest Rate

Stock Purchase Contract Annual Rate

Stock Purchase Settlement Date

RSN Maturity Date

(In millions, except interest rates)

10/5/2016

13.5

654

675

1.5%

5.0%

10/1/2019

10/1/2024

In October 2016, DTE Energy issued $400 million of 2016 Series D 1.50% Senior Notes due 2019 and $600 million of Series E 2.85% Senior Notes due 2026. The proceeds from the Senior Notes were used for the acquisition and general corporate purposes.