Significant Accounting Policies

3 Months Ended

Mar. 31, 2017

SIGNIFICANT ACCOUNTING POLICIES

Other Income

The following is a summary of DTE Energy's Other income:



	Three Months Ended March 31,
	2017		2016
	(In millions)
Equity earnings of equity method investees	$	26	$	15
Income from REF investees	18		19
Gains from trading securities	8		5
Allowance for equity funds used during construction	7		5
Contract services	4		6
Other	1		2
	$	64	$	52

The following is a summary of DTE Electric's Other income:



	Three Months Ended March 31,
	2017		2016
	(In millions)
Gains from trading securities allocated from DTE Energy	$	8	$	5
Allowance for equity funds used during construction	6		4
Contract services	4		6
Other	1		1
	$	19	$	16

Changes in Accumulated Other Comprehensive Income (Loss)

For the three months ended March 31, 2017 and 2016, reclassifications out of Accumulated other comprehensive income (loss) for the Registrants were not material. Changes in Accumulated other comprehensive income (loss) are presented in DTE Energy's Consolidated Statements of Changes in Equity and DTE Electric's Consolidated Statements of Changes in Shareholder's Equity.

Income Taxes

The effective tax rate and unrecognized tax benefits of the Registrants are as follows:



	Effective Tax Rate				Unrecognized Tax Benefits
	Three Months Ended March 31,				March 31,
	2017		2016		2017
					(In millions)
DTE Energy	22	%	26	%	$	10
DTE Electric	35	%	36	%	$	13

The 4% decrease in DTE Energy's effective tax rate for the three months ended March 31, 2017 is primarily due to $13 million of excess tax benefits on stock-based compensation recognized in accordance with ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which was adopted effective July 1, 2016.

DTE Energy had $7 million of unrecognized tax benefits that, if recognized, would favorably impact its effective tax rate. DTE Electric had $8 million of unrecognized tax benefits that, 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 with DTE Energy of $10 million and $9 million at March 31, 2017 and December 31, 2016, respectively.

Unrecognized Compensation Costs

As of March 31, 2017, DTE Energy had $92 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 1.82 years.

Allocated Stock-Based Compensation

DTE Electric received an allocation of costs from DTE Energy associated with stock-based compensation of $8 million and $10 million for the three months ended March 31, 2017 and 2016, respectively.