SIGNIFICANT ACCOUNTING POLICIES

Other Income

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



	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
	(In millions)
Equity earnings of equity method investees	$	25	$	20	$	51	$	35
Income from REF entities	22		20		40		39
Gains from trading securities	5		5		13		10
Allowance for equity funds used during construction	5		5		12		10
Contract services	4		5		8		11
Other	5		2		6		4
	$	66	$	57	$	130	$	109

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



	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
	(In millions)
Gains from trading securities allocated from DTE Energy	$	5	$	5	$	13	$	10
Contract services	5		5		9		11
Allowance for equity funds used during construction	4		5		10		9
Equity earnings of equity method investees	1		1		1		1
Other	2		1		3		2
	$	17	$	17	$	36	$	33

Changes in Accumulated Other Comprehensive Income (Loss)

For the three and six months ended June 30, 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 of the Registrants are as follows:



	Effective Tax Rate
	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
DTE Energy	25	%	26	%	23	%	26	%
DTE Electric	35	%	36	%	35	%	36	%

The 3% decrease in DTE Energy's effective tax rate for the six months ended June 30, 2017 was 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's total amount of unrecognized tax benefits as of June 30, 2017 and December 31, 2016 was $10 million. The amount, if recognized, that would favorably impact DTE Energy's effective tax rate as of June 30, 2017 and December 31, 2016 was $6 million and $7 million, respectively. DTE Electric's total amount of unrecognized tax benefits as of June 30, 2017 and December 31, 2016 was $13 million, of which $8 million, 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 $9 million at June 30, 2017 and December 31, 2016.

Unrecognized Compensation Costs

As of June 30, 2017, DTE Energy had $83 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 1.60 years.

Allocated Stock-Based Compensation

DTE Electric received an allocation of costs from DTE Energy associated with stock-based compensation of $10 million and $9 million for the three months ended June 30, 2017 and 2016, respectively, while such allocation was $18 million and $19 million for the six months ended June 30, 2017 and 2016, respectively.