Regulatory Matters

9 Months Ended

Sep. 30, 2019

Public Utilities, General Disclosures [Abstract]

Regulatory Matters

REGULATORY MATTERS

2018 Electric Rate Case Filing

DTE Electric filed a rate case with the MPSC on July 6, 2018 requesting an increase in base rates of $328 million based on a projected twelve-month period ending April 30, 2020. The requested increase in base rates was primarily due to an increase in net plant resulting from infrastructure investments, depreciation expense, as requested in the 2016 DTE Electric Depreciation Case Filing, and reliability improvement projects. The rate filing also requested an increase in return on equity from 10.0% to 10.5% and included projected changes in sales, operation and maintenance expenses, and working capital. In addition, the rate filing requested an Infrastructure Recovery Mechanism to recover the incremental revenue requirement associated with certain distribution, fossil generation, and nuclear generation capital expenditures through 2022. Finally, as noted in the 2017 Tax Reform section below, DTE Electric proposed an amortization schedule for Calculation C in this filing. On February 1, 2019, DTE Electric reduced its initial requested increase in base rates to $248.6 million, primarily reflecting the reduction in requested depreciation expense resulting from the MPSC's approval of new depreciation rates. On May 2, 2019, the MPSC issued an order approving an annual revenue increase of $125 million for services rendered on or after May 9, 2019. The MPSC authorized a return on equity of 10.0%. In addition, the order approved the proposed amortization schedule for Calculation C but denied the requested Infrastructure Recovery Mechanism.

2019 Electric Rate Case Filing

DTE Electric filed a rate case with the MPSC on July 8, 2019 requesting an increase in base rates of $351 million based on a projected twelve-month period ending April 30, 2021. The requested increase in base rates is primarily due to an increase in net plant resulting from infrastructure and generation investments. The rate filing also requests an increase in return on equity from 10.0% to 10.5% and includes projected changes in sales and operating and maintenance expenses. A final MPSC order in this case is expected by May 2020.

2016 DTE Electric Depreciation Case Filing

DTE Electric filed a depreciation case with the MPSC on November 1, 2016 requesting an increase in depreciation rates for plant in service balances as of December 31, 2015. The MPSC issued an order on December 6, 2018 authorizing DTE Electric to increase its composite depreciation rate from 3.06% to 3.72%. The new rates are effective for service rendered on or after May 9, 2019, per the final order in DTE Electric's 2018 rate case issued on May 2, 2019.

2017 Tax Reform

On December 27, 2017, the MPSC issued an order to consider changes in the rates of all Michigan rate-regulated utilities to reflect the effects of the federal TCJA. On January 19, 2018, DTE Electric and DTE Gas filed information with the MPSC regarding the potential change in revenue requirements due to the TCJA effective January 1, 2018 and outlined their recommended method to flow the current and deferred tax benefits of those impacts to ratepayers.

On February 22, 2018, the MPSC issued an order in this case requiring utilities, including DTE Electric and DTE Gas, to follow a 3-step approach of credits and calculations. In 2018, MPSC orders for the first two steps, Credit A and Credit B, were issued for DTE Electric and DTE Gas. The third step is to perform Calculation C to address all remaining issues relative to the new tax law, which is primarily the remeasurement of deferred taxes and how the amounts deferred as Regulatory liabilities will flow to ratepayers. DTE Gas filed its Calculation C case on November 16, 2018 to reduce the annual revenue requirement by $12 million related to the amortization of deferred tax remeasurement. On August 20, 2019, the MPSC issued an order in this case approving a $13 million reduction to DTE Gas' annual revenue requirement. This reduction in revenue will be offset by a corresponding reduction in income tax expense within the Consolidated Statements of Operations. DTE Electric proposed an amortization schedule for Calculation C in its general rate case filed July 6, 2018, which was approved by the MPSC in the May 2, 2019 rate order.