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Significant Accounting Policies
 12 Months Ended
Dec. 31, 2019
Accounting Policies [Abstract]  
Significant Accounting Policies SIGNIFICANT ACCOUNTING POLICIES
Other Income
Other income for the Registrants is recognized for non-operating income such as equity earnings of equity method investees, allowance for equity funds used during construction, contract services, and gains (losses) from trading securities. DTE Energy's Power and Industrial Projects segment also recognizes Other income in connection with the sale of membership interests in reduced emissions fuel facilities to investors. In exchange for the cash received, the investors will receive a portion of the economic attributes of the facilities, including income tax attributes. The transactions are not treated as a sale of membership interests for financial reporting purposes. Other income related to fixed non-refundable cash payments received from investors for which the earnings process is not contingent upon production of refined coal is recognized on a straight-line basis over the non-cancelable contract term as the economic benefit from the ownership of the facility is transferred to investors. Other income related to cash payments that is contingent upon production of refined coal is considered earned and recognized when the contingency regarding the timing and amount of payment is resolved, generally as refined coal is produced and tax credits are generated.
The following is a summary of DTE Energy's Other income:
 
2019
 
2018
 
2017
 
(In millions)
Income from REF entities
$
130

 
$
98

 
$
77

Equity earnings of equity method investees
111

 
132

 
102

Gains from equity securities
37

 
6

 
26

Contract services
29

 
51

 
19

Allowance for equity funds used during construction
24

 
28

 
23

Other
19

 
18

 
21

 
$
350

 
$
333

 
$
268

The following is a summary of DTE Electric's Other income:
 
2019
 
2018
 
2017
 
(In millions)
Gains from equity securities allocated from DTE Energy
$
37

 
$
6

 
$
26

Contract services
32

 
51

 
21

Allowance for equity funds used during construction
22

 
19

 
18

Other
16

 
7

 
12

 
$
107

 
$
83

 
$
77


For information on equity earnings of equity method investees by segment, see Note 23 to the Consolidated Financial Statements, "Segment and Related Information."
Accounting for ISO Transactions
DTE Electric participates in the energy market through MISO. MISO requires that DTE Electric submit hourly day-ahead, real-time, and FTR bids and offers for energy at locations across the MISO region. DTE Electric accounts for MISO transactions on a net hourly basis in each of the day-ahead, real-time, and FTR markets. In any single hour, transactions in each of the MISO energy markets are netted based on MWh to determine if DTE Electric is in a net sale or purchase position. Net purchases are recorded in Fuel, purchased power, and gas — utility and net sales are recorded in Operating Revenues — Utility operations on the Registrants' Consolidated Statements of Operations.
The Energy Trading segment participates in the energy markets through various ISOs and RTOs. These markets require that Energy Trading submits hourly day-ahead, real-time bids and offers for energy at locations across each region. Energy Trading submits bids in the annual and monthly auction revenue rights and FTR auctions to the RTOs. Energy Trading accounts for these transactions on a net hourly basis for the day-ahead, real-time, and FTR markets. These transactions are related to trading contracts which, if derivatives, are presented on a net basis in Operating Revenues — Non-utility operations, and if non-derivatives, the realized gains and losses for sales are recorded in Operating Revenues — Non-utility operations and purchases are recorded in Fuel, purchased power, and gas — non-utility in the DTE Energy Consolidated Statements of Operations.
DTE Electric and Energy Trading record accruals for future net purchases adjustments based on historical experience and reconcile accruals to actual costs when invoices are received from MISO and other ISOs and RTOs.
Derivatives
Energy Trading classifies derivative transactions as revenue or expense based on the intent of the transaction (buy or sell). Revenues are recorded on a gross or net basis within the income statement depending upon whether it represents a non-trading activity or trading activity, respectively. For additional information, refer to Note 14 to the Consolidated Financial Statements, "Financial and Other Derivative Instruments".
Changes in Accumulated Other Comprehensive Income (Loss)
Comprehensive income (loss) is the change in common shareholders’ equity during a period from transactions and events from non-owner sources, including Net Income. The amounts recorded to Accumulated other comprehensive income (loss) for DTE Energy include changes in benefit obligations, consisting of deferred actuarial losses and prior service costs, unrealized gains and losses from derivatives accounted for as cash flow hedges, DTE Energy's interest in other comprehensive income of equity investees which comprise the net unrealized gains and losses on investments, and foreign currency translation adjustments. DTE Energy releases income tax effects from accumulated other comprehensive income when the circumstances upon which they are premised cease to exist.
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. For further discussion regarding changes in Accumulated other comprehensive income (loss), see Note 3 to the Consolidated Financial Statements, "New Accounting Pronouncements." For the years ended December 31, 2019 and 2018, reclassifications out of Accumulated other comprehensive income (loss) not relating to the adoption of new accounting pronouncements for DTE Energy were not material.
The following table summarizes the changes in DTE Energy's Accumulated other comprehensive income (loss) by component(a) for the years ended December 31, 2019 and 2018:
 
Net Unrealized Gain (Loss) on Derivatives
 
Net Unrealized Loss on Investments
 
Benefit Obligations(b)
 
Foreign Currency Translation
 
Total
 
(In millions)
Balance, December 31, 2017
$
(3
)
 
$
(2
)
 
$
(110
)
 
$
(5
)
 
$
(120
)
Other comprehensive loss before reclassifications
(2
)
 
—

 
(1
)
 
(2
)
 
(5
)
Amounts reclassified from Accumulated other comprehensive income (loss)
1

 
—

 
9

 
—

 
10

Net current-period Other comprehensive income (loss)
(1
)
 
—


8


(2
)

5

Implementation of ASU 2016-01
(7
)
 
2

 
—

 
—

 
(5
)
Balance, December 31, 2018
$
(11
)
 
$
—


$
(102
)

$
(7
)

$
(120
)
Other comprehensive income (loss) before reclassifications
(14
)
 
—

 
(7
)
 
1

 
(20
)
Amounts reclassified from Accumulated other comprehensive income (loss)
2

 
—

 
15

 
—

 
17

Net current-period Other comprehensive income (loss)
(12
)
 
—


8


1


(3
)
Implementation of ASU 2018-02
(2
)
 
—

 
(23
)
 
—

 
(25
)
Balance, December 31, 2019
$
(25
)
 
$
—


$
(117
)

$
(6
)

$
(148
)
______________________________________
(a)
All amounts are net of tax, except for Foreign currency translation.
(b)
The amounts reclassified from Accumulated other comprehensive income (loss) are included in the computation of the net periodic pension and other postretirement benefit costs (see Note 21 to the Consolidated Financial Statements, "Retirement Benefits and Trusteed Assets").
Cash, Cash Equivalents, and Restricted Cash
Cash and cash equivalents include cash on hand, cash in banks, and temporary investments purchased with remaining maturities of three months or less. Restricted cash consists of funds held to satisfy requirements of certain debt and DTE Energy partnership operating agreements. Restricted cash designated for interest and principal payments within one year is classified as a Current Asset.
Receivables
Accounts receivable are primarily composed of trade receivables and unbilled revenue. The Registrants' Accounts receivable are stated at net realizable value.
The allowance for doubtful accounts for DTE Electric and DTE Gas is generally calculated using the aging approach that utilizes rates developed in reserve studies. DTE Electric and DTE Gas establish an allowance for uncollectible accounts based on historical losses and management’s assessment of existing economic conditions, customer trends, and other factors. Customer accounts are generally considered delinquent if the amount billed is not received by the due date, which is typically in 21 days, however, factors such as assistance programs may delay aggressive action. DTE Electric and DTE Gas assess late payment fees on trade receivables based on past-due terms with customers. Customer accounts are written off when collection efforts have been exhausted. The time period for write-off is 150 days after service has been terminated.
The customer allowance for doubtful accounts for DTE Energy's other businesses is calculated based on specific review of probable future collections based on receivable balances generally in excess of 30 days.
DTE Energy unbilled revenues of $0.9 billion and $1.0 billion at December 31, 2019 and 2018, respectively, include $263 million and $264 million of DTE Electric unbilled revenues, respectively, included in Customer Accounts receivable.
Notes Receivable
Notes receivable, or financing receivables, for DTE Energy are primarily comprised of finance lease receivables and loans and are included in Notes receivable and Other current assets on DTE Energy’s Consolidated Statements of Financial Position. Notes receivable, or financing receivables, for DTE Electric are primarily comprised of loans.
Notes receivable are typically considered delinquent when payment is not received for periods ranging from 60 to 120 days. The Registrants cease accruing interest (nonaccrual status), consider a note receivable impaired, and establish an allowance for credit loss when it is probable that all principal and interest amounts due will not be collected in accordance with the contractual terms of the note receivable. Cash payments received on nonaccrual status notes receivable, that do not bring the account contractually current, are first applied to contractually owed past due interest, with any remainder applied to principal. Accrual of interest is generally resumed when the note receivable becomes contractually current.
In determining the allowance for credit losses for notes receivable, the Registrants consider the historical payment experience and other factors that are expected to have a specific impact on the counterparty’s ability to pay. In addition, the Registrants monitor the credit ratings of the counterparties from which they have notes receivable.
Inventories
Inventory related to utility operations is generally valued at average cost. Inventory related to non-utility operations is valued at the lower of cost or net realizable value.
DTE Gas' natural gas inventory of $40 million and $48 million as of December 31, 2019 and 2018, respectively, is determined using the last-in, first-out (LIFO) method. The replacement cost of gas in inventory exceeded the LIFO cost by $49 million and $113 million at December 31, 2019 and 2018, respectively.
Property, Retirement and Maintenance, and Depreciation and Amortization
Property is stated at cost and includes construction-related labor, materials, overheads, and AFUDC for utility property. The cost of utility properties retired is charged to accumulated depreciation. Expenditures for maintenance and repairs are charged to expense when incurred.
Utility property at DTE Electric and DTE Gas is depreciated over its estimated useful life using straight-line rates approved by the MPSC. DTE Energy's non-utility property is depreciated over its estimated useful life using the straight-line method. Depreciation and amortization expense also includes the amortization of certain regulatory assets for the Registrants.
The cost of nuclear fuel is capitalized. The amortization of nuclear fuel is included within Fuel, purchased power, and gas — utility in the DTE Energy Consolidated Statements of Operations, and Fuel and purchased power in the DTE Electric Consolidated Statements of Operations, and is recorded using the units-of-production method.
See Note 7 to the Consolidated Financial Statements, "Property, Plant, and Equipment."
Long-Lived Assets
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. If the carrying amount of the asset exceeds the expected undiscounted future cash flows generated by the asset, an impairment loss is recognized resulting in the asset being written down to its estimated fair value. Assets to be disposed of are reported at the lower of the carrying amount or fair value, less costs to sell.
Intangible Assets
The Registrants have certain Intangible assets as shown below:
 
 
 
December 31, 2019
 
December 31, 2018
 
Useful Lives
 
Gross Carrying Value
 
Accumulated Amortization
 
Net Carrying Value
 
Gross Carrying Value
 
Accumulated Amortization
 
Net Carrying Value
 
 
 
(In millions)
Intangible assets subject to amortization
 
 
 
 
 
 
 
 
 
 
 
 
Customer relationships
25 to 40 years(a)
 
$
2,252

 
$
(66
)
 
$
2,186

 
$
779

 
$
(44
)
 
$
735

Contract intangibles
6 to 26 years
 
268

 
(76
)
 
192

 
159

 
(66
)
 
93

 
 
 
2,520

 
(142
)
 
2,378

 
938

 
(110
)
 
828

 
 
 
 
 
 
 
 
 
 
 
 
 
 
DTE Electric renewable energy credits
(b)
 
15

 
—

 
15

 
20

 
—

 
20

DTE Electric emission allowances
(b)
 
—

 
—

 
—

 
1

 
—

 
1

DTE Electric Long-term intangible assets
 
15

 
—

 
15

 
21

 
—

 
21

 
 
 
 
 
 
 
 
 
 
 
 
 
 
DTE Energy Long-term intangible assets
 
$
2,535

 
$
(142
)
 
$
2,393

 
$
959

 
$
(110
)
 
$
849


______________________________________
(a)
The useful lives of the customer relationship intangible assets are based on the number of years in which the assets are expected to economically contribute to the business. The expected economic benefit incorporates existing customer contracts and expected renewal rates based on the estimated volume and production lives of gas resources in the region.
(b)
Emission allowances and renewable energy credits are charged to expense, using average cost, as the allowances and credits are consumed in the operation of the business.
The following table summarizes DTE Energy's estimated customer relationship and contract intangible amortization expense expected to be recognized during each year through 2024:
 
2020
 
2021
 
2022
 
2023
 
2024
 
(In millions)
Estimated amortization expense
$
82

 
$
86

 
$
86

 
$
86

 
$
86


DTE Energy amortizes customer relationship and contract intangible assets on a straight-line basis over the expected period of benefit. DTE Energy's Intangible assets amortization expense was $33 million in 2019, $27 million in 2018, and $29 million in 2017.
Excise and Sales Taxes
The Registrants record the billing of excise and sales taxes as a receivable with an offsetting payable to the applicable taxing authority, with no net impact on the Registrants’ Consolidated Statements of Operations.
Deferred Debt Costs
The costs related to the issuance of long-term debt are deferred and amortized over the life of each debt issue. The deferred amounts are included as a direct deduction from the carrying amount of each debt issue in Mortgage bonds, notes, and other and Junior subordinated debentures on DTE Energy's Consolidated Statements of Financial Position and in Mortgage bonds, notes, and other on DTE Electric's Consolidated Statements of Financial Position. In accordance with MPSC regulations applicable to DTE Energy’s electric and gas utilities, the unamortized discount, premium, and expense related to utility debt redeemed with a refinancing are amortized over the life of the replacement issue. Discount, premium, and expense on early redemptions of debt associated with DTE Energy's non-utility operations are charged to earnings.
Investments in Debt and Equity Securities
The Registrants generally record investments in debt and equity securities at market value with unrealized gains or losses included in earnings. Changes in the fair value of Fermi 2 nuclear decommissioning investments are recorded as adjustments to Regulatory assets or liabilities, due to a recovery mechanism from customers. The Registrants' equity investments are reviewed for impairment each reporting period. If the assessment indicates that an impairment exists, a loss is recognized resulting in the equity investment being written down to its estimated fair value. See Note 13 of the Consolidated Financial Statements, "Fair Value."
DTE Energy Foundation
There were no contributions made by DTE Energy to the DTE Energy Foundation for the year ended December 31, 2019. DTE Energy's charitable contributions to the DTE Energy Foundation were $22 million and $43 million for the years ended December 31, 2018 and 2017, respectively. The DTE Energy Foundation is a non-consolidated not-for-profit private foundation, the purpose of which is to contribute to and assist charitable organizations.
Other Accounting Policies
See the following notes for other accounting policies impacting the Registrants’ Consolidated Financial Statements:
Note
 
Title
5
 
Revenue
9
 
Asset Retirement Obligations
10
 
Regulatory Matters
11
 
Income Taxes
13
 
Fair Value
14
 
Financial and Other Derivative Instruments
18
 
Leases
21
 
Retirement Benefits and Trusteed Assets
22
 
Stock-Based Compensation