Short-Term Credit Arrangements and Borrowings

12 Months Ended

Dec. 31, 2019

Short-Term Credit Arrangements and Borrowings

SHORT-TERM CREDIT ARRANGEMENTS AND BORROWINGS

DTE Energy, DTE Electric, and DTE Gas have unsecured revolving credit agreements that can be used for general corporate borrowings, but are intended to provide liquidity support for each of the companies’ commercial paper programs. Borrowings under the revolvers are available at prevailing short-term interest rates. Additionally, DTE Energy has other facilities to support letter of credit issuance.

The agreements require DTE Energy, DTE Electric, and DTE Gas to maintain a total funded debt to capitalization ratio of no more than 0.65 to 1. In the agreements, "total funded debt" means all indebtedness of each respective company and their consolidated subsidiaries, including finance lease obligations, hedge agreements, and guarantees of third parties’ debt, but excluding contingent obligations, nonrecourse and junior subordinated debt, and certain equity-linked securities and, except for calculations at the end of the second quarter, certain DTE Gas short-term debt. "Capitalization" means the sum of (a) total funded debt plus (b) "consolidated net worth," which is equal to consolidated total equity of each respective company and their consolidated subsidiaries (excluding pension effects under certain FASB statements), as determined in accordance with accounting principles generally accepted in the United States of America. At December 31, 2019, the total funded debt to total capitalization ratios for DTE Energy, DTE Electric, and DTE Gas were 0.58 to 1, 0.51 to 1, and 0.48 to 1, respectively, and were in compliance with this financial covenant.

The availability under the facilities in place at December 31, 2019 is shown in the following table:



	DTE Energy		DTE Electric		DTE Gas		Total
	(In millions)
Unsecured letter of credit facility, expiring in February 2021	$	150	$	—	$	—	$	150
Unsecured letter of credit facility, expiring in August 2021	110		—		—		110
Unsecured revolving credit facility, expiring April 2024	1,500		500		300		2,300
	1,760		500		300		2,560
Amounts outstanding at December 31, 2019
Commercial paper issuances	280		354		194		828
Letters of credit	229		—		—		229
	509		354		194		1,057
Net availability at December 31, 2019	$	1,251	$	146	$	106	$	1,503

DTE Energy has $9 million of other outstanding letters of credit which are used for various corporate purposes and are not included in the facilities described above.

The weighted average interest rate for short-term borrowings was 2.0% and 2.9% at December 31, 2019 and 2018, respectively, for DTE Energy. The weighted average interest rate for short-term borrowings was 1.9% and 2.9% at December 31, 2019 and 2018, respectively, for DTE Electric.

In conjunction with maintaining certain exchange-traded risk management positions, DTE Energy may be required to post collateral with its clearing agent. DTE Energy has a demand financing agreement for up to $100 million with its clearing agent. The agreement, as amended, also allows for up to $50 million of additional margin financing provided that DTE Energy posts a letter of credit for the incremental amount and allows the right of setoff with posted collateral. At December 31, 2019, the capacity under this facility was $150 million. The amount outstanding under this agreement was $114 million and $93 million at December 31, 2019 and 2018, respectively, and was fully offset by the posted collateral.

Dividend Restrictions

Certain of DTE Energy’s credit facilities contain a provision requiring DTE Energy to maintain a total funded debt to capitalization ratio, as defined in the agreements, of no more than 0.65 to 1, which has the effect of limiting the amount of dividends DTE Energy can pay in order to maintain compliance with this provision. At December 31, 2019, the effect of this provision was to restrict the payment of approximately $3.2 billion of Retained earnings totaling $6.6 billion. There are no other effective limitations with respect to DTE Energy’s ability to pay dividends.