
	Three Months Ended September 30,						Nine Months Ended September 30,
	2020		2019		2020		2019
	(In millions)
Equity earnings of equity method investees	$	37	$	34	$	96	$	77
Income from REF entities	43		40		95		96
Gains from equity and fixed income securities	2		3		24		27
Contract services	7		7		20		21
Gas Storage and Pipelines post-acquisition settlement	20		—		20		—
Allowance for equity funds used during construction	6		5		19		18
Other	5		9		12		20
	$	120	$	98	$	286	$	259


	Three Months Ended September 30,						Nine Months Ended September 30,
	2020		2019		2020		2019
	(In millions)
Gains from equity and fixed income securities allocated from DTE Energy	$	2	$	3	$	24	$	27
Contract services	7		7		20		23
Allowance for equity funds used during construction	6		5		18		17

Other	3		5		6		11
	$	18	$	20	$	68	$	78

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, 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 the three and nine months ended September 30, 2020, reclassifications out of Accumulated other comprehensive income (loss) were not material.

On January 1, 2019, DTE Energy reclassified $25 million of stranded tax effects resulting from the TCJA from Accumulated other comprehensive income (loss) to Retained Earnings. The reclassification was recorded upon adoption of ASU No. 2018-02, Income Statement — Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. For the three and nine months ended September 30, 2019, reclassifications out of Accumulated other comprehensive income (loss) not relating to the adoption of this standard were not material.

The 1% decrease in DTE Energy's effective tax rate for the three months ended September 30, 2020 was primarily due to higher amortization of the TCJA regulatory liability of 2%, partially offset by a decrease in annual production tax credits of 1%. The 2% decrease in DTE Energy's effective tax rate for the nine months ended September 30, 2020 was primarily due to the carryback of the 2018 net operating loss due to the CARES Act of 3% and higher amortization of the TCJA regulatory liability of 2%, partially offset by a decrease in production tax credits and other of 3%. Refer below for additional information regarding the CARES Act and related tax impacts.

The 3% decrease in DTE Electric's effective tax rate for the three months ended September 30, 2020 was primarily due to higher amortization of the TCJA regulatory liability of 3%. The 4% decrease in DTE Electric's effective tax rate for the nine months ended September 30, 2020 was primarily due to higher amortization of the TCJA regulatory liability of 3% and an increase in annual production tax credits of 1%.

In March 2020, the "Coronavirus Aid, Relief, and Economic Security Act" (CARES Act) was signed into law and included several significant changes to the Internal Revenue Code. The CARES Act includes certain tax relief provisions applicable to the Registrants including a) the immediate refund of the corporate AMT credit, b) the ability to carryback net operating losses five years for tax years 2018 through 2020, c) the employee retention credit, and d) delayed payment of employer payroll taxes.

During the second quarter 2020, the Registrants filed a claim for employee retention credits of $6 million, of which $3 million is attributable to DTE Electric. These amounts are included in Taxes other than income in the Consolidated Statements of Operations for the nine months ended September 30, 2020. The Registrants have also deferred employer payroll taxes of $32 million, of which $17 million was attributable to DTE Electric, increasing the amount of Other Liabilities - Other on the Registrants' Consolidated Statements of Financial Position as of September 30, 2020.

DTE Electric received an allocation of costs from DTE Energy associated with stock-based compensation of $12 million and $9 million for the three months ended September 30, 2020 and 2019, respectively, while such allocation was $28 million and $33 million for the nine months ended September 30, 2020 and 2019, respectively.

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 in separate bank accounts to satisfy contractual obligations to fund certain construction projects and guarantee performance. Restricted cash designated for payments within one year is classified as a Current Asset.

The Registrants monitor the credit quality of their financing receivables on a regular basis by reviewing credit quality indicators and monitoring for trigger events, such as a credit rating downgrade or bankruptcy. Credit quality indicators include, but are not limited to, ratings by credit agencies where available, collection history, collateral, counterparty financial statements and other internal metrics. Utilizing such data, the Registrants have determined three internal grades of credit quality. Internal grade 1 includes financing receivables for counterparties where credit rating agencies have ranked the counterparty as investment grade. To the extent credit ratings are not available, the Registrants utilize other credit quality indicators to determine the level of risk associated with the financing receivable. Internal grade 1 may include financing receivables for counterparties for which credit rating agencies have ranked the counterparty as below investment grade, however, due to favorable information on other credit quality indicators, the Registrants have determined the risk level to be similar to that of an investment grade counterparty. Internal grade 2 includes financing receivables for counterparties with limited credit information and those with a higher risk profile based upon credit quality indicators. Internal grade 3 reflects financing receivables for which the counterparties have the greatest level of risk, including those in bankruptcy status.


	DTE Energy										DTE Electric
	Year of origination
	2020		2019		2018 and prior		Total		2020 and prior
	(In millions)
Notes receivable
Internal grade 1	$	—	$	18	$	9	$	27	$	18
Internal grade 2	60		19		6		85		—
Total notes receivable^(a)	$	60	$	37	$	15	$	112	$	18

Net investment in leases
Net investment in leases, internal grade 1	$	8	$	—	$	40	$	48	$	—
Net investment in leases, internal grade 2	132		—		1		133		—
Total net investment in leases^(a)	$	140	$	—	$	41	$	181	$	—

The allowance for doubtful accounts on accounts receivable for the utility entities is generally calculated using an 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 and future 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 generally 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 non-utility businesses and other receivables for both utility and non-utility businesses is generally calculated based on specific review of probable future collections based on receivable balances generally in excess of 30 days. Existing and future economic conditions, customer trends and other factors are also considered. Receivables are written off on a specific identification basis and determined based upon the specific circumstances of the associated receivable.

Notes receivable, or financing receivables, for DTE Energy are primarily comprised of finance lease receivables and loans that 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. 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 including existing and future economic conditions.

DTE Energy has off balance sheet exposure in the form of a revolving credit facility. Refer to Note 13, "Commitments and Contingencies," for additional information. In determining the level of credit reserve needed, DTE considers the likelihood of funding in addition to the other factors noted above. A reserve may be established when it is likely that funding will occur. Cash payments received on nonaccrual status notes receivable, that do not bring the account contractually current, are first applied to the contractually owed past due interest, with any remainder applied to principal. Accrual of interest is generally resumed when the note receivable becomes contractually current.


	DTE Energy								DTE Electric
	Trade accounts receivable		Other receivables		Total		Trade and other accounts receivable
	(In millions)
Beginning reserve balance, January 1, 2020	$	87	$	4	$	91	$	46
Current period provision	73		2		75		47

Write-offs charged against allowance	(117)		(3)		(120)		(68)
Recoveries of amounts previously written off	41		—		41		24
Ending reserve balance, September 30, 2020	$	84	$	3	$	87	$	49

The Registrants have been monitoring the impacts from the COVID-19 pandemic on our customers and various counterparties. For DTE Electric and DTE Gas, the allowance for doubtful accounts has been increased to account for additional risk related to the pandemic. As of September 30, 2020, the impact of these increases has not been material.

In April 2020, the MPSC issued an order in response to the COVID-19 pandemic and authorized the deferral of certain uncollectible expense that is in excess of the amount used to set current rates. As a result of the order, DTE Electric and DTE Gas deferred $5 million and $1 million of uncollectible expense as Regulatory assets, respectively, for the nine months ended September 30, 2020. For the three months ended September 30, 2020, DTE Electric and DTE Gas, both reversed $1 million of previously deferred uncollectible expense. Refer to Note 6 to the Consolidated Financial Statements, "Regulatory Matters," for further information regarding the order.

For DTE Energy, uncollectible expense was $22 million and $70 million for the three and nine months ended September 30, 2020, respectively, which is primarily comprised of the current period provision for allowance for doubtful accounts adjusted for regulatory deferrals. DTE Energy uncollectible expense was $28 million and $81 million for the three and nine months ended September 30, 2019, respectively.

For DTE Electric, uncollectible expense was $16 million and $42 million for the three and nine months ended September 30, 2020, respectively, which is primarily comprised of the current period provision adjusted for regulatory deferrals. DTE Electric uncollectible expense was $17 million and $47 million for the three and nine months ended September 30, 2019, respectively.