Short-Term Credit Arrangements and Borrowings

9 Months Ended

Sep. 30, 2020

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. DTE Energy also has other facilities to support letter of credit issuance.

During 2020, the Registrants have entered into a series of unsecured term loans to raise additional liquidity, including terms consistent with the unsecured revolving credit agreements. In March 2020, DTE Energy entered into a $500 million unsecured term loan expiring in March 2021, of which the full $500 million was drawn.

In April 2020, DTE Electric entered into a $200 million unsecured term loan, of which the full $200 million was drawn, and a $200 million unsecured term loan, of which no amount has been drawn. Additionally, in April 2020, DTE Gas entered into a $100 million unsecured term loan, of which the full $100 million was drawn. All three loans expire in April 2021.

In May 2020, DTE Lake Erie Generation, Inc., an indirect wholly-owned subsidiary of DTE Energy, entered into a C$110 million unsecured revolving credit agreement to fund construction of on-site electric generation and related infrastructure projects at a Canadian integrated steel manufacturing facility in Ontario, Canada. The revolving credit agreement is guaranteed by DTE Energy and there was C$28 million outstanding as of September 30, 2020. The revolving credit agreement expires in May 2023 and has terms consistent with DTE Energy's unsecured revolving credit agreements.

In June 2020, DTE Energy entered into a $167 million unsecured term loan expiring in June 2021, of which the full amount was drawn in September 2020.

The unsecured revolving credit 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 September 30, 2020, the total funded debt to total capitalization ratios for DTE Energy, DTE Electric, and DTE Gas were 0.60 to 1, 0.52 to 1, and 0.49 to 1, respectively, and were in compliance with this financial covenant.

The availability under these facilities as of September 30, 2020 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 term loan, expiring in March 2021	500		—		—		500
Unsecured term loans, expiring in April 2021	—		400		100		500
Unsecured term loan, expiring in June 2021	167		—		—		167
Unsecured Canadian revolving credit facility, expiring May 2023	83		—		—		83
Unsecured revolving credit facility, expiring April 2024	1,500		500		300		2,300
	2,510		900		400		3,810
Amounts outstanding at September 30, 2020

Letters of credit	212		—		—		212
Unsecured term loan	667		200		100		967
Revolver borrowings	21		—		—		21
	900		200		100		1,200
Net availability at September 30, 2020	$	1,610	$	700	$	300	$	2,610

DTE Energy has $59 million of other outstanding letters of credit which are used for various corporate purposes and are not included in the facilities described above. These letters of credit include a $50 million uncommitted letter of credit facility entered into by DTE Energy in July 2020, of which the full amount has been drawn. The facility expires in July 2021 with an automatic renewal provision.

In October 2020, DTE Energy repaid several of its unsecured term loans. As noted in Note 10 to the Consolidated Financial Statements, "Long-term Debt", DTE Energy used proceeds from the issuance of long-term debt to repay its $500 million term loan expiring March 2021 and $167 million term loan expiring June 2021. In October 2020, DTE Gas also repaid its $100 million term loan expiring April 2021.

In conjunction with maintaining certain exchange traded risk management positions, DTE Energy may be required to post collateral with its clearing agents. DTE Energy has demand financing agreements with its clearing agents, including an agreement for up to $100 million with an indefinite term and an agreement for up to $150 million currently contracted through 2022 and subject to renewal. The $100 million 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. Both agreements allow the right of setoff with posted collateral. At September 30, 2020, the capacity under the facilities was $300 million. The amount outstanding under the agreements was $43 million and $114 million at September 30, 2020 and December 31, 2019, respectively, and was fully offset by the posted collateral.