Leases

9 Months Ended

Sep. 30, 2020

Leases [Abstract]

Leases

LEASES

Lessor

During the second quarter 2020, DTE Energy executed a sale of membership interests in the REF business accounted for as a finance lease arrangement with a term of less than 2 years, resulting in a net investment in finances leases of $8 million and selling profit of $11 million.

During the first quarter 2020, DTE Energy completed construction of and began operating certain energy infrastructure assets for a large industrial customer under a long-term agreement, where the assets will transfer to the customer at the end of the contract term in 2040. DTE Energy has accounted for a portion of the agreement as a finance lease arrangement, recognizing a net investment of $133 million.

The components of DTE Energy’s net investment in finance leases for remaining periods were as follows:

	DTE Energy
	September 30, 2020
	(In millions)
2020	$	8
2021	24
2022	20
2023	19
2024	19
2025 and Thereafter	273
Total minimum future lease receipts	363
Residual value of leased pipeline	19
Less unearned income	201
Net investment in finance lease	181
Less current portion	10
	$	171

Interest income recognized under finance leases was $4 million and $2 million for the three months ended September 30, 2020 and 2019, respectively, and $12 million and $4 million for the nine months ended September 30, 2020 and 2019, respectively.

DTE Energy’s lease income associated with operating leases was as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(In millions)
Fixed payments	$	17	$	17	$	50	$	51
Variable payments	43		40		82		92
	$	60	$	57	$	132	$	143

Leases

LEASES

Lessor

During the second quarter 2020, DTE Energy executed a sale of membership interests in the REF business accounted for as a finance lease arrangement with a term of less than 2 years, resulting in a net investment in finances leases of $8 million and selling profit of $11 million.

During the first quarter 2020, DTE Energy completed construction of and began operating certain energy infrastructure assets for a large industrial customer under a long-term agreement, where the assets will transfer to the customer at the end of the contract term in 2040. DTE Energy has accounted for a portion of the agreement as a finance lease arrangement, recognizing a net investment of $133 million.

The components of DTE Energy’s net investment in finance leases for remaining periods were as follows:

	DTE Energy
	September 30, 2020
	(In millions)
2020	$	8
2021	24
2022	20
2023	19
2024	19
2025 and Thereafter	273
Total minimum future lease receipts	363
Residual value of leased pipeline	19
Less unearned income	201
Net investment in finance lease	181
Less current portion	10
	$	171

Interest income recognized under finance leases was $4 million and $2 million for the three months ended September 30, 2020 and 2019, respectively, and $12 million and $4 million for the nine months ended September 30, 2020 and 2019, respectively.

DTE Energy’s lease income associated with operating leases was as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(In millions)
Fixed payments	$	17	$	17	$	50	$	51
Variable payments	43		40		82		92
	$	60	$	57	$	132	$	143

Leases

LEASES

Lessor

During the second quarter 2020, DTE Energy executed a sale of membership interests in the REF business accounted for as a finance lease arrangement with a term of less than 2 years, resulting in a net investment in finances leases of $8 million and selling profit of $11 million.

During the first quarter 2020, DTE Energy completed construction of and began operating certain energy infrastructure assets for a large industrial customer under a long-term agreement, where the assets will transfer to the customer at the end of the contract term in 2040. DTE Energy has accounted for a portion of the agreement as a finance lease arrangement, recognizing a net investment of $133 million.

The components of DTE Energy’s net investment in finance leases for remaining periods were as follows:

	DTE Energy
	September 30, 2020
	(In millions)
2020	$	8
2021	24
2022	20
2023	19
2024	19
2025 and Thereafter	273
Total minimum future lease receipts	363
Residual value of leased pipeline	19
Less unearned income	201
Net investment in finance lease	181
Less current portion	10
	$	171

Interest income recognized under finance leases was $4 million and $2 million for the three months ended September 30, 2020 and 2019, respectively, and $12 million and $4 million for the nine months ended September 30, 2020 and 2019, respectively.

DTE Energy’s lease income associated with operating leases was as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(In millions)
Fixed payments	$	17	$	17	$	50	$	51
Variable payments	43		40		82		92
	$	60	$	57	$	132	$	143