DTE Energy(DTE) - 2025 Q2 - Quarterly Report

Part I - Financial Information This section presents the consolidated financial statements, management's analysis, market risk disclosures, and internal controls for DTE Energy and DTE Electric Item 1. Financial Statements This section presents the unaudited consolidated financial statements for DTE Energy and DTE Electric, including key financial statements and detailed notes DTE Energy Consolidated Financial Statements (Unaudited) For the six months ended June 30, 2025, DTE Energy's total operating revenues increased to $7.86 billion from $6.12 billion year-over-year, driven by non-utility operations, with net income rising to $674 million DTE Energy Statement of Operations Highlights (Six Months Ended June 30) | Metric | 2025 (In millions) | 2024 (In millions) | Change | | :--- | :--- | :--- | :--- | | Operating Revenues | $7,859 | $6,115 | +28.5% | | Utility operations | $4,286 | $4,035 | +6.2% | | Non-utility operations | $3,573 | $2,080 | +71.8% | | Operating Income | $1,051 | $1,019 | +3.1% | | Net Income Attributable to DTE Energy | $674 | $635 | +6.1% | | Diluted EPS | $3.24 | $3.06 | +5.9% | DTE Energy Financial Position Highlights | Metric | June 30, 2025 (In millions) | Dec 31, 2024 (In millions) | Change | | :--- | :--- | :--- | :--- | | Total Assets | $50,248 | $48,846 | +2.9% | | Total Liabilities | $38,521 | $37,142 | +3.7% | | Total Equity | $11,727 | $11,704 | +0.2% | DTE Energy Cash Flow Summary (Six Months Ended June 30) | Activity | 2025 (In millions) | 2024 (In millions) | Change | | :--- | :--- | :--- | :--- | | Net cash from operating activities | $1,729 | $1,801 | -$72 | | Net cash used for investing activities | $(2,022) | $(3,524) | +$1,502 | | Net cash from financing activities | $289 | $1,759 | -$1,470 | DTE Electric Consolidated Financial Statements (Unaudited) For the six months ended June 30, 2025, DTE Electric's operating revenues increased to $3.14 billion from $3.08 billion year-over-year, though net income slightly decreased to $439 million DTE Electric Statement of Operations Highlights (Six Months Ended June 30) | Metric | 2025 (In millions) | 2024 (In millions) | Change | | :--- | :--- | :--- | :--- | | Operating Revenues | $3,136 | $3,077 | +1.9% | | Operating Income | $636 | $697 | -8.8% | | Net Income | $439 | $448 | -2.0% | DTE Electric Financial Position Highlights | Metric | June 30, 2025 (In millions) | Dec 31, 2024 (In millions) | Change | | :--- | :--- | :--- | :--- | | Total Assets | $36,561 | $35,221 | +3.8% | | Total Liabilities | $25,391 | $24,067 | +5.5% | | Total Shareholder's Equity | $11,170 | $11,154 | +0.1% | DTE Electric Cash Flow Summary (Six Months Ended June 30) | Activity | 2025 (In millions) | 2024 (In millions) | Change | | :--- | :--- | :--- | :--- | | Net cash from operating activities | $1,031 | $1,060 | -$29 | | Net cash used for investing activities | $(1,564) | $(1,731) | +$167 | | Net cash from financing activities | $523 | $700 | -$177 | Note 1 — Organization and Basis of Presentation DTE Energy operates regulated utilities and non-utility businesses, with financial statements prepared under U.S. GAAP, consolidating majority-owned subsidiaries and Variable Interest Entities - DTE Energy's main businesses include DTE Electric (electricity), DTE Gas (natural gas), DTE Vantage (renewable natural gas and custom energy solutions), and energy marketing and trading operations[62] - The company consolidates VIEs for which it is the primary beneficiary, including DTE Securitization entities whose assets service securitization bonds and are not available to other creditors[66][70] Consolidated VIEs Assets and Liabilities (June 30, 2025) | Registrant | Total Assets (In millions) | Total Liabilities (In millions) | | :--- | :--- | :--- | | DTE Energy | $1,416 | $751 | | DTE Electric | $702 | $705 | Note 4 — Revenue This note disaggregates revenue by segment and customer class, showing Electric, Gas, DTE Vantage, and Energy Trading contributions, with significant portions outside Topic 606 DTE Energy Disaggregated Operating Revenues (Six Months Ended June 30, 2025) | Segment | Revenue (In millions) | | :--- | :--- | | Electric | $3,145 | | Gas | $1,192 | | DTE Vantage | $357 | | Energy Trading | $3,350 | - A significant portion of revenue is outside the scope of Topic 606, including $2.465 billion from Energy Trading derivatives and revenues from alternative revenue programs for utility segments for the six months ended June 30, 2025[102] - DTE Energy has $949 million in remaining performance obligations with fixed consideration, with $103 million expected to be recognized in the remainder of 2025, and DTE Electric has $8 million in such obligations[108] Note 5 — Regulatory Matters This note details key regulatory proceedings, including the MPSC's approval of DTE Electric's power supply cost recovery and the filing of a new rate case seeking a $574 million increase - In its 2022 PSCR Reconciliation, DTE Electric was allowed to recover $387 million of the requested $416 million in power supply costs, resulting in a $33 million disallowance recorded in Q1 2025[109] - DTE Electric filed a new rate case on April 24, 2025, seeking a $574 million base rate increase, driven by capital investments for reliability and the clean energy transition[110] Note 9 — Long-Term Debt Through June 30, 2025, DTE Energy and DTE Electric collectively issued $2.4 billion in new debt and redeemed $1.185 billion in existing debt Debt Issuances through June 30, 2025 | Company | Type | Amount (In millions) | | :--- | :--- | :--- | | DTE Energy | Senior Notes | $1,100 | | DTE Electric | Mortgage Bonds | $1,300 | Debt Redemptions through June 30, 2025 | Company | Type | Amount (In millions) | | :--- | :--- | :--- | | DTE Energy | Senior Notes | $800 | | DTE Electric | Mortgage/Securitization Bonds | $385 | Note 12 — Commitments and Contingencies This note outlines significant commitments and legal or environmental contingencies, including estimated environmental compliance costs, a major contract dispute, and planned capital expenditures - DTE Electric estimates capital expenditures of $511 million through 2029 to comply with CCR and ELG environmental rules[197] - DTE Electric and Consumers Energy are in a contract dispute with Toshiba (TAES) over the Ludington plant upgrade, with DTE Electric's estimated share of repair costs at $350-$400 million, approved for deferral as a regulatory asset pending litigation outcome[210][212] - The DOJ, on behalf of the EPA, filed a complaint against DTE's subsidiary EES Coke, alleging Clean Air Act violations, with DTE Energy added as a defendant to potentially share in liability[202] - DTE Energy and DTE Electric have planned capital expenditures of approximately $4.9 billion and $3.7 billion, respectively, for 2025[209] Note 14 — Segment and Related Information DTE Energy reports on four segments: Electric, Gas, DTE Vantage, and Energy Trading, with the Electric segment being the largest contributor to net income and total assets DTE Energy Net Income by Segment (Six Months Ended June 30, 2025) | Segment | Net Income (Loss) (In millions) | | :--- | :--- | | Electric | $441 | | Gas | $212 | | DTE Vantage | $70 | | Energy Trading | $51 | | Corporate and Other | $(100) | | Total | $674 | DTE Energy Total Assets by Segment (June 30, 2025) | Segment | Total Assets (In millions) | | :--- | :--- | | Electric | $36,731 | | Gas | $8,698 | | DTE Vantage | $2,224 | | Energy Trading | $969 | | Corporate and Other | $4,861 | | Reclassifications/Eliminations | $(3,235) | | Total | $50,248 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses DTE Energy's financial results, strategic direction, capital investment plans, and liquidity, highlighting segment performance and funding strategies Strategy DTE Energy's strategy focuses on long-term EPS growth, a strong balance sheet, and attractive dividends, driven by investments in grid modernization and clean energy transition goals - The company is investing in base infrastructure and new generation to create a modern, reliable grid and support cleaner energy[243] - DTE Energy plans to reduce electric utility carbon emissions by 90% by 2040 (from 2005 levels), end coal use by 2032, and achieve net-zero carbon emissions by 2050 for both electric and gas utilities[244] - To comply with 2023 Michigan legislation, DTE will meet a 100% clean energy portfolio standard by 2040, with renewable sources comprising 50% by 2030 and 60% by 2035[245] Capital Investments DTE Energy outlines significant capital investment plans for 2025-2029, with DTE Electric projected to invest $24 billion in infrastructure and cleaner generation, DTE Gas $4.0 billion, and DTE Vantage $1.5-$2.0 billion Estimated Capital Investments (2025-2029) | Business | Estimated Investment (In billions) | Key Areas | | :--- | :--- | :--- | | DTE Electric | $24 | Distribution, Base Infrastructure, Cleaner Generation | | DTE Gas | $4.0 | Base Infrastructure, Gas Renewal Program | | DTE Vantage | $1.5 - $2.0 | Custom Energy, Renewables, Carbon Capture | - DTE Electric plans to retire its remaining six coal-fired generating units by 2032, converting the Belle River facility to natural gas and retiring the Monroe facility in stages[253] Results of Operations This section details financial performance by segment, with net income driven by Electric ($441 million) and Gas ($212 million) segments, and explains revenue and income changes due to rates, weather, commodity prices, and MTM adjustments Net Income (Loss) by Segment (Six Months Ended June 30) | Segment | 2025 (In millions) | 2024 (In millions) | | :--- | :--- | | Electric | $441 | $449 | | Gas | $212 | $166 | | DTE Vantage | $70 | $41 | | Energy Trading | $51 | $40 | | Corporate and Other | $(100) | $(61) | | Total | $674 | $635 | - Electric segment revenue for H1 2025 increased by $59 million, driven by interconnection sales (+$114 million) and new rates (+$82 million), partially offset by lower RPS regulatory mechanism revenue (-$122 million) and lower base sales (-$39 million)[263] - Energy Trading operating income for H1 2025 increased by $17 million, which includes a $104 million unfavorable change in timing-related gains/losses on gas strategies that will reverse in future periods[291] Capital Resources and Liquidity DTE Energy maintains a strong liquidity position with $2.3 billion available as of June 30, 2025, expecting $3.3 billion in cash from operations in 2025 to fund $4.9 billion in capital expenditures through cash flow, debt, and equity issuances - DTE Energy expects approximately $3.3 billion in cash from operations in 2025 to help fund $4.9 billion in planned capital expenditures[296] - As of June 30, 2025, DTE Energy had approximately $2.3 billion of available liquidity[316] - If DTE Energy's credit rating is downgraded below investment grade, it has a contractual obligation to post $348 million in collateral as of June 30, 2025[314] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section details DTE Energy's exposure to market risks, including commodity prices, credit, and interest rates, and how these risks are managed - The Electric and Gas businesses have limited earnings exposure to commodity price risk because costs are largely recovered through regulatory mechanisms like PSCR and GCR[322] Trading Counterparty Credit Exposure (June 30, 2025) | Credit Quality | Net Credit Exposure (In millions) | | :--- | :--- | | Investment Grade (Rated) | $729 | | Non-investment grade (Rated) | $5 | | Internally Rated — investment grade | $444 | | Internally Rated — non-investment grade | $43 | | Total | $1,221 | Market Risk Sensitivity Analysis (Change in Fair Value) | Risk Factor (Hypothetical 10% Change) | DTE Energy (In millions) | DTE Electric (In millions) | | :--- | :--- | :--- | | Interest Rate Increase | $(823) | $(534) | | Interest Rate Decrease | $883 | $582 | Item 4. Controls and Procedures Management confirms the effectiveness of disclosure controls and procedures for DTE Energy and DTE Electric, with no material changes to internal controls - Management of both DTE Energy and DTE Electric concluded that their disclosure controls and procedures were effective as of June 30, 2025[336][338] - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, internal controls for either registrant[337][339] Part II - Other Information This section covers legal proceedings, risk factors, equity security sales, and a list of exhibits filed with the report Item 1. Legal Proceedings This section refers to detailed legal proceedings information in Notes 5 and 12, including environmental disclosure policies - For information on legal proceedings, the report refers to Notes 5 and 12 of the Consolidated Financial Statements[340] Item 1A. Risk Factors This section confirms no material changes to risk factors previously disclosed in the 2024 Annual Report on Form 10-K - There have been no material changes to the risk factors from those disclosed in the combined 2024 Annual Report on Form 10-K[341] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds DTE Energy purchased 12,815 shares of its equity securities in Q2 2025, primarily for employee restricted stock tax obligations DTE Energy Equity Securities Purchases (Q2 2025) | Period | Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 10,859 | $112.25 | | May 2025 | 262 | $132.84 | | June 2025 | 1,694 | $118.24 | | Total | 12,815 | - | - The share purchases primarily represent shares withheld to satisfy income tax obligations related to the vesting of restricted stock[342] Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including a Supplemental Indenture and CEO/CFO certifications - The report includes exhibits such as a Supplemental Indenture for DTE Electric, CEO/CFO certifications, and XBRL data files[345]