Company: DTK
Filing Date: 2025-02-13
Form Type: 10-K
Source: 0000936340-25-000065
Chunk: 116

Company: DTE ENERGY CO
Filing Date: 2025-02-13
Form: 10-K
Item: Item 7
Chunk 116
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263)

Operation and maintenance expense increased $5 million in 2024 and $14 million in 2023.  The increase in 2024 and 2023 was primarily due to higher compensation costs.

Natural gas structured transactions typically involve a physical purchase or sale of natural gas in the future and/or natural gas basis financial instruments which are derivatives and a related non-derivative pipeline transportation contract.  These gas structured transactions can result in significant earnings volatility as the derivative components are marked-to-market without revaluing the related non-derivative contracts.

Operating Income (Loss) decreased $268 million in 2024, which includes a $167 million unfavorable change in timing-related gains primarily related to gas strategies subject to reversal in future periods as the underlying contracts settle.  The decrease also includes a $107 million unfavorable change in timing-related gains and losses primarily related to gas strategies that were recognized in previous periods and subsequently reversed as the underlying contracts settled.

Operating Income (Loss) increased $558 million in 2023, which includes a $429 million favorable change in timing-related gains and losses primarily related to gas strategies subject to reversal in future periods as the underlying contracts settle.  The increase also includes a $19 million favorable change in timing-related losses primarily related to gas strategies that were recognized in previous periods and subsequently reversed as the underlying contracts settled.

Other (Income) and Deductions increased $13 million in 2024 and decreased $13 million in 2023.  The increase in 2024 was primarily due to $22 million of higher contributions to not-for-profit organizations, partially offset by higher net interest income of $9 million.  The decrease in 2023 was primarily due to $10 million of lower contributions to not-for-profit organizations and lower net interest expense of $3 million.

Outlook — In the near-term, Energy Trading expects market conditions to remain challenging.  The profitability of this segment may be impacted by the volatility in commodity prices and the uncertainty of impacts associated with regulatory changes, and changes in operating rules of RTOs.  Significant portions of the Energy Trading portfolio are economically hedged.  Most financial instruments, physical power and natural gas contracts, and certain environmental contracts are deemed derivatives; whereas, natural gas and environmental inventory, contracts for pipeline transportation, storage assets, and some environmental contracts are not derivatives.  As a result, Energy Trading will experience earnings volatility as derivatives are marked-to-market without revaluing the underlying non-derivative contracts and assets.  Energy Trading's strategy is to economically manage