Company: DTK
Filing Date: 2025-02-13
Form Type: 10-K
Source: 0000936340-25-000065
Chunk: 124

Company: DTE ENERGY CO
Filing Date: 2025-02-13
Form: 10-K
Item: Item 7
Chunk 124
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 or paid to transfer a liability in an orderly transaction between market participants at the measurement date in a principal or most advantageous market.  Fair value is a market-based measurement that is determined based on inputs, which refer broadly to assumptions that market participants use in pricing assets or liabilities.  These inputs can be readily observable, market corroborated, or generally unobservable inputs.  The Registrants make certain assumptions they believe that market participants would use in pricing assets or liabilities, including assumptions about risk, and the risks inherent in the inputs to valuation techniques.  Credit risk of the Registrants and their counterparties is incorporated in the valuation of assets and liabilities through the use of credit reserves, the impact of which was immaterial at December 31, 2024 and 2023.  The Registrants believe they use valuation techniques that maximize the use of observable market-based inputs and minimize the use of unobservable inputs.

The fair values the Registrants calculate for their derivatives may change significantly as inputs and assumptions are updated for new information.  Actual cash returns realized on derivatives may be different from the results the Registrants estimate using models.  As fair value calculations are estimates based largely on commodity prices, the Registrants perform sensitivity analyses on the fair values of forward contracts.  See the sensitivity analysis in Item 7A. of this report, "Quantitative and Qualitative Disclosures About Market Risk."  See also the "Fair Value" section herein.

See Notes 11 and 12 to the Consolidated Financial Statements, "Fair Value" and "Financial and Other Derivative Instruments," respectively.

Goodwill

DTE Energy's reporting units have goodwill or allocated goodwill resulting from business combinations.  DTE Energy performs an impairment test for each of the reporting units annually or whenever events or circumstances indicate that the value of goodwill may be impaired.

In performing the impairment test, DTE Energy compares the fair value of the reporting unit to its carrying value including goodwill.  If the carrying value including goodwill were to exceed the fair value of a reporting unit, an impairment loss would be recognized.  A goodwill impairment loss is measured as the amount by which a reporting unit's carrying value exceeds fair value, not to exceed the carrying amount of goodwill.

DTE Energy estimates the reporting unit's fair value using standard valuation techniques, including techniques which use estimates of projected future results and cash flows to be generated by the reporting unit.  For all reporting units except Energy Trading, the fair values were calculated using a weighted combination of the income approach, which estimates fair value based