DTE Energy Company (DTE, NYSE)
Industry: Utilities - Regulated Electric
Annual report, fiscal year 2010


# UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K

☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2010

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-11607

## DTE ENERGY COMPANY

(Exact name of registrant as specified in its charter)

Michigan
(State or other jurisdiction of incorporation or organization)
One Energy Plaza, Detroit, Michigan
(Address of principal executive offices)

38-3217752
(I.R.S. Employer Identification No.)
48226-1279
(Zip Code)

313-235-4000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Name of Each Exchange on Which Registered

Common Stock, without par value

New York Stock Exchange

7.8% Trust Preferred Securities \( ^{*} \) 

New York Stock Exchange

7.50% Trust Originated Preferred Securities**

New York Stock Exchange

* Issued by DTE Energy Trust I. DTE Energy fully and unconditionally guarantees the payments of all amounts due on these securities to the extent DTE Energy Trust I has funds available for payment of such distributions.

** Issued by DTE Energy Trust II. DTE Energy fully and unconditionally guarantees the payments of all amounts due on these securities to the extent DTE Energy Trust II has funds available for payment of such distributions.

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☑ No ☑

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☑

Accelerated filer ☐

Non-accelerated filer ☐

(Do not check if a smaller reporting company)

Smaller Reporting company ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

On June 30, 2010, the aggregate market value of the Registrant’s voting and non-voting common equity held by non-affiliates was approximately $7.8 billion (based on the New York Stock Exchange closing price on such date). There were 169,443,420 shares of common stock outstanding at January 31, 2011.

Certain information in DTE Energy Company’s definitive Proxy Statement for its 2011 Annual Meeting of Common Shareholders to be held May 5, 2011, which will be filed with the Securities and Exchange Commission pursuant to Regulation 14A, not later than 120 days after the end of the Registrant’s fiscal year covered by this report on Form 10-K, is incorporated herein by reference to Part III (Items 10, 11, 12, 13 and 14) of this Form 10-K.



## DTE Energy Company

## Annual Report on Form 10-K
Year Ended December 31, 2010

## TABLE OF CONTENTS

Page
Definitions 1
Forward-Looking Statements 3
PART I
Items 1..1A..1B. & 2. Business, Risk Factors, Unresolved Staff Comments and Properties 5
Item 3. Legal Proceedings 25
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 27
Item 6. Selected Financial Data 30
Item 7. Management's Discussion And Analysis of Financial Condition and Results of Operations 31
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 56
Item 8. Financial Statements and Supplementary Data 59
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 135
Item 9A. Controls and Procedures 135
Item 9B. Other Information 135
PART III
Item 10. Directors, Executive Officers and Corporate Governance 135
Item 11. Executive Compensation 135
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 135
Item 13. Certain Relationships and Related Transactions, and Director Independence 135
Item 14. Principal Accountant Fees and Services 135
PART IV
Item 15. Exhibits and Financial Statement Schedules 135
Signatures 147
EX-3.1
EX-12.46
EX-21.6
EX-23.23
EX-23.24
EX-31.63
EX-31.64
EX-32.63
EX-32.64
EX-99.54
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT



## DEFINITIONS

ASC
Accounting Standards Codification

ASU
Accounting Standards Update

Company
DTE Energy Company and any subsidiary companies

CIM
A Choice Incentive Mechanism authorized by the MPSC that allows Detroit Edison to recover or refund non-fuel revenues lost or gained as a result of fluctuations in electric Customer Choice sales.

CTA
Costs to achieve, consisting of project management, consultant support and employee severance, related to the Performance Excellence Process

Customer Choice
Michigan legislation giving customers the option to choose alternative suppliers for electricity and gas.

Detroit Edison
The Detroit Edison Company (a direct wholly owned subsidiary of DTE Energy Company) and subsidiary companies

DTE Energy
DTE Energy Company, directly or indirectly the parent of Detroit Edison, MichCon and numerous non-utility subsidiaries

EPA
United States Environmental Protection Agency

FASB
Financial Accounting Standards Board

FERC
Federal Energy Regulatory Commission

FTRs
Financial transmission rights are financial instruments that entitle the holder to receive payments related to costs incurred for congestion on the transmission grid.

GCR
A Gas Cost Recovery mechanism authorized by the MPSC that allows MichCon to recover through rates its natural gas costs.

HCERA
Health Care and Education Reconciliation Act of 2010

MichCon
Michigan Consolidated Gas Company (an indirect wholly owned subsidiary of DTE Energy) and subsidiary companies

MISO
Midwest Independent System Operator is an Independent System Operator and the Regional Transmission Organization serving the Midwest United States and Manitoba, Canada.

MDNRE
Michigan Department of Natural Resources and Environment

MPSC
Michigan Public Service Commission

Non-utility
An entity that is not a public utility. Its conditions of service, prices of goods and services and other operating related matters are not directly regulated by the MPSC.

NRC
United States Nuclear Regulatory Commission

PPACA
Patient Protection and Affordable Care Act of 2010

Production tax credits
Tax credits as authorized under Sections 45K and 45 of the Internal Revenue Code that are designed to stimulate investment in and development of alternate fuel sources. The amount of a production tax credit can vary each year as determined by the Internal Revenue Service.



<table><tr><td>Proved reserves</td><td>Estimated quantities of natural gas, natural gas liquids and crude oil which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reserves under existing economic and operating conditions.</td></tr><tr><td>PSCR</td><td>A Power Supply Cost Recovery mechanism authorized by the MPSC that allows Detroit Edison to recover through rates its fuel, fuel-related and purchased power costs.</td></tr><tr><td>RDM</td><td>A Revenue Decoupling Mechanism authorized by the MPSC that is designed to minimize the impact on revenues of changes in average customer usage of electricity and natural gas.</td></tr><tr><td>Securitization</td><td>Detroit Edison financed specific stranded costs at lower interest rates through the sale of rate reduction bonds by a wholly-owned special purpose entity, The Detroit Edison Securitization Funding LLC.</td></tr><tr><td>Subsidiaries</td><td>The direct and indirect subsidiaries of DTE Energy Company</td></tr><tr><td>Unconventional Gas</td><td>Includes those gas and oil deposits that originated and are stored in coal bed, tight sandstone and shale formations.</td></tr><tr><td>VIE</td><td>Variable Interest Entity</td></tr><tr><td>Units of Measurement</td><td></td></tr><tr><td>Bcf</td><td>Billion cubic feet of gas</td></tr><tr><td>Bcfe</td><td>Conversion metric of natural gas, the ratio of 6 Mcf of gas to 1 barrel of oil.</td></tr><tr><td>kWh</td><td>Kilowatt-hour of electricity</td></tr><tr><td>Mcf</td><td>Thousand cubic feet of gas</td></tr><tr><td>MMcf</td><td>Million cubic feet of gas</td></tr><tr><td>MW</td><td>Megawatt of electricity</td></tr><tr><td>MWh</td><td>Megawatt-hour of electricity</td></tr></table>



## Forward-Looking Statements

Certain information presented herein includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations and business of DTE Energy. Forward-looking statements are subject to numerous assumptions, risks and uncertainties that may cause actual future results to be materially different from those contemplated, projected, estimated or budgeted. Many factors may impact forward-looking statements including, but not limited to, the following:

• economic conditions resulting in changes in demand, customer conservation and increased thefts of electricity and gas;

- changes in the economic and financial viability of our customers, suppliers, and trading counterparties, and the continued ability of such parties to perform their obligations to the Company;

• economic climate and population changes in the geographic areas where we do business;

• high levels of uncollectible accounts receivable;

- access to capital markets and capital market conditions and the results of other financing efforts which can be affected by credit agency ratings;

• instability in capital markets which could impact availability of short and long-term financing;

• the timing and extent of changes in interest rates;

• the level of borrowings;

- the potential for losses on investments, including nuclear decommissioning and benefit plan assets and the related increases in future expense and contributions;

• the potential for increased costs or delays in completion of significant construction projects;

• the effects of weather and other natural phenomena on operations and sales to customers, and purchases from suppliers;

• environmental issues, laws, regulations, and the increasing costs of remediation and compliance, including actual and potential new federal and state requirements that include or could include carbon and more stringent emission controls, a renewable portfolio standard, energy efficiency mandates, a carbon tax or cap and trade structure and ash landfill regulations;

• nuclear regulations and operations associated with nuclear facilities;

• impact of electric and gas utility restructuring in Michigan, including legislative amendments and Customer Choice programs;

• employee relations and the impact of collective bargaining agreements;

• unplanned outages;

• changes in the cost and availability of coal and other raw materials, purchased power and natural gas;

• volatility in the short-term natural gas storage markets impacting third-party storage revenues;

• cost reduction efforts and the maximization of plant and distribution system performance;

• the effects of competition;

• the uncertainties of successful exploration of gas shale resources and challenges in estimating gas reserves with certainty;

- impact of regulation by the FERC, MPSC, NRC and other applicable governmental proceedings and regulations, including any associated impact on rate structures;

- changes in and application of federal, state and local tax laws and their interpretations, including the Internal Revenue Code, regulations, rulings, court proceedings and audits;



## Table of Contents

• the amount and timing of cost recovery allowed as a result of regulatory proceedings, related appeals or new legislation;

• the cost of protecting assets against, or damage due to, terrorism or cyber attacks;

• the availability, cost, coverage and terms of insurance and stability of insurance providers;

• changes in and application of accounting standards and financial reporting regulations;

• changes in federal or state laws and their interpretation with respect to regulation, energy policy and other business issues; and

• binding arbitration, litigation and related appeals.

New factors emerge from time to time. We cannot predict what factors may arise or how such factors may cause our results to differ materially from those contained in any forward-looking statement. Any forward-looking statements refer only as of the date on which such statements are made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events.



## Part I

## Items 1. and 2. Business and Properties

## General

In 1995, DTE Energy incorporated in the State of Michigan. Our utility operations consist primarily of Detroit Edison and MichCon. We also have four other segments that are engaged in a variety of energy-related businesses.

Detroit Edison is a Michigan corporation organized in 1903 and is a public utility subject to regulation by the MPSC and the FERC. Detroit Edison is engaged in the generation, purchase, distribution and sale of electricity to approximately 2.1 million customers in southeastern Michigan.

MichCon is a Michigan corporation organized in 1898 and is a public utility subject to regulation by the MPSC. MichCon is engaged in the purchase, storage, transportation, gathering, distribution and sale of natural gas to approximately 1.2 million customers throughout Michigan and the sale of storage and transportation capacity.

Our other segments are involved in 1) natural gas storage and pipelines; 2) unconventional gas and oil project development and production; 3) power and industrial projects; and 4) energy marketing and trading operations.

Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements, and all amendments to such reports are available free of charge through the Investor Relations page of our website: www.deenergy.com, as soon as reasonably practicable after they are filed with or furnished to the Securities and Exchange Commission (SEC). Our previously filed reports and statements are also available at the SEC’s website: www.sec.gov.

The Company’s Code of Ethics and Standards of Behavior, Board of Directors’ Mission and Guidelines, Board Committee Charters, and Categorical Standards of Director Independence are also posted on its website. The information on the Company’s website is not part of this or any other report that the Company files with, or furnishes to, the SEC.

Additionally, the public may read and copy any materials the Company files with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Room 1580, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov.

References in this Report to “we,” “us,” “our,” “Company” or “DTE” are to DTE Energy and its subsidiaries, collectively.

## Corporate Structure

Based on the following structure, we set strategic goals, allocate resources, and evaluate performance. See Note 24 of the Notes to Consolidated Financial Statements in Item 8 of this Report for financial information by segment for the last three years.

## Electric Utility

- The Company’s Electric Utility segment consists of Detroit Edison, which is engaged in the generation, purchase, distribution and sale of electricity to approximately 2.1 million residential, commercial and industrial customers in southeastern Michigan.

## Gas Utility

- The Gas Utility segment consists of MichCon and Citizens. MichCon is engaged in the purchase, storage, transportation, gathering, distribution and sale of natural gas to approximately 1.2 million residential, commercial and industrial customers throughout Michigan and the sale of storage and transportation capacity. Citizens distributes natural gas in Adrian, Michigan to approximately 17,000 customers.



## Non-Utility Operations

• Gas Storage and Pipelines consists of natural gas storage and pipelines businesses.

• Unconventional Gas Production is engaged in unconventional gas and oil project development and production.

- Power and Industrial Projects is comprised of coke batteries and pulverized coal projects, reduced emission fuel and steel industry fuel-related projects, on-site energy services, renewable power generation, landfill gas recovery and coal transportation, marketing and trading.

• Energy Trading consists of energy marketing and trading operations.

Corporate & Other, includes various holding company activities, holds certain non-utility debt and energy-related investments.



Refer to our Management’s Discussion and Analysis in Item 7 of this Report for an in-depth analysis of each segment’s financial results. A description of each business unit follows.

## ELECTRIC UTILITY

## Description

Our Electric Utility segment consists of Detroit Edison. Our generating plants are regulated by numerous federal and state governmental agencies, including, but not limited to, the MPSC, the FERC, the NRC, the EPA and the MDNRE. Electricity is generated from our several fossil plants, a hydroelectric pumped storage plant and a nuclear plant, and is purchased from electricity generators, suppliers and wholesalers. The electricity we produce and purchase is sold to three major classes of customers: residential, commercial and industrial, principally throughout southeastern Michigan.

## Revenue by Service

<table><tr><td></td><td>2010</td><td>2009</td><td>2008</td></tr><tr><td></td><td colspan="3">(In millions)</td></tr><tr><td>Residential</td><td>$2,052</td><td>$1,820</td><td>$1,726</td></tr><tr><td>Commercial</td><td>1,629</td><td>1,702</td><td>1,753</td></tr><tr><td>Industrial</td><td>688</td><td>730</td><td>894</td></tr><tr><td>Other</td><td>479</td><td>299</td><td>289</td></tr><tr><td>Subtotal</td><td>4,848</td><td>4,551</td><td>4,662</td></tr><tr><td>Interconnection sales(1)</td><td>145</td><td>163</td><td>212</td></tr><tr><td>Total Revenue</td><td>$4,993</td><td>$4,714</td><td>$4,874</td></tr></table>

(1) Represents power that is not distributed by Detroit Edison.



Weather, economic factors, competition and electricity prices affect sales levels to customers. Our peak load and highest total system sales generally occur during the third quarter of the year, driven by air conditioning and other cooling-related demands. Our operations are not dependent upon a limited number of customers, and the loss of any one or a few customers would not have a material adverse effect on Detroit Edison.

## Fuel Supply and Purchased Power

Our power is generated from a variety of fuels and is supplemented with purchased power. We expect to have an adequate supply of fuel and purchased power to meet our obligation to serve customers. Our generating capability is heavily dependent upon the availability of coal. Coal is purchased from various sources in different geographic areas under agreements that vary in both pricing and terms. We expect to obtain the majority of our coal requirements through long-term contracts, with the balance to be obtained through short-term agreements and spot purchases. We have long-term and short-term contracts for a total purchase of approximately 30 million tons of low-sulfur western coal to be delivered from 2011 through 2013 and approximately 5 million tons of Appalachian coal to be delivered from 2011 through 2012. All of these contracts have pricing schedules. We have approximately 98% of our 2011 expected coal requirements under contract. Given the geographic diversity of supply, we believe we can meet our expected generation requirements. We lease a fleet of rail cars and have our expected western rail requirements under contract for the next five years. All of our eastern coal rail requirements are under contract through 2012 and approximately 50% of this requirement is under contract in 2013. Our expected vessel transportation requirements for delivery of purchased coal to our generating facilities are under contract through 2014.

Detroit Edison participates in the energy market through MISO. We offer our generation in the market on a day-ahead, real-time and FTR basis and bid for power in the market to serve our load. We are a net purchaser of power that supplements our generation capability to meet customer demand during peak cycles.

In 2008, a renewable portfolio standard was established for Michigan electric providers targeting 10% of electricity sold to retail customers from renewable energy by 2015. Detroit Edison has approximately 251 MW of renewable energy under contract at December 31, 2010 representing approximately 4% of electricity sold to retail customers. Approximately 40 MW is in commercial operation at December 31, 2010 with an additional 211 MW expected in commercial operation in 2011 or early 2012.

## Properties

Detroit Edison owns generating plants and facilities that are located in the State of Michigan. Substantially all of our property is subject to the lien of a mortgage.



Generating plants owned and in service as of December 31, 2010 are as follows:

<table><tr><td rowspan="3">Plant Name</td><td rowspan="3">Location by Michigan County</td><td colspan="2">Summer Net Rated Capability(1)</td><td rowspan="3">Year in Service</td></tr><tr><td>(MW)</td><td>(%)</td></tr><tr><td></td><td></td></tr><tr><td>Fossil-fueled Steam-Electric</td><td></td><td></td><td></td><td></td></tr><tr><td>Belle River(2)</td><td>St. Clair</td><td>1,044</td><td>9.5</td><td>1984 and 1985</td></tr><tr><td>Conners Creek</td><td>Wayne</td><td>239</td><td>2.1</td><td>1951</td></tr><tr><td>Greenwood</td><td>St. Clair</td><td>785</td><td>7.1</td><td>1979</td></tr><tr><td>Harbor Beach</td><td>Huron</td><td>94</td><td>0.9</td><td>1968</td></tr><tr><td>Marysville</td><td>St. Clair</td><td>84</td><td>0.8</td><td>1943 and 1947</td></tr><tr><td>Monroe(3)</td><td>Monroe</td><td>3,027</td><td>27.6</td><td>1971, 1973 and 1974</td></tr><tr><td>River Rouge</td><td>Wayne</td><td>523</td><td>4.8</td><td>1957 and 1958</td></tr><tr><td>St. Clair(4)</td><td>St. Clair</td><td>1,368</td><td>12.5</td><td>1953, 1954, 1959, 1961 and 1969</td></tr><tr><td>Trenton Channel</td><td>Wayne</td><td>698</td><td>6.4</td><td>1949 and 1968</td></tr><tr><td></td><td></td><td>7,862</td><td>71.7</td><td></td></tr><tr><td>Oil or Gas-fueled Peaking Units</td><td>Various</td><td>1,101</td><td>10.0</td><td>1966-1971, 1981 and 1999</td></tr><tr><td>Nuclear-fueled Steam-Electric Fermi 2(5)</td><td>Monroe</td><td>1,087</td><td>9.9</td><td>1988</td></tr><tr><td>Hydroelectric Pumped Storage</td><td></td><td></td><td></td><td></td></tr><tr><td>Ludington(6)</td><td>Mason</td><td>917</td><td>8.4</td><td>1973</td></tr><tr><td></td><td></td><td>10,967</td><td>100.0</td><td></td></tr></table>

(1) Summer net rated capabilities of generating plants in service are based on periodic load tests and are changed depending on operating experience, the physical condition of units, environmental control limitations and customer requirements for steam, which otherwise would be used for electric generation.

(2) The Belle River capability represents Detroit Edison’s entitlement to 81% of the capacity and energy of the plant. See Note 8 of the Notes to the Consolidated Financial Statements in Item 8 of this Report.

(3) The Monroe power plant provided 38% of Detroit Edison’s total 2010 power generation.

(4) Excludes one oil-fueled unit (250 MW) in cold standby status.

(5) Fermi 2 has a design electrical rating (net) of 1,150 MW.

(6) Represents Detroit Edison’s 49% interest in Ludington with a total capability of 1,872 MW. See Note 8 of the Notes to the Consolidated Financial Statements in Item 8 of this Report.

Detroit Edison owns and operates 674 distribution substations with a capacity of approximately 33,585,000 kilovolt-amperes (kVA) and approximately 412,100 line transformers with a capacity of approximately 23,849,000 kVA.

Circuit miles of electric distribution lines owned and in service as of December 31, 2010:

<table><tr><td rowspan="2">Operating Voltage-Kilovolts (kV)</td><td colspan="2">Circuit Miles</td></tr><tr><td>Overhead</td><td>Underground</td></tr><tr><td>4.8 kV to 13.2 kV</td><td>28,345</td><td>13,916</td></tr><tr><td>24 kV</td><td>181</td><td>6,96</td></tr><tr><td>40 kV</td><td>2,278</td><td>381</td></tr><tr><td>120 kV</td><td>54</td><td>13</td></tr><tr><td></td><td>30,858</td><td>15,006</td></tr></table>



There are numerous interconnections that allow the interchange of electricity between Detroit Edison and electricity providers external to our service area. These interconnections are generally owned and operated by ITC Transmission, an unrelated company, and connect to neighboring energy companies.

## Regulation

Detroit Edison’s business is subject to the regulatory jurisdiction of various agencies, including, but not limited to, the MPSC, the FERC and the NRC. The MPSC issues orders pertaining to rates, recovery of certain costs, including the costs of generating facilities and regulatory assets, conditions of service, accounting and operating-related matters. Detroit Edison’s MPSC-approved rates charged to customers have historically been designed to allow for the recovery of costs, plus an authorized rate of return on our investments. The FERC regulates Detroit Edison with respect to financing authorization and wholesale electric activities. The NRC has regulatory jurisdiction over all phases of the operation, construction, licensing and decommissioning of Detroit Edison’s nuclear plant operations. We are subject to the requirements of other regulatory agencies with respect to safety, the environment and health.

See Notes 4, 9, 12 and 20 of the Notes to Consolidated Financial Statements in Item 8 of this Report.

## Energy Assistance Programs

Energy assistance programs, funded by the federal government and the State of Michigan, remain critical to Detroit Edison’s ability to control its uncollectible accounts receivable and collections expenses. Detroit Edison’s uncollectible accounts receivable expense is directly affected by the level of government-funded assistance its qualifying customers receive. We work continuously with the State of Michigan and others to determine whether the share of funding allocated to our customers is representative of the number of low-income individuals in our service territory.

## Strategy and Competition

We strive to be the preferred supplier of electrical generation in southeast Michigan. We can accomplish this goal by working with our customers, communities and regulatory agencies to be a reliable, low-cost supplier of electricity. To ensure generation and network reliability we continue to make capital investments in our generating plants and distribution system, which will improve plant availability, operating efficiencies and environmental compliance in areas that have a positive impact on reliability with the goal of high customer satisfaction.

Our distribution operations focus on improving reliability, restoration time and the quality of customer service. We seek to lower our operating costs by improving operating efficiencies. Revenues from year to year will vary due to weather conditions, economic factors, regulatory events and other risk factors as discussed in the “Risk Factors” in Item 1A. of this Report. We are minimizing the impacts of changes in average customer usage through regulatory mechanisms which decouple our revenue levels from sales volumes.

The electric Customer Choice program in Michigan allows all of our electric customers to purchase their electricity from alternative electric suppliers of generation services, subject to limits. Customers choosing to purchase power from alternative electric suppliers represented approximately 10% of retail sales in 2010 and 3% of retail sales in 2009 and 2008. Customers participating in the electric Customer Choice program consist primarily of industrial and commercial customers whose MPSC-authorized full service rates exceed their cost of service. MPSC rate orders and 2008 energy legislation enacted by the State of Michigan are adjusting the pricing disparity over five years and have placed a 10% cap on the total potential Customer Choice related migration, mitigating some of the unfavorable effects of electric Customer Choice on our financial performance. In addition, we have a Choice Incentive Mechanism, which is an over/under recovery mechanism that measures non-fuel revenues lost or gained as a result of fluctuations in electric Customer Choice sales. If annual electric Customer Choice sales exceed the baseline amount from Detroit Edison’s most recent rate case, 90 percent of its lost non-fuel revenues associated with sales above that level may be recovered from full service customers. If annual electric Customer Choice sales decrease below the baseline, the Company must refund 90 percent of its increase in non-fuel revenues associated with sales below that level to full service customers. We expect that in 2011 customers choosing to purchase power from alternative electric suppliers will represent approximately 10% of retail sales.



Competition in the regulated electric distribution business is primarily from the on-site generation of industrial customers and from distributed generation applications by industrial and commercial customers. We do not expect significant competition for distribution to any group of customers in the near term.

## GAS UTILITY

## Description

Our Gas Utility segment consists of MichCon and Citizens.

Revenue is generated by providing the following major classes of service: gas sales, end user transportation, intermediate transportation, and gas storage.

## Revenue by Service

<table><tr><td></td><td>2010</td><td>2009</td><td>2008</td></tr><tr><td></td><td colspan="3">(In millions)</td></tr><tr><td>Gas sales</td><td>$1,281</td><td>$ 1,443</td><td>$ 1,824</td></tr><tr><td>End user transportation</td><td>185</td><td>144</td><td>143</td></tr><tr><td>Intermediate transportation</td><td>69</td><td>69</td><td>73</td></tr><tr><td>Storage and other</td><td>113</td><td>132</td><td>112</td></tr><tr><td>Total Revenue</td><td>$1,648</td><td>$1,788</td><td>$2,152</td></tr></table>

• Gas sales — Includes the sale and delivery of natural gas primarily to residential and small-volume commercial and industrial customers.

• End user transportation — Gas delivery service provided primarily to large-volume commercial and industrial customers. Additionally, the service is provided to residential customers, and small-volume commercial and industrial customers who have elected to participate in our Customer Choice program. End user transportation customers purchase natural gas directly from producers or brokers and utilize our pipeline network to transport the gas to their facilities or homes.

• Intermediate transportation — Gas delivery service is provided to producers, brokers and other gas companies that own the natural gas, but are not the ultimate consumers. Intermediate transportation customers utilize our gathering and high-pressure transportation system to transport the gas to storage fields, processing plants, pipeline interconnections or other locations.

• Storage and other — Includes revenues from gas storage, appliance maintenance, facility development and other energy-related services.

Our gas sales, end user transportation and intermediate transportation volumes, revenues and net income are impacted by weather. Given the seasonal nature of our business, revenues and net income are concentrated in the first and fourth quarters of the calendar year. By the end of the first quarter, the heating season is largely over, and we typically realize substantially reduced revenues and earnings in the second quarter and losses in the third quarter. We are minimizing the impacts of changes in average customer usage through regulatory mechanisms which decouple our revenue levels from sales volumes.

Our operations are not dependent upon a limited number of customers, and the loss of any one or a few customers would not have a material adverse effect on our Gas Utility segment.

## Natural Gas Supply

Our gas distribution system has a planned maximum daily send-out capacity of 2.4 Bcf, with approximately 65% of the volume coming from underground storage for 2010. Peak-use requirements are met through utilization of our storage facilities, pipeline transportation capacity, and purchased gas supplies. Because of our geographic diversity of supply and our pipeline transportation and storage capacity, we are able to reliably meet our supply



requirements. We believe natural gas supply and pipeline capacity will be sufficiently available to meet market demands in the foreseeable future.

We purchase natural gas supplies in the open market by contracting with producers and marketers, and we maintain a diversified portfolio of natural gas supply contracts. Supplier, producing region, quantity, and available transportation diversify our natural gas supply base. We obtain our natural gas supply from various sources in different geographic areas (Gulf Coast, Mid-Continent, Canada and Michigan) under agreements that vary in both pricing and terms. Gas supply pricing is generally tied to the New York Mercantile Exchange and published price indices to approximate current market prices combined with MPSC approved fixed price supplies with varying terms and volumes through 2014.

We are directly connected to interstate pipelines, providing access to most of the major natural gas supply producing regions in the Gulf Coast, Mid-Continent and Canadian regions. Our primary long-term transportation supply contracts are as follows:

<table><tr><td></td><td>Availability (MMcf/d)</td><td>Contract Expiration</td></tr><tr><td>Vector Pipeline L.P.</td><td>50</td><td>2012</td></tr><tr><td>Great Lakes Gas Transmission L.P.</td><td>80</td><td>2013</td></tr><tr><td>Viking Gas Transmission Company</td><td>51</td><td>2013</td></tr><tr><td>ANR Pipeline Company</td><td>195</td><td>2017</td></tr><tr><td>Panhandle Eastern Pipeline Company</td><td>75</td><td>2029</td></tr></table>

## Properties

We own distribution, storage and transportation properties that are located in the State of Michigan. Our distribution system includes approximately 19,000 miles of distribution mains, approximately 1,036,000 service lines and approximately 1,319,000 active meters. We own approximately 2,000 miles of transportation lines that deliver natural gas to the distribution districts and interconnect our storage fields with the sources of supply and the market areas.

We own properties relating to four underground natural gas storage fields with an aggregate working gas storage capacity of approximately 134 Bcf. These facilities are important in providing reliable and cost-effective service to our customers. In addition, we sell storage services to third parties. Most of our distribution and transportation property is located on property owned by others and used by us through easements, permits or licenses. Substantially all of our property is subject to the lien of a mortgage.

We own 602 miles of transportation and gathering (non-utility) pipelines in the northern lower peninsula of Michigan. We lease a portion of our pipeline system to the Vector Pipeline Partnership (an affiliate) through a capital lease arrangement. See Note 19 of the Notes to Consolidated Financial Statements in Item 8 of the Report.

## Regulation

MichCon’s business is subject to the regulatory jurisdiction of the MPSC, which issues orders pertaining to rates, recovery of certain costs, including the costs of regulatory assets, conditions of service, accounting and operating-related matters. MichCon’s MPSC-approved rates charged to customers have historically been designed to allow for the recovery of costs, plus an authorized rate of return on our investments. MichCon operates natural gas storage and transportation facilities in Michigan as intrastate facilities regulated by the MPSC and provides intrastate storage and transportation services pursuant to an MPSC-approved tariff.

MichCon also provides interstate storage and transportation services in accordance with an Operating Statement on file with the FERC. The FERC’s jurisdiction is limited and extends to the rates, non-discriminatory requirements and terms and conditions applicable to storage and transportation provided by MichCon in interstate markets. FERC granted MichCon authority to provide storage and related services in interstate commerce at market-based rates. MichCon provides transportation services in interstate commerce at cost-based rates approved by the MPSC and filed with the FERC.

We are subject to the requirements of other regulatory agencies with respect to safety, the environment and health.

See Note 12 of the Notes to the Consolidated Financial Statements in Item 8 of this Report.



## Energy Assistance Program

Energy assistance programs, funded by the federal government and the State of Michigan, remain critical to MichCon’s ability to control its uncollectible accounts receivable and collections expenses. MichCon’s uncollectible accounts receivable expense is directly affected by the level of government-funded assistance its qualifying customers receive. We work continuously with the State of Michigan and others to determine whether the share of funding allocated to our customers is representative of the number of low-income individuals in our service territory.

## Strategy and Competition

Our strategy is to be the preferred provider of natural gas in Michigan. We expect future sales volumes to decline as a result of economic conditions, a decrease in the number of customers, reduced natural gas usage by customers due to more efficient furnaces and appliances, and an increased emphasis on conservation of energy usage. We are minimizing the impacts of changes in average customer usage through regulatory mechanisms which decouple our revenue levels from sales volumes. We continue to provide energy-related services that capitalize on our expertise, capabilities and efficient systems. We continue to focus on lowering our operating costs by improving operating efficiencies.

Competition in the gas business primarily involves other natural gas providers, as well as providers of alternative fuels and energy sources. The primary focus of competition for end user transportation is cost and reliability. Some large commercial and industrial customers have the ability to switch to alternative fuel sources such as coal, electricity, oil and steam. If these customers were to choose an alternative fuel source, they would not have a need for our end-user transportation service. In addition, some of these customers could bypass our pipeline system and have their gas delivered directly from an interstate pipeline. We compete against alternative fuel sources by providing competitive pricing and reliable service, supported by our storage capacity.

Our extensive transportation pipeline system has enabled us to market 400 to 500 Bcf annually for intermediate storage and transportation services for Michigan gas producers, marketers, distribution companies and other pipeline companies. We operate in a central geographic location with connections to major Midwestern interstate pipelines that extend throughout the Midwest, eastern United States and eastern Canada.

MichCon’s storage capacity is used to store natural gas for delivery to MichCon’s customers as well as sold to third parties, under a variety of arrangements for periods up to three years. Prices for storage arrangements for shorter periods are generally higher, but more volatile than for longer periods. Prices are influenced primarily by market conditions and natural gas pricing.

## GAS STORAGE AND PIPELINES

## Description

Gas Storage and Pipelines owns partnership interests in two interstate transmission pipelines and two natural gas storage fields. The pipeline and storage assets are primarily supported by long-term, fixed-price revenue contracts. We have a partnership interest in Vector Pipeline (Vector), an interstate transportation pipeline, which connects Michigan to Chicago and Ontario. We also hold partnership interests in Millennium Pipeline Company which indirectly connects southern New York State to Upper Midwest/Canadian supply, while providing transportation service into the New York City markets. We have storage assets in Michigan capable of storing up to 90 Bcf in natural gas storage fields located in Southeast Michigan. The Washington 10 and 28 storage facilities are high deliverability storage fields having bi-directional interconnections with Vector Pipeline and MichCon, providing our customers access to the Chicago, Michigan, other Midwest and Ontario markets. Our customers include various utilities, pipelines, and producers and marketers.



## Properties

The Gas Storage and Pipelines business holds the following property:

<table><tr><td>Property Classification</td><td>% Owned</td><td>Description</td><td>Location</td></tr><tr><td>Pipelines</td><td></td><td></td><td></td></tr><tr><td>Vector Pipeline</td><td>40%</td><td>348-mile pipeline with 1,300 MMcf per day capacity</td><td>IL, IN, MI &amp; Ontario</td></tr><tr><td>Millennium Pipeline</td><td>26%</td><td>182-mile pipeline with 525 MMcf per day capacity</td><td>New York</td></tr><tr><td>Storage</td><td></td><td></td><td></td></tr><tr><td>Washington 10 (includes Shelby 2 Storage)</td><td>100%</td><td>74 Bcf of storage capacity</td><td>MI</td></tr><tr><td>Washington 28</td><td>50%</td><td>16 Bcf of storage capacity</td><td>MI</td></tr></table>

The assets of these businesses are well integrated with other DTE Energy operations. Pursuant to an operating agreement, MichCon provides physical operations, maintenance, and technical support for the Washington 28 and Washington 10 storage facilities.

## Regulation

The Gas Storage and Pipelines business operates natural gas storage facilities in Michigan as intrastate facilities regulated by the MPSC and provides intrastate storage and related services pursuant to an MPSC-approved tariff. We also provide interstate services in accordance with an Operating Statement on file with the FERC. Vector and Millennium Pipelines provide interstate transportation services in accordance with their FERC-approved tariffs.

## Strategy and Competition

Our Gas Storage and Pipelines business expects to continue its steady growth plan by expanding existing assets and developing new assets that are typically supported with long-term customer commitments. The Gas Storage and Pipelines business focuses on asset development opportunities in the Midwest-to-Northeast region to supply natural gas to meet growing demand. We expect much of the growth in the demand for natural gas in the U.S. to occur within the Mid-Atlantic and New England regions. We forecast these regions will require incremental pipeline and gas storage infrastructure necessary to deliver gas volumes to meet growing demand. Vector is an interstate pipeline that is filling a large portion of that need, and is complemented by our Michigan storage facilities. Due to the proximity of the Millennium Pipeline to the Marcellus shale in Southern New York/Northern Pennsylvania, we anticipate that the Millennium Pipeline may have opportunities to expand in the future.

## UNCONVENTIONAL GAS PRODUCTION

## Description

Our Unconventional Gas Production business is engaged in natural gas and oil exploration, development and production primarily within the Barnett shale in north Texas. Our acreage covers an area that produces high Btu gas which provides a significant contribution to revenues from the value of natural gas liquids extracted from the gas stream. During this period of low natural gas prices, these natural gas liquids, with prices correlated to crude oil prices, have provided a significant increase to our realized wellhead price. Our drilling efforts this year have and will continue to target liquids rich gas and oil producing locations. Total capital investment of $26 million and production of 5 Bcfe remained consistent with 2009. We executed on leasing opportunities to optimize our existing portfolio by acquiring acreage at attractive prices in 2010, bringing our total net acreage position to 70,246 acres, net of impairments and expirations.



## Properties and Other

The following information pertains to our interests in the Barnett shale as of December 31:

<table><tr><td></td><td>2010</td><td>2009</td><td>2008</td></tr><tr><td>Producing Wells(1)(2)(3)</td><td>194</td><td>174</td><td>162</td></tr><tr><td>Developed Lease Acreage(1)(3)(4)</td><td>15,928</td><td>14,968</td><td>14,248</td></tr><tr><td>Undeveloped Lease Acreage(1)(3)(5)</td><td>54,318</td><td>48,399</td><td>46,187</td></tr><tr><td>Production Volume (Bcfe)</td><td>4.8</td><td>5.0</td><td>5.0</td></tr><tr><td>Proved Reserves (Bcfe)(6)</td><td>201</td><td>234</td><td>167</td></tr><tr><td>Capital Expenditures (in millions)(3)</td><td>$ 26</td><td>$ 26</td><td>$ 100</td></tr><tr><td>Future Undiscounted Cash Flows (in millions)(7)</td><td>$ 478</td><td>$ 392</td><td>$ 324</td></tr><tr><td>Average Gas Price, excluding hedge contracts (per Mcf)</td><td>$ 5.99</td><td>$ 4.34</td><td>$ 8.69</td></tr><tr><td>Average Oil Price, excluding hedge contracts (per Barrel)</td><td>$ 76.41</td><td>$ 58.47</td><td>$ 90.27</td></tr></table>

(1) Excludes the interest of others.

(2) Producing wells are the number of wells that are found to be capable of producing hydrocarbons in sufficient quantities such that proceeds from the sale of the production exceed production expenses and taxes.

(3) Excludes sold and impaired properties.

(4) Developed lease acreage is the number of acres that are allocated or assignable to productive wells or wells capable of production.

(5) Undeveloped lease acreage is the number of acres on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of natural gas and oil regardless of whether such acreage contains proved reserves.

(6) The decrease in proved reserves in 2010 is primarily due to removal of reserves that exceeded the five-year development limit for the Proved Undeveloped classification, and other revisions to estimates. The increases in proved reserves in 2009 are primarily due to a definitional change in the disclosure rule issued by the SEC and technological improvements.

(7) Represents the standardized measure of undiscounted future net cash flows utilizing extensive estimates. The estimated future net cash flow computations should not be considered to represent our estimate of the expected revenues or the current value of existing proved reserves and do not include the impact of hedge contracts.

## Strategy and Competition

Outlook — In the longer-term, we plan to continue to develop our holdings in the western portion of the Barnett shale and to seek opportunities for additional monetization of select properties when conditions are appropriate. Our strategy for 2011 is to maintain our focus on reducing operating expenses and optimizing production volume. Given the current outlook of low natural gas prices, drilling efforts will continue to target liquids rich gas and oil production. During 2011, we expect total capital investment of $25 million to drill approximately 20 new wells and continue to acquire select acreage and achieve production of approximately 6 Bcfe of natural gas, compared with 5 Bcfe in 2010.

We manage and operate our properties to maximize returns on investment and increase earnings. We expect to continue acquiring additional acreage at attractive prices providing opportunities to create value at low cost. We will target properties with liquids rich gas and oil potential and our drilling efforts will continue to be focused on these areas. Due to increased activity in other shale plays throughout the country, the availability of service providers has decreased somewhat. However, we do not expect this to have a significant impact on our drilling plans or operations, since most oilfield services have been secured for the next 12 months.

From time to time, we may use financial derivative contracts to manage a portion of our exposure to changes in the price of natural gas and oil on our forecasted sales volume. At December 31, 2010, we had no long-term fixed



price contracts relating to natural gas and had the following financial contracts in place with our Energy Trading affiliate related to our projected oil production:

Oil Volume (in MBbl)

Price (in Bbl)

2011

72

$93.28

## POWER AND INDUSTRIAL PROJECTS

## Description

Power and Industrial Projects is comprised primarily of projects that deliver energy products and services to industrial, commercial and institutional customers; provide coal transportation and marketing; and sell electricity from biomass-fired energy projects. This business segment provides services using project assets usually located on or near the customers' premises in the steel, automotive, pulp and paper, airport and other industries as follows:

Steel, Steel Industry Fuel, and Petroleum Coke: We produce metallurgical coke from two coke batteries with a capacity of 1.4 million tons per year. We have an investment in a third coke battery with a capacity of 1.2 million tons per year. We are investors in steel industry fuel entities which sell steel industry fuel at three coke battery sites. Steel industry fuels facilities recycle tar decanter sludge, a byproduct of the coking process. Tax credits were generated in 2009 and 2010. The ability to generate tax credits from the steel industry fuel process expired at December 31, 2010. We also provide pulverized coal and petroleum coke to the steel, pulp and paper, and other industries.

Onsite Energy: We provide power generation, steam production, chilled water production, wastewater treatment and compressed air supply to industrial customers. This business segment provides utility-type services using project assets usually located on or near the customers' premises in the automotive, airport and other industries.

Wholesale Power and Renewables: We own and operate three biomass-fired electric generating plants with a capacity of 133 MWs. We own two coal-fired power plants currently undergoing conversions to biomass with expected in-service dates of the fourth quarter of 2011 and the first quarter of 2013. We own one gas-fired peaking electric generating plant. The electric output is sold under long term power purchase agreements. We also develop landfill gas recovery systems that capture the gas and provide local utilities, industry and consumers with an opportunity to use a competitive, renewable source of energy, in addition to providing environmental benefits by reducing greenhouse gas emissions.

Reduced Emission Fuel: We deliver reduced emission fuel to utilities with coal-fired electric generation power plants. We own and operate five facilities that process raw coal into reduced emission fuel resulting in reductions in Nitrogen Oxide (NO) and Mercury (Hg) emissions. We began generating production tax credits from these facilities beginning in 2009 which will continue through 2019 upon achieving certain criteria, including entering into transactions with unrelated equity partners or third-party customers for the reduced emission fuel. We continue to optimize these facilities by seeking investors for facilities operating at Detroit Edison sites, and intend to relocate other facilities to alternative sites which may provide increased production and emission reduction opportunities in 2011 and future years. In January 2011, the Company entered into an agreement to sell a membership interest in one of these reduced emission fuel facilities that is located at a Detroit Edison site.

Coal Services: The business provides coal transportation and related services including fuel to our customers with significant energy requirements which include electric utilities, merchant power producers, integrated steel mills and large industrial companies. We specialize in minimizing fuel costs and maximizing reliability of supply for those energy-intensive customers. We own and operate a coal transloading terminal which provides storage and blending for our customers. We also engage in coal marketing which includes the marketing and trading of physical coal and coal financial instruments, and forward contracts for the purchase and sale of emission allowances.



## Properties and Other

The following are significant properties operated by the Power and Industrial projects segment:

<table><tr><td>Facility</td><td>Location</td><td>Service Type</td></tr><tr><td>Steel</td><td></td><td></td></tr><tr><td>Pulverized Coal Operations</td><td>MI &amp; MD</td><td>Pulverized Coal</td></tr><tr><td>Coke Production</td><td>MI, PA &amp; IN</td><td>Metallurgical Coke Supply/Steel Industry Fuels</td></tr><tr><td>Other Investment in Coke Production and Petroleum Coke</td><td>IN &amp; MS</td><td>Metallurgical Coke Supply/Steel Industry Fuels, and Pulverized Petroleum Coke</td></tr><tr><td>On-Site Energy</td><td></td><td></td></tr><tr><td>Automotive</td><td>Various sites in MI, IN, OH, NY &amp; PA</td><td>Electric Distribution, Chilled Water, Waste Water, Steam, Cooling Tower Water, Reverse Osmosis Water, Compressed Air, Mist and Dust Collectors, Steam and Chilled Water</td></tr><tr><td>Airports</td><td>MI &amp; PA</td><td>Electricity, Hot and Chilled Water</td></tr><tr><td>Wholesale Power &amp; Renewables</td><td></td><td></td></tr><tr><td>Pulp and Paper</td><td>AL</td><td>Electric Generation and Steam</td></tr><tr><td>Power Generation</td><td>MI</td><td>Electric Peaking</td></tr><tr><td>Renewables</td><td>CA &amp; WI</td><td>Electric Generation</td></tr><tr><td>Landfill Gas Recovery</td><td>Various U.S. Sites</td><td>Electric generation</td></tr><tr><td>Other Industries</td><td></td><td></td></tr><tr><td>Reduced Emission Fuel</td><td>MI</td><td>Reduced Emission Fuel Supply</td></tr><tr><td>Coal Terminating</td><td>IL</td><td>Coal Terminal and Blending</td></tr></table>

<table><tr><td></td><td>2010</td><td>2009</td><td>2008</td></tr><tr><td></td><td colspan="3">(In millions)</td></tr><tr><td>Production Tax Credits Generated (Allocated to DTE Energy)</td><td></td><td></td><td></td></tr><tr><td>Coke Battery(1)</td><td>$—</td><td>$ 5</td><td>$ 5</td></tr><tr><td>Steel Industry Fuels(2)</td><td>29</td><td>4</td><td>—</td></tr><tr><td>Power Generation</td><td>2</td><td>2</td><td>2</td></tr><tr><td>Landfill Gas Recovery</td><td>1</td><td>1</td><td>—</td></tr><tr><td>Reduced Emission Fuel</td><td>1</td><td>—</td><td>—</td></tr></table>

(1) Tax laws enabling production tax credits related to two coke battery facilities expired on December 31, 2009.

(2) IRS regulations enabling the steel industry fuel tax credits expired on December 31, 2010.

## Regulation

Certain electric generating facilities within Power and Industrial Projects have market-based rate authority from the FERC to sell power. The facilities are subject to FERC reporting requirements and market behavior rules. Certain Power and Industrial projects are also subject to the applicable laws, rules and regulations related to the Commodity Futures Trading Commission, U.S. Department of Homeland Security and Department of Energy.



## Strategy and Competition

Power and Industrial Projects will continue leveraging its energy-related operating experience and project management capability to develop and grow our steel; renewable power; on-site energy; coal marketing, storage and blending; landfill gas recovery; and reduced emission fuel businesses. We also will continue to pursue opportunities to provide asset management and operations services to third parties. There are limited competitors for our existing disparate businesses who provide similar products and services.

We anticipate building around our core strengths in the markets where we operate. In determining the markets in which to compete, we examine closely the regulatory and competitive environment, new and pending legislation, the number of competitors and our ability to achieve sustainable margins. We plan to maximize the effectiveness of our inter-related businesses as we expand. As we pursue growth opportunities, our first priority will be to achieve value-added returns.

We intend to focus on the following areas for growth:

• Monetizing and relocating our reduced emission fuel facilities;

• Acquiring and developing landfill gas recovery facilities, renewable energy projects, and other energy projects which may qualify for tax credits; and

• Providing operating services to owners of industrial and power plants.

Our Coal Transportation and Marketing business will continue to leverage its existing business in 2011. Trends such as railroad and mining consolidation and the lack of certainty in developing new mines could have an impact on how we compete in the future. Effective January 1, 2011, our existing long-term rail transportation contract, at rates significantly below the current market, expired and we anticipate a decrease in transportation-related revenue of approximately $130 million as a result. We will continue to work with suppliers and the railroads to promote secure and competitive access to coal to meet the energy requirements of our customers.

## ENERGY TRADING

## Description

Energy Trading focuses on physical and financial power and gas marketing and trading, structured transactions, enhancement of returns from DTE Energy’s asset portfolio, optimization of contracted natural gas pipeline transportation and storage, and power transmission and generating capacity positions. Energy Trading also provides natural gas, power and ancillary services to various utilities which may include the management of associated storage and transportation contracts on the customers’ behalf. Our customer base is predominantly utilities, local distribution companies, pipelines, and other marketing and trading companies. We enter into derivative financial instruments as part of our marketing and hedging activities. These financial instruments are generally accounted for under the mark-to-market method, which results in the recognition in earnings of unrealized gains and losses from changes in the fair value of the derivatives. We utilize forwards, futures, swaps and option contracts to mitigate risk associated with our marketing and trading activity as well as for proprietary trading within defined risk guidelines. Energy Trading also provides commodity risk management services to the other businesses within DTE Energy.

Significant portions of the Energy Trading portfolio are economically hedged. Most financial instruments and physical power and gas contracts are deemed derivatives; whereas, gas inventory, power transmission, pipeline transportation and certain storage assets are not derivatives. As a result, this segment may experience earnings volatility as derivatives are marked-to-market without revaluing the underlying non-derivative contracts and assets. The segment’s strategy is to economically manage the price risk of these underlying non-derivative contracts and assets with futures, forwards, swaps and options. This results in gains and losses that are recognized in different interim and annual accounting periods.

## Regulation

Energy Trading has market-based rate authority from the FERC to sell power and blanket authority from the FERC to sell natural gas at market prices. Energy Trading is subject to FERC reporting requirements and market



behavior rules. Energy Trading is also subject to the applicable laws, rules and regulations related to the Commodity Futures Trading Commission, U.S. Department of Homeland Security and Department of Energy.

## Strategy and Competition

Our strategy for the energy trading business is to deliver value-added services to our customers. We seek to manage this business in a manner consistent with and complementary to the growth of our other business segments. We focus on physical marketing and the optimization of our portfolio of energy assets. We compete with electric and gas marketers, financial institutions, traders, utilities and other energy providers. The trading business is dependent upon the availability of capital and an investment grade credit rating. The Company believes it has ample available capital capacity to support Energy Trading activities. We monitor our use of capital closely to ensure that our commitments do not exceed capacity. A material credit restriction would negatively impact our financial performance. Competitors with greater access to capital or at a lower cost may have a competitive advantage. We have risk management and credit processes to monitor and mitigate risk.

## CORPORATE & OTHER

## Description

Corporate & Other includes various holding company activities and holds certain non-utility debt and energy-related investments.

## ENVIRONMENTAL MATTERS

We are subject to extensive environmental regulation. Additional costs may result as the effects of various substances on the environment are studied and governmental regulations are developed and implemented. Actual costs to comply could vary substantially. We expect to continue recovering environmental costs related to utility operations through rates charged to our customers. The following table summarizes our estimated significant future environmental expenditures based upon current regulations:

<table><tr><td></td><td>Electric</td><td>Gas</td><td>Non-Utility (In millions)</td><td>Total</td></tr><tr><td>Air</td><td>$ 2,100</td><td>$—</td><td>$—</td><td>$2,100</td></tr><tr><td>Water</td><td>5.5</td><td>—</td><td>13</td><td>68</td></tr><tr><td>MGP sites</td><td>4</td><td>36</td><td>—</td><td>40</td></tr><tr><td>Other sites</td><td>21</td><td>1</td><td>—</td><td>22</td></tr><tr><td>Estimated total future expenditures through 2020</td><td>$2,180</td><td>$37</td><td>$13</td><td>$2,230</td></tr><tr><td>Estimated 2011 expenditures</td><td>$ 239</td><td>$11</td><td>$3</td><td>$ 253</td></tr><tr><td>Estimated 2012 expenditures</td><td>$ 276</td><td>$ 7</td><td>$ 7</td><td>$ 290</td></tr></table>

Air — Detroit Edison is subject to the EPA ozone transport and acid rain regulations that limit power plant emissions of sulfur dioxide and nitrogen oxides. Since 2005, the EPA and the State of Michigan have issued additional emission reduction regulations relating to ozone, fine particulate, regional haze and mercury air pollution. The new rules will lead to additional controls on fossil-fueled power plants to reduce nitrogen oxide, sulfur dioxide and mercury emissions. Further, additional rulemakings are expected over the next few years which could require additional controls for sulfur dioxide, nitrogen oxides and hazardous air pollutants. It is not possible to quantify the impact of those expected rulemakings at this time.

In July 2009, DTE Energy received a Notice of Violation/Finding of Violation (NOV/FOV) from the EPA alleging, among other things, that five Detroit Edison power plants violated New Source Performance standards, Prevention of Significant Deterioration requirements, and operating permit requirements under the Clean Air Act. An additional NOV/FOV was received in June 2010 related to a recent project and outage at Unit 2 of the Monroe Power Plant.



On August 5, 2010, the United States Department of Justice, at the request of the EPA, brought a civil suit in the U.S. District Court for the Eastern District of Michigan against DTE Energy and Detroit Edison, related to the June 2010 NOV/FOV and the outage work performed at Unit 2 of the Monroe Power Plant, but not relating to the July 2009 NOV/FOV. Among other relief, the EPA requested the court to require Detroit Edison to install and operate the best available control technology at Unit 2 of the Monroe Power Plant. Further, the EPA requested the court to issue a preliminary injunction to require Detroit Edison to (i) begin the process of obtaining the necessary permits for the Monroe Unit 2 modification and (ii) offset the pollution from Monroe Unit 2 through emissions reductions from Detroit Edison's fleet of coal-fired power plants until the new control equipment is operating. In January 2011, the EPA's motion for preliminary injunction was denied and the liability phase of the civil suit has been scheduled for trial in May 2011.

DTE Energy and Detroit Edison believe that the plants identified by the EPA, including Unit 2 of the Monroe Power Plant, have complied with all applicable federal environmental regulations. Depending upon the outcome of discussions with the EPA regarding the NOV/FOV and the result of the civil action, the Company could also be required to install additional pollution control equipment at some or all of the power plants in question, implement early retirement of facilities where control equipment is not economical, engage in supplemental environmental programs, and/or pay fines. The Company cannot predict the financial impact or outcome of this matter, or the timing of its resolution.

Water— In response to an EPA regulation, Detroit Edison is required to examine alternatives for reducing the environmental impacts of the cooling water intake structures at several of its facilities. Based on the results of completed studies and expected future studies, Detroit Edison may be required to install additional control technologies to reduce the impacts of the water intakes. Initially, it was estimated that Detroit Edison could incur up to approximately $55 million in additional capital expenditures over the four to six years subsequent to 2008 to comply with these requirements. However, a January 2007 circuit court decision remanded back to the EPA several provisions of the federal regulation that has resulted in a delay in compliance dates. The decision also raised the possibility that Detroit Edison may have to install cooling towers at some facilities at a cost substantially greater than was initially estimated for other mitigative technologies. In 2008, the Supreme Court agreed to review the remanded cost-benefit analysis provision of the rule and in April 2009 upheld the EPA’s use of this provision in determining best technology available for reducing environmental impacts. Concurrently, the EPA continues to develop a revised rule, a draft of which is expected to be published in the first quarter of 2011, with a final rule scheduled for mid-2012. The EPA has also issued an information collection request to begin a review of steam electric effluent guidelines. It is not possible at this time to quantify the impacts of these developing requirements.

Manufactured Gas Plant (MGP) and Other Sites — Prior to the construction of major interstate natural gas pipelines, gas for heating and other uses was manufactured locally from processes involving coal, coke or oil. The facilities, which produced gas, have been designated as MGP sites. Gas Utility owns, or previously owned, fifteen such former MGP sites. Detroit Edison owns, or previously owned, three former MGP sites. In addition to the MGP sites, we are also in the process of cleaning up other sites where contamination is present as a result of historical and ongoing utility operations. These other sites include an engineered ash storage facility, electrical distribution substations, gas pipelines, and underground and aboveground storage tank locations. Cleanup activities associated with these sites will be conducted over the next several years.

Any significant change in assumptions, such as remediation techniques, nature and extent of contamination and regulatory requirements, could impact the estimate of remedial action costs for the sites and affect the Company’s financial position and cash flows. The Company anticipates the cost amortization methodology approved by the MPSC for MichCon, which allows MichCon to amortize the MGP costs over a ten-year period beginning with the year subsequent to the year the MGP costs were incurred, and the cost deferral and rate recovery mechanism for Citizens Fuel Gas approved by the City of Adrian, will prevent environmental costs from having a material adverse impact on the Company’s results of operations.

Landfill — Detroit Edison owns and operates a permitted engineered ash storage facility at the Monroe Power Plant to dispose of fly ash from the coal fired power plant. Detroit Edison performed an engineering analysis in 2009 and identified the need for embankment side slope repairs and reconstruction.



The EPA has published proposed rules to regulate coal ash under the authority of the Resources Conservation and Recovery Act (RCRA). The proposed rule published on June 21, 2010 contains two primary regulatory options to regulate coal ash residue. The EPA is currently considering either, to designate coal ash as a “Hazardous Waste” as defined by RCRA or to regulate coal ash as non-hazardous waste under RCRA. However, agencies and legislatures have urged the EPA to regulate coal ash as a non-hazardous waste. If the EPA were to designate coal ash as a hazardous waste, the agency could apply some, or all, of the disposal and reuse standards that have been applied to other existing hazardous wastes. Some of the regulatory actions currently being contemplated could have a significant impact on our operations and financial position and the rates we charge our customers. It is not possible to quantify the impact of those expected rulemakings at this time.

## Non-Utility

The Company’s non-utility affiliates are subject to a number of environmental laws and regulations dealing with the protection of the environment from various pollutants.

The Michigan coke battery facility received and responded to information requests from the EPA that resulted in the issuance of a Notice of Violation in June of 2007 alleging potential maximum achievable control technologies and new source review violations. The EPA is in the process of reviewing the Company’s position of demonstrated compliance and has not initiated escalated enforcement. At this time, the Company cannot predict the impact of this issue. Furthermore, the Michigan coke battery facility is the subject of an investigation by the MDNRE concerning visible emissions readings that resulted from the Company self reporting to the MDNRE questionable activities by an employee of a contractor hired by the Company to perform the visible emissions readings. At this time, the Company cannot predict the impact of this investigation.

The Company is also in the process of settling historical air and water violations at its coke battery facility located in Pennsylvania. At this time, the Company cannot predict the impact of this settlement. The Company received two notices of violation from the Pennsylvania Department of Environmental Protection in 2010 alleging violations of the permit for the Pennsylvania coke battery facility in connection with coal pile storm water runoff. The Company has implemented best management practices to address this issue and is currently seeking a permit from the Pennsylvania Department of Environmental Protection to upgrade its wastewater treatment technology to a biological treatment facility. The Company’s non-utility affiliates are substantially in compliance with all environmental requirements, other than as noted above.

## Global Climate Change

Climate regulation and/or legislation is being proposed and discussed within the U.S. Congress and the EPA. Despite passage of a greenhouse gas cap and trade bill by the U.S. House in June 2009, the Senate has been unable to pass a similar climate bill. A greenhouse gas cap and trade program is not expected to be included in energy or climate bills to be considered by the 112th Congress. Meanwhile, the EPA is beginning to implement regulatory actions under the Clean Air Act to address emission of greenhouse gases. The EPA regulation of greenhouse gases (GHGs) begins in 2011 requiring the best available control technology (BACT) for major sources or modifications to existing major sources that cause significant increases in GHG emissions. The impact of this rule is uncertain until BACT is better defined by the permitting agencies. Pending or future legislation or other regulatory actions could have a material impact on our operations and financial position and the rates we charge our customers. Impacts include expenditures for environmental equipment beyond what is currently planned, financing costs related to additional capital expenditures, the purchase of emission offsets from market sources and the retirement of facilities where control equipment is not economical. We would seek to recover these incremental costs through increased rates charged to our utility customers. Increased costs for energy produced from traditional sources could also increase the economic viability of energy produced from renewable and/or nuclear sources and energy efficiency initiatives and the development of market-based trading of carbon offsets providing business opportunities for our utility and non-utility segments. It is not possible to quantify these impacts on DTE Energy or its customers at this time.

See Notes 12 and 20 of the Notes to Consolidated Financial Statements in Item 8 of this Report and Management’s Discussion and Analysis in Item 7 of this Report.



## EMPLOYEES

We had approximately 9,800 employees as of December 31, 2010, of which approximately 5,000 were represented by unions. There are several bargaining units for the Company’s represented employees. In the 2010 third quarter, a new three-year agreement was ratified covering approximately 3,800 represented employees. The majority of the remaining represented employees are under contracts that expire in June 2011 and August 2012.

## Item 1A. Risk Factors

There are various risks associated with the operations of DTE Energy’s utility and non-utility businesses. To provide a framework to understand the operating environment of DTE Energy, we are providing a brief explanation of the more significant risks associated with our businesses. Although we have tried to identify and discuss key risk factors, others could emerge in the future. Each of the following risks could affect our performance.

Regional and national economic conditions can have an unfavorable impact on us. Our utility and non-utility businesses follow the economic cycles of the customers we serve. Our utilities and certain non-utility businesses provide services to the domestic automotive and steel industries which have undergone considerable financial distress, exacerbating the decline in regional economic conditions. Should national or regional economic conditions further decline, reduced volumes of electricity and gas, and demand for energy services we supply, collections of accounts receivable and potentially higher levels of lost or stolen gas could result in decreased earnings and cash flow.

We are exposed to credit risk of counterparties with whom we do business. Adverse economic conditions affecting, or financial difficulties of, counterparties with whom we do business could impair the ability of these counterparties to pay for our services or fulfill their contractual obligations, or cause them to delay such payments or obligations. We depend on these counterparties to remit payments on a timely basis. Any delay or default in payment could adversely affect our cash flows, financial position, or results of operations.

We are subject to rate regulation. Electric and gas rates for our utilities are set by the MPSC and the FERC and cannot be changed without regulatory authorization. We may be negatively impacted by new regulations or interpretations by the MPSC, the FERC or other regulatory bodies. Our ability to recover costs may be impacted by the time lag between the incurrence of costs and the recovery of the costs in customers' rates. Our regulators also may decide to disallow recovery of certain costs in customers' rates if they determine that those costs do not meet the standards for recovery under our governing laws and regulations. The State of Michigan elected a new governor and legislature in November 2010 and we cannot predict whether the resulting changes in political conditions will affect the regulations or interpretations affecting our utilities. New legislation, regulations or interpretations could change how our business operates, impact our ability to recover costs through rate increases or require us to incur additional expenses.

We may be required to refund amounts we collect under self-implemented rates. Michigan law allows our utilities to self-implement base rate changes six months after a rate filing, subject to certain limitations. However, if the final rate case order provides for lower rates than we have self-implemented, we must refund the difference, with interest. We have self-implemented rates in the past and have been ordered to make refunds to customers. Our financial performance may be negatively affected if the MPSC sets lower rates in future rate cases than those we have self-implemented, thereby requiring us to issue refunds. We cannot predict what rates an MPSC order will adopt in future rate cases.

Michigan’s electric Customer Choice program could negatively impact our financial performance. The electric Customer Choice program, as originally contemplated in Michigan, anticipated an eventual transition to a totally deregulated and competitive environment where customers would be charged market-based rates for their electricity. The State of Michigan currently experiences a hybrid market, where the MPSC continues to regulate electric rates for our customers, while alternative electric suppliers charge market-based rates. In addition, such regulated electric rates for certain groups of our customers exceed the cost of service to those customers. Due to distorted pricing mechanisms during the initial implementation period of electric Customer Choice, many commercial customers chose alternative electric suppliers. MPSC rate orders and 2008 energy legislation enacted by the State of Michigan are phasing out the pricing disparity over five years and have placed a cap on the total.



potential Customer Choice related migration. However, even with the electric Customer Choice-related relief received in recent Detroit Edison rate orders and the legislated 10 percent cap on participation in the electric Customer Choice program, there continues to be financial risk associated with the electric Customer Choice program. Electric Customer Choice migration is sensitive to market price and full service electric price changes.

Environmental laws and liability may be costly. We are subject to numerous environmental regulations. These regulations govern air emissions, water quality, wastewater discharge and disposal of solid and hazardous waste. Compliance with these regulations can significantly increase capital spending, operating expenses and plant down times. These laws and regulations require us to seek a variety of environmental licenses, permits, inspections and other regulatory approvals. We could be required to install expensive pollution control measures or limit or cease activities based on these regulations. Additionally, we may become a responsible party for environmental cleanup at sites identified by a regulatory body. We cannot predict with certainty the amount and timing of future expenditures related to environmental matters because of the difficulty of estimating clean up costs. There is also uncertainty in quantifying liabilities under environmental laws that impose joint and several liability on potentially responsible parties.

We may also incur liabilities as a result of potential future requirements to address climate change issues. Proposals for voluntary initiatives and mandatory controls are being discussed both in the United States and worldwide to reduce greenhouse gases such as carbon dioxide, a by-product of burning fossil fuels. If increased regulation of greenhouse gas emissions are implemented, the operations of our fossil-fuel generation assets and our unconventional gas production assets may be significantly impacted. Since there can be no assurances that environmental costs may be recovered through the regulatory process, our financial performance may be negatively impacted as a result of environmental matters.

Adverse changes in our credit ratings may negatively affect us. Regional and national economic conditions, increased scrutiny of the energy industry and regulatory changes, as well as changes in our economic performance, could result in credit agencies reexamining our credit rating. While credit ratings reflect the opinions of the credit agencies issuing such ratings and may not necessarily reflect actual performance, a downgrade in our credit rating below investment grade could restrict or discontinue our ability to access capital markets and could result in an increase in our borrowing costs, a reduced level of capital expenditures and could impact future earnings and cash flows. In addition, a reduction in credit rating may require us to post collateral related to various physical or financially settled contracts for the purchase of energy-related commodities, products and services, which could impact our liquidity.

Our ability to access capital markets is important. Our ability to access capital markets is important to operate our businesses. In the past, turmoil in credit markets has constrained, and may again in the future constrain, our ability as well as the ability of our subsidiaries to issue new debt, including commercial paper, and refinance existing debt at reasonable interest rates. In addition, the level of borrowing by other energy companies and the market as a whole could limit our access to capital markets. We have substantial amounts of credit facilities that expire in 2012 and 2013. We intend to seek to renew the facilities on or before the expiration dates. However, we cannot predict the outcome of these efforts, which could result in a decrease in amounts available and/or an increase in our borrowing costs and negatively impact our financial performance.

Poor investment performance of pension and other postretirement benefit plan holdings and other factors impacting benefit plan costs could unfavorably impact our liquidity and results of operations. Our costs of providing non-contributory defined benefit pension plans and other postretirement benefit plans are dependent upon a number of factors, such as the rates of return on plan assets, the level of interest rates used to measure the required minimum funding levels of the plans, future government regulation, and our required or voluntary contributions made to the plans. The performance of the debt and equity markets affects the value of assets that are held in trust to satisfy future obligations under our plans. We have significant benefit obligations and hold significant assets in trust to satisfy these obligations. These assets are subject to market fluctuations and will yield uncertain returns, which may fall below our projected return rates. A decline in the market value of the pension and postretirement benefit plan assets will increase the funding requirements under our pension and postretirement benefit plans if the actual asset returns do not recover these declines in the foreseeable future. Additionally, our pension and postretirement benefit plan liabilities are sensitive to changes in interest rates. As interest rates decrease, the liabilities increase.



potentially increasing benefit expense and funding requirements. Also, if future increases in pension and postretirement benefit costs as a result of reduced plan assets are not recoverable from Detroit Edison or MichCon customers, the results of operations and financial position of our company could be negatively affected. Without sustained growth in the plan investments over time to increase the value of our plan assets, we could be required to fund our plans with significant amounts of cash. Such cash funding obligations could have a material impact on our cash flows, financial position, or results of operations.

If our goodwill becomes impaired, we may be required to record a charge to earnings. We annually review the carrying value of goodwill associated with acquisitions made by the Company for impairment. Factors that may be considered for purposes of this analysis include any change in circumstances indicating that the carrying value of our goodwill may not be recoverable such as a decline in stock price and market capitalization, future cash flows, and slower growth rates in our industry. We cannot predict the timing, strength or duration of any economic slowdown or subsequent recovery, worldwide or in the economy or markets in which we operate; however, when events or changes in circumstances indicate that the carrying value of these assets may not be recoverable, the Company may take a non-cash impairment charge, which could potentially materially impact our results of operations and financial position.

Weather significantly affects operations. Deviations from normal hot and cold weather conditions affect our earnings and cash flow. Mild temperatures can result in decreased utilization of our assets, lowering income and cash flow. Ice storms, tornadoes, or high winds can damage the electric distribution system infrastructure and require us to perform emergency repairs and incur material unplanned expenses. The expenses of storm restoration efforts may not be fully recoverable through the regulatory process.

Operation of a nuclear facility subjects us to risk. Ownership of an operating nuclear generating plant subjects us to significant additional risks. These risks include, among others, plant security, environmental regulation and remediation, and operational factors that can significantly impact the performance and cost of operating a nuclear facility. While we maintain insurance for various nuclear-related risks, there can be no assurances that such insurance will be sufficient to cover our costs in the event of an accident or business interruption at our nuclear generating plant, which may affect our financial performance.

Construction and capital improvements to our power facilities subject us to risk. We are managing ongoing and planning future significant construction and capital improvement projects at multiple power generation and distribution facilities. Many factors that could cause delay or increased prices for these complex projects are beyond our control, including the cost of materials and labor, subcontractor performance, timing and issuance of necessary permits, construction disputes and weather conditions. Failure to complete these projects on schedule and on budget for any reason could adversely affect our financial performance and operations at the affected facilities.

The supply and/or price of energy commodities and/or related services may impact our financial results. We are dependent on coal for much of our electrical generating capacity. Price fluctuations, fuel supply disruptions and increases in transportation costs could have a negative impact on the amounts we charge our utility customers for electricity and on the profitability of our non-utility businesses. Our access to natural gas supplies is critical to ensure reliability of service for our utility gas customers. We have hedging strategies and regulatory recovery mechanisms in place to mitigate negative fluctuations in commodity supply prices, but there can be no assurances that our financial performance will not be negatively impacted by price fluctuations. The price of energy also impacts the market for our non-utility businesses that compete with utilities and alternative electric suppliers.

The supply and/or price of other industrial raw and finished inputs and/or related services may impact our financial results. We are dependent on supplies of certain commodities, such as copper and limestone, among others, and industrial materials and services in order to maintain day-to-day operations and maintenance of our facilities. Price fluctuations or supply interruptions for these commodities and other items could have a negative impact on the amounts we charge our customers for our utility products and on the profitability of our non-utility businesses.

Unplanned power plant outages may be costly. Unforeseen maintenance may be required to safely produce electricity or comply with environmental regulations. As a result of unforeseen maintenance, we may be required to



make spot market purchases of electricity that exceed our costs of generation. Our financial performance may be negatively affected if we are unable to recover such increased costs.

Our estimates of gas reserves are subject to change. While great care is exercised in utilizing historical information and assumptions to develop reasonable estimates of future production and cash flow, we cannot provide absolute assurance that our estimates of our Barnett gas reserves are accurate. We estimate proved gas reserves and the future net cash flows attributable to those reserves. There are numerous uncertainties inherent in estimating quantities of proved gas reserves and cash flows attributable to such reserves, including factors beyond our control. Reserve engineering is a subjective process of estimating underground accumulations of gas that cannot be measured in an exact manner. The accuracy of an estimate of quantities of reserves, or of cash flows attributable to such reserves, is a function of the available data, assumptions regarding expenditures for future development and exploration activities, and of engineering and geological interpretation and judgment. Additionally, reserves and future cash flows may be subject to material downward or upward revisions, based upon production history, development and exploration activities and prices of gas. Actual future production, revenue, taxes, development expenditures, operating expenses, quantities of recoverable reserves and the value of cash flows from such reserves may vary significantly from the assumptions and underlying information we used.

Our ability to utilize production tax credits may be limited. To reduce U.S. dependence on imported oil, the Internal Revenue Code provides production tax credits as an incentive for taxpayers to produce fuels and electricity from alternative sources. We have generated production tax credits from coke production, landfill gas recovery; biomass fired electric generation, reduced emission fuel, steel industry fuel and gas production operations. All production tax credits taken after 2008 are subject to audit by the Internal Revenue Service (IRS). If our production tax credits were disallowed in whole or in part as a result of an IRS audit, there could be additional tax liabilities owed for previously recognized tax credits that could significantly impact our earnings and cash flows.

We rely on cash flows from subsidiaries. DTE Energy is a holding company. Cash flows from our utility and non-utility subsidiaries are required to pay interest expenses and dividends on DTE Energy debt and securities. Should a major subsidiary not be able to pay dividends or transfer cash flows to DTE Energy, our ability to pay interest and dividends would be restricted.

Renewable portfolio standards and energy efficiency programs may affect our business. We are subject to Michigan and potential future federal legislation and regulation requiring us to secure sources of renewable energy. Under the current Michigan legislation we will be required in the future to provide a specified percentage of our power from Michigan renewable energy sources. We are developing a strategy for complying with the existing state legislation, but we do not know what requirements may be added by federal legislation. We are actively engaged in developing renewable energy projects and identifying third party projects in which we can invest. We cannot predict the financial impact or costs associated with these future projects.

We are also required by Michigan legislation to implement energy efficiency measures and provide energy efficiency customer awareness and education programs. These requirements necessitate expenditures and implementation of these programs creates the risk of reducing our revenues as customers decrease their energy usage. We do not know how these programs will impact our business and future operating results.

Threats of terrorism or cyber attacks could affect our business. We may be threatened by problems such as computer viruses or terrorism that may disrupt our operations and could harm our operating results. Our industry requires the continued operation of sophisticated information technology systems and network infrastructure. Despite our implementation of security measures, all of our technology systems are vulnerable to disability or failures due to hacking, viruses, acts of war or terrorism and other causes. If our information technology systems were to fail and we were unable to recover in a timely way, we might be unable to fulfill critical business functions, which could have a material adverse effect on our business, operating results, and financial condition.

In addition, our generation plants, gas pipeline and storage facilities and electrical distribution facilities in particular may be targets of terrorist activities that could disrupt our ability to produce or distribute some portion of our energy products. We have increased security as a result of past events and we may be required by our regulators or by the future terrorist threat environment to make investments in security that we cannot currently predict.



Our participation in energy trading markets subjects us to risk. Events in the energy trading industry have increased the level of scrutiny on the energy trading business and the energy industry as a whole. In certain situations we may be required to post collateral to support trading operations, which could be substantial. If access to liquidity to support trading activities is curtailed, we could experience decreased earnings potential and cash flows. Energy trading activities take place in volatile markets and expose us to risks related to commodity price movements. We routinely have speculative trading positions in the market, within strict policy guidelines we set, resulting from the management of our business portfolio. To the extent speculative trading positions exist, fluctuating commodity prices can improve or diminish our financial results and financial position. We manage our exposure by establishing and enforcing strict risk limits and risk management procedures. During periods of extreme volatility, these risk limits and risk management procedures may not work as planned and cannot eliminate all risks associated with these activities.

We may not be fully covered by insurance. We have a comprehensive insurance program in place to provide coverage for various types of risks, including catastrophic damage as a result of acts of God, terrorism or a combination of other significant unforeseen events that could impact our operations. Economic losses might not be covered in full by insurance or our insurers may be unable to meet contractual obligations.

Failure to maintain the security of personally identifiable information could adversely affect us. In connection with our business we collect and retain personally identifiable information of our customers, shareholders and employees. Our customers, shareholders and employees expect that we will adequately protect their personal information, and the United States regulatory environment surrounding information security and privacy is increasingly demanding. A significant theft, loss or fraudulent use of customer, shareholder, employee or DTE Energy data by cybercrime or otherwise could adversely impact our reputation and could result in significant costs, fines and litigation.

A work interruption may adversely affect us. Unions represent approximately 5,000 of our employees. A union choosing to strike would have an impact on our business. We are unable to predict the effect a work stoppage would have on our costs of operation and financial performance.

Failure to retain and attract key executive officers and other skilled professional and technical employees could have an adverse effect on our operations. Our business is dependent on our ability to recruit, retain, and motivate employees. Competition for skilled employees in some areas is high and the inability to retain and attract these employees could adversely affect our business and future operating results.

## Item 1B. Unresolved Staff Comments

None.

## Item 3. Legal Proceedings

We are involved in certain legal, regulatory, administrative and environmental proceedings before various courts, arbitration panels and governmental agencies concerning matters arising in the ordinary course of business. These proceedings include certain contract disputes, environmental reviews and investigations, audits, inquiries from various regulators, and pending judicial matters. We cannot predict the final disposition of such proceedings. We regularly review legal matters and record provisions for claims that are considered probable of loss. The resolution of pending proceedings is not expected to have a material effect on our operations or financial statements in the periods they are resolved.

In February 2008, DTE Energy was named as one of approximately 24 defendant oil, power and coal companies in a lawsuit filed in a United States District Court. DTE Energy was served with process in March 2008. The plaintiffs, the Native Village of Kivalina and City of Kivalina, which are home to approximately 400 people in Alaska, claim that the defendants' business activities have contributed to global warming and, as a result, higher temperatures are damaging the local economy and leaving the island more vulnerable to storm activity in the fall and winter. As a result, the plaintiffs are seeking damages of up to $400 million for relocation costs associated with moving the village to a safer location, as well as unspecified attorney's fees and expenses. On October 15, 2009, the U.S. District Court granted defendants' motions dismissing all of plaintiffs' federal claims in the case on two



independent grounds: (1) the court lacks subject matter jurisdiction to hear the claims because of the political question doctrine; and (2) plaintiffs lack standing to bring their claims. The court also dismissed plaintiffs' state law claims because the court lacked supplemental jurisdiction over them after it dismissed the federal claims; the dismissal of the state law claims was without prejudice. The plaintiffs have appealed to the U.S. Court of Appeals for the Ninth Circuit.

In July 2009, DTE Energy received a Notice of Violation/Finding of Violation (NOV/FOV) from the EPA alleging, among other things, that five of Detroit Edison’s power plants violated New Source Performance standards, Prevention of Significant Deterioration requirements, and operating permit requirements under the Clean Air Act. In June 2010, the EPA issued a NOV/FOV making similar allegations related to a recent project and outage at Unit 2 of the Monroe Power Plant.

On August 5, 2010, the United States Department of Justice, at the request of the EPA, brought a civil suit in the U.S. District Court for the Eastern District of Michigan against DTE Energy and Detroit Edison, related to the June 2010 NOV/FOV and the outage work performed at Unit 2 of the Monroe Power Plant, but not relating to the July 2009 NOV/FOV. Among other relief, the EPA requested the court to require Detroit Edison to install and operate the best available control technology at Unit 2 of the Monroe Power Plant. Further, the EPA requested the court to issue a preliminary injunction to require Detroit Edison to (i) begin the process of obtaining the necessary permits for the Monroe Unit 2 modification and (ii) offset the pollution from Monroe Unit 2 through emissions reductions from Detroit Edison’s fleet of coal-fired power plants until the new control equipment is operating. In January 2011, the EPA’s motion for preliminary injunction was denied and the liability phase of the civil suit has been scheduled for trial in May 2011.

DTE Energy and Detroit Edison believe that the plants identified by the EPA, including Unit 2 of the Monroe Power Plant, have complied with all applicable federal environmental regulations. Depending upon the outcome of discussions with the EPA regarding the NOV/FOV and the result of the civil action, Detroit Edison could also be required to install additional pollution control equipment at some or all of the power plants in question, implement early retirement of facilities where control equipment is not economical, engage in supplemental environmental programs, and/or pay fines. DTE Energy and Detroit Edison cannot predict the financial impact or outcome of this matter, or the timing of its resolution.

In October 2010, the Company received a Notice of Violation from the MDNRE alleging that the Michigan coke battery facility violated the visible emission readings and quench water sampling requirements under applicable National Emissions Standards for Hazardous Air Pollutants regulations. This Notice of Violation resulted from the Company self reporting to the MDNRE and the EPA questionable activities by an employee of a contractor hired by the Company to perform visible emissions readings and quench water sampling. The information provided by contractor was used by the Company in filing certain reports with the MDNRE and the EPA. The Company has ceased using the contractor for these activities, has retained a new certified contractor to perform the required activities and implemented standard operating procedures designed to prevent a reoccurrence of such a situation. At this time, the Company cannot predict the outcome or financial impact of this issue.

In December 2010, the Company received a Notice of Violation from the Detroit Water and Sewerage Department (DWSD) alleging that effluent discharges from the Michigan coke battery facility violated the City of Detroit Ordinance, the General Pre-Treatment Standards and the terms of a Consent Judgment entered between the Company and the DWSD with respect to the Michigan coke battery facility in March 2009. The Company has settled similar alleged violations with respect to the Michigan coke battery facility with the DWSD in the past. The Company has installed a biological waste water treatment plant at the Michigan coke battery facility in accordance with the Consent Judgment that is designed to meet the effluent limitations and is in the process of optimizing plant performance to minimize any future excursions of the Ordinance and the General Pre-Treatment Standards. The DWSD has demanded payment of $176,000 in penalties in connection with the alleged violations. The Company is actively pursuing a settlement with DWSD, but we cannot predict the outcome or financial impact of this matter.

In April 2006, the prior owners of the coke battery facility in Pennsylvania that the Company purchased in 2008 received a Notice of Violation/Finding of Violation from the EPA alleging violations of the lowest achievable emission rate requirements associated with visible emissions from the combustion stack, door leaks and charging activities at the coke battery facility. The EPA has also alleged certain violations of the Clean Water Act, but has not



issued a notice of violation in connection with these alleged violations. The Company is in the process of negotiating a Consent Order with the EPA to settle these historic air and water issues. The Company will be required to complete ceramic welding repairs to the coke battery facility and to make repairs to the waste water treatment facility at the coke battery facility. The Company will also be required to pay a fine in connection with the settlement of these historic violations. At this time, the Company cannot predict the outcome or financial impact of this settlement or the timing of its resolution.

For additional discussion on legal matters, see Notes 12 and 20 of the Notes to Consolidated Financial Statements in Item 8 of this Report.

## Part II

## Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock is listed on the New York Stock Exchange, which is the principal market for such stock. The following table indicates the reported high and low sales prices of our common stock on the Composite Tape of the New York Stock Exchange and dividends paid per share for each quarterly period during the past two years:

<table><tr><td>Year</td><td>Quarter</td><td>High</td><td>Low</td><td>Dividends Paid per Share</td></tr><tr><td>2010</td><td></td><td></td><td></td><td></td></tr><tr><td>First</td><td></td><td>$ 45.93</td><td>$41.25</td><td>$ 0.530</td></tr><tr><td>Second</td><td></td><td>$ 49.05</td><td>$ 43.00</td><td>$ 0.530</td></tr><tr><td>Third</td><td></td><td>$ 49.06</td><td>$ 44.93</td><td>$ 0.560</td></tr><tr><td>Fourth</td><td></td><td>$ 47.66</td><td>$ 44.27</td><td>$ 0.560</td></tr><tr><td>2009</td><td></td><td></td><td></td><td></td></tr><tr><td>First</td><td></td><td>$ 37.11</td><td>$ 23.32</td><td>$ 0.530</td></tr><tr><td>Second</td><td></td><td>$ 32.43</td><td>$ 27.32</td><td>$ 0.530</td></tr><tr><td>Third</td><td></td><td>$ 36.46</td><td>$ 30.59</td><td>$ 0.530</td></tr><tr><td>Fourth</td><td></td><td>$ 44.96</td><td>$ 33.75</td><td>$ 0.530</td></tr></table>

At December 31, 2010, there were 169,428,406 shares of our common stock outstanding. These shares were held by a total of 74,822 shareholders of record.

Our Bylaws nullify Chapter 7B of the Michigan Business Corporation Act (Act). This Act regulates shareholder rights when an individual’s stock ownership reaches 20% of a Michigan corporation’s outstanding shares. A shareholder seeking control of the Company cannot require our Board of Directors to call a meeting to vote on issues related to corporate control within 10 days, as stipulated by the Act.

We paid cash dividends on our common stock of $360 million in 2010, $348 million in 2009, and $344 million in 2008. The amount of future dividends will depend on our earnings, cash flows, financial condition and other factors that are periodically reviewed by our Board of Directors. Although there can be no assurances, we anticipate paying dividends for the foreseeable future.

See Note 14 of the Notes to Consolidated Financial Statements in Item 8 of this Report for information on dividend restrictions.

All of our equity compensation plans that provide for the annual awarding of stock-based compensation have been approved by shareholders. See Note 22 of the Notes to Consolidated Financial Statements in Item 8 of this Report for additional detail.



See the following table for information as of December 31, 2010.

<table><tr><td></td><td>Number of Securities to be Issued Upon Exercise of Outstanding Options</td><td>Weighted-Average Exercise Price of Outstanding Options</td><td>Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans</td></tr><tr><td>Plans approved by shareholders</td><td>4,827,457</td><td>$ 41.09</td><td>2,806,555</td></tr></table>

## UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

## Purchases of Equity Securities by the Issuer and Affiliated Purchasers

The following table provides information about our purchases of equity securities that are registered by the Company pursuant to Section 12 of the Exchange Act for the year ended December 31, 2010:

<table><tr><td></td><td>Number of Shares Purchased(1)</td><td>Average Price Paid per Share(1)</td><td>Number of Shares Purchased as Part of Publicly Announced Plans or Programs</td><td>Average Price Paid per Share</td><td>Maximum Dollar Value that May Yet Be Purchased Under the Plans or Programs</td></tr><tr><td>01/01/10 — 01/31/10</td><td>—</td><td>—</td><td>—</td><td>—</td><td>—</td></tr><tr><td>02/01/10 — 02/28/10</td><td>—</td><td>—</td><td>—</td><td>—</td><td>—</td></tr></table>

(1) Represents shares of common stock purchased on the open market to provide shares to participants under various employee compensation and incentive programs. These purchases were not made pursuant to a publicly announced plan or program.



## COMPARISON OF CUMULATIVE FIVE YEAR TOTAL RETURN

Total Return To Shareholders

(Includes reinvestment of dividends)

<table><tr><td rowspan="2">Company/Index</td><td colspan="6">Annual Return Percentage Year Ended December 31</td></tr><tr><td>2006</td><td>2007</td><td>2008</td><td>2009</td><td>2010</td><td></td></tr><tr><td>DTE Energy Company</td><td>17.66</td><td>(5.03)</td><td>(14.37)</td><td>30.08</td><td>9.06</td><td></td></tr><tr><td>S&amp;P 500 Index</td><td>15.79</td><td>5.49</td><td>(37.00)</td><td>26.46</td><td>15.06</td><td></td></tr><tr><td>S&amp;P 500 Multi-Utilities Index</td><td>16.74</td><td>10.86</td><td>(24.34)</td><td>20.93</td><td>11.08</td><td></td></tr></table>

<table><tr><td rowspan="2">Company/Index</td><td colspan="6">Indexed Returns Year Ended December 31</td></tr><tr><td>Base Period 2005</td><td>2006</td><td>2007</td><td>2008</td><td>2009</td><td>2010</td></tr><tr><td>DTE Energy Company</td><td>100</td><td>117.66</td><td>111.74</td><td>95.68</td><td>124.46</td><td>135.73</td></tr><tr><td>S&amp;P 500 Index</td><td>100</td><td>115.79</td><td>122.16</td><td>76.96</td><td>97.33</td><td>111.99</td></tr><tr><td>S&amp;P 500 Multi-Utilities Index</td><td>100</td><td>116.74</td><td>129.42</td><td>97.92</td><td>118.41</td><td>131.53</td></tr></table>

Comparison of Cumulative Five Year Total Return






## Item 6. Selected Financial Data

The following selected financial data should be read in conjunction with the accompanying Management’s Discussion and Analysis in Item 7 of this Report and Notes to the Consolidated Financial Statements in Item 8 of this Report.

<table><tr><td rowspan="2"></td><td rowspan="2">2010</td><td colspan="2">2009</td><td rowspan="2">2008</td><td rowspan="2">2007</td><td rowspan="2">2006</td></tr><tr><td colspan="4">(In millions, except per share amounts)</td></tr><tr><td>Operating Revenues</td><td>$ 8,557</td><td>$ 8,014</td><td>$ 9,329</td><td>$ 8,475</td><td>$ 8,157</td><td></td></tr><tr><td>Net Income Attributable to DTE Energy Company</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Income from continuing operations(1)</td><td>$ 630</td><td>$ 532</td><td>$ 526</td><td>$ 787</td><td>$ 389</td><td></td></tr><tr><td>Discontinued operations</td><td>—</td><td>—</td><td>20</td><td>184</td><td>43</td><td></td></tr><tr><td>Cumulative effect of accounting changes</td><td>—</td><td>—</td><td>—</td><td>—</td><td>1</td><td></td></tr><tr><td>Net Income Attributable to DTE Energy Company</td><td>$ 630</td><td>$ 532</td><td>$ 546</td><td>$ 971</td><td>$ 433</td><td></td></tr><tr><td>Diluted Earnings Per Common Share</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Income from continuing operations</td><td>$ 3.74</td><td>$ 3.24</td><td>$ 3.22</td><td>$ 4.61</td><td>$ 2.18</td><td></td></tr><tr><td>Discontinued operations</td><td>—</td><td>—</td><td>.12</td><td>1.08</td><td>.24</td><td></td></tr><tr><td>Cumulative effect of accounting changes</td><td>—</td><td>—</td><td>—</td><td>—</td><td>.01</td><td></td></tr><tr><td>Diluted Earnings Per Common Share</td><td>$ 3.74</td><td>$ 3.24</td><td>$ 3.34</td><td>$ 5.69</td><td>$ 2.43</td><td></td></tr><tr><td>Financial Information</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Dividends declared per share of common stock</td><td>$ 2.18</td><td>$ 2.12</td><td>$ 2.12</td><td>$ 2.12</td><td>$ 2.075</td><td></td></tr><tr><td>Total assets</td><td>$ 24,896</td><td>$ 24,195</td><td>$ 24,590</td><td>$ 23,742</td><td>$ 23,785</td><td></td></tr><tr><td>Long-term debt, including capital leases</td><td>$ 7,089</td><td>$ 7,370</td><td>$ 7,741</td><td>$ 6,971</td><td>$ 7,474</td><td></td></tr><tr><td>Shareholders&#x27; equity</td><td>$ 6,722</td><td>$ 6,278</td><td>$ 5,995</td><td>$ 5,853</td><td>$ 5,849</td><td></td></tr></table>

(1) 2007 amounts include $580 million after-tax gain on the Antrim sale transaction and $210 million after-tax losses on hedge contracts associated with the Antrim sale. 2008 amounts include $80 million after-tax gain on the sale of a portion of the Barnett shale properties. See Note 10 of Notes to Consolidated Financial Statements in Item 8 of this Report.



## Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

## OVERVIEW

DTE Energy is a diversified energy company with 2010 operating revenues in excess of $8 billion and approximately $25 billion in assets. We are the parent company of Detroit Edison and MichCon, regulated electric and gas utilities engaged primarily in the business of providing electricity and natural gas sales, distribution and storage services throughout southeastern Michigan. We operate four energy-related non-utility segments with operations throughout the United States.

The following table summarizes our financial results:

<table><tr><td></td><td>2010</td><td>2009</td><td>2008</td></tr><tr><td></td><td colspan="3">(In millions, except per share amounts)</td></tr><tr><td>Net income attributable to DTE Energy Company</td><td>$ 630</td><td>$ 532</td><td>$ 546</td></tr><tr><td>Diluted earnings per common share</td><td>$3.74</td><td>$3.24</td><td>$ 3.34</td></tr></table>

The increase in 2010 Net income attributable to DTE Energy as compared to 2009 was primarily due to improved results in the Electric and Gas Utilities and in the Power and Industrial Projects segment, partially offset by lower earnings in Energy Trading. The decrease in Net income attributable to DTE Energy in 2009 from 2008 was primarily due to an $80 million after-tax gain recorded in the Unconventional Gas Production segment on the 2008 sale of a portion of Barnett shale properties, partially offset by higher earnings in the Electric Utility and Energy Trading segments.

The items discussed below influenced our current financial performance and/or may affect future results:

• Impacts of national and regional economic conditions;

• Effects of weather on utility operations;

• Collectibility of accounts receivable on utility operations;

• Impact of regulatory decisions on utility operations;

• Non-utility operations;

• Capital investments, including required renewable, energy-efficiency, environmental, reliability-related and other costs; and

• Environmental matters.

Reference in this report to “we,” “us,” “our,” “Company” or “DTE” are to DTE Energy and its subsidiaries, collectively.

## UTILITY OPERATIONS

Our Electric Utility segment consists of Detroit Edison, which is engaged in the generation, purchase, distribution and sale of electricity to approximately 2.1 million customers in southeastern Michigan.

Our Gas Utility segment consists of MichCon and Citizens. MichCon is engaged in the purchase, storage, transportation, gathering, distribution and sale of natural gas to approximately 1.2 million customers throughout Michigan. Citizens distributes natural gas in Adrian, Michigan to approximately 17,000 customers.

Detroit Edison has experienced decreased electric sales in 2010 driven primarily by a decrease in commercial sales, partially offset by higher residential and industrial sales. Commercial sales continue to be lower due primarily to customers participating in the electric Customer Choice program. The residential sales increase is a result of warmer summer weather. Industrial sales are higher due to increased demand from customers in the automotive and steel industries and their related suppliers and other ancillary businesses. The impact of customers participating in the electric Customer Choice program is mitigated by the CIM, an over/under recovery mechanism which measures non-fuel revenues that are lost or gained as a result of fluctuations in electric Customer Choice sales. If annual electric Customer Choice sales exceed the baseline amount from Detroit Edison’s most recent rate case, 90 percent



of its lost non-fuel revenues associated with sales above that level may be recovered from full service customers. If annual electric Customer Choice sales decrease below the baseline, the Company must refund 90 percent of its increase in non-fuel revenues associated with sales below that level to full service customers. MichCon’s sales were lower due primarily to a decrease in the number of customers, reduced natural gas usage by customers due to economic conditions and an increased emphasis on conservation of energy usage.

We have RDMs in place at both utilities. The RDMs are designed to minimize the impact on revenues of changes in average customer usage of electricity and natural gas. The January 2010 MPSC order in Detroit Edison’s 2009 rate case provided for, among other items, the implementation of a pilot electric RDM effective February 1, 2010. The electric RDM enables Detroit Edison to recover or refund the change in revenue resulting from the difference between actual average sales per customer compared to the base level of average sales per customer established in the MPSC order. The June 2010 MPSC order in MichCon’s 2009 rate case provided for, among other items, the implementation of a pilot gas RDM effective July 1, 2010. The gas RDM enables MichCon to recover or refund the change in revenue resulting from the difference in weather-adjusted average sales per customer compared to the base average sales per customer established in the MPSC order. The RDMs for Detroit Edison and MichCon address changes in customer usage due to general economic conditions and conservation, but do not shield the utilities from the impacts of lost customers. In addition, the pilot electric RDM materially shields Detroit Edison from the impact of weather on customer usage. The pilot gas RDM does not shield MichCon from the impact of weather on customer usage. The electric and gas RDMs are subject to review by the MPSC after the initial one-year pilot programs.

Both utilities continue to experience high levels of past due receivables primarily attributable to economic conditions. Our service territories continue to experience high levels of unemployment, underemployment and low income households, home foreclosures and a lack of adequate levels of assistance for low-income customers. We have taken actions to manage the level of past due receivables, including customer assistance forums, contracting with collection agencies, working with Michigan officials and others to increase the share of low-income funding allocated to our customers, and increasing customer disconnections. As a result of actions taken to manage the level of past due receivables, arrears were reduced in 2010 in our electric and gas utilities. Detroit Edison has an uncollectible expense tracking mechanism that enables it to recover or refund 80 percent of the difference between the actual uncollectible expense for each year and the $66 million level reflected in base rates. In the June 2010 MPSC rate order, the base amount of MichCon’s uncollectible expense tracking mechanism was increased prospectively from $37 million to $70 million and MichCon’s portion of recovery or refund of the expenses above or below the base amount was modified to 80 percent from 90 percent. The Detroit Edison and MichCon uncollectible tracking mechanisms require annual reconciliation proceedings before the MPSC.

<table><tr><td></td><td>2010</td><td>2009</td><td>2008</td></tr><tr><td></td><td colspan="3">(In millions)</td></tr><tr><td>Uncollectible Expense</td><td></td><td></td><td></td></tr><tr><td>Detroit Edison</td><td>$ 58</td><td>$ 78</td><td>$ 87</td></tr><tr><td>MichCon</td><td>58</td><td>93</td><td>126</td></tr><tr><td></td><td>$116</td><td>$171</td><td>$ 213</td></tr></table>

We are continuing our efforts to identify opportunities to improve cash flow at our utility operations through working capital initiatives and maintaining flexibility in the timing and extent of our long-term capital projects. We are actively managing our cash, capital expenditures, cost structure and liquidity to maintain our financial strength. See the Capital Resources and Liquidity section in this Management’s Discussion and Analysis for further discussion of our liquidity outlook.

## NON-UTILITY OPERATIONS

We have significant investments in non-utility businesses. We employ disciplined investment criteria when assessing opportunities that leverage our assets, skills and expertise. Specifically, we invest in targeted energy markets with attractive competitive dynamics where meaningful scale is in alignment with our risk profile. We expect growth opportunities in the Gas Storage and Pipelines and Power and Industrial Projects segments in the future. Expansion of these businesses will also result in our ability to further diversify geographically.



Gas Storage and Pipelines owns partnership interests in two natural gas storage fields and two interstate pipelines serving the Midwest, Ontario and Northeast markets. Much of the growth in demand for natural gas is expected to occur in the Eastern Canada and the Northeast U.S. regions. Our Vector and Millennium pipelines are well positioned to provide access routes and low-cost expansion options to these markets. In addition, Millennium Pipeline is well positioned for growth related to the Marcellus shale, especially with respect to Marcellus production in Northern Pennsylvania and along the southern tier of New York.

Our Unconventional Gas Production business is engaged in natural gas and oil exploration, development and production primarily within the Barnett shale in north Texas. Our acreage covers an area that produces high Btu gas which provides a significant contribution to revenues from the value of natural gas liquids extracted from the gas stream. During this period of low natural gas prices, these natural gas liquids, with prices correlated to crude oil prices, have provided a significant increase to our realized wellhead price. Our drilling efforts have and will continue to target liquids rich gas and oil producing locations. We continue to develop our holdings and to seek opportunities for additional monetization of select properties, when conditions are appropriate.

Power and Industrial Projects is comprised primarily of projects that deliver energy and products and services to industrial, commercial and institutional customers; provide coal transportation, marketing and trading services; and sell electricity from biomass-fired energy projects. This business segment provides services using project assets usually located on or near the customers' premises in the steel, automotive, pulp and paper, airport and other industries. Renewable energy, environmental and economic trends are creating growth opportunities. The increasing number of states with renewable portfolio standards and energy efficiency mandates provides the opportunity to market the expertise of the Power and Industrial Projects segment in renewable power generation, landfill gas recovery, reduced emission fuel and other related services.

Energy Trading focuses on physical and financial power and gas marketing and trading, structured transactions, enhancement of returns from DTE Energy’s asset portfolio, and optimization of contracted natural gas pipeline transportation and storage, and power transmission and generating capacity positions. Energy Trading also provides natural gas, power and ancillary services to various utilities which may include the management of associated storage and transportation contracts on the customers’ behalf.

## CAPITAL INVESTMENTS

We anticipate significant capital investments during the next three years concentrated primarily in Detroit Edison.

<table><tr><td></td><td>2011-2013 (In billions)</td></tr><tr><td>Capital Investments</td><td></td></tr><tr><td>Detroit Edison</td><td>$ 3.4 — 3.8</td></tr><tr><td>MichCon</td><td>0.5 — 0.6</td></tr><tr><td>Non-Utility</td><td>0.6 — 0.9</td></tr><tr><td></td><td>$ 4.5 — 5.3</td></tr></table>

Our utility businesses require significant capital investments each year in order to maintain and improve the reliability of their asset bases, including power generation plants, distribution systems, storage fields and other facilities and fleets. For both Detroit Edison and MichCon we plan to seek regulatory approval in general rate case filings to include these capital expenditures within our regulatory rate base consistent with prior general rate case filing treatment. Detroit Edison is required to implement a 20-year renewable energy plan to address the provisions of Michigan Public Act 295 of 2008, with the goals of delivering cleaner renewable electric generation to its customers, further diversifying Detroit Edison's and the State of Michigan's sources of electric supply and addressing the state and national goals of increasing energy independence. Detroit Edison will seek separate regulatory approval and recovery of these renewable capital expenditures within our regulatory rate base through our renewable energy plan filings.

In April 2010, the Company signed an agreement with the U.S. Department of Energy for a grant of approximately $84 million in matching funds on total anticipated spending of approximately $168 million related to the accelerated deployment of smart grid technology in Michigan through 2012. The smart grid technology includes



the establishment of an advanced metering infrastructure and other technologies that address improved electric distribution service. See Note 2 of the Notes to Consolidated Financial Statements.

Non-utility investments are expected primarily in continued investment in gas storage and pipeline assets and renewable opportunities in the Power and Industrial Projects businesses.

## ENVIRONMENTAL MATTERS

We are subject to extensive environmental regulation. Additional costs may result as the effects of various substances on the environment are studied and governmental regulations are developed and implemented. Actual costs to comply could vary substantially. We expect to continue recovering environmental costs related to utility operations through rates charged to our customers.

Air — Detroit Edison is subject to the EPA ozone transport and acid rain regulations that limit power plant emissions of sulfur dioxide and nitrogen oxides. Since 2005, the EPA and the State of Michigan have issued additional emission reduction regulations relating to ozone, fine particulate, regional haze and mercury air pollution. The new rules will lead to additional controls on fossil-fueled power plants to reduce nitrogen oxide, sulfur dioxide and mercury emissions. To comply with these requirements, Detroit Edison has spent approximately $1.5 billion through 2010. The Company estimates Detroit Edison will make capital expenditures of over $230 million in 2011 and up to $2.1 billion of additional capital expenditures through 2020 based on current regulations. Further, additional rulemakings are expected over the next few years which could require additional controls for sulfur dioxide, nitrogen oxides and hazardous air pollutants. It is not possible to quantify the impact of those expected rulemakings at this time.

In July 2009, DTE Energy received a Notice of Violation/Finding of Violation (NOV/FOV) from the EPA alleging, among other things, that five Detroit Edison power plants violated New Source Performance standards, Prevention of Significant Deterioration requirements, and operating permit requirements under the Clean Air Act. An additional NOV/FOV was received in June 2010 related to a recent project and outage at Unit 2 of the Monroe Power Plant.

On August 5, 2010, the United States Department of Justice, at the request of the EPA, brought a civil suit in the U.S. District Court for the Eastern District of Michigan against DTE Energy and Detroit Edison, related to the June 2010 NOV/FOV and the outage work performed at Unit 2 of the Monroe Power Plant, but not relating to the July 2009 NOV/FOV. Among other relief, the EPA requested the court to require Detroit Edison to install and operate the best available control technology at Unit 2 of the Monroe Power Plant. Further, the EPA requested the court to issue a preliminary injunction to require Detroit Edison to (i) begin the process of obtaining the necessary permits for the Monroe Unit 2 modification and (ii) offset the pollution from Monroe Unit 2 through emissions reductions from Detroit Edison's fleet of coal-fired power plants until the new control equipment is operating. In January 2011, the EPA's motion for preliminary injunction was denied and the liability phase of the civil suit has been scheduled for trial in May 2011.

DTE Energy and Detroit Edison believe that the plants identified by the EPA, including Unit 2 of the Monroe Power Plant, have complied with all applicable federal environmental regulations. Depending upon the outcome of discussions with the EPA regarding the NOV/FOV and the result of the civil action, the Company could also be required to install additional pollution control equipment at some or all of the power plants in question, implement early retirement of facilities where control equipment is not economical, engage in supplemental environmental programs, and/or pay fines. The Company cannot predict the financial impact or outcome of this matter, or the timing of its resolution.

Water— In response to an EPA regulation, Detroit Edison is required to examine alternatives for reducing the environmental impacts of the cooling water intake structures at several of its facilities. Based on the results of completed studies and expected future studies, Detroit Edison may be required to install additional control technologies to reduce the impacts of the water intakes. Initially, it was estimated that Detroit Edison could incur up to approximately $55 million in additional capital expenditures over the four to six years subsequent to 2008 to comply with these requirements. However, a January 2007 circuit court decision remanded back to the EPA several provisions of the federal regulation that has resulted in a delay in compliance dates. The decision also raised the



possibility that Detroit Edison may have to install cooling towers at some facilities at a cost substantially greater than was initially estimated for other mitigative technologies. In 2008, the Supreme Court agreed to review the remanded cost-benefit analysis provision of the rule and in April 2009 upheld the EPA’s use of this provision in determining best technology available for reducing environmental impacts. The EPA continues to develop a revised rule, a draft of which is expected to be published in the first quarter of 2011, with a final rule scheduled for mid-2012. The EPA has also issued an information collection request to begin a review of steam electric effluent guidelines. It is not possible at this time to quantify the impacts of these developing requirements.

Manufactured Gas Plant (MGP) and Other Sites — Prior to the construction of major interstate natural gas pipelines, gas for heating and other uses was manufactured locally from processes involving coal, coke or oil. The facilities, which produced gas, have been designated as MGP sites. Gas Utility owns, or previously owned, fifteen such former MGP sites. Detroit Edison owns, or previously owned, three former MGP sites. In addition to the MGP sites, we are also in the process of cleaning up other sites where contamination is present as a result of historical and ongoing utility operations. These other sites include an engineered ash storage facility, electrical distribution substations, gas pipelines, and underground and aboveground storage tank locations. Cleanup activities associated with these sites will be conducted over the next several years.

Any significant change in assumptions, such as remediation techniques, nature and extent of contamination and regulatory requirements, could impact the estimate of remedial action costs for the sites and affect the Company’s financial position and cash flows. The Company anticipates the cost amortization methodology approved by the MPSC for MichCon, which allows MichCon to amortize the MGP costs over a ten-year period beginning with the year subsequent to the year the MGP costs were incurred, and the cost deferral and rate recovery mechanism for Citizens Fuel Gas approved by the City of Adrian, will prevent environmental costs from having a material adverse impact on the Company’s results of operations.

Landfill — Detroit Edison owns and operates a permitted engineered ash storage facility at the Monroe Power Plant to dispose of fly ash from the coal fired power plant. Detroit Edison performed an engineering analysis in 2009 and identified the need for embankment side slope repairs and reconstruction.

The EPA has published proposed rules to regulate coal ash under the authority of the Resources Conservation and Recovery Act (RCRA). The proposed rule published on June 21, 2010 contains two primary regulatory options to regulate coal ash residue. The EPA is currently considering either, to designate coal ash as a “Hazardous Waste” as defined by RCRA or to regulate coal ash as non-hazardous waste under RCRA. However, agencies and legislatures have urged the EPA to regulate coal ash as a non-hazardous waste. If the EPA were to designate coal ash as a hazardous waste, the agency could apply some, or all, of the disposal and reuse standards that have been applied to other existing hazardous wastes. Some of the regulatory actions currently being contemplated could have a significant impact on our operations and financial position and the rates we charge our customers. It is not possible to quantify the impact of those expected rulemakings at this time.

## Non-Utility

The Company’s non-utility affiliates are subject to a number of environmental laws and regulations dealing with the protection of the environment from various pollutants.

The Michigan coke battery facility received and responded to information requests from the EPA that resulted in the issuance of a Notice of Violation in June of 2007 alleging potential maximum achievable control technologies and new source review violations. The EPA is in the process of reviewing the Company’s position of demonstrated compliance and has not initiated escalated enforcement. At this time, the Company cannot predict the impact of this issue. Furthermore, the Michigan coke battery facility is the subject of an investigation by the MDNRE concerning visible emissions readings that resulted from the Company self reporting to MDNRE questionable activities by an employee of a contractor hired by the Company to perform the visible emissions readings. At this time, the Company cannot predict the impact of this investigation.

The Company is also in the process of settling historical air and water violations at its coke battery facility located in Pennsylvania. At this time, the Company cannot predict the impact of this settlement. The Company received two notices of violation from the Pennsylvania Department of Environmental Protection in 2010 alleging



violations of the permit for the Pennsylvania coke battery facility in connection with coal pile storm water runoff. The Company has implemented best management practices to address this issue and is currently seeking a permit from the Pennsylvania Department of Environmental Protection to upgrade its wastewater treatment technology to a biological treatment facility. The Company expects to spend approximately $0.7 million on the existing waste water treatment system to comply with existing water discharge requirements. The Company may spend an additional $13 million over the next few years to meet future regulatory requirements and gain other operational improvements/savings. The Company’s non-utility affiliates are substantially in compliance with all environmental requirements, other than as noted above.

## Global Climate Change

Climate regulation and/or legislation is being proposed and discussed within the U.S. Congress and the EPA. Despite passage of a greenhouse gas cap and trade bill by the U.S. House in June 2009, the Senate has been unable to pass a similar climate bill. A greenhouse gas cap and trade program is not expected to be included in energy or climate bills to be considered by the 112th Congress. Meanwhile, the EPA is beginning to implement regulatory actions under the Clean Air Act to address emission of greenhouse gases. The EPA regulation of greenhouse gases (GHGs) begins in 2011 requiring the best available control technology (BACT) for major sources or modifications to existing major sources that cause significant increases in GHG emissions. The impact of this rule is uncertain until BACT is better defined by the permitting agencies. Pending or future legislation or other regulatory actions could have a material impact on our operations and financial position and the rates we charge our customers. Impacts include expenditures for environmental equipment beyond what is currently planned, financing costs related to additional capital expenditures, the purchase of emission offsets from market sources and the retirement of facilities where control equipment is not economical. We would seek to recover these incremental costs through increased rates charged to our utility customers. Increased costs for energy produced from traditional sources could also increase the economic viability of energy produced from renewable and/or nuclear sources and energy efficiency initiatives and the development of market-based trading of carbon offsets providing business opportunities for our utility and non-utility segments. It is not possible to quantify these impacts on DTE Energy or its customers at this time.

## OUTLOOK

The next few years will be a period of rapid change for DTE Energy and for the energy industry. Our strong utility base, combined with our integrated non-utility operations, position us well for long-term growth.

Looking forward, we will focus on several areas that we expect will improve future performance:

• improving Electric and Gas Utility customer satisfaction;

• continuing to pursue regulatory stability and investment recovery for our utilities;

• managing the growth of our utility asset base;

• optimizing our cost structure across all business segments;

• managing cash, capital and liquidity to maintain or improve our financial strength; and

• investing in businesses that integrate our assets and leverage our skills and expertise.

We will continue to pursue opportunities to grow our businesses in a disciplined manner if we can secure opportunities that meet our strategic, financial and risk criteria.

## RESULTS OF OPERATIONS

The following sections provide a detailed discussion of the operating performance and future outlook of our segments.



<table><tr><td></td><td>2010</td><td>2009</td><td>2008</td></tr><tr><td></td><td colspan="3">(In millions)</td></tr><tr><td>Net Income Attributable to DTE Energy by Segment:</td><td></td><td></td><td></td></tr><tr><td>Electric Utility</td><td>$ 441</td><td>$ 376</td><td>$ 331</td></tr><tr><td>Gas Utility</td><td>127</td><td>80</td><td>85</td></tr><tr><td>Gas Storage and Pipelines</td><td>51</td><td>49</td><td>38</td></tr><tr><td>Unconventional Gas Production(1)</td><td>(11)</td><td>(9)</td><td>84</td></tr><tr><td>Power and Industrial Projects</td><td>85</td><td>31</td><td>40</td></tr><tr><td>Energy Trading</td><td>6</td><td>75</td><td>42</td></tr><tr><td>Corporate &amp; Other</td><td>(69)</td><td>(70)</td><td>(94)</td></tr><tr><td>Discontinued Operations</td><td>—</td><td>—</td><td>20</td></tr><tr><td>Net Income Attributable to DTE Energy Company</td><td>$ 630</td><td>$ 532</td><td>$ 546</td></tr></table>

(1) 2008 net income of the Unconventional Gas Production segment resulted principally from the gain on the sale of a portion of our Barnett shale properties See Note 10 of the Notes to the Consolidated Financial Statements in Item 8 of this Report.

## ELECTRIC UTILITY

Our Electric Utility segment consists of Detroit Edison.

Electric Utility results are discussed below:

<table><tr><td></td><td>2010</td><td>2009</td><td>2008</td></tr><tr><td></td><td colspan="3">(In millions)</td></tr><tr><td>Operating Revenues</td><td>$ 4,993</td><td>$ 4,714</td><td>$ 4,874</td></tr><tr><td>Fuel and Purchased Power</td><td>1,580</td><td>1,491</td><td>1,778</td></tr><tr><td>Gross Margin</td><td>3,413</td><td>3,223</td><td>3,096</td></tr><tr><td>Operation and Maintenance</td><td>1,305</td><td>1,277</td><td>1,322</td></tr><tr><td>Depreciation and Amortization</td><td>849</td><td>844</td><td>743</td></tr><tr><td>Taxes Other Than Income</td><td>237</td><td>205</td><td>232</td></tr><tr><td>Asset (Gains) Losses, Reserves and Impairments, Net</td><td>(6)</td><td>(2)</td><td>(1)</td></tr><tr><td>Operating Income</td><td>1,028</td><td>899</td><td>800</td></tr><tr><td>Other (Income) and Deductions</td><td>317</td><td>295</td><td>283</td></tr><tr><td>Income Tax Provision</td><td>270</td><td>228</td><td>186</td></tr><tr><td>Net Income Attributable to DTE Energy Company</td><td>$ 441</td><td>$ 376</td><td>$ 331</td></tr><tr><td>Operating Income as a Percent of Operating Revenues</td><td>21%</td><td>19%</td><td>16%</td></tr></table>

Gross margin increased $190 million in 2010 and increased $127 million in 2009. Revenues associated with certain tracking mechanisms and surcharges are offset by related expenses elsewhere in the Consolidated Statement of Operations. The following table details changes in various gross margin components relative to the comparable prior period:

<table><tr><td></td><td>2010</td><td>2009</td></tr><tr><td></td><td colspan="2">(In millions)</td></tr><tr><td>Weather, net of RDM</td><td>$ 84</td><td>$ (66)</td></tr><tr><td>Energy optimization and renewable surcharge/regulatory offset</td><td>(10)</td><td>54</td></tr><tr><td>Securitization bond and tax surcharge rate increase</td><td>40</td><td>62</td></tr><tr><td>2010 rate order, surcharges and other</td><td>76</td><td>77</td></tr><tr><td>Increase in gross margin</td><td>$190</td><td>$127</td></tr></table>



<table><tr><td rowspan="2"></td><td>2010</td><td>2009</td><td>2008</td></tr><tr><td colspan="3">(In thousands of MWh)</td></tr><tr><td>Electric Sales</td><td></td><td></td><td></td></tr><tr><td>Residential</td><td>15,726</td><td>14,625</td><td>15,492</td></tr><tr><td>Commercial</td><td>16,570</td><td>18,200</td><td>18,920</td></tr><tr><td>Industrial</td><td>10,195</td><td>9,922</td><td>13,086</td></tr><tr><td>Other</td><td>3,210</td><td>3,229</td><td>3,218</td></tr><tr><td></td><td>45,701</td><td>45,976</td><td>50,716</td></tr><tr><td>Interconnection sales(1)</td><td>4,876</td><td>5,156</td><td>3,583</td></tr><tr><td>Total Electric Sales</td><td>50,577</td><td>51,132</td><td>54,299</td></tr><tr><td>Electric Deliveries</td><td></td><td></td><td></td></tr><tr><td>Retail and Wholesale</td><td>45,701</td><td>45,976</td><td>50,716</td></tr><tr><td>Electric Customer Choice, including self generators(2)</td><td>5,005</td><td>1,477</td><td>1,457</td></tr><tr><td>Total Electric Sales and Deliveries</td><td>50,706</td><td>47,453</td><td>52,173</td></tr></table>

(1) Represents power that is not distributed by Detroit Edison.

(2) Includes deliveries for self generators who have purchased power from alternative energy suppliers to supplement their power requirements.

<table><tr><td></td><td>2010</td><td>2009</td><td>2008</td></tr><tr><td></td><td></td><td>(In thousands of MWh)</td><td></td></tr><tr><td>Power Generated and Purchased</td><td></td><td></td><td></td></tr><tr><td>Power Plant Generation</td><td></td><td></td><td></td></tr><tr><td>Fossil</td><td>39,433</td><td>73%</td><td>40,595</td></tr><tr><td>Nuclear</td><td>7,738</td><td>14</td><td>7,406</td></tr><tr><td></td><td>47,171</td><td>87</td><td>48,001</td></tr><tr><td>Purchased Power</td><td>6,638</td><td>13</td><td>6,495</td></tr><tr><td>System Output</td><td>53,809</td><td>100%</td><td>54,496</td></tr><tr><td>Less Line Loss and Internal Use</td><td>(3,232)</td><td></td><td>(3,364)</td></tr><tr><td>Net System Output</td><td>50,577</td><td></td><td>51,132</td></tr><tr><td>Average Unit Cost (\(/MWh)</td><td></td><td></td><td></td></tr><tr><td>Generation(1)</td><td>$ 18.94</td><td></td><td>$ 18.20</td></tr><tr><td>Purchased Power</td><td>$ 42.38</td><td></td><td>$ 37.74</td></tr><tr><td>Overall Average Unit Cost</td><td>$ 21.83</td><td></td><td>$ 20.53</td></tr></table>

(1) Represents fuel costs associated with power plants.

Operation and maintenance expense increased $28 million in 2010 and decreased $45 million in 2009. The increase in 2010 is primarily due to higher restoration and line clearance expenses of $40 million, higher energy optimization and renewable energy expenses of $18 million, higher legal expenses of $15 million, partially offset by reduced uncollectible expenses of $20 million, lower generation expenses of $18 million and lower employee benefit-related expenses of $6 million. The decrease in 2009 was primarily due to $71 million from continuous improvement initiatives and other cost reductions resulting in lower contract labor and outside services expense, information technology and other staff expenses, $14 million of lower employee benefit-related expenses, lower restoration and line clearance expenses of $12 million, $9 million of reduced uncollectible expenses and $6 million of reduced maintenance activities, partially offset by higher pension and health care costs of $54 million and $14 million of energy optimization and renewable energy expenses.



Depreciation and amortization expense increased $5 million in 2010 and $101 million in 2009 due primarily to a higher depreciable base and increased amortization of regulatory assets.

Taxes other than income were higher by $32 million in 2010 due primarily to a $30 million reduction in property tax expense in 2009 due to refunds received in settlement of appeals of assessments for prior years.

Outlook — We continue to move forward in our efforts to improve the operating performance and cash flow of Detroit Edison. The 2010 MPSC order provided for an uncollectible expense tracking mechanism which financially assists in mitigating the impacts of economic conditions in our service territory and a revenue decoupling mechanism that addresses changes in average customer usage due to general economic conditions, weather and conservation. These and other tracking mechanisms and surcharges are expected to result in lower earnings volatility. We expect that our planned significant environmental and renewable expenditures will result in earnings growth. Looking forward, we face additional challenges, such as higher levels of capital spending, volatility in prices for coal and other commodities, increased transportation costs, investment returns and changes in discount rate assumptions in benefit plans and health care costs, lower levels of wholesale sales due to contract expirations, and uncertainty of legislative or regulatory actions regarding climate change. We expect to continue our continuous improvement efforts to improve productivity and decrease our costs while improving customer satisfaction with consideration of customer rate affordability.

## GAS UTILITY

Our Gas Utility segment consists of MichCon and Citizens.

Gas Utility results are discussed below:

<table><tr><td></td><td>2010</td><td>2009 (In millions)</td><td>2008</td></tr><tr><td>Operating Revenues</td><td>$1,648</td><td>$1,788</td><td>$2,152</td></tr><tr><td>Cost of Gas</td><td>870</td><td>1,057</td><td>1,378</td></tr><tr><td>Gross Margin</td><td>778</td><td>731</td><td>774</td></tr><tr><td>Operation and Maintenance</td><td>378</td><td>415</td><td>464</td></tr><tr><td>Depreciation and Amortization</td><td>92</td><td>107</td><td>102</td></tr><tr><td>Taxes Other Than Income</td><td>55</td><td>49</td><td>48</td></tr><tr><td>Asset (Gains) and Losses, Net</td><td>—</td><td>(18)</td><td>(26)</td></tr><tr><td>Operating Income</td><td>253</td><td>178</td><td>186</td></tr><tr><td>Other (Income) and Deductions</td><td>59</td><td>59</td><td>60</td></tr><tr><td>Income Tax Provision</td><td>67</td><td>39</td><td>41</td></tr><tr><td>Net Income Attributable to DTE Energy Company</td><td>$127</td><td>$ 80</td><td>$ 85</td></tr><tr><td>Operating Income as a Percent of Operating Revenues</td><td>15%</td><td>10%</td><td>9%</td></tr></table>

Gross margin increased $47 million in 2010 and decreased $43 million in 2009. Revenues associated with certain tracking mechanisms and surcharges are offset by related expenses elsewhere in the Consolidated Statement



of Operations. The following table details changes in various gross margin components relative to the comparable prior period:

<table><tr><td></td><td>2010</td><td>2009</td></tr><tr><td></td><td colspan="2">(In millions)</td></tr><tr><td>2010 self-implementation and rate order</td><td>$125</td><td>$—</td></tr><tr><td>Lost and stolen gas</td><td>13</td><td>(15)</td></tr><tr><td>Midstream transportation and storage revenues</td><td>(20)</td><td>22</td></tr><tr><td>Uncollectible tracking mechanism</td><td>(43)</td><td>(28)</td></tr><tr><td>Lower sales volumes</td><td>—</td><td>(13)</td></tr><tr><td>Weather</td><td>(23)</td><td>(4)</td></tr><tr><td>Other</td><td>(5)</td><td>(5)</td></tr><tr><td>Increase (decrease) in gross margin</td><td>$47</td><td>$(43)</td></tr><tr><td>Gas Markets (in Bcf)</td><td></td><td></td></tr><tr><td>Gas sales</td><td>118</td><td>137</td></tr><tr><td>End user transportation</td><td>140</td><td>124</td></tr><tr><td></td><td>258</td><td>261</td></tr><tr><td>Intermediate transportation</td><td>391</td><td>463</td></tr><tr><td></td><td>649</td><td>724</td></tr></table>

Operation and maintenance expense decreased $37 million in 2010 and $49 million in 2009. The decrease in 2010 is primarily due to reduced uncollectible expenses of $35 million and the deferral of $32 million of previously expensed CTA restructuring expenses, partially offset by higher maintenance expenses of $11 million, increased energy optimization expenses of $9 million, higher employee benefit-related expenses of $3 million and expense of $3 million for contributions to the Low Income Energy Efficiency Fund. The decrease in 2009 was primarily due to $33 million of reduced uncollectible expenses, $15 million of lower employee benefit-related expenses, $14 million from continuous improvement initiatives and other cost reductions resulting in lower contract labor and outside services expense, information technology and other staff expenses, partially offset by higher health care expenses of $8 million and $4 million of energy optimization expenses. See Note 12 of Notes to Consolidated Financial Statements in Item 8 of this report.

Depreciation and amortization expense decreased $15 million in 2010 due to the March 2010 MPSC order that reduced MichCon’s depreciation rates effective April 1, 2010.

Asset (gains) losses, net decreased $18 million due to 2009 gains on the sale of base gas and the sale of certain gathering and processing assets.

Outlook — We continue to move forward in our efforts to improve the operating performance and cash flow of Gas Utility. Unfavorable economic trends have resulted in a decrease in the number of customers in our service territory, increased customer conservation and continued high levels of theft and uncollectible accounts receivable. The MPSC has provided for an uncollectible expense tracking mechanism which assists in mitigating the impacts of economic conditions in our service territory and a revenue decoupling mechanism that addresses changes in average customer usage due to general economic conditions and conservation. These and other tracking mechanisms and surcharges are expected to result in lower earnings volatility in the future. Looking forward, we face additional issues, such as volatility in gas prices, investment returns and changes in discount rate assumptions in benefit plans and health care costs. We expect to continue an intense focus on our continuous improvement efforts to improve productivity, minimize lost and stolen gas, and decrease our costs while improving customer satisfaction with consideration of customer rate affordability.



## GAS STORAGE AND PIPELINES

Our Gas Storage and Pipelines segment consists of our non-utility gas pipelines and storage businesses.

Gas Storage and Pipelines results are discussed below:

<table><tr><td></td><td>2010</td><td>2009 (In millions)</td><td>2008</td></tr><tr><td>Operating Revenues</td><td>$ 83</td><td>$ 82</td><td>$ 71</td></tr><tr><td>Operation and Maintenance</td><td>14</td><td>15</td><td>12</td></tr><tr><td>Depreciation and Amortization</td><td>5</td><td>5</td><td>5</td></tr><tr><td>Taxes Other Than Income</td><td>2</td><td>2</td><td>3</td></tr><tr><td>Asset (Gains) and Losses, Net</td><td>—</td><td>—</td><td>1</td></tr><tr><td>Operating Income</td><td>62</td><td>60</td><td>50</td></tr><tr><td>Other (Income) and Deductions</td><td>(25)</td><td>(23)</td><td>(12)</td></tr><tr><td>Income Tax Provision</td><td>32</td><td>33</td><td>24</td></tr><tr><td>Net Income</td><td>55</td><td>50</td><td>38</td></tr><tr><td>Noncontrolling interest</td><td>4</td><td>1</td><td>—</td></tr><tr><td>Net Income Attributable to DTE Energy</td><td>$ 51</td><td>$ 49</td><td>$ 38</td></tr></table>

Net income attributable to DTE Energy increased $2 million and $1 million in 2010 and 2009, respectively. The 2010 increase was driven by higher gas storage revenues and lower project development costs. The 2009 increase was driven by higher operating revenues resulting from increased capacity sold and higher rates from renewing storage contracts related to long-term agreements. In addition, in 2009 we had higher equity earnings from our investments in the Vector and Millennium Pipelines, reflecting a first full year of operations for Millennium.

Outlook — Our Gas Storage and Pipelines business expects to continue its steady growth plan and is evaluating new pipeline and storage investment opportunities.

## UNCONVENTIONAL GAS PRODUCTION

Our Unconventional Gas Production business is engaged in natural gas and oil exploration, development and production within the Barnett shale in northern Texas. In January 2008, we sold a portion of our Barnett shale properties for gross proceeds of approximately $260 million. We recognized a gain of $128 million ($80 million after-tax) on the sale in 2008.

Unconventional Gas Production results are discussed below:

<table><tr><td></td><td>2010</td><td>2009 (In millions)</td><td>2008</td></tr><tr><td>Operating Revenues</td><td>$ 32</td><td>$ 31</td><td>$ 48</td></tr><tr><td>Operation and Maintenance</td><td>16</td><td>15</td><td>22</td></tr><tr><td>Depreciation, Depletion and Amortization</td><td>15</td><td>16</td><td>12</td></tr><tr><td>Taxes Other Than Income</td><td>2</td><td>1</td><td>1</td></tr><tr><td>Asset (Gains) and Losses, Net</td><td>10</td><td>6</td><td>(120)</td></tr><tr><td>Operating Income (Loss)</td><td>(11)</td><td>(7)</td><td>133</td></tr><tr><td>Other (Income) and Deductions</td><td>6</td><td>6</td><td>2</td></tr><tr><td>Income Tax Provision (Benefit)</td><td>(6)</td><td>(4)</td><td>47</td></tr><tr><td>Net Income (Loss) Attributable to DTE Energy Company</td><td>$ (11)</td><td>$ (9)</td><td>$ 84</td></tr></table>



Operating revenues increased $1 million in 2010 as a result of higher commodity prices, and an increase in oil production. The 2009 decrease of $17 million was due to lower commodity prices realized for physical sales as well as a reduction in volumes hedged.

Operation and maintenance expense increased $1 million in 2010 due to more wells on line and increased water handling cost. The decrease of $7 million in 2009 was due to operational efficiencies and lower costs for goods and services due to economic conditions.

Asset (gains) and losses, net increased $4 million in 2010 and decreased $126 million in 2009. The increase in 2010 was due to impairment of unproved leasehold positions that the Company does not intend to drill prior to expiration. The 2009 decrease was due to the gain of $128 million ($80 million after-tax) on the 2008 sale of a portion of our Barnett shale properties and $2 million lower impairment in 2009 of expired or expiring leasehold positions that the Company did not intend to drill at then current commodity prices.

Outlook — In the longer-term, we plan to continue to develop our holdings in the western portion of the Barnett shale and to seek opportunities for additional monetization of select properties when conditions are appropriate. Our strategy for 2011 is to maintain our focus on reducing operating expenses and optimizing production volume. Given the current outlook of low natural gas prices, drilling efforts will continue to target liquids rich gas and oil production. During 2011, we expect total capital investment of $25 million to drill approximately 20 new wells and continue to acquire select acreage and achieve production of approximately 6 Bcfe of natural gas, compared with 5 Bcfe in 2010.

## POWER AND INDUSTRIAL PROJECTS

Power and Industrial Projects is comprised primarily of projects that deliver energy and utility-type products and services to industrial, commercial and institutional customers; provide coal transportation services and marketing; and sell electricity from biomass-fired energy projects.

Power and Industrial Projects results are discussed below:

<table><tr><td></td><td>2010</td><td>2009</td><td>2008</td></tr><tr><td></td><td colspan="3">(In millions)</td></tr><tr><td>Operating Revenues</td><td>$1,144</td><td>$661</td><td>$987</td></tr><tr><td>Operation and Maintenance</td><td>978</td><td>593</td><td>899</td></tr><tr><td>Depreciation and Amortization</td><td>60</td><td>40</td><td>34</td></tr><tr><td>Taxes other than Income</td><td>14</td><td>9</td><td>12</td></tr><tr><td>Other Asset (Gains) and Losses, Reserves and Impairments, Net</td><td>(14)</td><td>(6)</td><td>6</td></tr><tr><td>Operating Income</td><td>106</td><td>25</td><td>36</td></tr><tr><td>Other (Income) and Deductions</td><td>13</td><td>(1)</td><td>(20)</td></tr><tr><td>Income Taxes</td><td></td><td></td><td></td></tr><tr><td>Provision</td><td>36</td><td>5</td><td>18</td></tr><tr><td>Production Tax Credits</td><td>(33)</td><td>(12)</td><td>(7)</td></tr><tr><td></td><td>3</td><td>(7)</td><td>11</td></tr><tr><td>Net Income</td><td>90</td><td>33</td><td>45</td></tr><tr><td>Noncontrolling interest</td><td>5</td><td>2</td><td>5</td></tr><tr><td>Net Income Attributable to DTE Energy Company</td><td>$ 85</td><td>$ 31</td><td>$ 40</td></tr></table>

VIEs — As discussed in Notes 1 and 3 of Notes to the Consolidated Financial Statements, effective January 1, 2010, we adopted the provisions of ASU 2009-17, Amendments to FASB Interpretation 46(R). ASU 2009-17 changed the methodology for determining the primary beneficiary of a VIE from a quantitative risk and rewards-based model to a qualitative determination. The Company re-evaluated prior VIE and primary beneficiary determinations and, as a result, began consolidating five entities. Since these entities were previously accounted for under the equity method, the VIE consolidation had no impact on Net Income Attributable to DTE Energy. As a



result of the consolidation of these VIEs, Operating Revenues and Operations and Maintenance expense increased $174 million and $122 million, respectively, in 2010.

Operating revenues increased $309 million, net of VIE adjustments, in 2010 and decreased $326 million in 2009. The 2010 increase is attributed primarily to $172 million of higher coke sales and a $156 million increase in on-site services, partially offset by a $18 million decrease in coal trading and transportation services. The 2009 decrease is due primarily to $111 million reduction in certain coal structured transactions, $176 million of lower pricing and volumes of coal and emissions and $84 million of lower coke demand, partially offset by a $107 million increase in coal related services.

Operation and maintenance expense increased $262 million, net of VIE adjustments, in 2010 and decreased $306 million in 2009. The increase is due primarily to $118 million of higher coke production and a $154 million increase in on-site services, partially offset by $10 million of lower coal trading and transportation services. The 2009 decrease is due primarily to $111 million decrease in certain coal structured transactions and $64 million of lower coke demand, $141 million of lower pricing and volumes of coal and emissions and operating expenses, partially offset by $75 million of higher coal related services.

Asset (Gains) Losses were higher by $8 million in 2010 due primarily to the sale of DTE Rail Services and an increase in installment gains from the sale of a coke battery.

Other (income) and deductions were lower by $14 million in 2010 and lower by $19 million in 2009. The decreases in both years were due primarily to lower equity earnings in various projects and higher intercompany interest associated with project investment.

Outlook — We expect sustained production levels of metallurgical coke and pulverized coal supplied to steel industry customers for 2011. Beginning in 2011, substantially all of the metallurgical coke is under long-term contracts. The tax credits associated with our steel industry fuels facilities expired at December 31, 2010 that will result in lower tax credits of approximately $29 million in 2011. We supply on-site energy services to the domestic automotive manufacturers who have also experienced stabilized demand for automobiles. Our on-site energy services will continue to be delivered in accordance with the terms of long-term contracts.

In late 2009, we began operating reduced emission fuel facilities located at Detroit Edison owned coal-fired power plants. The facilities reduce Nitrogen Oxide (NO) and Mercury (Hg) emissions and qualify for production tax credits when the fuel is sold to an unrelated party through 2019. We continue to optimize these facilities by seeking investors for facilities operating at Detroit Edison sites and intend to relocate other facilities to alternative sites which may provide increased production and emission reduction opportunities in 2011 and future years. In January 2011, the Company entered into an agreement to sell a membership interest in one of these reduced emission fuel facilities that is located at a Detroit Edison site.

Environmental and economic trends are creating growth opportunities for renewable power. The increasing number of states with renewable portfolio standards and energy efficiency mandates provides investment opportunity in waste-wood power generation. In addition to the three facilities in operation, we will convert and place into service two additional facilities in 2011 and 2013. We will continue to look for additional investment opportunities for waste-wood renewable power generation and other energy projects at favorable prices.

Effective January 1, 2011, our existing long-term rail transportation contract, at rates significantly below the current market, expired and we anticipate a decrease in transportation-related revenue of approximately $130 million as a result. The decrease in revenue will be mostly offset by lower variable costs incurred to provide the transportation.

We will continue to work with suppliers and the railroads to promote secure and competitive access to coal to meet the energy requirements of our customers. Power and Industrial Projects will continue to leverage its extensive energy-related operating experience and project management capability to develop additional energy projects to serve energy intensive industrial customers.

## ENERGY TRADING

Energy Trading focuses on physical and financial power and gas marketing and trading, structured transactions, enhancement of returns from DTE Energy’s asset portfolio, and optimization of contracted natural gas



pipeline transportation and storage, and power transmission and generating capacity positions. Energy Trading also provides natural gas, power and ancillary services to various utilities which may include the management of associated storage and transportation contracts on the customers' behalf.

Energy Trading results are discussed below:

<table><tr><td></td><td>2010</td><td>2009 (In millions)</td><td>2008</td></tr><tr><td>Operating Revenues</td><td>$875</td><td>$ 804</td><td>$ 1,388</td></tr><tr><td>Fuel, Purchased Power and Gas</td><td>786</td><td>603</td><td>1,235</td></tr><tr><td>Gross Margin</td><td>89</td><td>201</td><td>153</td></tr><tr><td>Operation and Maintenance</td><td>59</td><td>71</td><td>68</td></tr><tr><td>Depreciation and Amortization</td><td>5</td><td>5</td><td>5</td></tr><tr><td>Taxes Other Than Income</td><td>2</td><td>3</td><td>2</td></tr><tr><td>Operating Income</td><td>23</td><td>122</td><td>78</td></tr><tr><td>Other (Income) and Deductions</td><td>12</td><td>10</td><td>5</td></tr><tr><td>Income Tax Provision (Benefit)</td><td>5</td><td>37</td><td>31</td></tr><tr><td>Net Income Attributable to DTE Energy Company</td><td>$ 6</td><td>$ 75</td><td>$ 42</td></tr></table>

Gross margin decreased $112 million in 2010 and increased $48 million in 2009. The overall decrease in gross margin in 2010 was the result of lower economic performance, lower commodity prices, lower volatility in the markets we participate in and lower risk positions relative to 2009, coupled with the absence of prior year timing-related gains. We experienced timing-related earnings volatility based on market movement related to derivative contracts.

The decrease in 2010 represents a $78 million decrease in realized margins and $34 million decrease in unrealized margins. The $78 million decrease in realized margins is due to $108 million of unfavorable results, primarily in our power and gas trading and gas full requirements strategies, offset by $30 million of favorable results, primarily in our power full requirements and power origination strategies. The $34 million decrease in unrealized margins is due to $56 million of unfavorable results, primarily in our power trading strategy and the absence of prior year timing-related gains related to our gas transportation strategy. These decreases were offset by $22 million of favorable results, primarily due to timing-related gains in our gas full requirements strategy.

The $48 million increase in gross margin in 2009 was due to increases in realized margins of $69 million, offset by decreases in unrealized margins of $21 million. The $69 million increase in realized margins was primarily the result of increases in our gas trading strategy and timing-related increases in our gas storage and gas transportation strategies. The $21 million decrease in unrealized margins consisted of unfavorable results of $58 million from our gas trading and gas storage strategies, partially offset by increases of $29 million primarily in our power trading strategy and timing-related improvements of $8 million in our oil strategies.

Operation and maintenance expense decreased $12 million in 2010 and increased $3 million in 2009. The 2010 decrease was primarily due to lower incentive costs. The 2009 increase was due to higher payroll and incentive costs and commissions, partially offset by lower contractor expense and allocated corporate costs.

Income tax provision decreased $32 million in 2010. This decrease is due to lower pretax income, partially offset by $10 million of favorable tax-related adjustments in 2009 resulting from the settlement of federal income tax audits. Income taxes were higher by $6 million in 2009 due to higher pretax income, partially offset by the $10 million of favorable tax-related adjustments.

Outlook — In the near term, we expect market conditions to remain challenging and the profitability of this segment may be impacted by the volatility or lack thereof in commodity prices in the markets we participate in and the uncertainty of impacts associated with financial reform, regulatory changes and changes in operating rules of regional transmission organizations.



The Energy Trading portfolio includes financial instruments, physical commodity contracts and gas inventory, as well as contracted natural gas pipeline transportation and storage, and power transmission and generation capacity positions. Energy Trading also provides natural gas, power and ancillary services to various utilities which may include the management of associated storage and transportation contracts on the customers' behalf. Significant portions of the Energy Trading portfolio are economically hedged. Most financial instruments and physical power and gas contracts are deemed derivatives, whereas natural gas inventory, power transmission, pipeline transportation and certain storage assets are not derivatives. As a result, we will experience earnings volatility as derivatives are marked-to-market without revaluing the underlying non-derivative contracts and assets. Our strategy is to economically manage the price risk of these underlying non-derivative contracts and assets with futures, forwards, swaps and options. This results in gains and losses that are recognized in different interim and annual accounting periods.

See also the “Fair Value” section that follows.

## CORPORATE & OTHER

Corporate & Other includes various holding company activities and holds certain non-utility debt and energy-related investments.

The 2010 net loss of $69 million was an improvement of $1 million from the 2009 net loss of $70 million. The net $1 million improvement was a result of the 2009 donation to the DTE Energy Foundation of $10 million and lower impairments of investments of $3 million, partially offset by higher state and local taxes of $3 million, higher tax related interest of $5 million, increased financing costs of $5 million. The 2010 donation to the DTE Energy Foundation of $14 million was made by Detroit Edison and MichCon.

The 2009 net loss of $70 million decreased from the net loss of $94 million in 2008 due to $34 million favorable tax-related adjustments primarily resulting from the settlement of federal income tax audits, $10 million lower inter-company interest expense and $9 million lower costs related to natural gas forward contracts associated with the 2007 sale of the Antrim Shale properties. These favorable variances were partially offset by a $10 million donation of cash and available-for-sale securities to the DTE Energy Foundation, $10 million resulting from a realignment of employee benefit expense from MichCon, $7 million increase in financing fees, $1 million increased impairment of investments and a $1 million decrease in interest income.

## CUMULATIVE EFFECT OF ACCOUNTING CHANGES

Effective January 1, 2008, we adopted ASC 820 (SFAS No. 157, Fair Value Measurements). The cumulative effect adjustment upon adoption of ASC 820 represented a $4 million increase to the January 1, 2008 balance of retained earnings. See also the “Fair Value” section.

## CAPITAL RESOURCES AND LIQUIDITY

## Cash Requirements

We use cash to maintain and expand our electric and gas utilities and to grow our non-utility businesses, retire and pay interest on long-term debt and pay dividends. We believe that we will have sufficient internal and external capital resources to fund anticipated capital and operating requirements. In 2011, we expect that cash from operations will be $1.9 billion due to lower working capital requirements. We anticipate base level capital investments and expenditures for existing businesses in 2011 of up to $1.4 billion. The capital needs of our utilities will increase due primarily to environmental expenditures. We plan to seek regulatory approval to include these capital expenditures within our regulatory rate base consistent with prior treatment. Capital spending for growth of



existing or new non-utility businesses will depend on the existence of opportunities that meet our strict risk-return and value creation criteria.

<table><tr><td></td><td>2010</td><td>2009</td><td>2008</td></tr><tr><td></td><td colspan="3">(In millions)</td></tr><tr><td>Cash and Cash Equivalents</td><td></td><td></td><td></td></tr><tr><td>Cash Flow From (Used For)</td><td></td><td></td><td></td></tr><tr><td>Operating activities:</td><td></td><td></td><td></td></tr><tr><td>Net income</td><td>$ 639</td><td>$ 535</td><td>$ 553</td></tr><tr><td>Depreciation, depletion and amortization</td><td>1,027</td><td>1,020</td><td>899</td></tr><tr><td>Deferred income taxes</td><td>457</td><td>205</td><td>348</td></tr><tr><td>Gain on sale of non-utility business</td><td>—</td><td>—</td><td>(128)</td></tr><tr><td>Gain on sale of synfuel and other assets, net and synfuel impairment</td><td>(5)</td><td>(10)</td><td>(35)</td></tr><tr><td>Working capital and other</td><td>(293)</td><td>69</td><td>(78)</td></tr><tr><td></td><td>1,825</td><td>1,819</td><td>1,559</td></tr><tr><td>Investing activities:</td><td></td><td></td><td></td></tr><tr><td>Plant and equipment expenditures — utility</td><td>(1,011)</td><td>(960)</td><td>(1,183)</td></tr><tr><td>Plant and equipment expenditures — non-utility</td><td>(88)</td><td>(75)</td><td>(190)</td></tr><tr><td>Proceeds from sale of non-utility business</td><td>—</td><td>—</td><td>253</td></tr><tr><td>Proceeds (refunds) from sale of synfuels and other assets</td><td>56</td><td>83</td><td>(278)</td></tr><tr><td>Restricted cash and other investments</td><td>(183)</td><td>(112)</td><td>(125)</td></tr><tr><td></td><td>(1,226)</td><td>(1,064)</td><td>(1,523)</td></tr><tr><td>Financing activities:</td><td></td><td></td><td></td></tr><tr><td>Issuance of long-term debt</td><td>614</td><td>427</td><td>1,310</td></tr><tr><td>Redemption of long-term debt</td><td>(663)</td><td>(486)</td><td>(446)</td></tr><tr><td>Repurchase of long-term debt</td><td>—</td><td>—</td><td>(238)</td></tr><tr><td>Short-term borrowings, net</td><td>(177)</td><td>(417)</td><td>(340)</td></tr><tr><td>Issuance of common stock</td><td>36</td><td>35</td><td>—</td></tr><tr><td>Repurchase of common stock</td><td>—</td><td>—</td><td>(16)</td></tr><tr><td>Dividends on common stock and other</td><td>(396)</td><td>(348)</td><td>(354)</td></tr><tr><td></td><td>(586)</td><td>(789)</td><td>(84)</td></tr><tr><td>Net Increase (Decrease) in Cash and Cash Equivalents</td><td>$ 13</td><td>$ (34)</td><td>$ (48)</td></tr></table>

## Cash from Operating Activities

A majority of our operating cash flow is provided by our electric and gas utilities, which are significantly influenced by factors such as weather, electric Customer Choice, regulatory deferrals, regulatory outcomes, economic conditions and operating costs.

Cash from operations totaling $1.8 billion in 2010 was consistent with the comparable 2009 period. The operating cash flow comparison primarily reflects higher net income after adjusting for non-cash and non-operating items (depreciation, depletion and amortization, deferred income taxes and gains on sales of assets), offset by higher working capital requirements.

Cash from operations totaling $1.8 billion in 2009, increased $260 million from the comparable 2008 period. The operating cash flow comparison primarily reflects lower working capital requirements and higher net income after adjusting for non-cash and non-operating items (depreciation, depletion and amortization, deferred income taxes and gains on sales of assets).

## Cash from Investing Activities

Cash inflows associated with investing activities are primarily generated from the sale of assets, while cash outflows are primarily generated from plant and equipment expenditures. In any given year, we will look to realize



cash from under-performing or non-strategic assets or matured fully valued assets. Capital spending within the utility business is primarily to maintain our generation and distribution infrastructure, comply with environmental regulations and gas pipeline replacements. Capital spending within our non-utility businesses is for ongoing maintenance and expansion. The balance of non-utility spending is for growth, which we manage very carefully. We look to make investments that meet strict criteria in terms of strategy, management skills, risks and returns. All new investments are analyzed for their rates of return and cash payback on a risk adjusted basis. We have been disciplined in how we deploy capital and will not make investments unless they meet our criteria. For new business lines, we initially invest based on research and analysis. We start with a limited investment, we evaluate results and either expand or exit the business based on those results. In any given year, the amount of growth capital will be determined by the underlying cash flows of the Company with a clear understanding of any potential impact on our credit ratings.

Net cash used for investing activities was approximately $1.2 billion in 2010, compared with net cash used for investing activities of $1.1 billion in 2009. The change was primarily driven by increased capital expenditures by our utility and non-utility businesses.

Net cash used for investing activities was approximately $1.1 billion in 2009, compared with net cash used for investing activities of $1.5 billion in 2008. The change was primarily driven by reduced capital expenditures by our utility and non-utility businesses and the completion of refund payments to our synfuel partners in 2008.

## Cash from Financing Activities

We rely on both short-term borrowing and long-term financing as a source of funding for our capital requirements not satisfied by our operations.

Our strategy is to have a targeted debt portfolio blend of fixed and variable interest rates and maturity. We continually evaluate our leverage target, which is currently 50% to 52%, to ensure it is consistent with our objective to have a strong investment grade debt rating.

Net cash used for financing activities was $586 million in 2010, compared to net cash used for financing activities of approximately $789 million for the same period in 2009. The change was primarily attributable to decreased payments for short-term borrowings. Increases in issuances of long-term debt were offset by increased long-term debt redemptions.

Net cash used for financing activities was $789 million in 2009, compared to net cash used for financing activities of approximately $84 million for the same period in 2008. The change was primarily attributable to lower proceeds from the issuance of long-term debt.

## Outlook

We expect cash flow from operations to increase over the long-term primarily as a result of growth from our utilities and the non-utility businesses. We expect growth in our utilities to be driven primarily by new and existing state and federal regulations that will result in additional environmental and renewable energy investments which will increase the base from which rates are determined. Our non-utility growth is expected from additional investments in energy projects as economic conditions improve.

We may be impacted by the delayed collection of underrecoveries of our various recovery and tracking mechanisms as a result of timing of MPSC orders. Energy prices are likely to be a source of volatility with regard to working capital requirements for the foreseeable future. We are continuing our efforts to identify opportunities to improve cash flow through working capital initiatives and maintaining flexibility in the timing and extent of our long-term capital projects.

We have approximately $900 million in long-term debt maturing in the next twelve months. DTE Energy has $600 million of unsecured debt maturing in June 2011 which is expected to be funded through a combination of internally generated funds and short-term debt. Substantially all of the remaining debt maturities relate to Securitization and other Detroit Edison issues. The repayment of the principal amount of the Securitization debt is



funded through a surcharge payable by Detroit Edison’s electric customers. The repayment of the other Detroit Edison debt is expected to be refinanced with long-term debt.

In August 2010, DTE Energy and its wholly owned subsidiaries, Detroit Edison and MichCon, entered into amended and restated two-year $1 billion unsecured revolving credit agreements and new three-year $800 million unsecured revolving credit agreements with a syndicate of 23 banks that may be used for general corporate borrowings, but are intended to provide liquidity support for each of the companies' commercial paper programs. No one bank provides more than 8.25% of the commitment in any facility. Borrowings under the facilities are available at prevailing short-term interest rates. DTE Energy has approximately $1.7 billion of available liquidity at December 31, 2010.

In March 2010, the PPACA and the HCERA were enacted into law (collectively, the “Act”). The Act is a comprehensive health care reform bill. A provision of the PPACA repeals the current rule permitting deduction of the portion of the drug coverage expense that is offset by the Medicare Part D subsidy, effective for taxable years beginning after December 31, 2012. We have initiated changes in benefit design and delivery and are continuing to evaluate alternatives to minimize the impact of the legislation. We contributed $200 million to our pension plans during the year ended December 31, 2010, including a DTE Energy stock contribution of $100 million in March 2010. We contributed $160 million to our postretirement medical and life insurance benefit plans during the year ended December 31, 2010, including a transfer of $25 million from the MichCon Grantor Trust. In January 2011, we contributed $200 million to our pension plans. Also, we contributed $81 million to our postretirement medical and life insurance plans in January 2011, and we expect to contribute up to an additional $90 million throughout the remainder of 2011.

In July 2010, a federal financial reform act was signed into law. The legislation reshapes financial regulation and is intended to address specific issues that contributed to the financial crisis. Most major areas of the legislation will be dependent upon regulatory interpretation, rulemaking and implementation. We do not expect any material effect on our operations and financial position.

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 provided for a special allowance for bonus depreciation in 2011 and 2012. Bonus depreciation is accelerated depreciation on certain types of business equipment that allows a tax deduction of either 50% or 100% of the cost of qualifying property in the year the asset is placed in service. DTE Energy expects to generate approximately $100 million to $200 million of cash in 2011-2012 from bonus depreciation deductions, a significant portion of which is expected to result from Detroit Edison property, plant and equipment expenditures during the qualifying period. The cash benefit is an acceleration of tax deductions that the Company would otherwise have received over 20 years.

We believe we have sufficient operating flexibility, cash resources and funding sources to maintain adequate amounts of liquidity and to meet our future operating cash and capital expenditure needs. However, virtually all of our businesses are capital intensive, or require access to capital, and the inability to access adequate capital could adversely impact earnings and cash flows.

See Notes 12, 16, 18, and 21 of the Notes to Consolidated Financial Statements in Item 8 of this Report.



## Contractual Obligations

The following table details our contractual obligations for debt redemptions, leases, purchase obligations and other long-term obligations as of December 31, 2010:

<table><tr><td></td><td>Total</td><td>2011</td><td>2012-2013 (In millions)</td><td>2014-2015</td><td>2016 and Beyond</td></tr><tr><td>Long-term debt:</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Mortgage bonds, notes and other</td><td>$ 6,888</td><td>$ 765</td><td>$ 691</td><td>$ 1,036</td><td>$ 4,396</td></tr><tr><td>Securitization bonds</td><td>793</td><td>150</td><td>341</td><td>302</td><td>—</td></tr><tr><td>Trust preferred-linked securities</td><td>289</td><td>—</td><td>—</td><td>—</td><td>289</td></tr><tr><td>Capital lease obligations</td><td>62</td><td>12</td><td>18</td><td>18</td><td>14</td></tr><tr><td>Interest</td><td>5,547</td><td>457</td><td>814</td><td>649</td><td>3,627</td></tr><tr><td>Operating leases</td><td>211</td><td>39</td><td>58</td><td>40</td><td>74</td></tr><tr><td>Electric, gas, fuel, transportation and storage purchase obligations(1)</td><td>5,921</td><td>2,175</td><td>1,670</td><td>744</td><td>1,332</td></tr><tr><td>Other long-term obligations(2)(3)(4)</td><td>243</td><td>49</td><td>44</td><td>31</td><td>119</td></tr><tr><td>Total obligations</td><td>$19,954</td><td>$3,647</td><td>$ 3,636</td><td>$ 2,820</td><td>$ 9,851</td></tr></table>

(1) Excludes amounts associated with full requirements contracts where no stated minimum purchase volume is required.

(2) Includes liabilities for unrecognized tax benefits of $28 million.

(3) Excludes other long-term liabilities of $184 million not directly derived from contracts or other agreements.

(4) At December 31, 2010, we met the minimum pension funding levels required under the Employee Retirement Income Security Act of 1974 (ERISA) and the Pension Protection Act of 2006 for our defined benefit pension plans. We may contribute more than the minimum funding requirements for our pension plans and may also make contributions to our benefit plans and our postretirement benefit plans; however, these amounts are not included in the table above as such amounts are discretionary. Planned funding levels are disclosed in the Capital Resources and Liquidity and Critical Accounting Estimates sections of MD&A and in Note 21 of the Notes to Consolidated Financial Statements in Item 8 of this Report.

## Credit Ratings

Credit ratings are intended to provide banks and capital market participants with a framework for comparing the credit quality of securities and are not a recommendation to buy, sell or hold securities. The Company’s credit ratings affect our cost of capital and other terms of financing as well as our ability to access the credit and commercial paper markets. Management believes that our current credit ratings provide sufficient access to the capital markets. However, disruptions in the banking and capital markets not specifically related to us may affect our ability to access these funding sources or cause an increase in the return required by investors.

As part of the normal course of business, Detroit Edison, MichCon and various non-utility subsidiaries of the Company routinely enter into physical or financially settled contracts for the purchase and sale of electricity, natural gas, coal, capacity, storage and other energy-related products and services. Certain of these contracts contain provisions which allow the counterparties to request that the Company post cash or letters of credit in the event that the senior unsecured debt rating of DTE Energy is downgraded below investment grade. Certain of these contracts for Detroit Edison and MichCon contain similar provisions in the event that the senior unsecured debt rating of the particular utility is downgraded below investment grade. The amount of such collateral which could be requested fluctuates based upon commodity prices and the provisions and maturities of the underlying transactions and could be substantial. Also, upon a downgrade below investment grade, we could have restricted access to the commercial paper market and if DTE Energy is downgraded below investment grade our non-utility businesses, especially the Energy Trading and Power and Industrial Projects segments, could be required to restrict operations due to a lack of available liquidity. A downgrade below investment grade could potentially increase the borrowing costs of DTE.



Energy and its subsidiaries and may limit access to the capital markets. The impact of a downgrade will not affect our ability to comply with our existing debt covenants. While we currently do not anticipate such a downgrade, we cannot predict the outcome of current or future credit rating agency reviews.

In January 2010, Standard & Poor’s Rating Group (Standard & Poor’s) revised the outlook on DTE Energy and its subsidiaries to stable from negative, and raised the short-term corporate credit and commercial paper ratings for DTE Energy, Detroit Edison and MichCon to ‘A-2’ from ‘A-3’. The revision was primarily due to the diminished possibility of a downgrade in light of the Company’s decreasing regulatory risk. We have experienced an improvement in our ability to issue commercial paper since the restoration of our short-term ratings. Short-term borrowings, principally in the form of commercial paper, provide us with the liquidity needed on a daily basis. Our commercial paper program is supported by our unsecured credit facilities. Potential instability in the credit markets and any lowering of ratings may impact future access to the commercial paper markets, which may require us to draw on our back-up facilities. In June 2010, Standard & Poor’s revised the outlook on DTE Energy and its subsidiaries to positive from stable. The outlook revision reflected the Company’s decreasing regulatory risk. In December 2010, Standard and Poor’s upgraded the corporate credit rating of DTE Energy and its utility subsidiaries to ‘BBB+’ from ‘BBB’ to reflect the company’s decreasing regulatory risk and improved financial measures. At the same time, Standard and Poor’s raised the rating on Detroit Edison’s senior secured debt to ‘A’ from ‘A-’ and raised the rating on MichCon’s senior secured debt to ‘A’ from ‘BBB+’. In January 2011, Fitch Ratings revised the rating outlook for Detroit Edison to positive from stable due to improvement in its credit protection measures as a result of supportive regulatory policies in Michigan.

## CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with generally accepted accounting principles requires that management apply accounting policies and make estimates and assumptions that affect results of operations and the amounts of assets and liabilities reported in the financial statements. Management believes that the areas described below require significant judgment in the application of accounting policy or in making estimates and assumptions in matters that are inherently uncertain and that may change in subsequent periods. Additional discussion of these accounting policies can be found in the Notes to Consolidated Financial Statements in Item 8 of this Report.

## Regulation

A significant portion of our business is subject to regulation. This results in differences in the application of generally accepted accounting principles between regulated and non-regulated businesses. Detroit Edison and MichCon are required to record regulatory assets and liabilities for certain transactions that would have been treated as revenue or expense in non-regulated businesses. Future regulatory changes or changes in the competitive environment could result in the discontinuance of this accounting treatment for regulatory assets and liabilities for some or all of our businesses. Management believes that currently available facts support the continued use of regulatory assets and liabilities and that all regulatory assets and liabilities are recoverable or refundable in the current rate environment.

In March 2010, the PPACA and the HCERA were enacted into law (collectively, the “Act”). A provision of the PPACA repeals the current rule permitting deduction of the portion of the drug coverage expense that is offset by the Medicare Part D subsidy, effective for taxable years beginning after December 31, 2012. This change in tax law required a remeasurement of the deferred tax asset related to the Other Postretirement Benefit Obligation (OPEB) and the deferred tax liability related to the OPEB Regulatory Asset. Income tax accounting rules require the impact of a change in tax law be recognized in continuing operations in the Consolidated Statements of Operations in the period that the tax law change is enacted. However, regulated businesses may defer changes in tax law if allowed by regulators. The MPSC’s historical practice has been to recognize both the expense and working capital impacts for OPEB costs. In addition, the current and deferred tax effects related to OPEB costs have been recognized consistently. The effects of the subsidy have been reflected through lower tax expense included in rates. We believe we have reasonable assurance that the impacts related to the enactment of the Act are recoverable through rates in future periods. Therefore, the amounts related to Detroit Edison of $18 million and MichCon of $4 million have been deferred as Regulatory Assets.

See Note 12 of the Notes to Consolidated Financial Statements in Item 8 of this Report.



## Derivatives and Hedging Activities

Derivatives are generally recorded at fair value and shown as Derivative Assets or Liabilities. Changes in the fair value of the derivative instruments are recognized in earnings in the period of change, unless the derivative meets certain defined conditions and qualifies as an effective hedge. The normal purchases and normal sales exception requires, among other things, physical delivery in quantities expected to be used or sold over a reasonable period in the normal course of business. Contracts that are designated as normal purchases and normal sales are not recorded at fair value. Substantially all of the commodity contracts entered into by Detroit Edison and MichCon meet the criteria specified for this exception.

Fair value is defined as the price that would be received to sell an asset 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 and liabilities. These inputs can be readily observable, market corroborated or generally unobservable inputs. Management makes certain assumptions it believes that market participants would use in pricing assets and liabilities, including assumptions about risk, and the risks inherent in the inputs to valuation techniques. Credit risk of the Company and our counterparties is incorporated in the valuation of the assets and liabilities through the use of credit reserves, the impact of which was immaterial at December 31, 2010 and 2009. Management believes it uses valuation techniques that maximize the use of observable market-based inputs and minimize the use of unobservable inputs.

The fair values we calculate for our derivatives may change significantly as inputs and assumptions are updated for new information. Actual cash returns realized on our derivatives may be different from the results we estimate using models. As fair value calculations are estimates based largely on commodity prices, we perform sensitivity analysis on the fair values of our forward contracts. See sensitivity analysis in Item 7A. Quantitative and Qualitative Disclosures About Market Risk. See also the Fair Value section, herein. See Notes 4 and 5 of the Notes to Consolidated Financial Statements in Item 8 of this report.

## Allowance for Doubtful Accounts

We establish an allowance for doubtful accounts based on historical losses and management’s assessment of existing economic conditions, customer trends, and other factors. The allowance for doubtful accounts for our two utilities is calculated using the aging approach that utilizes rates developed in reserve studies and applies these factors to past due receivable balances. As a result of the reduction in past due receivables in 2010, our allowance for doubtful accounts decreased significantly from the 2009 balance. We believe the allowance for doubtful accounts is based on reasonable estimates. As part of the 2005 gas rate order for MichCon, the MPSC provided for the establishment of an uncollectible expense tracking mechanism that partially mitigates the impact associated with MichCon uncollectible expenses. The MPSC provided for a similar tracking mechanism for Detroit Edison in its rate order received January 2010. Detroit Edison filed for the suspension of the tracking mechanism effective with the order in its pending rate case.

## Asset Impairments

## Goodwill

Certain of our reporting units have goodwill or allocated goodwill resulting from purchase business combinations. We perform an impairment test for each of our reporting units with goodwill annually or whenever events or circumstances indicate that the value of goodwill may be impaired. In performing Step 1 of the impairment test, we compare 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, Step 2 of the test would be performed. Step 2 of the impairment test requires the carrying value of goodwill to be reduced to its fair value, if lower, as of the test date.

For Step 1 of the test, we estimate 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. Such techniques generally include a terminal value that utilizes an earnings multiple approach, which incorporates the current market values of comparable entities. These cash flow valuations involve a number of estimates that require



broad assumptions and significant judgment by management regarding future performance. We also employ market-based valuation techniques to test the reasonableness of the indications of value for the reporting units determined under the cash flow technique.

We performed our annual impairment test as of October 1, 2010 and determined that except for the Coal Services reporting unit, the estimated fair value of each reporting unit exceeded its carrying value, and no impairment existed. The $4 million of goodwill attributable to the Coal Services reporting unit was written off in the fourth quarter of 2010 in connection with the sale of rail services assets. We also compared the aggregate fair value of our reporting units to our overall market capitalization. The implied premium of the aggregate fair value over market capitalization is likely attributable to an acquisition control premium (the price in excess of a stock’s market price that investors typically pay to gain control of an entity). The results of the test and key estimates that were incorporated are as follows.

As of October 1, 2010 Valuation Date

<table><tr><td>Reporting Unit</td><td>Goodwill (\( in millions)</td><td>Fair Value Reduction %(a)</td><td>Discount Rate</td><td>Terminal Multiple(b)</td><td>Valuation Methodology(c)</td></tr><tr><td>Electric Utility</td><td>$ 1,206</td><td>26%</td><td>7%</td><td>8.0x</td><td>DCF, assuming stock sale</td></tr><tr><td>Gas Utility</td><td>759</td><td>7%</td><td>7%</td><td>9.5x</td><td>DCF, assuming stock sale</td></tr><tr><td>Energy Services</td><td>28</td><td>66%</td><td>13%</td><td>9.0x</td><td>DCF, assuming asset sale(d)</td></tr><tr><td>Coal Services</td><td>4(e)</td><td>n/a</td><td>12%</td><td>8.5x</td><td>DCF, assuming asset sale</td></tr><tr><td>Gas Storage and Pipelines</td><td>8</td><td>66%</td><td>10%</td><td>8.0x</td><td>DCF, assuming asset sale</td></tr><tr><td>Energy Trading</td><td>17</td><td>74%</td><td>15%</td><td>n/a</td><td>Blended DCF, economic value of trading portfolio</td></tr><tr><td>Unconventional Gas Production</td><td>2</td><td>62%</td><td>13%</td><td>n/a</td><td>Blended DCF, transaction multiples</td></tr><tr><td></td><td>$ 2,024</td><td></td><td></td><td></td><td></td></tr></table>

(a) Percentage by which the fair value of the reporting unit would need to decline to equal its carrying value, including goodwill.

(b) Multiple of enterprise value (sum of debt plus equity value) to earnings before interest, taxes, depreciation and amortization (EBITDA.)

(c) Discounted cash flows (DCF) incorporated 2011-2015 projected cash flows plus a calculated terminal value.

(d) Asset sales were assumed except for Energy Services' reduced emissions fuel projects, which assumed stock sales.

(e) Goodwill attributable to Coal Services was written off in connection with the sale of rail services assets. Refer to Note 10 of the Notes to Consolidated Financial Statements in Item 8 of this Report.

The Gas Utility reporting unit passed Step 1 of the impairment test by a 7% margin. A substantive decrease in market multiples, negative regulatory actions or other disruptions in cash flows for the Gas Utility reporting unit could result in an impairment charge in the foreseeable future. For example, at the current discount rate and holding all other variables constant, a 0.5x decrease in the terminal multiple would lower the fair value by approximately $130 million. At the lower fair value, the Gas Utility reporting unit would likely fail Step 1 of the test potentially resulting in a charge for impairment of goodwill following completion of the Step 2 analysis.

We perform an annual impairment test each October. In between annual tests, we monitor our estimates and assumptions regarding estimated future cash flows, including the impact of movements in market indicators in future quarters and will update our impairment analyses if a triggering event occurs. While we believe our assumptions are reasonable, actual results may differ from our projections. To the extent projected results or cash flows are revised downward, the reporting unit may be required to write down all or a portion of its goodwill, which would adversely impact our earnings.



## Long-Lived Assets

We evaluate the carrying value of our long-lived assets, excluding goodwill, when circumstances indicate that the carrying value of those assets may not be recoverable. Conditions that could have an adverse impact on the cash flows and fair value of the long-lived assets are deteriorating business climate, condition of the asset, or plans to dispose of the asset before the end of its useful life. The review of long-lived assets for impairment requires significant assumptions about operating strategies and estimates of future cash flows, which require assessments of current and projected market conditions. An impairment evaluation is based on an undiscounted cash flow analysis at the lowest level for which independent cash flows of long-lived assets can be identified from other groups of assets and liabilities. Impairment may occur when the carrying value of the asset exceeds the future undiscounted cash flows. When the undiscounted cash flow analysis indicates a long-lived asset is not recoverable, the amount of the impairment loss is determined by measuring the excess of the long-lived asset over its fair value. An impairment would require us to reduce both the long-lived asset and current period earnings by the amount of the impairment, which would adversely impact our earnings. See Note 11 of Notes to Consolidated Financial Statements in Item 8 of this Report.

## Pension and Postretirement Costs

We sponsor defined benefit pension plans and postretirement benefit plans for substantially all of the employees of the Company. The measurement of the plan obligations and cost of providing benefits under these plans involve various factors, including numerous assumptions and accounting elections. When determining the various assumptions that are required, we consider historical information as well as future expectations. The benefit costs are affected by, among other things, the actual rate of return on plan assets, the long-term expected return on plan assets, the discount rate applied to benefit obligations, the incidence of mortality, the expected remaining service period of plan participants, level of compensation and rate of compensation increases, employee age, length of service, the anticipated rate of increase of health care costs and the level of benefits provided to employees and retirees. Pension and postretirement benefit costs attributed to the segments are included with labor costs and ultimately allocated to projects within the segments, some of which are capitalized.

We had pension costs for pension plans of $112 million in 2010, $28 million in 2009, and $24 million in 2008. Postretirement benefits costs for all plans were $164 million in 2010, $205 million in 2009 and $142 million in 2008. Pension and postretirement benefits costs for 2010 are calculated based upon a number of actuarial assumptions, including an expected long-term rate of return on plan assets of 8.75%. In developing our expected long-term rate of return assumptions, we evaluated asset class risk and return expectations, as well as inflation assumptions. Projected returns are based on broad equity, bond and other markets. Our 2011 expected long-term rate of return on pension plan assets is based on an asset allocation assumption utilizing active investment management of 47% in equity markets, 25% in fixed income markets, and 28% invested in other assets. Because of market volatility, we periodically review our asset allocation and rebalance our portfolio when considered appropriate. Given market conditions, we are lowering our long-term rate of return assumption for our pension plans to 8.50% for 2011. Our long-term rate of return assumption for our postretirement health and life plans will remain at 8.75% for 2011. We believe these two rates are reasonable assumptions for the long-term rate of return on our plan assets for 2011 given our investment strategy. We will continue to evaluate our actuarial assumptions, including our expected rate of return, at least annually.

We calculate the expected return on pension and other postretirement benefit plan assets by multiplying the expected return on plan assets by the market-related value (MRV) of plan assets at the beginning of the year, taking into consideration anticipated contributions and benefit payments that are to be made during the year. Current accounting rules provide that the MRV of plan assets can be either fair value or a calculated value that recognizes changes in fair value in a systematic and rational manner over not more than five years. For our pension plans, we use a calculated value when determining the MRV of the pension plan assets and recognize changes in fair value over a three-year period. Accordingly, the future value of assets will be impacted as previously deferred gains or losses are recognized. Financial markets in 2010 contributed to our investment performance resulting in unrecognized net gains. As of December 31, 2010, we had $242 million of cumulative losses that remain to be recognized in the calculation of the MRV of pension assets. For our postretirement benefit plans, we use fair value when



determining the MRV of postretirement benefit plan assets, therefore all investment losses and gains have been recognized in the calculation of MRV for these plans.

The discount rate that we utilize for determining future pension and postretirement benefit obligations is based on a yield curve approach and a review of bonds that receive one of the two highest ratings given by a recognized rating agency. The yield curve approach matches projected pension plan and postretirement benefit payment streams with bond portfolios reflecting actual liability duration unique to our plans. The discount rate determined on this basis decreased to 5.5% at December 31, 2010 from 5.9% at December 31, 2009. We estimate that our 2011 total pension costs will approximate $167 million compared to $112 million in 2010 primarily due to a lower discount rate, partially offset by better than expected asset returns in 2010 and 2011 contributions. Our 2011 postretirement benefit costs will approximate $137 million compared to $164 million in 2010 primarily due to changing our strategy for providing post-65 prescription drug benefits to retirees, better than expected asset returns in 2010 and favorable retiree medical utilization. These positive impacts were partially offset by a lower discount rate and updated assumed long-term retiree medical inflation. Our health care trend rate assumes 7% for 2011 through 2015, 6.5% in 2016, 6% in 2017, 5.5% in 2018 and 5% in 2019 and beyond. Future actual pension and postretirement benefit costs will depend on future investment performance, changes in future discount rates and various other factors related to plan design. The pension cost tracking mechanism that provided for recovery or refunding of pension costs above or below amounts reflected in Detroit Edison’s base rates, at the request of Detroit Edison, was not reauthorized by the MPSC in its rate order effective January 1, 2009. The MPSC approved the deferral of the non-capitalized portion of MichCon’s negative pension expense. MichCon records a regulatory liability for any negative pension costs, as determined under generally accepted accounting principles.

Lowering the expected long-term rate of return on our plan assets by one percentage point would have increased our 2010 pension costs by approximately $30 million. Lowering the discount rate and the salary increase assumptions by one percentage point would have increased our 2010 pension costs by approximately $10 million. Lowering the health care cost trend assumptions by one percentage point would have decreased our postretirement benefit service and interest costs for 2010 by approximately $25 million.

The value of our pension and postretirement benefit plan assets was $3.9 billion at December 31, 2010 and $3.4 billion at December 31, 2009. At December 31, 2010 our pension plans were underfunded by $872 million and our other postretirement benefit plans were underfunded by $1.3 billion. The 2010 and 2009 funding levels were generally similar due to positive investment performance returns and plan sponsor contributions in 2010 and 2009, largely offset by the decreased discount rates.

Pension and postretirement costs and pension cash funding requirements may increase in future years without typical returns in the financial markets. We made contributions to our pension plans of $200 million in each of 2010 and 2009. Also, we contributed $200 million to our pension plans in January 2011. At the discretion of management, consistent with the Pension Protection Act of 2006, and depending upon financial market conditions, we anticipate making contributions to our pension plans of up to $1.2 billion over the next five years. We made postretirement benefit plan contributions of $160 million and $205 million in 2010 and 2009, respectively. We are required by orders issued by the MPSC to make postretirement benefit contributions at least equal to the amounts included in Detroit Edison’s and MichCon’s base rates. As a result, we contributed $81 million to our postretirement plans in January 2011 and expect to make up to an additional $90 million contribution to our postretirement plans in 2011 and, subject to MPSC funding requirements, up to $850 million over the next five years. The planned contributions will be made in cash, DTE Energy common stock or a combination of cash and stock.

See Note 21 of the Notes to Consolidated Financial Statements in Item 8 of this Report.

## Legal Reserves

We are involved in various legal proceedings, claims and litigation arising in the ordinary course of business. We regularly assess our liabilities and contingencies in connection with asserted or potential matters, and establish reserves when appropriate. Legal reserves are based upon management’s assessment of pending and threatened legal proceedings and claims against us.



## Insured and Uninsured Risks

Our comprehensive insurance program provides coverage for various types of risks. Our insurance policies cover risk of loss including property damage, general liability, workers' compensation, auto liability, and directors' and officers' liability. Under our risk management policy, we self-insure portions of certain risks up to specified limits, depending on the type of exposure. The maximum self-insured retention for various risks is as follows: property damage- $10 million, general liability- $7 million, workers' compensation-$9 million, and auto liability-$7 million. We have an actuarially determined estimate of our incurred but not reported (IBNR) liability prepared annually and we adjust our reserves for self-insured risks as appropriate. As of December 31, 2010, this IBNR liability was approximately $39 million.

## Accounting for Tax Obligations

We are required to make judgments regarding the potential tax effects of various financial transactions and results of operations in order to estimate our obligations to taxing authorities. We account for uncertain income tax positions using a benefit recognition model with a two-step approach, a more-likely-than-not recognition criterion and a measurement attribute that measures the position as the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement. If the benefit does not meet the more likely than not criteria for being sustained on its technical merits, no benefit will be recorded. Uncertain tax positions that relate only to timing of when an item is included on a tax return are considered to have met the recognition threshold. We also have non-income tax obligations related to property, sales and use and employment-related taxes and ongoing appeals related to these tax matters.

Accounting for tax obligations requires judgments, including assessing whether tax benefits are more likely than not to be sustained, and estimating reserves for potential adverse outcomes regarding tax positions that have been taken. We also assess our ability to utilize tax attributes, including those in the form of carryforwards, for which the benefits have already been reflected in the financial statements. We do not record valuation allowances for deferred tax assets related to capital losses that we believe will be realized in future periods. We believe the resulting tax reserve balances as of December 31, 2010 and December 31, 2009 are appropriately accounted. The ultimate outcome of such matters could result in favorable or unfavorable adjustments to our consolidated financial statements and such adjustments could be material.

See Note 13 of the Notes to Consolidated Financial Statements in Item 8 of this Report.

## NEW ACCOUNTING PRONOUNCEMENTS

See Note 3 of the Notes to Consolidated Financial Statements in Item 8 of this Report.

## FAIR VALUE

Derivatives are generally recorded at fair value and shown as Derivative Assets or Liabilities. Contracts we typically classify as derivative instruments include power, gas, oil and certain coal forwards, futures, options and swaps, and foreign currency exchange contracts. Items we do not generally account for as derivatives include natural gas inventory, power transmission, pipeline transportation and certain storage assets. See Notes 4 and 5 of the Notes to Consolidated Financial Statements.

As a result of adherence to generally accepted accounting principles, the tables below do not include the expected earnings impact of non-derivative gas storage, transportation and power contracts. Consequently, gains and losses from these positions may not match with the related physical and financial hedging instruments in some reporting periods, resulting in volatility in DTE Energy’s reported period-by-period earnings; however, the financial impact of the timing differences will reverse at the time of physical delivery and/or settlement.

The Company manages its mark-to-market (MTM) risk on a portfolio basis based upon the delivery period of its contracts and the individual components of the risks within each contract. Accordingly, it records and manages the energy purchase and sale obligations under its contracts in separate components based on the commodity (e.g. electricity or gas), the product (e.g. electricity for delivery during peak or off-peak hours), the delivery location (e.g. by region), the risk profile (e.g. forward or option), and the delivery period (e.g. by month and year).



The Company has established a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value in three broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). For further discussion of the fair value hierarchy, see Note 4 of the Notes to Consolidated Financial Statements.

The following tables provide details on changes in our MTM net asset (or liability) position during 2010:

<table><tr><td></td><td>Total (In millions)</td></tr><tr><td>MTM at December 31, 2009</td><td>$ (93)</td></tr><tr><td>Reclassify to realized upon settlement</td><td>(3)</td></tr><tr><td>Changes in fair value recorded to income</td><td>123</td></tr><tr><td>Amounts recorded to unrealized income</td><td>120</td></tr><tr><td>Changes in fair value recorded in regulatory liabilities</td><td>6</td></tr><tr><td>Amounts recorded in other comprehensive income pre-tax</td><td>1</td></tr><tr><td>Change in collateral held for others</td><td>(42)</td></tr><tr><td>Option premiums paid (received) and other</td><td>(36)</td></tr><tr><td>MTM at December 31, 2010</td><td>$ (44)</td></tr></table>

The table below shows the maturity of our MTM positions:

<table><tr><td rowspan="2">Source of Fair Value</td><td rowspan="2">2011</td><td rowspan="2">2012</td><td rowspan="2">2013</td><td colspan="2">2014</td><td rowspan="2">Total Fair Value</td></tr><tr><td colspan="2">and Beyond</td></tr><tr><td>Level 1</td><td>$ 9</td><td>$ (23)</td><td>$ 11</td><td>$ 10</td><td>$ 7</td><td></td></tr><tr><td>Level 2</td><td>(68)</td><td>(54)</td><td>(32)</td><td>—</td><td>(154)</td><td></td></tr><tr><td>Level 3</td><td>29</td><td>33</td><td>(2)</td><td>(1)</td><td>59</td><td></td></tr><tr><td>Total MTM before netting adjustments</td><td>$ (30)</td><td>$ (44)</td><td>$ (23)</td><td>$ 9</td><td>$ (88)</td><td></td></tr><tr><td>Collateral adjustments</td><td></td><td></td><td></td><td></td><td>$ 44</td><td></td></tr><tr><td>Total MTM at December 31, 2010</td><td></td><td></td><td></td><td></td><td>$ (44)</td><td></td></tr></table>

## Item 7A. Quantitative and Qualitative Disclosures About Market Risk

## Market Price Risk

DTE Energy has commodity price risk in both utility and non-utility businesses arising from market price fluctuations.

The Electric and Gas utility businesses have risks in conjunction with the anticipated purchases of coal, natural gas, uranium, electricity, and base metals to meet their service obligations. However, the Company does not bear significant exposure to earnings risk as such changes are included in the form of PSCR and GCR regulatory rate-recovery mechanisms. In addition, changes in the price of natural gas can impact the valuation of lost and stolen gas, storage sales revenue and uncollectible expenses at the Gas Utility. Gas Utility manages its market price risk related to storage sales revenue primarily through the sale of long-term storage contracts. The Company is exposed to short-term cash flow or liquidity risk as a result of the time differential between actual cash settlements and regulatory rate recovery.

Our Gas Storage and Pipelines business segment has limited exposure to natural gas price fluctuations and manages its exposure through the sale of long-term storage and transportation contracts.

Our Unconventional Gas Production business segment has exposure to natural gas and crude oil price fluctuations. These commodity price fluctuations can impact both current year earnings and reserve valuations. To manage this exposure we may use forward energy and futures contracts.



Our Power and Industrial Projects business segment is subject to electricity, natural gas, coal and coal-based product price risk and other risks associated with the weakened U.S. economy. To the extent that commodity price risk has not been mitigated through the use of long-term contracts, we manage this exposure using forward energy, capacity and futures contracts.

Our Energy Trading business segment has exposure to electricity, natural gas, crude oil, heating oil, and foreign currency exchange price fluctuations. These risks are managed by our energy marketing and trading operations through the use of forward energy, capacity, storage, options and futures contracts, within pre-determined risk parameters.

## Credit Risk

## Bankruptcies

The Company purchases and sells electricity, gas, coal, coke and other energy products from and to numerous companies operating in the steel, automotive, energy, retail, financial and other industries. Certain of its customers have filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code. The Company regularly reviews contingent matters relating to these customers and its purchase and sale contracts and records provisions for amounts considered at risk of probable loss. The Company believes its accrued amounts are adequate for probable loss. The final resolution of these matters may have a material effect on its consolidated financial statements.

## Other

The Company has tracking mechanisms to mitigate a significant amount of losses related to uncollectible accounts receivable at Detroit Edison and MichCon. These mechanisms are subject to the jurisdiction of the MPSC and are periodically reviewed. See Note 12 of the Notes to Consolidated Financial Statements in Item 8 of this Report.

We engage in business with customers that are non-investment grade. We closely monitor the credit ratings of these customers and, when deemed necessary, we request collateral or guarantees from such customers to secure their obligations.

## Trading Activities

We are exposed to credit risk through trading activities. Credit risk is the potential loss that may result if our trading counterparties fail to meet their contractual obligations. We utilize both external and internal credit assessments when determining the credit quality of our trading counterparties. The following table displays the credit quality of our trading counterparties as of December 31, 2010:

<table><tr><td rowspan="2"></td><td colspan="2">Credit Exposure Before Cash Collateral</td><td colspan="2">Cash Collateral</td><td rowspan="2">Net Credit Exposure</td></tr><tr><td colspan="4">(In millions)</td></tr><tr><td>Investment Grade(1)</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>A- and Greater</td><td>$</td><td>163</td><td>$</td><td>(10)</td><td>$ 153</td></tr><tr><td>BBB+ and BBB</td><td></td><td>199</td><td></td><td>—</td><td>199</td></tr><tr><td>BBB-</td><td></td><td>54</td><td></td><td>—</td><td>54</td></tr><tr><td>Total Investment Grade</td><td></td><td>416</td><td></td><td>(10)</td><td>406</td></tr><tr><td>Non-investment grade(2)</td><td></td><td>2</td><td></td><td>—</td><td>2</td></tr><tr><td>Internally Rated — investment grade(3)</td><td></td><td>147</td><td></td><td>—</td><td>147</td></tr><tr><td>Internally Rated — non-investment grade(4)</td><td></td><td>12</td><td></td><td>—</td><td>12</td></tr><tr><td>Total</td><td></td><td>$ 577</td><td></td><td>(10)</td><td>$ 567</td></tr></table>

(1) This category includes counterparties with minimum credit ratings of Baa3 assigned by Moody’s Investor Service (Moody’s) and BBB- assigned by Standard & Poor’s Rating Group (Standard & Poor’s). The five



largest counterparty exposures combined for this category represented approximately 36 percent of the total gross credit exposure.

(2) This category includes counterparties with credit ratings that are below investment grade. The five largest counterparty exposures combined for this category represented less than one percent of the total gross credit exposure.

(3) This category includes counterparties that have not been rated by Moody’s or Standard & Poor’s, but are considered investment grade based on DTE Energy’s evaluation of the counterparty’s creditworthiness. The five largest counterparty exposures combined for this category represented approximately 18 percent of the total gross credit exposure.

(4) This category includes counterparties that have not been rated by Moody’s or Standard & Poor’s, and are considered non-investment grade based on DTE Energy’s evaluation of the counterparty’s creditworthiness. The five largest counterparty exposures combined for this category represented approximately two percent of the total gross credit exposure.

## Interest Rate Risk

We are subject to interest rate risk in connection with the issuance of debt and preferred securities. In order to manage interest costs, we may use treasury locks and interest rate swap agreements. Our exposure to interest rate risk arises primarily from changes in U.S. Treasury rates, commercial paper rates and London Inter-Bank Offered Rates (LIBOR). As of December 31, 2010, we had a floating rate debt-to-total debt ratio of approximately two percent (excluding securitized debt).

## Foreign Currency Exchange Risk

We have foreign currency exchange risk arising from market price fluctuations associated with fixed priced contracts. These contracts are denominated in Canadian dollars and are primarily for the purchase and sale of power as well as for long-term transportation capacity. To limit our exposure to foreign currency exchange fluctuations, we have entered into a series of exchange forward contracts through January 2013. Additionally, we may enter into fair value foreign currency exchange hedges to mitigate changes in the value of contracts or loans.

## Summary of Sensitivity Analysis

We performed a sensitivity analysis on the fair values of our commodity contracts, long-term debt obligations and foreign currency exchange forward contracts. The commodity contracts and foreign currency exchange risk listed below principally relate to our energy marketing and trading activities. The sensitivity analysis involved increasing and decreasing forward rates at December 31, 2010 and 2009 by a hypothetical 10% and calculating the resulting change in the fair values.

The results of the sensitivity analysis calculations as of December 31, 2010 and 2009:

<table><tr><td rowspan="4">Activity</td><td colspan="3">Assuming a</td><td colspan="3">Assuming a</td></tr><tr><td colspan="3">10% Increase in Rates</td><td colspan="3">10% Decrease in Rates</td></tr><tr><td colspan="3">As of December 31,</td><td colspan="3">As of December 31,</td></tr><tr><td>2010</td><td>2009</td><td>2010</td><td>2009</td><td>Change in the Fair Value of</td></tr><tr><td></td><td colspan="6">(In millions)</td></tr><tr><td>Coal Contracts</td><td>$ 1</td><td>$ —</td><td>$ (1)</td><td>$ —</td><td>Commodity contracts</td><td></td></tr><tr><td>Gas Contracts</td><td>$ (11)</td><td>$ (2)</td><td>$ 10</td><td>$ 1</td><td>Commodity contracts</td><td></td></tr><tr><td>Oil Contracts</td><td>$ —</td><td>$ 1</td><td>$ —</td><td>$ (1)</td><td>Commodity contracts</td><td></td></tr><tr><td>Power Contracts</td><td>$ (5)</td><td>$ (3)</td><td>$ 5</td><td>$ 2</td><td>Commodity contracts</td><td></td></tr><tr><td>Interest Rate Risk</td><td>$ (291)</td><td>$ (290)</td><td>$ 313</td><td>$ 313</td><td>Long-term debt</td><td></td></tr><tr><td>Foreign Currency Exchange Risk</td><td>$ 6</td><td>$ 2</td><td>$ 7</td><td>$ (2)</td><td>Forward contracts</td><td></td></tr><tr><td>Discount Rates</td><td>$ —</td><td>$ —</td><td>$ —</td><td>$ —</td><td>Commodity contracts</td><td></td></tr></table>

For further discussion of market risk, see Note 5 of the Notes to Consolidated Financial Statements in Item 8 of this Report.



## Item 8. Financial Statements and Supplementary Data

The following consolidated financial statements and financial statement schedule are included herein.

Controls and Procedures 60
Consolidated Financial Statements
Reports of Independent Registered Public Accounting Firms 61
Consolidated Statements of Operations 63
Consolidated Statements of Financial Position 64
Consolidated Statements of Cash Flows 66
Consolidated Statements of Changes in Equity 67
Consolidated Statements of Comprehensive Income 68
Notes to Consolidated Financial Statements 69
Note 1 Organization and Basis of Presentation 69
Note 2 Significant Accounting Policies 72
Note 3 New Accounting Pronouncements 76
Note 4 Fair Value 77
Note 5 Financial and Other Derivative Instruments 84
Note 6 Goodwill 89
Note 7 Property, Plant and Equipment 89
Note 8 Jointly Owned Utility Plant 90
Note 9 Asset Retirement Obligations 91
Note 10 Disposals and Discontinued Operations 92
Note 11 Other Impairments and Restructuring 93
Note 12 Regulatory Matters 94
Note 13 Income Taxes 101
Note 14 Common Stock 104
Note 15 Earnings Per Share 104
Note 16 Long-Term Debt 106
Note 17 Preferred and Preference Securities 108
Note 18 Short-Term Credit Arrangements and Borrowings 108
Note 19 Capital and Operating Leases 109
Note 20 Commitments and Contingencies 110
Note 21 Retirement Benefits and Trusted Assets 115
Note 22 Stock-based Compensation 128
Note 23 Supplemental Cash Flow Information 131
Note 24 Segment and Related Information 132
Note 25 Supplementary Quarterly Financial Information (Unaudited) 134
Financial Statement Schedule
Schedule II — Valuation and Qualifying Accounts 146



## Controls and Procedures

## (a) Evaluation of disclosure controls and procedures

Management of the Company carried out an evaluation, under the supervision and with the participation of DTE Energy’s Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of December 31, 2010, which is the end of the period covered by this report. Based on this evaluation, the Company’s CEO and CFO have concluded that such disclosure controls and procedures are effective in providing reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) is accumulated and communicated to the Company’s management, including its CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. Due to the inherent limitations in the effectiveness of any disclosure controls and procedures, management cannot provide absolute assurance that the objectives of its disclosure controls and procedures will be attained.

## (b) Management’s report on internal control over financial reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Internal control over financial reporting is a process designed by, or under the supervision of, our CEO and CFO, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management of the Company has assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2010. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework. Based on this assessment, management concluded that, as of December 31, 2010, the Company’s internal control over financial reporting was effective based on those criteria.

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2010 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm who also audited the Company’s financial statements, as stated in their report which appears herein.

## (c) Changes in internal control over financial reporting

There have been no changes in the Company’s internal control over financial reporting during the quarter ended December 31, 2010 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.



# REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of DTE Energy Company:

In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of DTE Energy Company and its subsidiaries at December 31, 2010 and 2009, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule for the years ended December 31, 2010 and 2009 listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2010, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's report on internal control over financial reporting. Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

Detroit, Michigan

February 18, 2011



# REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of DTE Energy Company:

We have audited the consolidated statements of operations, cash flows, comprehensive income, and changes in equity of DTE Energy Company and subsidiaries (the "Company") for the year ended December 31, 2008. Our audit also included the 2008 information in the financial statement schedule listed in the accompanying index. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on the consolidated financial statements and financial statement schedule based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the results of operations and cash flows of DTE Energy Company and subsidiaries for the year ended December 31, 2008 in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such 2008 financial statement schedule, when considered in relation to the basic consolidated financial statements of the Company taken as a whole, presents fairly, in all material respects, the information set forth therein.

/s/ Deloitte & Touche LLP

Detroit, Michigan

February 27, 2009

(August 20, 2009, as to the effects of the retrospective adoption of Accounting Standards Codification (“ASC”) 810-10 and ASC 260-10 as described in Note 3 to the consolidated financial statements)



## DTE Energy Company

## Consolidated Statements of Operations

<table><tr><td rowspan="3"></td><td colspan="3">Year Ended December 31</td></tr><tr><td>2010</td><td>2009</td><td>2008</td></tr><tr><td colspan="3">(In millions, except per share amounts)</td></tr><tr><td>Operating Revenues</td><td>$ 8,557</td><td>$ 8,014</td><td>$9,329</td></tr><tr><td>Operating Expenses</td><td></td><td></td><td></td></tr><tr><td>Fuel, purchased power and gas</td><td>3,190</td><td>3,118</td><td>4,306</td></tr><tr><td>Operation and maintenance</td><td>2,578</td><td>2,372</td><td>2,694</td></tr><tr><td>Depreciation, depletion and amortization</td><td>1,027</td><td>1,020</td><td>901</td></tr><tr><td>Taxes other than income</td><td>308</td><td>275</td><td>304</td></tr><tr><td>Gain on sale of non-utility business</td><td>—</td><td>—</td><td>(128)</td></tr><tr><td>Other asset (gains) and losses, reserves and impairments, net</td><td>(10)</td><td>(20)</td><td>(11)</td></tr><tr><td></td><td>7,093</td><td>6,765</td><td>8,066</td></tr><tr><td>Operating Income</td><td>1,464</td><td>1,249</td><td>1,263</td></tr><tr><td>Other (Income) and Deductions</td><td></td><td></td><td></td></tr><tr><td>Interest expense</td><td>549</td><td>545</td><td>503</td></tr><tr><td>Interest income</td><td>(12)</td><td>(19)</td><td>(19)</td></tr><tr><td>Other income</td><td>(78)</td><td>(102)</td><td>(104)</td></tr><tr><td>Other expenses</td><td>55</td><td>43</td><td>64</td></tr><tr><td></td><td>514</td><td>467</td><td>444</td></tr><tr><td>Income Before Income Taxes</td><td>950</td><td>782</td><td>819</td></tr><tr><td>Income Tax Provision</td><td>311</td><td>247</td><td>288</td></tr><tr><td>Income from Continuing Operations</td><td>639</td><td>535</td><td>531</td></tr><tr><td>Discontinued Operations Income, net of tax</td><td>—</td><td>—</td><td>22</td></tr><tr><td>Net Income</td><td>639</td><td>535</td><td>553</td></tr><tr><td>Less: Net Income Attributable to Noncontrolling Interests From</td><td></td><td></td><td></td></tr><tr><td>Continuing operations</td><td>9</td><td>3</td><td>5</td></tr><tr><td>Discontinued operations</td><td>—</td><td>—</td><td>2</td></tr><tr><td></td><td>9</td><td>3</td><td>7</td></tr><tr><td>Net Income Attributable to DTE Energy Company</td><td>$ 630</td><td>$ 532</td><td>$ 546</td></tr><tr><td>Basic Earnings per Common Share</td><td></td><td></td><td></td></tr><tr><td>Income from continuing operations</td><td>$ 3.75</td><td>$ 3.24</td><td>$ 3.22</td></tr><tr><td>Discontinued operations</td><td>—</td><td>—</td><td>.12</td></tr><tr><td>Total</td><td>$ 3.75</td><td>$ 3.24</td><td>$ 3.34</td></tr><tr><td>Diluted Earnings per Common Share</td><td></td><td></td><td></td></tr><tr><td>Income from continuing operations</td><td>$ 3.74</td><td>$ 3.24</td><td>$ 3.22</td></tr><tr><td>Discontinued operations</td><td>—</td><td>—</td><td>.12</td></tr><tr><td>Total</td><td>$ 3.74</td><td>$ 3.24</td><td>$ 3.34</td></tr><tr><td>Weighted Average Common Shares Outstanding</td><td></td><td></td><td></td></tr><tr><td>Basic</td><td>168</td><td>164</td><td>163</td></tr><tr><td>Diluted</td><td>169</td><td>164</td><td>163</td></tr><tr><td>Dividends Declared per Common Share</td><td>$ 2.18</td><td>$ 2.12</td><td>$ 2.12</td></tr></table>

See Notes to Consolidated Financial Statements



## DTE Energy Company

## Consolidated Statements of Financial Position

<table><tr><td rowspan="3"></td><td colspan="3">December 31</td></tr><tr><td>2010</td><td>2009</td><td></td></tr><tr><td colspan="3">(In millions)</td></tr><tr><td>ASSETS</td><td></td><td></td><td></td></tr><tr><td>Current Assets</td><td></td><td></td><td></td></tr><tr><td>Cash and cash equivalents</td><td>$ 65</td><td>$ 52</td><td></td></tr><tr><td>Restricted cash (Note 2)</td><td>120</td><td>84</td><td></td></tr><tr><td>Accounts receivable (less allowance for doubtful accounts of $196 and $262, respectively)</td><td></td><td></td><td></td></tr><tr><td>Customer</td><td>1,393</td><td>1,438</td><td></td></tr><tr><td>Other</td><td>402</td><td>217</td><td></td></tr><tr><td>Inventories</td><td></td><td></td><td></td></tr><tr><td>Fuel and gas</td><td>460</td><td>309</td><td></td></tr><tr><td>Materials and supplies</td><td>202</td><td>200</td><td></td></tr><tr><td>Deferred income taxes</td><td>139</td><td>167</td><td></td></tr><tr><td>Derivative assets</td><td>131</td><td>209</td><td></td></tr><tr><td>Other</td><td>255</td><td>201</td><td></td></tr><tr><td></td><td>3,167</td><td>2,877</td><td></td></tr><tr><td>Investments</td><td></td><td></td><td></td></tr><tr><td>Nuclear decommissioning trust funds</td><td>939</td><td>817</td><td></td></tr><tr><td>Other</td><td>518</td><td>598</td><td></td></tr><tr><td></td><td>1,457</td><td>1,415</td><td></td></tr><tr><td>Property</td><td></td><td></td><td></td></tr><tr><td>Property, plant and equipment</td><td>21,574</td><td>20,588</td><td></td></tr><tr><td>Less accumulated depreciation, depletion and amortization</td><td>(8,582)</td><td>(8,157)</td><td></td></tr><tr><td></td><td>12,992</td><td>12,431</td><td></td></tr><tr><td>Other Assets</td><td></td><td></td><td></td></tr><tr><td>Goodwill</td><td>2,020</td><td>2,024</td><td></td></tr><tr><td>Regulatory assets</td><td>4,058</td><td>4,110</td><td></td></tr><tr><td>Securitized regulatory assets</td><td>729</td><td>870</td><td></td></tr><tr><td>Intangible assets</td><td>67</td><td>54</td><td></td></tr><tr><td>Notes receivable</td><td>123</td><td>113</td><td></td></tr><tr><td>Derivative assets</td><td>77</td><td>116</td><td></td></tr><tr><td>Other</td><td>206</td><td>185</td><td></td></tr><tr><td></td><td>7,280</td><td>7,472</td><td></td></tr><tr><td>Total Assets</td><td>$ 24,896</td><td>$ 24,195</td><td></td></tr></table>

See Notes to Consolidated Financial Statements



## DTE Energy Company

## Consolidated Statements of Financial Position — (Continued)

<table><tr><td rowspan="3"></td><td colspan="2">December 31</td></tr><tr><td>2010</td><td>2009</td></tr><tr><td colspan="2">(In millions, except shares)</td></tr><tr><td colspan="3">LIABILITIES AND EQUITY</td></tr><tr><td>Current Liabilities</td><td></td><td></td></tr><tr><td>Accounts payable</td><td>$ 729</td><td>$ 723</td></tr><tr><td>Accrued interest</td><td>111</td><td>114</td></tr><tr><td>Dividends payable</td><td>95</td><td>88</td></tr><tr><td>Short-term borrowings</td><td>150</td><td>327</td></tr><tr><td>Current portion long-term debt, including capital leases</td><td>925</td><td>671</td></tr><tr><td>Derivative liabilities</td><td>142</td><td>220</td></tr><tr><td>Other</td><td>597</td><td>502</td></tr><tr><td></td><td>2,749</td><td>2,645</td></tr><tr><td>Long-Term Debt (net of current portion)</td><td></td><td></td></tr><tr><td>Mortgage bonds, notes and other</td><td>6,114</td><td>6,237</td></tr><tr><td>Securitization bonds</td><td>643</td><td>793</td></tr><tr><td>Trust preferred-linked securities</td><td>289</td><td>289</td></tr><tr><td>Capital lease obligations</td><td>43</td><td>51</td></tr><tr><td></td><td>7,089</td><td>7,370</td></tr><tr><td>Other Liabilities</td><td></td><td></td></tr><tr><td>Deferred income taxes</td><td>2,632</td><td>2,096</td></tr><tr><td>Regulatory liabilities</td><td>1,328</td><td>1,337</td></tr><tr><td>Asset retirement obligations</td><td>1,498</td><td>1,420</td></tr><tr><td>Unamortized investment tax credit</td><td>75</td><td>85</td></tr><tr><td>Derivative liabilities</td><td>110</td><td>198</td></tr><tr><td>Liabilities from transportation and storage contracts</td><td>83</td><td>96</td></tr><tr><td>Accrued pension liability</td><td>866</td><td>881</td></tr><tr><td>Accrued postretirement liability</td><td>1,275</td><td>1,287</td></tr><tr><td>Nuclear decommissioning</td><td>149</td><td>136</td></tr><tr><td>Other</td><td>275</td><td>328</td></tr><tr><td></td><td>8,291</td><td>7,864</td></tr><tr><td>Commitments and Contingencies (Notes 12 and 20)</td><td></td><td></td></tr><tr><td>Equity</td><td></td><td></td></tr><tr><td>Common stock, without par value, 400,000,000 shares authorized, 169,428,406 and 165,400,045 shares issued and outstanding, respectively</td><td>3,440</td><td>3,257</td></tr><tr><td>Retained earnings</td><td>3,431</td><td>3,168</td></tr><tr><td>Accumulated other comprehensive loss</td><td>(149)</td><td>(147)</td></tr><tr><td>Total DTE Energy Company Shareholders&#x27; Equity</td><td>6,722</td><td>6,278</td></tr><tr><td>Noncontrolling interests</td><td>45</td><td>38</td></tr><tr><td>Total Equity</td><td>6,767</td><td>6,316</td></tr><tr><td>Total Liabilities and Equity</td><td>$ 24,896</td><td>$ 24,195</td></tr></table>

See Notes to Consolidated Financial Statements



## DTE Energy Company

## Consolidated Statements of Cash Flows

<table><tr><td rowspan="3"></td><td colspan="4">Year Ended December 31</td></tr><tr><td>2010</td><td>2009</td><td>2008</td><td></td></tr><tr><td colspan="4">(In millions)</td></tr><tr><td>Operating Activities</td><td></td><td></td><td></td><td></td></tr><tr><td>Net income</td><td>$ 639</td><td>$ 535</td><td>$ 553</td><td></td></tr><tr><td>Adjustments to reconcile net income to net cash from operating activities:</td><td></td><td></td><td></td><td></td></tr><tr><td>Depreciation, depletion and amortization</td><td>1,027</td><td>1,020</td><td>899</td><td></td></tr><tr><td>Deferred income taxes</td><td>457</td><td>205</td><td>348</td><td></td></tr><tr><td>Gain on sale of non-utility business</td><td>—</td><td>—</td><td>(128)</td><td></td></tr><tr><td>Other asset (gains), losses and reserves, net</td><td>(5)</td><td>(10)</td><td>(4)</td><td></td></tr><tr><td>Gain on sale of interests in sinful projects</td><td>—</td><td>—</td><td>(31)</td><td></td></tr><tr><td>Contributions from sinful partners</td><td>—</td><td>—</td><td>14</td><td></td></tr><tr><td>Changes in assets and liabilities, exclusive of changes shown separately (Note 23)</td><td>(293)</td><td>69</td><td>(92)</td><td></td></tr><tr><td>Net cash from operating activities</td><td>1,825</td><td>1,819</td><td>1,559</td><td></td></tr><tr><td>Investing Activities</td><td></td><td></td><td></td><td></td></tr><tr><td>Plant and equipment expenditures — utility</td><td>(1,011)</td><td>(960)</td><td>(1,183)</td><td></td></tr><tr><td>Plant and equipment expenditures — non-utility</td><td>(88)</td><td>(75)</td><td>(190)</td><td></td></tr><tr><td>Proceeds from sale of interests in sinful projects</td><td>—</td><td>—</td><td>84</td><td></td></tr><tr><td>Refunds to sinful partners</td><td>—</td><td>—</td><td>(387)</td><td></td></tr><tr><td>Proceeds from sale of non-utility business</td><td>—</td><td>—</td><td>253</td><td></td></tr><tr><td>Proceeds from sale of other assets, net</td><td>56</td><td>83</td><td>25</td><td></td></tr><tr><td>Restricted cash for debt redemption</td><td>(32)</td><td>2</td><td>54</td><td></td></tr><tr><td>Proceeds from sale of nuclear decommissioning trust fund assets</td><td>377</td><td>295</td><td>232</td><td></td></tr><tr><td>Investment in nuclear decommissioning trust funds</td><td>(410)</td><td>(315)</td><td>(255)</td><td></td></tr><tr><td>Consolidation of VIEs</td><td>19</td><td>—</td><td>—</td><td></td></tr><tr><td>Investment in Millennium Pipeline Project</td><td>(49)</td><td>(15)</td><td>(31)</td><td></td></tr><tr><td>Other investments</td><td>(88)</td><td>(79)</td><td>(125)</td><td></td></tr><tr><td>Net cash used for investing activities</td><td>(1,226)</td><td>(1,064)</td><td>(1,523)</td><td></td></tr><tr><td>Financing Activities</td><td></td><td></td><td></td><td></td></tr><tr><td>Issuance of long-term debt</td><td>614</td><td>427</td><td>1,310</td><td></td></tr><tr><td>Redemption of long-term debt</td><td>(663)</td><td>(486)</td><td>(446)</td><td></td></tr><tr><td>Repurchase of long-term debt</td><td>—</td><td>—</td><td>(238)</td><td></td></tr><tr><td>Short-term borrowings, net</td><td>(177)</td><td>(417)</td><td>(340)</td><td></td></tr><tr><td>Issuance of common stock</td><td>36</td><td>35</td><td>—</td><td></td></tr><tr><td>Repurchase of common stock</td><td>—</td><td>—</td><td>(16)</td><td></td></tr><tr><td>Dividends on common stock</td><td>(360)</td><td>(348)</td><td>(344)</td><td></td></tr><tr><td>Other</td><td>(36)</td><td>—</td><td>(10)</td><td></td></tr><tr><td>Net cash used for financing activities</td><td>(586)</td><td>(789)</td><td>(84)</td><td></td></tr><tr><td>Net Increase (Decrease) in Cash and Cash Equivalents</td><td>13</td><td>(34)</td><td>(48)</td><td></td></tr><tr><td>Cash and Cash Equivalents Reclassified from Assets Held for Sale</td><td>—</td><td>—</td><td>11</td><td></td></tr><tr><td>Cash and Cash Equivalents at Beginning of Period</td><td>52</td><td>86</td><td>123</td><td></td></tr><tr><td>Cash and Cash Equivalents at End of Period</td><td>$ 65</td><td>$ 52</td><td>$ 86</td><td></td></tr></table>

See Notes to Consolidated Financial Statements



## DTE Energy Company

## Consolidated Statements of Changes in Equity

<table><tr><td rowspan="2"></td><td colspan="2">Common Stock</td><td rowspan="2">Retained Earnings</td><td rowspan="2">Accumulated Other Comprehensive Loss</td><td rowspan="2">Non-Controlling Interest</td><td rowspan="2">Total</td></tr><tr><td>Shares</td><td>Amount</td></tr><tr><td>Balance, December 31, 2007</td><td>163,232</td><td>$ 3,176</td><td>$ 2,790</td><td>$ (113)</td><td>$ 48</td><td>$5,901</td></tr><tr><td>Net income (loss)</td><td>—</td><td>—</td><td>546</td><td>—</td><td>7</td><td>553</td></tr><tr><td>Implementation of ASC 820, net of tax</td><td>—</td><td>—</td><td>4</td><td>—</td><td>—</td><td>4</td></tr><tr><td>Implementation of ASC 715 measurement date provision, net of tax</td><td>—</td><td>—</td><td>(9)</td><td>—</td><td>—</td><td>(9)</td></tr><tr><td>Dividends declared on common stock</td><td>—</td><td>—</td><td>(346)</td><td>—</td><td>—</td><td>(346)</td></tr><tr><td>Repurchase and retirement of common stock</td><td>(479)</td><td>(16)</td><td>—</td><td>—</td><td>—</td><td>(16)</td></tr><tr><td>Benefit obligations, net of tax</td><td>—</td><td>—</td><td>—</td><td>(22)</td><td>—</td><td>(22)</td></tr><tr><td>Foreign currency translation, net of tax</td><td>—</td><td>—</td><td>—</td><td>(2)</td><td>—</td><td>(2)</td></tr><tr><td>Net change in unrealized losses on derivatives, net of tax</td><td>—</td><td>—</td><td>—</td><td>6</td><td>—</td><td>6</td></tr><tr><td>Net change in unrealized losses on investments, net of tax</td><td>—</td><td>—</td><td>—</td><td>(34)</td><td>—</td><td>(34)</td></tr><tr><td>Contributions from noncontrolling interests</td><td>—</td><td>—</td><td>—</td><td>—</td><td>14</td><td>14</td></tr><tr><td>Stock-based compensation, distributions to noncontrolling interests and other</td><td>267</td><td>15</td><td>—</td><td>—</td><td>(26)</td><td>(11)</td></tr><tr><td>Balance, December 31, 2008</td><td>163,020</td><td>3,175</td><td>2,985</td><td>(165)</td><td>43</td><td>6,038</td></tr><tr><td>Net income</td><td>—</td><td>—</td><td>532</td><td>—</td><td>3</td><td>535</td></tr><tr><td>Dividends declared on common stock</td><td>—</td><td>—</td><td>(349)</td><td>—</td><td>—</td><td>(349)</td></tr><tr><td>Issuance of common stock</td><td>1,109</td><td>35</td><td>—</td><td>—</td><td>—</td><td>35</td></tr><tr><td>Benefit obligations, net of tax</td><td>—</td><td>—</td><td>—</td><td>7</td><td>—</td><td>7</td></tr><tr><td>Foreign currency translation, net of tax</td><td>—</td><td>—</td><td>—</td><td>2</td><td>—</td><td>2</td></tr><tr><td>Net change in unrealized losses on derivatives, net of tax</td><td>—</td><td>—</td><td>—</td><td>1</td><td>—</td><td>1</td></tr><tr><td>Net change in unrealized losses on investments, net of tax</td><td>—</td><td>—</td><td>—</td><td>8</td><td>—</td><td>8</td></tr><tr><td>Contributions from noncontrolling interests</td><td>—</td><td>—</td><td>—</td><td>—</td><td>4</td><td>4</td></tr><tr><td>Stock-based compensation, distributions to noncontrolling interests and other</td><td>1,271</td><td>47</td><td>—</td><td>—</td><td>(12)</td><td>35</td></tr><tr><td>Balance, December 31, 2009</td><td>165,400</td><td>3,257</td><td>3,168</td><td>(147)</td><td>38</td><td>6,316</td></tr><tr><td>Net income</td><td>—</td><td>—</td><td>630</td><td>—</td><td>9</td><td>639</td></tr><tr><td>Dividends declared on common stock</td><td>—</td><td>—</td><td>(367)</td><td>—</td><td>—</td><td>(367)</td></tr><tr><td>Issuance of common stock</td><td>777</td><td>36</td><td>—</td><td>—</td><td>—</td><td>36</td></tr><tr><td>Contribution of common stock to pension plan</td><td>2,224</td><td>100</td><td>—</td><td>—</td><td>—</td><td>100</td></tr><tr><td>Benefit obligations, net of tax</td><td>—</td><td>—</td><td>—</td><td>15</td><td>—</td><td>15</td></tr><tr><td>Foreign currency translation, net of tax</td><td>—</td><td>—</td><td>—</td><td>1</td><td>—</td><td>1</td></tr><tr><td>Net change in unrealized losses on derivatives, net of tax</td><td>—</td><td>—</td><td>—</td><td>2</td><td>—</td><td>2</td></tr><tr><td>Net change in unrealized losses on investments, net of tax</td><td>—</td><td>—</td><td>—</td><td>(20)</td><td>—</td><td>(20)</td></tr><tr><td>Stock-based compensation, distributions to noncontrolling interests and other</td><td>1,027</td><td>47</td><td>—</td><td>—</td><td>(2)</td><td>45</td></tr><tr><td>Balance, December 31, 2010</td><td>169,428</td><td>$ 3,440</td><td>$ 3,431</td><td>$ (149)</td><td>$ 45</td><td>$ 6,767</td></tr></table>

See Notes to Consolidated Financial Statements



## DTE Energy Company

## Consolidated Statements of Comprehensive Income

The following table displays comprehensive income:

<table><tr><td></td><td>2010</td><td>2009</td><td>2008</td></tr><tr><td></td><td colspan="3">(In millions)</td></tr><tr><td>Net income</td><td>$639</td><td>$535</td><td>$553</td></tr><tr><td>Other comprehensive income (loss), net of tax:</td><td></td><td></td><td></td></tr><tr><td>Benefit obligations:</td><td></td><td></td><td></td></tr><tr><td>Benefit obligations, net of taxes of $3, $4 and $12)</td><td>5</td><td>7</td><td>(22)</td></tr><tr><td>Amounts reclassified to benefit obligations related to consolidation of VIEs (Note 1), net of taxes of $5, \)— and \(—</td><td>10</td><td>—</td><td>—</td></tr><tr><td></td><td>15</td><td>7</td><td>(22)</td></tr><tr><td>Net unrealized gains on derivatives:</td><td></td><td></td><td></td></tr><tr><td>Gains arising during the period, net of taxes of $1, $2 and $2</td><td>1</td><td>3</td><td>4</td></tr><tr><td>Amounts reclassified to income, net of taxes of $1, $1) and $1</td><td>1</td><td>(2)</td><td>2</td></tr><tr><td></td><td>2</td><td>1</td><td>6</td></tr><tr><td>Net unrealized gains (losses) on investments:</td><td></td><td></td><td></td></tr><tr><td>Gains (losses) arising during the period, net of taxes of (6), $3 and (19)</td><td>(10)</td><td>5</td><td>(34)</td></tr><tr><td>Amounts reclassified to income, net of taxes of \)—, $2 and \)—</td><td>—</td><td>3</td><td>—</td></tr><tr><td>Amounts reclassified to benefit obligations related to consolidation of VIEs (Note 1), net of taxes of $5, \(— and \)—</td><td>(10)</td><td>—</td><td>—</td></tr><tr><td></td><td>(20)</td><td>8</td><td>(34)</td></tr><tr><td>Foreign currency translation, net of taxes of \(—, $1 and $1)</td><td>1</td><td>2</td><td>(2)</td></tr><tr><td>Comprehensive income</td><td>637</td><td>553</td><td>501</td></tr><tr><td>Less: Comprehensive income attributable to noncontrolling interests</td><td>9</td><td>3</td><td>7</td></tr><tr><td>Comprehensive income attributable to DTE Energy Company</td><td>$628</td><td>$550</td><td>$494</td></tr></table>

See Notes to Consolidated Financial Statements



# DTE Energy Company

# Notes to Consolidated Financial Statements

## NOTE 1 — ORGANIZATION AND BASIS OF PRESENTATION

## Corporate Structure

DTE Energy owns the following businesses:

- Detroit Edison, an electric utility engaged in the generation, purchase, distribution and sale of electricity to approximately 2.1 million customers in southeast Michigan;

- MichCon, a natural gas utility engaged in the purchase, storage, transportation, gathering, distribution and sale of natural gas to approximately 1.2 million customers throughout Michigan and the sale of storage and transportation capacity; and

- Other businesses are involved in 1) natural gas pipelines and storage; 2) unconventional gas and oil project development and production; 3) power and industrial projects and coal transportation and marketing; and 4) energy marketing and trading operations.

Detroit Edison and MichCon are regulated by the MPSC. Certain activities of Detroit Edison and MichCon, as well as various other aspects of businesses under DTE Energy are regulated by the FERC. In addition, the Company is regulated by other federal and state regulatory agencies including the NRC, the EPA and the MDNRE.

References in this report to “Company” or “DTE” are to DTE Energy and its subsidiaries, collectively.

## Basis of Presentation

The accompanying Consolidated Financial Statements are prepared using accounting principles generally accepted in the United States of America. These accounting principles require management to use estimates and assumptions that impact reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Actual results may differ from the Company’s estimates.

Certain prior year balances were reclassified to match the current year’s financial statement presentation.

## Principles of Consolidation

The Company consolidates all majority owned subsidiaries and investments in entities in which it has controlling influence. Non-majority owned investments are accounted for using the equity method when the Company is able to influence the operating policies of the investee. Non-majority owned investments include investments in limited liability companies, partnerships or joint ventures. When the Company does not influence the operating policies of an investee, the cost method is used. These consolidated financial statements also reflect the Company’s proportionate interests in certain jointly owned utility plant. The Company eliminates all intercompany balances and transactions.

Effective January 1, 2010, the Company adopted the provisions of ASU 2009-17, Amendments to FASB Interpretation 46(R). ASU 2009-17 changed the methodology for determining the primary beneficiary of a VIE from a quantitative risk and rewards-based model to a qualitative determination. There is no grandfathering of previous consolidation conclusions. As a result, the Company re-evaluated all prior VIE and primary beneficiary determinations. The requirements of ASU 2009-17 were adopted on a prospective basis.

The Company evaluates whether an entity is a VIE whenever reconsideration events occur. The Company consolidates VIEs for which it is the primary beneficiary. If the Company is not the primary beneficiary and an ownership interest is held, the VIE is accounted for under the equity method of accounting. When assessing the determination of the primary beneficiary, the Company considers all relevant facts and circumstances, including: the power, through voting or similar rights, to direct the activities of the VIE that most significantly impact the VIE’s economic performance and the obligation to absorb the expected losses and/or the right to receive the expected



# DTE Energy Company
Notes to Consolidated Financial Statements — (Continued)

returns of the VIE. The Company performs ongoing reassessments of all VIEs to determine if the primary beneficiary status has changed.

Legal entities within the Company’s Power and Industrial Projects segments enter into long-term contractual arrangements with customers to supply energy-related products or services. The entities are generally designed to pass-through the commodity risk associated with these contracts to the customers, with the Company retaining operational and customer default risk. These entities generally are VIEs. The Company re-evaluated prior VIE and primary beneficiary determinations and, as a result, in 2010 began consolidating five entities that were previously accounted for as equity investments. The primary reason for the change in the primary beneficiary conclusion was the determination that the Company’s responsibility for the management and operations of the VIEs afforded the Company the power to direct the significant activities of the VIEs. In addition, the Company has interests in certain VIEs that we share control of all significant activities for those entities with our partners, and therefore are accounted for under the equity method.

The Company has variable interests in VIEs through certain of its long-term purchase contracts. As of December 31, 2010, the carrying amount of assets and liabilities in the Consolidated Statement of Financial Position that relate to its variable interests under long-term purchase contracts are predominantly related to working capital accounts and generally represent the amounts owed by the Company for the deliveries associated with the current billing cycle under the contracts. The Company has not provided any form of financial support associated with these long-term contracts. There is no significant potential exposure to loss as a result of its variable interests through these long-term purchase contracts.

In 2001, Detroit Edison financed a regulatory asset related to Fermi 2 and certain other regulatory assets through the sale of rate reduction bonds by a wholly-owned special purpose entity, Securitization. Detroit Edison performs servicing activities including billing and collecting surcharge revenue for Securitization. Under ASU 2009-17, this entity is now a VIE, and continues to be consolidated as the Company is the primary beneficiary.

DTE Energy has interests in various unconsolidated trusts that were formed for the purpose of issuing preferred securities and lending the gross proceeds to the Company. The assets of the trusts are debt securities of DTE Energy with terms similar to those of the related preferred securities. Payments the Company makes are used by the trusts to make cash distributions on the preferred securities it has issued. DTE Energy has reviewed these interests and has determined they are VIEs, but the Company is not the primary beneficiary as it does not have variable interests in the trusts and therefore, the trusts are not consolidated by the Company.

The maximum risk exposure for consolidated VIEs is reflected on the Company’s Consolidated Statements of Financial Position. For non-consolidated VIEs, the maximum risk exposure is generally limited to its investment and amounts which it has guaranteed.



## DTE Energy Company

## Notes to Consolidated Financial Statements — (Continued)

The following table summarizes the major balance sheet items for consolidated VIEs as of December 31, 2010 and December 31, 2009. Amounts at December 31, 2010 for consolidated VIEs that are either (1) assets that can be used only to settle obligations of the VIE or (2) liabilities for which creditors do not have recourse to the general credit of the primary beneficiary are segregated in the restricted amounts column. Entities, in which the Company holds a majority voting interest and is the primary beneficiary, that meet the definition of a business and whose assets can be used for purposes other than the settlement of the VIE’s obligations have been excluded from the table below.

<table><tr><td rowspan="2"></td><td colspan="6">December 31, 2010</td></tr><tr><td>Securitization</td><td>Other</td><td>Total</td><td>Restricted Amounts</td><td>December 31, 2009</td><td></td></tr><tr><td>ASSETS</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Cash and cash equivalents</td><td>$ —</td><td>$ 4</td><td>$ 4</td><td>$ —</td><td>$ 2</td><td></td></tr><tr><td>Restricted cash</td><td>104</td><td>8</td><td>112</td><td>112</td><td>—</td><td></td></tr><tr><td>Accounts receivable</td><td>42</td><td>8</td><td>50</td><td>44</td><td>4</td><td></td></tr><tr><td>Inventories</td><td>—</td><td>99</td><td>99</td><td>—</td><td>9</td><td></td></tr><tr><td>Other current assets</td><td>—</td><td>1</td><td>1</td><td>—</td><td>—</td><td></td></tr><tr><td>Property, plant and equipment</td><td>—</td><td>54</td><td>54</td><td>38</td><td>45</td><td></td></tr><tr><td>Securitized regulatory assets</td><td>729</td><td>—</td><td>729</td><td>729</td><td>—</td><td></td></tr><tr><td>Other assets</td><td>13</td><td>9</td><td>22</td><td>21</td><td>9</td><td></td></tr><tr><td></td><td>$ 888</td><td>$183</td><td>$1,071</td><td>$ 944</td><td>$ 69</td><td></td></tr><tr><td>LIABILITIES</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Accounts payable and accrued current liabilities</td><td>$ 17</td><td>$ 27</td><td>$ 44</td><td>$ 18</td><td>$ 3</td><td></td></tr><tr><td>Current portion long-term debt, including capital leases</td><td>150</td><td>7</td><td>157</td><td>157</td><td>4</td><td></td></tr><tr><td>Other current liabilities</td><td>62</td><td>6</td><td>68</td><td>66</td><td>1</td><td></td></tr><tr><td>Mortgage bonds, notes and other</td><td>—</td><td>35</td><td>35</td><td>35</td><td>17</td><td></td></tr><tr><td>Securitization bonds</td><td>643</td><td>—</td><td>643</td><td>643</td><td>—</td><td></td></tr><tr><td>Capital lease obligations</td><td>—</td><td>23</td><td>23</td><td>23</td><td>26</td><td></td></tr><tr><td>Other long term liabilities</td><td>6</td><td>7</td><td>13</td><td>12</td><td>—</td><td></td></tr><tr><td></td><td>$ 878</td><td>$105</td><td>$ 983</td><td>$ 954</td><td>$ 51</td><td></td></tr></table>

Amounts for non-consolidated VIEs as of December 31, 2010 and December 31, 2009 are as follows:

<table><tr><td rowspan="2"></td><td>December 31, 2010</td><td>December 31, 2009</td></tr><tr><td>(In millions)</td><td></td></tr><tr><td>Other investments</td><td>$ 98</td><td>$ 178</td></tr><tr><td>Note receivable and bank loan guarantee</td><td>6</td><td>11</td></tr><tr><td>Trust preferred — linked securities</td><td>289</td><td>289</td></tr></table>



# DTE Energy Company
Notes to Consolidated Financial Statements — (Continued)

## NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES

## Revenues

Revenues from the sale and delivery of electricity, and the sale, delivery and storage of natural gas are recognized as services are provided. Detroit Edison and MichCon record revenues for electric and gas provided but unbilled at the end of each month. Rates for Detroit Edison and MichCon include provisions to adjust billings for fluctuations in fuel and purchased power costs, cost of natural gas and certain other costs. Revenues are adjusted for differences between actual costs and the amounts billed in current rates. Under or over recovered revenues related to these cost tracking mechanisms are recorded on the Consolidated Statement of Financial Position and are recovered or returned to customers through adjustments to the billing factors. See Note 12 for further discussion of cost recovery mechanisms.

Detroit Edison has a CIM, which is an over/under recovery mechanism that measures non-fuel revenues lost or gained as a result of fluctuations in electric Customer Choice sales. If annual electric Customer Choice sales exceed the baseline amount from Detroit Edison’s most recent rate case, 90 percent of its lost non-fuel revenues associated with sales above that level may be recovered from full service customers. If annual electric Customer Choice sales decrease below the baseline, the Company must refund 90 percent of its increase in non-fuel revenues associated with sales below that level to full service customers.

Detroit Edison and MichCon have RDMs that are designed to minimize the impact on revenues of changes in average customer usage of electricity and natural gas. The January 2010 MPSC order in Detroit Edison’s 2009 rate case provided for, among other items, the implementation of a pilot electric RDM effective February 1, 2010. The electric RDM enables Detroit Edison to recover or refund the change in revenue resulting from the difference between actual average sales per customer compared to the base level of average sales per customer established in the MPSC order. The June 2010 MPSC order in MichCon’s 2009 rate case provided for, among other items, the implementation of a pilot gas RDM effective July 1, 2010. The gas RDM enables MichCon to recover or refund the change in revenue resulting from the difference in weather-adjusted average sales per customer compared to the base average sales per customer established in the MPSC order. The RDMs for Detroit Edison and MichCon address changes in customer usage due to general economic conditions and conservation, but do not shield the utilities from the impacts of lost customers. In addition, the pilot electric RDM materially shields Detroit Edison from the impact of weather on customer usage. The pilot gas RDM does not shield MichCon from the impact of weather on customer usage. The electric and gas RDMs are subject to review by the MPSC after the initial one-year pilot programs.

Non-utility businesses recognize revenues as services are provided and products are delivered. Revenues and energy costs related to trading contracts are presented on a net basis in the Consolidated Statements of Operations. Commodity derivatives used for trading purposes are accounted for using the mark-to-market method with unrealized gains and losses recorded in Operating Revenues.

## Accounting for ISO Transactions

Detroit Edison participates in the energy market through MISO. MISO requires that we submit hourly day-ahead, real time and FTR bids and offers for energy at locations across the MISO region. Detroit Edison accounts for MISO transactions on a net hourly basis in each of the day-ahead, real-time and FTR markets and net transactions across all MISO energy market locations. In any single hour Detroit Edison records net purchases in Fuel, purchased power and gas and net sales in Operating revenues on the Consolidated Statements of Operations. Detroit Edison records net sale billing adjustments when invoices are received. Detroit Edison records expense accruals for future net purchases adjustments based on historical experience, and reconciles accruals to actual expenses when invoices are received from MISO.

Energy Trading participates in the energy markets through various independent system operators and regional transmission organizations. These markets require that we submit hourly day-ahead, real time bids and offers for



# DTE Energy Company

## Notes to Consolidated Financial Statements — (Continued)

energy at locations across each region. We submit bids in the annual and monthly auction revenue rights and FTR auctions to the regional transmission organizations. Energy Trading accounts for these transactions on a net hourly basis for the day-ahead, real-time and FTR markets. These transactions are related to our trading contracts which are presented on a net basis in Operating revenues in the Consolidated Statements of Income.

## Comprehensive Income

Comprehensive income is the change in Common shareholders’ equity during a period from transactions and events from non-owner sources, including net income. As shown in the following table, amounts recorded to accumulated other comprehensive loss for the year ended December 31, 2010 include unrealized gains and losses from derivatives accounted for as cash flow hedges, unrealized gains and losses on available for sale securities, the Company’s interest in comprehensive income of equity investees, and changes in benefit obligations, consisting of deferred actuarial losses, prior service costs and transition amounts related to pension and other postretirement benefit plans, and foreign currency translation adjustments.

<table><tr><td></td><td colspan="2">Net Unrealized Gain/(Loss) on Derivatives</td><td colspan="2">Net Unrealized Gain/(Loss) on Investments</td><td colspan="2">Benefit Obligations</td><td colspan="2">Foreign Currency Translation (In millions)</td><td colspan="2">Accumulated Other Comprehensive Loss</td></tr><tr><td>Beginning balances</td><td>$</td><td>(6)</td><td>$</td><td>(10)</td><td>$</td><td>(131)</td><td>$</td><td>—</td><td>$</td><td>(147)</td></tr><tr><td>Current period change, net of tax</td><td></td><td>2</td><td></td><td>(20)</td><td></td><td>15</td><td></td><td>1</td><td></td><td>(2)</td></tr><tr><td>Ending balance</td><td>$</td><td>(4)</td><td>$</td><td>(30)</td><td>$</td><td>(116)</td><td>$</td><td>1</td><td>$</td><td>(149)</td></tr></table>

## Cash Equivalents and Restricted Cash

Cash and cash equivalents include cash on hand, cash in banks and temporary investments purchased with remaining maturities of three months or less. Restricted cash consists of funds held to satisfy requirements of certain debt, primarily Securitization bonds, and partnership operating agreements. Restricted cash designated for interest and principal payments within one year is classified as a current asset.

## Receivables

Accounts receivable are primarily composed of trade receivables and unbilled revenue. Our accounts receivable are stated at net realizable value.

The allowance for doubtful accounts for Detroit Edison and MichCon is generally calculated using the aging approach that utilizes rates developed in reserve studies. We establish an allowance for uncollectible accounts based on historical losses and management’s assessment of existing economic conditions, customer trends, and other factors. Customer accounts are generally considered delinquent if the amount billed is not received by the due date, which is typically in 21 days, however, factors such as assistance programs may delay aggressive action. We assess late payment fees on trade receivables based on past-due terms with customers. Customer accounts are written off when collection efforts have been exhausted, generally one year after service has been terminated.

The customer allowance for doubtful accounts for our other businesses is calculated based on specific review of probable future collections based on receivable balances in excess of 90 days.

Unbilled revenues of $575 million and $618 million are included in customer accounts receivable at December 31, 2010 and 2009, respectively.



# DTE Energy Company
Notes to Consolidated Financial Statements — (Continued)

## Notes Receivable

Notes receivable, or financing receivables, are primarily comprised of capital lease receivables and loans and are included in Other current assets and Notes receivable on the Company’s Consolidated Statements of Financial Position.

Notes receivable are typically considered delinquent when payment is not received for periods ranging from 60 to 120 days. The Company ceases accruing interest (nonaccrual status), considers a note receivable impaired, and establishes an allowance for credit loss when it is probable that all principal and interest amounts due will not be collected in accordance with the contractual terms of the note receivable. Cash payments received on nonaccrual status notes receivable, that do not bring the account contractually current, are first applied to contractually owed past due interest, with any remainder applied to principle. Accrual of interest is generally resumed when the note receivable becomes contractually current.

In determining the allowance for credit losses for notes receivable, we consider the historical payment experience and other factors that are expected to have a specific impact on the counterparty’s ability to pay. In addition, the Company monitors the credit ratings of the counterparties from which we have notes receivable.

## Inventories

The Company generally values inventory at average cost.

Gas inventory of $43 million and $44 million as of December 31, 2010 and 2009, respectively, at MichCon is determined using the last-in, first-out (LIFO) method. At December 31, 2010, the replacement cost of gas remaining in storage exceeded the LIFO cost by $147 million. At December 31, 2009, the replacement cost of gas remaining in storage exceeded the LIFO cost by $218 million.

## Property, Retirement and Maintenance, and Depreciation, Depletion and Amortization

Property is stated at cost and includes construction-related labor, materials, overheads and, for utility property, an allowance for funds used during construction (AFUDC). The cost of utility properties retired, less salvage value, is charged to accumulated depreciation. Expenditures for maintenance and repairs are charged to expense when incurred, except for Fermi 2.

The Company bases depreciation provisions for utility property at Detroit Edison and MichCon on straight-line and units-of-production rates approved by the MPSC.

Non-utility property is depreciated over its estimated useful life using straight-line, declining-balance or units-of-production methods.

The Company credits depreciation, depletion and amortization expense when it establishes regulatory assets for plant-related costs such as depreciation or plant-related financing costs. The Company charges depreciation, depletion and amortization expense when it amortizes these regulatory assets. The Company credits interest expense to reflect the accretion income on certain regulatory assets.

Approximately $3 million and $13 million of expenses related to Fermi 2 refueling outages were accrued at December 31, 2010 and December 31, 2009, respectively. Amounts are accrued on a pro-rata basis over an 18-month period that coincides with scheduled refueling outages at Fermi 2. This accrual of outage costs matches the regulatory recovery of these costs in rates set by the MPSC.

See Note 7.



# DTE Energy Company
Notes to Consolidated Financial Statements — (Continued)

## Unconventional Gas Production

The Company follows the successful efforts method of accounting for investments in gas properties. Under this method of accounting, all property acquisition costs and costs of exploratory and development wells are capitalized when incurred, pending determination of whether the well contains proved reserves. If an exploratory well does not contain proved reserves, the costs of drilling the well are expensed. The costs of development wells are capitalized, whether productive or nonproductive. Geological and geophysical costs on exploratory prospects and the costs of carrying and retaining properties without economical quantities of proved reserves are expensed as incurred. An impairment loss is recorded if the net capitalized costs of proved gas properties exceed the aggregate related undiscounted future net revenues. An impairment loss is recorded to the extent that capitalized costs of unproved properties, on a property-by-property basis, are considered not to be realizable. Depreciation, depletion and amortization of proved gas properties are determined using the units-of-production method.

## Long-Lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. If the carrying amount of the asset exceeds the expected future cash flows generated by the asset, an impairment loss is recognized resulting in the asset being written down to its estimated fair value. Assets to be disposed of are reported at the lower of the carrying amount or fair value, less costs to sell.

## Intangible Assets

The Company has certain intangible assets relating to emission allowances, renewable energy credits and non-utility contracts. Emission allowances and renewable energy credits are charged to expense as the allowances and credits are consumed in the operation of the business. The Company’s intangible assets related to emission allowances were $9 million at December 31, 2010 and 2009. The Company’s intangible assets related to renewable energy credits were $17 million at December 31, 2010. The Company had no renewable energy credits at December 31, 2009. The gross carrying amount and accumulated amortization of contract intangible assets at December 31, 2010 were $63 million and $22 million, respectively. The gross carrying amount and accumulated amortization of contract intangible assets at December 31, 2009 were $64 million and $19 million, respectively. The Company amortizes contract intangible assets on a straight-line basis over the expected period of benefit, ranging from 4 to 30 years. Intangible assets amortization expense was $4 million in 2010, $4 million in 2009 and $7 million in 2008. Amortization expense of intangible assets is estimated to be $4 million annually for 2011 through 2015.

## Excise and Sales Taxes

The Company records the billing of excise and sales taxes as a receivable with an offsetting payable to the applicable taxing authority, with no net impact on the Consolidated Statements of Operations.

## Deferred Debt Costs

The costs related to the issuance of long-term debt are deferred and amortized over the life of each debt issue. In accordance with MPSC regulations applicable to the Company’s electric and gas utilities, the unamortized discount, premium and expense related to debt redeemed with a refinancing are amortized over the life of the replacement issue. Discount, premium and expense on early redemptions of debt associated with non-utility operations are charged to earnings.

## Investments in Debt and Equity Securities

The Company generally classifies investments in debt and equity securities as either trading or available-for-sale and has recorded such investments at market value with unrealized gains or losses included in earnings.



# DTE Energy Company

## Notes to Consolidated Financial Statements — (Continued)

or in other comprehensive income or loss, respectively. Changes in the fair value of Fermi 2 nuclear decommissioning investments are recorded as adjustments to regulatory assets or liabilities, due to a recovery mechanism from customers. The Company’s equity investments are reviewed for impairment each reporting period. If the assessment indicates that the impairment is other than temporary, a loss is recognized resulting in the equity investment being written down to its estimated fair value. See Note 4.

## Offsetting Amounts Related to Certain Contracts

The Company offsets the fair value of derivative instruments with cash collateral received or paid for those derivative instruments executed with the same counterparty under a master netting agreement, which reduces both the Company’s total assets and total liabilities. As of December 31, 2010 and December 31, 2009, the total cash collateral posted, net of cash collateral received, was $77 million and $117 million, respectively. Derivative assets and derivative liabilities are shown net of collateral of $9 million and $33 million, respectively, as of December 31, 2010 and $34 million and $120 million, respectively, as of December 31, 2009. The Company recorded cash collateral received of $2 million and cash collateral paid of $35 million not related to unrealized derivative positions as of December 31, 2010. The Company recorded cash collateral received of $1 million and cash collateral paid of $32 million not related to unrealized derivative positions, as of December 31, 2009. These amounts are included in accounts receivable and accounts payable and are recorded net by counterparty.

## Government Grants

Grants are recognized when there is reasonable assurance that the grant will be received and that any conditions associated with the grant will be met. When grants are received related to Property, Plant and Equipment, the Company reduces the basis of the assets on the Consolidated Statements of Financial Position, resulting in lower depreciation expense over the life of the associated asset. Grants received related to expenses are reflected as a reduction of the associated expense in the period in which the expense is incurred.

## Other Accounting Policies

See the following notes for other accounting policies impacting the Company’s consolidated financial statements:

<table><tr><td>Note</td><td>Title</td></tr><tr><td>3</td><td>New Accounting Pronouncements</td></tr><tr><td>4</td><td>Fair Value</td></tr><tr><td>5</td><td>Financial and Other Derivative Instruments</td></tr><tr><td>6</td><td>Goodwill</td></tr><tr><td>9</td><td>Asset Retirement Obligation</td></tr><tr><td>12</td><td>Regulatory Matters</td></tr><tr><td>13</td><td>Income Taxes</td></tr><tr><td>21</td><td>Retirement Benefits and Trusted Assets</td></tr><tr><td>22</td><td>Stock-based Compensation</td></tr></table>

## NOTE 3 — NEW ACCOUNTING PRONOUNCEMENTS

## Variable Interest Entity

In June 2009, the FASB issued ASU 2009-17, Amendments to FASB Interpretation 46(R). This standard amends the consolidation guidance that applies to VIEs and affects the overall consolidation analysis under ASC 810-10, Consolidation. The amendments to the consolidation guidance affect all entities and enterprises



# DTE Energy Company
Notes to Consolidated Financial Statements — (Continued)

currently within the scope of ASC 810-10, as well as qualifying special purpose entities that are currently outside the scope of ASC 810-10. Accordingly, the Company reconsidered its previous ASC 810-10 conclusions, including (1) whether an entity is a VIE, (2) whether the enterprise is the VIE’s primary beneficiary, and (3) what type of financial statement discloses are required. ASU 2009-17 is effective as of the beginning of the first fiscal year that begins after November 15, 2009. The Company adopted the standard as of January 1, 2010. The adoption of the standard resulted in the consolidation of certain entities within the Power and Industrial Projects segment where the investments in such entities were previously accounted for under the equity method. See Note 1.

## Fair Value Measurements and Disclosures

In January 2010, the FASB issued ASU 2010-06, Improving Disclosures about Fair Value Measurements. ASU 2010-06 requires details of transfers in and out of Level 1 and 2 fair value measurements and the gross presentation of activity within the Level 3 fair value measurement roll forward. The new disclosures are required of all entities that are required to provide disclosures about recurring and nonrecurring fair value measurements. The Company adopted ASU 2010-06 effective January 1, 2010, except for the gross presentation of the Level 3 fair value measurement roll forward which is effective for annual reporting periods beginning after December 15, 2010 and for interim reporting periods within those years.

## Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities

The Company adopted the requirements of ASC 260-10 (FASB Staff Position EITF No. 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities) effective January 1, 2009 and applied the requirements retrospectively. This FSP addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing earnings per share. The adoption of the FSP had the effect of reducing previously reported 2008 amounts for basic and diluted earnings per common share by $.03 and $.02, respectively.

## Noncontrolling Interests in Consolidated Financial Statements

The Company adopted ASC 810-10 (SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements — an Amendment of ARB No. 51) effective as of January 1, 2009 and applied the new presentation and disclosure requirements retrospectively. As a result, the formats and captions of certain 2008 financial statement amounts were revised, including reclassifying minority interest expense as net income attributable to noncontrolling interests, and separately reflecting activity of noncontrolling interests in the Consolidated Statements of Equity and of Comprehensive Income.

## NOTE 4 — FAIR VALUE

Fair value is defined as the price that would be received to sell an asset 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 Company makes certain assumptions it believes 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 Company and its 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, 2010 and December 31, 2009. The Company believes it uses valuation techniques that maximize the use of observable market-based inputs and minimize the use of unobservable inputs.



## DTE Energy Company

## Notes to Consolidated Financial Statements — (Continued)

A fair value hierarchy has been established, which prioritizes the inputs to valuation techniques used to measure fair value in three broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). In some cases, the inputs used to measure fair value might fall in different levels of the fair value hierarchy. All assets and liabilities are required to be classified in their entirety based on the lowest level of input that is significant to the fair value measurement in its entirety. Assessing the significance of a particular input may require judgment considering factors specific to the asset or liability, and may affect the valuation of the asset or liability and its placement within the fair value hierarchy. The Company classifies fair value balances based on the fair value hierarchy defined as follows:

- Level 1 — Consists of unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access as of the reporting date.

- Level 2 — Consists of inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data.

- Level 3 — Consists of unobservable inputs for assets or liabilities whose fair value is estimated based on internally developed models or methodologies using inputs that are generally less readily observable and supported by little, if any, market activity at the measurement date. Unobservable inputs are developed based on the best available information and subject to cost-benefit constraints.

The following table presents assets and liabilities measured and recorded at fair value on a recurring basis as of December 31, 2010:

<table><tr><td></td><td>Level 1</td><td>Level 2</td><td>Level 3</td><td>Netting Adjustments(2) (In millions)</td><td>Net Balance at December 31, 2010</td></tr><tr><td>Assets:</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Nuclear decommissioning trusts</td><td>$ 599</td><td>$ 340</td><td>$ —</td><td>$ —</td><td>$ 939</td></tr><tr><td>Other investments(1)</td><td>56</td><td>55</td><td>—</td><td>—</td><td>111</td></tr><tr><td>Derivative assets:</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Foreign currency exchange contracts</td><td>—</td><td>20</td><td>—</td><td>(20)</td><td>—</td></tr><tr><td>Commodity Contracts:</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Natural Gas</td><td>1,846</td><td>128</td><td>12</td><td>(1,960)</td><td>26</td></tr><tr><td>Electricity</td><td>—</td><td>649</td><td>117</td><td>(589)</td><td>177</td></tr><tr><td>Other</td><td>68</td><td>4</td><td>4</td><td>(71)</td><td>5</td></tr><tr><td>Total derivative assets</td><td>1,914</td><td>801</td><td>133</td><td>(2,640)</td><td>208</td></tr><tr><td>Total</td><td>$2,569</td><td>$1,196</td><td>$ 133</td><td>$ (2,640)</td><td>$ 1,258</td></tr></table>



## DTE Energy Company

## Notes to Consolidated Financial Statements — (Continued)

<table><tr><td></td><td>Level 1</td><td>Level 2</td><td>Level 3</td><td>Netting Adjustments(2) (In millions)</td><td>Net Balance at December 31, 2010</td></tr><tr><td>Liabilities:</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Derivative liabilities:</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Foreign currency exchange contracts</td><td>$ —</td><td>$ (30)</td><td>$ —</td><td>$ 20</td><td>$ (10)</td></tr><tr><td>Interest rate contracts</td><td>—</td><td>(1)</td><td>—</td><td>—</td><td>(1)</td></tr><tr><td>Commodity Contracts:</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Natural Gas</td><td>(1,844)</td><td>(263)</td><td>(11)</td><td>1,955</td><td>(163)</td></tr><tr><td>Electricity</td><td>—</td><td>(653)</td><td>(63)</td><td>643</td><td>(73)</td></tr><tr><td>Other</td><td>(63)</td><td>(8)</td><td>—</td><td>66</td><td>(5)</td></tr><tr><td>Total derivative liabilities</td><td>(1,907)</td><td>(955)</td><td>(74)</td><td>2,684</td><td>(252)</td></tr><tr><td>Total</td><td>$ (1,907)</td><td>$ (955)</td><td>$ (74)</td><td>$ 2,684</td><td>$ (252)</td></tr><tr><td>Net Assets as of December 31, 2010</td><td>$ 662</td><td>$ 241</td><td>$ 59</td><td>$ 44</td><td>$ 1,006</td></tr><tr><td>Assets:</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Current</td><td>$ 1,299</td><td>$ 663</td><td>$ 49</td><td>$ (1,880)</td><td>$ 131</td></tr><tr><td>Noncurrent(3)</td><td>1,270</td><td>533</td><td>84</td><td>(760)</td><td>1,127</td></tr><tr><td>Total Assets</td><td>$ 2,569</td><td>$1,196</td><td>$ 133</td><td>$ (2,640)</td><td>$ 1,258</td></tr><tr><td>Liabilities:</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Current</td><td>$ (1,290)</td><td>$ (730)</td><td>$ (21)</td><td>$ 1,899</td><td>$ (142)</td></tr><tr><td>Noncurrent</td><td>(617)</td><td>(225)</td><td>(53)</td><td>785</td><td>(110)</td></tr><tr><td>Total Liabilities</td><td>$ (1,907)</td><td>$ (955)</td><td>$ (74)</td><td>$ 2,684</td><td>$ (252)</td></tr><tr><td>Net Assets as of December 31, 2010</td><td>$ 662</td><td>$ 241</td><td>$ 59</td><td>$ 44</td><td>$ 1,006</td></tr></table>

The following table presents assets and liabilities measured and recorded at fair value on a recurring basis as of December 31, 2009:

<table><tr><td></td><td>Level 1</td><td>Level 2</td><td>Level 3</td><td>Netting Adjustments(2) (In millions)</td><td>Net Balance at December 31, 2009</td></tr><tr><td>Assets:</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Cash equivalents</td><td>$ 15</td><td>$ —</td><td>$ —</td><td>$ —</td><td>$ 15</td></tr><tr><td>Nuclear decommissioning trusts</td><td>549</td><td>268</td><td>—</td><td>—</td><td>817</td></tr><tr><td>Other Investments(1)</td><td>50</td><td>57</td><td>—</td><td>—</td><td>107</td></tr><tr><td>Derivative assets</td><td>1,080</td><td>1,207</td><td>385</td><td>(2,347)</td><td>325</td></tr><tr><td>Total</td><td>$ 1,694</td><td>$ 1,532</td><td>$ 385</td><td>$ (2,347)</td><td>$ 1,264</td></tr><tr><td>Liabilities:</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Derivative liabilities</td><td>$ (1,120)</td><td>$ (1,370)</td><td>$ (361)</td><td>$ 2,433</td><td>$ (418)</td></tr><tr><td>Total</td><td>$ (1,120)</td><td>$ (1,370)</td><td>$ (361)</td><td>$ 2,433</td><td>$ (418)</td></tr><tr><td>Net Assets at December 31, 2009</td><td>$ 574</td><td>$ 162</td><td>$ 24</td><td>$ 86</td><td>$ 846</td></tr></table>



# DTE Energy Company
Notes to Consolidated Financial Statements — (Continued)

(1) Excludes cash surrender value of life insurance investments.

(2) Amounts represent the impact of master netting agreements that allow the Company to net gain and loss positions and cash collateral held or placed with the same counterparties.

(3) Includes $111 million of other investments that are included in the Consolidated Statements of Financial Position in Other Investments at December 31, 2010.

The following tables present the fair value reconciliation of Level 3 assets and liabilities measured at fair value on a recurring basis for the years ended December 31, 2010 and 2009:

<table><tr><td rowspan="3"></td><td colspan="5">Year Ended December 31, 2010</td></tr><tr><td>Natural Gas</td><td colspan="2">Electricity (In millions)</td><td>Other</td><td>Total</td></tr><tr><td>$ 2</td><td>$ 19</td><td>$ 3</td><td>$ 24</td><td></td></tr><tr><td>Asset balance as of January 1, 2010</td><td>4</td><td>64</td><td>1</td><td>69</td><td></td></tr><tr><td>Changes in fair value recorded in income</td><td>—</td><td>—</td><td>6</td><td>6</td><td></td></tr><tr><td>Changes in fair value recorded in regulatory assets/liabilities</td><td>(8)</td><td>(73)</td><td>(6)</td><td>(87)</td><td></td></tr><tr><td>Purchases, issuances and settlements</td><td>3</td><td>44</td><td>—</td><td>47</td><td></td></tr><tr><td>Transfers in/out of Level 3</td><td>1</td><td>54</td><td>4</td><td>59</td><td></td></tr><tr><td>Asset balance as of December 31, 2010</td><td>$ 1</td><td>$ 54</td><td>$ 4</td><td>$ 59</td><td></td></tr><tr><td>The amount of total gains (losses) included in net income attributed to the change in unrealized gains (losses) related to assets and liabilities held at December 31, 2010</td><td>$ (4)</td><td>$ (6)</td><td>$ 1</td><td>$ (9)</td><td></td></tr></table>

<table><tr><td rowspan="3"></td><td colspan="5">Year Ended December 31, 2009</td></tr><tr><td>Natural Gas</td><td colspan="2">Electricity (In millions)</td><td>Other</td><td>Total</td></tr><tr><td>$ (183)</td><td>$ (5)</td><td>$ 5</td><td>$ (183)</td><td></td></tr><tr><td>Asset (Liability) balance as of January 1, 2009</td><td>(17)</td><td>59</td><td>(1)</td><td>41</td><td></td></tr><tr><td>Changes in fair value recorded in income</td><td>8</td><td>—</td><td>—</td><td>8</td><td></td></tr><tr><td>Changes in fair value recorded in other comprehensive income</td><td>(15)</td><td>(30)</td><td>1</td><td>(44)</td><td></td></tr><tr><td>Purchases, issuances and settlements</td><td>209</td><td>(5)</td><td>(2)</td><td>202</td><td></td></tr><tr><td>Transfers in/out of Level 3</td><td>2</td><td>19</td><td>3</td><td>24</td><td></td></tr><tr><td>Asset (Liability) balance as of December 31, 2009</td><td>$ (60)</td><td>$ 154</td><td>$ (1)</td><td>$ 93</td><td></td></tr><tr><td>The amount of total gains (losses) included in net income attributed to the change in unrealized gains (losses) related to assets and liabilities held at December 31, 2009</td><td>$ (60)</td><td>$ 154</td><td>$ (1)</td><td>$ 93</td><td></td></tr></table>

Transfers in/out of Level 3 represent existing assets or liabilities that were either previously categorized as a higher level and for which the inputs to the model became unobservable or assets and liabilities that were previously classified as Level 3 for which the lowest significant input became observable during the period. Transfers in/out of Level 3 are reflected as if they had occurred at the beginning of the period. No significant transfers between Level 1 and 2 occurred in years ended December 31, 2010 and December 31, 2009. Transfers from Level 2 to Level 3 representing $9 million of assets reflect inputs related to certain power transactions identified as unobservable due to lack of available broker quotes for the year ended December 31, 2010. Transfers from Level 3 to Level 2



# DTE Energy Company
Notes to Consolidated Financial Statements — (Continued)

representing $35 million of liabilities reflect inputs related to certain power transactions identified as observable due to available broker quotes for the year ended December 31, 2010. Transfers out of Level 3 of $202 million reflect increased reliance on broker quotes for certain gas transactions for the year ended December 31, 2009.

## Cash Equivalents

Cash equivalents include investments with maturities of three months or less when purchased. The cash equivalents shown in the fair value table are comprised of investments in money market funds. The fair values of the shares of these funds are based on observable market prices and, therefore, have been categorized as Level 1 in the fair value hierarchy.

## Nuclear Decommissioning Trusts and Other Investments

The nuclear decommissioning trusts and other investments hold debt and equity securities directly and indirectly through commingled funds and institutional mutual funds. Exchange-traded debt and equity securities held directly are valued using quoted market prices in actively traded markets. The commingled funds and institutional mutual funds which hold exchange-traded equity or debt securities are valued based on the underlying securities, using quoted prices in actively traded markets. Non-exchange-traded fixed income securities are valued based upon quotations available from brokers or pricing services. A primary price source is identified by asset type, class or issue for each security. The trustees monitor prices supplied by pricing services and may use a supplemental price source or change the primary price source of a given security if the trustees determine that another price source is considered to be preferable. DTE Energy has obtained an understanding of how these prices are derived, including the nature and observability of the inputs used in deriving such prices. Additionally, DTE Energy selectively corroborates the fair values of securities by comparison of market-based price sources.

## Derivative Assets and Liabilities

Derivative assets and liabilities are comprised of physical and financial derivative contracts, including futures, forwards, options and swaps that are both exchange-traded and over-the-counter traded contracts. Various inputs are used to value derivatives depending on the type of contract and availability of market data. Exchange-traded derivative contracts are valued using quoted prices in active markets. DTE Energy considers the following criteria in determining whether a market is considered active: frequency in which pricing information is updated, variability in pricing between sources or over time and the availability of public information. Other derivative contracts are valued based upon a variety of inputs including commodity market prices, broker quotes, interest rates, credit ratings, default rates, market-based seasonality and basis differential factors. DTE Energy monitors the prices that are supplied by brokers and pricing services and may use a supplemental price source or change the primary price source of an index if prices become unavailable or another price source is determined to be more representative of fair value. DTE Energy has obtained an understanding of how these prices are derived. Additionally, DTE Energy selectively corroborates the fair value of its transactions by comparison of market-based price sources. Mathematical valuation models are used for derivatives for which external market data is not readily observable, such as contracts which extend beyond the actively traded reporting period.

## Fair Value of Financial Instruments

The fair value of long-term debt is determined by using quoted market prices when available and a discounted cash flow analysis based upon estimated current borrowing rates when quoted market prices are not available. The table below shows the fair value and the carrying value for long-term debt securities. Certain other financial



## DTE Energy Company

## Notes to Consolidated Financial Statements — (Continued)

instruments, such as notes payable, customer deposits and notes receivable are not shown as carrying value approximates fair value. See Note 5 for further fair value information on financial and derivative instruments.

<table><tr><td rowspan="2"></td><td colspan="2">December 31, 2010</td><td colspan="2">December 31, 2009</td></tr><tr><td>Fair Value</td><td>Carrying Value</td><td>Fair Value</td><td>Carrying Value</td></tr><tr><td>Long-Term Debt</td><td>$8.5 billion</td><td>$ 8.0 billion</td><td>$8.3 billion</td><td>$ 8.0 billion</td></tr></table>

## Nuclear Decommissioning Trust Funds

Detroit Edison has a legal obligation to decommission its nuclear power plants following the expiration of their operating licenses. This obligation is reflected as an asset retirement obligation on the Consolidated Statements of Financial Position. See Note 9 for additional information.

The NRC has jurisdiction over the decommissioning of nuclear power plants and requires decommissioning funding based upon a formula. The MPSC and FERC regulate the recovery of costs of decommissioning nuclear power plants and both require the use of external trust funds to finance the decommissioning of Fermi 2. Rates approved by the MPSC provide for the recovery of decommissioning costs of Fermi 2 and the disposal of low-level radioactive waste. Detroit Edison is continuing to fund FERC jurisdictional amounts for decommissioning even though explicit provisions are not included in FERC rates. The Company believes the MPSC and FERC collections will be adequate to fund the estimated cost of decommissioning using the NRC formula. The decommissioning assets, anticipated earnings thereon and future revenues from decommissioning collections will be used to decommission Fermi 2. The Company expects the liabilities to be reduced to zero at the conclusion of the decommissioning activities. If amounts remain in the trust funds for Fermi 2 following the completion of the decommissioning activities, those amounts will be disbursed based on rulings by the MPSC and FERC. The decommissioning of Fermi 1 is funded by Detroit Edison. Contributions to the Fermi 1 trust are discretionary.

The following table summarizes the fair value of the nuclear decommissioning trust fund assets:

<table><tr><td rowspan="2"></td><td>December 31</td><td>December 31</td></tr><tr><td>2010</td><td>2009</td></tr><tr><td></td><td colspan="2">(In millions)</td></tr><tr><td>Fermi 2</td><td>$ 910</td><td>$ 790</td></tr><tr><td>Fermi 1</td><td>3</td><td>3</td></tr><tr><td>Low level radioactive waste</td><td>26</td><td>24</td></tr><tr><td>Total</td><td>$ 939</td><td>$ 817</td></tr></table>

At December 31, 2010, investments in the nuclear decommissioning trust funds consisted of approximately 61% in publicly traded equity securities, 38% in fixed debt instruments and 1% in cash equivalents. At December 31, 2009, investments in the nuclear decommissioning trust funds consisted of approximately 51% in publicly traded equity securities, 48% in fixed debt instruments and 1% in cash equivalents. The debt securities at both December 31, 2010 and December 31, 2009 had an average maturity of approximately 6 and 5 years, respectively.

The costs of securities sold are determined on the basis of specific identification. The following table sets forth the gains and losses and proceeds from the sale of securities by the nuclear decommissioning trust funds:

<table><tr><td rowspan="2"></td><td colspan="3">Year Ended December 31</td></tr><tr><td>2010</td><td>2009</td><td>2008</td></tr><tr><td></td><td colspan="3">(In millions)</td></tr><tr><td>Realized gains</td><td>$192</td><td>$ 37</td><td>$ 34</td></tr><tr><td>Realized losses</td><td>$ (83)</td><td>$ (55)</td><td>$ (49)</td></tr><tr><td>Proceeds from sales of securities</td><td>$377</td><td>$295</td><td>$232</td></tr></table>



## DTE Energy Company

## Notes to Consolidated Financial Statements — (Continued)

Realized gains and losses from the sale of securities for the Fermi 2 trust and the low level radioactive waste funds are recorded to the Regulatory asset and Nuclear decommissioning liability. The following table sets forth the fair value and unrealized gains for the nuclear decommissioning trust funds:

<table><tr><td></td><td>Fair Value</td><td>Unrealized Gains</td></tr><tr><td></td><td colspan="2">(In millions)</td></tr><tr><td>As of December 31, 2010</td><td></td><td></td></tr><tr><td>Equity securities</td><td>$ 572</td><td>$ 77</td></tr><tr><td>Debt securities</td><td>361</td><td>11</td></tr><tr><td>Cash and cash equivalents</td><td>6</td><td>—</td></tr><tr><td></td><td>$ 939</td><td>$ 88</td></tr><tr><td>As of December 31, 2009</td><td></td><td></td></tr><tr><td>Equity securities</td><td>$ 420</td><td>$ 135</td></tr><tr><td>Debt securities</td><td>388</td><td>17</td></tr><tr><td>Cash and cash equivalents</td><td>9</td><td>—</td></tr><tr><td></td><td>$ 817</td><td>$ 152</td></tr></table>

Securities held in the nuclear decommissioning trust funds are classified as available-for-sale. As Detroit Edison does not have the ability to hold impaired investments for a period of time sufficient to allow for the anticipated recovery of market value, all unrealized losses are considered to be other than temporary impairments.

Impairment charges for unrealized losses incurred by the Fermi 2 trust are recognized as a Regulatory asset. Detroit Edison recognized $26 million and $48 million of unrealized losses as Regulatory assets at December 31, 2010 and 2009, respectively. Since the decommissioning of Fermi 1 is funded by Detroit Edison rather than through a regulatory recovery mechanism, there is no corresponding regulatory asset treatment. Therefore, impairment charges for unrealized losses incurred by the Fermi 1 trust are recognized in earnings immediately. There were no impairment charges in 2010, 2009 and 2008 for Fermi 1.

## Other Available- For- Sale Securities

The following table summarizes the fair value of the Company’s investment in available-for-sale debt and equity securities, excluding nuclear decommissioning trust fund assets:

<table><tr><td rowspan="2"></td><td colspan="3">December 31, 2010</td><td colspan="3">December 31, 2009</td></tr><tr><td>Fair Value</td><td>Carrying value</td><td>Fair Value</td><td>Carrying Value</td><td></td><td></td></tr><tr><td>Cash equivalents</td><td>$ 133</td><td>$ 133</td><td>$ 106</td><td>$ 106</td><td></td><td></td></tr><tr><td>Equity securities</td><td>$ 6</td><td>$ 6</td><td>$ 11</td><td>$ 11</td><td></td><td></td></tr></table>

At December 31, 2010 and 2009, these securities are comprised primarily of money-market and equity securities. During the year ended December 31, 2010, no amounts of unrealized losses on available for sale securities were reclassified out of other comprehensive income into losses for the period. During the year ended December 31, 2009, $3 million of unrealized losses on available-for-sale securities were reclassified out of other comprehensive income into earnings. This reclassification includes an other than temporary impairment of equity securities of $4 million. Gains (losses) related to trading securities held at December 31, 2010, 2009, and 2008 were $7 million, $8 million and $(14) million respectively.



# DTE Energy Company
Notes to Consolidated Financial Statements — (Continued)

## NOTE 5 — FINANCIAL AND OTHER DERIVATIVE INSTRUMENTS

The Company recognizes all derivatives at their fair value as Derivative Assets or Liabilities on the Consolidated Statements of Financial Position unless they qualify for certain scope exceptions, including the normal purchases and normal sales exception. Further, derivatives that qualify and are designated for hedge accounting are classified as either hedges of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge), or as hedges of the fair value of a recognized asset or liability or of an unrecognized firm commitment (fair value hedge). For cash flow hedges, the portion of the derivative gain or loss that is effective in offsetting the change in the value of the underlying exposure is deferred in Accumulated other comprehensive income and later reclassified into earnings when the underlying transaction occurs. For fair value hedges, changes in fair values for the derivative are recognized in earnings each period. Gains and losses from the ineffective portion of any hedge are recognized in earnings immediately. For derivatives that do not qualify or are not designated for hedge accounting, changes in the fair value are recognized in earnings each period.

The Company’s primary market risk exposure is associated with commodity prices, credit, interest rates and foreign currency exchange. The Company has risk management policies to monitor and manage market risks. The Company uses derivative instruments to manage some of the exposure. The Company uses derivative instruments for trading purposes in its Energy Trading segment and the coal marketing activities of its Power and Industrial Projects segment. Contracts classified as derivative instruments include power, gas, oil and certain coal forwards, futures, options and swaps, and foreign currency exchange contracts. Items not classified as derivatives include natural gas inventory, unconventional gas reserves, power transmission, pipeline transportation and certain storage assets.

Electric Utility — Detroit Edison generates, purchases, distributes and sells electricity. Detroit Edison uses forward energy and capacity contracts to manage changes in the price of electricity and fuel. Substantially all of these contracts meet the normal purchases and sales exemption and are therefore accounted for under the accrual method. Other derivative contracts are recoverable through the PSCR mechanism when settled. This results in the deferral of unrealized gains and losses as Regulatory assets or liabilities until realized.

Gas Utility — MichCon purchases, stores, transports, gathers, distributes and sells natural gas and sells storage and transportation capacity. MichCon has fixed-priced contracts for portions of its expected gas supply requirements through March 2014. Substantially all of these contracts meet the normal purchases and sales exemption and are therefore accounted for under the accrual method. MichCon may also sell forward transportation and storage capacity contracts. Forward transportation and storage contracts are not derivatives and are therefore accounted for under the accrual method.

Gas Storage and Pipelines — This segment is primarily engaged in services related to the transportation and storage of natural gas. Fixed-priced contracts are used in the marketing and management of transportation and storage services. Generally these contracts are not derivatives and are therefore accounted for under the accrual method.

Unconventional Gas Production — The Unconventional Gas Production business is engaged in unconventional natural gas and oil project development and production. The Company uses derivative contracts to manage changes in the price of natural gas and crude oil. In 2010 and prior periods, these derivatives were designated as cash flow hedges. Approximately $1 million after-tax gain recorded in Accumulated other comprehensive income at the end of 2009 was reclassified to earnings as the related production affected earnings through 2010. Total pre-tax gains from derivative contracts on natural gas during 2010 were approximately $3 million.

Power and Industrial Projects — Business units within this segment manage and operate onsite energy and pulverized coal projects, coke batteries, landfill gas recovery and power generation assets. These businesses utilize fixed-priced contracts in the marketing and management of their assets. These contracts are generally not



# DTE Energy Company
Notes to Consolidated Financial Statements — (Continued)

derivatives and are therefore accounted for under the accrual method. The segment also engages in coal marketing which includes the marketing and trading of physical coal and coal financial instruments, and forward contracts for the purchase and sale of emissions allowances. Certain of these physical and financial coal contracts and contracts for the purchase and sale of emission allowances are derivatives and are accounted for by recording changes in fair value to earnings.

Energy Trading — Commodity Price Risk — Energy Trading markets and trades electricity and natural gas physical products and energy financial instruments, and provides risk management services utilizing energy commodity derivative instruments. Forwards, futures, options and swap agreements are used to manage exposure to the risk of market price and volume fluctuations in its operations. These derivatives are accounted for by recording changes in fair value to earnings unless hedge accounting criteria are met.

Energy Trading — Foreign Currency Exchange Risk — Energy Trading has foreign currency exchange forward contracts to economically hedge fixed Canadian dollar commitments existing under power purchase and sale contracts and gas transportation contracts. The Company enters into these contracts to mitigate price volatility with respect to fluctuations of the Canadian dollar relative to the U.S. dollar. These derivatives are accounted for by recording changes in fair value to earnings unless hedge accounting criteria are met.

Corporate and Other — Interest Rate Risk — The Company uses interest rate swaps, treasury locks and other derivatives to hedge the risk associated with interest rate market volatility. In 2004 and 2000, the Company entered into a series of interest rate derivatives to limit its sensitivity to market interest rate risk associated with the issuance of long-term debt. Such instruments were designated as cash flow hedges. The Company subsequently issued long-term debt and terminated these hedges at a cost that is included in other comprehensive loss. Amounts recorded in other comprehensive loss will be reclassified to interest expense through 2033. In 2011, the Company estimates reclassifying less than $1 million of losses to earnings.

Credit Risk — The utility and non-utility businesses are exposed to credit risk if customers or counterparties do not comply with their contractual obligations. The Company maintains credit policies that significantly minimize overall credit risk. These policies include an evaluation of potential customers' and counterparties' financial condition, credit rating, collateral requirements or other credit enhancements such as letters of credit or guarantees. The Company generally uses standardized agreements that allow the netting of positive and negative transactions associated with a single counterparty. The Company maintains a provision for credit losses based on factors surrounding the credit risk of its customers, historical trends, and other information. Based on the Company's credit policies and its December 31, 2010 provision for credit losses, the Company's exposure to counterparty nonperformance is not expected to have a material adverse effect on the Company's financial statements.

## Derivative Activities

The Company manages its MTM risk on a portfolio basis based upon the delivery period of its contracts and the individual components of the risks within each contract. Accordingly, it records and manages the energy purchase and sale obligations under its contracts in separate components based on the commodity (e.g. electricity or gas), the product (e.g. electricity for delivery during peak or off-peak hours), the delivery location (e.g. by region), the risk profile (e.g. forward or option), and the delivery period (e.g. by month and year). The following describe the four categories of activities represented by their operating characteristics and key risks:

- Asset Optimization — Represents derivative activity associated with assets owned and contracted by DTE Energy, including forward sales of gas production and trades associated with power transmission, gas transportation and storage capacity. Changes in the value of derivatives in this category economically offset changes in the value of underlying non-derivative positions, which do not qualify for fair value accounting. The difference in accounting treatment of derivatives in this category and the underlying non-derivative positions can result in significant earnings volatility.



# DTE Energy Company

## Notes to Consolidated Financial Statements — (Continued)

• Marketing and Origination — Represents derivative activity transacted by originating substantially hedged positions with wholesale energy marketers, producers, end users, utilities, retail aggregators and alternative energy suppliers.

• Fundamentals Based Trading — Represents derivative activity transacted with the intent of taking a view, capturing market price changes, or putting capital at risk. This activity is speculative in nature as opposed to hedging an existing exposure.

• Other — Includes derivative activity at Detroit Edison related to FTRs and forward contracts related to emissions. Changes in the value of derivative contracts at Detroit Edison are recorded as Derivative Assets or Liabilities, with an offset to Regulatory Assets or Liabilities as the settlement value of these contracts will be included in the PSCR mechanism when realized.

The following represents the fair value of derivative instruments as of December 31, 2010:

<table><tr><td rowspan="2"></td><td colspan="2">Derivative Assets</td><td colspan="2">Derivative Liabilities</td></tr><tr><td colspan="4">(In millions)</td></tr><tr><td>Derivatives designated as hedging instruments:</td><td></td><td></td><td></td><td></td></tr><tr><td>Interest rate contracts</td><td>$ —</td><td>—</td><td>$ (1)</td><td></td></tr><tr><td>Total derivatives designated as hedging instruments:</td><td>$ —</td><td>—</td><td>$ (1)</td><td></td></tr><tr><td>Derivatives not designated as hedging instruments:</td><td></td><td></td><td></td><td></td></tr><tr><td>Foreign currency exchange contracts</td><td>$ 20</td><td>$ (30)</td><td></td><td></td></tr><tr><td>Commodity Contracts:</td><td></td><td></td><td></td><td></td></tr><tr><td>Natural Gas</td><td>1,986</td><td></td><td>(2,118)</td><td></td></tr><tr><td>Electricity</td><td>766</td><td></td><td>(716)</td><td></td></tr><tr><td>Other</td><td>76</td><td></td><td>(71)</td><td></td></tr><tr><td>Total derivatives not designated as hedging instruments:</td><td>$ 2,848</td><td>$ (2,935)</td><td></td><td></td></tr><tr><td>Total derivatives:</td><td></td><td></td><td></td><td></td></tr><tr><td>Current</td><td>$ 2,011</td><td>$ (2,041)</td><td></td><td></td></tr><tr><td>Noncurrent</td><td>837</td><td></td><td>(895)</td><td></td></tr><tr><td>Total derivatives</td><td>$ 2,848</td><td>$ (2,936)</td><td></td><td></td></tr><tr><td rowspan="2"></td><td colspan="2">Derivative Assets</td><td colspan="2">Derivative Liabilities</td></tr><tr><td>Current</td><td>Noncurrent</td><td>Current</td><td>Noncurrent</td></tr><tr><td>Reconciliation of derivative instruments to Consolidated Statements of Financial Position:</td><td></td><td></td><td></td><td></td></tr><tr><td>Total fair value of derivatives</td><td>$ 2,011</td><td>$ 837</td><td>$ (2,041)</td><td>$ (895)</td></tr><tr><td>Counterparty netting</td><td>(1,871)</td><td>(760)</td><td>1,871</td><td>760</td></tr><tr><td>Collateral adjustment</td><td>(9)</td><td>—</td><td>28</td><td>25</td></tr><tr><td>Total derivatives as reported</td><td>$ 131</td><td>$ 77</td><td>$ (142)</td><td>$ (110)</td></tr></table>



## DTE Energy Company

## Notes to Consolidated Financial Statements — (Continued)

The following represents the fair value of derivative instruments as of December 31, 2009:

<table><tr><td rowspan="2"></td><td colspan="2">Derivative Assets</td><td colspan="2">Derivative Liabilities</td></tr><tr><td colspan="4">(In millions)</td></tr><tr><td>Derivatives designated as hedging instruments:</td><td></td><td></td><td></td><td></td></tr><tr><td>Commodity Contracts — Natural Gas</td><td>$     2</td><td>$     2</td><td>$     2</td><td>—</td></tr><tr><td>Derivatives not designated as hedging instruments:</td><td></td><td></td><td></td><td></td></tr><tr><td>Foreign currency exchange contracts</td><td>$     24</td><td>$     24</td><td>$     24</td><td>(31)</td></tr><tr><td>Commodity Contracts:</td><td></td><td></td><td></td><td></td></tr><tr><td>Natural Gas</td><td>1,323</td><td></td><td>(1,552)</td><td></td></tr><tr><td>Electricity</td><td>1,304</td><td></td><td>(1,241)</td><td></td></tr><tr><td>Other</td><td>19</td><td></td><td>(27)</td><td></td></tr><tr><td>Total derivatives not designated as hedging instruments:</td><td>$     2,670</td><td>$     2,670</td><td>$     2,670</td><td>(2,851)</td></tr><tr><td>Total derivatives:</td><td></td><td></td><td></td><td></td></tr><tr><td>Current</td><td>$     1,860</td><td>$     1,860</td><td>$     1,860</td><td>(1,951)</td></tr><tr><td>Noncurrent</td><td>812</td><td></td><td>(900)</td><td></td></tr><tr><td>Total derivatives</td><td>$     2,672</td><td>$     2,672</td><td>$     2,672</td><td>(2,851)</td></tr><tr><td rowspan="2"></td><td colspan="2">Derivative Assets</td><td colspan="2">Derivative Liabilities</td></tr><tr><td>Current</td><td>Noncurrent</td><td>Current</td><td>Noncurrent</td></tr><tr><td>Reconciliation of derivative instruments to Consolidated Statements of Financial Position:</td><td></td><td></td><td></td><td></td></tr><tr><td>Total fair value of derivatives</td><td>$     1,860</td><td>$     812</td><td>$     1,951)</td><td>$     900</td></tr><tr><td>Counterparty netting</td><td>(1,644)</td><td>(669)</td><td>1,644</td><td>669</td></tr><tr><td>Collateral adjustment</td><td>(7)</td><td>(27)</td><td>87</td><td>33</td></tr><tr><td>Total derivatives as reported</td><td>$     209</td><td>$     116</td><td>$     220)</td><td>(198)</td></tr></table>

For the effective portion of natural gas derivatives designated as cash flow hedges, the Company recognized an after-tax gain of $1 million and $3 million in Other comprehensive income for the years ended December 31, 2010 and 2009, respectively. The Company reclassified an after-tax gain of $2 million and $5 million from Accumulated other comprehensive income into Operating revenue for the years ended December 31, 2010 and 2009, respectively. For the effective portion of interest swaps representing a discontinued cash flow hedge, the Company reclassified an after-tax loss of $3 million from Accumulated other comprehensive income into Interest expense for the year ended December 31, 2009.



## DTE Energy Company

## Notes to Consolidated Financial Statements — (Continued)

The effect of derivatives not designated as hedging instruments on the Consolidated Statements of Operations for years ended December 31, 2010 and December 31, 2009 is as follows:

<table><tr><td></td><td>Location of Gain (Loss) Recognized in Income On Derivatives</td><td colspan="2">Gain (Loss) Recognized in Income on Derivatives for Years Ended December 31</td></tr><tr><td>Derivatives not Designated as Hedging Instruments</td><td></td><td>2010</td><td>2009</td></tr><tr><td></td><td></td><td colspan="2">(In millions)</td></tr><tr><td>Foreign currency exchange contracts</td><td>Operating Revenue</td><td>$ (14)</td><td>$ (24)</td></tr><tr><td>Commodity Contracts:</td><td></td><td></td><td></td></tr><tr><td>Natural Gas</td><td>Operating Revenue</td><td>61</td><td>179</td></tr><tr><td>Natural Gas</td><td>Fuel, purchased power and gas</td><td>(8)</td><td>4</td></tr><tr><td>Electricity</td><td>Operating Revenue</td><td>80</td><td>19</td></tr><tr><td>Other</td><td>Operating Revenue</td><td>9</td><td>(4)</td></tr><tr><td>Other</td><td>Operation and maintenance</td><td>(5)</td><td>6</td></tr><tr><td>Total</td><td></td><td>$123</td><td>$180</td></tr></table>

The effects of derivative instruments recoverable through the PSCR mechanism when realized on the Consolidated Statements of Financial Position are $1 million in losses related to Emissions recognized in Regulatory assets and $6 million in gains related to FTRs recognized in Regulatory liabilities for the year ended December 31, 2010, and $14 million and $2 million in losses related to Emissions recognized in Regulatory assets and Regulatory liabilities, respectively, for the year ended December 31, 2009.

The following represents the cumulative gross volume of derivative contracts outstanding as of December 31, 2010:

<table><tr><td>Commodity</td><td>Number of Units</td></tr><tr><td>Natural Gas (MMBtu)</td><td>803,275,912</td></tr><tr><td>Electricity (MWh)</td><td>51,720,281</td></tr><tr><td>Foreign Currency Exchange (\( CAD)</td><td>238,336,031</td></tr></table>

Various non-utility subsidiaries of the Company have entered into contracts which contain ratings triggers and are guaranteed by DTE Energy. These contracts contain provisions which allow the counterparties to request that the Company post cash or letters of credit as collateral in the event that DTE Energy’s credit rating is downgraded below investment grade. Certain of these provisions (known as “hard triggers”) state specific circumstances under which the Company can be asked to post collateral upon the occurrence of a credit downgrade, while other provisions (known as “soft triggers”) are not as specific. For contracts with soft triggers, it is difficult to estimate the amount of collateral which may be requested by counterparties and/or which the Company may ultimately be required to post. The amount of such collateral which could be requested fluctuates based on commodity prices (primarily gas, power and coal) and the provisions and maturities of the underlying transactions. As of December 31, 2010, the value of the transactions for which the Company would have been exposed to collateral requests had DTE Energy’s credit rating been below investment grade on such date under both hard trigger and soft trigger provisions was approximately $234 million. In circumstances where an entity is downgraded below investment grade and collateral requests are made as a result, the requesting parties often agree to accept less than the full amount of their exposure to the downgraded entity.



## DTE Energy Company

## Notes to Consolidated Financial Statements — (Continued)

## NOTE 6 — GOODWILL

The Company has goodwill resulting from purchase business combinations.

The change in the carrying amount of goodwill for the fiscal years ended December 31, 2010 and December 31, 2009 is as follows:

<table><tr><td></td><td>2010</td><td>2009</td></tr><tr><td></td><td colspan="2">(In millions)</td></tr><tr><td>Balance as of January 1</td><td>$2,024</td><td>$2,037</td></tr><tr><td>Goodwill attributable to sale of subsidiary in Power and Industrial Projects</td><td>(4)</td><td>—</td></tr><tr><td>Goodwill attributable to sale of subsidiary in Gas Utility</td><td>—</td><td>(13)</td></tr><tr><td>Balance at December 31</td><td>$2,020</td><td>$2,024</td></tr></table>

## NOTE 7 — PROPERTY, PLANT AND EQUIPMENT

Summary of property by classification as of December 31:

<table><tr><td></td><td>2010</td><td>2009</td></tr><tr><td></td><td colspan="2">(In millions)</td></tr><tr><td>Property, Plant and Equipment</td><td></td><td></td></tr><tr><td>Electric Utility</td><td></td><td></td></tr><tr><td>Generation</td><td>$ 9,268</td><td>$ 8,833</td></tr><tr><td>Distribution</td><td>6,800</td><td>6,618</td></tr><tr><td>Total Electric Utility</td><td>16,068</td><td>15,451</td></tr><tr><td>Gas Utility</td><td></td><td></td></tr><tr><td>Distribution</td><td>2,460</td><td>2,386</td></tr><tr><td>Storage</td><td>395</td><td>383</td></tr><tr><td>Other</td><td>991</td><td>1,013</td></tr><tr><td>Total Gas Utility</td><td>3,846</td><td>3,782</td></tr><tr><td>Non-utility and other</td><td>1,660</td><td>1,355</td></tr><tr><td>Total</td><td>21,574</td><td>20,588</td></tr><tr><td>Less Accumulated Depreciation, Depletion and Amortization</td><td></td><td></td></tr><tr><td>Electric Utility</td><td></td><td></td></tr><tr><td>Generation</td><td>(3,850)</td><td>(3,890)</td></tr><tr><td>Distribution</td><td>(2,568)</td><td>(2,243)</td></tr><tr><td>Total Electric Utility</td><td>(6,418)</td><td>(6,133)</td></tr><tr><td>Gas Utility</td><td></td><td></td></tr><tr><td>Distribution</td><td>(1,019)</td><td>(972)</td></tr><tr><td>Storage</td><td>(108)</td><td>(113)</td></tr><tr><td>Other</td><td>(512)</td><td>(543)</td></tr><tr><td>Total Gas Utility</td><td>(1,639)</td><td>(1,628)</td></tr><tr><td>Non-utility and other</td><td>(525)</td><td>(396)</td></tr><tr><td>Total</td><td>(8,582)</td><td>(8,157)</td></tr><tr><td>Net Property, Plant and Equipment</td><td>$12,992</td><td>$12,431</td></tr></table>



# DTE Energy Company

## Notes to Consolidated Financial Statements — (Continued)

AFUDC capitalized during 2010 and 2009 was approximately $10 million and $14 million, respectively.

The composite depreciation rate for Detroit Edison was 3.3% in 2010, 2009 and 2008. The composite depreciation rate for MichCon was 2.5% in 2010, 3.1% in 2009 and 3.2% in 2008. In March 2010, the MPSC issued an order reducing MichCon’s composite depreciation rates effective April 1, 2010.

The average estimated useful life for each major class of utility property, plant and equipment as of December 31, 2010 follows:

<table><tr><td rowspan="2">Utility</td><td colspan="3">Estimated Useful Lives in Years</td></tr><tr><td>Generation</td><td>Distribution</td><td>Transmission</td></tr><tr><td>Electric</td><td>40</td><td>37</td><td>N/A</td></tr><tr><td>Gas</td><td>N/A</td><td>62</td><td>61</td></tr></table>

The estimated useful lives for major classes of non-utility assets and facilities ranges from 3 to 55 years.

Capitalized software costs are classified as Property, plant and equipment and the related amortization is included in Accumulated depreciation, depletion and amortization on the Consolidated Statements of Financial Position. The Company capitalizes the costs associated with computer software it develops or obtains for use in its business. The Company amortizes capitalized software costs on a straight-line basis over the expected period of benefit, ranging from 3 to 20 years.

Capitalized software costs amortization expense was $65 million in 2010, $66 million in 2009 and $54 million in 2008. The gross carrying amount and accumulated amortization of capitalized software costs at December 31, 2010 were $602 million and $252 million, respectively. The gross carrying amount and accumulated amortization of capitalized software costs at December 31, 2009 were $613 million and $234 million, respectively. Amortization expense of capitalized software costs is estimated to be approximately $66 million annually for 2011 through 2015.

Gross property under capital leases was $153 million at December 31, 2010 and December 31, 2009. Accumulated amortization of property under capital leases was $114 million and $93 million at December 31, 2010 and December 31, 2009, respectively.

## NOTE 8 — JOINTLY OWNED UTILITY PLANT

Detroit Edison has joint ownership interest in two power plants, Belle River and Ludington Hydroelectric Pumped Storage. Detroit Edison’s share of direct expenses of the jointly owned plants are included in Fuel, purchased power and gas and Operation and maintenance expenses in the Consolidated Statements of Operations. Ownership information of the two utility plants as of December 31, 2010 was as follows:

<table><tr><td rowspan="2"></td><td colspan="2">Ludington Hydroelectric Pumped Storage</td></tr><tr><td>Belle River</td><td>1973</td></tr><tr><td>In-service date</td><td>1984-1985</td><td></td></tr><tr><td>Total plant capacity</td><td>1,270MW</td><td>1,872MW</td></tr><tr><td>Ownership interest</td><td>*</td><td>49%</td></tr><tr><td>Investment (in millions)</td><td>$ 1,635</td><td>$ 199</td></tr><tr><td>Accumulated depreciation (in millions)</td><td>$ 923</td><td>$ 117</td></tr></table>

* Detroit Edison’s ownership interest is 63% in Unit No. 1, 81% of the facilities applicable to Belle River used jointly by the Belle River and St. Clair Power Plants and 75% in common facilities used at Unit No. 2.



# DTE Energy Company
Notes to Consolidated Financial Statements — (Continued)

## Belle River

The Michigan Public Power Agency (MPPA) has an ownership interest in Belle River Unit No. 1 and other related facilities. The MPPA is entitled to 19% of the total capacity and energy of the plant and is responsible for the same percentage of the plant’s operation, maintenance and capital improvement costs.

## Ludington Hydroelectric Pumped Storage

Consumers Energy Company has an ownership interest in the Ludington Hydroelectric Pumped Storage Plant. Consumers Energy is entitled to 51% of the total capacity and energy of the plant and is responsible for the same percentage of the plant’s operation, maintenance and capital improvement costs.

## NOTE 9 — ASSET RETIREMENT OBLIGATIONS

The Company has a legal retirement obligation for the decommissioning costs for its Fermi 1 and Fermi 2 nuclear plants. To a lesser extent, the Company has legal retirement obligations for gas production facilities, gas gathering facilities and various other operations. The Company has conditional retirement obligations for gas pipeline retirement costs and disposal of asbestos at certain of its power plants. To a lesser extent, the Company has conditional retirement obligations at certain service centers, compressor and gate stations, and disposal costs for PCB contained within transformers and circuit breakers. The Company recognizes such obligations as liabilities at fair market value when they are incurred, which generally is at the time the associated assets are placed in service. Fair value is measured using expected future cash outflows discounted at our credit-adjusted risk-free rate. In its regulated operations, the Company recognizes regulatory assets or liabilities for timing differences in expense recognition for legal asset retirement costs that are currently recovered in rates.

No liability has been recorded with respect to lead-based paint, as the quantities of lead-based paint in the Company’s facilities are unknown. In addition, there is no incremental cost to demolitions of lead-based paint facilities vs. non-lead-based paint facilities and no regulations currently exist requiring any type of special disposal of items containing lead-based paint.

The Ludington Hydroelectric Power Plant (a jointly owned plant) has an indeterminate life and no legal obligation currently exists to decommission the plant at some future date. Substations, manholes and certain other distribution assets within Detroit Edison have an indeterminate life. Therefore, no liability has been recorded for these assets.

A reconciliation of the asset retirement obligations for 2010 follows:

<table><tr><td></td><td>(In millions)</td></tr><tr><td>Asset retirement obligations at January 1, 2010</td><td>1,439</td></tr><tr><td>Accretion</td><td>92</td></tr><tr><td>Liabilities incurred</td><td>10</td></tr><tr><td>Liabilities settled</td><td>(9)</td></tr><tr><td>Revision in estimated cash flows</td><td>(22)</td></tr><tr><td>Consolidation of VIEs</td><td>4</td></tr><tr><td>Asset retirement obligations at December 31, 2010</td><td>1,514</td></tr><tr><td>Less amount included in current liabilities</td><td>(16)</td></tr><tr><td></td><td>1,498</td></tr></table>

Detroit Edison has a legal obligation to decommission its nuclear power plants following the expiration of their operating licenses. This obligation is reflected as an asset retirement obligation on the Consolidated Statements of Financial Position. In 2010, Detroit Edison filed a rate case with the MPSC proposing a reduction to the nuclear



# DTE Energy Company
Notes to Consolidated Financial Statements — (Continued)

decommissioning surcharge under the assumption that it would request an extension of the Fermi 2 license for an additional 20 years beyond the term of the existing license which expires in 2025. This proposed extension of the license, including the associated impact on spent nuclear fuel, resulted in a revision in estimated cash flows for the Fermi 2 asset retirement obligation of approximately $22 million. It is estimated that the cost of decommissioning Fermi 2 is $1.3 billion in 2010 dollars and $10 billion in 2045 dollars, using a 6% inflation rate. In 2001, Detroit Edison began the decommissioning of Fermi 1, with the goal of removing the radioactive material and terminating the Fermi 1 license. The decommissioning of Fermi 1 is expected to be completed by 2012. Approximately $1.3 billion of the asset retirement obligations represent nuclear decommissioning liabilities that are funded through a surcharge to electric customers over the life of the Fermi 2 nuclear plant.

The NRC has jurisdiction over the decommissioning of nuclear power plants and requires minimum decommissioning funding based upon a formula. The MPSC and FERC regulate the recovery of costs of decommissioning nuclear power plants and both require the use of external trust funds to finance the decommissioning of Fermi 2. Rates approved by the MPSC provide for the recovery of decommissioning costs of Fermi 2 and the disposal of low-level radioactive waste. Detroit Edison is continuing to fund FERC jurisdictional amounts for decommissioning even though explicit provisions are not included in FERC rates. The Company believes the MPSC and FERC collections will be adequate to fund the estimated cost of decommissioning. The decommissioning assets, anticipated earnings thereon and future revenues from decommissioning collections will be used to decommission Fermi 2. The Company expects the liabilities to be reduced to zero at the conclusion of the decommissioning activities. If amounts remain in the trust funds for Fermi 2 following the completion of the decommissioning activities, those amounts will be disbursed based on rulings by the MPSC and FERC.

A portion of the funds recovered through the Fermi 2 decommissioning surcharge and deposited in external trust accounts is designated for the removal of non-radioactive assets and the clean-up of the Fermi site. This removal and clean-up is not considered a legal liability. Therefore, it is not included in the asset retirement obligation, but is reflected as the nuclear decommissioning liability. The decommissioning of Fermi 1 is funded by Detroit Edison. Contributions to the Fermi 1 trust are discretionary. See Note 4 for additional discussion of Nuclear Decommissioning Trust Fund Assets.

## NOTE 10 — DISPOSALS AND DISCONTINUED OPERATIONS

## Sale of Rail Services Assets

In 2010, the Company sold certain non-strategic rail services assets for gross proceeds of approximately $23 million. The Company recognized a gain of approximately $5 million, net of a write-off of goodwill of approximately $4 million.

## Sale of Gathering and Processing Assets

In 2009, the Company sold certain non-strategic gas gathering and processing assets in northern Michigan for gross proceeds of approximately $45 million, which approximated its carrying value, including goodwill of approximately $13 million.

## Sale of Interest in Barnett Shale Properties

In 2008, the Company sold a portion of its Barnett shale properties for gross proceeds of approximately $260 million. The Company recognized a gain of $128 million ($80 million after-tax) on the sale during 2008.

## Plan to Sell Interest in Certain Power and Industrial Projects

In 2007, the Company announced its plans to sell a 50% interest in a portfolio of select Power and Industrial Projects. As a result, the assets and liabilities of the Projects were classified as held for sale at that time and the



# DTE Energy Company

# Notes to Consolidated Financial Statements — (Continued)

Company ceased recording depreciation and amortization expense related to these assets. In 2008, the Company’s work on this planned monetization was discontinued and the assets and liabilities of the Projects were no longer classified as held for sale. Depreciation and amortization resumed when the assets were reclassified as held and used. In 2008, the Company recorded a loss of $19 million related to the valuation adjustment for the cumulative depreciation and amortization not recorded during the held for sale period.

## Synthetic Fuel Business

The Company discontinued the operations of its synthetic fuel production facilities throughout the United States as of December 31, 2007. The Company provided certain guarantees and indemnities in conjunction with the sales of interests in its synfuel facilities. The guarantees cover potential commercial, environmental, oil price and tax-related obligations and will survive until 90 days after expiration of all applicable statutes of limitations. The Company estimates that its maximum potential liability under these guarantees at December 31, 2010 is $2.6 billion, although payment under these guarantees is not considered probable. The Company has reported the business activity of the synthetic fuel business as a discontinued operation. For the year ended December 31, 2008, the synthetic fuels business had net income of $22 million (including $2 million for noncontrolling interests), primarily from asset gains, net of income taxes.

## NOTE 11 — OTHER IMPAIRMENTS AND RESTRUCTURING

## Other Impairments — Barnett Shale

Our Unconventional Gas Production segment recorded pre-tax impairment losses of $10 million, $6 million and $8 million in 2010, 2009 and 2008, respectively. The impairments related primarily to the write-off of expired or expiring leasehold positions that the Company does not intend to drill.

## Restructuring Costs

In 2005, the Company initiated a company-wide review of its operations called the Performance Excellence Process. The Company incurred CTA restructuring expense for employee severance, early retirement programs and other costs which include project management and consultant support. In September 2006, the MPSC issued an order approving a settlement agreement that allowed Detroit Edison and MichCon, commencing in 2006, to defer the incremental CTA. Further, the order provided for Detroit Edison and MichCon to amortize the CTA deferrals over a ten-year period beginning with the year subsequent to the year the CTA was deferred. Detroit Edison deferred approximately $24 million of CTA in 2008 as a regulatory asset and capitalized $2 million. The recovery of these costs for Detroit Edison was provided for by the MPSC in the order approving the settlement in the show cause proceeding and in the December 23, 2008 MPSC rate order. Detroit Edison amortized prior year deferred CTA costs of $18 million in 2010, $18 million in 2009 and $16 million in 2008. The September 2006 order did not provide a regulatory recovery mechanism for MichCon, therefore MichCon expensed CTA incurred during the period 2006 through 2008. The Company incurred restructuring expense, net of amounts deferred and capitalized of $10 million in 2008. The June 2010 MPSC order provided for MichCon's recovery of the regulatory unamortized balance of CTA. At June 30, 2010, MichCon deferred and recognized in income approximately $32 million ($20 million after-tax) of previously expensed CTA. The non-pension component of CTA of approximately $21 million is included in Regulatory assets. The pension component of CTA of approximately $11 million is included in Regulatory liabilities. MichCon amortized approximately $2 million of prior year deferred CTA costs in 2010. Amounts expensed are recorded in Operation and maintenance expense on the Consolidated Statements of Operations. Deferred amounts are recorded in Regulatory assets and Regulatory liabilities on the Consolidated Statements of Financial Position. See Note 12.



# DTE Energy Company
Notes to Consolidated Financial Statements — (Continued)

## NOTE 12 — REGULATORY MATTERS

## Regulation

Detroit Edison and MichCon are subject to the regulatory jurisdiction of the MPSC, which issues orders pertaining to rates, recovery of certain costs, including the costs of generating facilities and regulatory assets, conditions of service, accounting and operating-related matters. Detroit Edison is also regulated by the FERC with respect to financing authorization and wholesale electric activities. Regulation results in differences in the application of generally accepted accounting principles between regulated and non-regulated businesses.

## Regulatory Assets and Liabilities

Detroit Edison and MichCon are required to record regulatory assets and liabilities for certain transactions that would have been treated as revenue or expense in non-regulated businesses. Continued applicability of regulatory accounting treatment requires that rates be designed to recover specific costs of providing regulated services and be charged to and collected from customers. Future regulatory changes or changes in the competitive environment could result in the discontinuance of this accounting treatment for regulatory assets and liabilities for some or all of our businesses and may require the write-off of the portion of any regulatory asset or liability that was no longer probable of recovery through regulated rates. Management believes that currently available facts support the continued use of regulatory assets and liabilities and that all regulatory assets and liabilities are recoverable or refundable in the current rate environment.

The following are balances and a brief description of the regulatory assets and liabilities at December 31:

<table><tr><td>Assets</td><td>2010</td><td>2009</td></tr><tr><td>Recoverable pension and postretirement costs:</td><td></td><td></td></tr><tr><td>Pension</td><td>$1,742</td><td>$1,670</td></tr><tr><td>Postretirement costs</td><td>624</td><td>665</td></tr><tr><td>Asset retirement obligation</td><td>336</td><td>415</td></tr><tr><td>Recoverable income taxes related to securitized regulatory assets</td><td>400</td><td>476</td></tr><tr><td>Deferred income taxes — Michigan Business Tax</td><td>383</td><td>407</td></tr><tr><td>Cost to achieve Performance Excellence Process</td><td>137</td><td>136</td></tr><tr><td>Choice incentive mechanism</td><td>105</td><td>—</td></tr><tr><td>Recoverable uncollectible expense</td><td>90</td><td>138</td></tr><tr><td>Other recoverable income taxes</td><td>85</td><td>89</td></tr><tr><td>Unamortized loss on reacquired debt</td><td>65</td><td>70</td></tr><tr><td>Accrued PSCR/GCR revenue</td><td>52</td><td>—</td></tr><tr><td>Deferred environmental costs</td><td>41</td><td>40</td></tr><tr><td>Enterprise Business Systems costs</td><td>21</td><td>24</td></tr><tr><td>Recoverable restoration expense</td><td>19</td><td>—</td></tr><tr><td>Electric Customer Choice implementation costs</td><td>—</td><td>18</td></tr><tr><td>Other</td><td>58</td><td>15</td></tr><tr><td></td><td>4,158</td><td>4,163</td></tr><tr><td>Less amount included in current assets</td><td>(100)</td><td>(53)</td></tr><tr><td></td><td>$ 4,058</td><td>$ 4,110</td></tr><tr><td>Securitized regulatory assets</td><td>$ 729</td><td>$ 870</td></tr></table>



## DTE Energy Company

## Notes to Consolidated Financial Statements — (Continued)

<table><tr><td></td><td>2010</td><td>2009</td></tr><tr><td></td><td colspan="2">(In millions)</td></tr><tr><td>Liabilities</td><td></td><td></td></tr><tr><td>Asset removal costs</td><td>$ 479</td><td>$ 506</td></tr><tr><td>Deferred income taxes — Michigan Business Tax</td><td>418</td><td>423</td></tr><tr><td>Negative pension offset</td><td>129</td><td>133</td></tr><tr><td>Renewable energy</td><td>125</td><td>32</td></tr><tr><td>Refundable income taxes</td><td>77</td><td>88</td></tr><tr><td>Refundable self implemented rates</td><td>52</td><td>27</td></tr><tr><td>Refundable revenue decoupling</td><td>47</td><td>—</td></tr><tr><td>Refundable costs under PA 141</td><td>33</td><td>27</td></tr><tr><td>Refundable restoration expense</td><td>15</td><td>15</td></tr><tr><td>Accrued PSCR/GCR refund</td><td>8</td><td>39</td></tr><tr><td>Fermi 2 refueling outage</td><td>3</td><td>13</td></tr><tr><td>Pension equalization mechanism</td><td>—</td><td>75</td></tr><tr><td>Other</td><td>36</td><td>11</td></tr><tr><td></td><td>1,422</td><td>1,389</td></tr><tr><td>Less amount included in current liabilities</td><td>(94)</td><td>(52)</td></tr><tr><td></td><td>$1,328</td><td>$1,337</td></tr></table>

As noted below, regulatory assets for which costs have been incurred have been included (or are expected to be included, for costs incurred subsequent to the most recently approved rate case) in Detroit Edison or MichCon's rate base, thereby providing a return on invested costs. Certain regulatory assets do not result from cash expenditures and therefore do not represent investments included in rate base or have offsetting liabilities that reduce rate base.

## ASSETS

• Recoverable pension and postretirement costs — In 2007, the Company adopted ASC 715 (SFAS No. 158) which required, among other things, the recognition in other comprehensive income of the actuarial gains or losses and the prior service costs that arise during the period but that are not immediately recognized as components of net periodic benefit costs. Detroit Edison and MichCon record the charge related to the additional liability as a regulatory asset since the traditional rate setting process allows for the recovery of pension and postretirement costs. The asset will reverse as the deferred items are recognized as benefit expenses in net income. \( ^{(1)} \) 

• Asset retirement obligation — This obligation is primarily for Fermi 2 decommissioning costs. The asset captures the timing differences between expense recognition and current recovery in rates and will reverse over the remaining life of the related plant. \( ^{(1)} \) 

• Recoverable income taxes related to securitized regulatory assets — Receivable for the recovery of income taxes to be paid on the non-bypassable securitization bond surcharge. A non-bypassable securitization tax surcharge recovers the income tax over a fourteen-year period ending 2015.

• Deferred income taxes — Michigan Business Tax (MBT) — In July 2007, the MBT was enacted by the State of Michigan. State deferred tax liabilities were established for the Company’s utilities, and offsetting regulatory assets were recorded as the impacts of the deferred tax liabilities will be reflected in rates as the related taxable temporary differences reverse and flow through current income tax expense. \( ^{(1)} \)



# DTE Energy Company

# Notes to Consolidated Financial Statements — (Continued)

- Cost to achieve Performance Excellence Process (PEP) — The MPSC authorized the deferral of costs to implement the PEP. These costs consist of employee severance, project management and consultant support. These costs are amortized over a ten-year period beginning with the year subsequent to the year the costs were deferred.

• Choice incentive mechanism — Detroit Edison receivable for non-fuel revenues lost as a result of fluctuations in electric Customer Choice sales.

• Recoverable uncollectible expense — Detroit Edison and MichCon receivable for the MPSC approved uncollectible expense tracking mechanism that tracks the difference in the fluctuation in uncollectible accounts and amounts recognized pursuant to the MPSC authorization.

• Other recoverable income taxes — Income taxes receivable from Detroit Edison’s customers representing the difference in property-related deferred income taxes and amounts previously reflected in Detroit Edison’s rates. This asset will reverse over the remaining life of the related plant. \( ^{(1)} \) 

• Unamortized loss on reacquired debt — The unamortized discount, premium and expense related to debt redeemed with a refinancing are deferred, amortized and recovered over the life of the replacement issue.

• Accrued PSCR revenue — Receivable for the temporary under-recovery of and a return on fuel and purchased power costs incurred by Detroit Edison which are recoverable through the PSCR mechanism.

• Accrued GCR revenue — Receivable for the temporary under-recovery of and a return on gas costs incurred by MichCon which are recoverable through the GCR mechanism.

• Deferred environmental costs — The MPSC approved the deferral of investigation and remediation costs associated with Gas Utility’s former MGP sites. Amortization of deferred costs is over a ten-year period beginning in the year after costs were incurred, with recovery (net of any insurance proceeds) through base rate filings.

• Enterprise Business Systems (EBS) costs — The MPSC approved the deferral and amortization over 10 years beginning in January 2009 of EBS costs that would otherwise be expensed.

• Recoverable restoration expense — Receivable for the MPSC approved restoration expenses tracking mechanism that tracks the difference between actual restoration expense and the amount provided for in base rates, recognized pursuant to the MPSC authorization.

• Electric Customer Choice implementation costs — PA 141 permits, after MPSC authorization, the recovery of and a return on costs incurred associated with the implementation of the electric Customer Choice program.

• Securitized regulatory assets — The net book balance of the Fermi 2 nuclear plant was written off in 1998 and an equivalent regulatory asset was established. In 2001, the Fermi 2 regulatory asset and certain other regulatory assets were securitized pursuant to PA 142 and an MPSC order. Anon-bypassable securitization bond surcharge recovers the securitized regulatory asset over a fourteen-year period ending in 2015.

(1) Regulatory assets not earning a return.

## LIABILITIES

• Asset removal costs — The amount collected from customers for the funding of future asset removal activities.



# DTE Energy Company

## Notes to Consolidated Financial Statements — (Continued)

- Deferred income taxes — Michigan Business Tax — In July 2007, the MBT was enacted by the State of Michigan. State deferred tax assets were established for the Company’s utilities, and offsetting regulatory liabilities were recorded as the impacts of the deferred tax assets will be reflected in rates.

- Negative pension offset — MichCon’s negative pension costs are not included as a reduction to its authorized rates; therefore, the Company is accruing a regulatory liability to eliminate the impact on earnings of the negative pension expense accrued. This regulatory liability will reverse to the extent MichCon’s pension expense is positive in future years.

• Renewable energy — Amounts collected in rates in excess of renewable energy expenditures.

- Refundable income taxes — Income taxes refundable to MichCon’s customers representing the difference in property-related deferred income taxes payable and amounts recognized pursuant to MPSC authorization.

- Refundable self-implemented rates — Amounts refundable to customers for base rates implemented by Detroit Edison and MichCon in excess of amounts authorized in MPSC orders.

- Refundable revenue decoupling — Amounts refundable to Detroit Edison customers for the change in revenue resulting from the difference between actual average sales per customer compared to the base level of average sales per customer established by the MPSC. Amounts refundable to MichCon customers for the change in revenue resulting from the difference in weather-adjusted average sales per customer compared to the base level of average sales per customer established by the MPSC.

- Refundable costs under PA 141 — Detroit Edison’s 2007 CIM reconciliation and allocation resulted in the elimination of Regulatory Asset Recovery Surcharge (RARS) balances for commercial and industrial customers. RARS revenues received that exceed the regulatory asset balances are required to be refunded to the affected classes.

- Refundable restoration expense — Amounts refundable for the MPSC approved restoration expenses tracking mechanism that tracks the difference between actual restoration expense and the amount provided for in base rates, recognized pursuant to the MPSC authorization.

- Accrued PSCR refund — Liability for the temporary over-recovery of and a return on power supply costs and transmission costs incurred by Detroit Edison which are recoverable through the PSCR mechanism.

- Accrued GCR refund — Liability for the temporary over-recovery of and a return on gas costs incurred by MichCon which are recoverable through the GCR mechanism.

• Fermi 2 refueling outage — Accrued liability for refueling outage at Fermi 2 pursuant to MPSC authorization.

- Pension equalization mechanism — Pension expense refundable to customers representing the difference created from volatility in the pension obligation and amounts recognized pursuant to MPSC authorization.

## 2010 Electric Rate Case Filing

Detroit Edison filed a rate case on October 29, 2010 based on a projected twelve-month period ending March 31, 2012. The filing with the MPSC requested a $443 million increase in base rates that is required to recover higher costs associated with environmental compliance, operation and maintenance of the Company’s electric distribution system and generation plants, inflation, the capital costs of plant additions, the reduction in territory sales, the impact from the expiration of certain wholesale for resale contracts and the increased migration of customers to the electric Customer Choice program. Detroit Edison also proposed certain adjustments which could reduce the net impact on the required increase in rates by approximately $190 million. These adjustments relate to electric Customer Choice migration, pension and other postretirement benefits expenses and the Nuclear Decommissioning surcharge.



# DTE Energy Company
Notes to Consolidated Financial Statements — (Continued)

## 2009 Electric Rate Case Filing

On January 11, 2010, the MPSC issued an order in Detroit Edison’s January 26, 2009 rate case filing. The MPSC approved an annual revenue increase of $217 million or a 4.8% increase in Detroit Edison’s annual revenue requirement for 2010. Included in the approved increase in revenues was a return on equity of 11% on an expected 49% equity and 51% debt capital structure. In addition, the order provided for continued application of adjustment mechanisms for electric Customer Choice sales and expenses associated with restoration costs (storm and non-storm) and line clearance expenses and implementation of RDM and UETM mechanisms.

Since the final rate relief ordered was less than the Company’s self-implemented rate increase of $280 million effective on July 26, 2009, the MPSC ordered refunds for the period the self-implemented rates were in effect. On December 21, 2010, the MPSC issued an order authorizing this refund to be applied as credits to customer bills during the January 2011 billing period. Detroit Edison has a refund liability of approximately $27 million, including interest at December 31, 2010 representing the refund due customers.

## 2009 Detroit Edison Depreciation Filing

In 2007, the MPSC ordered Michigan utilities to file depreciation studies using the current method, an approach that considers the time value of money and an inflation adjusted method proposed by the Company that removes excess escalation. In compliance with the MPSC order, Detroit Edison filed its ordered depreciation studies in November 2009. The various required depreciation studies indicate composite depreciation rates from 3.05% to 3.54%. The Company has proposed no change to its current composite depreciation rate of 3.33%. An MPSC order is expected in the second quarter of 2011.

## Renewable Energy Plan

In March 2009, Detroit Edison filed its Renewable Energy Plan with the MPSC as required under Michigan Public Act 295 of 2008. The Renewable Energy Plan application requests authority to recover approximately $35 million of additional revenue in 2009. The proposed revenue increase is necessary in order to properly implement Detroit Edison’s 20-year renewable energy plan, to deliver cleaner, renewable electric generation to its customers, to further diversify Detroit Edison’s and the State of Michigan’s sources of electric supply, and to address the state and national goals of increasing energy independence. An MPSC order was issued in June 2009 approving the renewable energy plan and customer surcharges. The Renewable Energy Plan surcharges became effective in September 2009. In August 2010, Detroit Edison filed its reconciliation for the 2009 plan year indicating that the 2009 actual renewable plan revenues and costs approximated the related surcharge revenues and cost of the filed plan. An MPSC order is expected in the third quarter of 2011.

## Energy Optimization (EO) Plans

In March 2009, Detroit Edison and MichCon filed EO Plans with the MPSC as required under Michigan Public Act 295 of 2008. The EO Plan applications are designed to help each customer class reduce their electric and gas usage by: (1) building customer awareness of energy efficiency options and (2) offering a diverse set of programs and participation options that result in energy savings for each customer class. In March 2010, Detroit Edison and MichCon filed amended EO Plans with the MPSC. Detroit Edison’s amended EO Plan application proposed the recovery of EO expenditures for the period 2010-2015 of $406 million and further requested approval of surcharges to recover these costs, including a financial incentive mechanism. MichCon’s amended EO Plan proposed the recovery of EO expenditures for the period 2010-2015 of $150 million and further requested approval of surcharges that are designed to recover these costs, including a financial incentive mechanism. The MPSC approved the amended EO Plans and the surcharge and tariff sheets reflecting the exclusion of the financial incentive mechanism. The disposition of the financial incentive mechanisms is expected to be addressed in the EO reconciliation cases. In April 2010, Detroit Edison and MichCon filed reconciliations for the 2009 plan years. The Detroit Edison



# DTE Energy Company

# Notes to Consolidated Financial Statements — (Continued)

reconciliation included $3.2 million in overrecovery, net of $3 million in incentives. The MichCon reconciliation included an underrecovery of $0.2 million, net of incentives of $0.9 million. On February 8, 2011, the MPSC issued an order approving Detroit Edison’s and MichCon’s 2009 EO reconciliation filings, including financial incentives for both utilities.

## Detroit Edison Restoration Expense Tracker Mechanism (RETM) and Line Clearance Tracker (LCT) Reconciliation

In March 2010, Detroit Edison filed an application with the MPSC for approval of the reconciliation of its 2009 RETM and LCT. The Company’s 2009 restoration and line clearance expenses are less than the amount provided in rates. Accordingly, Detroit Edison has proposed a refund in the amount of approximately $16 million, including interest. An MPSC order is expected in the second quarter of 2011.

## Detroit Edison Uncollectible Expense True-Up Mechanism (UETM)

In March 2010, Detroit Edison filed an application with the MPSC for approval of its UETM for 2009 requesting recovery of approximately $4.5 million consisting of costs related to 2009 uncollectible expense and associated carrying charges. In August 2010, the MPSC determined that the UETM was effective with its January 2010 order in Detroit Edison’s rate case and dismissed the request for UETM expenses for 2009.

## Detroit Edison Regulatory Asset Recovery Surcharge (RARS) Reconciliation

In April 2010, Detroit Edison filed an application with the MPSC for approval of the final reconciliation of its RARS. On January 20, 2011, the MPSC issued an order authorizing a refund of approximately $28 million, including interest, to be applied as credits to customer bills during the February 2011 billing period.

## Power Supply Cost Recovery Proceedings

The PSCR process is designed to allow Detroit Edison to recover all of its power supply costs if incurred under reasonable and prudent policies and practices. Detroit Edison’s power supply costs include fuel costs, purchased and net interchange power costs, nitrogen oxide and sulfur dioxide emission allowances costs, urea costs, transmission costs and MISO costs. The MPSC reviews these costs, policies and practices for prudence in annual plan and reconciliation filings.

The following table summarizes Detroit Edison’s PSCR reconciliation filing currently pending with the MPSC:

<table><tr><td>PSCR Year</td><td>Date Filed</td><td>Net Over-Recovery, Including Interest</td><td>PSCR Cost of Power Sold</td></tr><tr><td>2009</td><td>March 2010</td><td>$ 15.6 million</td><td>$1.1 billion</td></tr></table>

2010 Plan Year — In September 2009, Detroit Edison submitted its 2010 PSCR plan case seeking approval of a levelized PSCR factor of 5.64 mills/kWh below the amount included in base rates for all PSCR customers. The filing supports a 2010 power supply expense forecast of $1.2 billion. Also included in the filing is a request for approval of the Company’s expense associated with the use of urea in the selective catalytic reduction units at Monroe power plant as well as a request for approval of a contract for capacity and energy associated with a wind energy project. The Company has also requested authority to recover transfer prices for renewable energy, coke oven gas expense and other potential expenses.

2011 Plan Year — In September 2010, Detroit Edison filed its 2011 PSCR plan case seeking approval of a levelized PSCR factor of 2.98 mills/kWh below the amount included in base rates for all PSCR customers. The filing supports a total power supply expense forecast of $1.2 billion. The plan also includes approximately $36 million for the recovery of its projected 2010 PSCR under-recovery.



# DTE Energy Company
Notes to Consolidated Financial Statements — (Continued)

## 2010 Gas Rate Case Filing

MichCon filed a rate case on July 27, 2010 based on a fully projected 2011 test year. The filing with the MPSC requested a $51 million increase in revenues. During the pendency of this proceeding, MichCon continuously evaluated its case and determined that it no longer desired to pursue the relief requested. On December 13, 2010, the MPSC approved MichCon’s request to withdraw this rate filing.

## 2009 Gas Rate Case Filing

On June 3, 2010, the MPSC issued an order in MichCon’s June 9, 2009 rate case filing. The MPSC approved an annual revenue increase of $119 million. Included in the approved increase in revenues was a return on equity of 11% on an expected permanent capital structure of 50.4% equity and 49.6% debt. The rate order includes a $22 million impact of lower depreciation rates as ordered by the MPSC in March 2010, effective April 1, 2010. Since the final rate relief ordered was less than the Company’s self-implemented rate increase of $170 million effective on January 1, 2010, the MPSC ordered refunds for the period the self-implemented rates were in effect. On January 20, 2011, the MPSC issued an order authorizing this refund to be applied as credits to customer bills during the February 2011 billing period. MichCon has a refund liability of approximately $26 million, including interest at December 31, 2010 representing the refund due customers.

Other key aspects of the MPSC order include the following:

- Continued application of an Uncollectible Expense Tracking Mechanism with two modifications. The base amount was increased prospectively from $37 million to $70 million with an 80/20 percent sharing of the expenses (modified from 90/10) above or below the base amount.

• Implementation of a pilot Revenue Decoupling Mechanism, that will require MichCon to recover or refund the change in distribution revenue resulting from the difference in weather-adjusted average sales per customer by rate schedule compared to the base average sales per customer by rate schedule established in the MPSC order for the period July 1, 2010 to June 30, 2011.

• Approval of the recovery of previously expensed CTA. See Note 11.

## 2008 MichCon Depreciation Filing

On March 18, 2010, the MPSC issued an order reducing MichCon’s composite depreciation rates from 2.97% to 2.38% effective April 1, 2010.

## MichCon UETM

In March 2010, MichCon filed an application with the MPSC for approval of its UETM for 2009 requesting approximately $59 million consisting of $51 million of costs related to 2009 uncollectible expense and associated carrying charges and $8 million of under-collections for the 2007 UETM. On December 21, 2010, the MPSC approved MichCon’s request with new surcharges applicable to services rendered beginning on January 1, 2011.

## Gas Cost Recovery Proceedings

The GCR process is designed to allow MichCon to recover all of its gas supply costs if incurred under reasonable and prudent policies and practices. The MPSC reviews these costs, policies and practices for prudence in annual plan and reconciliation filings.

The following table summarizes MichCon’s GCR reconciliation filing currently pending with the MPSC:

<table><tr><td>GCR Year</td><td>Date Filed</td><td>Net Over-Recovery, Including Interest</td><td>GCR Cost of Gas Sold</td></tr><tr><td>2009-2010</td><td>June 2010</td><td>$ 5.9 million</td><td>$ 1.0 billion</td></tr></table>



# DTE Energy Company

# Notes to Consolidated Financial Statements — (Continued)

2010-2011 Plan Year — In December 2009, MichCon filed its GCR plan case for the 2010-2011 GCR plan year. The MPSC issued an order in this case in September 2010 authorizing MichCon to charge a maximum of $7.06 per Mcf, adjustable monthly by a contingent factor. The MPSC also approved MichCon's proposed fixed price gas purchasing program and provided clarification regarding treatment of certain affiliate purchases.

2011-2012 Plan Year — In December 2010, MichCon filed its GCR plan case for the 2011-2012 GCR plan year. MichCon filed for a maximum base GCR factor of $5.89 per Mcf adjustable monthly by a contingency factor.

## Gas Main Renewal and Gas Meter Move Out Programs

The June 3, 2010 MPSC gas rate case order required MichCon to make filings related to gas main renewal and meter move-out programs. In a July 30, 2010 filing, MichCon proposed to implement a 10-year gas main renewal program beginning in 2012 which would require capital expenditures of approximately $17 million per year for renewing gas distribution mains, retiring gas mains, and where appropriate and when related to the gas main renewal or retirement activity, relocate inside meters to outside locations and renew service lines.

In a September 30, 2010 filing, MichCon proposed to implement a 10-year gas meter move out program beginning in 2012 which would require capital expenditures of approximately $22 million per year primarily for relocation of inside meters to the outside of residents' houses. Recovery of costs associated with these two programs is expected to be provided through these filings or future MichCon rate cases.

## Other

The Company is unable to predict the outcome of the unresolved regulatory matters discussed herein. Resolution of these matters is dependent upon future MPSC orders and appeals, which may materially impact the financial position, results of operations and cash flows of the Company.

## NOTE 13 — INCOME TAXES

## Income Tax Summary

The Company files a consolidated federal income tax return. Total income tax expense varied from the statutory federal income tax rate for the following reasons:

<table><tr><td></td><td>2010</td><td>2009</td><td>2008</td></tr><tr><td></td><td colspan="3">(In millions)</td></tr><tr><td>Income before income taxes</td><td>$ 950</td><td>$ 782</td><td>$ 819</td></tr><tr><td>Income tax expense at 35% statutory rate</td><td>$ 333</td><td>$ 274</td><td>$ 287</td></tr><tr><td>Production tax credits</td><td>(33)</td><td>(12)</td><td>(7)</td></tr><tr><td>Investment tax credits</td><td>(6)</td><td>(7)</td><td>(7)</td></tr><tr><td>Depreciation</td><td>(4)</td><td>(4)</td><td>(4)</td></tr><tr><td>Employee Stock Ownership Plan dividends</td><td>(5)</td><td>(5)</td><td>(4)</td></tr><tr><td>Medicare part D subsidy</td><td>—</td><td>(6)</td><td>(5)</td></tr><tr><td>Domestic production activities deduction</td><td>(7)</td><td>(5)</td><td>(2)</td></tr><tr><td>Goodwill attributed to the sale of Gas Utility subsidiaries</td><td>—</td><td>4</td><td>—</td></tr><tr><td>Settlement of Federal tax audit</td><td>(12)</td><td>(11)</td><td>—</td></tr><tr><td>State and local income taxes, net of federal benefit</td><td>44</td><td>25</td><td>23</td></tr><tr><td>Other, net</td><td>1</td><td>(6)</td><td>7</td></tr><tr><td>Income tax expense from continuing operations</td><td>$ 311</td><td>$ 247</td><td>$ 288</td></tr><tr><td>Effective income tax rate</td><td>32.7%</td><td>31.6%</td><td>35.2%</td></tr></table>



## DTE Energy Company

## Notes to Consolidated Financial Statements — (Continued)

Components of income tax expense were as follows:

<table><tr><td></td><td>2010</td><td>2009</td><td>2008</td></tr><tr><td></td><td colspan="3">(In millions)</td></tr><tr><td>Continuing operations</td><td></td><td></td><td></td></tr><tr><td>Current income taxes</td><td></td><td></td><td></td></tr><tr><td>Federal</td><td>$ (172)</td><td>$ 25</td><td>$ 130</td></tr><tr><td>State and other income tax expense</td><td>26</td><td>17</td><td>17</td></tr><tr><td>Total current income taxes</td><td>(146)</td><td>42</td><td>147</td></tr><tr><td>Deferred income taxes</td><td></td><td></td><td></td></tr><tr><td>Federal</td><td>415</td><td>182</td><td>121</td></tr><tr><td>State and other income tax expense</td><td>42</td><td>23</td><td>20</td></tr><tr><td>Total deferred income taxes</td><td>457</td><td>205</td><td>141</td></tr><tr><td>Total income taxes from continuing operations</td><td>311</td><td>247</td><td>288</td></tr><tr><td>Discontinued operations</td><td>—</td><td>—</td><td>12</td></tr><tr><td>Total</td><td>$ 311</td><td>$ 247</td><td>$ 300</td></tr></table>

Deferred tax assets and liabilities are recognized for the estimated future tax effect of temporary differences between the tax basis of assets or liabilities and the reported amounts in the financial statements. Deferred tax assets and liabilities are classified as current or noncurrent according to the classification of the related assets or liabilities. Deferred tax assets and liabilities not related to assets or liabilities are classified according to the expected reversal date of the temporary differences. Consistent with rate making treatment, deferred taxes are offset in the table below for temporary differences which have related regulatory assets and liabilities.

Deferred tax assets (liabilities) were comprised of the following at December 31:

<table><tr><td></td><td>2010</td><td>2009</td></tr><tr><td></td><td colspan="2">(In millions)</td></tr><tr><td>Property, plant and equipment</td><td>$ (2,558)</td><td>$ (1,932)</td></tr><tr><td>Securitized regulatory assets</td><td>(396)</td><td>(474)</td></tr><tr><td>Alternative minimum tax credit carry-forwards</td><td>337</td><td>197</td></tr><tr><td>Merger basis differences</td><td>49</td><td>51</td></tr><tr><td>Pension and benefits</td><td>(36)</td><td>17</td></tr><tr><td>Other comprehensive income</td><td>83</td><td>75</td></tr><tr><td>Derivative assets and liabilities</td><td>29</td><td>59</td></tr><tr><td>State net operating loss and credit carry-forwards</td><td>33</td><td>43</td></tr><tr><td>Other</td><td>(2)</td><td>78</td></tr><tr><td></td><td>(2,461)</td><td>(1,886)</td></tr><tr><td>Less valuation allowance</td><td>(32)</td><td>(43)</td></tr><tr><td></td><td>$ (2,493)</td><td>$ (1,929)</td></tr><tr><td>Current deferred income tax assets</td><td>$ 139</td><td>$ 167</td></tr><tr><td>Long-term deferred income tax liabilities</td><td>(2,632)</td><td>(2,096)</td></tr><tr><td></td><td>$ (2,493)</td><td>$ (1,929)</td></tr><tr><td>Deferred income tax assets</td><td>$ 1,418</td><td>$ 1,462</td></tr><tr><td>Deferred income tax liabilities</td><td>(3,911)</td><td>(3,391)</td></tr><tr><td></td><td>$ (2,493)</td><td>$ (1,929)</td></tr></table>



# DTE Energy Company

## Notes to Consolidated Financial Statements — (Continued)

Production tax credits earned in prior years but not utilized totaled $337 million and are carried forward indefinitely as alternative minimum tax credits. The majority of the production tax credits earned, including all of those from our synfuel projects, were generated from projects that had received a private letter ruling (PLR) from the Internal Revenue Service (IRS). These PLRs provide assurance as to the appropriateness of using these credits to offset taxable income, however, these tax credits are subject to IRS audit and adjustment.

The above table excludes deferred tax liabilities associated with unamortized investment tax credits that are shown separately on the Consolidated Statements of Financial Position. Investment tax credits are deferred and amortized to income over the average life of the related property.

The Company has state deferred tax assets related to net operating loss and credit carry-forwards of $32 million and $43 million at December 31, 2010 and 2009, respectively. The state net operating loss and credit carry-forwards expire from 2011 through 2030. The Company has recorded valuation allowances at December 31, 2010 and 2009 of approximately $32 million and $43 million, respectively, with respect to these deferred tax assets. In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

## Uncertain Tax Positions

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

<table><tr><td></td><td>2010</td><td>2009</td><td>2008</td></tr><tr><td></td><td colspan="3">(In millions)</td></tr><tr><td>Balance at January 1</td><td>$ 81</td><td>$ 72</td><td>$ 22</td></tr><tr><td>Additions for tax positions of prior years</td><td>4</td><td>15</td><td>12</td></tr><tr><td>Reductions for tax positions of prior years</td><td>(4)</td><td>(5)</td><td>(5)</td></tr><tr><td>Additions for tax positions related to the current year</td><td>—</td><td>7</td><td>47</td></tr><tr><td>Settlements</td><td>(53)</td><td>(5)</td><td>(1)</td></tr><tr><td>Lapse of statute of limitations</td><td>—</td><td>(3)</td><td>(3)</td></tr><tr><td>Balance at December 31</td><td>$ 28</td><td>$ 81</td><td>$ 72</td></tr></table>

The Company had $5 million and $7 million of unrecognized tax benefits at December 31, 2010 and at December 31, 2009, respectively, that, if recognized, would favorably impact its effective tax rate. During the next twelve months, it is reasonably possible that the Company will settle certain federal and state tax examinations and audits. As a result, the Company believes that it is possible that there will be a decrease in unrecognized tax benefits of up to $13 million within the next twelve months.

The Company recognizes interest and penalties pertaining to income taxes in Interest expense and Other expenses, respectively, on its Consolidated Statements of Operations. Accrued interest pertaining to income taxes totaled $3 million and $6 million at December 31, 2010 and December 31, 2009, respectively. The Company had no accrued penalties pertaining to income taxes. The Company recognized interest expense related to income taxes of $1 million, $2 million and $2 million in 2010, 2009 and 2008, respectively.

In 2009, the Company settled a federal tax audit for the 2004 through 2006 tax years, which resulted in the recognition of $9 million of unrecognized tax benefits. In 2010, the Company settled a federal tax audit for the 2007 and 2008 tax years, which resulted in the recognition of $53 million of unrecognized tax benefits. The Company’s federal income tax returns for 2009 and subsequent years remain subject to examination by the IRS. The Company’s Michigan Business Tax returns for the year 2008 and subsequent years remain subject to examination by the State of Michigan. The Company also files tax returns in numerous state and local jurisdictions with varying statutes of limitation.



# DTE Energy Company
Notes to Consolidated Financial Statements — (Continued)

## Michigan Business Tax

In July 2007, the Michigan Business Tax (MBT) was enacted by the State of Michigan to replace the Michigan Single Business Tax (MSBT) effective January 1, 2008. The MBT is comprised of an apportioned modified gross receipts tax of 0.8 percent; and an apportioned business income tax of 4.95 percent. The MBT provides credits for Michigan business investment, compensation, and research and development. Legislation was also enacted, in 2007, by the State of Michigan creating a deduction for businesses that realize an increase in their deferred tax liability due to the enactment of the MBT. The MBT is accounted for as an income tax.

The MBT consolidated deferred tax liability balance is $366 million as of December 31, 2010 and $357 million as of December 31, 2009 and is reported net of the related federal tax benefit. The MBT deferred tax asset balance is $330 million as of December 31, 2010 and $331 million as of December 31, 2009 and is reported net of the related federal deferred tax liability. The utilities' regulatory asset balance is $383 million and the regulatory liability balance is $418 million as of December 31, 2010. The utilities' regulatory asset balance is $407 million and the regulatory liability balance is $423 million as of December 31, 2009 and is further discussed in Note 12.

## NOTE 14 — COMMON STOCK

## Common Stock

In March 2010, the Company contributed $100 million of DTE Energy common stock to the DTE Energy Company Affiliates Employee Benefit Plans Master Trust. The common stock was contributed over four business days from March 26, 2010 through March 31, 2010 and was valued using the closing market prices of DTE Energy common stock on each of those days in accordance with fair value measurement and accounting requirements.

Under the DTE Energy Company Long-Term Incentive Plan, the Company grants non-vested stock awards to key employees, primarily management. As a result of a stock award, a settlement of an award of performance shares, or by exercise of a participant's stock option, the Company may deliver common stock from the Company's authorized but unissued common stock and/or from outstanding common stock acquired by or on behalf of the Company in the name of the participant.

## Dividends

Certain of the Company’s credit facilities contain a provision requiring the Company to maintain a total funded debt to capitalization ratio, as defined in the agreements, of no more than 0.65 to 1, which has the effect of limiting the amount of dividends the Company can pay in order to maintain compliance with this provision. See Note 18 for a definition of this ratio. The effect of this provision as of December 31, 2010 was to restrict the payment of approximately $46 million of total retained earnings of approximately $3.4 billion. There are no other effective limitations with respect to the Company’s ability to pay dividends.

## NOTE 15 — EARNINGS PER SHARE

The Company reports both basic and diluted earnings per share. The calculation of diluted earnings per share assumes the issuance of potentially dilutive common shares outstanding during the period from the exercise of stock options. Effective January 1, 2009, the adoption of new accounting requirements clarifying the definition of participating securities to be included in the earnings per share calculation had the effect of reducing previously



## DTE Energy Company

## Notes to Consolidated Financial Statements — (Continued)

reported 2008 amounts for basic and diluted earnings per share by $.03 and $.02, respectively. A reconciliation of both calculations is presented in the following table as of December 31:

<table><tr><td></td><td>2010</td><td>2009</td><td>2008</td></tr><tr><td></td><td colspan="3">(In millions, expect per share amounts)</td></tr><tr><td>Basic Earnings per Share</td><td></td><td></td><td></td></tr><tr><td>Net income attributable to DTE Energy Company</td><td>$ 630</td><td>$ 532</td><td>$ 546</td></tr><tr><td>Average number of common shares outstanding</td><td>168</td><td>164</td><td>163</td></tr><tr><td>Weighted average net restricted shares outstanding</td><td>1</td><td>1</td><td>1</td></tr><tr><td>Dividends declared — common shares</td><td>$ 365</td><td>$ 347</td><td>$ 344</td></tr><tr><td>Dividends declared — net restricted shares</td><td>2</td><td>2</td><td>2</td></tr><tr><td>Total distributed earnings</td><td>$ 367</td><td>$ 349</td><td>$ 346</td></tr><tr><td>Net income less distributed earnings</td><td>$ 263</td><td>$ 183</td><td>$ 200</td></tr><tr><td>Distributed (dividends per common share)</td><td>$ 2.18</td><td>$ 2.12</td><td>$ 2.12</td></tr><tr><td>Undistributed</td><td>1.57</td><td>1.12</td><td>1.22</td></tr><tr><td>Total Basic Earnings per Common Share</td><td>$ 3.75</td><td>$ 3.24</td><td>$ 3.34</td></tr><tr><td>Diluted Earnings per Share</td><td></td><td></td><td></td></tr><tr><td>Net income attributable to DTE Energy Company</td><td>$ 630</td><td>$ 532</td><td>$ 546</td></tr><tr><td>Average number of common shares outstanding</td><td>168</td><td>164</td><td>163</td></tr><tr><td>Average incremental shares from assumed exercise of options</td><td>1</td><td>—</td><td>—</td></tr><tr><td>Common shares for dilutive calculation</td><td>169</td><td>164</td><td>163</td></tr><tr><td>Weighted average net restricted shares outstanding</td><td>1</td><td>1</td><td>1</td></tr><tr><td>Dividends declared — common shares</td><td>$ 365</td><td>$ 347</td><td>$ 344</td></tr><tr><td>Dividends declared — net restricted shares</td><td>2</td><td>2</td><td>2</td></tr><tr><td>Total distributed earnings</td><td>$ 367</td><td>$ 349</td><td>$ 346</td></tr><tr><td>Net income less distributed earnings</td><td>$ 263</td><td>$ 183</td><td>$ 200</td></tr><tr><td>Distributed (dividends per common share)</td><td>$ 2.18</td><td>$ 2.12</td><td>$ 2.12</td></tr><tr><td>Undistributed</td><td>1.56</td><td>1.12</td><td>1.22</td></tr><tr><td>Total Diluted Earnings per Common Share</td><td>$ 3.74</td><td>$ 3.24</td><td>$ 3.34</td></tr></table>

Options to purchase approximately 5 million shares, 4 million shares and 5 million shares of common stock in 2010, 2009 and 2008, respectively, were not included in the computation of diluted earnings per share because the options' exercise price was greater than the average market price of the common shares, thus making these options anti-dilutive.



## DTE Energy Company

## Notes to Consolidated Financial Statements — (Continued)

## NOTE 16 — LONG-TERM DEBT

## Long-Term Debt

The Company’s long-term debt outstanding and weighted average interest rates (1) of debt outstanding at December 31 were:

<table><tr><td></td><td>2010</td><td>2009</td></tr><tr><td></td><td colspan="2">(In millions)</td></tr><tr><td>Mortgage bonds, notes, and other</td><td></td><td></td></tr><tr><td>DTE Energy Debt, Unsecured</td><td></td><td></td></tr><tr><td>6.9% due 2011 to 2033</td><td>$1,597</td><td>$1,597</td></tr><tr><td>Detroit Edison Taxable Debt, Principally Secured</td><td></td><td></td></tr><tr><td>5.5% due 2011 to 2038</td><td>2,915</td><td>2,829</td></tr><tr><td>Detroit Edison Tax-Exempt Revenue Bonds(2)</td><td></td><td></td></tr><tr><td>5.5% due 2011 to 2038</td><td>1,283</td><td>1,263</td></tr><tr><td>MichCon Taxable Debt, Principally Secured</td><td></td><td></td></tr><tr><td>6.1% due 2012 to 2033</td><td>889</td><td>889</td></tr><tr><td>Other Long-Term Debt, Including Non-Recourse Debt</td><td>195</td><td>180</td></tr><tr><td></td><td>6,879</td><td>6,758</td></tr><tr><td>Less amount due within one year</td><td>(765)</td><td>(521)</td></tr><tr><td></td><td>$6,114</td><td>$6,237</td></tr><tr><td>Securitization bonds</td><td></td><td></td></tr><tr><td>6.5% due 2011 to 2015</td><td>$ 793</td><td>$ 933</td></tr><tr><td>Less amount due within one year</td><td>(150)</td><td>(140)</td></tr><tr><td></td><td>$ 643</td><td>$ 793</td></tr><tr><td>Trust preferred-linked securities</td><td></td><td></td></tr><tr><td>7.8% due 2032</td><td>$ 186</td><td>$ 186</td></tr><tr><td>7.5% due 2044</td><td>103</td><td>103</td></tr><tr><td></td><td>$ 289</td><td>$ 289</td></tr></table>

(1) Weighted average interest rates as of December 31, 2010 are shown below the description of each category of debt.

(2) Detroit Edison Tax-Exempt Revenue Bonds are issued by a public body that loans the proceeds to Detroit Edison on terms substantially mirroring the Revenue Bonds.



## DTE Energy Company

## Notes to Consolidated Financial Statements — (Continued)

## Debt Issuances

In 2010, the Company issued the following long-term debt:

<table><tr><td>Company</td><td>Month Issued</td><td>Type</td><td>Interest Rate</td><td>Maturity</td><td>Amount (In millions)</td></tr><tr><td>Detroit Edison</td><td>August</td><td>Senior Notes(1)</td><td>3.45%</td><td>2020</td><td>300</td></tr><tr><td>Detroit Edison</td><td>September</td><td>Senior Notes(1)(2)</td><td>4.89%</td><td>2020</td><td>300</td></tr><tr><td>Detroit Edison</td><td>December</td><td>Tax-Exempt Revenue Bonds(3)</td><td>5.00%</td><td>2030</td><td>20</td></tr><tr><td></td><td></td><td></td><td></td><td></td><td>$ 620</td></tr></table>

(1) Proceeds were used to repay a portion of Detroit Edison’s $500 million 6.125% Senior Notes due October 1, 2010 and for general corporate purposes.

(2) These bonds were priced in March 2010 in a private placement transaction which was closed and funded in September 2010.

(3) Proceeds were used to finance the acquisition and construction of improvements to certain electrical generating facilities and pollution control equipment at Detroit Edison’s Monroe Power Plant.

## Debt Retirements and Redemptions

In 2010, the following debt was retired:

<table><tr><td>Company</td><td>Month Retired</td><td>Type</td><td>Interest Rate</td><td>Maturity</td><td>Amount (In millions)</td></tr><tr><td>Detroit Edison</td><td>September</td><td>Senior Notes(1)</td><td>6.125%</td><td>2010</td><td>$ 500</td></tr></table>

(1) These Senior Notes, maturing October 1, 2010, were optionally redeemed on September 30, 2010.

The following table shows the scheduled debt maturities, excluding any unamortized discount or premium on debt:

<table><tr><td></td><td>2011</td><td>2012</td><td>2013</td><td>2014</td><td>2015</td><td>2016 and Thereafter</td><td>Total</td></tr><tr><td></td><td></td><td></td><td></td><td colspan="4">(In millions)</td></tr><tr><td>Amount to mature</td><td>$915</td><td>$520</td><td>$512</td><td>$861</td><td>$477</td><td>$4,685</td><td>$7,970</td></tr></table>

## Trust Preferred-Linked Securities

DTE Energy has interests in various unconsolidated trusts that were formed for the sole purpose of issuing preferred securities and lending the gross proceeds to the Company. The sole assets of the trusts are debt securities of DTE Energy with terms similar to those of the related preferred securities. Payments the Company makes are used by the trusts to make cash distributions on the preferred securities it has issued.

The Company has the right to extend interest payment periods on the debt securities. Should the Company exercise this right, it cannot declare or pay dividends on, or redeem, purchase or acquire, any of its capital stock during the deferral period.

DTE Energy has issued certain guarantees with respect to payments on the preferred securities. These guarantees, when taken together with the Company’s obligations under the debt securities and related indenture, provide full and unconditional guarantees of the trusts’ obligations under the preferred securities.

Financing costs for these issuances were paid for and deferred by DTE Energy. These costs are being amortized using the straight-line method over the estimated lives of the related securities.



# DTE Energy Company
Notes to Consolidated Financial Statements — (Continued)

## Cross Default Provisions

Substantially all of the net utility properties of Detroit Edison and MichCon are subject to the lien of mortgages. Should Detroit Edison or MichCon fail to timely pay their indebtedness under these mortgages, such failure may create cross defaults in the indebtedness of DTE Energy.

## NOTE 17 — PREFERRED AND PREFERENCE SECURITIES

As of December 31, 2010, the amount of authorized and unissued stock is as follows:

<table><tr><td>Company</td><td>Type of Stock</td><td>Par Value</td><td>Shares Authorized</td></tr><tr><td>DTE Energy</td><td>Preferred</td><td>None</td><td>5,000,000</td></tr><tr><td>Detroit Edison</td><td>Preferred</td><td>$ 100</td><td>6,747,484</td></tr><tr><td>Detroit Edison</td><td>Preference</td><td>$ 1</td><td>30,000,000</td></tr><tr><td>MichCon</td><td>Preferred</td><td>$ 1</td><td>7,000,000</td></tr><tr><td>MichCon</td><td>Preference</td><td>$ 1</td><td>4,000,000</td></tr></table>

## NOTE 18 — SHORT-TERM CREDIT ARRANGEMENTS AND BORROWINGS

In August 2010, DTE Energy and its wholly owned subsidiaries, Detroit Edison and MichCon, entered into amended and restated two-year unsecured revolving credit agreements and new three-year unsecured revolving credit agreements with a syndicate of 23 banks that may be used for general corporate borrowings, but are intended to provide liquidity support for each of the companies' commercial paper programs. No one bank provides more than 8.25% of the commitment in any facility. Borrowings under the facilities are available at prevailing short-term interest rates. Additionally, DTE Energy has other facilities to support letter of credit issuance.

The above agreements require the Company 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 the Company and its consolidated subsidiaries, including capital 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 MichCon short-term debt. “Capitalization” means the sum of (a) total funded debt plus (b) “consolidated net worth,” which is equal to consolidated total stockholders’ equity of the Company and its 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 December 31, 2010, the total funded debt to total capitalization ratios for DTE Energy, Detroit Edison and MichCon are 0.49 to 1, 0.52 to 1 and 0.46 to 1, respectively, and are in compliance with this financial covenant. The availability under these combined facilities at December 31, 2010 is shown in the following table:

<table><tr><td></td><td>DTE Energy</td><td>Detroit Edison (In millions)</td><td>MichCon</td><td>Total</td></tr><tr><td>Unsecured revolving credit facility, expiring August 2012</td><td>$ 538</td><td>$ 212</td><td>$ 250</td><td>$ 1,000</td></tr><tr><td>Unsecured revolving credit facility, expiring August 2013</td><td>562</td><td>63</td><td>175</td><td>800</td></tr><tr><td>Unsecured letter of credit facility, expiring in May 2013</td><td>50</td><td>—</td><td>—</td><td>50</td></tr><tr><td>Unsecured letter of credit facility, expiring in August 2015</td><td>125</td><td>—</td><td>—</td><td>125</td></tr><tr><td>Total credit facilities at December 31, 2010</td><td>$ 1,275</td><td>$ 275</td><td>$ 425</td><td>$1,975</td></tr><tr><td>Amounts outstanding at December 31, 2010:</td><td></td><td></td><td></td><td></td></tr><tr><td>Commercial paper issuances</td><td>—</td><td>—</td><td>150</td><td>150</td></tr><tr><td>Letters of credit</td><td>153</td><td>—</td><td>—</td><td>153</td></tr><tr><td></td><td>153</td><td>—</td><td>150</td><td>303</td></tr><tr><td>Net availability at December 31, 2010</td><td>$ 1,122</td><td>$ 275</td><td>$ 275</td><td>$1,672</td></tr></table>



# DTE Energy Company
Notes to Consolidated Financial Statements — (Continued)

The Company has other outstanding letters of credit which are not included in the above described facilities totaling approximately $28 million which are used for various corporate purposes.

The weighted average interest rate for short-term borrowings was 0.4% and 0.7% at December 31, 2010 and 2009, respectively.

In conjunction with maintaining certain exchange traded risk management positions, the Company may be required to post cash collateral with its clearing agent. The Company has a demand financing agreement for up to $100 million with its clearing agent. In April 2010, the agreement was amended to allow for up to $50 million of additional margin financing provided that the Company posts a letter of credit for the incremental amount. At December 31, 2010, a $10 million letter of credit was in place, raising capacity under this facility for up to $110 million. The $10 million letter of credit is included in the table above. The amount outstanding under this agreement was $39 million and $1 million at December 31, 2010 and December 31, 2009, respectively.

## NOTE 19 — CAPITAL AND OPERATING LEASES

Lessee — The Company leases various assets under capital and operating leases, including coal railcars, office buildings, a warehouse, computers, vehicles and other equipment. The lease arrangements expire at various dates through 2031. Future minimum lease payments under non-cancelable leases at December 31, 2010 were:

<table><tr><td></td><td>Capital Leases</td><td>Operating Leases</td></tr><tr><td></td><td colspan="2">(In millions)</td></tr><tr><td>2011</td><td>$ 12</td><td>$ 39</td></tr><tr><td>2012</td><td>9</td><td>32</td></tr><tr><td>2013</td><td>9</td><td>26</td></tr><tr><td>2014</td><td>9</td><td>22</td></tr><tr><td>2015</td><td>9</td><td>18</td></tr><tr><td>Thereafter</td><td>14</td><td>74</td></tr><tr><td>Total minimum lease payments</td><td>$ 62</td><td>$ 211</td></tr><tr><td>Less imputed interest</td><td>9</td><td></td></tr><tr><td>Present value of net minimum lease payments</td><td>53</td><td></td></tr><tr><td>Less current portion</td><td>10</td><td></td></tr><tr><td>Non-current portion</td><td>$ 43</td><td></td></tr></table>

Rental expense for operating leases was $54 million in 2010, $58 million in 2009, and $49 million in 2008.



## DTE Energy Company

## Notes to Consolidated Financial Statements — (Continued)

Lessor — The Company leases a portion of its pipeline system to the Vector Pipeline through a capital lease contract that expires in 2020, with renewal options extending for five years. The Company owns a 40% interest in the Vector Pipeline. In addition, the Company has an energy services agreement, a portion of which is accounted for as a capital lease. The agreement expires in 2019, with a three or five year renewal option. The components of the net investment in the capital leases at December 31, 2010, were as follows:

<table><tr><td></td><td>(In millions)</td></tr><tr><td>2011</td><td>$ 12</td></tr><tr><td>2012</td><td>12</td></tr><tr><td>2013</td><td>12</td></tr><tr><td>2014</td><td>12</td></tr><tr><td>2015</td><td>12</td></tr><tr><td>Thereafter</td><td>5 6</td></tr><tr><td>Total minimum future lease receipts</td><td>116</td></tr><tr><td>Residual value of leased pipeline</td><td>40</td></tr><tr><td>Less unearned income</td><td>(64)</td></tr><tr><td>Net investment in capital lease</td><td>92</td></tr><tr><td>Less current portion</td><td>(4)</td></tr><tr><td></td><td>$ 88</td></tr></table>

## NOTE 20 — COMMITMENTS AND CONTINGENCIES

## Environmental

## Electric Utility

Air — Detroit Edison is subject to the EPA ozone transport and acid rain regulations that limit power plant emissions of sulfur dioxide and nitrogen oxides. Since 2005, the EPA and the State of Michigan have issued additional emission reduction regulations relating to ozone, fine particulate, regional haze and mercury air pollution. The new rules will lead to additional controls on fossil-fueled power plants to reduce nitrogen oxide, sulfur dioxide and mercury emissions. To comply with these requirements, Detroit Edison has spent approximately $1.5 billion through 2010. The Company estimates Detroit Edison will make capital expenditures of over $230 million in 2011 and up to $2.1 billion of additional capital expenditures through 2020 based on current regulations. Further, additional rulemakings are expected over the next few years which could require additional controls for sulfur dioxide, nitrogen oxides and hazardous air pollutants. It is not possible to quantify the impact of those expected rulemakings at this time.

In July 2009, DTE Energy received a Notice of Violation/Finding of Violation (NOV/FOV) from the EPA alleging, among other things, that five of Detroit Edison’s power plants violated New Source Performance standards, Prevention of Significant Deterioration requirements, and operating permit requirements under the Clean Air Act. In June 2010, the EPA issued a NOV/FOV making similar allegations related to a recent project and outage at Unit 2 of the Monroe Power Plant.

On August 5, 2010, the United States Department of Justice, at the request of the EPA, brought a civil suit in the U.S. District Court for the Eastern District of Michigan against DTE Energy and Detroit Edison, related to the June 2010 NOV/FOV and the outage work performed at Unit 2 of the Monroe Power Plant, but not relating to the July 2009 NOV/FOV. Among other relief, the EPA is requesting the court to require Detroit Edison to install and operate the best available control technology at Unit 2 of the Monroe Power Plant. Further, the EPA is requesting the court to issue a preliminary injunction to require Detroit Edison to (i) begin the process of obtaining the necessary permits



# DTE Energy Company
Notes to Consolidated Financial Statements — (Continued)

for the Monroe Unit 2 modification and (ii) offset the pollution from Monroe Unit 2 through emissions reductions from Detroit Edison's fleet of coal-fired power plants until the new control equipment is operating. In January 2011, the EPA's motion for preliminary injunction was denied and the liability phase of the civil suit has been scheduled for trial in May 2011.

DTE Energy and Detroit Edison believe that the plants identified by the EPA, including Unit 2 of the Monroe Power Plant, have complied with all applicable federal environmental regulations. Depending upon the outcome of discussions with the EPA regarding the NOV/FOV and the result of the civil action, Detroit Edison could also be required to install additional pollution control equipment at some or all of the power plants in question, implement early retirement of facilities where control equipment is not economical, engage in supplemental environmental programs, and/or pay fines. DTE Energy and Detroit Edison cannot predict the financial impact or outcome of this matter, or the timing of its resolution.

Water — In response to an EPA regulation, Detroit Edison is required to examine alternatives for reducing the environmental impacts of the cooling water intake structures at several of its facilities. Based on the results of completed studies and expected future studies, Detroit Edison may be required to install additional control technologies to reduce the impacts of the water intakes. Initially, it was estimated that Detroit Edison could incur up to approximately $55 million in additional capital expenditures over the four to six years subsequent to 2008 to comply with these requirements. However, a January 2007 circuit court decision remanded back to the EPA several provisions of the federal regulation that has resulted in a delay in compliance dates. The decision also raised the possibility that Detroit Edison may have to install cooling towers at some facilities at a cost substantially greater than was initially estimated for other mitigative technologies. In 2008, the Supreme Court agreed to review the remanded cost-benefit analysis provision of the rule and in April 2009 upheld the EPA’s use of this provision in determining best technology available for reducing environmental impacts. Concurrently, the EPA continues to develop a revised rule, a draft of which is expected to be published in the first quarter of 2011, with a final rule scheduled for mid-2012. The EPA has also issued an information collection request to begin a review of steam electric effluent guidelines. It is not possible at this time to quantify the impacts of these developing requirements.

Contaminated Sites — Prior to the construction of major interstate natural gas pipelines, gas for heating and other uses was manufactured locally from processes involving coal, coke or oil. The facilities, which produced gas, have been designated as manufactured gas plant (MGP) sites. Detroit Edison conducted remedial investigations at contaminated sites, including three former MGP sites. The investigations have revealed contamination related to the by-products of gas manufacturing at each site. In addition to the MGP sites, the Company is also in the process of cleaning up other contaminated sites, including the area surrounding an ash landfill, electrical distribution substations, and underground and aboveground storage tank locations. The findings of these investigations indicated that the estimated cost to remediate these sites is expected to be incurred over the next several years. At December 31, 2010 and December 31, 2009, the Company had $9 million accrued for remediation. Any significant change in assumptions, such as remediation techniques, nature and extent of contamination and regulatory requirements, could impact the estimate of remedial action costs for the sites and affect the Company’s financial position and cash flows.

Landfill — Detroit Edison owns and operates a permitted engineered ash storage facility at the Monroe Power Plant to dispose of fly ash from the coal fired power plant. Detroit Edison performed an engineering analysis in 2009 and identified the need for embankment side slope repairs and reconstruction.

The EPA has published proposed rules to regulate coal ash under the authority of the Resources Conservation and Recovery Act (RCRA). The proposed rule published on June 21, 2010 contains two primary regulatory options to regulate coal ash residue. The EPA is currently considering either designating coal ash as a “Hazardous Waste” as defined by RCRA or regulating coal ash as non-hazardous waste under RCRA. Agencies and legislatures have urged the EPA to regulate coal ash as a non-hazardous waste. If the EPA designates coal ash as a hazardous waste, the agency could apply some, or all, of the disposal and reuse standards that have been applied to other existing hazardous wastes to disposal and reuse of coal ash. Some of the regulatory actions currently being contemplated



# DTE Energy Company

# Notes to Consolidated Financial Statements — (Continued)

could have a significant impact on our operations and financial position and the rates we charge our customers. It is not possible to quantify the impact of those expected rulemakings at this time.

## Gas Utility

Contaminated Sites — Gas Utility owns, or previously owned, 15 former MGP sites. Investigations have revealed contamination related to the by-products of gas manufacturing at each site. In addition to the MGP sites, the Company is also in the process of cleaning up other contaminated sites. Cleanup activities associated with these sites will be conducted over the next several years.

The MPSC has established a cost deferral and rate recovery mechanism for investigation and remediation costs incurred at former MGP sites. Accordingly, Gas Utility recognizes a liability and corresponding regulatory asset for estimated investigation and remediation costs at former MGP sites. As of December 31, 2010 and December 31, 2009, the Company had $36 million, accrued for remediation.

Any significant change in assumptions, such as remediation techniques, nature and extent of contamination and regulatory requirements, could impact the estimate of remedial action costs for the sites and affect the Company’s financial position and cash flows. The Company anticipates the cost amortization methodology approved by the MPSC for MichCon, which allows MichCon to amortize the MGP costs over a ten-year period beginning with the year subsequent to the year the MGP costs were incurred, and the cost deferral and rate recovery mechanism for Citizens Fuel Gas approved by the City of Adrian, will prevent environmental costs from having a material adverse impact on the Company’s results of operations.

## Non-Utility

The Company’s non-utility affiliates are subject to a number of environmental laws and regulations dealing with the protection of the environment from various pollutants.

The Michigan coke battery facility received and responded to information requests from the EPA that resulted in the issuance of a Notice of Violation in June of 2007 alleging potential maximum achievable control technologies and new source review violations. The EPA is in the process of reviewing the Company’s position of demonstrated compliance and has not initiated escalated enforcement. At this time, the Company cannot predict the impact of this issue. Furthermore, the Michigan coke battery facility is the subject of an investigation by the MDNRE concerning visible emissions readings that resulted from the Company self reporting to MDNRE questionable activities by an employee of a contractor hired by the Company to perform the visible emissions readings. At this time, the Company cannot predict the impact of this investigation.

The Company is also in the process of settling historical air and water violations at its coke battery facility located in Pennsylvania. At this time, the Company cannot predict the impact of this settlement. The Company received two notices of violation from the Pennsylvania Department of Environmental Protection in 2010 alleging violations of the permit for the Pennsylvania coke battery facility in connection with coal pile storm water runoff. The Company has implemented best management practices to address this issue and is currently seeking a permit from the Pennsylvania Department of Environmental Protection to upgrade its wastewater treatment technology to a biological treatment facility. The Company expects to spend approximately $0.7 million on the existing waste water treatment system to comply with existing water discharge requirements. The Company may spend an additional $13 million over the next few years to meet future regulatory requirements and gain other operational improvements savings. The Company’s non-utility affiliates are substantially in compliance with all environmental requirements, other than as noted above.



# DTE Energy Company
Notes to Consolidated Financial Statements — (Continued)

## Other

In February 2008, DTE Energy was named as one of approximately 24 defendant oil, power and coal companies in a lawsuit filed in a United States District Court. DTE Energy was served with process in March 2008. The plaintiffs, the Native Village of Kivalina and City of Kivalina, which are home to approximately 400 people in Alaska, claim that the defendants' business activities have contributed to global warming and, as a result, higher temperatures are damaging the local economy and leaving the island more vulnerable to storm activity in the fall and winter. As a result, the plaintiffs are seeking damages of up to $400 million for relocation costs associated with moving the village to a safer location, as well as unspecified attorney's fees and expenses. On October 15, 2009, the U.S. District Court granted defendants' motions dismissing all of plaintiffs' federal claims in the case on two independent grounds: (1) the court lacks subject matter jurisdiction to hear the claims because of the political question doctrine; and (2) plaintiffs lack standing to bring their claims. The court also dismissed plaintiffs' state law claims because the court lacked supplemental jurisdiction over them after it dismissed the federal claims; the dismissal of the state law claims was without prejudice. The plaintiffs have appealed to the U.S. Court of Appeals for the Ninth Circuit.

## Nuclear Operations

## Property Insurance

Detroit Edison maintains property insurance policies specifically for the Fermi 2 plant. These policies cover such items as replacement power and property damage. The Nuclear Electric Insurance Limited (NEIL) is the primary supplier of the insurance policies.

Detroit Edison maintains a policy for extra expenses, including replacement power costs necessitated by Fermi 2's unavailability due to an insured event. This policy has a 12-week waiting period and provides an aggregate $490 million of coverage over a three-year period.

Detroit Edison has $500 million in primary coverage and $2.25 billion of excess coverage for stabilization, decontamination, debris removal, repair and/or replacement of property and decommissioning. The combined coverage limit for total property damage is $2.75 billion.

In 2007, the Terrorism Risk Insurance Extension Act of 2005 (TRIA) was extended through December 31, 2014. A major change in the extension is the inclusion of “domestic” acts of terrorism in the definition of covered or “certified” acts. For multiple terrorism losses caused by acts of terrorism not covered under the TRIA occurring within one year after the first loss from terrorism, the NEIL policies would make available to all insured entities up to $3.2 billion, plus any amounts recovered from reinsurance, government indemnity, or other sources to cover losses.

Under the NEIL policies, Detroit Edison could be liable for maximum assessments of up to approximately $28 million per event if the loss associated with any one event at any nuclear plant in the United States should exceed the accumulated funds available to NEIL.

## Public Liability Insurance

As of January 1, 2011, as required by federal law, Detroit Edison maintains $375 million of public liability insurance for a nuclear incident. For liabilities arising from a terrorist act outside the scope of TRIA, the policy is subject to one industry aggregate limit of $300 million. Further, under the Price-Anderson Amendments Act of 2005, deferred premium charges up to $117.5 million could be levied against each licensed nuclear facility, but not more than $17.5 million per year per facility. Thus, deferred premium charges could be levied against all owners of licensed nuclear facilities in the event of a nuclear incident at any of these facilities.



# DTE Energy Company
Notes to Consolidated Financial Statements — (Continued)

## Nuclear Fuel Disposal Costs

In accordance with the Federal Nuclear Waste Policy Act of 1982, Detroit Edison has a contract with the U.S. Department of Energy (DOE) for the future storage and disposal of spent nuclear fuel from Fermi 2. Detroit Edison is obligated to pay the DOE a fee of 1 mill per kWh of Fermi 2 electricity generated and sold. The fee is accounted as a component of nuclear fuel expense. Delays have occurred in the DOE’s program for the acceptance and disposal of spent nuclear fuel at a permanent repository and the proposed fiscal year 2011 federal budget recommends termination of funding for completion of the government’s long-term storage facility. Detroit Edison is a party in the litigation against the DOE for both past and future costs associated with the DOE’s failure to accept spent nuclear fuel under the timetable set forth in the Federal Nuclear Waste Policy Act of 1982. Detroit Edison currently employs a spent nuclear fuel storage strategy utilizing a fuel pool. In 2011, the Company expects to begin loading spent nuclear fuel into an on-site dry cask storage facility which is expected to provide sufficient storage capability for the life of the plant as defined by the original operating license. Issues relating to long-term waste disposal policy and to the disposition of funds contributed by Detroit Edison ratepayers to the federal waste fund await future governmental action.

## Guarantees

In certain limited circumstances, the Company enters into contractual guarantees. The Company may guarantee another entity’s obligation in the event it fails to perform. The Company may provide guarantees in certain indemnification agreements. Finally, the Company may provide indirect guarantees for the indebtedness of others.

In connection with the November 2010 sale of the steam heating business by Thermal Ventures II, L.P. an $11 million bank term loan was repaid and the guarantee by Detroit Edison was released. In addition, Detroit Edison made a new $6 million secured senior term loan to the new entity. The Company has reserved the entire amount of the term loan.

The Company’s remaining guarantees are not individually material with maximum potential payments totaling $10 million at December 31, 2010.

The Company is periodically required to obtain performance surety bonds in support of obligations to various governmental entities and other companies in connection with its operations. As of December 31, 2010, the Company had approximately $14 million of performance bonds outstanding. In the event that such bonds are called for nonperformance, the Company would be obligated to reimburse the issuer of the performance bond. The Company is released from the performance bonds as the contractual performance is completed and does not believe that a material amount of any currently outstanding performance bonds will be called.

## Millennium Pipeline Project

The Company owns a 26 percent equity interest in the Millennium Pipeline Project (Millennium). Millennium is accounted for under the equity method. On August 26, 2010, Millennium closed on a $725 million long-term financing that is non-recourse to the Company. The proceeds thereof, along with equity contributions from the project sponsors, repaid in full Millennium’s $800 million construction loan and settled certain forward-starting interest rate swaps related to the new long-term financing. The Company’s share of the equity contribution was $49 million. The project partners’ guarantee of the $800 million construction loan and forward-starting interest rate swaps was terminated upon closing of the long-term financing. The project sponsors have agreed to provide credit support to Millennium’s debt service reserve requirement. The Company’s share of the credit support is $9 million and is being satisfied with a letter of credit in favor of the Trustee of the long-term bond holders.



# DTE Energy Company
Notes to Consolidated Financial Statements — (Continued)

## Labor Contracts

There are several bargaining units for the Company’s approximately 5,000 represented employees. In the 2010 third quarter, a new three-year agreement was ratified covering approximately 3,800 represented employees. The majority of the remaining represented employees are under contracts that expire in June 2011 and August 2012.

## Purchase Commitments

As of December 31, 2010, the Company was party to numerous long-term purchase commitments relating to a variety of goods and services required for the Company’s business. These agreements primarily consist of fuel supply commitments and energy trading contracts. The Company estimates that these commitments will be approximately $6 billion from 2011 through 2051 as detailed in the following table:

<table><tr><td></td><td>(In millions)</td></tr><tr><td>2011</td><td>$ 2,175</td></tr><tr><td>2012</td><td>1,085</td></tr><tr><td>2013</td><td>585</td></tr><tr><td>2014</td><td>471</td></tr><tr><td>2015</td><td>273</td></tr><tr><td>2016 — 2051</td><td>1,332</td></tr><tr><td></td><td>$ 5,921</td></tr></table>

The Company also estimates that 2011 capital expenditures will be approximately $1.4 billion. The Company has made certain commitments in connection with expected capital expenditures.

## Bankruptcies

The Company purchases and sells electricity, gas, coal, coke and other energy products from and to numerous companies operating in the steel, automotive, energy, retail, financial and other industries. Certain of its customers have filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code. The Company regularly reviews contingent matters relating to these customers and its purchase and sale contracts and records provisions for amounts considered at risk of probable loss. The Company believes its accrued amounts are adequate for probable loss. The final resolution of these matters may have a material effect on its consolidated financial statements.

## Other Contingencies

The Company is involved in certain other legal, regulatory, administrative and environmental proceedings before various courts, arbitration panels and governmental agencies concerning claims arising in the ordinary course of business. These proceedings include certain contract disputes, additional environmental reviews and investigations, audits, inquiries from various regulators, and pending judicial matters. The Company cannot predict the final disposition of such proceedings. The Company regularly reviews legal matters and records provisions for claims that it can estimate and are considered probable of loss. The resolution of these pending proceedings is not expected to have a material effect on the Company’s operations or financial statements in the periods they are resolved.

See Notes 5 and 12 for a discussion of contingencies related to derivatives and regulatory matters.

## NOTE 21 — RETIREMENT BENEFITS AND TRUSTEED ASSETS

## Measurement Date

In 2008, we changed the measurement date of our pension and postretirement benefit plans from November 30 to December 31. As a result, we recognized adjustments of $17 million ($9 million after-tax) and $4 million to



## DTE Energy Company

## Notes to Consolidated Financial Statements — (Continued)

retained earnings and regulatory liabilities, respectively, which represents approximately one month of pension and other postretirement benefit costs for the period from December 1, 2007 to December 31, 2008.

## Pension Plan Benefits

The Company has qualified defined benefit retirement plans for eligible represented and non-represented employees. The plans are noncontributory and cover substantially all employees. The plans provide traditional retirement benefits based on the employees' years of benefit service, average final compensation and age at retirement. In addition, certain represented and non-represented employees are covered under cash balance provisions that determine benefits on annual employer contributions and interest credits. The Company also maintains supplemental nonqualified, noncontributory, retirement benefit plans for selected management employees. These plans provide for benefits that supplement those provided by DTE Energy’s other retirement plans.

The Company’s policy is to fund pension costs by contributing amounts consistent with the Pension Protection Act of 2006 provisions and additional amounts when it deems appropriate. The Company contributed $200 million to its pension plans in 2010, including a contribution of DTE Energy stock of $100 million (consisting of approximately 2.2 million shares valued at an average price of $44.97 per share). In January 2011, the Company contributed $200 million to its pension plans.

Net pension cost includes the following components:

<table><tr><td></td><td>2010</td><td>2009
(In millions)</td><td>2008</td></tr><tr><td>Service cost</td><td>$ 64</td><td>$ 52</td><td>$ 55</td></tr><tr><td>Interest cost</td><td>202</td><td>203</td><td>190</td></tr><tr><td>Expected return on plan assets</td><td>(258)</td><td>(255)</td><td>(259)</td></tr><tr><td>Amortization of:</td><td></td><td></td><td></td></tr><tr><td>Net actuarial loss</td><td>100</td><td>52</td><td>32</td></tr><tr><td>Prior service cost</td><td>4</td><td>6</td><td>6</td></tr><tr><td>Net pension cost</td><td>$ 112</td><td>$ 58</td><td>$ 24</td></tr><tr><td></td><td></td><td>2010</td><td>2009</td></tr><tr><td></td><td></td><td>(In millions)</td><td></td></tr><tr><td>Other changes in plan assets and benefit obligations recognized in other comprehensive income and regulatory assets</td><td></td><td></td><td></td></tr><tr><td>Net actuarial loss</td><td></td><td>$ 166</td><td>$ 216</td></tr><tr><td>Amortization of net actuarial loss</td><td></td><td>(100)</td><td>(52)</td></tr><tr><td>Amortization of prior service cost</td><td></td><td>(4)</td><td>(6)</td></tr><tr><td>Total recognized in other comprehensive income and regulatory assets</td><td></td><td>$ 62</td><td>$ 158</td></tr><tr><td>Total recognized in net periodic pension cost, Other comprehensive income and regulatory assets</td><td></td><td>$ 174</td><td>$ 216</td></tr><tr><td>Estimated amounts to be amortized from accumulated other comprehensive income and regulatory assets into net periodic benefit cost during next fiscal year</td><td></td><td></td><td></td></tr><tr><td>Net actuarial loss</td><td></td><td>$ 133</td><td>$ 100</td></tr><tr><td>Prior service cost</td><td></td><td>3</td><td>4</td></tr></table>



## DTE Energy Company

## Notes to Consolidated Financial Statements — (Continued)

The following table reconciles the obligations, assets and funded status of the plans as well as the amounts recognized as prepaid pension cost or pension liability in the Consolidated Statements of Financial Position at December 31:

<table><tr><td></td><td>2010</td><td>2009</td></tr><tr><td></td><td colspan="2">(In millions)</td></tr><tr><td>Accumulated benefit obligation, end of year</td><td>$3,521</td><td>$3,193</td></tr><tr><td>Change in projected benefit obligation</td><td></td><td></td></tr><tr><td>Projected benefit obligation, beginning of year</td><td>$3,436</td><td>$3,032</td></tr><tr><td>Consolidation of VIEs</td><td>82</td><td>—</td></tr><tr><td>Service cost</td><td>64</td><td>52</td></tr><tr><td>Interest cost</td><td>202</td><td>203</td></tr><tr><td>Actuarial loss</td><td>216</td><td>351</td></tr><tr><td>Benefits paid</td><td>(215)</td><td>(202)</td></tr><tr><td>Projected benefit obligation, end of year</td><td>$3,785</td><td>$3,436</td></tr><tr><td>Change in plan assets</td><td></td><td></td></tr><tr><td>Plan assets at fair value, beginning of year</td><td>$2,549</td><td>$2,155</td></tr><tr><td>Consolidation of VIEs</td><td>64</td><td>—</td></tr><tr><td>Actual return on plan assets</td><td>309</td><td>390</td></tr><tr><td>Company contributions</td><td>206</td><td>206</td></tr><tr><td>Benefits paid</td><td>(215)</td><td>(202)</td></tr><tr><td>Plan assets at fair value, end of year</td><td>$2,913</td><td>$2,549</td></tr><tr><td>Funded status of the plans</td><td>$ (872)</td><td>$ (887)</td></tr><tr><td>Amount recorded as:</td><td></td><td></td></tr><tr><td>Current liabilities</td><td>$ (6)</td><td>$ (6)</td></tr><tr><td>Noncurrent liabilities</td><td>(866)</td><td>(881)</td></tr><tr><td></td><td>$ (872)</td><td>$ (887)</td></tr><tr><td>Amounts recognized in Accumulated other comprehensive loss, pre-tax</td><td></td><td></td></tr><tr><td>Net actuarial loss</td><td>$ 195</td><td>$ 196</td></tr><tr><td>Prior service (credit)</td><td>(4)</td><td>(5)</td></tr><tr><td></td><td>$ 191</td><td>$ 191</td></tr><tr><td>Amounts recognized in regulatory assets (see Note 12)</td><td></td><td></td></tr><tr><td>Net actuarial loss</td><td>$1,730</td><td>$1,653</td></tr><tr><td>Prior service cost</td><td>12</td><td>17</td></tr><tr><td></td><td>$1,742</td><td>$1,670</td></tr></table>



## DTE Energy Company

## Notes to Consolidated Financial Statements — (Continued)

Assumptions used in determining the projected benefit obligation and net pension costs are listed below:

<table><tr><td></td><td>2010</td><td>2009</td><td>2008</td></tr><tr><td>Projected benefit obligation</td><td></td><td></td><td></td></tr><tr><td>Discount rate</td><td>5.50%</td><td>5.90%</td><td>6.90%</td></tr><tr><td>Rate of compensation increase</td><td>4.00%</td><td>4.00%</td><td>4.00%</td></tr><tr><td>Net pension costs</td><td></td><td></td><td></td></tr><tr><td>Discount rate</td><td>5.90%</td><td>6.90%</td><td>6.50%</td></tr><tr><td>Rate of compensation increase</td><td>4.00%</td><td>4.00%</td><td>4.00%</td></tr><tr><td>Expected long-term rate of return on plan assets</td><td>8.75%</td><td>8.75%</td><td>8.75%</td></tr></table>

The Company employs a formal process in determining the long-term rate of return for various asset classes. Management reviews historic financial market risks and returns and long-term historic relationships between the asset classes of equities, fixed income and other assets, consistent with the widely accepted capital market principle that asset classes with higher volatility generate a greater return over the long-term. Current market factors such as inflation, interest rates, asset class risks and asset class returns are evaluated and considered before long-term capital market assumptions are determined. The long-term portfolio return is also established employing a consistent formal process, with due consideration of diversification, active investment management and rebalancing. Peer data is reviewed to check for reasonableness. The long-term portfolio return is also established employing a consistent formal process, with due consideration of diversification, active investment and rebalancing. As a result of this process, the Company is lowering its long-term rate of return assumptions for its pension plans to 8.50% for 2011. The Company believes this rate is a reasonable assumption for the long-term rate of return on its plan assets for 2011 given its investment strategy.

At December 31, 2010, the benefits related to the Company’s qualified and nonqualified pension plans expected to be paid in each of the next five years and in the aggregate for the five fiscal years thereafter are as follows:

<table><tr><td rowspan="2"></td><td colspan="2">(In millions)</td></tr><tr><td>2011</td><td>217</td></tr><tr><td>2012</td><td></td><td>226</td></tr><tr><td>2013</td><td></td><td>231</td></tr><tr><td>2014</td><td></td><td>235</td></tr><tr><td>2015</td><td></td><td>244</td></tr><tr><td>2016 — 2020</td><td></td><td>1,343</td></tr><tr><td></td><td></td><td>2,496</td></tr></table>

The Company employs a total return investment approach whereby a mix of equities, fixed income and other investments are used to maximize the long-term return on plan assets consistent with prudent levels of risk, with consideration given to the liquidity needs of the plan. The intent of this strategy is to minimize plan expenses over the long-term. Risk tolerance is established through consideration of future plan cash flows, plan funded status, and corporate financial considerations. The investment portfolio contains a diversified blend of equity, fixed income and other investments. Furthermore, equity investments are diversified across U.S. and non-U.S. stocks, growth and value investment styles, and large and small market capitalizations. Fixed income securities generally include corporate bonds of companies from diversified industries, mortgage-backed securities, and U.S. Treasuries. Other assets such as private equity and hedge funds are used to enhance long-term returns while improving portfolio diversification. Derivatives may be utilized in a risk controlled manner, to potentially increase the portfolio beyond the market value of invested assets and reduce portfolio investment risk. Investment risk is measured and monitored.



## DTE Energy Company

## Notes to Consolidated Financial Statements — (Continued)

on an ongoing basis through annual liability measurements, periodic asset/liability studies, and quarterly investment portfolio reviews.

Target allocations for plan assets as of December 31, 2010 are listed below:

<table><tr><td>U.S. Large Cap Equity Securities</td><td>22%</td></tr><tr><td>U.S. Small Cap and Mid Cap Equity Securities</td><td>5</td></tr><tr><td>Non U.S. Equity Securities</td><td>20</td></tr><tr><td>Fixed Income Securities</td><td>25</td></tr><tr><td>Hedge Funds and Similar Investments</td><td>20</td></tr><tr><td>Private Equity and Other</td><td>8</td></tr><tr><td></td><td>100%</td></tr></table>

Fair Value Measurements at December 31, 2010(a)

<table><tr><td rowspan="2"></td><td rowspan="2">Level 1</td><td rowspan="2">Level 2</td><td rowspan="2">Level 3</td><td colspan="2">Balance at December 31,</td></tr><tr><td>2010</td><td></td></tr><tr><td>Asset Category:</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Short-term investments(b)</td><td>$ —</td><td>$ 34</td><td>$ —</td><td>$</td><td>34</td></tr><tr><td>Equity securities</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>U.S. Large Cap(c)</td><td>686</td><td>38</td><td>—</td><td></td><td>724</td></tr><tr><td>U.S. Small/Mid Cap(d)</td><td>181</td><td>8</td><td>—</td><td></td><td>189</td></tr><tr><td>Non U.S(e)</td><td>285</td><td>222</td><td>—</td><td></td><td>507</td></tr><tr><td>Fixed income securities(f)</td><td>61</td><td>658</td><td>—</td><td></td><td>719</td></tr><tr><td>Other types of investments</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Hedge Funds and Similar Investments(g)</td><td>189</td><td>73</td><td>304</td><td></td><td>566</td></tr><tr><td>Private Equity and Other(h)</td><td>—</td><td>—</td><td>174</td><td></td><td>174</td></tr><tr><td>Total</td><td>$1,402</td><td>$1,033</td><td>$ 478</td><td>$</td><td>2,913</td></tr></table>



## DTE Energy Company

## Notes to Consolidated Financial Statements — (Continued)

## Fair Value Measurements at December 31, 2009(a)

<table><tr><td></td><td>Level 1</td><td>Level 2</td><td>Level 3</td><td>Balance at December 31, 2009</td></tr><tr><td>Asset Category:</td><td></td><td></td><td></td><td></td></tr><tr><td>Short-term investments(b)</td><td>$ —</td><td>$ 63</td><td>$ —</td><td>$ 63</td></tr><tr><td>Equity securities</td><td></td><td></td><td></td><td></td></tr><tr><td>U.S. Large Cap(c)</td><td>6 59</td><td>30</td><td>—</td><td>689</td></tr><tr><td>U.S. Small/Mid Cap(d)</td><td>153</td><td>3</td><td>—</td><td>156</td></tr><tr><td>Non U.S(e)</td><td>231</td><td>120</td><td>—</td><td>351</td></tr><tr><td>Fixed income securities(f)</td><td>47</td><td>599</td><td>—</td><td>646</td></tr><tr><td>Other types of investments</td><td></td><td></td><td></td><td></td></tr><tr><td>Hedge Funds and Similar Investments(g)</td><td>—</td><td>—</td><td>484</td><td>484</td></tr><tr><td>Private Equity and Other(h)</td><td>—</td><td>—</td><td>160</td><td>160</td></tr><tr><td>Total</td><td>$ 1,090</td><td>$ 815</td><td>$ 644</td><td>$ 2,549</td></tr></table>

(a) See Note 4 — Fair Value for a description of levels within the fair value hierarchy.

(b) This category predominantly represents certain short-term fixed income securities and money market investments that are managed in separate accounts or commingled funds. Pricing for investments in this category are obtained from quoted prices in actively traded markets or valuations from brokers or pricing services.

(c) This category comprises both actively and not actively managed portfolios that track the S&P 500 low cost equity index funds. Investments in this category are exchange-traded securities whereby unadjusted quote prices can be obtained. Exchange-traded securities held in a commingled fund are classified as Level 2 assets.

(d) This category represents portfolios of small and medium capitalization domestic equities. Investments in this category are exchange-traded securities whereby unadjusted quote prices can be obtained. Exchange-traded securities held in a commingled fund are classified as Level 2 assets.

(e) This category primarily consists of portfolios of non-U.S. developed and emerging market equities. Investments in this category are exchange-traded securities whereby unadjusted quote prices can be obtained. Exchange-traded securities held in a commingled fund are classified as Level 2 assets.

(f) This category includes corporate bonds from diversified industries, U.S. Treasuries, and mortgage backed securities. Pricing for investments in this category is obtained from quoted prices in actively traded markets and quotations from broker or pricing services. Non-exchange traded securities and exchange-traded securities held in commingled funds are classified as Level 2 assets.

(g) This category includes a diversified group of funds and strategies that attempt to capture financial market inefficiencies. In 2009, pricing for investments in this category was based on limited observable inputs as there was little, if any, publicly available pricing. Valuations for assets in this category may be based on relevant publicly-traded securities, derivatives, and privately-traded securities. In 2010, pricing for investments in this category included quoted prices in active markets and quotations from broker or pricing services. Non-exchanged traded securities held in commingled funds are classified as Level 2 assets.

(h) This category includes a diversified group of funds and strategies that primarily invests in private equity partnerships. This category also includes investments in timber and private mezzanine debt. Pricing for investments in this category is based on limited observable inputs as there is little, if any, publicly available pricing. Valuations for assets in this category may be based on discounted cash flow analyses, relative publicly-traded comparables and comparable transactions.



## DTE Energy Company

## Notes to Consolidated Financial Statements — (Continued)

The pension trust holds debt and equity securities directly and indirectly through commingled funds and institutional mutual funds. Exchange-traded debt and equity securities held directly are valued using quoted market prices in actively traded markets. The commingled funds and institutional mutual funds which hold exchange-traded equity or debt securities are valued based on underlying securities, using quoted prices in actively traded markets. Non-exchange traded fixed income securities are valued by the trustee based upon quotations available from brokers or pricing services. A primary price source is identified by asset type, class or issue for each security. The trustees monitor prices supplied by pricing services and may use a supplemental price source or change the primary price source of a given security if the trustees challenge an assigned price and determine that another price source is considered to be preferable. DTE Energy has obtained an understanding of how these prices are derived, including the nature and observability of the inputs used in deriving such prices. Additionally, DTE Energy selectively corroborates the fair values of securities by comparison of market-based price sources.

Fair Value Measurements Using Significant Unobservable Inputs (Level 3):

<table><tr><td></td><td>Hedge Funds and Similar Investments</td><td>Private Equity and Other (In millions)</td><td>Total</td></tr><tr><td>Beginning Balance at January 1, 2010</td><td>$ 484</td><td>$ 160</td><td>$ 644</td></tr><tr><td>Total realized/unrealized gains (losses)</td><td>51</td><td>23</td><td>74</td></tr><tr><td>Purchases, sales and settlements</td><td>(231)</td><td>(9)</td><td>(240)</td></tr><tr><td>Ending Balance at December 31, 2010</td><td>$ 304</td><td>$ 174</td><td>$ 478</td></tr><tr><td>The amount of total gains (losses) for the period attributable to the change in unrealized gains or losses related to assets still held at the end of the period</td><td>$ 29</td><td>$ 13</td><td>$ 42</td></tr><tr><td></td><td>Hedge Funds and Similar Investments</td><td>Private Equity and Other (In millions)</td><td>Total</td></tr><tr><td>Beginning Balance at January 1, 2009</td><td>$ 468</td><td>$ 159</td><td>$ 627</td></tr><tr><td>Total realized/unrealized gains (losses)</td><td>31</td><td>(11)</td><td>20</td></tr><tr><td>Purchases, sales and settlements</td><td>(15)</td><td>12</td><td>(3)</td></tr><tr><td>Ending Balance at December 31, 2009</td><td>$ 484</td><td>$ 160</td><td>$ 644</td></tr><tr><td>The amount of total gains (losses) for the period attributable to the change in unrealized gains or losses related to assets still held at the end of the period</td><td>$ 34</td><td>$ (10)</td><td>$ 24</td></tr></table>

The Company also sponsors defined contribution retirement savings plans. Participation in one of these plans is available to substantially all represented and non-represented employees. The Company matches employee contributions up to certain predefined limits based upon eligible compensation, the employee’s contribution rate and, in some cases, years of credited service. The cost of these plans was $34 million, $33 million, and $33 million in each of the years 2010, 2009, and 2008, respectively.

## Other Postretirement Benefits

The Company provides certain postretirement health care and life insurance benefits for employees who are eligible for these benefits. The Company’s policy is to fund certain trusts to meet its postretirement benefit obligations. Separate qualified Voluntary Employees Beneficiary Association (VEBA) and 401(h) trusts exist for



## DTE Energy Company

## Notes to Consolidated Financial Statements — (Continued)

represented and non-represented employees. The Company contributed $161 million to its postretirement medical and life insurance benefit plans during 2010, including a transfer of $25 million from the MichCon Grantor Trust.

In January 2011, the Company contributed $81 million to its other postretirement benefit plans. At the discretion of management, the Company may make up to an additional $90 million contribution to its VEBA trusts through the remainder of 2011.

Net postretirement cost includes the following components:

<table><tr><td></td><td>2010</td><td>2009</td><td>2008</td></tr><tr><td></td><td></td><td>(In millions)</td><td></td></tr><tr><td>Service cost</td><td>$ 61</td><td>$ 59</td><td>$ 62</td></tr><tr><td>Interest cost</td><td>125</td><td>133</td><td>121</td></tr><tr><td>Expected return on plan assets</td><td>(74)</td><td>(55)</td><td>(75)</td></tr><tr><td>Amortization of:</td><td></td><td></td><td></td></tr><tr><td>Net loss</td><td>54</td><td>72</td><td>38</td></tr><tr><td>Prior service (credit)</td><td>(4)</td><td>(6)</td><td>(6)</td></tr><tr><td>Net transition obligation</td><td>2</td><td>2</td><td>2</td></tr><tr><td>Net postretirement cost</td><td>$164</td><td>$205</td><td>$142</td></tr><tr><td></td><td></td><td>2010</td><td>2009</td></tr><tr><td></td><td></td><td>(In millions)</td><td></td></tr><tr><td>Other changes in plan assets and APBO recognized in other comprehensive income and regulatory assets</td><td></td><td></td><td></td></tr><tr><td>Net actuarial loss (gain)</td><td>$ 93</td><td>$ (59)</td><td></td></tr><tr><td>Amortization of net actuarial loss</td><td>(54)</td><td>(72)</td><td></td></tr><tr><td>Prior service cost (credit)</td><td>(79)</td><td>—</td><td></td></tr><tr><td>Amortization of prior service credit</td><td>4</td><td>6</td><td></td></tr><tr><td>Amortization of transition (asset)</td><td>(2)</td><td>(2)</td><td></td></tr><tr><td>Total recognized in other comprehensive income and regulatory assets</td><td>$ (38)</td><td>$ (127)</td><td></td></tr><tr><td>Total recognized in net periodic pension cost, other comprehensive income and regulatory assets</td><td>$ 126</td><td>$ 78</td><td></td></tr><tr><td></td><td></td><td>2010</td><td>2009</td></tr><tr><td>Estimated amounts to be amortized from accumulated other comprehensive income and regulatory assets into net periodic benefit cost during next fiscal year</td><td></td><td></td><td></td></tr><tr><td>Net actuarial loss</td><td>$ 59</td><td>$ 53</td><td></td></tr><tr><td>Prior service (credit)</td><td>$ (26)</td><td>$ (3)</td><td></td></tr><tr><td>Net transition obligation</td><td>$ 2</td><td>$ 2</td><td></td></tr></table>



## DTE Energy Company

## Notes to Consolidated Financial Statements — (Continued)

The following table reconciles the obligations, assets and funded status of the plans including amounts recorded as accrued postretirement cost in the Consolidated Statements of Financial Position at December 31:

<table><tr><td></td><td>2010</td><td>2009</td></tr><tr><td></td><td colspan="2">(In millions)</td></tr><tr><td>Change in accumulated postretirement benefit obligation</td><td></td><td></td></tr><tr><td>Accumulated postretirement benefit obligation, beginning of year</td><td>$ 2,151</td><td>$ 2,032</td></tr><tr><td>Consolidation of VIEs</td><td>21</td><td>—</td></tr><tr><td>Service cost</td><td>61</td><td>59</td></tr><tr><td>Interest cost</td><td>125</td><td>133</td></tr><tr><td>Plan amendments</td><td>(79)</td><td>—</td></tr><tr><td>Actuarial loss</td><td>127</td><td>22</td></tr><tr><td>Medicare Part D subsidy</td><td>7</td><td>6</td></tr><tr><td>Benefits paid</td><td>(108)</td><td>(101)</td></tr><tr><td>Accumulated postretirement benefit obligation, end of year</td><td>$ 2,305</td><td>$ 2,151</td></tr><tr><td>Change in plan assets</td><td></td><td></td></tr><tr><td>Plan assets at fair value, beginning of year</td><td>$ 864</td><td>$ 598</td></tr><tr><td>Actual return on plan assets</td><td>108</td><td>135</td></tr><tr><td>Company contributions</td><td>160</td><td>205</td></tr><tr><td>Benefits paid</td><td>(103)</td><td>(74)</td></tr><tr><td>Plan assets at fair value, end of year</td><td>$ 1,029</td><td>$ 864</td></tr><tr><td>Funded status, end of year</td><td>$ (1,276)</td><td>$ (1,287)</td></tr><tr><td>Amount recorded as:</td><td></td><td></td></tr><tr><td>Current liabilities</td><td>$ (1)</td><td>$ —</td></tr><tr><td>Noncurrent liabilities</td><td>$ (1,275)</td><td>$ (1,287)</td></tr><tr><td></td><td>$ (1,276)</td><td>$ (1,287)</td></tr><tr><td>Amounts recognized in Accumulated other comprehensive loss, pre-tax</td><td></td><td></td></tr><tr><td>Net actuarial loss</td><td>$ 46</td><td>$ 51</td></tr><tr><td>Prior service (credit)</td><td>(28)</td><td>(27)</td></tr><tr><td>Net transition (asset)</td><td>(2)</td><td>(12)</td></tr><tr><td></td><td>$ 16</td><td>$ 12</td></tr><tr><td>Amounts recognized in regulatory assets (See Note 12)</td><td></td><td></td></tr><tr><td>Net actuarial loss</td><td>$ 692</td><td>$ 646</td></tr><tr><td>Prior service cost</td><td>(74)</td><td>1</td></tr><tr><td>Net transition obligation</td><td>6</td><td>18</td></tr><tr><td></td><td>$ 624</td><td>$ 665</td></tr></table>



## DTE Energy Company

## Notes to Consolidated Financial Statements — (Continued)

Assumptions used in determining the projected benefit obligation and net benefit costs are listed below:

<table><tr><td></td><td>2010</td><td>2009</td><td>2008</td></tr><tr><td>Projected benefit obligation</td><td></td><td></td><td></td></tr><tr><td>Discount rate</td><td>5.50%</td><td>5.90%</td><td>6.90%</td></tr><tr><td>Net benefit costs</td><td></td><td></td><td></td></tr><tr><td>Discount rate</td><td>5.90%</td><td>6.90%</td><td>6.50%</td></tr><tr><td>Expected long-term rate of return on plan assets</td><td>8.75%</td><td>8.75%</td><td>8.75%</td></tr><tr><td>Health care trend rate pre-65</td><td>7.00%</td><td>7.00%</td><td>7.00%</td></tr><tr><td>Health care trend rate post-65</td><td>7.00%</td><td>7.00%</td><td>6.00%</td></tr><tr><td>Ultimate health care trend rate</td><td>5.00%</td><td>5.00%</td><td>5.00%</td></tr><tr><td>Year in which ultimate reached</td><td>2016</td><td>2016</td><td>2011</td></tr></table>

A one percentage point increase in health care cost trend rates would have increased the total service cost and interest cost components of benefit costs by $32 million and increased the accumulated benefit obligation by $300 million at December 31, 2010. A one percentage point decrease in the health care cost trend rates would have decreased the total service and interest cost components of benefit costs by $28 million and would have decreased the accumulated benefit obligation by $287 million at December 31, 2010.

At December 31, 2010, the benefits expected to be paid, including prescription drug benefits, in each of the next five years and in the aggregate for the five fiscal years thereafter are as follows:

<table><tr><td rowspan="2"></td><td colspan="2">(In millions)</td></tr><tr><td>2011</td><td>$ 110</td></tr><tr><td>2012</td><td></td><td>114</td></tr><tr><td>2013</td><td></td><td>137</td></tr><tr><td>2014</td><td></td><td>144</td></tr><tr><td>2015</td><td></td><td>151</td></tr><tr><td>2016 — 2020</td><td></td><td>866</td></tr><tr><td></td><td></td><td>$ 1,522</td></tr></table>

The process used in determining the long-term rate of return for assets and the investment approach for the Company’s other postretirement benefits plans is similar to those previously described for its pension plans.

Target allocations for plan assets as of December 31, 2010 are listed below:

<table><tr><td>U.S. Large Cap Equity Securities</td><td>25%</td></tr><tr><td>Non U.S. Equity Securities</td><td>20</td></tr><tr><td>Fixed Income Securities</td><td>25</td></tr><tr><td>Hedge Funds and Similar Investments</td><td>20</td></tr><tr><td>Private Equity and Other</td><td>10</td></tr><tr><td></td><td>100%</td></tr></table>



## DTE Energy Company

## Notes to Consolidated Financial Statements — (Continued)

## Fair Value Measurements at December 31, 2010(a)

<table><tr><td></td><td>Level 1</td><td>Level 2</td><td>Level 3</td><td>Balance at December 31, 2010</td></tr><tr><td>Asset Category:</td><td></td><td></td><td></td><td></td></tr><tr><td>Short-term investments(b)</td><td>$ —</td><td>$ 8</td><td>$ —</td><td>$ 8</td></tr><tr><td>Equity securities</td><td></td><td></td><td></td><td></td></tr><tr><td>U.S. Large Cap(c)</td><td>126</td><td>62</td><td>—</td><td>188</td></tr><tr><td>U.S. Small/Mid Cap(d)</td><td>60</td><td>58</td><td>—</td><td>118</td></tr><tr><td>Non U.S(e)</td><td>79</td><td>122</td><td>—</td><td>201</td></tr><tr><td>Fixed income securities(f)</td><td>4</td><td>252</td><td>—</td><td>256</td></tr><tr><td>Other types of investments</td><td></td><td></td><td></td><td></td></tr><tr><td>Hedge Funds and Similar Investments(g)</td><td>76</td><td>48</td><td>79</td><td>203</td></tr><tr><td>Private Equity and Other(h)</td><td>—</td><td>—</td><td>55</td><td>55</td></tr><tr><td>Total</td><td>$ 345</td><td>$ 550</td><td>$ 134</td><td>$ 1,029</td></tr></table>

## Fair Value Measurements at December 31, 2009(a)

<table><tr><td></td><td>Level 1</td><td>Level 2</td><td>Level 3</td><td>Balance at December 31, 2009</td></tr><tr><td>Asset Category:</td><td></td><td></td><td></td><td></td></tr><tr><td>Short-term investments(b)</td><td>$ —</td><td>$ 18</td><td>$ —</td><td>$ 18</td></tr><tr><td>Equity securities</td><td></td><td></td><td></td><td></td></tr><tr><td>U.S. Large Cap(c)</td><td>148</td><td>80</td><td>—</td><td>228</td></tr><tr><td>U.S. Small/Mid Cap(d)</td><td>46</td><td>50</td><td>—</td><td>96</td></tr><tr><td>Non U.S(e)</td><td>73</td><td>69</td><td>—</td><td>142</td></tr><tr><td>Fixed income securities(f)</td><td>8</td><td>234</td><td>—</td><td>242</td></tr><tr><td>Other types of investments</td><td></td><td></td><td></td><td></td></tr><tr><td>Hedge Funds and Similar Investments(g)</td><td>—</td><td>—</td><td>92</td><td>92</td></tr><tr><td>Private Equity and Other(h)</td><td>—</td><td>—</td><td>46</td><td>46</td></tr><tr><td>Total</td><td>$ 275</td><td>$ 451</td><td>$ 138</td><td>$ 864</td></tr></table>

(a) See Note 4 — Fair Value for a description of levels within the fair value hierarchy.

(b) This category predominantly represents certain short-term fixed income securities and money market investments that are managed in separate accounts or commingled funds. Pricing for investments in this category are obtained from quoted prices in actively traded markets or valuations from brokers or pricing services.

(c) This category comprises both actively and not actively managed portfolios that track the S&P 500 low cost equity index funds. Investments in this category are exchange-traded securities whereby unadjusted quote prices can be obtained. Exchange-traded securities held in a commingled fund are classified as Level 2 assets.

(d) This category represents portfolios of small and medium capitalization domestic equities. Investments in this category are exchange-traded securities whereby unadjusted quote prices can be obtained. Exchange-traded securities held in a commingled fund are classified as Level 2 assets.



# DTE Energy Company

# Notes to Consolidated Financial Statements — (Continued)

(e) This category primarily consists of portfolios of non-U.S. developed and emerging market equities. Investments in this category are exchange-traded securities whereby unadjusted quote prices can be obtained. Exchange-traded securities held in a commingled fund are classified as Level 2 assets.

(f) This category includes corporate bonds from diversified industries, U.S. Treasuries, and mortgage backed securities. Pricing for investments in this category is obtained from quoted prices in actively traded markets and quotations from broker or pricing services. Non-exchange traded securities and exchange-traded securities held in commingled funds are classified as Level 2 assets.

(g) This category includes a diversified group of funds and strategies that attempt to capture financial market inefficiencies. In 2009, pricing for investments in this category was based on limited observable inputs as there was little, if any, publicly available pricing. Valuations for assets in this category may be based on relevant publicly-traded securities, derivatives, and privately-traded securities. In 2010, pricing for investments in this category included quoted prices in active markets and quotations from broker or pricing services. Non-exchanged traded securities held in commingled funds are classified as Level 2 assets.

(h) This category includes a diversified group of funds and strategies that primarily invests in private equity partnerships. This category also includes investments in timber and private mezzanine debt. Pricing for investments in this category is based on limited observable inputs as there is little, if any, publicly available pricing. Valuations for assets in this category may be based on discounted cash flow analyses, relative publicly-traded comparables and comparable transactions.

The VEBA trusts hold debt and equity securities directly and indirectly through commingled funds and institutional mutual funds. Exchange-traded debt and equity securities held directly are valued using quoted market prices in actively traded markets. The commingled funds and institutional mutual funds which hold exchange-traded equity or debt securities are valued based on underlying securities, using quoted prices in actively traded markets. Non-exchange traded fixed income securities are valued by the trustee based upon quotations available from brokers or pricing services. A primary price source is identified by asset type, class or issue for each security. The trustees monitor prices supplied by pricing services and may use a supplemental price source or change the primary price source of a given security if the trustees challenge an assigned price and determine that another price source is considered to be preferable. DTE Energy has obtained an understanding of how these prices are derived, including the nature and observability of the inputs used in deriving such prices. Additionally, DTE Energy selectively corroborates the fair values of securities by comparison of market-based price sources.

Fair Value Measurements Using Significant Unobservable Inputs (Level 3):

<table><tr><td></td><td>Hedge Funds and Similar Investments</td><td>Private Equity and Other (In millions)</td><td>Total</td></tr><tr><td>Beginning Balance at January 1, 2010</td><td>$ 92</td><td>$ 46</td><td>$138</td></tr><tr><td>Total realized/unrealized gains</td><td>10</td><td>8</td><td>18</td></tr><tr><td>Purchases, sales and settlements</td><td>(23)</td><td>1</td><td>(22)</td></tr><tr><td>Ending Balance at December 31, 2010</td><td>$ 79</td><td>$ 55</td><td>$134</td></tr><tr><td>The amount of total gains (losses) for the period attributable to the change in unrealized gains or losses related to assets still held at the end of the period</td><td>$ 6</td><td>$ 7</td><td>$ 13</td></tr></table>



## DTE Energy Company

## Notes to Consolidated Financial Statements — (Continued)

<table><tr><td></td><td>Hedge Funds and Similar Investments</td><td>Private Equity and Other (In millions)</td><td>Total</td></tr><tr><td>Beginning Balance at January 1, 2009</td><td>$     76</td><td>$     38</td><td>$ 114</td></tr><tr><td>Total realized/unrealized gains</td><td>6</td><td>5</td><td>11</td></tr><tr><td>Purchases, sales and settlements</td><td>10</td><td>3</td><td>13</td></tr><tr><td>Ending Balance at December 31, 2009</td><td>$     92</td><td>$     46</td><td>$ 138</td></tr><tr><td>The amount of total gains (losses) for the period attributable to the change in unrealized gains or losses related to assets still held at the end of the period</td><td>$     7</td><td>$     2</td><td>$ 9</td></tr></table>

## Healthcare Legislation

In March 2010, the PPACA and the HCERA were enacted into law (collectively, the “Act”). The Act is a comprehensive health care reform bill. A provision of the PPACA repeals the current rule permitting deduction of the portion of the drug coverage expense that is offset by the Medicare Part D subsidy, effective for taxable years beginning after December 31, 2012.

DTE Energy’s retiree healthcare plan includes the provision of postretirement prescription drug coverage (“coverage”) which is included in the calculation of the recorded other postemployment benefit (OPEB) obligation. Because the Company’s coverage meets certain criteria, DTE Energy is eligible to receive the Medicare Part D subsidy. With the enactment of the Act, the subsidy will continue to not be subject to tax, but an equal amount of prescription drug coverage expenditures will not be deductible. Income tax accounting rules require the impact of a change in tax law be recognized in continuing operations in the Consolidated Statements of Operations in the period that the tax law change is enacted.

For DTE Energy and its utilities this change in tax law required a remeasurement of the Deferred Tax Asset related to the OPEB obligation and the Deferred Tax Liability related to the OPEB Regulatory Asset. The net impact of the remeasurement is $23 million, $18 million and $4 million for DTE Energy, Detroit Edison and MichCon, respectively. The Detroit Edison and MichCon amounts have been deferred as Regulatory Assets as the traditional rate setting process allows for the recovery of income tax costs. Income tax expense of $1 million was recognized related to corporate entities in 2010.

In December 2003, the Medicare Act was signed into law which provides for a non-taxable federal subsidy to sponsors of retiree health care benefit plans that provide a benefit that is at least “actuarially equivalent” to the benefit established by law. The effects of the subsidy reduced net periodic postretirement benefit costs by $7 million in 2010, $20 million in 2009, and $14 million in 2008. At December 31, 2010, the gross amount of federal subsidies expected to be received in each of the next two years is estimated to be $7 million in 2011 and $8 million in 2012.

## Grantor Trust

MichCon maintains a Grantor Trust to fund other postretirement benefit obligations that invests in life insurance contracts and income securities. Employees and retirees have no right, title or interest in the assets of the Grantor Trust, and MichCon can revoke the trust subject to providing the MPSC with prior notification. The Company accounts for its investment at fair value with unrealized gains and losses recorded to earnings.



# DTE Energy Company
Notes to Consolidated Financial Statements — (Continued)

## NOTE 22 — STOCK-BASED COMPENSATION

The Company’s stock incentive program permits the grant of incentive stock options, non-qualifying stock options, stock awards, performance shares and performance units to employees and members of its Board of Directors. Key provisions of the stock incentive program are:

• Authorized limit is 9,000,000 shares of common stock;

• Prohibits the grant of a stock option with an exercise price that is less than the fair market value of the Company’s stock on the date of the grant; and

• Imposes the following award limits to a single participant in a single calendar year, (1) options for more than 500,000 shares of common stock; (2) stock awards for more than 150,000 shares of common stock; (3) performance share awards for more than 300,000 shares of common stock (based on the maximum payout under the award); or (4) more than 1,000,000 performance units, which have a face amount of $1.00 each.

The Company records compensation expense at fair value over the vesting period for all awards it grants. In addition, the Company is required to record compensation expense at fair value (as previous awards continue to vest) for the unvested portion of previously granted stock option awards that were outstanding as of January 1, 2006. As of December 31, 2008, all such awards have been fully expensed.

Stock-based compensation for the reporting periods is as follows:

<table><tr><td></td><td>2010</td><td>2009</td><td>2008</td></tr><tr><td></td><td colspan="3">(In millions)</td></tr><tr><td>Stock-based compensation</td><td>$52</td><td>$5.6</td><td>$38</td></tr><tr><td>Tax benefit of compensation</td><td>$20</td><td>$22</td><td>$13</td></tr></table>

Approximately $3.3 million, $3.3 million, and $1.6 million of stock-based compensation cost was capitalized as part of fixed assets during 2010, 2009, and 2008, respectively.

## Options

Options are exercisable according to the terms of the individual stock option award agreements and expire 10 years after the date of the grant. The option exercise price equals the fair value of the stock on the date that the option was granted. Stock options vest ratably over a three-year period.

Stock option activity was as follows:

<table><tr><td></td><td>Number of Options</td><td>Weighted Average Exercise Price</td><td>Aggregate Intrinsic Value (In millions)</td></tr><tr><td>Options outstanding at January 1, 2010</td><td>5,593,392</td><td>$ 40.50</td><td></td></tr><tr><td>Granted</td><td>611,500</td><td>$ 43.95</td><td></td></tr><tr><td>Exercised</td><td>(1,256,897)</td><td>$ 39.74</td><td></td></tr><tr><td>Forfeited or expired</td><td>(120,538)</td><td>$ 42.30</td><td></td></tr><tr><td>Options outstanding at December 31, 2010</td><td>4,827,457</td><td>$ 41.09</td><td>$ 25</td></tr><tr><td>Options exercisable at December 31, 2010</td><td>3,440,401</td><td>$ 42.57</td><td>$ 13</td></tr></table>

As of December 31, 2010, the weighted average remaining contractual life for the exercisable shares is 4.10 years. As of December 31, 2010, 1,387,056 options were non-vested. During 2010, 663,754 options vested.



## DTE Energy Company

## Notes to Consolidated Financial Statements — (Continued)

The weighted average grant date fair value of options granted during 2010, 2009, and 2008 was $5.62, $4.41, and $4.76, respectively. The intrinsic value of options exercised for the years ended December 31, 2010, 2009 and 2008 was $9 million, $3 million, and $1 million, respectively. Total option expense recognized during 2010, 2009 and 2008 was $4 million, $3 million and $3 million, respectively.

The number, weighted average exercise price and weighted average remaining contractual life of options outstanding were as follows:

<table><tr><td>Range of Exercise Prices</td><td>Number of Options</td><td>Weighted Average Exercise Price</td><td>Weighted Average Remaining Contractual Life (Years)</td></tr><tr><td>$27.00 — $38.00</td><td>626,927</td><td>$ 27.76</td><td>8.16</td></tr><tr><td>$38.01 — $42.00</td><td>1,902,170</td><td>$ 41.09</td><td>4.02</td></tr><tr><td>$42.01 — $45.00</td><td>1,771,567</td><td>$ 43.96</td><td>5.87</td></tr><tr><td>$45.01 — $50.00</td><td>526,793</td><td>$ 47.26</td><td>4.97</td></tr><tr><td></td><td>4,827,457</td><td>$ 41.09</td><td>5.34</td></tr></table>

The Company determined the fair value for these options at the date of grant using a Black-Scholes based option pricing model and the following assumptions:

<table><tr><td rowspan="2"></td><td colspan="3">December 31</td></tr><tr><td>2010</td><td>2009</td><td>2008</td></tr><tr><td>Risk-free interest rate</td><td>2.91%</td><td>2.04%</td><td>3.05%</td></tr><tr><td>Dividend yield</td><td>5.08%</td><td>4.98%</td><td>5.20%</td></tr><tr><td>Expected volatility</td><td>22.96%</td><td>27.88%</td><td>20.45%</td></tr><tr><td>Expected life</td><td>6 years</td><td>6 years</td><td>6 years</td></tr></table>

The Company includes both historical and implied share-price volatility in option volatility. Implied volatility is derived from exchange traded options on DTE Energy common stock. The Company’s expected life estimate is based on industry standards.

## Stock Awards

Stock awards granted under the plan are restricted for varying periods, generally for three years. Participants have all rights of a shareholder with respect to a stock award, including the right to receive dividends and vote the shares. Prior to vesting in stock awards, the participant: (i) may not sell, transfer, pledge, exchange or otherwise dispose of shares; (ii) shall not retain custody of the share certificates; and (iii) will deliver to the Company a stock power with respect to each stock award.

The stock awards are recorded at cost that approximates fair value on the date of grant. The cost is amortized to compensation expense over the vesting period.

Stock award activity for the periods ended December 31 was:

<table><tr><td></td><td>2010</td><td>2009</td><td>2008</td></tr><tr><td>Fair value of awards vested (in millions)</td><td>$ 19</td><td>$ 18</td><td>$ 18</td></tr><tr><td>Restricted common shares awarded</td><td>238,405</td><td>523,660</td><td>389,055</td></tr><tr><td>Weighted average market price of shares awarded</td><td>$ 44.08</td><td>$ 28.73</td><td>$ 41.96</td></tr><tr><td>Compensation cost charged against income (in millions)</td><td>$ 12</td><td>$ 18</td><td>$ 20</td></tr></table>



## DTE Energy Company

## Notes to Consolidated Financial Statements — (Continued)

The following table summarizes the Company’s stock awards activity for the period ended December 31, 2010:

<table><tr><td></td><td>Restricted Stock</td><td>Weighted Average Grant Date Fair Value</td></tr><tr><td>Balance at January 1, 2010</td><td>1,024,765</td><td>$ 37.11</td></tr><tr><td>Grants</td><td>238,405</td><td>$ 44.08</td></tr><tr><td>Forfeitures</td><td>(21,549)</td><td>$ 37.28</td></tr><tr><td>Vested</td><td>(484,207)</td><td>$ 40.21</td></tr><tr><td>Balance at December 31, 2010</td><td>757,414</td><td>$ 37.32</td></tr></table>

## Performance Share Awards

Performance shares awarded under the plan are for a specified number of shares of common stock that entitle the holder to receive a cash payment, shares of common stock or a combination thereof. The final value of the award is determined by the achievement of certain performance objectives and market conditions. The awards vest at the end of a specified period, usually three years. The Company accounts for performance share awards by accruing compensation expense over the vesting period based on: (i) the number of shares expected to be paid which is based on the probable achievement of performance objectives; and (ii) the closing stock price market value. The settlement of the award is based on the closing price at the settlement date.

The Company recorded compensation expense as follows:

<table><tr><td></td><td>2010</td><td>2009</td><td>2008</td></tr><tr><td></td><td colspan="3">(In millions)</td></tr><tr><td>Compensation expense</td><td>$36</td><td>$35</td><td>$15</td></tr><tr><td>Cash settlements(1)</td><td>$ 3</td><td>$ 1</td><td>$ 3</td></tr><tr><td>Stock settlements(1)</td><td>$23</td><td>$ 8</td><td>$ —</td></tr></table>

(1) Sum of cash and stock settlements approximates the intrinsic value of the liability.

During the vesting period, the recipient of a performance share award has no shareholder rights. However, for performance shares granted before 2010, recipients will be paid an amount equal to the dividend equivalent on such shares. Performance shares granted in 2010 or later will not be entitled to dividend equivalent payments before the performance shares granted are earned and vested. Performance share awards are nontransferable and are subject to risk of forfeiture.

The following table summarizes the Company’s performance share activity for the period ended December 31, 2010:

<table><tr><td></td><td>Performance Shares</td></tr><tr><td>Balance at January 1, 2010</td><td>1,455,042</td></tr><tr><td>Grants</td><td>582,552</td></tr><tr><td>Forfeitures</td><td>(103,520)</td></tr><tr><td>Payouts</td><td>(406,821)</td></tr><tr><td>Balance at December 31, 2010</td><td>1,527,253</td></tr></table>



## DTE Energy Company

## Notes to Consolidated Financial Statements — (Continued)

## Unrecognized Compensation Costs

As of December 31, 2010, there was $44 million of total unrecognized compensation cost related to non-vested stock incentive plan arrangements. That cost is expected to be recognized over a weighted-average period of 1.58 years.

<table><tr><td></td><td>Unrecognized Compensation Cost</td><td>Weighted Average to be Recognized (In years)</td></tr><tr><td>Options</td><td>$ 2</td><td>1.40</td></tr><tr><td>Stock awards</td><td>10</td><td>1.09</td></tr><tr><td>Performance shares</td><td>32</td><td>1.75</td></tr><tr><td></td><td>$ 44</td><td>1.58</td></tr></table>

## NOTE 23 — SUPPLEMENTAL CASH FLOW INFORMATION

A detailed analysis of the changes in assets and liabilities that are reported in the Consolidated Statements of Cash Flows follows:

<table><tr><td></td><td>2010</td><td>2009</td><td>2008</td></tr><tr><td></td><td colspan="3">(In millions)</td></tr><tr><td>Changes in Assets and Liabilities, Exclusive of Changes Shown Separately</td><td></td><td></td><td></td></tr><tr><td>Accounts receivable, net</td><td>$ 79</td><td>$ 167</td><td>$ 328</td></tr><tr><td>Inventories</td><td>(133)</td><td>28</td><td>9.6</td></tr><tr><td>Recoverable pension and postretirement costs</td><td>(32)</td><td>(19)</td><td>(1,324)</td></tr><tr><td>Accrued/prepaid pensions</td><td>67</td><td>11</td><td>944</td></tr><tr><td>Accounts payable</td><td>12</td><td>(162)</td><td>(286)</td></tr><tr><td>Income taxes payable</td><td>(245)</td><td>43</td><td>(22)</td></tr><tr><td>Derivative assets and liabilities</td><td>(48)</td><td>(81)</td><td>(178)</td></tr><tr><td>Postretirement obligation</td><td>(24)</td><td>(147)</td><td>340</td></tr><tr><td>Other assets</td><td>(52)</td><td>58</td><td>3</td></tr><tr><td>Other liabilities</td><td>83</td><td>171</td><td>7</td></tr><tr><td></td><td>$ (293)</td><td>$ 69</td><td>$ (92)</td></tr></table>

Supplementary cash and non-cash information for the years ended December 31, were as follows:

<table><tr><td></td><td>2010</td><td>2009</td><td>2008</td></tr><tr><td></td><td colspan="3">(In millions)</td></tr><tr><td>Cash paid (received) for:</td><td></td><td></td><td></td></tr><tr><td>Interest (net of interest capitalized)</td><td>$551</td><td>$550</td><td>$496</td></tr><tr><td>Income taxes</td><td>$93</td><td>$18</td><td>$(59)</td></tr><tr><td>Noncash financing activities: Common stock issued for employee benefit plans</td><td>$156</td><td>$47</td><td>$15</td></tr></table>



# DTE Energy Company
Notes to Consolidated Financial Statements — (Continued)

## NOTE 24 — SEGMENT AND RELATED INFORMATION

The Company sets strategic goals, allocates resources and evaluates performance based on the following structure:

Electric Utility segment consists of Detroit Edison, which is engaged in the generation, purchase, distribution and sale of electricity to approximately 2.1 million customers in southeastern Michigan.

Gas Utility segment consists of MichCon and Citizens. MichCon is engaged in the purchase, storage, transportation, gathering, distribution and sale of natural gas to approximately 1.2 million customers throughout Michigan and the sale of storage and transportation capacity. Citizens distributes natural gas in Adrian, Michigan to approximately 17,000 customers.

Gas Storage and Pipelines consists of natural gas storage and pipelines businesses.

Unconventional Gas Production is engaged in unconventional gas and oil project development and production.

Power and Industrial Projects is comprised of coke batteries and pulverized coal projects, reduced emission fuel and steel industry fuel-related projects, on-site energy services, renewable power generation, landfill gas recovery and coal transportation, marketing and trading.

Energy Trading consists of energy marketing and trading operations.

Corporate & Other, includes various holding company activities, holds certain non-utility debt and energy-related investments.

The federal income tax provisions or benefits of DTE Energy’s subsidiaries are determined on an individual company basis and recognize the tax benefit of production tax credits and net operating losses if applicable. The Michigan Business Tax provision of the utility subsidiaries is determined on an individual company basis and recognizes the tax benefit of various tax credits and net operating losses if applicable. The subsidiaries record federal and state income taxes payable to or receivable from DTE Energy based on the federal and state tax provisions of each company.

Inter-segment billing for goods and services exchanged between segments is based upon tariffed or market-based prices of the provider and primarily consists of power sales, gas sales and coal transportation services in the following segments:

<table><tr><td></td><td>2010</td><td>2009</td><td>2008</td></tr><tr><td></td><td colspan="3">(In millions)</td></tr><tr><td>Electric Utility</td><td>$ 30</td><td>$ 28</td><td>$ 16</td></tr><tr><td>Gas Utility</td><td>—</td><td>2</td><td>7</td></tr><tr><td>Gas Storage and Pipelines</td><td>4</td><td>5</td><td>10</td></tr><tr><td>Power and Industrial Projects</td><td>161</td><td>11</td><td>80</td></tr><tr><td>Energy Trading</td><td>89</td><td>93</td><td>145</td></tr><tr><td>Corporate &amp; Other</td><td>(65)</td><td>(74)</td><td>(80)</td></tr><tr><td></td><td>$ 219</td><td>$ 65</td><td>$ 178</td></tr></table>



## DTE Energy Company

## Notes to Consolidated Financial Statements — (Continued)

Financial data of the business segments follows:

<table><tr><td></td><td>Operating Revenue</td><td>Depreciation, Depletion &amp; Amortization</td><td>Interest Income</td><td>Interest Expense</td><td>Income Taxes</td><td>Net Income Attributable to DTE Energy Company (In millions)</td><td>Total Assets</td><td>Goodwill</td><td>Capital Expenditures</td></tr><tr><td>2010</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Electric Utility</td><td>$ 4,993</td><td>$ 849</td><td>$ (1)</td><td>$ 313</td><td>$ 270</td><td>$ 441</td><td>$16,375</td><td>$1,206</td><td>$ 864</td></tr><tr><td>Gas Utility</td><td>1,648</td><td>92</td><td>(9)</td><td>66</td><td>67</td><td>127</td><td>3,854</td><td>759</td><td>147</td></tr><tr><td>Gas Storage and Pipelines</td><td>83</td><td>5</td><td>(1)</td><td>6</td><td>32</td><td>51</td><td>391</td><td>9</td><td>5</td></tr><tr><td>Unconventional Gas Production</td><td>32</td><td>15</td><td>—</td><td>6</td><td>(6)</td><td>(11)</td><td>308</td><td>2</td><td>27</td></tr><tr><td>Power and Industrial Projects</td><td>1,144</td><td>60</td><td>(3)</td><td>33</td><td>3</td><td>85</td><td>1,236</td><td>27</td><td>53</td></tr><tr><td>Energy Trading</td><td>875</td><td>5</td><td>—</td><td>13</td><td>5</td><td>6</td><td>483</td><td>17</td><td>1</td></tr><tr><td>Corporate &amp; Other</td><td>1</td><td>1</td><td>(47)</td><td>160</td><td>(60)</td><td>(69)</td><td>2,249</td><td>—</td><td>—</td></tr><tr><td>Reconciliation and Eliminations</td><td>(219)</td><td>—</td><td>49</td><td>(48)</td><td>—</td><td>—</td><td>—</td><td>—</td><td>—</td></tr><tr><td>Total</td><td>$8,557</td><td>$ 1,027</td><td>$ (12)</td><td>$ 549</td><td>$ 311</td><td>$ 630</td><td>$24,896</td><td>$2,020</td><td>$ 1,097</td></tr><tr><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td></td><td>Operating Revenue</td><td>Depreciation, Depletion &amp; Amortization</td><td>Interest Income</td><td>Interest Expense</td><td>Income Taxes</td><td>Net Income Attributable to DTE Energy Company (In millions)</td><td>Total Assets</td><td>Goodwill</td><td>Capital Expenditures</td></tr><tr><td>2009</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Electric Utility</td><td>$ 4,714</td><td>$ 844</td><td>$ (1)</td><td>$ 324</td><td>$ 228</td><td>$ 376</td><td>$15,879</td><td>$1,206</td><td>$ 794</td></tr><tr><td>Gas Utility</td><td>1,788</td><td>107</td><td>(8)</td><td>68</td><td>39</td><td>80</td><td>3,832</td><td>759</td><td>166</td></tr><tr><td>Gas Storage and Pipelines</td><td>82</td><td>5</td><td>(1)</td><td>10</td><td>33</td><td>49</td><td>367</td><td>9</td><td>2</td></tr><tr><td>Unconventional Gas Production</td><td>31</td><td>16</td><td>—</td><td>6</td><td>(4)</td><td>(9)</td><td>309</td><td>2</td><td>26</td></tr><tr><td>Power and Industrial Projects</td><td>661</td><td>40</td><td>(3)</td><td>30</td><td>7</td><td>31</td><td>1,118</td><td>31</td><td>45</td></tr><tr><td>Energy Trading</td><td>804</td><td>5</td><td>(1)</td><td>10</td><td>37</td><td>75</td><td>552</td><td>17</td><td>2</td></tr><tr><td>Corporate &amp; Other</td><td>—</td><td>3</td><td>(55)</td><td>147</td><td>(79)</td><td>(70)</td><td>2,138</td><td>—</td><td>—</td></tr><tr><td>Reconciliation and Eliminations</td><td>(66)</td><td>—</td><td>50</td><td>(50)</td><td>—</td><td>—</td><td>—</td><td>—</td><td>—</td></tr><tr><td>Total</td><td>$8,014</td><td>$ 1,020</td><td>$ (19)</td><td>$ 545</td><td>$ 247</td><td>$ 532</td><td>$24,195</td><td>$2,024</td><td>$ 1,035</td></tr></table>



## DTE Energy Company

## Notes to Consolidated Financial Statements — (Continued)

<table><tr><td></td><td>Operating Revenue</td><td>Depreciation, Depletion &amp; Amortization</td><td>Interest Income</td><td>Interest Expense</td><td>Income Taxes</td><td>Net Income Attributable to DTE Energy Company (In millions)</td><td>Total Assets</td><td>Goodwill</td><td>Capital Expenditures</td></tr><tr><td>2008</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Electric Utility</td><td>$4,874</td><td>$ 743</td><td>$ (6)</td><td>$ 293</td><td>$ 186</td><td>$ 331</td><td>$15,798</td><td>$1,206</td><td>$ 944</td></tr><tr><td>Gas Utility</td><td>2,152</td><td>102</td><td>(8)</td><td>66</td><td>41</td><td>85</td><td>3,884</td><td>772</td><td>239</td></tr><tr><td>Gas Storage and Pipelines</td><td>71</td><td>5</td><td>(1)</td><td>7</td><td>24</td><td>38</td><td>316</td><td>9</td><td>19</td></tr><tr><td>Unconventional Gas Production(1)</td><td>48</td><td>12</td><td>—</td><td>2</td><td>47</td><td>84</td><td>314</td><td>2</td><td>101</td></tr><tr><td>Power and Industrial Projects</td><td>987</td><td>34</td><td>(7)</td><td>20</td><td>11</td><td>40</td><td>1,126</td><td>31</td><td>65</td></tr><tr><td>Energy Trading</td><td>1,388</td><td>5</td><td>(5)</td><td>10</td><td>31</td><td>42</td><td>787</td><td>17</td><td>5</td></tr><tr><td>Corporate &amp; Other</td><td>(13)</td><td>—</td><td>(41)</td><td>154</td><td>(52)</td><td>(94)</td><td>2,365</td><td>—</td><td>—</td></tr><tr><td>Reconciliation and Eliminations</td><td>(178)</td><td>—</td><td>49</td><td>(49)</td><td>—</td><td>—</td><td>—</td><td>—</td><td>—</td></tr><tr><td>Total from Continuing Operations</td><td>$9,329</td><td>$ 901</td><td>$ (19)</td><td>$ 503</td><td>$288</td><td>526</td><td>24,590</td><td>2,037</td><td>1,373</td></tr><tr><td>Discontinued Operations (Note 10)</td><td></td><td></td><td></td><td></td><td></td><td>20</td><td>—</td><td>—</td><td>—</td></tr><tr><td>Total</td><td></td><td></td><td></td><td></td><td></td><td>$ 546</td><td>$ 24,590</td><td>$ 2,037</td><td>$ 1,373</td></tr></table>

(1) Net income attributable to DTE Energy Company of the Unconventional Gas Production segment in 2008 reflects the gain recognized on the sale of Barnett shale properties. See Note 10.

## NOTE 25 — SUPPLEMENTARY QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

Quarterly earnings per share may not total for the years, since quarterly computations are based on weighted average common shares outstanding during each quarter.

<table><tr><td></td><td>First Quarter</td><td>Second Quarter</td><td>Third Quarter</td><td>Fourth Quarter</td><td>Year</td></tr><tr><td></td><td colspan="5">(In millions, except per share amounts)</td></tr><tr><td>2010</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Operating Revenues</td><td>$2,453</td><td>$1,792</td><td>$2,139</td><td>$2,173</td><td>$8,557</td></tr><tr><td>Operating Income</td><td>$ 472</td><td>$ 256</td><td>$ 386</td><td>$ 350</td><td>$1,464</td></tr><tr><td>Net Income Attributable to DTE Energy Company</td><td>$ 229</td><td>$ 86</td><td>$ 163</td><td>$ 152</td><td>$ 630</td></tr><tr><td>Basic Earnings per Share</td><td>$ 1.38</td><td>$ .51</td><td>$ .97</td><td>$ .90</td><td>$ 3.75</td></tr><tr><td>Diluted Earnings per Share</td><td>$ 1.38</td><td>$ .51</td><td>$ .96</td><td>$ .90</td><td>$ 3.74</td></tr><tr><td>2009</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Operating Revenues</td><td>$2,255</td><td>$1,688</td><td>$1,950</td><td>$2,121</td><td>$ 8,014</td></tr><tr><td>Operating Income</td><td>$ 395</td><td>$ 215</td><td>$ 332</td><td>$ 307</td><td>$1,249</td></tr><tr><td>Net Income Attributable to DTE Energy Company</td><td>$ 178</td><td>$ 83</td><td>$ 151</td><td>$ 120</td><td>$ 532</td></tr><tr><td>Basic Earnings per Share</td><td>$ 1.09</td><td>$ .51</td><td>$ .92</td><td>$ .72</td><td>$ 3.24</td></tr><tr><td>Diluted Earnings per Share</td><td>$ 1.09</td><td>$ .51</td><td>$ .92</td><td>$ .72</td><td>$ 3.24</td></tr></table>



## Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.

## Item 9A. Controls and Procedures

See Item 8. Financial Statements and Supplementary Data for management’s evaluation of disclosure controls and procedures, its report on internal control over financial reporting, and its conclusion on changes in internal control over financial reporting.

## Item 9B. Other Information

## Part III

Item 10. Directors, Executive Officers and Corporate Governance

Item 11. Executive Compensation

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 13. Certain Relationships and Related Transactions, and Director Independence

Item 14. Principal Accountant Fees and Services

Information required by Part III (Items 10, 11, 12, 13 and 14) of this Form 10-K is incorporated by reference from DTE Energy’s definitive Proxy Statement for its 2011 Annual Meeting of Common Shareholders to be held May 5, 2011. The Proxy Statement will be filed with the Securities and Exchange Commission, pursuant to Regulation 14A, not later than 120 days after the end of our fiscal year covered by this report on Form 10-K, all of which information is hereby incorporated by reference in, and made part of, this Form 10-K.

## Part IV

## Item 15. Exhibits and Financial Statement Schedules

(a) The following documents are filed as part of this Annual Report on Form 10-K.

(1) Consolidated financial statements. See “Item 8 — Financial Statements and Supplementary Data.”

(2) Financial statement schedules. See “Item 8 — Financial Statements and Supplementary Data.”

(3) Exhibits.

## (i) Exhibits filed herewith.

3-1 Bylaws of DTE Energy Company, as amended through December 16, 2010.

12-46 Computation of Ratio of Earnings to Fixed Charges.

21-6 Subsidiaries of the Company.

23-23 Consent of PricewaterhouseCoopers LLP.

23-24 Consent of Deloitte & Touche LLP.

31-63 Chief Executive Officer Section 302 Form 10-K Certification of Periodic Report.

31-64 Chief Financial Officer Section 302 Form 10-K Certification of Periodic Report.

99-54 Amendment and Restatement of Master Trust Agreement for the DTE Energy Company Master Plan Trust between DTE Energy Corporate Services, LLC and DTE Energy Investment Committee and JP Morgan Chase Bank, N.A., dated as of October 15, 2010.



## (ii) Exhibits incorporated herein by reference.

Amended and Restated Articles of Incorporation of DTE Energy Company, dated December 13, 1995 and as amended from time to time (Exhibit 3.1 to Form 8-K dated May 6, 2010).

Amended and Restated Indenture, dated as of April 9, 2001, between DTE Energy Company and Bank of New York, as trustee (Exhibit 4.1 to Registration Statement on Form S-3 (File No. 333-58834)).

Supplemental Indenture, dated as of May 30, 2001, between DTE Energy Company and Bank of New York, as trustee (Exhibit 4-226 to Form 10-Q for the quarter ended June 30, 2001). (7.05% Senior Notes due 2011).

Supplemental Indenture, dated as of April 5, 2002 between DTE Energy Company and Bank of New York, as trustee (Exhibit 4-230 to Form 10-Q for the quarter ended March 31, 2002). (2002 Series A 6.65% Senior Notes due 2009).

Supplemental Indenture, dated as of April 1, 2003, between DTE Energy Company and Bank of New York, as trustee, creating 2003 Series A 6 \( ^{3/8} \) % Senior Notes due 2033 (Exhibit 4(o) to Form 10-Q for the quarter ended March 31, 2003). (2003 Series A 6 \( ^{3/8} \) % Senior Notes due 2033).

Supplemental Indenture, dated as of May 15, 2006, between DTE Energy Company and Bank of New York, as trustee (Exhibit 4-239 to Form 10-Q for the quarter ended June 30, 2006). (2006 Series B 6.35% Senior Notes due 2016).

Amended and Restated Trust Agreement of DTE Energy Trust I, dated as of January 15, 2002 (Exhibit 4-229 to Form 10-K for the year ended December 31, 2001).

Amended and Restated Trust Agreement of DTE Energy Trust II, dated as of June 1, 2004 (Exhibit 4(q) to Form 10-Q for the quarter ended June 30, 2004).

Trust Agreement of DTE Energy Trust III (Exhibit 4-21 to Registration Statement on Form S-3 (File No. 333-99955).

Mortgage and Deed of Trust, dated as of October 1, 1924, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit B-1 to Detroit Edison's Registration Statement on Form A-2 (File No. 2-1630)) and indentures supplemental thereto, dated as of dates indicated below, and filed as exhibits to the filings set forth below:

Supplemental Indenture, dated as of December 1, 1940, to the Mortgage and Deed of Trust, dated as of October 1, 1924, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit B-14 to Detroit Edison's Registration Statement on Form A-2 (File No. 2-4609)). (amendment)

Supplemental Indenture, dated as of September 1, 1947, to the Mortgage and Deed of Trust, dated as of October 1, 1924, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit B-20 to Detroit Edison's Registration Statement on Form S-1 (File No. 2-7136)). (amendment)

Supplemental Indenture, dated as of March 1, 1950, to the Mortgage and Deed of Trust, dated as of October 1, 1924, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit B-22 to Detroit Edison's Registration Statement on Form S-1 (File No. 2-8290)). (amendment)

Supplemental Indenture, dated as of November 15, 1951, to the Mortgage and Deed of Trust, dated as of October 1, 1924, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit B-23 to Detroit Edison's Registration Statement on Form S-1 (File No. 2-9226)). (amendment)

Supplemental Indenture, dated as of August 15, 1957, to the Mortgage and Deed of Trust, dated as of October 1, 1924, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 3-B-30 to Detroit Edison's Form 8-K dated September 11, 1957). (amendment)



Supplemental Indenture, dated as of December 1, 1966, to the Mortgage and Deed of Trust, dated as of October 1, 1924, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 2-B-32 to Detroit Edison’s Registration Statement on Form S-9 (File No. 2-25664)). (amendment)

Supplemental Indenture, dated as of February 15, 1990, to the Mortgage and Deed of Trust, dated as of October 1, 1924, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-212 to Detroit Edison’s Form 10-K for the year ended December 31, 2000). (1990 Series B, C, E and F)

Supplemental Indenture, dated as of May 1, 1991, to the Mortgage and Deed of Trust, dated as of October 1, 1924, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-178 to Detroit Edison’s Form 10-K for the year ended December 31, 1996). (1991 Series BP and CP)

Supplemental Indenture, dated as of May 15, 1991, to the Mortgage and Deed of Trust, dated as of October 1, 1924, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-179 to Detroit Edison’s Form 10-K for the year ended December 31, 1996). (1991 Series DP)

Supplemental Indenture, dated as of February 29, 1992, to the Mortgage and Deed of Trust, dated as of October 1, 1924, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-187 to Detroit Edison’s Form 10-Q for the quarter ended March 31, 1998). (1992 Series AP)

Supplemental Indenture, dated as of April 26, 1993, to the Mortgage and Deed of Trust, dated as of October 1, 1924, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-215 to Detroit Edison’s Form 10-K for the year ended December 31, 2000). (amendment)

Supplemental Indenture, dated as of August 1, 1999, to the Mortgage and Deed of Trust, dated as of October 1, 1924, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-204 to Detroit Edison’s Form 10-Q for the quarter ended September 30, 1999). (1999 Series AP, BP and CP)

Supplemental Indenture, dated as of August 1, 2000, to the Mortgage and Deed of Trust, dated as of October 1, 1924, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-210 to Detroit Edison’s Form 10-Q for the quarter ended September 30, 2000). (2000 Series BP)

Supplemental Indenture, dated as of August 15, 2001, to the Mortgage and Deed of Trust, dated as of October 1, 1924, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-227 to Detroit Edison’s Form 10-Q for the quarter ended September 30, 2001). (2001 Series CP)

Supplemental Indenture, dated as of September 17, 2002, to the Mortgage and Deed of Trust, dated as of October 1, 1924, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4.1 to Detroit Edison’s Registration Statement on Form S-3 (File No. 333-100000)). (amendment and successor trustee)

Supplemental Indenture, dated as of October 15, 2002, to the Mortgage and Deed of Trust, dated as of October 1, 1924, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-230 to Detroit Edison’s Form 10-Q for the quarter ended September 30, 2002). (2002 Series A and B)



Supplemental Indenture, dated as of December 1, 2002, to the Mortgage and Deed of Trust, dated as of October 1, 1924, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-232 to Detroit Edison's Form 10-K for the year ended December 31, 2002). (2002 Series C and D)

Supplemental Indenture, dated as of August 1, 2003, to the Mortgage and Deed of Trust, dated as of October 1, 1924, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-235 to Detroit Edison's Form 10-Q for the quarter ended September 30, 2003). (2003 Series A)

Supplemental Indenture, dated as of March 15, 2004, to the Mortgage and Deed of Trust, dated as of October 1, 1924, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-238 to Detroit Edison's Form 10-Q for the quarter ended March 31, 2004). (2004 Series A and B)

Supplemental Indenture, dated as of July 1, 2004, to the Mortgage and Deed of Trust, dated as of October 1, 1924, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-240 to Detroit Edison's Form 10-Q for the quarter ended June 30, 2004). (2004 Series D)

Supplemental Indenture, dated as of April 1, 2005, to the Mortgage and Deed of Trust, dated as of October 1, 1924, between Detroit Edison and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4.3 to Detroit Edison's Registration Statement on Form S-4 (File No. 333-123926)). (2005 Series AR and BR)

Supplemental Indenture, dated as of September 15, 2005, to the Mortgage and Deed of Trust, dated as of October 1, 1924, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4.2 to Detroit Edison's Form 8-K dated September 29, 2005). (2005 Series C)

Supplemental Indenture, dated as of September 30, 2005, to the Mortgage and Deed of Trust, dated as of October 1, 1924, between Detroit Edison and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-248 to Detroit Edison's Form 10-Q for the quarter ended September 30, 2005). (2005 Series E)

Supplemental Indenture, dated as of May 15, 2006, to the Mortgage and Deed of Trust, dated as of October 1, 1924, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-250 to Detroit Edison's Form 10-Q for the quarter ended June 30, 2006). (2006 Series A)

Supplemental Indenture, dated as of April 1, 2008 to Mortgage and Deed of Trust, dated as of October 1, 1924 between the Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-251 to the Detroit Edison's Form 10-Q for the quarter ended March 31, 2008). (2008 Series DT)

Supplemental Indenture, dated as of May 1, 2008 to Mortgage and Deed of Trust, dated as of October 1, 1924 between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-253 to Detroit Edison's Form 10-Q for the quarter ended June 30, 2008). (2008 Series ET)

Supplemental Indenture, dated as of June 1, 2008 to Mortgage and Deed of Trust, dated as of October 1, 1924 between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-255 to Detroit Edison's Form 10-Q for the quarter ended June 30, 2008). (2008 Series G)



Supplemental Indenture, dated as of July 1, 2008 to Mortgage and Deed of Trust, dated as of October 1, 1924 between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-257 to Detroit Edison's Form 10-Q for the quarter ended June 30, 2008). (2008 Series KT)

Supplemental Indenture, dated as of October 1, 2008 to Mortgage and Deed of Trust, dated as of October 1, 1924 between The Detroit Edison Company and The Bank of New York Mellon Trust Company N.A. as successor trustee (Exhibit 4-259 to Detroit Edison's Form 10-Q for the quarter ended September 30, 2008). (2008 Series J)

Supplemental Indenture, dated as of December 1, 2008 to Mortgage and Deed of Trust, dated as of October 1, 1924 between The Detroit Edison Company and The Bank of New York Mellon Trust Company N.A., as successor trustee (Exhibit 4-261 to Detroit Edison's Form 10-K for the year ended December 31, 2008). (2008 Series LT)

Supplemental Indenture, dated as of March 15, 2009 to Mortgage and Deed of Trust, dated as of October 1, 1924 between The Detroit Edison Company and The Bank of New York Mellon Trust Company N.A., as successor trustee (Exhibit 4-263 to Detroit Edison's Form 10-Q for the quarter ended March 31, 2009). (2009 Series BT)

Supplemental Indenture, dated as of November 1, 2009 to Mortgage and Deed of Trust, dated as of October 1, 1924, between The Detroit Edison Company and The Bank of New York Mellon Trust Company N.A., as successor trustee (Exhibit 4-267 to Detroit Edison's Form 10-K for the year ended December 31, 2009). (2009 Series CT)

Supplemental Indenture, dated as of August 1, 2010, to the Mortgage and Deed of Trust, dated as of October 1, 1924, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-269 to Detroit Edison's Form 10-Q for the quarter ended September 30, 2010). (2010 Series B)

Supplemental Indenture, dated as of September 1, 2010, to the Mortgage and Deed of Trust, dated as of October 1, 1924, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-271 to Detroit Edison's Form 10-Q for the quarter ended September 30, 2010). (2010 Series A)

Supplemental Indenture, dated as of December 1, 2010, to the Mortgage and Deed of Trust, dated as of October 1, 1924, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-273 to Detroit Edison's Form 10-K for the year ended December 31, 2010). (2010 Series CT)

Collateral Trust Indenture, dated as of June 30, 1993, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-152 to Detroit Edison's Registration Statement (File No. 33-50325)) and indentures supplemental thereto, dated as of dates indicated below, and filed as exhibits to the filings set forth below:

Tenth Supplemental Indenture, dated as of October 23, 2002, to the Collateral Trust Indenture, dated as of June 30, 1993, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-231 to Detroit Edison's Form 10-Q for the quarter ended September 30, 2002). (5.20% Senior Notes due 2012 and 6.35% Senior Notes due 2032)

Eleventh Supplemental Indenture, dated as of December 1, 2002, to the Collateral Trust Indenture, dated as of June 30, 1993, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-233 to Detroit Edison's Form 10-Q for the quarter ended March 31, 2003). (5.45% Senior Notes due 2032 and 5.25% Senior Notes due 2032)



Twelfth Supplemental Indenture, dated as of August 1, 2003, to the Collateral Trust Indenture, dated as of June 30, 1993, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-236 to Detroit Edison’s Form 10-Q for the quarter ended September 30, 2003). (51 \( ^{1/2} \) % Senior Notes due 2030)

Thirteenth Supplemental Indenture, dated as of April 1, 2004, to the Collateral Trust Indenture, dated as of June 30, 1993, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-237 to Detroit Edison’s Form 10-Q for the quarter ended March 31, 2004). (4.875% Senior Notes Due 2029 and 4.65% Senior Notes due 2028)

Fourteenth Supplemental Indenture, dated as of July 15, 2004, to the Collateral Trust Indenture, dated as of June 30, 1993, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-239 to Detroit Edison’s Form 10-Q for the quarter ended June 30, 2004). (2004 Series D 5.40% Senior Notes due 2014)

Sixteenth Supplemental Indenture, dated as of April 1, 2005, to the Collateral Trust Indenture, dated as of June 30, 1993, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4.1 to Detroit Edison’s Registration Statement on Form S-4 (File No. 333-123926)). (2005 Series AR 4.80% Senior Notes due 2015 and 2005 Series BR 5.45% Senior Notes due 2035)

Eighteenth Supplemental Indenture, dated as of September 15, 2005, to the Collateral Trust Indenture, dated as of June 30, 1993, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4.1 to Detroit Edison’s Form 8-K dated September 29, 2005). (2005 Series C 5.19% Senior Notes due October 1, 2023)

Nineteenth Supplemental Indenture, dated as of September 30, 2005, to the Collateral Trust Indenture, dated as of June 30, 1993, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-247 to Detroit Edison’s Form 10-Q for the quarter ended September 30, 2005). (2005 Series E 5.70% Senior Notes due 2037)

Twentieth Supplemental Indenture, dated as of May 15, 2006, to the Collateral Trust Indenture dated as of June 30, 1993, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-249 to Detroit Edison’s Form 10-Q for the quarter ended June 30, 2006). (2006 Series A Senior Notes due 2036)

Twenty-second Supplemental Indenture, dated as of December 1, 2007, to the Collateral Trust Indenture, dated as of June 30, 1993, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4.1 to Detroit Edison’s Form 8-K dated December 18, 2007). (2007 Series A Senior Notes due 2038)

Twenty-fourth Supplemental Indenture, dated as of May 1, 2008 to the Collateral Trust Indenture, dated as of June 30, 1993 between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A. as successor trustee (Exhibit 4-254 to Detroit Edison’s Form 10-Q for the quarter ended June 30, 2008). (2008 Series ET Variable Rate Senior Notes due 2029)

Amendment dated June 1, 2009 to the Twenty-fourth Supplemental Indenture, dated as of May 1, 2008 to the Collateral Trust Indenture, dated as of June 30, 1993 between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A. as successor trustee (2008 Series ET Variable Rate Senior Notes due 2029) (Exhibit 4-265 to Detroit Edison’s Form 10-Q for the quarter ended June 30, 2009)

Twenty-fifth Supplemental Indenture, dated as of June 1, 2008 to the Collateral Trust Indenture, dated as of June 30, 1993 between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-256 to Detroit Edison’s Form 10-Q for the quarter ended June 30, 2008). (2008 Series G 5.60% Senior Notes due 2018)



Twenty-sixth Supplemental Indenture, dated as of July 1, 2008 to the Collateral Trust Indenture, dated as of June 30, 1993 between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-258 to Detroit Edison's Form 10-Q for the quarter ended June 30, 2008). (2008 Series KT Variable Rate Senior Notes due 2020)

Amendment dated June 1, 2009 to the Twenty-sixth Supplemental Indenture, dated as of July 1, 2008 to the Collateral Trust Indenture, dated as of June 30, 1993 between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-266 to Detroit Edison's Form 10-Q for the quarter ended June 30, 2009) (2008 Series KT Variable Rate Senior Notes due 2020)

Twenty-seventh Supplemental Indenture, dated as of October 1, 2008 to the Collateral Trust Indenture, dated as of June 30, 1993 between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-260 to Detroit Edison's Form 10-Q for the quarter ended September 30, 2008). (2008 Series J 6.40% Senior Notes due 2013)

Twenty-eighth Supplemental Indenture, dated as of December 1, 2008 to the Collateral Trust Indenture, dated as of June 30, 1993 between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-262 to Detroit Edison's Form 10-K for the year ended December 31, 2008). (2008 Series LT 6.75% Senior Notes due 2038)

Twenty-ninth Supplemental Indenture, dated as of March 15, 2009, to the Collateral Trust Indenture, dated as of June 30, 1993 between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-264 to Detroit Edison's Form 10-Q for the quarter ended March 31, 2009). (2009 Series BT 6.00% Senior Notes due 2036)

Thirtieth Supplemental Indenture, dated as of November 1, 2009, to the Collateral Trust Indenture, dated as of June 30, 1993 between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-268 to Detroit Edison's Form 10-K for the year ended December 31, 2009). (2009 Series CT Variable Rate Notes due 2024)

Thirty-First Supplemental Indenture, dated as of August 1, 2010 to the Collateral Trust Indenture, dated as of June 1, 1993 between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-270 to Detroit Edison's Form 10-Q for the quarter ended September 30, 2010). (2010 Series B 3.45% Senior Notes due 2020)

Thirty-Second Supplemental Indenture, dated as of September 1, 2010, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-272 to Detroit Edison's Form 10-Q for the quarter ended September 30, 2010). (2010 Series A 4.89% Senior Notes due 2020)

Trust Agreement of Detroit Edison Trust I. (Exhibit 4.9 to Registration Statement on Form S-3 (File No. 333-100000)).

Trust Agreement of Detroit Edison Trust II. (Exhibit 4.10 to Registration Statement on Form S-3 (File No. 333-100000)).

Indenture dated as of June 1, 1998 between Michigan Consolidated Gas Company and Citibank, N.A., as trustee, related to Senior Debt Securities (Exhibit 4-1 to Michigan Consolidated Gas Company Registration Statement on Form S-3 (File No. 333-63370)) and indentures supplemental thereto, dated as of dates indicated below, and filed as exhibits to the filings set forth below:

Fourth Supplemental Indenture dated as of February 15, 2003, to the Indenture dated as of June 1, 1998 between Michigan Consolidated Gas Company and Citibank, N.A., trustee (Exhibit 4-3 to Michigan Consolidated Gas Company Form 10-Q for the quarter ended March 31, 2003). (5.70% Senior Notes, 2003 Series A due 2033)



Fifth Supplemental Indenture dated as of October 1, 2004, to the Indenture dated as of June 1, 1998 between Michigan Consolidated Gas Company and Citibank, N.A., trustee (Exhibit 4-6 to Michigan Consolidated Gas Company Form 10-Q for the quarter ended September 31, 2004). (5.00% Senior Notes, 2004 Series E due 2019)

Sixth Supplemental Indenture dated as of April 1, 2008, to the Indenture dated as of June 1, 1998 between Michigan Consolidated Gas Company and Citibank, N.A., trustee (Exhibit 4-241 to Form 10-Q for the quarter ended March 31, 2008). (5.26% Senior Notes, 2008 Series 'A' due 2013, 6.04% Senior Notes, 2008 Series 'B' due 2018 and 6.44% Senior Notes, 2008 Series 'C' due 2023).

Seventh Supplemental Indenture, dated as of June 1, 2008 to Indenture dated as of June 1, 1998 between Michigan Consolidated Gas Company and Citibank, N.A., trustee (Exhibit 4-243 to Form 10-Q for the quarter ended June 30, 2008). (6.78% Senior Notes, 2008 Series F due 2028)

Eighth Supplemental Indenture, dated as of August 1, 2008 to Indenture dated as of June 1, 1998 between Michigan Consolidated Gas Company and Citibank, N.A., trustee (Exhibit 4-251 to Form 10-Q for the quarter ended September 30, 2008). (5.94% Senior Notes, 2008 Series H due 2015 and 6.36% Senior Notes, 2008 Series I due 2020)

Ninth Supplemental Indenture, dated as of December 1, 2008 to Indenture dated as of June 1, 1998 between Michigan Consolidated Gas Company and Citibank, N.A., trustee. (Exhibit 4-252 to Form 10-K for the year ended December 31, 2008). (Floating Rate Senior Notes, 2008 Series M due 2009)

Indenture of Mortgage and Deed of Trust dated as of March 1, 1944 (Exhibit 7-D to Michigan Consolidated Gas Company Registration Statement No. 2-5252) and indentures supplemental thereto, dated as of dates indicated below, and filed as exhibits to the filings set forth below:

Twenty-ninth Supplemental Indenture dated as of July 15, 1989, among Michigan Consolidated Gas Company and Citibank, N.A. and Robert T. Kirchner, as trustees, creating an issue of first mortgage bonds and providing for the modification and restatement of the Indenture of Mortgage and Deed of Trust dated as of March 1, 1944 (Exhibit 4-2 to Michigan Consolidated Gas Company Registration Statement on Form S-3 (File No. 333-63370)).

Thirty-second Supplemental Indenture dated as of January 5, 1993 to Indenture of Mortgage and Deed of Trust dated as of March 1, 1944 between Michigan Consolidated Gas Company and Citibank, N.A., trustee (Exhibit 4-1 to Michigan Consolidated Gas Company Form 10-K for the year ended December 31, 1992). (First Mortgage Bonds Designated Secured Term Notes, Series B)

Thirty-third Supplemental Indenture dated as of May 1, 1995 to Indenture of Mortgage and Deed of Trust dated as of March 1, 1944 between Michigan Consolidated Gas Company and Citibank, N.A., trustee (Exhibit 4-2 to Michigan Consolidated Gas Company Registration Statement on Form S-3 (File No. 33-59093)). (First Mortgage Bonds Designated Secured Medium Term Notes, Series B)

Thirty-fourth Supplemental Indenture dated as of November 1, 1996 to Indenture of Mortgage and Deed of Trust dated as of March 1, 1944 between Michigan Consolidated Gas Company and Citibank, N.A., trustee (Exhibit 4-2 to Michigan Consolidated Gas Company Registration Statement on Form S-3 (File No. 333-16285)). (First Mortgage Bonds Designated Secured Medium Term Notes, Series C)

Thirty-fifth Supplemental Indenture dated as of June 18, 1998 to Indenture of Mortgage and Deed of Trust dated as of March 1, 1944 between Michigan Consolidated Gas Company and Citibank, N.A., trustee, creating an issue of first mortgage bonds designated as collateral bonds (Exhibit 4-2 to Michigan Consolidated Gas Company Form 8-K dated June 18, 1998).

Thirty-seventh Supplemental Indenture dated as of February 15, 2003 to Indenture of Mortgage and Deed of Trust dated as of March 1, 1944 between Michigan Consolidated Gas Company and Citibank, N.A., trustee (Exhibit 4-4 to Michigan Consolidated Gas Company Form 10-Q for the quarter ended March 31, 2003). (5.70% collateral bonds due 2033)



Thirty-eighth Supplemental Indenture dated as of October 1, 2004 to Indenture of Mortgage and Deed of Trust dated as of March 1, 1944 between Michigan Consolidated Gas Company and Citibank, N.A., trustee (Exhibit 4-5 to Michigan Consolidated Gas Company Form 10-Q for the quarter ended September 31, 2004). (2004 Series E collateral bonds)

Thirty-ninth Supplemental Indenture, dated as of April 1, 2008 to Indenture of Mortgage and Deed of Trust dated as of March 1, 1944 between Michigan Consolidated Gas Company and Citibank, N.A., trustee (Exhibit 4-240 to Form 10-Q for the quarter ended March 31, 2008). (2008 Series A, B and C Collateral Bonds)

Fortieth Supplemental Indenture, dated as of June 1, 2008 to Indenture of Mortgage and Deed of Trust dated as of March 1, 1944 between Michigan Consolidated Gas Company and Citibank, N.A., trustee (Exhibit 4-242 to Form 10-Q for the quarter ended June 30, 2008). (2008 Series F Collateral Bonds)

Forty-first Supplemental Indenture, dated as of August 1, 2008 to Indenture of Mortgage and Deed of Trust dated as of March 1, 1944 between Michigan Consolidated Gas Company and Citibank, N.A., trustee (Exhibit 4-250 to Form 10-Q for the quarter ended September 30, 2008). (2008 Series H and I Collateral Bonds)

Forty-second Supplemental Indenture, dated as of December 1, 2008 to Indenture of Mortgage and Deed of Trust dated as of March 1, 1944 between Michigan Consolidated Gas Company and Citibank, N.A., Trustee (Exhibit 4-253 to Form 10-K for the year ending December 31, 2008) (2008 Series M Collateral Bonds).

Form of Indemnification Agreement between DTE Energy Company and each of Gerard M. Anderson, Anthony F. Earley, Jr., Steven E. Kurmas, David E. Meador, Bruce D. Peterson, and non-employee Directors. (Exhibit 10-1 to Form 8-K dated December 6, 2007).

Certain arrangements pertaining to the employment of Anthony F. Earley, Jr. with The Detroit Edison Company, dated April 25, 1994 (Exhibit 10-53 to The Detroit Edison Company’s Form 10-Q for the quarter ended March 31, 1994).

Certain arrangements pertaining to the employment of Gerard M. Anderson with The Detroit Edison Company, dated October 6, 1993 (Exhibit 10-48 to The Detroit Edison Company’s Form 10-K for the year ended December 31, 1993).

Certain arrangements pertaining to the employment of David E. Meador with The Detroit Edison Company, dated January 14, 1997 (Exhibit 10-5 to Form 10-K for the year ended December 31, 1996).

Certain arrangements pertaining to the employment of Bruce D. Peterson, dated May 22, 2002 (Exhibit 10-48 to Form 10-Q for the quarter ended June 30, 2002).

Amended and Restated Post-Employment Income Agreement, dated March 23, 1998, between The Detroit Edison Company and Anthony F. Earley, Jr. (Exhibit 10-21 to Form 10-Q for the quarter ended March 31, 1998).

DTE Energy Company Annual Incentive Plan (Exhibit 10-44 to Form 10-Q for the quarter ended March 31, 2001).

Amended and Restated DTE Energy Company 2006 Long-Term Incentive Plan (as amended and restated effective as of May 6, 2010) (Annex A to DTE Energy’s Definitive Proxy Statement dated March 29, 2010).

DTE Energy Company Retirement Plan for Non-Employee Directors’ Fees (as amended and restated effective as of December 31, 1998) (Exhibit 10-31 to Form 10-K for the year ended December 31, 1998).

The Detroit Edison Company Supplemental Long-Term Disability Plan, dated January 27, 1997 (Exhibit 10-4 to Form 10-K for the year ended December 31, 1996).



10(k) Description of Executive Life Insurance Plan (Exhibit 10-47 to Form 10-Q for the quarter ended June 30, 2002).

10(l) DTE Energy Affiliates Nonqualified Plans Master Trust, effective as of May 1, 2003 (Exhibit 10-49 to Form 10-Q for the quarter ended March 31, 2003).

10(m) Form of Director Restricted Stock Agreement (Exhibit 10.1 to Form 8-K dated June 23, 2005).

10(n) Form of Director Restricted Stock Agreement pursuant to the DTE Energy Company Long-Term Incentive Plan (Exhibit 10.1 to Form 8-K dated June 29, 2006).

10(o) DTE Energy Company Executive Supplemental Retirement Plan as Amended and Restated, effective as of January 1, 2005. (Exhibit 10.75 to Form 10-K for year ended December 31, 2008)
First Amendment to the DTE Energy Company Executive Supplemental Retirement Plan (Amended and Restated Effective January 1, 2005) dated as of December 2, 2009. (Exhibit 10.1 to Form 8-K dated December 8, 2009).

10(p) DTE Energy Company Supplemental Retirement Plan as Amended and Restated, effective as of January 1, 2005. (Exhibit 10.76 to Form 10-K for year ended December 31, 2008).

10(q) DTE Energy Company Supplemental Savings Plan as Amended and Restated, effective as of January 1, 2005. (Exhibit 10.77 to Form 10-K for year ended December 31, 2008).

10(r) DTE Energy Company Executive Deferred Compensation Plan as Amended and Restated, effective as of January 1, 2005. (Exhibit 10.78 to Form 10-K for year ended December 31, 2008).

10(s) DTE Energy Company Plan for Deferring the Payment of Directors’ Fees as Amended and Restated, effective as of January 1, 2005. (Exhibit 10.79 to Form 10-K for year ended December 31, 2008).

10(t) DTE Energy Company Deferred Stock Compensation Plan for Non-Employee Directors as Amended and Restated, effective January 1, 2005. (Exhibit 10.80 to Form 10-K for year ended December 31, 2008).

10(u) Form of DTE Energy Three-Year Credit Agreement, dated as of August 20, 2010, by and among DTE Energy Company, the lenders party thereto, Citibank, N.A., as Administrative Agent, and Barclays Capital, Bank of America, N.A. and JPMorgan Chase Bank, N.A., as Co-Syndication Agents (Exhibit 10.3 to Form 8-K filed on August 26, 2010).

10(v) Form of MichCon Three-Year Credit Agreement, dated as of August 20, 2010, by and among Michigan Consolidated Gas Company, the lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and Barclays Capital, Citibank N.A. and Bank of America N.A., as Co-Syndication Agents (Exhibit 10.4 to Form 8-K filed on August 26, 2010).

10(w) Form of Detroit Edison Three-Year Credit Agreement, dated as of August 20, 2010, by and among The Detroit Edison Company, the lenders party thereto, Barclays Bank plc, as Administrative Agent, and Citibank N.A., JPMorgan Chase Bank, N.A. and the Royal Bank of Scotland plc, as Co-Syndication Agents (Exhibit 10.2 to Detroit Edison Form 8-K filed on August 26, 2010).

10(x) Form of Amended and Restated DTE Energy Two-Year Credit Agreement, dated as of April 29, 2009 and amended and restated as of August 20, 2010, by and among DTE Energy Company, the lenders party thereto, Citibank, N.A., as Administrative Agent, and Barclays Capital, Bank of America, N.A. and JPMorgan Chase Bank, N.A., as Co-Syndication Agents (Exhibit 10.1 to Form 8-K filed on August 26, 2010).

10(y) Form of Amended and Restated MichCon Two-Year Credit Agreement, dated as of April 29, 2009 and amended and restated as of August 20, 2010, by and among Michigan Consolidated Gas Company, the lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and Barclays Capital, Citibank N.A. and Bank of America N.A., as Co-Syndication Agents (Exhibit 10.2 to Form 8-K filed on August 26, 2010).



## Table of Contents

10(z) Form of Amended and Restated Detroit Edison Two-Year Credit Agreement, dated as of April 29, 2009 and amended and restated as of August 20, 2010, by and among The Detroit Edison Company, the lenders party thereto, Barclays Bank plc, as Administrative Agent, and Citibank N.A., JPMorgan Chase Bank, N.A. and the Royal Bank of Scotland plc, as Co-Syndication Agents (Exhibit 10.1 to Detroit Edison Form 8-K filed on August 26, 2010).

(iii) Exhibits furnished herewith:

32-63 Chief Executive Officer Section 906 Form 10-K Certification of Periodic Report.

32-64 Chief Financial Officer Section 906 Form 10-K Certification of Periodic Report.

101.INS XBRL Instance Document

101.SCH XBRL Taxonomy Extension Schema

101.CAL XBRL Taxonomy Extension Calculation Linkbase

101.DEF XBRL Taxonomy Extension Definition Database

101.LAB XBRL Taxonomy Extension Label Linkbase

101.PRE XBRL Taxonomy Extension Presentation Linkbase



## DTE Energy Company

## Schedule II — Valuation and Qualifying Accounts

<table><tr><td rowspan="2"></td><td colspan="3">Year Ending December 31,</td></tr><tr><td>2010</td><td>2009</td><td>2008</td></tr><tr><td></td><td colspan="3">(In millions)</td></tr><tr><td>Allowance for Doubtful Accounts (shown as deduction from Accounts Receivable in the Consolidated Statements of Financial Position)</td><td></td><td></td><td></td></tr><tr><td>Balance at Beginning of Period</td><td>$ 262</td><td>$ 265</td><td>$ 182</td></tr><tr><td>Additions:</td><td></td><td></td><td></td></tr><tr><td>Charged to costs and expenses</td><td>113</td><td>155</td><td>198</td></tr><tr><td>Charged to other accounts(1)</td><td>20</td><td>17</td><td>18</td></tr><tr><td>Deductions(2)</td><td>(199)</td><td>(175)</td><td>(133)</td></tr><tr><td>Balance at End of Period</td><td>$ 196</td><td>$ 262</td><td>$ 265</td></tr></table>

(1) Collection of accounts previously written off and, in 2008, balances previously held for sale of $4 million.

(2) Uncollectible accounts written off.



## Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

## DTE ENERGY COMPANY
(Registrant)

By /s/ GERARD M. ANDERSON

Gerard M. Anderson

President and

Chief Executive Officer

Date: February 18, 2011

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.

<table><tr><td rowspan="3">By</td><td>/s/ GERARD M. ANDERSON</td><td rowspan="3">By</td><td>/s/ DAVID E. MEADOR</td></tr><tr><td>Gerard M. Anderson</td><td>David E. Meador</td></tr><tr><td>President and Chief Executive Officer and Director</td><td>Executive Vice President and Chief Financial Officer</td></tr><tr><td rowspan="2">By</td><td>/s/ PETER B. OLEKSIAK</td><td rowspan="2">By</td><td>/s/ GAIL J. MCGOVERN</td></tr><tr><td>Peter B. Oleksiak</td><td>Gail J. McGovern, Director</td></tr><tr><td rowspan="2">By</td><td>Vice President, Controller and Chief Accounting Officer</td><td rowspan="2">By</td><td>/s/ EUGENE A. MILLER</td></tr><tr><td>/s/ LILLIAN BAUDER</td><td>Eugene A. Miller, Director</td></tr><tr><td rowspan="2">By</td><td>Lillian Bauder, Director</td><td rowspan="2">By</td><td>/s/ MARK A. MURRAY</td></tr><tr><td>/s/ DAVID A. BRANDON</td><td>Mark A. Murray, Director</td></tr><tr><td rowspan="2">By</td><td>David A. Brandon, Director</td><td rowspan="2">By</td><td>/s/ CHARLES W. PRYOR, JR.</td></tr><tr><td>/s/ ANTHONY F. EARLEY, JR.</td><td>Charles W. Pryor, Jr., Director</td></tr><tr><td rowspan="2">By</td><td>Anthony F. Earley, Jr.</td><td rowspan="2">By</td><td>/s/ JOSUE ROBLES, JR.</td></tr><tr><td>Executive Chairman and Director</td><td>Jose Robles, Jr., Director</td></tr><tr><td rowspan="2">By</td><td>/s/ W. FRANK FOUNTAIN, JR.</td><td rowspan="2">By</td><td>/s/ RUTH G. SHAW</td></tr><tr><td>W. Frank Fountain, Jr., Director</td><td>Ruth G. Shaw, Director</td></tr><tr><td rowspan="2">By</td><td>/s/ ALLAN D. GILMOUR</td><td rowspan="2">By</td><td>/s/ JAMES H. VANDENBERGHE</td></tr><tr><td>Allan D. Gilmour, Director</td><td>James H. Vandenberghe, Director</td></tr><tr><td rowspan="2">By</td><td>/s/ FRANK M. HENNESSEY</td><td rowspan="2">By</td><td>/s/ JAMES H. VANDENBERGHE</td></tr><tr><td>Frank M. Hennessey, Director</td><td>James H. Vandenberghe, Director</td></tr><tr><td rowspan="2">By</td><td>/s/ JOHN E. LOBBIA</td><td rowspan="2"></td><td rowspan="2"></td></tr><tr><td>John E. Lobbia, Director</td></tr></table>

Date: February 18, 2011



AMENDED BYLAWS

of

DTE ENERGY COMPANY

As amended through December 16, 2010



## AMENDED BYLAWS
of
DTE ENERGY COMPANY

## INDEX

ARTICLE I. Shareholders
ARTICLE II. Board of Directors and Committees
ARTICLE III. Officers
ARTICLE IV. Capital Stock
ARTICLE V. Delivery of Notices
ARTICLE VI. Checks, Notes, Bonds, Debentures, etc.
ARTICLE VII. Corporate Seal
ARTICLE VIII. Control Share Acquisitions
ARTICLE IX. Amendment of Bylaws
Page
1
5
9
10
11
12
12
12
12



# AMENDED BYLAWS

of

# DTE ENERGY COMPANY

# As amended through May 6, 2010

# ARTICLE I.

# Shareholders

Section 1. Annual Meeting. The annual meeting of the shareholders of the Company shall be held on such date and at such time and place as may be fixed by the Board of Directors and stated in the notice of meeting, for the purpose of electing directors and such other purpose or purposes as may be stated in the notice of meeting.

Section 2. Special Meetings. Special meetings of the shareholders may be called by the Board of Directors, the Chairman of the Board, the Presiding Director, if one has been designated, or the holders of record of three-quarters of the outstanding shares of stock of the Company entitled to vote at such meeting, on such date and at such time and place as may designated and for such purpose or purposes as set forth in the notice of meeting.

Section 3. Notice of Meetings. Written notice or notice by electronic transmission of the date, time, place and purpose or purposes of every meeting of the shareholders shall be given in the manner described in Article V. If a shareholder or proxy holder may be present and vote at a meeting by remote communication, the means of remote communication allowed shall be included in the notice. Notice of a special meeting shall also indicate that it is being issued by or at the direction of the Board of Directors, the Chairman of the Board, the Presiding Director, if one has been designated, or the holders of three-quarters of the outstanding shares of stock of the Company.

Notice of a meeting need not be given to any shareholder who submits a signed waiver of notice, in person or by proxy, or a waiver of notice by electronic transmission, whether before or after the meeting. The attendance of any shareholder at a meeting, in person or by proxy, will result in both of the following:

(a) Waiver of objection to lack of notice or defective notice of the meeting, unless the shareholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting; and

(b) Waiver of objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the shareholder objects to considering the matter when it is presented.



Section 4. Adjournments. Any meeting of shareholders, annual or special, may adjourn from time to time to reconvene at the same or some other place. Notice need not be given of any adjourned meeting if the new date, time and place of the meeting are announced at the meeting at which the adjournment is taken. A shareholder or proxy holder may be present and vote at the adjourned meeting by means of remote communication if he or she were permitted to be present and vote by that means of remote communication in the original meeting notice. If a notice of the adjourned meeting is not given, the Company may only transact business that might have been transacted at the original meeting. If, after the adjournment, the Board of Directors fixes a new record date for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder entitled to notice under these Bylaws as of the new record date.

Section 5. Quorum. Unless otherwise provided by law, the Articles of Incorporation or these Bylaws, the holders of a majority of the outstanding shares of stock of the Company entitled to vote at such meeting, whether present in person or by proxy, shall constitute a quorum at any meeting of shareholders. If at any meeting there shall be no quorum, the holders of a majority of the outstanding shares of stock so present or represented shall have the power to adjourn the meeting, without notice other than announcement at the meeting of the new meeting time and place, until a quorum has been obtained. When a quorum is present, the shareholders present in person or by proxy at such meeting may continue to do business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum.

Section 6. Voting. Except as otherwise provided in the Articles of Incorporation, each outstanding share of capital stock shall be entitled to one vote on each matter submitted to a vote. Votes may be cast orally, in writing or by any other means permitted under Michigan law, as the chair of the meeting may decide. All voting may be done either in person or by proxy appointed by instrument in writing or by electronic means (telephone or internet), signed, or identified by the shareholder's identification number or other unique identifier that is reasonably designed to ensure authenticity by such shareholder or his or her authorized agent. When a quorum is present:

(a) Action on a matter is approved if the votes properly cast favoring the action exceed the votes properly cast opposing the action, unless the action is the election of directors, or is one upon which by express provision of law, the Articles of Incorporation or these Bylaws, a larger or different vote is required; and

(b) Each director shall be elected by a majority of votes properly cast at any meeting of shareholders for the election of directors. However, if the number of director nominees for any director election exceeds the number of directors to be elected (a “Contested Election”), the nominees receiving a plurality of the votes cast by holders of the shares entitled to vote at any meeting for the election of directors at which a quorum is present will be elected. For purposes of this Section 6(b) of Article I, a majority of the votes properly cast means that the number of shares properly voted “for” a director must exceed fifty percent (50%) of the votes properly cast with respect to that director. The votes cast shall exclude abstentions with respect to that director’s election.



Section 7. Record of Shareholders. For the purpose of determining the shareholders entitled (a) to notice of, or to vote at, any meeting of shareholders or any adjournment thereof, (b) to express consent to, or dissent from, any proposal without a meeting, or (c) to receive payment of any dividend or the allotment of any rights, or for the purpose of any other action, the Board of Directors may fix, in advance, a date as the record date for any such determination of shareholders. The record date shall not precede the date upon which it is fixed and shall not be less than 10 days nor more than 60 days before the date of the meeting, or the taking of any other action. A determination of shareholders of record entitled to notice of or to vote at a meeting of shareholders shall apply to any adjournment of the meeting, unless the Board of Directors chooses to fix a new record date for the adjourned meeting.

Section 8. List of Shareholders. The Corporate Secretary shall prepare or have prepared before every meeting of shareholders a complete list of shareholders entitled to vote at the meeting in compliance with Michigan law.

Section 9. Order of Business. At each meeting of shareholders, a chair shall preside. In the absence of a specific selection by the Board of Directors, the chair shall be the Chairman of the Board as provided in these Bylaws. The chair shall determine the order of business and shall have the authority in his or her sole discretion to regulate the conduct of any such meeting including, without limitation, by imposing restrictions on the persons (other than shareholders of the Company or their duly appointed proxies) who may attend any such shareholders' meeting, by ascertaining whether any shareholder or his proxy may be excluded from any meeting of shareholders based upon any determination by the chair in his or her sole discretion, that any such person has unduly disrupted or is likely to disrupt the proceedings of the meeting, and by determining the circumstances in which any person may make a statement or ask questions at any meeting of shareholders. The chair of the meeting shall announce at the meeting when the polls close for each matter voted upon. If no announcement is made, the polls shall be deemed to have closed upon the final adjournment of the meeting. After the polls close, no ballots, proxies or votes, nor any revocations or changes thereto may be accepted.

Section 10. Director Nominations and Shareholder Business.

(a) Annual Shareholder Meeting. At an annual meeting of shareholders, only such business will be conducted or considered as is properly brought before the meeting. To be properly brought before an annual meeting:

(i) Nominations of persons for election as directors may be made only at an annual meeting (A) by or at the direction of the Board of Directors or a committee thereof, or (B) by any shareholder who is a shareholder of record at the time of giving notice, who is entitled to vote at the annual meeting and who complies with the notice requirements set forth in this Section.

(ii) Other business to be considered at an annual meeting shall be: (A) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, Chairman of the Board, the President, a Vice President, the



Corporate Secretary or an Assistant Corporate Secretary; (B) brought by or at the direction of the Board of Directors; or (C) properly requested by a shareholder of the Company in accordance with the law and with the notice requirements provided in this Section.

(b) A shareholder who intends to make a director nomination or to bring any other matter before an annual meeting must give notice of his or her intent in writing to the Corporate Secretary. A shareholder’s notice must be received at the principal executive offices of the Company not less than 60 nor more than 90 calendar days prior to the annual meeting of shareholders. If the Company does not make a public announcement of an annual meeting date at least 70 calendar days prior to the date of the annual meeting, a shareholder’s notice must be received at the principal executive offices of the Company by the close of business on the 10th day following the Company’s first public announcement of the annual meeting date.

(c) All shareholder notices must include:

(i) the name and address, as they appear on the Company books, of the shareholder making the nomination or proposing the shareholder business, along with the class and number of shares of Company stock owned by the shareholder;

(ii) a representation that the shareholder is a shareholder of record of Company stock entitled to vote at such annual meeting and intends to appear in person or by proxy at the annual meeting to make the nomination or propose the business specified in the notice;

(iii) if the shareholder notice is to bring a matter up for vote at a shareholder meeting, (A) a description in reasonable detail of the business desired to be brought before the annual meeting, (B) the reasons for conducting such business at the annual meeting, (C) any material interest the shareholder has in the matter, and (D) compliance with all applicable requirements of the Securities Exchange Act of 1934, as amended (the “Act”), for shareholder proposals, including matters covered by Rule 14a-8;

(iv) if a shareholder notice is to nominate a person for election as a director, a description of all arrangements or understandings between or among any of (A) the shareholder giving the notice, (B) the beneficial owner on whose behalf the notice is given, (C) each nominee, and (D) any other person or person (naming such person or persons) pursuant to which the nomination is to be made by the shareholder giving the notice; and

(v) if a shareholder notice is to nominate a person for election as a director, the information that would be required to be disclosed in a proxy statement to comply with all applicable requirements of the Act and the rules and regulations thereunder as if each nominee had been nominated by the Board.



Any shareholder notice to nominate a person for the election as a director must be accompanied by a written and signed consent of each nominee to serve as a director of the Company if elected.

(d) Special Shareholder Meetings. At a special meeting of shareholders, only such business may be conducted or considered as is properly brought before the meeting. To be properly brought before a special meeting, business must be (i) specified in the notice of the meeting (or any supplement thereto), given by or at the direction of the Board of Directors, Chairman of the Board, the Presiding Director, if one has been designated, or the holders of record of three-quarters of the outstanding shares of stock of the Company entitled to vote at such meeting, in accordance with Article I, Section 3 of these Bylaws; or (ii) otherwise brought before the meeting by the chair of the meeting or by or at the direction of the Board of Directors or a committee thereof.

(e) The chair of any annual or special meeting of shareholders shall have the power to declare that any proposed nomination or business matter is not in compliance with these Bylaws and to declare that such defective nomination or proposal be disregarded.

(f) For purposes of this Section, “public announcement” means disclosure in a press release to a national news service or financial news service or in a document publicly filed by the Company with the Securities and Exchange Commission pursuant to Sections 13, 14, or 15(d) of the Act, or publicly filed by the Company with any national securities exchange or quotation service through which the Company’s stock is listed or traded, or furnished by the Company to its shareholders.

(g) Nothing in this Section will be deemed to affect any rights of shareholders to request inclusion of proposals in the Company’s proxy statement pursuant to Rule 14a-8 under the Act.

## Section 11. Inspectors.

In advance of any meeting of shareholders, the Board of Directors may appoint one or more inspectors for the meeting. If inspectors are not so appointed, the chair of the meeting may appoint such inspectors. No officer or director of the Company or candidate for director shall be appointed as an inspector.

## ARTICLE II.
Board of Directors and Committees

Section 1. Number and Time of Holding Office. The business and affairs of the Company shall be managed by or under the direction of a Board of Directors. The number of directors constituting the entire Board of Directors shall be determined from time to time by resolution of the Board of Directors; provided that no change in the number of directors shall serve to shorten the term of office of any incumbent director. The directors shall be divided into three classes, as nearly equal in number as possible,



and the term of the office of the first class shall expire at the 1996 annual meeting of shareholders, the term of office of the second class shall expire at the 1997 annual meeting of shareholders and the term of office of the third class shall expire at the 1998 annual meeting of shareholders, or, in each case, until their successors shall be duly elected and qualified. At each annual meeting commencing in 1996, a number of directors equal to the number of the class whose term expires at the time of the meeting shall be elected to hold office until the third succeeding annual meeting of shareholders. If at any time the holders of any series of the Company’s Preferred Stock are entitled to elect directors pursuant to the Articles of Incorporation of the Company, then the provisions of such series of Preferred Stock with respect to their rights shall apply and such directors shall be elected in a manner and for terms expiring consistent with the Articles of Incorporation.

Each director shall serve for the term to which the director was elected, and until a successor shall have been elected and qualified or until the director’s prior death, resignation, or removal. Except for the Chief Executive Officer of the Company, no person who has served as an employee of the Company or a subsidiary shall be elected a director after retiring from employment with the Company or a subsidiary.

Section 2. Vacancies. Any vacancy in the Board of Directors may be filled by a majority vote of the remaining members of the Board of Directors then in office (even if constituting less than a quorum). Each person elected by the Board of Directors to fill a director vacancy shall be subject to election by a vote of the shareholders at the next annual shareholder meeting. During the existence of any vacancy, the remaining directors shall possess and may exercise all the powers of the full Board of Directors, unless otherwise required by law or these Bylaws.

## Section 3. Meetings of the Board.

(a) Annual Meetings. An annual meeting of the Board of Directors shall be held without notice each year as soon as practicable after the adjournment of the annual meeting of shareholders for the purpose of election of officers and consideration of such business that may properly be brought before the meeting. If there is less than a quorum at the annual meeting of the Board of Directors, the meeting shall be adjourned and the matters which might have been taken up at the annual meeting may be taken up at any later special or annual meeting, or by consent resolution.

(b) Regular Meetings. Regular meetings of the Board of Directors shall be held at such times and at such places as may from time to time be fixed by the Board of Directors.

(c) Special Meetings. Special meetings of the Board of Directors may be called by the Chairman of the Board, the Presiding Director, if one has been designated, or, during the absence or incapacity of the Chairman of the Board or any designated Presiding Director, special meetings may be called by the Executive Committee, if one has been designated, by giving reasonable notice of the time and place of such meetings or by obtaining waivers of notice either signed or received by electronic transmission,



before or after the meeting, from each absent director. A director’s attendance at or participation in any meeting of the Board of Directors or a committee waives any required notice to him or her of the meeting unless he or she, at the beginning of the meeting or upon his or her arrival, objects to the meeting or the transacting of business at the meeting and does not thereafter vote for or assent to any action taken at the meeting.

(d) A director may participate in a meeting by means of remote communications where all persons participating in the meeting can communicate with each other. Such participation shall constitute attendance at any meeting.

(e) Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting.

Section 4. Quorum. A majority of the directors in office at the time of a meeting of the Board of Directors shall constitute a quorum for the transaction of business. If at any meeting of the Board of Directors there shall be less than a quorum present, a majority of the directors present may adjourn the meeting without notice other than announcement at the meeting of the new meeting time and place, until a quorum has been obtained. The acts of a majority of the directors present at any meeting at which there is a quorum shall be the acts of the Board of Directors, unless otherwise provided by law, by the Articles of Incorporation or by these Bylaws.

Section 5. Chairman of the Board. From its members, the Board of Directors shall annually elect a Chairman of the Board. The Chairman of the Board may simultaneously serve as the Chief Executive Officer. Subject to Article I Section 9 and Article II Section 6, the Chairman of the Board shall preside at meetings of the Board of Directors and meetings of shareholders at which the Chairman of the Board is present.

Section 6. Presiding Director. If the Chairman of the Board is not an independent director, the Board of Directors may elect a Presiding Director from among its members other than the Chairman of the Board. The Presiding Director shall have such authority and powers as the Board of Directors may from time to time prescribe.

## Section 7. Committees.

(a) Executive Committee. The Board of Directors may, by resolution passed by a majority of the Board of Directors, designate an Executive Committee to consist of the Chairman of the Board, the Presiding Director, if one has been designated, and one or more of the other directors, and alternates, and shall designate the chair of the Executive Committee. Meetings of the Executive Committee may be called by the Chairman of the Board, or, in the event of the incapacity or absence of the Chairman of the Board, the Presiding Director, if one has been designated, or, in the incapacity or absence of the Chairman of the Board and of any designated Presiding Director, meetings may be called by one or more members of the Executive Committee by giving reasonable notice of the time and place of such meetings. The Executive Committee shall have and may exercise, when the Board of Directors is not in session, all of the powers of the Board of Directors.



in the management of the business and affairs of the Company, and shall have the power to authorize the seal of the Company to be affixed to all papers which may require it. The Executive Committee may make rules for the conduct of its business and may appoint such subcommittees and assistants, as it shall from time to time deem necessary. All action taken by the Executive Committee shall be reported to the Board of Directors at its next meeting succeeding such action. The Corporate Secretary or an Assistant Corporate Secretary shall attend and act as the secretary of all meetings of the Executive Committee and keep the minutes thereof.

(b) Other Committees. The Board of Directors may, by resolution, appoint such other committees consisting of one or more directors, and alternates, and shall designate the chair of each such committee. Committees other than the Executive Committee shall have such authority as shall be specified by the Board of Directors in the resolution making such appointments.

(c) The Board of Directors may designate one or more directors as alternate members of any committee who may replace an absent or disqualified member at any meeting of the committee. The Board shall have the power at any time to fill vacancies in, to change the membership of, or to dissolve any committee. A majority of the authorized number of members of any such committee shall constitute a quorum for the transaction of business, and the act of a majority of those present at any meeting at which a quorum is present shall be the act of such committee. Committees and each member shall serve at the pleasure of the Board.

(d) Notwithstanding the foregoing, no committee of the Board shall have the power or authority to:

(i) amend the Articles of Incorporation, except that a committee may prescribe the relative rights and preferences of the shares of a series if the Articles of Incorporation authorize the Board of Directors to do so;

(ii) adopt an agreement of merger or plan of share exchange;

(iii) recommend to shareholders the sale, lease or exchange of all or substantially all of the Company’s property and assets;

(iv) recommend to shareholders a dissolution of the Company or revocation of a dissolution;

(v) amend these Bylaws;

(vi) fill vacancies in the Board of Directors; or

(vii) unless expressly authorized by the Board of Directors, declare a dividend or authorize the issuance of stock.

Section 8. Action by Consent. Any action required or permitted at any meeting of directors or committee of directors may be taken without a meeting, without



prior notice and without a vote, if all of the directors or committee members entitled to vote on the action consent to the action in writing or by electronic transmission, before or after the action is taken. Such consents shall be filed with the minutes of the proceedings of the Board of Directors or committee and shall have the same effect as a vote of the Board of Directors or committee for all purposes.

Section 9. Compensation. Each director of the Company who is not a salaried officer or employee of the Company may receive reasonable compensation for services as a director, including a reasonable fee for attendance at meetings of the Board of Directors and committees thereof, service as a committee chair or as Presiding Director and attendance at the Company’s request at other meetings or similar activities related to the Company.

## ARTICLE III.

## Officers

Section 1. Officers and Agents. The officers of the Company shall be a President, a Corporate Secretary and a Treasurer. The Board of Directors may also, from time to time, elect a Chief Executive Officer and one or more Vice Presidents, a Controller, a General Auditor, a General Counsel and such other officers and agents, as it may deem proper or advisable in the conduct of the affairs of the Company. The Board of Directors may, in its discretion, leave vacant any office other than that of the President, Corporate Secretary, or Treasurer. Except as otherwise provided by law, the Articles of Incorporation or these Bylaws, one person may hold any number of offices.

Section 2. Term of Office. The term of office of all officers shall be until the next annual meeting of the Board of Directors or until the officers' respective successors are chosen and qualified. Any officer or agent elected by the Board of Directors may be removed by the Board at any time, with or without cause.

Section 3. Chief Executive Officer. The Chief Executive Officer of the Company shall have general charge of the business and affairs of the Company, subject to the control of the Board of Directors, may create in the name of the Company corporate obligations or other instruments and shall perform such other functions and acts as may be incident to the office of Chief Executive Officer or prescribed by the Board of Directors from time to time. The Chief Executive Officer may also simultaneously serve as the Chairman of the Board.

The Chief Executive Officer shall manage or supervise the conduct of the corporate finances and relations of the Company with its shareholders, with the public, and with regulatory authorities, and may exercise all powers conferred upon the President elsewhere in the Bylaws. The Chief Executive Officer may delegate from time to time to other officers, employees or positions of the Company, such powers as the Chief Executive Officer may specify in writing. A copy of each such delegation and of any revocation or change shall be filed with the Corporate Secretary.



Section 4. President. The President shall have the power and authority, subject to the control of the Board of Directors and the Chief Executive Officer, if one has been appointed, to perform all acts incident to the President’s office or prescribed by the Board of Directors or the Chief Executive Officer, or authorized or required by law. During the absence or disability of the Chief Executive Officer, if one has been elected, the President shall assume the duties and authority of the Chief Executive Officer of the Company.

Section 5. Other Officers. The other officers, agents, and employees of the Company shall each have such powers and authority to perform such duties in the management of the property and affairs of the Company, subject to the control of the Board of Directors, as generally pertain to their respective offices, as well as such powers and duties that, from time to time, may be prescribed by the Board of Directors, by the Chief Executive Officer, or by the President, as the case may be.

Section 6. Compensation. The compensation of all executive officers of the Company above the level of Assistant Vice President (or equivalent) and the General Auditor (whether or not he or she is above the level of Assistant Vice President) shall be fixed by the Board of Directors or by an authorized committee of the Board of Directors.

Section 7. Voting of Shares and Securities of Other Corporations. Unless the Board of Directors otherwise directs, the Company’s Chairman of the Board, Chief Executive Officer, President, Corporate Secretary and Assistant Corporate Secretary shall each be authorized to vote or to designate a proxy to vote all shares and other securities that the Company owns in any other corporation or entity.

## ARTICLE IV.

## Capital Stock

Section 1. Certificates of Shares. Shares of the Company’s stock may be certificated or uncertificated, as provided under Michigan law at any time. The certificated shares shall be represented by certificates signed by the Chairman of the Board, the President or a Vice President and may also be signed by the Treasurer, an Assistant Treasurer, the Corporate Secretary or an Assistant Corporate Secretary of the Company, and shall be countersigned by a transfer agent for the stock and registered by a registrar for such stock. The signatures of the officers and the transfer agent and the registrar upon such certificates may be facsimiles, engraved, or printed, subject to the provisions of applicable law. In case any officer, transfer agent, or registrar shall cease to serve in that capacity after their facsimile signature has been placed on a certificate, the certificates may be issued with the same effect as if the officer, transfer agent, or registrar were still in office. A certificate representing shares shall state on its face that the Company is formed under the laws of the State of Michigan and shall also state the name of the person to whom it is issued, the number and class of shares and the designation of the series, if any, that the certificate represents, and any other provisions that may be required by the laws of the State of Michigan or by federal law or by the rules or regulations of any stock exchange or other organization applicable to the Company.



Section 2. Uncertificated Shares. The Board of Directors may authorize, by resolution, the issuance of some or all of the shares of any class or series without certificates. The authorization will not affect shares already represented by certificates until the certificates are surrendered to the Company. Within a reasonable time after the issuance or transfer of shares without certificates, the Company shall send the shareholder a written statement of the information required on certificates by applicable law, rule or regulation.

Section 3. Transfer of Shares. The Company shall make transfers of stock on the Company’s books (a) upon the presentation of the certificates by the registered holder in person or by duly authorized agent or attorney, or upon presentation of proper evidence of succession, assignment or authority to transfer the stock and upon surrender of the appropriate certificates, or (b) in the case of uncertificated shares, upon receipt of proper transfer instructions from the registered owner of such uncertificated shares, or from a duly authorized agent or attorney or from an individual presenting proper evidence of succession, assignment or authority to transfer the stock.

Section 4. Lost or Destroyed Stock Certificates. No certificate for shares of stock of the Company shall be issued in place of any certificate alleged to have been lost, stolen or destroyed, except upon production of such evidence of the loss, theft or destruction, and upon indemnification of the Company and its agents to such extent and in such manner as the Board of Directors may from time to time prescribe.

## ARTICLE V.

## Delivery of Notices

All notices to shareholders, directors and Board committee members shall be given (a) personally, (b) by mail (as provided in the Michigan Business Corporation Act, with postage pre-paid), and addressed to such person at the address designated by him or her for that purpose, or, if none is designated, at his or her last known address, (c) by electronic transmission in a manner authorized by the person, or (d) as otherwise provided in the Michigan Business Corporation Act. In addition to any other form of notice to a shareholder permitted by the Articles of Incorporation, these Bylaws, or the Michigan Business Corporation Act, any notice given to a shareholder by a form of electronic transmission to which the shareholder has consented is effective. When a notice is required or permitted by the Michigan Business Corporation Act or these Bylaws to be given in writing, electronic transmission is written notice. Notices given pursuant to this Article V shall be deemed to be given when dispatched, or, if mailed, when deposited, with postage prepaid, in a post office or official depository under the exclusive care and custody of the United States Postal Service; provided that when a notice or communication is permitted by the Michigan Business Corporation Act or these Bylaws to be transmitted electronically, the notice or communication is given when electronically transmitted to the person entitled to the notice or communication in a manner authorized by the person. Further notice shall be given by mail, publication, electronic transmission, or otherwise, if and as required by law.



## ARTICLE VI.
Checks, Notes, Bonds, Debentures, etc.

All checks and drafts on the Company’s bank accounts, all bills of exchange and promissory notes, and all acceptances, obligations, and other instruments for the payment of money, shall be signed by such officer or officers or agent or agents, either manually or by facsimile signature or signatures, as shall be thereunto authorized from time to time by the Board of Directors either generally or in specific instances; provided that bonds, debentures, and other evidences of indebtedness of the Company bearing facsimile signatures of officers of the Company shall be issued only when authenticated by a manual signature on behalf of a trustee or an authenticating agent appointed by the Board of Directors. In case any such officer of the Company shall cease to be such after such officer’s facsimile signature has been placed on the document, such bonds, debentures or other evidences of indebtedness may be issued with the same effect as if such person were still in office.

## ARTICLE VII.

## Corporate Seal

The Board of Directors may provide a suitable seal containing the name of the Company.

## ARTICLE VIII.

## Control Share Acquisitions

The Stacey, Bennett, and Randall Shareholder Equity Act (Chapter 7B of the Michigan Business Corporation Act) shall not apply to any control share acquisitions (as defined in such Act) of shares of the Company.

This Article VIII of the Bylaws may not be amended, altered, or repealed with respect to any control share acquisition of shares of the Company effected pursuant to a tender offer or other transaction commenced prior to the date of such amendment, alteration, or repeal.

## ARTICLE IX.

## Amendment of Bylaws

Those provisions of these Bylaws providing for a classified Board of Directors (currently the third, fourth and fifth sentences of the first paragraph of Section 1 of Article II) and the provisions of this sentence may be amended or repealed only by the affirmative vote of the holders of a majority of shares of Common Stock of the Company. Except as provided in the immediately preceding sentence, Bylaws of the Company may



be amended, repealed or adopted by vote of the holders of a majority of shares at the time entitled to vote in the election of any directors or by vote of a majority of the directors in office.



## DTE ENERGY COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

<table><tr><td rowspan="2">(Millions of Dollars)</td><td rowspan="2">2010</td><td colspan="5">Twelve Months Ended December 31</td></tr><tr><td>2009</td><td>2008</td><td>2007</td><td>2006</td><td></td></tr><tr><td>Earnings:</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Pretax earnings</td><td>$ 944</td><td>$ 782</td><td>$ 819</td><td>$ 1,155</td><td>$ 536</td><td></td></tr><tr><td>Adjustments</td><td>40</td><td>4</td><td>(3)</td><td>(4)</td><td>(4)</td><td></td></tr><tr><td>Fixed charges</td><td>567</td><td>572</td><td>540</td><td>562</td><td>558</td><td></td></tr><tr><td>Net earnings</td><td>$ 1,551</td><td>$ 1,358</td><td>$ 1,356</td><td>$ 1,713</td><td>$ 1,090</td><td></td></tr><tr><td>Fixed charges:</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Interest expense</td><td>$ 543</td><td>$ 545</td><td>$ 503</td><td>$ 533</td><td>$ 525</td><td></td></tr><tr><td>Adjustments</td><td>24</td><td>27</td><td>37</td><td>29</td><td>33</td><td></td></tr><tr><td>Fixed charges</td><td>$ 567</td><td>$ 572</td><td>$ 540</td><td>$ 562</td><td>$ 558</td><td></td></tr><tr><td>Ratio of earnings to fixed charges</td><td>2.74</td><td>2.37</td><td>2.51</td><td>3.05</td><td>1.95</td><td></td></tr></table>



## SUBSIDIARIES OF DTE ENERGY COMPANY

DTE Energy Company’s principal subsidiaries as of December 31, 2010 are listed below. All other subsidiaries, if considered in the aggregate as a single subsidiary, would not constitute a significant subsidiary.

<table><tr><td>Subsidiary</td><td>State of Incorporation</td></tr><tr><td>1. The Detroit Edison Company</td><td>Michigan</td></tr><tr><td>2. DTE Enterprises, Inc.</td><td>Michigan</td></tr><tr><td>3. DTE Energy Resources, Inc.</td><td>Michigan</td></tr><tr><td>4. Michigan Consolidated Gas Company</td><td>Michigan</td></tr></table>



## CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (Nos. 333-161489, 333-161489-01 and 333-157769) and Form S-8 (Nos. 333-157768, 333-133645, 333-109623, 333-61992 and 333-47247) of DTE Energy Company of our report dated February 18, 2011 relating to the financial statements, financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

Detroit, Michigan

February 18, 2011



## CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference of our report dated February 27, 2009 (August 20, 2009, as to the effects of the retrospective adoption of Accounting Standards Codification (“ASC”) 810-10 and ASC 260-10 as described in Note 3 to the consolidated financial statements) relating to the consolidated financial statements and financial statement schedule of DTE Energy Company and subsidiaries appearing in this Annual Report on Form 10-K of DTE Energy Company for the year ended December 31, 2010, in the following registration statements:

<table><tr><td>Form</td><td>Registration Number</td></tr><tr><td>Form S-3</td><td>333-161489</td></tr><tr><td>Form S-3</td><td>333-157769</td></tr><tr><td>Form S-8</td><td>333-157768</td></tr><tr><td>Form S-8</td><td>333-47247</td></tr><tr><td>Form S-8</td><td>333-133645</td></tr><tr><td>Form S-8</td><td>333-61992</td></tr><tr><td>Form S-8</td><td>333-109623</td></tr></table>

/s/ Deloitte & Touche LLP

Detroit, Michigan

February 18, 2011



## FORM 10-K CERTIFICATION

I, Gerard M. Anderson, certify that:

1. I have reviewed this Annual Report on Form 10-K of DTE Energy Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



## FORM 10-K CERTIFICATION

I, David E. Meador, certify that:

1. I have reviewed this Annual Report on Form 10-K of DTE Energy Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 18, 2011



# CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 10-K of DTE Energy Company (the "Company") for the year ended December 31, 2010, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Gerard M. Anderson, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and belief:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 18, 2011

/S/ GERARD M. ANDERSON

Gerard M. Anderson

President and Chief Executive Officer

of DTE Energy Company

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.



# CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 10-K of DTE Energy Company (the "Company") for the year ended December 31, 2010, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, David E. Meador, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and belief:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 18, 2011

/S/ DAVID E. MEADOR

David E. Meador

Executive Vice President and Chief Financial Officer of DTE Energy Company

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.



AMENDMENT AND RESTATEMENT

OF

MASTER TRUST AGREEMENT

FOR THE DTE ENERGY COMPANY MASTER PLAN TRUST

BETWEEN

DTE ENERGY CORPORATE SERVICES, LLC.

AND

DTE ENERGY INVESTMENT COMMITTEE

AND

JPMORGAN CHASE BANK, N.A.



## TABLE OF CONTENTS

FIRST: Acceptance of Property 2
SECOND: Investment Powers 2
THIRD: Payments 9
FOURTH: Powers of the Trustee 9
FIFTH: Insurance Contracts 14
SIXTH: Fiduciary Standards 16
SEVENTH: Prohibition of Diversion 16
EIGHTH: Indemnification and Contribution 17
NINTH: Valuation of the Trust Fund and Periodic Accounts 19
TENTH: Plan Administrator 21
ELEVENTH: Compensation and Expenses 22
TWELFTH: Resignation or Removal of Trustee 22
THIRTEENTH: Amendment 23
FOURTEENTH: Termination 23
FIFTEENTH: Plan-to-Plan Transfers; Rollovers 24
SIXTEENTH: Plans and Participating Employers 25
SEVENTEENTH: Alienation 28
EIGHTEENTH: Bond 28
NINETEENTH: Successors 28
TWENTIETH: Communications 28
TWENTY-FIRST: Governing Law and Jurisdiction 29



# AMENDMENT AND RESTATEMENT
OF DTE ENERGY COMPANY MASTER PLAN TRUST
TRUST AGREEMENT

WHEREAS, DTE Energy Corporate Services, LLC (the “Employer”), and certain of its affiliates and subsidiaries, maintain the tax-qualified employee benefit plans as listed on the attached Schedule A (the “Plans”), for the purpose of providing retirement and related benefits to eligible employees under the Plans and their beneficiaries; and

WHEREAS, the DTE Energy Investment Committee, the members of which are “named fiduciaries” as defined in the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), (which named fiduciaries are hereinafter referred to as the “Plan Administrator”) has general responsibility for reviewing the performance of the Trustee thereunder; and

WHEREAS, a trust is maintained in connection with the Plans (the “Trust”) to which contributions are to be made by the Employer and its affiliates and subsidiaries who elect to participate in the Plans (as hereinafter defined as “Participating Employers”) to be held by the Trustee and to be managed, invested and reinvested for the exclusive benefit of participants of the Plans and their beneficiaries; and

WHEREAS, the Plans and trust are intended to qualify as a plan and trust which meet the applicable requirements of Section 401(a) and 501(a) of the Internal Revenue Code of 1986, as amended (the “Code”); and

WHEREAS, on June 30, 1994, the Detroit Edison Company, an affiliate of the Employer that was the Plans’ sponsor at that time, entered into a master trust agreement with Fidelity Management Trust Company, a corporation organized and existing under the laws of the State of



Massachusetts, having its principal place of business at 82 Devonshire Street, Boston, Massachusetts 02109, which has been removed or has resigned as trustee; and

WHEREAS, the Employer, as the current sponsor of the Plans, and DTE Energy Investment Committee wish to amend and restate the Trust in its entirety and appoint JPMorgan Chase Bank, National Association, a national banking association organized under the laws of the United States, having a place of business at One Chase Manhattan Plaza, 19th Floor, New York, New York 10005-1401, as successor trustee (the “Trustee”).

NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein contained, the Employer, the Plan Administrator and the Trustee do hereby covenant and agree as follows:

FIRST: Acceptance of Property. The Trustee or its agent shall accept such cash and other property as is tendered to it as contributions hereunder, and as is acceptable to it, hereinafter referred to as the "Trust Fund," but shall not be under any duty to require the Employer or any Participating Employer to contribute to the Trust Fund or to determine whether the amount of any contribution has been correctly computed under the terms of the Plans, which duties are assigned to the Plan Administrator as named fiduciary for the Plans and the Trustee shall be a directed trustee with respect to contributions and shall have no obligation to take any action to collect any contributions except upon the direction of the Plan Administrator. In no event shall the Trustee be considered a party to the Plans. The Trustee shall have only such duties with respect to the Plans as are set forth in this Agreement.

SECOND: Investment Powers. (a) The Trustee shall have no discretion or authority with respect to the investment of Trust assets, but shall act solely as a directed Trustee, and shall invest and reinvest the principal and income of the Trust and keep the Trust invested in such investments as directed by the Plan Administrator in accordance with paragraph (b), which



investments shall be made and held without distinction between principal and income, in such securities or other property, real or personal, within or without the United States, including, without limitation:

(i) interests and part interests in any bond and mortgage or note and mortgage and interests and part interests in certificates of deposit, commercial paper and other short-term or demand obligations, secured or unsecured, whether issued by governmental or quasi-governmental agencies or corporations or by any firm or corporation;

(ii) capital, common and preferred, voting and nonvoting stock (regardless of dividend or earnings record), including an employer security, as such term is defined in Section 407(d) of ERISA, and including shares of mutual funds, annuity or investment contracts issued by an insurance company; and

(iii) financial options and futures or any other form of option, and to hold such securities or property in one or more funds; or in any fund created and administered by it or any other bank or investment manager as the trustee thereof for the collective investment of the assets of employee benefit trusts, as long as such collective investment fund is a qualified trust under the applicable provisions of the Code (and while any portion of the Trust Fund is so invested, such collective investment fund shall constitute part of the Plans, and the instrument creating such fund shall constitute part of this Agreement). The Trustee may keep such portion of the Trust Fund in cash and cash balances or hold all or any portion of the Trust Fund in savings accounts, certificates of deposit, and other types of time or demand deposits with any financial institution or quasi-financial institution, either domestic or foreign (including any such institution operated or maintained by the Trustee in its corporate capacity) as directed by the Plan Administrator. Notwithstanding the foregoing, unless otherwise authorized by ERISA or by regulations promulgated by the Secretary of the Department of



Labor, the Trustee shall maintain the indicia of ownership of all securities or other investments within the jurisdiction of the District Courts of the United States.

To the maximum extent permitted by law, the Trustee shall not be liable for the acquisition, retention or disposition of any assets of the Trust Fund or for any loss to or diminution of such assets unless due to the Trustee’s own willful misconduct, or failure to act in good faith.

(b) The Plan Administrator shall select investment alternatives for the Plans (each an “Investment Alternative”) which include some or all of the following types, or some other type reasonably acceptable to the Trustee from an administrative standpoint: (i) securities issued by open-end investment companies registered under the Investment Company Act of 1940, (ii) notes evidencing loans to Plan participants in accordance with the terms of the Plan, (iii) a portfolio of securities and obligations which is intended to produce a fixed rate of investment return, including but not limited to guaranteed investment contracts (“GICs”), United States government securities, corporate bonds, notes, debentures, convertible securities, preferred stocks, and interests in collective investment funds maintained by banks or other financial institutions which invest in such securities and obligations and other similar investments, in each case as chosen by the Plan Administrator or an investment manager, (iv) portfolios of securities managed by an investment manager for which market values can be obtained readily from securities exchanges or pricing services subscribed to by the Trustee, and (v) interests in collective investment funds maintained by the Trustee or another bank or financial institution for qualified plans. The Plan Administrator will direct the investment of Plan assets in the selected investment alternatives or direct the Trustee to accept investment directions from the Plans’ participants.



The Trustee will have no responsibility for the prudence or propriety of such investment directions and will have no liability for any loss or diminution in value occasioned thereby.

If the investment of any Plan’s assets is to be directed by participants, the Plan Administrator shall be solely responsible for the Plan satisfying the various criteria set forth in Department of Labor Regulation §2550.404c-1 for qualification as an “ERISA Section 404(c) Plan.” Thus, among other things, the Plan Administrator is solely responsible for satisfying that regulation’s criteria with respect to selecting a broad range of investment alternatives among which participants may designate investments of their accounts, providing participants with information concerning the designated Investment Alternatives, and restricting the frequency with which participants may issue investment instructions. If the Plan fails at any time to qualify as an ERISA Section 404(c) Plan, no participant-directed investments shall be deemed to have been directed by the Trustee and will be deemed to have been directed by the Plan Administrator, or other fiduciary meeting the requirements under ERISA Section 403(a)(1) or (2) that has been designated by a named fiduciary to perform such function.

(c) The Plan Administrator may appoint an “investment manager,” as defined in Section 3(38) of ERISA to manage any Investment Alternative, or any part of an Investment Alternative. Any investment manager so appointed shall be (i) an investment adviser registered as such under the Investment Advisers Act of 1940, (ii) a bank, (iii) an insurance company qualified to perform investment management services under the laws of more than one state of the United States, or (iv) another entity described in Section 3(38) of ERISA. The Plan Administrator shall notify the Trustee of any such appointment by delivering to the Trustee an executed copy of the instrument under which the investment manager is appointed and evidencing the investment manager’s acceptance of such appointment and an acknowledgment by the investment manager that it is a fiduciary of the Plans. The Plan Administrator shall be



responsible for ascertaining that, while each investment manager is acting in that capacity, that investment manager satisfies the requirements of Section 3(38) of ERISA, or any successor thereto. The Plan Administrator shall specify to the Trustee the portion of the Trust Fund which shall be subject to such investment management. The Trustee shall invest and reinvest the portion of the Trust Fund subject to such investment management only to the extent and in the manner directed by the investment manager in writing. During the term of such appointment, the Trustee shall have no liability for the acts or omissions of such investment manager, and except as provided in the preceding sentence, shall be under no obligation to invest, review, or otherwise manage the portion of the Trust Fund subject to such investment management. The Trustee may maintain separate accounts within the Trust Fund for the assets of the Trust Fund subject to such investment management. The Plan Administrator may terminate its appointment of an investment manager at any time and shall notify the Trustee in writing of such termination. To the maximum extent permitted by ERISA the Trustee shall be protected in assuming that the appointment of an investment manager remains in effect until it is otherwise notified in writing by the Plan Administrator.

In the event that the investment manager appointed hereunder is a bank or a trust company, or an affiliate of a bank or trust company, the Trustee shall, upon the direction of the Plan Administrator, transfer funds to such bank, trust company, or affiliate for investment through the medium of any collective investment fund created and administered by such bank, trust company, or affiliate, acting as trustee therefor, for the collective investment of the assets of employee benefit trusts, provided that such fund is qualified under the applicable provisions of the Code. If, and to the extent, directed by the Plan Administrator or an investment manager, the Trustee also shall use such a collective investment fund maintained by it or one of its affiliates as the vehicle for short-term investment of cash held in the Trust Fund. While any portion of the



assets are invested in a collective investment fund, such fund shall constitute part of the applicable plan or plans, and the instrument creating such fund shall constitute part of this Trust. In order to implement the provisions of this paragraph, the Trustee is authorized to enter into any required ancillary trust, agency or other type of agreement with an investment manager, or its affiliate, as described in the preceding sentence.

(d) If, and to the extent, specifically authorized by the Plans, the Plan Administrator may establish an Employer Stock Fund as an Investment Alternative. The Employer Stock Fund shall be invested primarily in common stock which constitutes "qualifying employer securities" of the Employer within the meaning of Section 407 of ERISA (the "Employer Stock Fund"). It shall be the duty of the Plan Administrator to determine that such investment is not prohibited by Sections 406 or 407 of ERISA. Except to the extent that control over the investment of the Plans' assets in such qualifying employer securities is assigned to participants, the Plan Administrator shall at all times have the full and exclusive fiduciary responsibility with respect to the investment of the Plans' assets in the Employer Stock Fund, and the Trustee's responsibilities with respect to the Employer Stock Fund shall be no different than if an investment manager were appointed with respect to the Employer Stock Fund. To the extent that control over the investment of the Plans' assets in such Employer Stock Fund is assigned to participants, the Plan Administrator shall at all times have the full and exclusive fiduciary responsibility to monitor the continuing appropriateness of such Employer Stock Fund as an Investment Alternative under the Plan. In this regard, the Plan Administrator shall be responsible for determining from time to time the percentage of the Employer Stock Fund that shall be held in a short-term investment providing adequate liquidity reserves, as determined by the Plan Administrator, maintained by the Trustee or one of its affiliates in order to meet the liquidity needs of such Employer Stock Fund. The Trustee acknowledges that the Plan



Administrator has delegated these responsibilities to an independent fiduciary; provided, however, the Plan Administrator shall remain responsible to the Trustee under the terms of this Agreement with respect to any of Plan Administrator's responsibilities delegated to an independent fiduciary. In the event that a tender or exchange offer is made for all or any portion of the common stock held in the Employer Stock Fund, the Plan Administrator shall be responsible for ensuring that the issuer of the common stock held in the Employer Stock Fund takes such action as is practicable to provide each participant in a Plan having an interest in the Employer Stock Fund with the same information that is distributed to the stockholders owning the same class of common stock for which such offer is made. Notwithstanding any other provision of any Plan or this Trust Agreement, in the event such an offer is made, each such participant shall have the right to direct the Trustee, by timely notice, to tender or exchange all or any portion of the shares of such common stock deemed to be allocated to his account which is at such time fully vested, and the Trustee shall so tender or exchange only upon receipt of such direction. With respect to fractional shares, the Trustee shall aggregate the fractional shares for which instructions to tender have been received into whole shares and shall tender such whole shares as instructed. Any remaining fractional share shall not be tendered. For the MichCon Investment and Stock Ownership Plan, the Trustee shall tender unallocated shares of the Employer Stock Fund in the same proportion as the allocated shares for which the Trustee has received direction are tendered or exchanged, subject to the terms of any loan or pledge agreement covering such shares. All property received in exchange for such common stock so tendered shall upon receipt be held by the Trustee in the Employer Stock Fund for the account of those participants who so tendered, the provisions of each of the Plans and this Trust Agreement shall hereby be deemed amended to permit the holding of such property within said Fund and



thereafter administered, invested, reinvested and distributed in accordance with the applicable terms of the Plans and Trust.

THIRD: Payments. Subject to the provisions of Article FOURTEENTH hereof, the Trustee shall from time to time transfer cash or other property from the Trust Fund to such persons, including an insurance company or companies or a receiving or paying agent designated by the Plan Administrator, at such addresses, in such amounts, for such purposes and in such manner as the Plan Administrator may direct, provided that such transfer is administratively feasible, and the Trustee shall incur no liability for any such payment made at the direction of the Plan Administrator. The Plan Administrator shall be solely responsible to insure that any payment made at its direction conforms with the provisions of the applicable Plan, the provisions of this Agreement, and ERISA, and the Trustee shall have no duty to determine the rights or benefits of any person in the Trust Fund or under the Plans or to inquire into the right or power of the Plan Administrator to direct any such payment.

FOURTH: Powers of the Trustee. (a) The Trustee is authorized to exercise from time to time in accordance with directions from the Plan Administrator, an investment manager, or a participant, as the case may be, the following powers in respect of any property, real or personal, of the Trust Fund, it being intended that these powers be construed in the broadest possible manner:

(1) power to sell at public or private sale for cash or upon credit or partly for cash and partly upon credit and upon such terms and conditions as the directing party shall deem proper. No purchaser shall be bound to see to or be liable for the application of the proceeds of any such sale;

(2) power to vote in person or by proxy at corporate or other meetings and to participate in or consent to any voting trust, reorganization, dissolution, merger or other action



affecting any securities in its possession or the issuers thereof, to make payments in connection therewith, and to respond to class actions in the following manner:

(i) With respect to mutual funds, except where held in participant-directed brokerage accounts, as directed by the Plan Administrator;

(ii) with respect to all investments held in participant-directed brokerage accounts, each participant who has such a brokerage account shall take all such actions directly;

(iii) with respect to individual securities maintained in a separately managed account for the Plan, as directed by the Plan Administrator or the investment manager for such separate account, as applicable under the provisions of the investment management agreement governing such separate account; and

(iv) with respect to the Employer Stock Fund, each participant in the Plan who has an interest in the Employer Stock Fund shall be entitled to direct the Trustee as to the manner in which the stock constituting “qualifying employer securities” having voting rights which is deemed to be allocated to such participant’s account is to be voted. The Trustee, itself or by its nominee, shall be entitled to vote and shall vote such stock with voting rights allocated to the accounts of such participants as follows:

(A) The Plan Administrator shall be responsible for ensuring that the issuer of the common stock in the Employer Stock Fund adopts reasonable measures to notify such participants of the date and purposes of each meeting of stockholders at which holders of shares of stock shall be entitled to vote, and to request instructions from such participants to the issuer, its agent or the Trustee as to the voting at such meeting of the number of shares of common stock (including fractional shares) in the account of each such participant whether or not vested;



(B) In each case, the Trustee, itself or by proxy, shall vote the shares of such stock (including fractional shares) in the account of each such participant in accordance with the directions of the participant as communicated directly to the Trustee or to the Trustee by the issuer, the Plan Administrator or their agent;

(C) If prior to the time of such meeting of stockholders (or a date prior thereto specified by the Trustee), the Trustee shall not have received timely directions from a participant, the Plan Administrator or the issuer as to the manner of voting any shares of allocated stock in the account of such participant, the Trustee shall, either as directed by the Plan Administrator, the issuer, or its agent vote, itself or by proxy, all such shares of common stock in all matters coming before the meeting, in the same ratio in which the total shares with respect to which timely directions were received were voted in such matters except as provided in Schedule B. With respect to fractional shares, the Trustee shall aggregate the fractional shares for which instructions to vote have been received into whole shares and shall vote such whole shares as instructed. Any remaining fractional share shall not be voted.;

(D) With respect to the proxy vote for those shares described in Schedule B, the Plan Administrator shall provide written direction with respect to the voting of those shares for each proxy solicitation that includes an acknowledgement of the plan provision upon which the Plan Administrator is relying. The Plan Sponsor agrees to timely notify the Trustee of any Plan amendment that changes the proxy voting requirements for any qualifying employer securities held in the Plan. Plan Administrator represents that the Plan document will be consistent with the terms of the collective bargaining agreements with respect to proxy voting.

(3) power to exchange securities or property held by it for other securities or property, or partly for such securities or property and partly for cash, and to exercise conversion,



subscription, option and similar rights with respect to securities held by it, and to make payments in connection therewith;

(4) power to compromise and adjust all debts or claims due to or made against it, to participate in any plan or reorganization, consolidation, merger, combination, liquidation or other similar plan or any action thereunder, or any contract, lease, mortgage, purchase, sale or other action by any corporation or other entity;

(5) power to deposit any such property with any protective, reorganization or similar administrator; to delegate discretionary power to any such administrator; and to pay part of the expenses and compensation of any such administrator and any assessments levied with respect to any property so deposited;

(6) power to exercise any conversion privilege or subscription right available in connection with any such property; to oppose or to consent to the reorganization, consolidation, merger or readjustment of the finances of any corporation, company or association or to the sale, mortgage, pledge or lease of the property of any corporation, company or association any of the securities of which may at any time be held in the Trust Fund and to do any act with reference thereto, including the exercise of options, the making of agreements or subscriptions and the payments of expenses, assessments or subscriptions, which may be deemed necessary or advisable in connection therewith and to hold and retain any securities or other property which it may so acquire;

(7) power to make distributions in cash or in specific property, real or personal, or an undivided interest therein, or partly in cash and partly in such property;

(8) power to commence or defend suits or legal proceedings and to represent the Trust in all suits or legal proceedings; to settle, compromise or submit to arbitration any claims, debts or damages due or owing to or from the Trust, provided that the Trustee shall



notify the Plan Administrator of all such suits, legal proceedings and claims and, except in the case of a suit, legal proceeding or claim involving solely the Trustee’s action or omissions to act, shall obtain the written direction of the Plan Administrator before settling, compromising or submitting to binding arbitration any claim, suit or legal proceeding of any nature whatsoever;

(9) power, upon the written direction of the Plan Administrator, to enter into any contract or policy with an insurance company or companies, for the purpose of insurance coverage or otherwise, provided that, except with respect to the purchase of annuity contracts for the payment of benefits, the Trustee shall be the sole owner of all such contracts or policies and all such contracts or policies shall be held as assets of the Trust Fund; and

(10) power to transfer assets of the Trust Fund to a successor trustee as provided in Article TWELFTH.

(b) Notwithstanding the appointment of an investment manager, the Trustee shall have the following ministerial powers and authority, to be exercised in its sole discretion, with respect to the Trust Fund:

(1) To employ suitable agents, custodians and counsel and to pay their reasonable expenses and compensation out of the Trust Fund;

(2) To register any securities or other property held by it hereunder in its own name or in the name of a nominee with or without the addition of words indicating that such securities or other property are held in a fiduciary capacity and to hold any securities or other property in bearer form and to deposit any securities or other property in a depository or clearing corporation;

(3) To permit overdrafts in connection with the settlement of investment transactions relating to, or the distribution of funds from, the Trust Fund, (and the Plan Administrator or, if applicable, the investment manager shall be deemed to have requested the



Trustee to permit such overdraft under the terms and conditions announced by the Trustee from time to time for overdrafts); to repay any such overdraft out of the Trust Fund; to permit the party extending any such overdraft (including the Trustee in its corporate capacity) to set the overdraft off against any cash balances in the Trust Fund; and to pay reasonable compensation to the party extending the overdraft for its services (or reimburse that party for its expenses) to the extent permitted under law;

(4) To reverse any erroneous or provisional credit entries to the Trust Fund retroactively to the date upon which the correct entry or no entry should have been made;

(5) To make, execute and deliver, as Trustee, any and all deeds, leases, mortgages, conveyances, waivers, releases or other instruments in writing necessary or desirable for the accomplishment of any of the foregoing powers; and

(6) Generally to do all ministerial acts, whether or not expressly authorized, which the Trustee may deem necessary or desirable in carrying out its duties under this Agreement.

(c) The Trustee may consult with legal counsel concerning questions which may arise with reference to this Agreement and its powers and duties as trustee. To the extent permissible by law, the written opinion of such counsel shall be full and complete protection of the Trustee in respect to any action reasonably taken or suffered by the Trustee hereunder in good faith reliance on the opinion.

FIFTH: Insurance Contracts. The Trustee may, at the direction of the Plan Administrator, (i) enter into one or more contracts issued by an insurance company, including such contracts providing for investment in a separate account maintained by an insurance company, (ii) transfer to any such insurance companies a portion of the Trust Fund in accordance with any such contracts, and (iii) hold any such contracts as a part of the Trust Fund until



directed otherwise by the Plan Administrator. The Plan Administrator shall give such direction to the Trustee by delivering to the Trustee a copy of the action of the Plan Administrator signed by the Secretary of the Investment Committee, which shall specifically refer to this Article FIFTH and direct the Trustee to so act. The Trustee shall have no responsibility to review any contract or the creditworthiness of the insurance company issuing such contract at any time or from time to time. The Plan Administrator may direct the Trustee to (i) request any information from any such insurance companies necessary or appropriate to make an investment decision, (ii) demand or accept withdrawals or other distributions under any such contracts, (iii) exercise or not to exercise any rights, powers, privileges and options under any such contracts and (iv) assign, amend, modify, or terminate any such contracts. The Trustee shall take no action with respect to any such contracts except at the direction of the Plan Administrator. The Trustee shall incur no liability for complying with, or failing to comply in the absence of, any such direction of the Plan Administrator unless the Trustee's action is prima facie contrary to ERISA or contrary to the Trustee's duties and responsibilities under this Agreement. Any insurance companies issuing any contracts as hereinabove described may deal with the Trustee as the absolute owner of any such contracts and need not inquire as to the authority of the Trustee to act with regard to such contracts. Any such insurance company may accept and rely upon any communication from the Trustee which is signed by an officer of the Trustee. For purposes of this Agreement, any such insurance company shall be considered to be an investment manager with regard to the assets of the Plans subject to its control. In no event shall the underlying assets of such insurance company in which such contracts are invested be considered assets of the Plans or part of the Trust Fund.



SIXTH: Fiduciary Standards. The Trustee shall perform those duties under this Agreement that cause it to be deemed a fiduciary under ERISA in accordance with the standard of care set forth in Section 404(a) of ERISA; the Trustee shall exercise reasonable care with respect to its remaining duties and obligations under this Agreement.

The Trustee shall not be responsible for the administration of any Plan, for determining the funding policy of any Plan or the adequacy of the Trust Fund to meet and discharge liabilities under any Plan, or for the investments of any Plan. The Trustee shall not be responsible for any failure of the Plan Administrator or the Employer to discharge any of their respective responsibilities with respect to the Plans nor be required to enforce payment of any contributions to the Trust Fund.

Except as otherwise required by ERISA, under no circumstances shall the Trustee or its agent incur liability for any indirect, incidental, consequential or special damages (including, without limitation, lost profits) of any form incurred by any person, whether or not foreseeable and regardless of the form of the action in which such a claim may be brought, with respect to the Trust Fund or its role as Trustee or agent.

SEVENTH: Prohibition of Diversion. (a) At no time prior to the satisfaction of all liabilities with respect to participants in the Plans and their beneficiaries shall any part of the corpus or income of the Trust Fund be used for, or diverted to, purposes other than for the exclusive benefit of such participants and their beneficiaries. Except as provided in paragraphs (b), (c) and (d) below, and Article THIRTEENTH, the assets of the Trust Fund shall never inure to the benefit of the Employer or any Participating Employer and shall be held for the exclusive purpose of providing benefits to participants in any Plan and their beneficiaries and defraying the reasonable expenses of administering the Plans.



(b) In the case of a contribution that is made by the Employer or a Participating Employer by a mistake of fact, paragraph (a) above shall not prohibit the return to the Employer or the Participating Employer of such contribution, without any earnings, but reduced by any losses, at the direction of the Plan Administrator within one year after the payment of the contribution.

(c) If a contribution by the Employer or a Participating Employer is expressly conditioned on qualification of a Plan under Section 401 of the Code, and if the Plan does not so qualify, then paragraph (a) above shall not prohibit the return to the Employer or the Participating Employer of such contribution at the direction of the Plan Administrator within one year after the date of denial of qualification of the Plan, to the extent permitted by ERISA and the Code.

(d) If a contribution by the Employer or a Participating Employer is expressly conditioned upon the deductibility of the contribution under Section 404 of the Code, then to the extent such deduction is disallowed, paragraph (a) above shall not prohibit the return to the Employer or the Participating Employer of such contribution, without any earnings, but reduced by any losses, at the direction of the Plan Administrator, to the extent disallowed, within one year after the date of such disallowance.

EIGHTH: Indemnification and Contribution. (a) The Employer shall indemnify and save harmless the Trustee, its affiliates, and their officers, agents and employees (each an “Indemnified Person”) for and from any Liability, as defined below, that may be imposed on, incurred by, or asserted against any Indemnified Person in connection with or arising out of (i) any matter as to which the Trustee has complied with directions or instructions as contemplated by this Agreement or has refrained from acting in the absence of directions or instructions as contemplated by this Agreement, (ii) any matter to which the Trustee has acted in



accordance with its applicable standard of care under this Agreement and ERISA, or (iii) any breach of any statutory or other duty owed to the Plans by the Employer, the Plan Administrator, any investment manager or any delegate of any of them, provided that the Trustee does not participate knowingly in, or knowingly undertake to conceal, any act or omission of any such person acting as a fiduciary to any Plan, knowing such act or omission to be a breach of fiduciary responsibility by such person. “Liability” means any liability, loss, cost, damage, penalty, fine, obligation or expense of any kind whatsoever (including, without limitation, reasonable attorneys’, accountants’, consultants’ or experts’ fees and disbursements).

(b) The Trustee, its affiliates, and their officers, agents and employees may bring action against the Employer to contribute to the satisfaction of any Liability only to the extent that the Liability (i) is not subject to indemnification under Subsection (a) and (ii) is caused by the culpable conduct of the Employer, the Plan Administrator, an investment manager, or their respective agents.

(c) The Trustee shall have no obligation to undertake, defend or continue to maintain any action or proceeding arising in connection with the Trust, unless and until the Employer agrees in writing to indemnify the Trustee against the Trustee’s costs, expenses and liabilities (including, without limitation, attorneys’ fees and expenses) relating thereto, to be primarily liable for such payment and to make periodic payments in respect of such fees and expenses during the course of such proceedings. If the Employer thereafter does not pay such costs, expenses and liabilities in a reasonably timely manner, the Trustee shall discontinue participation in such action or proceeding, and charge the assets of the Trust Fund to the extent sufficient for any unpaid fees and expenses.

(d) Subject to the limitation in the last paragraph of Article SIXTH, the Trustee will be liable for direct damages suffered by the Trust, the Employer and the Plan Administrator to



the extent such direct damages result from the Trustee’s fraud, negligence or willful misconduct in performing its duties as set out in this Agreement or from its breach of fiduciary duty under ERISA in performing specific fiduciary responsibilities as set out in this Agreement.

(e) The foregoing rights of indemnification and contribution shall not limit any rights or remedies that may be available to the Trustee under law.

NINTH: Valuation of the Trust Fund and Periodic Accounts. (a) The Trustee shall determine the fair market value or fair value of property held in the Trust Fund based upon one or more of the following:

(i) information and financial publications of general circulation;

(ii) statistical and valuation services;

(iii) records of security exchanges;

(iv) appraisals by qualified persons;

(v) transactions and bona fide offers in assets of the type in question;

(vi) valuations provided by investment managers; and

(vii) other information customarily used in the valuation of property.

Units in collective investment funds or group trusts (within the meaning of Revenue Ruling 81-100) shall be valued at the value stated by the trustee of such trust. Units or shares in registered investment companies, limited partnerships, limited liability companies, or other funds (each a “Fund”) shall be their net asset value or other unit or share value as announced by the Fund or its operator. An investment manager shall certify, at the request of the Trustee, the value of any property managed by such investment manager, and such certification shall be regarded as a direction with regard to such valuation. The Trustee shall be entitled to rely upon such valuation for all purposes under this Agreement.



(b) Notwithstanding anything contained in this Agreement to the contrary and to the extent permissible under applicable law, for the purposes of valuing the assets of any Investment Alternative, the Trustee may retain one or more pricing services as the Trustee may deem advisable and the Trustee shall have no duty to confirm or validate any information or valuation provided by any such pricing service nor shall the Trustee be responsible or liable for any act or omission of any such pricing service in the absence of the Trustee’s negligence in selecting or continuing to retain such pricing service.

(c) Valuations of property reasonably deemed by the Trustee to be commodity interests or over-the-counter options or derivative instruments shall be valued at their last prior sales prices on the principal board of trade or other contracts market in which dealings are made or by quotations from the contraparty bank or party. The Plan Administrator acknowledges that values of derivative instruments are indicative values only based on market levels on the date, or upon change in rates, so indicated. These valuations do not indicate the actual terms at which derivatives could be liquidated or unwound or the calculation or estimate of an amount that would be payable following the designation of an early termination date under any applicable agreement. Valuations of derivatives may be derived from proprietary models (including proprietary models developed by the dealer from which a given derivative was purchased) based upon estimates about relevant future market conditions. Valuations based on other models or different assumptions may yield different results. The Trustee expressly disclaims any responsibility for the accuracy of the models or estimates used in deriving the valuations.

(d) The Trustee or its agent shall keep records of all transactions relating to the Trust Fund, which shall be made available at all reasonable times to persons designated by the Plan Administrator or as may be required by law. The Trustee or its agent shall render an accounting to the Plan Administrator at least annually. The Plan Administrator may approve such



accounting, on behalf of itself and the Employer, by an instrument in writing delivered to the Trustee. If the Plan Administrator does not file with the Trustee objections to any such accounting within sixty (60) days after its receipt, the Plan Administrator shall be deemed to have approved such accounting on behalf of itself and the Employer. In such case, or upon the written approval of the Plan Administrator of any such accounting, the Trustee and its agent shall, to the extent permitted by law, be discharged from all liability for its acts or failures to act described in such accounting. Except to the extent otherwise provided in ERISA, no person, other than the Employer or the Plan Administrator, may require an accounting or bring any action against the Trustee with respect to the Trust Fund. The Trustee or its agent shall render to the Plan Administrator, at least quarterly, a statement of the Trust Fund assets and their values and, whenever a contribution is made to the Trust Fund other than in cash, a statement of the value of such property on the date it is received by the Trustee.

Nothing contained in this Agreement or in any Plan shall deprive the Trustee or its agent of the right to have a judicial settlement of its accounts. In any proceeding for a judicial settlement of the accounts of the Trustee or its agent or for instructions with regard to the Trust, the only necessary parties thereto in addition to the Trustee and its agent as appropriate shall be the Plan Administrator and the Employer. If the Trustee or its agent so elects, it may join as a party or parties defendant any other person or persons.

TENTH: Plan Administrator. The Employer shall certify to the Trustee and its agent the names of the persons from time to time constituting the Plan Administrator. All directions to the Trustee or its agent by the Plan Administrator shall be in writing, and shall be properly certified by a member or the Secretary of the Investment Committee thereof. The Trustee and its agent shall be entitled to rely without further inquiry upon all such written directions received from the Plan Administrator.



ELEVENTH: Compensation and Expenses. The Trustee shall be entitled to receive such reasonable compensation for its services as may be agreed upon from time to time by the Plan Administrator and the Trustee. Unless paid by the Employer, such compensation, attorneys' fees incurred in the administration of the Trust Fund, all taxes levied or assessed against the Trust Fund, and such other expenses as are incurred in the administration of the Trust Fund shall be paid from the Trust Fund.

TWELFTH: Resignation or Removal of Trustee. The Trustee may resign at any time by giving one hundred eighty (180) days' written notice to the Plan Administrator. The Plan Administrator may remove the Trustee at any time by giving ninety (90) days' written notice to the Trustee. However, the parties may mutually agree, which agreement shall not be unreasonably withheld, to extend the notice up to three hundred sixty-five (365) days in the event it is reasonably necessary to transfer the Trust Fund in their respective sole discretion. In the case of the resignation or removal of the Trustee, the Plan Administrator shall appoint a successor trustee who shall have the same powers and duties as those conferred upon the Trustee. Upon the resignation or removal of the Trustee and the appointment of a successor trustee, the Trustee shall account for the administration of the Trust Fund up to the date of its resignation or removal in the manner provided in Article NINTH hereof and, upon the approval or deemed approval of such accounting, the Trustee or its agent shall transfer to the successor trustee all of the assets then constituting the Trust Fund and the Trustee or its agent shall to the maximum extent permitted by ERISA be forever released and discharged from all liability and accountability with respect to the propriety of its acts and transactions; provided, however, that the Trustee or its agent may, in its sole discretion, transfer such assets prior to the completion of such accounting if the Plan Administrator agrees thereto in writing, such writing to include such limitations on the



Trustee’s liability therefor as the Trustee may deem appropriate. The term “Trustee” as used in this Agreement shall be deemed to apply to any successor trustee acting hereunder.

THIRTEENTH: Amendment. This Agreement, together with any fee agreement between the parties, sets out the entire agreement between the parties in connection with the subject matter, and this Agreement supersedes any prior agreement, statement, or representation relating to the obligations of the Trustee, whether oral or written. This Agreement may be amended by written agreement between the Trustee, the Employer and the Plan Administrator at any time or from time to time. The Employer hereby delegates to the Plan Administrator authority to approve amendments to this Agreement on the Employer’s behalf, so that the written approval of the Employer to any amendments is not necessary.

Notwithstanding anything contained in this Article THIRTEENTH to the contrary, no amendment shall divert any part of the Trust Fund to, and no part of the Trust Fund shall be used for, any purpose other than for the exclusive purpose of providing benefits to participants and their beneficiaries; provided, however, that nothing in this Article THIRTEENTH shall be deemed to limit or otherwise prevent the payment from the Trust Fund of expenses and other charges as provided in Article ELEVENTH.

FOURTEENTH: Termination. This Agreement and the trust hereby created may be terminated at any time by the Plan Administrator by written notice delivered to the Trustee. The Employer hereby acknowledges that it has delegated to the Plan Administrator the authority to terminate this Trust Agreement. Upon receipt of such notice of termination, the Trustee shall, after payment of all expenses incurred in the administration of the Trust Fund and such compensation as the Trustee may be entitled to, distribute the Trust Fund in cash or in kind to such persons or entities at such time and in such amounts as the Plan Administrator shall direct, which direction shall be in conformity with the provisions of the Plans and ERISA.



Notwithstanding the foregoing, the Trustee shall not be required to pay out any assets of the Trust Fund until it shall have received such rulings or determinations of the Internal Revenue Service, the United States Department of Labor or any other administrative agency as it may deem necessary or appropriate in order to assure itself that any such payment is made in accordance with the provisions of law or that it will not subject the Trust Fund or the Trustee, individually or as such Trustee, to liability.

FIFTEENTH: Plan-to-Plan Transfers; Rollovers. The Trustee or its agent may transfer part or all of the property representing a participant’s vested interest in any Plan to the trustees of any trust qualified under Section 401(a) of the Code in a plan-to-plan transfer, or with respect to an eligible rollover distribution, to any eligible retirement plan as provided under Section 402(c) of the Code. The Trustee or its agent may make such a transfer only at the direction of the Plan Administrator.

The Trustee or its agent may accept as part of the Trust Fund such property as is acceptable to the Trustee which represents a participant’s retirement benefits transferred from a trust qualified under Section 401(a) of the Code or transferred as a permissible rollover under Section 402(c) or 408(d)(3) of the Code. The Trustee or its agent may accept such a transfer only at the direction of the Plan Administrator. The amount of such benefits shall at all times be separately accounted for by the Plan Administrator. A participant shall at all times be fully vested in any property so transferred as a rollover to the Trust Fund. Such property shall be distributed to the participant or his beneficiary at the direction of the Plan Administrator within the time required for distribution of his retirement benefits under the applicable provisions of the Plans.



SIXTEENTH: Plans and Participating Employers. (a) This Trust shall constitute a funding vehicle for the Plans maintained by the Employer or any other Participating Employer, or both, as defined below. A “Participating Employer” shall mean the Employer and any corporation, trade or business that is treated as a single employer or otherwise required to be aggregated with the Employer under Sections 414(b), (c), (m) or (o) of the Code, provided, however, that for purposes of applying subsections (b) and (c) of Section 414 the phrase “more than 50%” shall be substituted for the phrase “at least 80%” each place it appears in Section 1563(a)(1) of the Code. The Plans participating in the Trust are listed on the attached Schedule A, as the same may be amended by the Plan Administrator and communicated to the Trustee from time to time. A Participating Employer shall become a party to this Agreement by delivering to the Plan Administrator and the Trustee a certified copy of a resolution of its board of directors or other governing body to the effect that it agrees to become a party to this Agreement, and to be bound by all the terms and conditions of the Plans which it has adopted and this Agreement.

(b) The Plan Administrator shall be responsible for verifying that, while any assets of a particular Plan are held in the Trust Fund, that Plan (i) is “qualified” within the meaning of Section 401(a) of the Code, (ii) is permitted by existing or future rulings of the United States Treasury Department to pool its funds in a group trust maintained in accordance with Revenue Ruling 81-100, and (iii) permits its assets to be commingled for investment purposes with the assets of other plans by investing such assets in this Trust Fund whether or not its assets will in fact be held in a separate investment account.

(c) All transfers to, withdrawals from, and other transactions regarding the Trust Fund shall be conducted in such a way that the proportionate interest in the Trust Fund of each Plan and the fair market value of that interest may be determined at any time. Whenever the assets of more



than one plan are commingled in the Trust Fund or in any Investment Account, the undivided interest therein of that plan shall be debited or credited (as the case may be) (i) for the entire amount of every contribution received on behalf of that Plan, every benefit payment, or other expense attributable solely to that Plan, and every other transaction relating only to that Plan and (ii) for its proportionate share of every item of collected or accrued income, gain, or loss, and general expense; and other transactions attributable to the Trust Fund or that Investment Account as a whole. As of each date when the fair market value of the investments held in the Trust Fund or an Investment Account are determined as provided for in this Agreement, the Trustee shall adjust the value of each Plan’s interest therein to reflect the net increase of decrease in such values since the last such date. For all of the foregoing purposes, fractions of a cent may be disregarded. The Trustee shall not be required to maintain any separate records or accounts with respect to any participant, unless separately agreed upon by the Trustee and the Plan Administrator.

(d) In the event of the withdrawal of any Plan from the trust or in the event of the Participating Employer’s election to terminate or to fund separately the benefits provided under any Plan (a “Separate Plan”), the Plan Administrator shall cause a valuation to be made of the share of the Trust Fund which is held for the benefit of participants and their beneficiaries having an interest therein under such Separate Plan. The Participating Employer establishing such Separate Plan shall file with the Trustee a document evidencing its segregation from the Trust Fund and its continuance as a trust in accordance with the provisions of this Agreement as though such company were the sole creator thereof. In such event, the Trustee shall deliver to itself as Trustee of such trust the beneficial interest of such Separate Plan as determined above. Such Participating Employer may thereafter exercise in respect of this Agreement all the rights and powers reserved to the Plan Administrator under the provisions of this Trust Agreement. In lieu of the establishment of a separate trust with respect to the participants under a segregating



Separate Plan in accordance with the foregoing provisions of this paragraph, such beneficial interest may be segregated as provided above and transferred directly to the trustee or insurance company maintaining the funding medium of any Separate Plan.

(e) If the Plan Administrator receives notice that one or more of the Plans is no longer qualified under the provisions of Section 401 of the Code or any successor thereto, the Plan Administrator shall immediately cause a valuation to be made of the share of the Trust Fund which is held for the benefit of such participants and their beneficiaries having an interest under such disqualified Plan or Plans. The Trustee shall thereupon segregate, withdraw from the Trust Fund, and dispose of such share in accordance with the terms of the disqualified Plan or Plans. The Plan Administrator may provide instructions directing the Trustee to dispose of such share by the transfer and delivery of such share to itself as trustee of a separate trust, the terms and conditions of which shall be identical with those of this Agreement, except that the Participating Employer maintaining such disqualified Plan or Plans and the Trustee shall be the only parties thereto.

(f) Each Participating Employer, other than the Employer, which is or shall become a party to this Agreement, hereby irrevocably gives and grants to the Plan Administrator full and exclusive power and authority to exercise all of the powers conferred upon it by the terms of this Agreement and to take or refrain from taking any and all action which such Participating Employer might otherwise take or refrain from taking with respect to this Agreement, including the sole and exclusive power to exercise, enforce, or waive any rights whatsoever which such Participating Employer might otherwise have with respect to the Trust Fund, and each such Participating Employer, by becoming a party to this Agreement, irrevocably appoints the Plan Administrator its agent for such purposes. The Trustee shall have no obligation to account to any such Participating Employer or to follow the instructions of or otherwise deal with any such



Participating Employer or Affiliated Company, the intention being that the Trustee shall deal solely with the Plan Administrator as if the Trustee and the Plan Administrator were the only parties in this Agreement.

SEVENTEENTH: Alienation. No interest in the Trust Fund shall be assignable or subject to anticipation, sale, transfer, mortgage, pledge, charge, garnishment, attachment, bankruptcy or encumbrance or levy of any kind, and the Trustee or its agent shall not recognize any attempt to assign, sell, transfer, mortgage, pledge, charge, garnish, attach or otherwise encumber the same except to the extent that such attempt is (i) made pursuant to a court order determined by the Plan Administrator to be a qualified domestic relations order, as defined in Section 414 of the Code and Section 206 of ERISA, (ii) as required by a federal tax levy made in accordance with Section 6331 of the Code, (iii) pursuant to an offset under Section 401(a)(13)(C) of the Code or (iv) as otherwise allowed under ERISA and the Code.

EIGHTEENTH: Bond. The Trustee shall not be required to give any bond or any other security for the faithful performance of its duties under this Agreement except as required by law.

NINETEENTH: Successors. This Agreement shall be binding upon the respective successors and assigns of the Employer, the Plan Administrator, and the Trustee. Any corporation which shall, by merger, consolidation, purchase or otherwise, succeed to substantially all the trust business of the Trustee shall, upon such succession, and without any appointment or other action by any person, be and become successor Trustee hereunder.

TWENTIETH: Communications. Communications to the Employer or the Plan Administrator shall be addressed to the Plan Administrator at One Energy Plaza, 847 WCB, Detroit, MI 48226; provided, however, that upon the Employer’s or Plan Administrator’s written request such communications shall be sent to such other address as the Employer or Plan



Administrator may specify. No written communication is binding on the Employer or the Plan Administrator until it is received by the Plan Administrator.

Communications to the Trustee shall be addressed to:

JPMorgan Chase Bank, N.A.

Investor Services

One Chase Manhattan Plaza, 19th Floor

New York, New York 10005-1401

Attention: JPMorgan Retirement Plan Services Account Representative

Provided, however, that upon the Trustee’s written request, such communications shall be sent to such other address as the Trustee may specify. No communication shall be binding on the Trustee until it is received by the Trustee. Communications under Sections 12 and 13 shall be in writing.

TWENTY-FIRST: Governing Law and Jurisdiction. This Agreement and the Trust shall be construed, regulated, and administered under the laws of the United States or the State of New York, as applicable, without regard to New York’s principles regarding conflicts of law. Except where otherwise specifically required by ERISA, the United States District Court for the Southern District of New York shall have the sole and exclusive jurisdiction over any lawsuit or other judicial proceeding relating to or arising from this Agreement. If that court lacks federal subject matter jurisdiction, the Supreme Court of the State of New York, New York County shall have sole and exclusive jurisdiction. Either of these courts shall have proper venue for any such lawsuit or judicial proceeding, and the parties waive any objection to venue or their convenience as a forum. The parties agree to submit to the jurisdiction of any of the courts specified and to accept service of process to vest personal jurisdiction over them in any of these courts. The parties further hereby knowingly, voluntarily and intentionally waive, to the fullest extent permitted by law, any right to a trial by jury with respect to any such lawsuit or judicial



proceeding arising or relating to this Agreement or the transactions contemplated hereby. All contributions to the Trustee shall be deemed to take place in the State of New York.

IN WITNESS WHEREOF the Employer and the Trustee have executed this instrument this 15 \( ^{th} \)  day of October, 2010.

ATTEST:

Michael T. Wood

Title: Attorney

ATTEST:

/s/ Kevin J. Kenneally

Title: Manager, Trust Investments

ATTEST:

/s/ Joseph DeBold

Title: Vice President

DTE ENERGY CORPORATE SERVICES, LLC

By: /s/ Lisa A. Muschong

Title: Corporate Secretary

DTE ENERGY INVESTMENT COMMITTEE

By: /s/ Paul Cavazos
Title: Solely in my capacity as Secretary of DTE
Energy Company Investment Committee

JPMORGAN CHASE BANK, N.A.

By: /s/ Denis Burchell

Title: Vice President



SCHEDULE A

PARTICIPATING PLANS

DTE Energy Company Savings and Stock Ownership Plan

Detroit Edison Company Savings and Stock Ownership Plan for Employees Represented by Local 17 of the International Brotherhood of Electrical Workers

Detroit Edison Company Savings and Stock Ownership Plan for Employees Represented by Local 223 of the Utility Workers Union of America

MichCon Investment and Stock Ownership Plan



## SCHEDULE B

## PROXY VOTING PROVISIONS

For the following participants, the Trustee will not vote any shares in the Employer Stock Fund for which it has not received voting directions from the participant, except as otherwise required by law as determined by the Plan Administrator, in which event the Plan Administrator shall so notify the Trustee and direct the Trustee to vote such shares in the same ratio in which the total shares with respect to which timely directions were received were voted in such manner:

(a) Participants in the DTE Energy Company Savings and Stock Ownership Plan except shares held in the accounts of Citizens Gas Plan Members and shares held in the accounts of MCN Plan Members;

(b) Detroit Edison Company Savings & Stock Ownership Plan for Employees Represented by Local 223 of the Utility Workers Union of America;

(c) Detroit Edison Company Savings & Stock Ownership Plan for Employees Represented by Local 17 of the International Brotherhood of Electrical Workers.



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