UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

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

DTE ENERGY COMPANY

(Exact name of registrant as specified in its charter)

Michigan		38-3217752
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)
One Energy Plaza, Detroit, Michigan		48226-1279
(Address of principal executive offices)		(Zip Code)

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

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 þ          No o          

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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes o          No o          

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):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o          No þ          

At June 30, 2009, 164,472,648 shares of DTE Energy’s common stock were outstanding, substantially all of which were held by non-affiliates.

 

 

DTE Energy Company
Quarterly Report on Form 10-Q
Quarter Ended June 30, 2009

TABLE OF CONTENTS

		Page
Definitions			1
Forward-Looking Statements			3
Part I — Financial Information
Item 1. Financial Statements
Consolidated Statements of Operations (Unaudited)			31
Consolidated Statements of Financial Position (Unaudited)			32
Consolidated Statements of Cash Flows (Unaudited)			34
Consolidated Statements of Changes in Shareholders’ Equity and Comprehensive Income (Unaudited)			35
Notes to Consolidated Financial Statements (Unaudited)			36
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			5
Item 3. Quantitative and Qualitative Disclosures About Market Risk			27
Item 4. Controls and Procedures			30
Part II — Other Information
Item 1. Legal Proceedings			64
Item 1A. Risk Factors			64
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			64
Item 4. Submission of Matters to a Vote of Security Holders			65
Item 6. Exhibits			66
Signature			67
EX-12.43
EX-31.51
EX-31.52
EX-32.51
EX-32.52

Definitions

Company		DTE Energy Company and any subsidiary companies
Customer Choice		Statewide initiatives giving customers in Michigan the option to choose alternative suppliers for electricity and gas
Detroit Edison		The Detroit Edison Company (a direct wholly-owned subsidiary of DTE Energy) 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
FSP		FASB Staff Position
MDEQ		Michigan Department of Environmental Quality
MichCon		Michigan Consolidated Gas Company (an indirect wholly-owned subsidiary of DTE Energy) and subsidiary companies
MISO		Midwest Independent System Operator, a Regional Transmission Organization
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 or the FERC.
NRC		Nuclear Regulatory Commission
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.
Proved reserves		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.
PSCR		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 expenses.
Securitization		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.
SFAS		Statement of Financial Accounting Standards
Subsidiaries		The direct and indirect subsidiaries of DTE Energy Company

Synfuels		The fuel produced through a process involving chemically modifying and binding particles of coal. Synfuels are used for power generation and coke production. Synfuel production through December 31, 2007 generated production tax credits.
Unconventional Gas		Includes those oil and gas deposits that originated and are stored in coal bed, tight sandstone and shale formations
Units of Measurement
Bcf		Billion cubic feet of gas
Bcfe		Conversion metric of natural gas, the ratio of 6 Mcf of gas to 1 barrel of oil
GWh		Gigawatthour of electricity
kWh		Kilowatthour of electricity
Mcf		Thousand cubic feet of gas
MMcf		Million cubic feet of gas
MW		Megawatt of electricity
MWh		Megawatthour of electricity

Forward-Looking Statements

Certain information presented herein includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve certain risks and uncertainties that may cause actual future results to differ materially from those presently contemplated, projected, estimated or budgeted. Many factors may impact forward-looking statements including, but not limited to, the following:

	•		the length and severity of ongoing economic decline;
	•		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;
	•		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;
	•		potential for continued loss on investments, including nuclear decommissioning and benefit plan assets;
	•		the timing and extent of changes in interest rates;
	•		the level of borrowings;
	•		the availability, cost, coverage and terms of insurance and stability of insurance providers;
	•		the effects of weather and other natural phenomena on operations and sales to customers, and purchases from suppliers;
	•		economic climate and population growth or decline in the geographic areas where we do business;
	•		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 mercury emission controls, a renewable portfolio standard, energy efficiency mandates, and a carbon tax or cap and trade structure;
	•		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;
	•		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;
	•		the ability to recover costs through rate increases;
	•		the cost of protecting assets against, or damage due to, terrorism;
	•		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 — Item 2.

DTE ENERGY COMPANY
Management’s Discussion and Analysis
of Financial Condition and Results of Operations

OVERVIEW

DTE Energy is a diversified energy company with 2008 revenues in excess of $9 billion and approximately $24 billion of 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.

Net income attributable to DTE Energy in the second quarter of 2009 was $83 million, or $0.51 per diluted share, compared to net income attributable to DTE Energy of $28 million, or $0.17 per diluted share, in the second quarter of 2008. Net income attributable to DTE Energy for the six months ended June 30, 2009 was $261 million, or $1.59 per diluted share, compared to net income attributable to DTE Energy of $240 million, or $1.47 per diluted share, in the comparable period of 2008. The increases are primarily due to higher earnings in the electric utility and energy trading segments, partially offset in the six-month period, by the $80 million after-tax gain recorded in the Unconventional Gas production segment on the 2008 sale of a portion of Barnett shale properties.

Please see detailed explanations of segment performance in the following Results of Operations section.

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

•		Impacts of national and regional economic conditions on utility and non-utility operations, including automotive industry uncertainty;
•		Effects of weather on utility operations;
•		Collectibility of accounts receivable on utility operations;
•		Impact of regulatory decisions on utility operations;
•		Results in our Energy Trading business; and
•		Required renewable, energy-efficiency, environmental and reliability-related capital investments and other costs.

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 2.2 million customers in southeastern Michigan.

Our Gas Utility segment consists of MichCon and Citizens Gas Fuel Company (Citizens). MichCon is engaged in the purchase, storage, transmission, distribution and sale of natural gas to approximately 1.2 million customers throughout Michigan. MichCon also has subsidiaries involved in the gathering, processing and transmission of natural gas in northern Michigan. Citizens distributes natural gas in Adrian, Michigan to approximately 17,000 customers.

Impact of National and Regional Economic Conditions on our Utility Operations — Revenues from our utility operations follow the economic cycles of the customers we serve. Unfavorable national and regional economic trends have resulted in reduced demand for electricity in our service territory and high levels in our uncollectible

accounts receivable. The magnitude of these trends will be driven by the impacts of the challenges in the domestic automotive industry and the timing and level of recovery in the national and regional economies. Direct and indirect effects of further automotive and other industrial plant closures could have a significant impact on the results of Detroit Edison. As discussed further below, deteriorating economic conditions impact our ability to collect amounts due from our electric and gas customers and drive increased thefts of electricity and natural gas. In the face of these economic conditions, we are actively managing our cash, capital expenditures, cost structure and liquidity to maintain our financial strength. See Note 8 of the Notes to Consolidated Financial Statements.

Effects of Weather on Utility Operations — Earnings from our utility operations are seasonal and very sensitive to weather. Electric utility earnings are primarily dependent on hot summer weather, while the gas utility’s results are primarily dependent on cold winter weather.

Collectibility of Accounts Receivable on Utility Operations — Both utilities continue to experience high levels of past due receivables, which is 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 increasing customer disconnections, contracting with collection agencies and working with Michigan officials and others to increase the share of low-income funding allocated to our customers. The April 2005 MPSC gas rate order provided for an uncollectible true-up mechanism for MichCon. The uncollectible true-up mechanism enables MichCon to recover ninety percent of the difference between the actual uncollectible expense for each year and $37 million after an annual reconciliation proceeding before the MPSC. We experienced a decrease in our uncollectible accounts expense for the two utilities to approximately $71 million in the 2009 second quarter from approximately $94 million in the 2008 second quarter. Uncollectible accounts expense was approximately $114 million during the six months ended June 30, 2009, in comparison to $136 million during the six months ended June 30, 2008. The 2008 periods experienced higher expense due to an analysis of our greater than ninety day receivables that indicated a change in the mix of customers in that group and therefore an increased risk of collection. The bankruptcies of General Motors Corporation (GM) and Chrysler LLC (Chrysler) did not have a significant impact to our uncollectible expense in the 2009 periods.

Impact of Regulatory Decisions on Utility Operations

Detroit Edison filed a general rate case on January 26, 2009 based on a twelve months ended June 2008 historical test year. The filing with the MPSC requested a $378 million, or 8.1 percent average increase in Detroit Edison’s annual revenues for the twelve months ended June 30, 2010 projected test year. The requested $378 million increase in revenues is required to recover the increased costs associated with environmental compliance, operation and maintenance of the Company’s electric distribution system and generation plants, customer uncollectible accounts, inflation, the capital costs of plant additions and the reduction in territory sales. Pursuant to an MPSC order issued May 26, 2009, Detroit Edison filed proposed tariffs on June 26, 2009 to implement $280 million of its requested annual increase on July 26, 2009. On July 16, 2009, the MPSC issued an order requiring Detroit Edison to implement the increase by applying the rate design reflected in its January 26, 2009 application. Detroit Edison expects the impact of this self-implemented increase would be significantly offset by its plan to begin reducing its PSCR factor beginning August 1, 2009. This increase will remain in place until a final order is issued by the MPSC, which is expected in January 2010. If the final rate case order provides for lower rates than we have self-implemented, we must refund the difference with interest.

MichCon filed a general rate case on June 9, 2009 based on a 2008 historical test year. The filing with the MPSC requested a $193 million, or 11.5 percent average increase in MichCon’s annual revenues for a 2010 projected test year. The requested $193 million increase in revenues is required to recover the increased costs associated with the revenue requirement associated with increased investments in net plant and working capital, the impact of high levels of uncollectible expense and the cost of natural gas theft primarily due to economic conditions in Michigan, sales reductions due to customer conservation and the trend of warmer weather on MichCon’s market, and increasing operating costs, largely due to inflation. Pursuant to the October 2008 Michigan legislation, and the settlement in MichCon’s last base gas sale case, MichCon anticipates self-implementing a rate increase on January 1, 2010.

See Note 5 of the Notes to Consolidated Financial Statements.

NON-UTILITY OPERATIONS

We have significant investments in non-utility asset-intensive 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.

Gas Midstream

Gas Midstream 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 transmission pipeline, which connects Michigan to Chicago and Ontario. We also have a partnership interest in Millennium Pipeline Company (Millennium), which was placed in service in December 2008. Millennium 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 89 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 and MichCon providing our customers access to the Chicago, Michigan, other Midwest and Ontario market centers. The pipeline and storage business is expanding capacity to serve markets throughout the Midwest and Northeast United States regions.

Unconventional Gas Production

Our Unconventional Gas Production business is engaged in natural gas exploration, development and production within the Barnett shale in north Texas. We continue to develop our position, with total leasehold acreage of 61,520 (59,698 acres, net of impairment and interest of others). Due to economic conditions and lower natural gas prices, we have chosen to do minimal lease acquisitions during the first half of 2009. However, we continue to evaluate leasing opportunities in active development areas in the Barnett shale to optimize our existing portfolio.

In 2008, we sold a portion of our Barnett shale properties for gross proceeds of approximately $260 million. The properties sold included 75 Bcfe of proved reserves on approximately 11,000 net acres in the core area of the Barnett shale.

We continue to develop our holdings in the western portion of the Barnett shale and to seek opportunities for additional monetization of select properties within our Barnett shale holdings, when conditions are appropriate. We expect to invest approximately $25 million in 2009. During 2009, we expect to drill 10 to 15 new wells and achieve Barnett shale production of approximately 5 to 6 Bcfe of natural gas, compared with approximately 5 Bcfe in 2008.

As a component of our risk management strategy for our Barnett shale reserves, we hedged a portion of anticipated production from our reserves to secure an attractive investment return. As of June 30, 2009, we have a series of cash flow hedges for approximately 2.2 Bcf of anticipated Barnett gas production through 2010 at an average price of $7.28 per Mcf.

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 and marketing; and sell electricity from biomass-fired energy projects. This business segment provides utility- type services using project assets usually located on or near the customers’ premises in the steel, automotive, pulp and paper, airport and other industries.

Services provided include pulverized coal and petroleum coke supply and metallurgical coke supply, power generation, steam production, chilled water production, wastewater treatment and compressed air supply. We own and operate one gas-fired peaking electric generating plant, two biomass-fired electric generating plants and operate one coal-fired power plant. A third biomass-fired electric generating plant is currently under development with an expected in-service date of June 2010. This business segment also develops, owns and operates landfill gas recovery systems throughout the United States and produces metallurgical coke from three coke batteries. The production of

coke from two of the coke batteries generates production tax credits. The business provides coal transportation-related services including fuel, transportation, storage, blending and rail equipment management services. We specialize in minimizing fuel costs and maximizing reliability of supply for energy-intensive customers. Additionally, we participate in coal marketing and trading and the purchase and sale of emissions credits. This business segment performs coal mine methane extraction, in which we recover methane gas from mine voids for processing and delivery to natural gas pipelines.

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 the 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. We also enter into contracts for the purchase or sale of commodities which may also qualify as derivative contracts. Our derivative instruments and contracts are accounted for under the mark-to-market method, which results in the recognition of unrealized gains and losses from changes in the fair value of the derivatives, unless specific hedge criteria are met. 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 electric and gas marketing and trading portfolio are economically hedged. The portfolio includes financial instruments and gas inventory, as well as contracted natural gas pipeline transportation and storage and power generation capacity positions. Most financial instruments are deemed derivatives, whereas proprietary gas inventory, power transmission, pipelines and 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. This results in gains and losses that are recognized in different accounting periods. We may incur mark-to-market accounting gains or losses in one period that could reverse in subsequent periods.

CAPITAL INVESTMENT

We anticipate significant capital investment across all of our business segments during the next five years. Most of our capital expenditures will be concentrated within our utility segments. Our electric utility segment currently expects to invest approximately $6 billion (excluding investments in new base-load generation capacity, if any), including renewable and energy-efficiency related expenditures, increased environmental requirements and reliability enhancement projects during the period of 2009 through 2013. Our gas utility segment currently expects to invest approximately $850 million on system expansion, pipeline safety and reliability enhancement projects through the same period. We plan to seek regulatory approval to include these capital expenditures within our regulatory rate base consistent with prior treatment. Due to the economy and credit market conditions, we are continually reviewing our capital expenditure commitments for potential reductions and deferrals and plan to adjust spending as appropriate.

ENVIRONMENTAL MATTERS

Proposals for voluntary initiatives and mandatory controls are being discussed in the United States to reduce greenhouse gases such as carbon dioxide, a by-product of burning fossil fuels. On June 26, 2009, the U.S. House of Representatives passed the American Clean Energy and Security Act (ACESA). The bill has yet to be taken up by the U.S. Senate. The ACESA includes a cap and trade program that would start in 2012 and provides for costs for emissions of greenhouse gases (e.g. carbon dioxide). Meanwhile, the EPA is beginning to implement regulatory action under the Clean Air Act to address climate change. There may be further legislative and or regulatory action to address the issue of changes in climate that may result from the build-up of greenhouse gases in the atmosphere. If passed, legislative or regulatory actions as currently being discussed could have a material impact on our operations and financial position and the rates we charge our customers.

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 Review standards, Prevention of Significant Deterioration requirements, and Title V operating permit requirements under the Clean Air Act. We are in the process of preparing our response to the NOV/FOV, but we believe that the plants identified by the EPA have complied with applicable regulations. Depending upon the outcome of our discussions with the EPA regarding the NOV/FOV, the EPA could bring legal action against Detroit Edison. We could also be required to install additional pollution control equipment at some or all of the power plants in question, engage in Supplemental Environmental Programs, and/or pay fines. We cannot predict the financial impact or outcome of this matter, or the timing of its resolution.

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:

	•		continuing to pursue regulatory stability and investment recovery for our utilities;
	•		managing the growth of our utility asset base;
	•		enhancing our cost structure across all business segments;
	•		managing cash, capital and liquidity to maintain or improve our financial strength;
	•		improving Electric and Gas Utility customer satisfaction; 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.

Net income attributable to DTE Energy by segment for the three and six month periods ended June 30, 2009 and 2008 is as follows:

		Three Months Ended								Six Months Ended
		June 30								June 30
(in Millions)		2009				2008				2009				2008
Net Income Attributable to DTE Energy Company:
Electric Utility		$	79			$	51			$	157			$	92
Gas Utility			(15	)			(11	)			46				48
Non-utility Operations:
Gas Midstream			10				8				24				16
Unconventional Gas Production (1)			(2	)			4				(4	)			86
Power and Industrial Projects			(6	)			(6	)			(2	)			4
Energy Trading			27				(14	)			67				17
Corporate & Other			(10	)			(4	)			(27	)			(35	)
Income (Loss) from Continuing Operations:
Utility			64				40				203				140
Non-utility			29				(8	)			85				123
Corporate & Other			(10	)			(4	)			(27	)			(35	)
			83				28				261				228
Discontinued Operations			—				—				—				12
Net Income Attributable to DTE Energy Company		$	83			$	28			$	261			$	240

ELECTRIC UTILITY

Our Electric Utility segment consists of Detroit Edison.

Electric Utility results for the three and six months ended June 30, 2009 as compared to the comparable periods in 2008 are discussed below:

		Three Months Ended								Six Months Ended
		June 30								June 30
(in Millions)		2009				2008				2009				2008
Operating Revenues		$	1,108			$	1,173			$	2,226			$	2,326
Fuel and Purchased Power			372				415				712				817
Gross Margin			736				758				1,514				1,509
Operation and Maintenance			306				369				622				727
Depreciation and Amortization			197				178				385				370
Taxes Other Than Income			44				60				104				122
Operating Income			189				151				403				290
Other (Income) and Deductions			61				71				145				145
Income Tax Provision			49				29				101				53
Net Income Attributable to DTE Energy Company		$	79			$	51			$	157			$	92
Operating Income as a Percentage of Operating Revenues			17	%			13	%			18	%			12	%

Gross margin decreased $22 million in the second quarter of 2009 and increased $5 million in the six-month period ended June 30, 2009. The following table details changes in various gross margin components relative to the comparable prior period:

(in Millions)		Three Months				Six Months
Weather		$	(20	)		$	(17	)
Economy			(66	)			(103	)
April 2008 expiration of show-cause rate decrease			6				23
December 2008 rate order			22				40
Securitization bond and tax surcharge rate increase			17				25
Other, net			19				37
Increase (decrease) in gross margin		$	(22	)		$	5

		Three Months Ended								Six Months Ended
		June 30								June 30
(in Thousands of MWh)		2009				2008				2009				2008
Electric Sales
Residential			3,147				3,428				6,885				7,360
Commercial			4,536				4,913				8,959				9,275
Industrial			2,385				3,231				5,022				6,747
Wholesale			695				700				1,399				1,423
Other			87				87				200				196
			10,850				12,359				22,465				25,001
Interconnections sales (1)			1,189				1,183				2,224				2,009
Total Electric Sales			12,039				13,542				24,689				27,010
Electric Deliveries
Retail and Wholesale			10,850				12,359				22,465				25,001
Electric Customer Choice (2)			344				296				661				752
Total Electric Sales and Deliveries			11,194				12,655				23,126				25,753

Power Generated and Purchased

		Three Months Ended								Six Months Ended
		June 30								June 30
(in Thousands of MWh)		2009				2008				2009				2008
Power Plant Generation
Fossil			9,852				10,347				19,694				20,587
Nuclear			1,486				2,408				3,740				4,751
			11,338				12,755				23,434				25,338
Purchased Power			1,464				1,509				2,816				3,239
System Output			12,802				14,264				26,250				28,577
Less Line Loss and Internal Use			(763	)			(722	)			(1,561	)			(1,567	)
Net System Output			12,039				13,542				24,689				27,010
Average Unit Cost ($/MWh)
Generation (1)		$	18.97			$	17.98			$	18.10			$	17.30
Purchased Power		$	41.83			$	61.53			$	38.05			$	61.56
Overall Average Unit Cost		$	21.58			$	22.59			$	20.24			$	22.31

Operation and maintenance expense decreased $63 million in the second quarter of 2009 and $105 million in the six-month period ended June 30, 2009. The decrease for the second quarter is primarily due to $23 million from the timing of maintenance activities, $25 million from continuous improvement initiatives resulting in lower contract labor and outside services expense, information technology and other staff expenses, lower storm expenses of $14 million and $12 million from employee benefit-related changes, partially offset by higher pension and healthcare costs of $15 million. The decrease for the six-month period is primarily due to $37 million from the timing of maintenance activities, $59 million from continuous improvement initiatives resulting in lower contract labor and outside services expense, information technology and other staff expenses, $21 million from employee benefit-related changes and lower storm expenses of $14 million, partially offset by higher pension and healthcare costs of $31 million.

Taxes other than income were lower by $16 million in the 2009 second quarter and $18 million in the 2009 six-month period due primarily to a $13 million reduction in property tax expense due to refunds received in partial settlement of appeals of assessments for prior years.

Outlook — We will move forward in our efforts to continue to improve the operating performance and cash flow of Detroit Edison. We continue to resolve outstanding regulatory issues. Many of these issues have been addressed by the legislation signed by the Governor of Michigan in October 2008. Looking forward, additional issues, such as volatility in prices for coal and other commodities, investment returns and changes in discount rate assumptions in benefit plans, health care costs and higher levels of capital spending, will result in us continuing to pursue opportunities to improve productivity, remove waste and decrease our costs while improving customer satisfaction.

Unfavorable national and regional economic trends have resulted in reduced demand for electricity in our service territory and increases in our uncollectible accounts receivable. The magnitude of these trends will be driven by the impacts of the challenges in the domestic automotive industry and the timing and level of recovery in the national and regional economies. Direct and indirect effects of further automotive and other industrial plant closures could have a significant impact on the results of Detroit Edison. We continue to monitor developments in this sector. Due to the economy and credit market conditions, in the near term, we are reviewing our capital expenditure commitments for potential adjustments as appropriate.

The following variables, either individually or in combination, could impact our future results:

	•		Economic conditions within Michigan resulting in lower demand and increased thefts of electricity;
	•		Collectibility of accounts receivable;
	•		Instability in capital markets which could impact availability of short and long-term financing or the potential for loss on investments;
	•		Increases in future expense and contributions to pension and other postretirement plans due to declines in asset values resulting from market conditions;
	•		The amount and timing of cost recovery allowed as a result of regulatory proceedings, related appeals or new legislation;
	•		Our ability to reduce costs and maximize plant and distribution system performance;
	•		Weather;
	•		The level of customer participation in the electric Customer Choice program; and
	•		Environmental issues, laws, regulations, and the increasing costs of remediation and compliance, including actual and potential new federal and state requirements that could include carbon and more stringent mercury emission controls, a renewable portfolio standard, energy efficiency mandates, and a carbon tax or cap and trade structure.

GAS UTILITY

Our Gas Utility segment consists of MichCon and Citizens.

Gas Utility results for the three and six months ended June 30, 2009 as compared to the comparable periods in 2008 are discussed below:

		Three Months Ended								Six Months Ended
		June 30								June 30
(in Millions)		2009				2008				2009				2008
Operating Revenues		$	292			$	397			$	1,063			$	1,312
Cost of Gas			138				216				651				870
Gross Margin			154				181				412				442
Operation and Maintenance			123				148				242				271
Depreciation and Amortization			27				26				53				50
Taxes Other Than Income			12				12				26				26
Other Asset Losses and Reserves, Net			(1	)			—				(1	)			—
Operating Income (Loss)			(7	)			(5	)			92				95
Other (Income) and Deductions			15				10				28				25
Income Tax Provision			(7	)			(4	)			18				22
Net Income (Loss) Attributable to DTE Energy Company		$	(15	)		$	(11	)		$	46			$	48
Operating Income as a Percentage of Operating Revenues			(2	)%			(1	)%			9	%			7	%

Gross margin decreased $27 million in the second quarter of 2009 and $30 million in the six-month period ended June 30, 2009. For the second quarter, this decrease reflects $19 million of lower revenues from the uncollectible tracking mechanism, lower end user transportation revenue of $7 million, $5 million of lower valued gas received as compensation for transportation of third party gas, $3 million of continued customer conservation efforts and a $2 million unfavorable result from lost and stolen gas, partially offset by $7 million higher midstream transportation and storage revenues and the effects of favorable weather of $2 million.

For the six-month period, the decrease reflects $16 million of lower revenues from the uncollectible tracking mechanism, $14 million unfavorable result from lost and stolen gas, $10 million of continued customer conservation efforts, lower end user transportation revenue of $6 million, partially offset by $8 million higher midstream transportation and storage revenues, the effects of favorable weather of $5 million and $3 million higher appliance service revenues.

		Three Months Ended								Six Months Ended
		June 30								June 30
		2009				2008				2009				2008
Gas Markets (in Millions)
Gas sales		$	219			$	322			$	892			$	1,141
End user transportation			26				32				78				83
			245				354				970				1,224
Intermediate transportation			17				16				34				35
Storage and other			30				27				59				53
		$	292			$	397			$	1,063			$	1,312
Gas Markets (in Bcf)
Gas sales			18				19				86				90
End user transportation			21				23				63				67
			39				42				149				157
Intermediate transportation			123				122				267				238
			162				164				416				395

Operation and maintenance expense decreased $25 million in the second quarter of 2009 and $29 million in the six-month period ended June 30, 2009. The decrease for the second quarter is primarily due to $20 million of lower uncollectible expense $7 million from continuous improvement initiatives resulting in lower contract labor and outside services expense, information technology and other staff expenses, $5 million from employee benefit-related changes, partially offset by higher pension and healthcare costs of $7 million. The decrease for the six-month period is primarily due to $19 million of lower uncollectible expense, $14 million from continuous improvement initiatives resulting in lower contract labor and outside services expense, information technology and other staff expenses, and $7 million from employee benefit-related changes, partially offset by higher pension and healthcare costs of $14 million.

Outlook — Volatile gas prices and deteriorating economic conditions have resulted in continued pressure on receivables and working capital requirements that are partially mitigated by the MPSC’s GCR and uncollectible true-up mechanisms. We will continue to seek opportunities to improve productivity, minimize lost and stolen gas, remove waste and decrease our costs while improving customer satisfaction.

Unfavorable national and regional economic trends have resulted in a decrease in the number of customers in our service territory and continued high levels of uncollectible accounts receivable. The magnitude of these trends will be driven by the impacts of the challenges in the domestic automotive industry and the timing and level of recovery in the national and regional economies.

The following variables, either individually or in combination, could impact our future results:

	•		Economic conditions within Michigan resulting in lower demand and increased thefts of natural gas;
	•		Collectibility of accounts receivable;
	•		Instability in capital markets which could impact availability of short and long-term financing or the potential for loss investments;
	•		Increases in future expense and contributions to pension and other postretirement plans due to declines in asset values resulting from market conditions;
	•		The amount and timing of cost recovery allowed as a result of regulatory proceedings, related appeals or new legislation;
	•		Our ability to reduce costs and maximize distribution system performance;
	•		Weather;
	•		Customer conservation;
	•		Volatility in the short-term natural gas storage markets which impact third-party storage revenues; and
	•		Any current and potential new federal and state environmental, and energy efficiency requirements.

NON-UTILITY OPERATIONS

Gas Midstream

Our Gas Midstream segment consists of our gas pipelines and storage business.

Gas Midstream results for the three and six months ended June 30, 2009 as compared to the comparable periods in 2008 are discussed below:

		Three Months Ended								Six Months Ended
		June 30								June 30
(in Millions)		2009				2008				2009				2008
Operating Revenues		$	20			$	17			$	42			$	34
Operation and Maintenance			4				3				7				7
Depreciation and Amortization			1				1				2				3
Taxes Other Than Income			1				—				2				1
Operating Income			14				13				31				23
Other (Income) and Deductions			(4	)			(1	)			(11	)			(5	)
Income Tax Provision			7				6				17				12
Net Income			11				8				25				16
Attributable to Noncontrolling Interests			1				—				1				—
Net Income Attributable to DTE Energy Company		$	10			$	8			$	24			$	16

Net income attributable to DTE Energy increased $2 million and $8 million for the 2009 second quarter and six-month periods. The increases were driven by higher operating revenues resulting from increased capacity sold with higher rates on long-term agreements and higher short-term contract revenue. In addition, there were higher pipeline operating earnings from both Vector and Millennium.

Outlook — Our Gas Midstream business expects to continue its steady growth plan. In April 2008, an additional 7 Bcf of storage capacity was placed in service, which was followed by an additional 2 Bcf in April 2009. The Vector Pipeline Phase 2 expansion is currently under construction and will add approximately 100 MMcf/day, with an expected in-service date of November 2009. The 2009 expansion project is supported by customers under long-term contracts. Millennium Pipeline was placed in service in December 2008 and currently has nearly 85 percent of its capacity sold to customers under long-term contracts. We are also a 50 percent owner in the proposed Dawn Gateway Pipeline which will provide transport between our Michigan storage facilities and the Dawn Hub in Ontario, Canada.

Unconventional Gas Production

Our Unconventional Gas Production business is engaged in natural gas exploration, development and production primarily within the Barnett shale in northern Texas.

Unconventional Gas Production results for the three and six months ended June 30, 2009 as compared to the comparable periods in 2008 are discussed below:

		Three Months Ended								Six Months Ended
		June 30								June 30
(in Millions)		2009				2008				2009				2008
Operating Revenues		$	8			$	13			$	15			$	23
Operation and Maintenance			3				5				7				11
Depreciation, Depletion and Amortization			4				3				9				5
Taxes Other Than Income			1				—				1				—
Other Asset (Gains) and Losses, Reserves and Impairments, net			1				(2	)			1				(128	)
Operating Income (Loss)			(1	)			7				(3	)			135
Other (Income) and Deductions			2				1				3				1
Income Tax Provision (Benefit)			(1	)			2				(2	)			48
Net Income (Loss) Attributable to DTE Energy Company		$	(2	)		$	4			$	(4	)		$	86

Operating revenues decreased $5 million in the second quarter of 2009 and $8 million in the 2009 six-month period as a result of lower commodity prices, despite a 12% increase in production.

Operation and maintenance expense was lower by $2 million and $4 million in the second quarter and six-month period ended June 30, 2009, respectively, due to the ample supply of service companies available and our ability to secure lower prices for oilfield services. For the six-month period of 2009, Barnett shale production was approximately 2.7 Bcfe of natural gas compared with approximately 2.4 Bcfe during the same period of 2008.

Other asset (gains) and losses, reserves and impairments, net decreased in the six-month period ended June 30, 2009 as compared to 2008 due to the gain of $128 million ($80 million after-tax) on the 2008 sale of a portion of our Barnett shale properties.

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 within our Barnett shale holdings, when conditions are appropriate. Our strategy for 2009 is centered on reducing operating expenses and optimizing production volume. During 2009, we expect to invest approximately $20 million to $25 million to drill 10 to 15 new wells and achieve Barnett shale production of approximately 5 to 6 Bcfe of natural gas, compared with approximately 5 Bcfe in 2008.

Power and Industrial Projects

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

Power and Industrial Projects results for the three and six months ended June 30, 2009 as compared to the comparable periods in 2008 are discussed below:

		Three Months Ended								Six Months Ended
		June 30								June 30
(in Millions)		2009				2008				2009				2008
Operating Revenues		$	138			$	238			$	293			$	454
Operation and Maintenance			140				221				281				424
Depreciation and Amortization			10				8				20				11
Taxes Other Than Income			2				3				6				7
Asset (Gains) Losses and Reserves, Net			(1	)			16				(4	)			13
Operating Loss			(13	)			(10	)			(10	)			(1	)
Other (Income) and Deductions			3				—				5				(3	)
Income Taxes
Provision (Benefit)			(6	)			(3	)			(7	)			1
Production Tax Credits			(4	)			(2	)			(7	)			(4	)
			(10	)			(5	)			(14	)			(3	)
Net Income (Loss)			(6	)			(5	)			(1	)			5
Noncontrolling Interests			—				1				1				1
Net Income (Loss) Attributable to DTE Energy Company		$	(6	)		$	(6	)		$	(2	)		$	4

Operating revenues decreased $100 million in the second quarter of 2009 and $161 million in the six-month period ended June 30, 2009. The 2009 second quarter decrease is attributed to $74 million representing a reduction in coal structured transactions, $11 million of lower pricing and volumes and $38 million of lower coke demand, partially offset by a $27 million increase in coal transportation services. The 2009 six-month decrease is attributable to $138 million representing a reduction in coal structured transactions, $17 million of lower pricing and volumes and $62 million of lower coke demand, partially offset by a $55 million increase in coal transportation services.

Operation and maintenance expense decreased $81 million in the second quarter of 2009 and $143 million in the six-month period ended June 30, 2009. The 2009 second quarter decrease is due primarily to $71 million representing a decrease in coal structured transactions and $24 million of lower coke demand, $7 million of lower operating expenses, partially offset by $16 million of higher coal transportation services and $5 million of higher uncollectible accounts expense, principally GM. The 2009 six-month decrease is due primarily to $129 million representing a decrease in coal structured transactions and $40 million of lower coke demand, $14 million of lower

operating expenses, partially offset by $41 million of higher coal transportation services and $5 million of higher uncollectible accounts expense, principally GM.

Depreciation and amortization expense increased $2 million in the second quarter of 2009 and $9 million in the six-month period ended June 30, 2009. In 2007, we announced our 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 Company ceased recording depreciation and amortization expense related to these assets. During the second quarter of 2008, our 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 in June 2008 when the assets were reclassified as held and used.

Assets (gains) losses and reserves, net expense improved $17 million in both the second quarter of 2009 and six-month period ended June 30, 2009. These increases are primarily attributable to a loss recorded in the 2008 periods of approximately $19 million related to the valuation adjustment for the cumulative depreciation and amortization upon reclassification of certain project assets as held for sale and gains attributable to the sale of one of our coke battery projects where the proceeds were dependent on future production.

Outlook — The deterioration in the U.S. economy is expected to continue to negatively impact our customers in the steel industry and we expect a corresponding reduction in demand for metallurgical coke and pulverized coal supplied to these customers for the remainder of 2009 and into 2010. We supply onsite energy services to the domestic automotive manufacturers who have also been negatively affected by the economic downturn and constriction in the capital and credit markets. On April 30, 2009 and June 1, 2009, respectively, Chrysler and GM filed for Chapter 11 bankruptcy protection. We have been in discussions with both automakers and do not anticipate significant impacts to onsite energy services. Our onsite energy services will continue to be delivered in accordance with the terms of long-term contracts. Further plant closures could have a significant impact on the results of our onsite energy projects. We continue to monitor developments in this sector.

Our existing long-term rail transportation contract which gives us a competitive advantage will expire in 2011. 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 that are experiencing capital constraints due to the economic downturn. We will also continue to look for opportunities to acquire energy projects and biomass fired generating projects for advantageous prices.

Energy Trading

Our Energy Trading segment focuses on physical power and gas marketing, structured transactions, enhancement of returns from DTE Energy’s asset portfolio, optimization of contracted natural gas pipelines 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 transport contracts on the customers’ behalf.

Energy Trading results for the three and six months ended June 30, 2009 as compared to the comparable periods in 2008 are discussed below:

		Three Months Ended								Six Months Ended
		June 30								June 30
(in Millions)		2009				2008				2009				2008
Operating Revenues		$	128			$	435			$	332			$	723
Fuel, Purchased Power and Gas			74				430				190				649
Gross Margin			54				5				142				74
Operation and Maintenance			17				17				35				33
Depreciation, Depletion and Amortization			2				2				3				3
Taxes Other Than Income			—				—				2				1
Operating Income (Loss)			35				(14	)			102				37
Other (Income) and Deductions			2				2				4				3
Income Tax Provision			6				(2	)			31				17
Net Income (Loss) Attributable to DTE Energy Company		$	27			$	(14	)		$	67			$	17

Gross margin increased $49 million in the second quarter of 2009 and increased $68 million in the six-month period ended June 30, 2009. Overall gross margin was impacted by a decrease in gas and power commodity prices in the three and six months ended June 30, 2009 as compared to the same periods in the prior year. The second quarter 2009 increase of $49 million is due to an increase in unrealized margins of $64 million, offset by lower realized margins of $15 million. The increase in unrealized margins primarily consisted of $22 million of improvement in our power strategies; timing related gains of $9 million in our gas transportation strategy; and the absence of 2008 second quarter timing related losses of $22 million and $11 million in our gas storage and gas transportation strategies, respectively. The $15 million decrease in realized margin consisted of a decrease of $17 million in our gas strategies, partially offset by $2 million of timing related gains in our oil trading portfolio.

The increase of $68 million for the six-month period is due to an increase in unrealized margins of $112 million, partially offset by lower realized margins of $44 million. The increase in unrealized gains primarily consisted of $18 million of improvement in our power strategies; timing related gains of $12 million in each of our gas storage and gas transportation strategies; the absence of 2008 timing related losses of $30 million and $19 million in our gas storage and gas transportation strategies, respectively; and $21 million of mark-to-market improvement in our other gas strategies. The $44 million decrease in realized margin is caused by a decrease in gas margin of $56 million, primarily in our gas storage strategy, offset by an increase of realized power margin of $9 million and timing related gains in our oil trading portfolio of $3 million.

Income tax provision increased $8 million in the second quarter of 2009 and $14 million in the six-month period ended June 30, 2009. The second quarter 2009 increase of $8 million is due to an increase in income taxes attributable to higher pretax income, partially offset by a $10 million of favorable tax-related adjustments resulting from the settlement of federal income tax audits. The six-month period ended June 30, 2009 increase of $14 million is due to an increase in income taxes resulting from higher pretax income, partially offset by $10 million of favorable tax-related adjustments primarily resulting from the settlement of federal income tax audits.

Outlook — Significant portions of the Energy Trading portfolio are economically hedged. The portfolio includes financial instruments, physical commodity contracts and gas inventory, as well as contracted natural gas pipeline transportation and storage, and power generation capacity positions. Energy Trading also provides power and ancillary services and natural gas to various utilities which may include the management of associated storage and transport contracts on the customers’ behalf. Most financial instruments and physical power and gas contracts are deemed derivatives, whereas proprietary 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 storage with futures, forwards and swaps. 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 net loss from Corporate & Other increased $6 million for the second quarter of 2009 and decreased $8 million for the six-month period ended June 30, 2009, respectively. The second quarter increase is primarily due to an $11 million increase in costs related to natural gas forward contracts, $4 million for the impairment of an investment in an available-for-sale security and a $3 million increase in financing fees, partially offset by $11 million of favorable tax-related adjustments resulting from the recognition of tax benefits from the settlement of tax audits. For the six-month period, the decrease is primarily due to $11 million of favorable tax-related adjustments and a $4 million reduction in the inter-company interest allocation, partially offset by $4 million for the impairment of an investment in an available-for-sale security and $3 million due to increasing financing fees.

DISCONTINUED OPERATIONS

Synthetic Fuel

Due to the expiration of synfuel production tax credits in 2007, the Synthetic Fuel business ceased operations and was classified as a discontinued operation as of December 31, 2007. The favorable impact of reserve adjustments for the final phase-out percentage of approximately $16 million, the final settlement of other miscellaneous assets and liabilities and related tax impacts resulted in net income of $12 million for the first six months of 2008.

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.

Our strategic direction anticipates base level capital investments and expenditures for existing businesses in 2009 of up to $1.1 billion. The capital needs of our utilities will increase due primarily to environmental related expenditures. We expect over $2.9 billion of future capital expenditures through 2018 to satisfy both existing and known new requirements, not including any potential requirements related to climate change. We plan to seek regulatory approval to include these capital expenditures within our regulatory rate base consistent with prior treatment.

We expect non-utility capital spending will approximate $200 million to $300 million annually for the next several years. Capital spending for growth of existing or new businesses will depend on the existence of opportunities that meet our strict risk-return and value creation criteria.

Due to the economy and credit market conditions, we are continually reviewing our capital expenditure commitments for potential reductions and deferrals and plan to adjust spending as appropriate.

		Six Months Ended
		June 30
(in Millions)		2009				2008
Cash and Cash Equivalents
Cash Flow From (Used For)
Operating activities:
Net income		$	263			$	245
Depreciation, depletion and amortization			472				440
Deferred income taxes			88				180
Gain on sale of non-utility assets			—				(128	)
Gain on sale of synfuel and other assets, net			3				(3	)
Working capital and other			475				801
			1,301				1,535
Investing activities:
Plant and equipment expenditures — utility			(581	)			(544	)
Plant and equipment expenditures — non-utility			(32	)			(110	)
Proceeds from sale of non-utility assets			—				253
Proceeds from sale of synfuels and other assets			32				2
Restricted cash and other investments			(29	)			(53	)
			(610	)			(452	)
Financing activities:
Issuance of long-term debt			363				798
Redemption of long-term debt			(355	)			(154	)
Repurchase of long-term debt			—				(238	)
Short-term borrowings, net			(575	)			(984	)
Issuance of common stock			18				—
Repurchase of common stock			—				(16	)
Dividends on common stock and other			(186	)			(178	)
			(735	)			(772	)
Net Increase (Decrease) in Cash and Cash Equivalents		$	(44	)		$	311

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.

Net cash from operating activities in the six months ended June 30, 2009, decreased $234 million from the comparable 2008 period primarily due to lower cash from working capital and other items, primarily accounts receivable, accounts payable and derivative assets and liabilities.

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 primarily to maintain our existing facilities and for 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 $610 million for the six months ended June 30, 2009, compared with net cash used for investing activities of $452 million in the same period in 2008. The 2009 change was primarily driven by the sale of a portion of our Barnett shale properties 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 percent to 52 percent, to ensure it is consistent with our objective to have a strong investment grade debt rating. We have completed a number of refinancings with the effect of extending the average maturity of our long-term debt and strengthening our balance sheet.

Net cash used for financing activities of $735 million for the six months ended June 30, 2009 was consistent with net cash used for financing activities of $772 million for the same period in 2008. Compared to 2008, lower levels of issuances of long-term debt, net of redemptions, were offset by lower levels of short-term debt repayments.

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-regulated 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. Our non-utility growth is expected from additional investments in energy projects following the current economic crisis.

We have been impacted by unfavorable national and regional economic trends that have reduced demand for electricity in our service territory. We may be impacted by the delayed collection of underrecoveries of our PSCR and GCR costs and electric and gas accounts receivable as a result 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.

Distress in the financial markets has had an adverse impact on financial market activities, including extreme volatility in security prices and severely diminished liquidity and credit availability. Pursuant to the failures of large financial institutions, the credit situation rapidly evolved into a global crisis resulting in a number of international bank failures and declines in various stock indexes, and large reductions in the market value of equities and commodities worldwide. The crisis has led to increased volatility in the markets for both financial and physical assets, as the failures of large financial institutions resulted in sharply reduced trading volumes and activity. The effects of the credit situation will continue to be monitored.

In April 2009 we completed an early renewal of $975 million of our syndicated revolving credit facilities before their scheduled expiration in October 2009. The new $1 billion two-year facility will expire in 2011 and has similar covenants to the prior facility. A new two-year $50 million credit facility was completed in May 2009 and a new one-year $70 million credit facility was completed in June 2009. We have a $925 million five-year facility that expires in October 2010. See Note 8 of Notes to Consolidated Financial Statements.

As a result of losses experienced in the 2008 financial markets, our benefit plan assets experienced negative returns, which will result in higher benefit costs and contributions in 2009 and potentially in future years relative to the recent past. During the first six months of 2009, our benefit plan assets produced a small positive return, in contrast to the negative return on assets experienced for the full year of 2008. During 2009, we expect to contribute $250 million to our pension plans and $130 million to our postretirement medical and life insurance benefit plans.

While the impact of continued market volatility and turmoil in the credit markets cannot be predicted, 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.

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 credit 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 credit 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. Our current credit ratings, as determined by three nationally recognized credit rating agencies, are considered investment grade.

In May 2009, Standard & Poor’s Rating Group (Standard & Poor’s) revised the outlook on DTE Energy and its subsidiaries to negative from stable, and lowered the short-term corporate credit and commercial paper ratings for DTE Energy, Detroit Edison and MichCon to A-3 from A-2. The revision is primarily due to concerns over Michigan’s economic climate. Moody’s Investors Service (Moody’s) affirmed our existing short-term ratings of P-2. 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. The resulting split (A-3/P-2) rating has weakened our ability to issue commercial paper, however, to date, we have met our short-term borrowing requirements in the commercial paper market without drawing on back-up credit facilities. Potential instability in the credit markets and the result of our lower rating may impact future access to the commercial paper markets, which may require us to draw on our back-up facilities.

CRITICAL ACCOUNTING ESTIMATES

Asset Impairments — Goodwill

Certain of our reporting units have goodwill or allocated goodwill resulting from purchase business combinations. In accordance with SFAS No. 142, Goodwill and Other Intangible Assets, 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 on October 1, 2008 and determined that the estimated fair value of each reporting unit exceeded its carrying value, and no impairment existed. In the period from October 1, 2008 to March 31, 2009, DTE Energy’s stock price declined by 31 percent and at March 31, 2009 was approximately 26 percent below its book value per share of $37.29. We deemed the duration and severity of the decline in DTE Energy’s stock price to be a triggering event to test for potential goodwill impairment for the first quarter.

A first quarter interim test was performed for all reporting units with allocated goodwill as of February 28, 2009. The results of the test and key estimates that were incorporated are as follows.

As of February 28, 2009 Valuation Date
($ in millions)

						Fair Value				Discount				Terminal
Reporting Unit		Goodwill				Reduction % (a)				Rate				Multiple (b)				Valuation Methodology (c)
Electric Utility		$	1,206				17	%			7	%			7.0x			DCF, assuming stock sale
Gas Utilities			772				6	%			7	%			9.0x			DCF, assuming stock sale
Energy Services			28				55	%			14	%			4.5x			DCF, assuming asset sale
Coal Services			4				15	%			11	%			5.5x			DCF, assuming asset sale
Gas Midstream			7				59	%			10	%			7.5x			DCF, assuming asset sale
Energy Trading			17				100	%			n/a				n/a			Economic value of trading portfolio
Unconventional Gas Production			2				56	%			14	%			n/a			Blended — DCF, transaction multiples
		$	2,036

For the first quarter interim test, we updated projected future results, cash flows and discount rates to reflect recent regulatory actions and negative impacts from the deterioration in the regional and national economy. Terminal values that utilize an earnings multiple approach were updated to incorporate the current market values of comparable entities. As compared to the annual test performed in the fourth quarter of 2008, the valuations were negatively impacted by current market factors with particular downward pressure on market multiples. 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 factors such as (1) an acquisition control premium (the price in excess of a stock’s market price that investors typically pay to gain control of an

entity), and (2) the market’s apparent discounting of DTE Energy’s stock price due to uncertainty regarding the current regulatory and automotive industry environment and DTE Energy’s diverse non-utility business portfolio. All reporting units passed Step 1 of the impairment test.

The excess of fair value over carrying value for our Gas Utilities reporting unit narrowed considerably since the fourth quarter 2008 test, largely due to declines in the market values and resulting market multiples of comparable entities referenced in our valuation. Further declines 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.

For the quarter ended June 30, 2009, DTE Energy’s closing stock price increased 16 percent. Although DTE is still trading at a discount to book value at the end of the second quarter, the discount improved to 14 percent at June 30, 2009 from 26 percent at March 31, 2009. In assessing whether the continuing discount to book value was an indication of impairment, we considered the following factors: (1) the severity of the decline in DTE’s share price experienced since the fourth quarter of 2008 has diminished and is beginning to recover; and (2) the assumptions incorporated in the first quarter impairment test have either improved or have not changed significantly during the second quarter such that they would change the results of Step 1. As a result of this assessment, we determined that the continuing discount to book value was not a triggering event for impairment testing purposes.

We did, however, identify a trigger for our Energy Services reporting unit related to the long-lived asset impairment tests that were performed during the second quarter on certain automotive-related project companies. Accordingly, we performed an interim goodwill impairment test for Energy Services. The fair value of the reporting unit exceeded its carrying value including goodwill. Therefore, the reporting unit passed Step 1 of the impairment test. As compared to the first quarter interim test, the second quarter valuation was favorably impacted by increased market multiples and a favorable discount rate.

We will continue to 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.

FAIR VALUE

All contracts considered to be derivative instruments are recorded on the balance sheet at their fair value, as Derivative assets or liabilities. Contracts we typically classify as derivative instruments include power, gas, certain coal and oil forwards, futures, options and swaps, and foreign currency contracts. Items we do not generally account for as derivatives include proprietary gas inventory, gas storage and transportation arrangements, and gas and oil reserves. See Note 3 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 impacts 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 this timing difference 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 following tables contain the four categories of activities represented by their operating characteristics and key risks:

	•		Economic Hedges — Represents derivative activity associated with assets owned and contracted by DTE Energy, including forward sales of gas production and trades associated with owned 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.
	•		Structured Contracts — Represents derivative activity transacted by originating substantially hedged positions with wholesale energy marketers, producers, end users, utilities, retail aggregators and alternative energy suppliers.
	•		Proprietary 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 associated with our Unconventional Gas reserves. A portion of the price risk associated with anticipated production from the Barnett natural gas reserves has been mitigated through 2010. Changes in the value of the hedges are recorded as Derivative assets or liabilities, with an offset in Other comprehensive income to the extent that the hedges are deemed effective. The amounts shown in the following tables exclude the value of the underlying gas reserves including changes therein. Other also includes derivative activity at Detroit Edison related to Financial Transmission Rights (FTR) 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 tables provide details on changes in our MTM net asset (or liability) position for the six months ended June 30, 2009:

		Economic				Structured				Proprietary
(in Millions)		Hedges				Contracts				Trading				Other				Total
MTM at December 31, 2008		$	18			$	(222	)		$	22			$	9			$	(173	)
Reclassify to realized upon settlement			18				13				(72	)			(4	)			(45	)
Changes in fair value recorded to income			(1	)			49				92				1				141
Amortization of option premiums			—				—				47				—				47
Amounts recorded to unrealized income			17				62				67				(3	)			143
Changes in fair value recorded in regulatory liabilities			—				—				—				(13	)			(13	)
Amounts recorded in other comprehensive income			—				—				—				4				4
Change in collateral held by (for) others			(8	)			12				(16	)			—				(12	)
Option premiums and other			—				—				(32	)			—				(32	)
MTM at June 30, 2009		$	27			$	(148	)		$	41			$	(3	)		$	(83	)

A substantial portion of the Company’s price risk related to its Antrim shale gas exploration and production business was mitigated by financial contracts that hedged our price risk exposure through 2013. The contracts were retained when the Antrim business was sold and offsetting financial contracts were put into place to effectively settle these positions. The contracts will require payments through 2013. These contracts represent a significant portion of the above net mark-to-market liability.

The following table provides a current and noncurrent analysis of Derivative assets and liabilities, as reflected on the Consolidated Statements of Financial Position as of June 30, 2009. Amounts that relate to contracts that become due within twelve months are classified as current and all remaining amounts are classified as noncurrent.

		Economic				Structured				Proprietary												Assets
(in Millions)		Hedges				Contracts				Trading				Other				Eliminations				(Liabilities)
Current assets		$	21			$	212			$	82			$	7			$	(3	)		$	319
Noncurrent assets			13				134				9				1				(2	)			155
Total MTM assets			34				346				91				8				(5	)			474
Current liabilities			(5	)			(230	)			(45	)			(11	)			3				(288	)
Noncurrent liabilities			(2	)			(264	)			(5	)			—				2				(269	)
Total MTM liabilities			(7	)			(494	)			(50	)			(11	)			5				(557	)
Total MTM net assets (liabilities)		$	27			$	(148	)		$	41			$	(3	)		$	—			$	(83	)

The table below shows the maturity of our MTM positions:

														2012
(in Millions)														and				Total Fair
Source of Fair Value		2009				2010				2011				Beyond				Value
Economic Hedges		$	32			$	(8	)		$	(2	)		$	5			$	27
Structured Contracts			(1	)			(34	)			(46	)			(67	)			(148	)
Proprietary Trading			83				(41	)			2				(3	)			41
Other			2				(5	)			—				—				(3	)
Total		$	116			$	(88	)		$	(46	)		$	(65	)		$	(83	)

Part I — Item 3.

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 has a tracking mechanism to mitigate a portion of losses related to uncollectible accounts receivable at MichCon. 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 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 Unconventional Gas Production business segment has exposure to natural gas and, to a lesser extent, 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 Energy Trading business segment has exposure to electricity, natural gas, crude oil, heating oil, and foreign currency 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.

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

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.

The Company’s utilities and certain non-utility businesses provide services to the domestic automotive industry, including GM, Ford Motor Company (Ford) and Chrysler and many of their vendors and suppliers. Chrysler filed for bankruptcy protection on April 30, 2009. We have reserved approximately $9.3 million of pre-petition accounts receivable related to Chrysler as of June 30, 2009. GM filed for bankruptcy protection on June 1, 2009. We have reserved or written off approximately $6.6 million of pre-petition accounts and notes receivable related to GM as of June 30, 2009. Closing of GM or Chrysler plants or other facilities that operate within Detroit Edison’s service territory will also negatively impact the Company’s operating revenues in future periods. In 2008, GM and Chrysler represented 3 percent and 2 percent of its annual electric sales volumes, respectively. GM and Chrysler have an immaterial impact to MichCon’s revenues.

The Company’s Power and Industrial Projects segment has long-term contracts with GM to provide onsite energy services at certain of its manufacturing and administrative facilities. The long-term contracts provide for full recovery of its investment in the event of early termination. At June 30, 2009, the book value of long-lived assets

used in the servicing of these facilities was approximately $69 million. Certain of these long-lived assets have been funded by non-recourse financing totaling approximately $57 million at June 30, 2009.

The Company’s Power and Industrial Projects segment also has an equity investment of approximately $52 million in an entity which provides onsite services to Chrysler manufacturing facilities. Chrysler’s performance under the long-term contracts for services is guaranteed by Daimler North America Corporation (Daimler), a subsidiary of Daimler AG. The long-term contracts and the supporting Daimler guarantee provide for full recovery of the Company’s investment in the event of early termination or default. Chrysler has announced the closure of one site that is under a long-term service contract with the Company. Through June 30, 2009, to the extent that Chrysler has not been performing in accordance with its contracts, Daimler has been performing under its guarantee. Therefore, the Company believes that it will recover its investment in the event of a facility closure or a Chrysler default.

In the second quarter of 2009, the Company determined that the GM and Chrysler bankruptcy filings were triggering events to assess certain automotive-related long-lived assets for impairment. As of June 30, 2009, the Company performed an impairment analysis on these assets in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. Based on its undiscounted cash flow projections and fair value calculations, the Company determined that it did not have an impairment loss at June 30, 2009. We have also determined that we do not have an other than temporary decline in our Chrysler-related equity investment as described in APB 18, The Equity Method of Accounting for Investments in Common Stock. The Company’s assumptions and conclusions may change in the future and we could have an impairment loss if certain facilities are not utilized as currently anticipated.

Other

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 internally generated credit assessments when determining the credit quality of our trading counterparties. The following table displays the credit quality of our trading counterparties as of June 30, 2009:

		Credit Exposure
		before Cash				Cash				Net Credit
(in Millions)		Collateral				Collateral				Exposure
Investment Grade (1)
A- and Greater		$	275			$	(16	)		$	259
BBB+ and BBB			228				(5	)			223
BBB-			47				—				47
Total Investment Grade			550				(21	)			529
Non-investment grade (2)			23				(1	)			22
Internally Rated — investment grade (3)			90				(4	)			86
Internally Rated — non-investment grade (4)			10				—				10
Total		$	673			$	(26	)		$	647

Interest Rate Risk

DTE Energy is 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 June 30, 2009, we had a floating rate debt-to-total debt ratio of approximately three percent (excluding securitized debt).

Foreign Currency 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 fluctuations, we have entered into a series of currency forward contracts through January 2013. Additionally, we may enter into fair value currency 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 instruments and foreign currency forward contracts. The sensitivity analysis involved increasing and decreasing forward rates at June 30, 2009 by a hypothetical 10 percent and calculating the resulting change in the fair values. The results of the sensitivity analysis calculations follow:

(in Millions)		Assuming a 10%				Assuming a 10%
Activity		increase in rates				decrease in rates				Change in the fair value of
Coal Contracts		$	1			$	(1	)		Commodity contracts
Gas Contracts		$	(8	)		$	9			Commodity contracts
Oil Contracts		$	2			$	(2	)		Commodity contracts
Power Contracts		$	(13	)		$	13			Commodity contracts
Interest Rate Risk		$	(310	)		$	336			Long-term debt
Foreign Currency Risk		$	(4	)		$	4			Forward contracts
Discount Rates		$	1			$	(1	)		Commodity contracts

Part I — Item 4.

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 and Chief Financial Officer, 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 June 30, 2009, which is the end of the period covered by this report. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that such 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 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, 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) 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 June 30, 2009 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Part I — Item 1.

DTE Energy Company

		Three Months Ended								Six Months Ended
		June 30								June 30
(in Millions, Except per Share Amounts)		2009				2008				2009				2008
Operating Revenues		$	1,688			$	2,251			$	3,943			$	4,821
Operating Expenses
Fuel, purchased power and gas			577				1,032				1,537				2,298
Operation and maintenance			595				754				1,186				1,453
Depreciation, depletion and amortization			240				216				472				442
Taxes other than income			61				78				141				158
Gain on sale of non-utility assets			—				(2	)			—				(128	)
Other asset (gains) and losses, reserves and impairments, net			—				16				(3	)			12
			1,473				2,094				3,333				4,235
Operating Income			215				157				610				586
Other (Income) and Deductions
Interest expense			134				122				266				246
Interest income			(3	)			(4	)			(6	)			(8	)
Other income			(22	)			(18	)			(46	)			(40	)
Other expenses			(5	)			9				9				23
			104				109				223				221
Income Before Income Taxes			111				48				387				365
Income Tax Provision			27				18				124				134
Income from Continuing Operations			84				30				263				231
Discontinued Operations Income, net of tax			—				2				—				14
Net Income			84				32				263				245
Less: Net Income Attributable to Noncontrolling Interests From
Continuing operations			1				2				2				3
Discontinued operations			—				2				—				2
			1				4				2				5
Net Income Attributable to DTE Energy Company		$	83			$	28			$	261			$	240
Basic Earnings per Common Share
Income from continuing operations		$	.51			$	.17			$	1.59			$	1.40
Discontinued operations			—				—				—				.07
Total		$	.51			$	.17			$	1.59			$	1.47
Diluted Earnings per Common Share
Income from continuing operations		$	.51			$	.17			$	1.59			$	1.40
Discontinued operations			—				—				—				.07
Total		$	.51			$	.17			$	1.59			$	1.47
Weighted Average Common Shares Outstanding
Basic			164				163				164				163
Diluted			164				163				164				163
Dividends Declared per Common Share		$	.53			$	.53			$	1.06			$	1.06