Leases

12 Months Ended

Dec. 31, 2023

Leases [Abstract]

Leases

LEASES

Lessee

Leases at DTE Energy are primarily comprised of various forms of equipment, computer hardware, coal railcars, production facilities, buildings, and certain easement leases with terms ranging from approximately 2 to 40 years. Leases at DTE Electric are primarily comprised of various forms of equipment, computer hardware, coal railcars, and certain easement leases with terms ranging from approximately 2 to 40 years.

A lease is deemed to exist when the Registrants have the right to control the use of identified property, plant or equipment, as conveyed through a contract, for a certain period of time and consideration paid. The right to control is deemed to occur when the Registrants have the right to obtain substantially all of the economic benefits of the identified assets and the right to direct the use of such assets.

Lease liabilities are determined utilizing a discount rate to determine the present values of lease payments. Topic 842 requires the use of the rate implicit in the lease when it is readily determinable. When the rate implicit in the lease is not readily determinable, the incremental borrowing rate is used. The Registrants have determined their respective incremental borrowing rates based upon the rate of interest that would have been paid on a collateralized basis over similar tenors to that of the leases. The incremental borrowing rates for DTE Electric and DTE Gas have been determined utilizing respective secured borrowing rates for first mortgage bonds with like tenors of remaining lease terms. Incremental borrowing rates for non-utility entities have been determined utilizing an implied secured borrowing rate based upon an unsecured rate for a similar tenor of remaining lease terms, which is then adjusted for the estimated impact of collateral.

Certain leases of the Registrants contain escalation clauses whereby the payments are adjusted for consumer price or labor indices. The Registrants have leases with non-index based escalation clauses for fixed dollar or percentage increases. DTE Energy also has leases with variable payments based upon usage of, or revenues associated with, the leased assets. DTE Electric also has leases with variable payments based upon the usage of the leased assets.

Certain leases of easements and coal railcars contain provisions whereby the Registrants have the option to terminate the lease agreement by giving notice of such termination during the time frames specified in the respective lease. The Registrants have considered such provisions in the determination of the lease term when it is reasonably certain that the lease would be terminated.

The Registrants have certain leases which contain purchase options. Based upon the nature of the leased property and terms of the purchase options, the Registrants have determined it is not reasonably certain that such purchase options will be utilized. Thus, the impact of the purchase options has not been included in the determination of right-of-use assets and lease liabilities for the subject leases.

The Registrants have certain leases which contain renewal options. Where the renewal options were deemed reasonably certain to occur, the impacts of such options were included in the determination of the right of use assets and lease liabilities.

The Registrants have agreements with lease and non-lease components, which are generally accounted for separately. Consideration in a lease is allocated between lease and non-lease components based upon the estimated relative standalone prices. The Registrants have certain coal railcar leases for which non-lease and lease components are accounted for as a single lease component, as permitted under Topic 842.

The following is a summary of the components of lease cost for the years ended December 31:

	DTE Energy						DTE Electric
	2023		2022		2021		2023		2022		2021
	(In millions)
Operating lease cost	$	22	$	18	$	19	$	17	$	12	$	14
Finance lease cost:
Amortization of right-of-use assets	7		7		7		6		6		6
Interest of lease liabilities	—		1		1		—		—		—
Total finance lease cost	7		8		8		6		6		6
Variable lease cost	13		9		9		—		—		—
Short-term lease cost	12		19		14		4		10		6
	$	54	$	54	$	50	$	27	$	28	$	26

The Registrants have elected not to apply the recognition requirements of Topic 842 to leases with a term of 12 months or less. DTE Energy and DTE Electric record operating, variable, and short-term lease costs as Operating Expenses on the Consolidated Statements of Operations, except for certain amounts that may be capitalized to Other Assets.

The following is a summary of other information related to leases for the years ended December 31:

	DTE Energy									DTE Electric
	2023			2022			2021			2023			2022			2021
	(In millions)
Supplemental Cash Flows Information
Cash paid for amounts included in the measurement of these liabilities:
Operating cash flows for finance leases	$	9		$	8		$	8		$	7		$	7		$	7
Operating cash flows for operating leases	$	19		$	17		$	19		$	15		$	12		$	14
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	61		$	5		$	5		$	61		$	2		$	1
Finance leases	$	5		$	3		$	3		$	5		$	1		$	1
Weighted Average Remaining Lease Term (Years)
Operating leases	18.7			12.8			12.7			19.8			11.1			10.3
Finance leases	8.9			8.2			7.8			4.5			1.1			2.1
Weighted Average Discount Rate
Operating leases	4.4		%	3.7		%	3.6		%	4.5		%	3.4		%	3.4		%
Finance leases	4.0		%	2.4		%	2.2		%	5.4		%	1.0		%	1.0		%

The Registrants' future minimum lease payments under leases for remaining periods as of December 31, 2023 are as follows:

	DTE Energy				DTE Electric
	Operating Leases		Finance Leases		Operating Leases		Finance Leases
	(In millions)
2024	$	20	$	3	$	16	$	2
2025	15		3		12		1
2026	14		2		10		1
2027	12		2		10		1
2028	10		2		8		1
2029 and thereafter	134		6		110		—
Total future minimum lease payments	205		18		166		6
Imputed interest	(80)		(2)		(70)		—
Lease liabilities	$	125	$	16	$	96	$	6

Finance leases reported on the Consolidated Statements of Financial Position are as follows for the years ended December 31:

	DTE Energy				DTE Electric
	2023		2022		2023		2022
	(In millions)
Right-of-use assets, within Property, plant, and equipment, net	$	18	$	19	$	6	$	6
Current lease liabilities, within Current portion of long-term debt	$	3	$	8	$	2	$	6
Long-term lease liabilities	$	13	$	11	$	4	$	1

Lessor

DTE Energy leases a portion of its pipeline system through a finance lease contract that has been renewed through 2025, with additional renewal options reasonably certain to be exercised through 2040. DTE Energy also leases certain energy infrastructure assets for large industrial customers under separate long-term agreements through 2040 and 2042, respectively. For the agreement ending in 2040, the assets will transfer to the customer at the end of the term. For the agreement scheduled to end in 2042, the customer will have the option to extend the term in 5 year increments and may purchase the assets during the extension period. DTE Energy has accounted for a portion of these agreements as finance lease arrangements.

DTE Energy also leases various assets under operating leases for a pipeline, energy facilities and related equipment. Such leases are comprised of both fixed payments and variable payments which are contingent on volumes, with terms ranging from 2 to 24 years. Generally, the operating leases do not have renewal provisions or options to purchase the assets at the end of the lease. The operating leases generally do not have termination for convenience provisions. Termination may be allowed under specific circumstances stated in the lease contract, such as under an event of default.

Certain of the finance and operating leases have lease terms that extend to the end of the estimated economic life of the leased assets, thereby resulting in no residual value. Any remaining residual values under the finance and operating leases are expected to be recovered through rates, renewals or new lease contracts. Residual values have been determined using the estimated economic life of the leased assets. The finance and operating leases do not contain residual value guarantees.

Certain of the operating leases have both lease and non-lease components. The lease and non-lease components are allocated based upon estimated relative standalone selling prices.

A lease is deemed to exist when the Registrants have provided other parties with the right to control the use of identified property, plant or equipment, as conveyed through a contract, for a certain period of time and consideration received. The right to control is deemed to occur when the Registrants have provided other parties with the right to obtain substantially all of the economic benefits of the identified assets and the right to direct the use of such assets.

DTE Energy’s lease income associated with operating leases, including the line items in which it was included on the Consolidated Statements of Operations, was as follows:

	2023		2022		2021
	(In millions)
Fixed payments	$	15	$	15	$	67
Variable payments	44		67		131
	$	59	$	82	$	198
Operating revenues	$	59	$	82	$	103
Other income(a)	—		—		95
	$	59	$	82	$	198

_______________________________________

(a)Decrease in 2022 is due to the closure of the REF business.

DTE Energy’s minimum future rental revenues under operating leases for remaining periods as of December 31, 2023 are as follows:

	DTE Energy
	(In millions)
2024	$	15
2025	15
2026	11
2027	10
2028	6
2029 and thereafter	36
	$	93

Depreciation expense associated with DTE Energy's property under operating leases was $8 million, $11 million, and $22 million for the years ended December 31, 2023, 2022, and 2021 respectively.

The following is a summary of property under operating leases for DTE Energy as of December 31:

	2023		2022
	(In millions)
Gross property under operating leases	$	228	$	282
Accumulated amortization of property under operating leases	$	118	$	128

The components of DTE Energy’s net investment in finance leases for remaining periods as of December 31, 2023 are as follows:

	DTE Energy
	(In millions)
2024	$	34
2025	34
2026	34
2027	34
2028	34
2029 and thereafter	389
Total minimum future lease receipts	559
Residual value of leased pipeline	17
Less unearned income	289
Net investment in finance lease	287
Less current portion	8
	$	279

Interest income recognized under finance leases was $27 million, $24 million, and $17 million for the years ended December 31, 2023, 2022, and 2021, respectively.

Leases

LEASES

Lessee

Leases at DTE Energy are primarily comprised of various forms of equipment, computer hardware, coal railcars, production facilities, buildings, and certain easement leases with terms ranging from approximately 2 to 40 years. Leases at DTE Electric are primarily comprised of various forms of equipment, computer hardware, coal railcars, and certain easement leases with terms ranging from approximately 2 to 40 years.

A lease is deemed to exist when the Registrants have the right to control the use of identified property, plant or equipment, as conveyed through a contract, for a certain period of time and consideration paid. The right to control is deemed to occur when the Registrants have the right to obtain substantially all of the economic benefits of the identified assets and the right to direct the use of such assets.

Lease liabilities are determined utilizing a discount rate to determine the present values of lease payments. Topic 842 requires the use of the rate implicit in the lease when it is readily determinable. When the rate implicit in the lease is not readily determinable, the incremental borrowing rate is used. The Registrants have determined their respective incremental borrowing rates based upon the rate of interest that would have been paid on a collateralized basis over similar tenors to that of the leases. The incremental borrowing rates for DTE Electric and DTE Gas have been determined utilizing respective secured borrowing rates for first mortgage bonds with like tenors of remaining lease terms. Incremental borrowing rates for non-utility entities have been determined utilizing an implied secured borrowing rate based upon an unsecured rate for a similar tenor of remaining lease terms, which is then adjusted for the estimated impact of collateral.

Certain leases of the Registrants contain escalation clauses whereby the payments are adjusted for consumer price or labor indices. The Registrants have leases with non-index based escalation clauses for fixed dollar or percentage increases. DTE Energy also has leases with variable payments based upon usage of, or revenues associated with, the leased assets. DTE Electric also has leases with variable payments based upon the usage of the leased assets.

Certain leases of easements and coal railcars contain provisions whereby the Registrants have the option to terminate the lease agreement by giving notice of such termination during the time frames specified in the respective lease. The Registrants have considered such provisions in the determination of the lease term when it is reasonably certain that the lease would be terminated.

The Registrants have certain leases which contain purchase options. Based upon the nature of the leased property and terms of the purchase options, the Registrants have determined it is not reasonably certain that such purchase options will be utilized. Thus, the impact of the purchase options has not been included in the determination of right-of-use assets and lease liabilities for the subject leases.

The Registrants have certain leases which contain renewal options. Where the renewal options were deemed reasonably certain to occur, the impacts of such options were included in the determination of the right of use assets and lease liabilities.

The Registrants have agreements with lease and non-lease components, which are generally accounted for separately. Consideration in a lease is allocated between lease and non-lease components based upon the estimated relative standalone prices. The Registrants have certain coal railcar leases for which non-lease and lease components are accounted for as a single lease component, as permitted under Topic 842.

The following is a summary of the components of lease cost for the years ended December 31:

	DTE Energy						DTE Electric
	2023		2022		2021		2023		2022		2021
	(In millions)
Operating lease cost	$	22	$	18	$	19	$	17	$	12	$	14
Finance lease cost:
Amortization of right-of-use assets	7		7		7		6		6		6
Interest of lease liabilities	—		1		1		—		—		—
Total finance lease cost	7		8		8		6		6		6
Variable lease cost	13		9		9		—		—		—
Short-term lease cost	12		19		14		4		10		6
	$	54	$	54	$	50	$	27	$	28	$	26

The Registrants have elected not to apply the recognition requirements of Topic 842 to leases with a term of 12 months or less. DTE Energy and DTE Electric record operating, variable, and short-term lease costs as Operating Expenses on the Consolidated Statements of Operations, except for certain amounts that may be capitalized to Other Assets.

The following is a summary of other information related to leases for the years ended December 31:

	DTE Energy									DTE Electric
	2023			2022			2021			2023			2022			2021
	(In millions)
Supplemental Cash Flows Information
Cash paid for amounts included in the measurement of these liabilities:
Operating cash flows for finance leases	$	9		$	8		$	8		$	7		$	7		$	7
Operating cash flows for operating leases	$	19		$	17		$	19		$	15		$	12		$	14
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	61		$	5		$	5		$	61		$	2		$	1
Finance leases	$	5		$	3		$	3		$	5		$	1		$	1
Weighted Average Remaining Lease Term (Years)
Operating leases	18.7			12.8			12.7			19.8			11.1			10.3
Finance leases	8.9			8.2			7.8			4.5			1.1			2.1
Weighted Average Discount Rate
Operating leases	4.4		%	3.7		%	3.6		%	4.5		%	3.4		%	3.4		%
Finance leases	4.0		%	2.4		%	2.2		%	5.4		%	1.0		%	1.0		%

The Registrants' future minimum lease payments under leases for remaining periods as of December 31, 2023 are as follows:

	DTE Energy				DTE Electric
	Operating Leases		Finance Leases		Operating Leases		Finance Leases
	(In millions)
2024	$	20	$	3	$	16	$	2
2025	15		3		12		1
2026	14		2		10		1
2027	12		2		10		1
2028	10		2		8		1
2029 and thereafter	134		6		110		—
Total future minimum lease payments	205		18		166		6
Imputed interest	(80)		(2)		(70)		—
Lease liabilities	$	125	$	16	$	96	$	6

Finance leases reported on the Consolidated Statements of Financial Position are as follows for the years ended December 31:

	DTE Energy				DTE Electric
	2023		2022		2023		2022
	(In millions)
Right-of-use assets, within Property, plant, and equipment, net	$	18	$	19	$	6	$	6
Current lease liabilities, within Current portion of long-term debt	$	3	$	8	$	2	$	6
Long-term lease liabilities	$	13	$	11	$	4	$	1

Lessor

DTE Energy leases a portion of its pipeline system through a finance lease contract that has been renewed through 2025, with additional renewal options reasonably certain to be exercised through 2040. DTE Energy also leases certain energy infrastructure assets for large industrial customers under separate long-term agreements through 2040 and 2042, respectively. For the agreement ending in 2040, the assets will transfer to the customer at the end of the term. For the agreement scheduled to end in 2042, the customer will have the option to extend the term in 5 year increments and may purchase the assets during the extension period. DTE Energy has accounted for a portion of these agreements as finance lease arrangements.

DTE Energy also leases various assets under operating leases for a pipeline, energy facilities and related equipment. Such leases are comprised of both fixed payments and variable payments which are contingent on volumes, with terms ranging from 2 to 24 years. Generally, the operating leases do not have renewal provisions or options to purchase the assets at the end of the lease. The operating leases generally do not have termination for convenience provisions. Termination may be allowed under specific circumstances stated in the lease contract, such as under an event of default.

Certain of the finance and operating leases have lease terms that extend to the end of the estimated economic life of the leased assets, thereby resulting in no residual value. Any remaining residual values under the finance and operating leases are expected to be recovered through rates, renewals or new lease contracts. Residual values have been determined using the estimated economic life of the leased assets. The finance and operating leases do not contain residual value guarantees.

Certain of the operating leases have both lease and non-lease components. The lease and non-lease components are allocated based upon estimated relative standalone selling prices.

A lease is deemed to exist when the Registrants have provided other parties with the right to control the use of identified property, plant or equipment, as conveyed through a contract, for a certain period of time and consideration received. The right to control is deemed to occur when the Registrants have provided other parties with the right to obtain substantially all of the economic benefits of the identified assets and the right to direct the use of such assets.

DTE Energy’s lease income associated with operating leases, including the line items in which it was included on the Consolidated Statements of Operations, was as follows:

	2023		2022		2021
	(In millions)
Fixed payments	$	15	$	15	$	67
Variable payments	44		67		131
	$	59	$	82	$	198
Operating revenues	$	59	$	82	$	103
Other income(a)	—		—		95
	$	59	$	82	$	198

_______________________________________

(a)Decrease in 2022 is due to the closure of the REF business.

DTE Energy’s minimum future rental revenues under operating leases for remaining periods as of December 31, 2023 are as follows:

	DTE Energy
	(In millions)
2024	$	15
2025	15
2026	11
2027	10
2028	6
2029 and thereafter	36
	$	93

Depreciation expense associated with DTE Energy's property under operating leases was $8 million, $11 million, and $22 million for the years ended December 31, 2023, 2022, and 2021 respectively.

The following is a summary of property under operating leases for DTE Energy as of December 31:

	2023		2022
	(In millions)
Gross property under operating leases	$	228	$	282
Accumulated amortization of property under operating leases	$	118	$	128

The components of DTE Energy’s net investment in finance leases for remaining periods as of December 31, 2023 are as follows:

	DTE Energy
	(In millions)
2024	$	34
2025	34
2026	34
2027	34
2028	34
2029 and thereafter	389
Total minimum future lease receipts	559
Residual value of leased pipeline	17
Less unearned income	289
Net investment in finance lease	287
Less current portion	8
	$	279

Interest income recognized under finance leases was $27 million, $24 million, and $17 million for the years ended December 31, 2023, 2022, and 2021, respectively.

Leases

LEASES

Lessee

Leases at DTE Energy are primarily comprised of various forms of equipment, computer hardware, coal railcars, production facilities, buildings, and certain easement leases with terms ranging from approximately 2 to 40 years. Leases at DTE Electric are primarily comprised of various forms of equipment, computer hardware, coal railcars, and certain easement leases with terms ranging from approximately 2 to 40 years.

A lease is deemed to exist when the Registrants have the right to control the use of identified property, plant or equipment, as conveyed through a contract, for a certain period of time and consideration paid. The right to control is deemed to occur when the Registrants have the right to obtain substantially all of the economic benefits of the identified assets and the right to direct the use of such assets.

Lease liabilities are determined utilizing a discount rate to determine the present values of lease payments. Topic 842 requires the use of the rate implicit in the lease when it is readily determinable. When the rate implicit in the lease is not readily determinable, the incremental borrowing rate is used. The Registrants have determined their respective incremental borrowing rates based upon the rate of interest that would have been paid on a collateralized basis over similar tenors to that of the leases. The incremental borrowing rates for DTE Electric and DTE Gas have been determined utilizing respective secured borrowing rates for first mortgage bonds with like tenors of remaining lease terms. Incremental borrowing rates for non-utility entities have been determined utilizing an implied secured borrowing rate based upon an unsecured rate for a similar tenor of remaining lease terms, which is then adjusted for the estimated impact of collateral.

Certain leases of the Registrants contain escalation clauses whereby the payments are adjusted for consumer price or labor indices. The Registrants have leases with non-index based escalation clauses for fixed dollar or percentage increases. DTE Energy also has leases with variable payments based upon usage of, or revenues associated with, the leased assets. DTE Electric also has leases with variable payments based upon the usage of the leased assets.

Certain leases of easements and coal railcars contain provisions whereby the Registrants have the option to terminate the lease agreement by giving notice of such termination during the time frames specified in the respective lease. The Registrants have considered such provisions in the determination of the lease term when it is reasonably certain that the lease would be terminated.

The Registrants have certain leases which contain purchase options. Based upon the nature of the leased property and terms of the purchase options, the Registrants have determined it is not reasonably certain that such purchase options will be utilized. Thus, the impact of the purchase options has not been included in the determination of right-of-use assets and lease liabilities for the subject leases.

The Registrants have certain leases which contain renewal options. Where the renewal options were deemed reasonably certain to occur, the impacts of such options were included in the determination of the right of use assets and lease liabilities.

The Registrants have agreements with lease and non-lease components, which are generally accounted for separately. Consideration in a lease is allocated between lease and non-lease components based upon the estimated relative standalone prices. The Registrants have certain coal railcar leases for which non-lease and lease components are accounted for as a single lease component, as permitted under Topic 842.

The following is a summary of the components of lease cost for the years ended December 31:

	DTE Energy						DTE Electric
	2023		2022		2021		2023		2022		2021
	(In millions)
Operating lease cost	$	22	$	18	$	19	$	17	$	12	$	14
Finance lease cost:
Amortization of right-of-use assets	7		7		7		6		6		6
Interest of lease liabilities	—		1		1		—		—		—
Total finance lease cost	7		8		8		6		6		6
Variable lease cost	13		9		9		—		—		—
Short-term lease cost	12		19		14		4		10		6
	$	54	$	54	$	50	$	27	$	28	$	26

The Registrants have elected not to apply the recognition requirements of Topic 842 to leases with a term of 12 months or less. DTE Energy and DTE Electric record operating, variable, and short-term lease costs as Operating Expenses on the Consolidated Statements of Operations, except for certain amounts that may be capitalized to Other Assets.

The following is a summary of other information related to leases for the years ended December 31:

	DTE Energy									DTE Electric
	2023			2022			2021			2023			2022			2021
	(In millions)
Supplemental Cash Flows Information
Cash paid for amounts included in the measurement of these liabilities:
Operating cash flows for finance leases	$	9		$	8		$	8		$	7		$	7		$	7
Operating cash flows for operating leases	$	19		$	17		$	19		$	15		$	12		$	14
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	61		$	5		$	5		$	61		$	2		$	1
Finance leases	$	5		$	3		$	3		$	5		$	1		$	1
Weighted Average Remaining Lease Term (Years)
Operating leases	18.7			12.8			12.7			19.8			11.1			10.3
Finance leases	8.9			8.2			7.8			4.5			1.1			2.1
Weighted Average Discount Rate
Operating leases	4.4		%	3.7		%	3.6		%	4.5		%	3.4		%	3.4		%
Finance leases	4.0		%	2.4		%	2.2		%	5.4		%	1.0		%	1.0		%

The Registrants' future minimum lease payments under leases for remaining periods as of December 31, 2023 are as follows:

	DTE Energy				DTE Electric
	Operating Leases		Finance Leases		Operating Leases		Finance Leases
	(In millions)
2024	$	20	$	3	$	16	$	2
2025	15		3		12		1
2026	14		2		10		1
2027	12		2		10		1
2028	10		2		8		1
2029 and thereafter	134		6		110		—
Total future minimum lease payments	205		18		166		6
Imputed interest	(80)		(2)		(70)		—
Lease liabilities	$	125	$	16	$	96	$	6

Finance leases reported on the Consolidated Statements of Financial Position are as follows for the years ended December 31:

	DTE Energy				DTE Electric
	2023		2022		2023		2022
	(In millions)
Right-of-use assets, within Property, plant, and equipment, net	$	18	$	19	$	6	$	6
Current lease liabilities, within Current portion of long-term debt	$	3	$	8	$	2	$	6
Long-term lease liabilities	$	13	$	11	$	4	$	1

Lessor

DTE Energy leases a portion of its pipeline system through a finance lease contract that has been renewed through 2025, with additional renewal options reasonably certain to be exercised through 2040. DTE Energy also leases certain energy infrastructure assets for large industrial customers under separate long-term agreements through 2040 and 2042, respectively. For the agreement ending in 2040, the assets will transfer to the customer at the end of the term. For the agreement scheduled to end in 2042, the customer will have the option to extend the term in 5 year increments and may purchase the assets during the extension period. DTE Energy has accounted for a portion of these agreements as finance lease arrangements.

DTE Energy also leases various assets under operating leases for a pipeline, energy facilities and related equipment. Such leases are comprised of both fixed payments and variable payments which are contingent on volumes, with terms ranging from 2 to 24 years. Generally, the operating leases do not have renewal provisions or options to purchase the assets at the end of the lease. The operating leases generally do not have termination for convenience provisions. Termination may be allowed under specific circumstances stated in the lease contract, such as under an event of default.

Certain of the finance and operating leases have lease terms that extend to the end of the estimated economic life of the leased assets, thereby resulting in no residual value. Any remaining residual values under the finance and operating leases are expected to be recovered through rates, renewals or new lease contracts. Residual values have been determined using the estimated economic life of the leased assets. The finance and operating leases do not contain residual value guarantees.

Certain of the operating leases have both lease and non-lease components. The lease and non-lease components are allocated based upon estimated relative standalone selling prices.

A lease is deemed to exist when the Registrants have provided other parties with the right to control the use of identified property, plant or equipment, as conveyed through a contract, for a certain period of time and consideration received. The right to control is deemed to occur when the Registrants have provided other parties with the right to obtain substantially all of the economic benefits of the identified assets and the right to direct the use of such assets.

DTE Energy’s lease income associated with operating leases, including the line items in which it was included on the Consolidated Statements of Operations, was as follows:

	2023		2022		2021
	(In millions)
Fixed payments	$	15	$	15	$	67
Variable payments	44		67		131
	$	59	$	82	$	198
Operating revenues	$	59	$	82	$	103
Other income(a)	—		—		95
	$	59	$	82	$	198

_______________________________________

(a)Decrease in 2022 is due to the closure of the REF business.

DTE Energy’s minimum future rental revenues under operating leases for remaining periods as of December 31, 2023 are as follows:

	DTE Energy
	(In millions)
2024	$	15
2025	15
2026	11
2027	10
2028	6
2029 and thereafter	36
	$	93

Depreciation expense associated with DTE Energy's property under operating leases was $8 million, $11 million, and $22 million for the years ended December 31, 2023, 2022, and 2021 respectively.

The following is a summary of property under operating leases for DTE Energy as of December 31:

	2023		2022
	(In millions)
Gross property under operating leases	$	228	$	282
Accumulated amortization of property under operating leases	$	118	$	128

The components of DTE Energy’s net investment in finance leases for remaining periods as of December 31, 2023 are as follows:

	DTE Energy
	(In millions)
2024	$	34
2025	34
2026	34
2027	34
2028	34
2029 and thereafter	389
Total minimum future lease receipts	559
Residual value of leased pipeline	17
Less unearned income	289
Net investment in finance lease	287
Less current portion	8
	$	279

Interest income recognized under finance leases was $27 million, $24 million, and $17 million for the years ended December 31, 2023, 2022, and 2021, respectively.

Leases

LEASES

Lessee

Leases at DTE Energy are primarily comprised of various forms of equipment, computer hardware, coal railcars, production facilities, buildings, and certain easement leases with terms ranging from approximately 2 to 40 years. Leases at DTE Electric are primarily comprised of various forms of equipment, computer hardware, coal railcars, and certain easement leases with terms ranging from approximately 2 to 40 years.

A lease is deemed to exist when the Registrants have the right to control the use of identified property, plant or equipment, as conveyed through a contract, for a certain period of time and consideration paid. The right to control is deemed to occur when the Registrants have the right to obtain substantially all of the economic benefits of the identified assets and the right to direct the use of such assets.

Lease liabilities are determined utilizing a discount rate to determine the present values of lease payments. Topic 842 requires the use of the rate implicit in the lease when it is readily determinable. When the rate implicit in the lease is not readily determinable, the incremental borrowing rate is used. The Registrants have determined their respective incremental borrowing rates based upon the rate of interest that would have been paid on a collateralized basis over similar tenors to that of the leases. The incremental borrowing rates for DTE Electric and DTE Gas have been determined utilizing respective secured borrowing rates for first mortgage bonds with like tenors of remaining lease terms. Incremental borrowing rates for non-utility entities have been determined utilizing an implied secured borrowing rate based upon an unsecured rate for a similar tenor of remaining lease terms, which is then adjusted for the estimated impact of collateral.

Certain leases of the Registrants contain escalation clauses whereby the payments are adjusted for consumer price or labor indices. The Registrants have leases with non-index based escalation clauses for fixed dollar or percentage increases. DTE Energy also has leases with variable payments based upon usage of, or revenues associated with, the leased assets. DTE Electric also has leases with variable payments based upon the usage of the leased assets.

Certain leases of easements and coal railcars contain provisions whereby the Registrants have the option to terminate the lease agreement by giving notice of such termination during the time frames specified in the respective lease. The Registrants have considered such provisions in the determination of the lease term when it is reasonably certain that the lease would be terminated.

The Registrants have certain leases which contain purchase options. Based upon the nature of the leased property and terms of the purchase options, the Registrants have determined it is not reasonably certain that such purchase options will be utilized. Thus, the impact of the purchase options has not been included in the determination of right-of-use assets and lease liabilities for the subject leases.

The Registrants have certain leases which contain renewal options. Where the renewal options were deemed reasonably certain to occur, the impacts of such options were included in the determination of the right of use assets and lease liabilities.

The Registrants have agreements with lease and non-lease components, which are generally accounted for separately. Consideration in a lease is allocated between lease and non-lease components based upon the estimated relative standalone prices. The Registrants have certain coal railcar leases for which non-lease and lease components are accounted for as a single lease component, as permitted under Topic 842.

The following is a summary of the components of lease cost for the years ended December 31:

	DTE Energy						DTE Electric
	2023		2022		2021		2023		2022		2021
	(In millions)
Operating lease cost	$	22	$	18	$	19	$	17	$	12	$	14
Finance lease cost:
Amortization of right-of-use assets	7		7		7		6		6		6
Interest of lease liabilities	—		1		1		—		—		—
Total finance lease cost	7		8		8		6		6		6
Variable lease cost	13		9		9		—		—		—
Short-term lease cost	12		19		14		4		10		6
	$	54	$	54	$	50	$	27	$	28	$	26

The Registrants have elected not to apply the recognition requirements of Topic 842 to leases with a term of 12 months or less. DTE Energy and DTE Electric record operating, variable, and short-term lease costs as Operating Expenses on the Consolidated Statements of Operations, except for certain amounts that may be capitalized to Other Assets.

The following is a summary of other information related to leases for the years ended December 31:

	DTE Energy									DTE Electric
	2023			2022			2021			2023			2022			2021
	(In millions)
Supplemental Cash Flows Information
Cash paid for amounts included in the measurement of these liabilities:
Operating cash flows for finance leases	$	9		$	8		$	8		$	7		$	7		$	7
Operating cash flows for operating leases	$	19		$	17		$	19		$	15		$	12		$	14
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	61		$	5		$	5		$	61		$	2		$	1
Finance leases	$	5		$	3		$	3		$	5		$	1		$	1
Weighted Average Remaining Lease Term (Years)
Operating leases	18.7			12.8			12.7			19.8			11.1			10.3
Finance leases	8.9			8.2			7.8			4.5			1.1			2.1
Weighted Average Discount Rate
Operating leases	4.4		%	3.7		%	3.6		%	4.5		%	3.4		%	3.4		%
Finance leases	4.0		%	2.4		%	2.2		%	5.4		%	1.0		%	1.0		%

The Registrants' future minimum lease payments under leases for remaining periods as of December 31, 2023 are as follows:

	DTE Energy				DTE Electric
	Operating Leases		Finance Leases		Operating Leases		Finance Leases
	(In millions)
2024	$	20	$	3	$	16	$	2
2025	15		3		12		1
2026	14		2		10		1
2027	12		2		10		1
2028	10		2		8		1
2029 and thereafter	134		6		110		—
Total future minimum lease payments	205		18		166		6
Imputed interest	(80)		(2)		(70)		—
Lease liabilities	$	125	$	16	$	96	$	6

Finance leases reported on the Consolidated Statements of Financial Position are as follows for the years ended December 31:

	DTE Energy				DTE Electric
	2023		2022		2023		2022
	(In millions)
Right-of-use assets, within Property, plant, and equipment, net	$	18	$	19	$	6	$	6
Current lease liabilities, within Current portion of long-term debt	$	3	$	8	$	2	$	6
Long-term lease liabilities	$	13	$	11	$	4	$	1

Lessor

DTE Energy leases a portion of its pipeline system through a finance lease contract that has been renewed through 2025, with additional renewal options reasonably certain to be exercised through 2040. DTE Energy also leases certain energy infrastructure assets for large industrial customers under separate long-term agreements through 2040 and 2042, respectively. For the agreement ending in 2040, the assets will transfer to the customer at the end of the term. For the agreement scheduled to end in 2042, the customer will have the option to extend the term in 5 year increments and may purchase the assets during the extension period. DTE Energy has accounted for a portion of these agreements as finance lease arrangements.

DTE Energy also leases various assets under operating leases for a pipeline, energy facilities and related equipment. Such leases are comprised of both fixed payments and variable payments which are contingent on volumes, with terms ranging from 2 to 24 years. Generally, the operating leases do not have renewal provisions or options to purchase the assets at the end of the lease. The operating leases generally do not have termination for convenience provisions. Termination may be allowed under specific circumstances stated in the lease contract, such as under an event of default.

Certain of the finance and operating leases have lease terms that extend to the end of the estimated economic life of the leased assets, thereby resulting in no residual value. Any remaining residual values under the finance and operating leases are expected to be recovered through rates, renewals or new lease contracts. Residual values have been determined using the estimated economic life of the leased assets. The finance and operating leases do not contain residual value guarantees.

Certain of the operating leases have both lease and non-lease components. The lease and non-lease components are allocated based upon estimated relative standalone selling prices.

A lease is deemed to exist when the Registrants have provided other parties with the right to control the use of identified property, plant or equipment, as conveyed through a contract, for a certain period of time and consideration received. The right to control is deemed to occur when the Registrants have provided other parties with the right to obtain substantially all of the economic benefits of the identified assets and the right to direct the use of such assets.

DTE Energy’s lease income associated with operating leases, including the line items in which it was included on the Consolidated Statements of Operations, was as follows:

	2023		2022		2021
	(In millions)
Fixed payments	$	15	$	15	$	67
Variable payments	44		67		131
	$	59	$	82	$	198
Operating revenues	$	59	$	82	$	103
Other income(a)	—		—		95
	$	59	$	82	$	198

_______________________________________

(a)Decrease in 2022 is due to the closure of the REF business.

DTE Energy’s minimum future rental revenues under operating leases for remaining periods as of December 31, 2023 are as follows:

	DTE Energy
	(In millions)
2024	$	15
2025	15
2026	11
2027	10
2028	6
2029 and thereafter	36
	$	93

Depreciation expense associated with DTE Energy's property under operating leases was $8 million, $11 million, and $22 million for the years ended December 31, 2023, 2022, and 2021 respectively.

The following is a summary of property under operating leases for DTE Energy as of December 31:

	2023		2022
	(In millions)
Gross property under operating leases	$	228	$	282
Accumulated amortization of property under operating leases	$	118	$	128

The components of DTE Energy’s net investment in finance leases for remaining periods as of December 31, 2023 are as follows:

	DTE Energy
	(In millions)
2024	$	34
2025	34
2026	34
2027	34
2028	34
2029 and thereafter	389
Total minimum future lease receipts	559
Residual value of leased pipeline	17
Less unearned income	289
Net investment in finance lease	287
Less current portion	8
	$	279

Interest income recognized under finance leases was $27 million, $24 million, and $17 million for the years ended December 31, 2023, 2022, and 2021, respectively.

Leases

LEASES

Lessee

Leases at DTE Energy are primarily comprised of various forms of equipment, computer hardware, coal railcars, production facilities, buildings, and certain easement leases with terms ranging from approximately 2 to 40 years. Leases at DTE Electric are primarily comprised of various forms of equipment, computer hardware, coal railcars, and certain easement leases with terms ranging from approximately 2 to 40 years.

A lease is deemed to exist when the Registrants have the right to control the use of identified property, plant or equipment, as conveyed through a contract, for a certain period of time and consideration paid. The right to control is deemed to occur when the Registrants have the right to obtain substantially all of the economic benefits of the identified assets and the right to direct the use of such assets.

Lease liabilities are determined utilizing a discount rate to determine the present values of lease payments. Topic 842 requires the use of the rate implicit in the lease when it is readily determinable. When the rate implicit in the lease is not readily determinable, the incremental borrowing rate is used. The Registrants have determined their respective incremental borrowing rates based upon the rate of interest that would have been paid on a collateralized basis over similar tenors to that of the leases. The incremental borrowing rates for DTE Electric and DTE Gas have been determined utilizing respective secured borrowing rates for first mortgage bonds with like tenors of remaining lease terms. Incremental borrowing rates for non-utility entities have been determined utilizing an implied secured borrowing rate based upon an unsecured rate for a similar tenor of remaining lease terms, which is then adjusted for the estimated impact of collateral.

Certain leases of the Registrants contain escalation clauses whereby the payments are adjusted for consumer price or labor indices. The Registrants have leases with non-index based escalation clauses for fixed dollar or percentage increases. DTE Energy also has leases with variable payments based upon usage of, or revenues associated with, the leased assets. DTE Electric also has leases with variable payments based upon the usage of the leased assets.

Certain leases of easements and coal railcars contain provisions whereby the Registrants have the option to terminate the lease agreement by giving notice of such termination during the time frames specified in the respective lease. The Registrants have considered such provisions in the determination of the lease term when it is reasonably certain that the lease would be terminated.

The Registrants have certain leases which contain purchase options. Based upon the nature of the leased property and terms of the purchase options, the Registrants have determined it is not reasonably certain that such purchase options will be utilized. Thus, the impact of the purchase options has not been included in the determination of right-of-use assets and lease liabilities for the subject leases.

The Registrants have certain leases which contain renewal options. Where the renewal options were deemed reasonably certain to occur, the impacts of such options were included in the determination of the right of use assets and lease liabilities.

The Registrants have agreements with lease and non-lease components, which are generally accounted for separately. Consideration in a lease is allocated between lease and non-lease components based upon the estimated relative standalone prices. The Registrants have certain coal railcar leases for which non-lease and lease components are accounted for as a single lease component, as permitted under Topic 842.

The following is a summary of the components of lease cost for the years ended December 31:

	DTE Energy						DTE Electric
	2023		2022		2021		2023		2022		2021
	(In millions)
Operating lease cost	$	22	$	18	$	19	$	17	$	12	$	14
Finance lease cost:
Amortization of right-of-use assets	7		7		7		6		6		6
Interest of lease liabilities	—		1		1		—		—		—
Total finance lease cost	7		8		8		6		6		6
Variable lease cost	13		9		9		—		—		—
Short-term lease cost	12		19		14		4		10		6
	$	54	$	54	$	50	$	27	$	28	$	26

The Registrants have elected not to apply the recognition requirements of Topic 842 to leases with a term of 12 months or less. DTE Energy and DTE Electric record operating, variable, and short-term lease costs as Operating Expenses on the Consolidated Statements of Operations, except for certain amounts that may be capitalized to Other Assets.

The following is a summary of other information related to leases for the years ended December 31:

	DTE Energy									DTE Electric
	2023			2022			2021			2023			2022			2021
	(In millions)
Supplemental Cash Flows Information
Cash paid for amounts included in the measurement of these liabilities:
Operating cash flows for finance leases	$	9		$	8		$	8		$	7		$	7		$	7
Operating cash flows for operating leases	$	19		$	17		$	19		$	15		$	12		$	14
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	61		$	5		$	5		$	61		$	2		$	1
Finance leases	$	5		$	3		$	3		$	5		$	1		$	1
Weighted Average Remaining Lease Term (Years)
Operating leases	18.7			12.8			12.7			19.8			11.1			10.3
Finance leases	8.9			8.2			7.8			4.5			1.1			2.1
Weighted Average Discount Rate
Operating leases	4.4		%	3.7		%	3.6		%	4.5		%	3.4		%	3.4		%
Finance leases	4.0		%	2.4		%	2.2		%	5.4		%	1.0		%	1.0		%

The Registrants' future minimum lease payments under leases for remaining periods as of December 31, 2023 are as follows:

	DTE Energy				DTE Electric
	Operating Leases		Finance Leases		Operating Leases		Finance Leases
	(In millions)
2024	$	20	$	3	$	16	$	2
2025	15		3		12		1
2026	14		2		10		1
2027	12		2		10		1
2028	10		2		8		1
2029 and thereafter	134		6		110		—
Total future minimum lease payments	205		18		166		6
Imputed interest	(80)		(2)		(70)		—
Lease liabilities	$	125	$	16	$	96	$	6

Finance leases reported on the Consolidated Statements of Financial Position are as follows for the years ended December 31:

	DTE Energy				DTE Electric
	2023		2022		2023		2022
	(In millions)
Right-of-use assets, within Property, plant, and equipment, net	$	18	$	19	$	6	$	6
Current lease liabilities, within Current portion of long-term debt	$	3	$	8	$	2	$	6
Long-term lease liabilities	$	13	$	11	$	4	$	1

Lessor

DTE Energy leases a portion of its pipeline system through a finance lease contract that has been renewed through 2025, with additional renewal options reasonably certain to be exercised through 2040. DTE Energy also leases certain energy infrastructure assets for large industrial customers under separate long-term agreements through 2040 and 2042, respectively. For the agreement ending in 2040, the assets will transfer to the customer at the end of the term. For the agreement scheduled to end in 2042, the customer will have the option to extend the term in 5 year increments and may purchase the assets during the extension period. DTE Energy has accounted for a portion of these agreements as finance lease arrangements.

DTE Energy also leases various assets under operating leases for a pipeline, energy facilities and related equipment. Such leases are comprised of both fixed payments and variable payments which are contingent on volumes, with terms ranging from 2 to 24 years. Generally, the operating leases do not have renewal provisions or options to purchase the assets at the end of the lease. The operating leases generally do not have termination for convenience provisions. Termination may be allowed under specific circumstances stated in the lease contract, such as under an event of default.

Certain of the finance and operating leases have lease terms that extend to the end of the estimated economic life of the leased assets, thereby resulting in no residual value. Any remaining residual values under the finance and operating leases are expected to be recovered through rates, renewals or new lease contracts. Residual values have been determined using the estimated economic life of the leased assets. The finance and operating leases do not contain residual value guarantees.

Certain of the operating leases have both lease and non-lease components. The lease and non-lease components are allocated based upon estimated relative standalone selling prices.

A lease is deemed to exist when the Registrants have provided other parties with the right to control the use of identified property, plant or equipment, as conveyed through a contract, for a certain period of time and consideration received. The right to control is deemed to occur when the Registrants have provided other parties with the right to obtain substantially all of the economic benefits of the identified assets and the right to direct the use of such assets.

DTE Energy’s lease income associated with operating leases, including the line items in which it was included on the Consolidated Statements of Operations, was as follows:

	2023		2022		2021
	(In millions)
Fixed payments	$	15	$	15	$	67
Variable payments	44		67		131
	$	59	$	82	$	198
Operating revenues	$	59	$	82	$	103
Other income(a)	—		—		95
	$	59	$	82	$	198

_______________________________________

(a)Decrease in 2022 is due to the closure of the REF business.

DTE Energy’s minimum future rental revenues under operating leases for remaining periods as of December 31, 2023 are as follows:

	DTE Energy
	(In millions)
2024	$	15
2025	15
2026	11
2027	10
2028	6
2029 and thereafter	36
	$	93

Depreciation expense associated with DTE Energy's property under operating leases was $8 million, $11 million, and $22 million for the years ended December 31, 2023, 2022, and 2021 respectively.

The following is a summary of property under operating leases for DTE Energy as of December 31:

	2023		2022
	(In millions)
Gross property under operating leases	$	228	$	282
Accumulated amortization of property under operating leases	$	118	$	128

The components of DTE Energy’s net investment in finance leases for remaining periods as of December 31, 2023 are as follows:

	DTE Energy
	(In millions)
2024	$	34
2025	34
2026	34
2027	34
2028	34
2029 and thereafter	389
Total minimum future lease receipts	559
Residual value of leased pipeline	17
Less unearned income	289
Net investment in finance lease	287
Less current portion	8
	$	279

Interest income recognized under finance leases was $27 million, $24 million, and $17 million for the years ended December 31, 2023, 2022, and 2021, respectively.